 "Bharti Enterprises")
The telecom industry's financial health needs to improve if India's dream of digital connectivity across the country has to be fulfilled, Bharti Enterprises Vice-Chairman Akhil Gupta said on Tuesday.
Very poor return on capital is a big hindrance in telecom development in India today and unless it changes, investments will dry up at some point or the other, he said while speaking at the Times Network India Digital Fest here.
However, due to competitive reasons increasing average revenue per user (ARPU) has been difficult and the industry players need to work together so that the ARPU goes up to Rs 300 in a phased manner in the next few years.
"The big hindrance in telecom development in India today is the very poor return on capital, which this industry has, and at some point in time, that will have to change because otherwise, the investments will dry up at some point or the other," Gupta said.
Return on capital is a big hindrance today and that's the reason why "a very big and a very respected player being in a bit of a not a bit of, serious trouble today", he said without naming Vodafone Idea.
Bharti Airtel and Reliance Jio are the two main players in the sector at present.
When asked what has stopped Bharti Enterprises from raising tariffs, he said, "competition".
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"I'm not worried about tariffs. What we need to see is an increase in ARPUs. The overall revenue has to go up. The per GB price can come down, that's not a problem, but the overall revenues have to go up. ARPUs need to go up to Rs 300 in a phased manner over the next few years," he added.
Asked about the solution and the way forward to improve the telecom industry's financial health, Gupta said, "I guess, we all need to work together. I don't want to put blame on anybody. Not on the government because they're not saying no. I guess it will happen but it should happen sooner than later".
He also asserted that while consumers are ready, "but somehow, as an industry, we have not been able to come to an understanding of increasing ARPUs so that this industry can be healthy".
The increase in tariff has to be gradual and steady, he added.
Gupta disagreed with the notion that the telecom industry in India has become a duopoly, saying, "I'm quite certain Voda-Idea would be there. BSNL is going to come in some form in a new avatar. So, it is not going to be a two-player market but yes, quite clearly behind the entire digital revolution, it is connectivity and therefore, the telecom networks are clearly very important".
On the 5G rollout, he said the telecom industry is "collectively investing about Rs 3 lakh crore that is about USD 35 billion. In that, it includes spectrum equipment, the towers, which are being created, the fibre networks, which have been set up".
He further said, "So, this is about capacity creation, because I believe telecom is a supply-led demand. The more you supply, the more demand will come".
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
