Need three private sector players in telecom market: Bharti Airtel CEO Gopal Vittal

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August 05, 2021 4:00 AM

Bharti recently hiked tariffs at two extreme ends – postpaid corporate users and entry-level prepaid subscribers.

Speaking to analysts a day after the April-June quarter earnings announcement, Gopal Vittal, MD and CEO, India and South Asia, said there is serious financial stress in the industry and pointed out that one of the players has told the government that it won’t be able to pay its dues coming up in March 2022.Speaking to analysts a day after the April-June quarter earnings announcement, Gopal Vittal, MD and CEO, India and South Asia, said there is serious financial stress in the industry and pointed out that one of the players has told the government that it won’t be able to pay its dues coming up in March 2022.

The call for a relief package for the telecom industry grew louder on Wednesday with Bharti Airtel saying that the financially-stressed sector needs the government’s help and efforts should be made to ensure that three private sector players remain in the market.

Speaking to analysts a day after the April-June quarter earnings announcement, Gopal Vittal, MD and CEO, India and South Asia, said there is serious financial stress in the industry and pointed out that one of the players has told the government that it won’t be able to pay its dues coming up in March 2022.

“We hope the government does something to actually provide some relief to the industry. Even more important, I think is that if Arpu (average revenue per user) can go up, the industry repair will certainly happen. I would love to see a three-player market continuing as it is appropriate for a country as large as India,” Vittal said.

He said the industry has made substantial investments and there are lots of jobs, direct and indirect, and many parts of the ecosystem which depend on this industry for employment and livelihood. “I think just from a national perspective, it will be appropriate to see an industry structure with 3+1 – public sector – players not just survive but thrive,” Vittal added.

Vodafone Idea has written to the government for extension in moratorium on deferred spectrum instalments which are due in April 2022. On June 7, its chairman Kumar Mangalam Birla wrote to the government offering to give up his stake in the company to any public sector, government, or domestic financial entity, which can keep the company as a going concern.

Asked if more tariff hikes are in the offing for a wider set of customers, Vittal said it may be difficult for Bharti to do so as its rates are already on a 2X premium to rivals and further hikes will lead to erosion of customers and competitiveness. “Going up beyond the premium that we today have on the large pool of 500 million smartphones could lead to some switch away of perhaps some price-elastic customers, and therefore, we need to be a bit careful about that…we are already on a premium and this is where we will perhaps not be in a position to take the first step, simply because that could lead to a more erosion of customers and consequently erosion of competitiveness,” Vittal said.

Bharti recently hiked tariffs at two extreme ends – postpaid corporate users and entry-level prepaid subscribers.

Vittal reiterated that the company aims to have an Arpu of Rs 200 in the near or medium term and consequently of Rs 300. The company’s Arpu during the April-June quarter was Rs 146, the best in the industry.

To a query around capex plans against the backdrop of 5G rollout, Vittal said as per reports, auction may happen early next year and the price of 5G spectrum may hopefully be reduced, but capex intensity is expected to remain at the same levels as most of the network in upgradable to 5G.

To another query about low-cost smartphones and subsidy model, Vittal said at such low levels of Arpu, giving subsidy will be difficult, but the company has plans to partner with OEMs (original equipment manufacturers) and other stakeholders to provide low-cost devices.

On subscriber additions, Vittal said the company expects some SIM consolidation at low price points in August as price hikes come into effect.

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