How is corporate India looking at the latest GDP numbers?
Isn’t the Q4 number a surprise going by the commentary so far?
The consumption is still not very robust, it seems….
With these GDP numbers, do you see animal spirits of India Inc coming out now?
What is your capex outlook for FY24?
What are the takeaways from the ongoing 5G rollout?
On satellite spectrum, what’s your sense. Will it be auctioned?
We are building two plots of 15 acres for our ground stations, How do you auction a plot so small? There has been no successful global precedent simply because no one has even tried it. It is a shared resource unlike the terrestrial spectrum.
We will be ready by Diwali to provide OneWeb services. The space policy has been ushered in. The FDI policy in the space sector is being discussed, and is expected to come in the next 90 days. Some people confuse the auctions for slots of orbits. That has nothing to do with spectrum; it is covered by the International Telecommunications Union. We are already in service in Canada, the US, Greenland and Northern Europe….The service is required for connecting the unconnected, connecting the armed forces in the Himalayas and deep rural areas. It’s not for Delhi and Mumbai. You cannot deny this wonderful opportunity in your arsenal to deliver connectivity to everyone in India because somebody is trying to block it. The government has to see through this. In the end it is a very small business. Onewebs total capacity that will land in India will not generate more than $10-15 million a year. If they auction it, we will stay out. What else can we do?
If you want to put out 5G fast, we need access to V and E bands. Rolling out fibre cables will take time. The government was very smart to understand the wickedness of this opposition to E and V bands. That’s why they immediately granted it on a provisional basis. Otherwise we wouldn’t have been able to launch 5G.
Rather than duopoly, I would say, it’s about two private players. We heard the minister saying that BSNL will be strengthened. So if not a four-player market, certainly India will be a three–player market. BSNL has placed orders for 100,000 new base stations. The government is determined to have at least three players.
What do you do? Operating in this industry requires serious investments. Within a matter of 24 months, Airtel has spent Rs 40,000 crore on 5G spectrum. It has made a capital expenditure of Rs 60,000 crore in these two years. So, we have spent Rs 1 trillion on establishing a new layer of technology. That is the level of investment you need. This is over and above the massive investments that have gone into 4G and 3G. Can Vodafone Idea raise that kind of capital? I really have no visibility on that, I hope they can.
We already have a little premium. It would be hard for us to push the envelope any further on the idea that that this industry requires better financial health. It’s accepted by everyone including the government. Look at the fragility of the situation. If you are going to have only a handful of telecom players on whom the entire dream of Digital India rests, it’s important they are financially sustainable. To that extent, I have maintained for a long number of years, we need an ARPU (average revenue per user per month) of Rs 300. Now, it is nearing Rs 200 which is the first pit stop. It’s taken us much longer to reach this level, than I imagined. So, it’s painful…. We have been taking the lead. We have moved all our plans above Rs150. We now have nothing below that level. We took that roll call at a time when no one was willing to.
We consider ourselves to be leaders in this industry. But you can’t have an outlier position on tariffs. You have to be in line with the market. We have done whatever we could do, and wherever, without hurting our market share, and burdening our customers. We are also conscious that a large section of society has affordability issues. When we say ARPU needs to go up to Rs 300, we are not saying everybody has to pay that much. But this whole phenomenon of providing unlimited services, no matter what you pay, is destroying the industry. You must pay more for more.
That’s because the per GB cost in India is the lowest anywhere. Africa consumes 6-7 GB (per month) with a higher ARPU. India averages 23 GB with a lower ARPU. So you can imagine the burden of investments on the network. We have to create higher capacities for the higher consumption, on which we get no extraction. Return on investment is low in India.
This industry is waiting for an increase in tariffs to be financially healthy. Who is holding it back is for you to determine. It’s not us.
We are not in the numbers game. People see Airtel as a leader, without a doubt. We may not be ahead of our competitors in numbers, that’s okay.
