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telecom | IST

Telecom sector could be reduced to 2 companies, warns Bharti Airtel's Sunil Mittal

Amid the ongoing Adjusted Gross Revenue (AGR) case in the Supreme Court, the top boss of Bharti Airtel has warned that the telecom sector in the country could come down to only two companies due to the financial stress faced by the sector.

Amid the ongoing Adjusted Gross Revenue (AGR) case in the Supreme Court, the top boss of Bharti Airtel has warned that the telecom sector in the country could come down to only two companies due to the financial stress faced by the sector.
"We could well be down to two companies given the financial stress in the sector. Unless promoters of the third company decide to bring in large amounts of capital, sustainability will be in difficulty. Airtel has also been badly hit. We have managed to pump in new capital, rights issues and QIP placement. The third operator may want to do the same to raise capital," said Sunil Bharti Mittal Chairman, Bharti Airtel.
Speaking to CNBC-TV18, Mittal said that the AGR payments are huge which has put an extraordinary load of penalties and interest. These large amounts which are sucked of the industry would rather go into building 4G, 5G network.
"But we will have to bow before the orders of the highest court. Time alone will not be enough, there is an interest to be paid on staggered payment," Mittal said.
"This is done now, let's not have further litigation in the sectors. Can't afford to continue hammering on the spine of the digital sectors," he added.
It is to be noted that for Bharti Airtel, the total AGR demand came in at Rs 43,980 crore of which the telco has so far paid Rs 18,004 crore. It is now seeking a 15-year timeline to pay the remaining Rs 25,976 crore. For Vodafone Idea, the total AGR demand came in at Rs 58,254 crore with the company so far clearing Rs 7,854 crore. Like Bharti Airtel, it is also seeking at least a 15-year timeline to clear the remaining Rs 50,400 crore dues.
On the business front, Mittal hoped for solid ARPUs (Average Revenue Per User) building up in the next 5-6 months.
"Earning $2 for 16GB is not sustainable. We have to reach decent levels of ARPU. Need ARPU levels of around Rs 300 a month for sustainability. Telcos don’t want $ 50-60, but we need to get $5. If people are consuming content online, they need to be able to pay accordingly," he added.
Mittal said that the company will cross ARPUs of Rs 200 in 6 months.
"India is a price-sensitive market, in 6 months would ideally like to see move past ARPU levels of Rs 250.
Further, he also batted for clear regulations, policy stability and a predictable regulatory regime.
"We are going through throws of change and a different style of governance. The government should be less litigious with the industry. Once the government loses a case at a certain level, they should not look to take it to the last level," Mittal said.
He is of the view that the Taxpayers charter is a step in that direction. A similar situation required for regulatory space. The government should engage with the few players, settle disputes and focus on Vivad Se Vishwas, he added.
Further, Mittal said that there will be fundamental changes post the pandemic.
"We will see the advent of the digital world. The last 5 months have done what the last 5 years could not have done. We have seen increased activity by customers, saying goodbye to the physical world. People like me who never did e-commerce, are now fully reliant on it, a brilliant discovery even for my generation," Mittal said.
However, a lot more needs to be done on digital connectivity, digital medicine, and education, according to Mittal.