We have economies of scale on our side, can absorb dents

Written by Anandita Singh Mankotia | Rishi Raj | Updated: Nov 1 2009, 04:38am hrs
Bharti Airtel, the countrys largest telecom operator, which on Friday reported one of its slowest growth in revenue and profit in recent time, sees the current trend of intense tariff as a short-term blip in the otherwise robust outlook for the Indian telecom sector. In an exclusive interview with Anandita Singh Mankotia & Rishi Raj, Bharti Airtel CEO Manoj Kohli said operators indulging in the tariff war have only tariff to offer, while Airtel as an integrated operator has much more. The company, which will bid for both 3G and WiMAX spectrum, has robust internal accruals and would not raise debt for the forthcoming auctions. Excerpts:

The ongoing tariff war has adversely impacted Bhartis top-line and bottom-line during the quarter. How do you plan to combat this trend

The tariff wars are happening because tariff is the only offering that new operators or the ones catching up can offer to catch the markets attention. Bharti has much more to offer, as it is an integrated player with a bouquet of offerings. We have the highest network coverage across the country that no other operator can match; we have a strong balance sheet and our debt-equity ratio is at an all-time low of 0.12. We are virtually a zero-debt company. We do believe in competitive pricing and would continue to offer our customers the best we can, but we will not match the lowest denominator in the market. Finally, we have economies of scale on our side and can absorb such dents. However, now the heat is on the new operators whose business case has become even weaker.

The ARPU was never a matter of concern for Indian operators. However, for the past year, the average talk time is also declining. Even customer addition is slowing in your case. Obviously, it has impacted revenue and profit. Are not these a matter of concern

This is essentially due to the price war unleashed by new players. Of course, seasonality has also been a factor. We are prepared to experience a decline in net profit and revenue for the next few quarters before the market begins to correct such irrational features.

Dont you think the Indian telecom space needs consolidation That it is too crowded, leading to irrational pricing, which is not healthy for the sector

Consolidation is certainly needed. The Telecom Regulatory Authority of India had come out with a consultation paper to address the issue. It would not be fair on my part to comment upon the optimal number of players when the consultation process is on. We would wait for the governments decision on the matter.

You said Bharti is well poised to take on the competition since it has diversified into other segments as well. What portion of revenue comes from the non-mobile businesses

As much as 35% of our Ebitda comes from the non-mobile businesses, which includes DTH and our enterprise division. In the previous month we added as many as five lakh DTH subscribers and this is a very encouraging trend for the company. We believe our product portfolio is diversified and very good compared to pure-play telecom operators.

Will you be bidding for both 3G and WiMAX spectrum

Yes, we will bid for both, but have not decided on the final modalities.

You said Bharti is almost a zero debt company. So can we expect Bharti to use its reserves to bid for 3G and the WiMAX spectrum or will it raise money from the market since there is enough room to do so

Our internal accruals are very high and we have one of the strongest balancesheets in the country. We will not raise funds for bidding.