“I think just from national perspective, it would be appropriate to see an industry structure where three players not just survive, but thrive,” Gopal Vittal said.
Bharti Airtel CEO Gopal Vittal, amid Vodafone Idea’s struggle to stay afloat, said on Wednesday that that a large nation like India needs three private players in telecom. Mr Vittal also hoped that the government would take measures to offer relief to the financially-stressed industry.
The recent changes effected by Airtel in some of its plans is a step towards raising average revenue per user (ARPU), which is currently “abysmally low”, Mr Vittal said.
The CEO of Airtel, which already has a premium positioning in the market, further indicated that the company may not initiate a broader tariff revision unilaterally and risk any erosion of customers and competitiveness.
Mr Vittal, speaking on the Supreme Court dismissing applications by telcos for recalculation of AGR-related dues, said while Airtel is “disappointed” with the outcome, the company has provisioned for the onerous payout and already paid over Rs 18,000 crore covering its obligations for the first few years.
“On the next steps relating to any review petition, we will be guided by legal advice and no decision has been taken on this yet,” Vittal said at Airtel’s Q1 earnings call, the Business Standard reported.
The Airtel CEO, when questioned on how Airtel perceives industry structure to be in next 1-2 years, and whether the Sunil Mittal-led telco is prepared for a two-player market, responded saying the Indian market can easily accommodate three private players.
“I think just from national perspective, it would be appropriate to see an industry structure where three players not just survive, but thrive and of course the government player is always there,” he said.
“I feel as a country we do need three players… it is a large enough country with 1.3 billion people, which can easily accommodate three (private) players in this market,” Vittal said.
This comes shortly after a letter written by former Vodafone Idea Chairman Kumar Mangalam Birla to cabinet secretary in June was made public this week. Mr Birla, in his letter, had offered to hand over the group’s stake in debt-laden Vodafone Idea Ltd (VIL) to the government or any other entity to ensure that the company remains a going concern.
“There is clearly a situation of serious financial stress in the industry and we have seen one of the players actually saying to the government that they may not be able to pay their dues coming up in March 2022. We hope that the government does something to provide some relief to the industry,” Mr Vittal said.
Mr Vittal, further flagging the “extremely low” ARPU in the Indian telecom market, said that the level needs to rise to Rs 200 and eventually Rs 300.
“As we have always said, ARPU in India is extremely low and at this level, our return on capital is in the low single digit. ARPU must rise first to (Rs) 200 and eventually to (Rs) 300,” he added.
He also noted that if ARPU rises, the industry repair can “certainly happen”.
Mr Vittal said that having three private players in the telecom market would be an “appropriate outcome” for a country as large as India, adding that substantial investments have already been infused by the industry.
“There are lots of jobs not just direct but indirect jobs, and there are many parts of the ecosystem which depend on industry for employment and livelihood…I would love to continue to see a three-player market,” he pointed out.
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