Airtel’s Sunil Mittal asks government to cut levies on telcos

Bharti Enterprises chairman Sunil Mittal on Tuesday urged the government to walk the talk on the issue of reducing levies on the telecom sector. He said that, so far, the government has only given assurances but taken no action.

Speaking to a group of journalists at the ongoing Mobile World Congress, Mittal said government has already stated that revenue maximisation is not the top priority when it comes to telecom, so it needs to act now before it’s too late.

“The government needs to walk the talk. They need to reduce the licence fees, spectrum charges and GST. They have committed in their document (telecom policy) that this industry is overburdened, so there is no debate on that. I would say the government must be concerned about the sector.

You don’t want to take it to a point of no return. We have seen that in the aviation industry and therefore you should not take it too far and take timely action,” Mittal said.

The Telecom Regulatory Authority of India (Trai) has also given recommendation to the government to lower the levies. Mittal said the government can help the financially strained telecom industry, by giving spectrum at reasonable prices. The government can also ensure that the levies on the sector are not punitive. “It’s one of the heaviest taxed sector and you cannot have a situation where you want Digital India and have such high taxes,” he added.

Asked about the pricing for spectrum auction and will Airtel buy airwaves in the upcoming 5G auction, he said the current pricing proposed by Trai for 5G is absolutely unacceptable. When told that the Trai says the price is fine, Mittal said, “fine from what perspective? The fact is that the renewal spectrum was a gun to a head where operators had no choice and those prices are taken as a base for future auctions. What logic does that make? There is no logic.”

“DoT can keep on auctioning, they have had two failed auctions and do they want to have five more failed auctions? It’s up to them. Spectrum is required, spectrum will be bought, India will get into 5G but the only thing that will stand in the way is right pricing for spectrum,” he added.

Eventually, India will get into 5G in step with the world. Mittal said his recommendation would be the government must encourage 5G coming early in the country rather than late and for that three ingredients are required: the infrastructure, which is the equipment, devices and spectrum. “The spectrum is most ready and available in India. So, there is no hurdle to spectrum. Government needs to sit down with the industry as there are only three players and take a commitment to rollout fast”.

Asked about the tariffs prevalent in the telecom sector currently, Mittal said operators will return to shape in 2020 and early signs can be seen now. “My own view is before Reliance Jio entered the industry, average revenue per customer (ARPU) was around `200 and all we need to do is get back to that. We are not saying India needs to go to the levels of $50-60 a month but can India be at $3 a month which it was before Jio came in, yes it can,” he said.

He further added that if the ARPU rises from Rs 100 to Rs 200, the industry will become sustainable but Rs 300 will be an ideal situation. “If you are consuming 12 GB of data, those customers can comfortably pay Rs 300. Everybody doesn’t need to pay Rs 300. Eventually the market has to correct itself. It will happen and at some stage when the land grab gets over, it will happen,” he said.

He also termed the hyper competition in telecom as a global affair and not only restricted to India, where Jio changed the dynamics of the industry with its dirt-cheap voice and data offerings.

“The operators worldwide in their quest to have dominance, superior market share have been killing each other, so it’s not just India, we have seen this all over the world. Returns of telecom investments have been low because of the quest to get market share or land grad whatever you call it,” he said.

“Overall, I remain optimistic now because we have to look forward and not look back. We have had two-and-a-half years of real difficult period but I think time to now look forward. Three players in a country of 1.3 billion, per capita consumption highest in the world at 12 GB, market remains very large as lots of people are migrating from 2G to 4G,” he added.

Asked if even the three player market will survive or it will become a two player thing, he said for a country like India three players will remain and Airtel will be there.

On optic fibre company which Airtel is creating after demerger from it, Mittal said, “We will have our fibre company in place by end of March and in that we have invited Vodafone to come and join”. The invitation is on the same lines of Indus Towers where Vodafone and Idea Cellular have stakes. Currently, Telesonic is a subsidiary of Airtel and if Vodafone wants to come, there will be a new structure.

On a possible deal with Jio, he said, “From our point of view, more the merrier… one fibre company will be perfect. We will first get the Vodafone thing going and will see after that”.

Also, Airtel’s board is meeting on February 28 for fund raising. Asked if Airtel is interested in buying spectrum from Reliance Communications, Mittal said, “I feel that the spectrum belongs to the DoT and I fail to understand how come RCom can sell it”. The licences are gone and there is no payment made to DoT, it gets over. He said the spectrum belongs to DoT and it will eventually go into the auctions, that’s my view and it cannot be sold by RCom as its a sovereign asset.