A day after the Center announced a back-up plan for the telecommunications sector, Bharti Airtel chairman Sunil Bharti Mittal sent a synergy message, telling reporters he had spoken to Vodafone Group CEO Nick Read, of the need for more investment and the existence of a conversation with the President and CEO of Reliance Industries, Mukesh Ambani, as well as all the telecom companies working together.
Acknowledging that Bharti Airtel would benefit from the moratorium on dues offered by the government, Mittal said the company would redirect cash flow to aggressively build networks.
Advising Vodafone Idea to inject funds to stay in the game, Mittal said in a virtual press conference Thursday: “They have to bring their own money to the business.” UK-based Vodafone and its joint venture partner in India, Aditya Birla Group, have maintained until recently that they will not throw good after bad money.
During his discussion with Ambani after the government’s announcement, Mittal said he spoke of the need for synergy between telecom players. âThe time has come for three operators plus one to come together and work as a team to build telecommunications rather than being fierce competitors. We will be competitive, but just like in other industries like steel, let’s build the ecosystem together, âhe said. Bharti Airtel competes aggressively with Reliance Jio, which has disrupted the Indian telecommunications market by blocking significant rate increases for years.
Suggesting collaboration through the sharing of infrastructure such as FTTH, local loop unbundling, fiber optic and submarine cable, Mittal said companies should also work together to introduce more discipline in the practices of the market such as commissions, dealer margins, portability, among others.
Telecommunications reforms have made it possible for all actors to come together and work as a team to unleash India’s telecom dream, he said. When asked if too much synergy between the three private actors could lead to cartelization, he replied: âThe synergy is not in terms of setting prices but in terms of improving technology to the consumer. Indian. He said that in 25 years the rates were close to each other and the market was very competitiveâ¦. “If a telco lowered its prices, there was no choice but to approach it.”
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Highlighting the need for a 20-30% tariff hike to support high capital spending, Mittal said Airtel has already taken the lead. In the new scheme of things, he expects no one to go bankrupt and a more sensible approach to raising tariffs to be taken. According to Mittal, regulatory intervention in tariffs will not be necessary. âThe market share in the industry has been reasonably fixed. We must therefore, for our own good, be reasonable. I will play my part, but if others don’t and strive to increase their market share, we will fight back as well. But how long will the business be unsustainable.
The government’s offer of a moratorium, which will apply from October 1, is an optional device. Any firm that decides to use it would pay interest at the marginal cost of fund-based lending (MCLR) rate plus 2%. The MCLR is the minimum lending rate below which a bank is not allowed to lend. The deferral concerns payments for spectrum purchased in previous auctions (excluding the 2021 auction) for up to four years.
While saying Airtel has no plans to manufacture handsets, Mittal stressed that the company would not hesitate to compete with Reliance Jio if it delves into this aspect of the business. This was in response to Jio’s plans to launch inexpensive handsets in the domestic telecommunications market. These plans were delayed due to a chip shortage.
Mittal reiterated that the government and the Telecom Regulatory Authority of India (TRAI) need to “rationalize” the prices of 5G spectrum.
On his next big bet, Mittal, who will turn 64 in the next few months, said it should be the infrastructure space.