Bharti Airtel today said it is not targeting to be the absolute number one mobile service provider as it sees three large private players eventually remaining in the market as an "ideal and sustainable" model for the growth of the sector.
Bharti Airtel today said it is not targeting to be the absolute number one mobile service provider as it sees three large private players eventually remaining in the market as an “ideal and sustainable” model for the growth of the sector. Airtel, which will lose its numero uno position to the soon-to-be merged Vodafone-Idea Cellular, gave full credit to Mukesh Ambani’s Reliance Jio for having the “audacity” to be part of what enabled the explosion in data growth in India and for triggering competition, that in effect, always makes rivals sharper. In an interview to PTI, Bharti Airtel MD and CEO (India and South Asia), Gopal Vittal said that intense competition in the sector had brought down revenue per user, putting financial pressure, but the situation will correct as tariffs have bottomed out.
“We are at the bottom of that cycle. We have been at the bottom of that cycle for the last six months… it has not gone down any further. From here the pricing and ARPU (Average Revenue Per User) will only start moving up, the question is only one of timing and for that, I am not a soothsayer,” he said.
Vittal said Airtel has “dramatically” stepped up investments in bringing in new technology, tripling tower strength to improve mobile reception, laying new fibre and other infrastructure and automating its network. The Sunil Bharti Mittal-led firm is also ploughing investments into home broadband network, in simplifying business and digitising it so that lesser number of people have to call its customer centres.
It is creating an array of digital and non-wireless services, and forging strong partnerships — alliances with Netflix and Amazon being cases in point. “Our strategy is not to be number one. I mean no strategy can be defined like that. Our strategy is to make choices to serve customers better. I have also said at the end of the day there will be 3 equal sized players, someone may be one or two share points ahead, someone one or two share points behind, we are relaxed about it,” Vittal said.
Vittal was responding to specific questions on whether Airtel will try reclaim its pole position in the market in the face of the proposed Vodafone-Idea Cellular merger. “We are not here to put a badge on our chest, we are here to serve customers well…that is when the customers reward you. We would love to grow market share but our objective is to actually serve our customers well. It (a few share points ahead or behind) is not going to give us sleepless nights,” he said. India, he said, at one point of time had 12 telecom players which are now down to three private ones — Airtel, soon-to-combine Idea-Vodafone and Reliance Jio, besides the state-owned operator BSNL.
“For three private players to serve 1.3 billion customers is a phenomenal industry structure and we feel it is sustainable and ideal,” Vittal said, adding that Vodafone and Idea combine will be just a shade under 40 per cent revenue market share, Airtel along with its recent acquisition of Telenor and Tata will be in the ballpark of 33 per cent, and Reliance Jio will be just over 20 per cent.
“We think that in not so distant future, this will be three large more-or-less equal size players. So there will be some share somebody will lose…somebody will gain…it will be more or less three large equal size players. Within this, you might have somebody one share ahead, two shares behind. That is the upside,” he said.
Vittal said competition has made Airtel — which has seen profits decline quarter after quarter since the time Jio entered the market with free voice and dirt-cheap data offerings — sharper. “I must give full credit to Reliance Jio for having the audacity to do what they did. We respect what they did. In a way, I think they have been a part of what has enabled this explosion in data growth,” Vittal said. Airtel, he said, had also done its bit and invested in technology, staying “well ahead of the curve on 4G”.
“We are doing all we can to get upgradation from feature phones to smartphones, we are investing massively in networks, in digitisation of our key processes and in building an array of digital services,” he said. Vittal said many of the things Airtel is doing now would probably not have been done in an “uncompetitive market”.
“The point, however, is that the overall goal of any business must be to generate a profitable and sustainable return. For that, where we are on pricing is unsustainable and that has to lift,” he admitted. Asked if the tariff has bottomed out, Vittal said the Indian market has matured with consumers spending about four hours a day on their devices now, against three hours a year ago. “It is a lot and beyond this, it will be unhealthy. At four hours, this has become the fulcrum around which they (consumers) lead their lives…from chatting to entertainment to commerce to productivity enhancement, you name it,” he said.