With data usage exploding, the competition in the telecom landscape has moved away from tariff, which in anyway is at its lowest, to content as a majority of subscribers use mobile data to watch video.
With data usage exploding, the competition in the telecom landscape has moved away from tariff, which in anyway is at its lowest, to content as a majority of subscribers use mobile data to watch video. Currently, the country’s top two telecom operators Bharti Airtel and Reliance Jio are aggregating content through their various apps. While Jio has acquired stakes in some content companies in its aim to develop customised content, Bharti has so far shunned this approach. Bharti Airtel’s MD & CEO (India & South Asia) Gopal Vittal in an interview to FE’s Rishi Ranjan Kala & Rishi Raj explains the company’s approach to content as well as other industry issues. Edited excerpts:
Your competitor Jio has a different strategy than yours towards content. While it believes in developing customised content you have adopted the aggregator/partnership model. Is there any change in this approach?
Broadly Bharti will be an aggregator of content. However, we will look at maybe a few exclusive shows.
I think this will more be a testing and trial approach. The DNA of a production company is quite different and we would have to build such a DNA if we want exclusive content. That’s why our focus is on partnerships. This is one of the reasons we partnered with Amazon, Hotstar and Netflix. We are the biggest aggregator of all linear TV content. There are two or three options to do exclusive shows. One, commission content from anybody and they will make it for you. But for that you need a DNA of what kind of content is needed. Second, you take stakes in a content company. Some of these we are only exploring. We haven’t decided what to do. Our world view is that this ultimately is a partnership game. Let whoever is good at doing their job do that job and we partner with them. Through a platform that we have created, for instance on Airtel TV we have 50 million users. So when we get that kind of scale then we build that platform building partnerships. That’s how we are approaching it. We will do exclusive deals only for learning purposes.
You have often highlighted the below cost tariffs by Jio as a reason for Arpu (average revenue per user) erosion and profit erosion. Do you think the phase of tariff wars is over or you see further damage in the days to come?
I think pricing is unsustainably low today. We do believe it needs to lift and at the end of the day we are here to make sure that we deliver growth, which is sustainable and profitable. We want market share, but we want it in a profitable and sustainable way. On the tariff side we are at the bottom and gradually we should start seeing some repair. My own view is that if you look at by and large where tariff today is and where Arpu is, we are sort of at the bottom. In the last six months we are pretty much at the same level at the bottom. From here onwards repair is good for the industry. In the last 18 months, there has been Arpu and tariff erosion. This has obviously put us and rest of the industry through financial pain. Once this corrects, I think we will be on a very solid sustainable path.
Which way do you see the industry moving?
Leaving out the pain part, the the last two years in the industry we have lived through the most defining phase because we came down from 12 players per circle to three. It’s a dramatic change in the landscape. The pace of growth that we have seen on 4G consumption, who would have thought it would have gone like this. It is staggering. The industry has broken all the estimates. With 1.3 billion customers to serve and three players, I think it is a fantastic industry, very sustainable, ideal industry structure. We are quite relaxed in a three equal-sized player market, which is emerging.
Though a tariff war has been going on with Jio entering the fray, there doesn’t seem to be much of subscriber churn happening. How do you explain this?
Exactly. You will start seeing whatever little churn is there would go down even further. With three players, more or less equal-sized and pricing, which is give or take, up and down, some premiums here, some discounts there, churn has to go down. Secondly, lot of new services like content will also reduce churn. One of the banes of this industry is maniacal focus on gross additions, which don’t necessarily translate into net additions. I think that noise needs to come down.
One of the areas where Bharti and other incumbents feel they have got a raw deal is the regulatory side. Do you think the worst is over here or a battle is staring at the corner?
I would like to take a broader view. We have been here for 23 years. It is a regulated industry. We have had things going against us and also in our favour. Take it on the chin and move on is the way I see it. Our focus is on networks and customers. Move forward and do our best. Our ambition is to build a Digital Airtel – a network that enriches the lives of its customers by enabling a world-class digital experience.