Bharti Airtel chairman Sunil Mittal dials Voda, Jio to strike synergy note

A day after the Centre announced a relief package for the telecom sector, Bharti Airtel Chairman Sunil Bharti Mittal sent out a message of synergy, telling reporters that he had spoken to Vodafone Group CEO Nick Read about the need to invest more and that there was a conversation with Reliance Industries Chairman and Managing Director Mukesh Ambani as well on all telcos working together.

Acknowledging that Bharti Airtel would avail the moratorium of dues offered by the government, Mittal said the company would redirect the cash flow to aggressively build networks.

Advising Vodafone Idea to pump in funds to stay in the game, Mittal said at a virtual press meet on Thursday, "They need to contribute their own monies in the company". UK-based Vodafone and its joint venture partner in India, Aditya Birla Group, have maintained till recently that they would not throw good money after bad.       

On his discussion with Ambani after the government announcement, Mittal said they spoke about the need for synergy between the telecom players. “Time has come for three plus one operators to close ranks and work as a team for building telecommunications rather than being fierce competitors. We will compete, but just like in other industries like steel, build the eco system together,” he said. Bharti Airtel has competed aggressively with Reliance Jio—which disrupted the Indian telecom market stalling meaningful tariff hikes for years.    

Suggesting collaboration through sharing infrastructure like FTTH, local loop unbundling, fibre and submarine cable, Mittal said companies should also work together in bringing in more discipline in market practices like commissions, dealer margins, portability amongst others.’

Telecom reforms have paved the way for all players to come together and work as a team to unleash India's telecom dream, he said. When asked whether too much synergy between the three private players may lead to cartelization, he said, "The synergy is not in terms of fixing tariffs but in terms of bringing better technology to the Indian consumer." He said in 25 years, the tariffs were close to each other and the market was highly competitive…. ‘’If one telco dropped prices, there was no choice but to be close to it.’’

Stressing the need for tariff hike by 20-30 per cent to sustain the high capital expenditure, Mittal said Airtel had already taken a lead. In the new scheme of things, he expects that  nobody will be out of business and a more sensible approach to increasing tariffs will be taken. According to Mittal, regulatory intervention in tariffs won’t be required. “Market share in the industry has been reasonably set. So we have to, for our sake, need to be sensible.  I will play my part, but if others don’t and press on for more market share, we will also fight back. But how long will the business be unsustainable.”

The government offer of a moratorium, which will be applicable from October 1, is an optional scheme. Any company that decides to avail of it would pay interest at the rate of the marginal cost of funds-based lending rate (MCLR) plus 2 per cent. MCLR is the minimum lending rate below which a bank is not permitted to lend. The deferment is on payments of spectrum purchased in past auctions (excluding the auction of 2021) for up to four years.

While saying that Airtel doesn't have any handset manufacturing plans, Mittal pointed out that the company wouldn't shy away from competing with Reliance Jio if they dive into that aspect of the business. This was in response to Jio's plans to launch cheap handsets in the domestic telecom market. Those plans have been delayed due to shortage of chips.

Mittal re-iterated that the government and the Telecom Regulatory Authority of India (TRAI) need to "rationalize" the prices for 5G spectrum.

On his next big bet, Mittal, who would turn 64 next months, said it would have to be the infrastructure space.