Last fiscal has been one of the most challenging ones for Bharti Airtel with the mobile market getting crowded with around 14 players and the race to the bottom beginning with new players slashing tariffs. The impact was visible. Bharti for the first time in its history witnessed fall in revenues in Q2 and Q3 on sequential basis. In Q4, for the first time in the last five years, its net profits fell 8%. However, in an exclusive interview with FE?s Anandita Singh Mankotia and Rishi Raj, CEO Sanjay Kapoor said that the propensity for any player to further drop rates is now bleak. He also said that the consolidation in the consumers mind has started. Excerpts:
You described the quarter as being good because on a sequential basis revenues have gone up and so have the minutes of usage. Does it signify that the era of irrational pricing is over, and going ahead, the industry would return to stability in terms of tariffs?
Strictly from the industry point of view, we seem to have come out of the price war phase, which is mainly due to oversupply in the market. If one looks at the tariff, there has been a decline of 25% compared to what was prevailing around this time last year and clearly this is not sustainable and the industry seems to have realised this. Going forward, the propensity to drop prices looks very bleak whoever you may be. We were, and continue to be, a responsible player and as you know we never participated in the race to the bottom. Such pricing wars only make bigger players even stronger and that?s clearly visible in our case.
Do you see some form consolidation emerging in the crowded telecom market?
One thing is very clear that consolidation has already started taking place in the minds of the consumers. Today, with around 14 operators in the market, the top two players command a market share of 50%. This was not the case even when there were four or five operators in the market.
You said price would not drive the sector now. What would be the driving force then?
We have always maintained that price can never be the only driving force in any market in any sector across the globe. Even, if in the short run, price does become the differentiating factor, it ceases to become important in the long run. The fundamental differentiation would be on the value of the services offered and the customer experience.
During Q4, there has been an 8% decline in your net profits, which would be for the first time in almost five years. Also, your revenue has grown by only 2%. Does this concern you?
The decline in net profit is because of the one-time acquisition cost of Warid and Zain, which comes to Rs 98 crore. Further, there?s a deferred tax liability of Rs 171 crore. If the two were not there, there would have been an increase of about 4%. Therefore, this is not a matter of concern for us.