 "I don't think free will run for a lifetime: Gopal Vittal")
Gopal Vittal, chief executive officer and managing director of Bharti Airtel, believes the telco will retain market leadership, as nothing can be offered free for life, when asked about the company’s response to Mukesh Ambani-led Reliance Jio entering the markets. Vittal told Kiran Rathee & Nivedita Mookerji that Airtel had seen many competitors in the past decade and the firm had always emerged stronger. Edited excerpts:
Telecom Minister Manoj Sinha is reviewing the call drop situation. What’s your take?
We had a 100-day plan on managing call drops and we are going to update the minister on that. …We have seen an improvement in the situation — between 15 and 30 per cent lesser call drops — but we have to improve it much more. We expect significant improvement by December in Delhi.
The Telecom Regulatory Authority of India (Trai) has imposed a penalty on Airtel and others for not providing enough points of interconnects (PoIs) to Reliance Jio, thus violating licence conditions.
We believe that there is confusion over this. Providing PoIs is a regulatory obligation and we are absolutely committed to it. We have done it for 20 years and we will continue to do it. ….The pace of augmentation of PoIs has been nothing short of staggering. In 10 working days, we provided over 2,000 PoIs and in five weeks, we provided multiples of that. Normally, as per regulatory obligations, we are given 90 days. The quantum of PoIs that we provided is 2.5 times that of any other competitor in the market. Finally, it takes two parties to make an interconnect happen. In many cases, the other party was not ready on its side because it did not have transmission links coming into our switching centres. We have done everything we could have possibly done. We feel there is misunderstanding and confusion in this area and we are very confident that some objective outcome will emerge.
Do you feel there is a certain amount of bias when it comes to Trai handling the PoI issue among others?
I am not here to look backwards, I will look forward. We have great regard for Trai as a regulator over the past two decades. They have done excellent work in terms of protecting customers and shaping the industry and we believe that it is our job to work with the regulator to make sure we finally have a level-playing field and objective outcomes are delivered.
How will competition with Jio play out?
I don’t want this to be one competitor and the next three months. We have a motto — win customers for life — and that drives everything that we do. The metric we use is revenue market share (RMS). Last year, we gained 1.5 points of revenue market share. If you look at the incremental market share, it was almost 50 per cent. This year, in the first six months, we have gained one point of RMS.
What’s the impact of competition?
You are asking about a new competitor coming in, but we have seen many new competitors in the past 10 years and each time a competitor comes, there is price erosion. Some years, we have lost share; some years, we have gained share. When you look at the past decade, we have actually gone stronger. We are not obsessed with our competitor but with our customers.
Will you see price erosion and softening of revenue growth this time?
Yes, possibly; we have seen that before and we are prepared for it again. It’s as simple as that.
Will the next quarter see more impact?
I am not going to comment on that because that’s guidance... But, if free services continue, yes we will see softening of growth because people will try other things. Now, how do you compete with free? My view is that only way to compete with free is by giving it free, which we don’t want to do because that does not make any sense for us.
Voice and data pricing is coming down, whereas data growth and realisation is showing a downward trend. Why?
Yes, that’s a concern. The reason for that has partly to do with softening penetration, but it’s also to do with the fact that the pricing has come more sharply down, as volume growth is still there but overall revenue growth has softened. This underlying trend was there for the past four-five quarters, it’s just got accelerated with the new entrant offering free for sure.
Do you see this as the biggest disruption in many years?
If there is a lower price, that’s not disruption, its lower pricing. The fact is Jio is a big and well-capitalised competitor, with a lot of investments. They will be good for the industry in long term because you will see greater consolidation. But, at the end of the day, we have to win customers. Many years ago, Tata DoCoMo launched, moving from a minute pulse to a second pulse. There was a big change in pricing. But, was it a disruption? I think it was a price change.
Tata Teleservices might like to sell now. Will you consider buying a company like Tata Teleservices or any other company for that matter?
We have a national footprint and in many circles, we have market share of 35-40 per cent and upwards. We are weak in some of the western geographies like Maharashtra, MP, Gujarat, Kerala and Haryana. Our final objective is how to grow organically. When you are buying for a national footprint, you are buying spectrum. We did that with Videocon and Aircel; in spectrum we are very well positioned. So for us, the opportunity now is how to grow organically and continue to grow market share.
So, you are not looking at mergers and acquisitions in terms of mobile services?
We have always said that in markets where we are number three or three, we have announced mergers, like in Bangladesh. We will continue to look at such opportunities. In India, we are a strong number one with over 33 per cent share and there is a seven-eight percentage gap with the second player…
When is the sale of stake in Bharti Infratel?
We have already announced that a committee of directors has been appointed to assess the possibility of a significant stake sale in Infratel. They will look at options and come back to the board. There’s no date to it.
How do you assess the spectrum spend?
Over the last five years, we have spent almost Rs 1.10 lakh crore on spectrum. When spectrum auction for renewal circles came up, we ended up overpaying. The design of the auction was such that if we did not bid, we would have been driven out of business. We have been very deliberate and thoughtful about other auctions.
If 700 MHz is put on auction at a lower price now, would you go for it?
We have always said the reserve price of 700 MHz was very high and unaffordable. I think the price will come down. Its great spectrum, but right now the eco-system is still very nascent. We have to wait for it to evolve.
Is the future of telecom voice, data or landline phones?
The mobile business is still large, of the Rs 70,000 crore in India, it’s Rs 50,000 crore. So, that will continue to be a dominant side of our business. In future, you could see a dual structure — bundles on one side and a large number of customers on the other side buying voice and data separately because there will be feature phones. We have to be able to play both the games. One of the things for us is that we don’t believe that we do one or the other. For us, we have to do one and the other.
If free services are not what you are looking at, what kind of investments will you make to build your business further?
I don’t think free will run for a lifetime. Nothing will be free forever. So, it will get priced and like I said we have been through many competitive battles. Our objective is to win customers for life and that means we have to win market share.
Competition is talking big investment numbers. What’s yours?
We have already put in lots of investments. Last year was our biggest year of capex when we announced Project Leap.
Currently, about 27 per cent of your revenues come from data. What’s the projection?
Data will be the engine of growth. The only challenge in the recent time has been sharper erosion in pricing which led to data slowdown growth sequentially, even though volume is strong. That is partially on account of customers using service that is free.
When are you launching VoLTE services?
We are currently doing trials. We will assess at what point we are ready.