Numbers already matter less. If you look at VLR or active subscribers, we already have 99 per cent active subscribers, as compared to 80 per cent for our competitors….. In many circles, we have remained leaders. We have not given up. What matters is what kind of customers you have. What counts is whether they are better quality customers, in the mid to high segment, or people who care for brands and are willing to pay a little bit extra. Otherwise, it’s just a numbers game which even our teams do not focus on. We aim for a solid revenue market share. When Jio came in, we had 30 per cent revenue market share in the country. We are now touching closer to 40 per cent. That is more important for us.
They were a very big part of the supply chain. It’s very clear that a position has been taken where trusted sources, trusted products, trusted shoring have become a norm. As far as India is concerned, we had a smaller portion of our network with Chinese vendors. We stopped at that. We have 100 per cent non-Chinese 5G and Reliance has also done 100 per cent non-Chinese. Vodafone has not started but they too have no choice because now you cannot buy anything that’s not certified. So far there’s nothing on the statute to block Chinese, but we have not seen them getting the certificate of trusted networks.
We don’t know, but my view is that the train has left the station. The orders have been placed—Ericsson, Nokia and a bit of Samsung– and we can’t roll back even if they (Chinese) are allowed tomorrow.
It’s not true. I can take you to my data room… See the millions of calls that are going on and look at the call drops… it’s the lowest ever.
That’s because people have got used to it. We don’t mind it. Unlike many other parts of the world where they block calls on Whatsapp, we have not. Anyway, it’s not Whatsapp providing the network, it’s the telecom service providers providing the network.…Call drop is an old mindset… Some poor network areas are a possibility but compare it to the rest of the world. Go to London and see, go to New York and see, go to Paris and see. Our’s is significantly better.
It’s still very low. I think the OTT world should learn to share the burden of our telecom rollout. Telcos are spending hundreds of dollars globally on building networks. The total cost is going to be upwards of $2 trillion in rolling out the 5G networks. Who enjoys it? I put up the network, and they have a call. There should be some money coming from them. Why not?
I would say there’s a pleasant change in the regulatory environment in India in the last few years, whether it’s the ministerial leadership level or it’s at the department level or regulator’s. There’s an even-handed approach to the industry. For this, they should be complimented and companies like us feel very positively relieved to have a very conducive telecom environment. An area where we are still pushing and pressing is on the levies. There’s been only one area where there’s been progress—spectrum usage charge where we’ve always been saying you can rent or sell but you can’t sell and rent. This is exactly what was happening prior to the change—you sold spectrum and then you also took rent. Rent was supposed to be when there was no auction. This was an anomaly that cost the industry heavily. That’s gone now. The second part now is the USO fund which is at 5 per cent. This is meant for universal service obligation—we are doing that, every village is covered. We have done the job that is required under USO. There’s a large amount of money sitting on the USO Fund—Rs 65,000 crore. Why burden the industry more? The need of the country is to connect more, we will do it ourselves… Last is the licence fee at 3 per cent. It’s a relic of the past. Abolition of 80 per cent of bank guarantees was very helpful. My view would be why keep the 20 per cent! Why have guarantees at all.
The economic integration of Africa is one of the areas where the Prime Minister wants to leave his legacy. There are two councils at B20, on African integration, and ESG, while the others are task forces. I was happy to take this charge given that it is my 13th year of foraying into Africa in a big way. We have produced a good document, which is ready to be presented now. Our final meeting is coming up in August, when we will make our recommendation to the G20. I’m hoping the G20 will adopt it.
The agenda is the integration of Africa. Africa is a huge continent, with $3.2 trillion and 1.3 billion people, and 56 countries. But between themselves, they trade very little. I was heavily involved in the creation of the trade facilitation agreement at the World Trade Organisation which happened a few years back as the Paris-based chairman of the International Chamber of Commerce. It was heavily geared towards Africa so that cross-border trade becomes easy and better technologies are introduced. A lot of money was also given to Africa to upgrade their tech, and harmonise their tariff codes. But it still did not happen.
You have one of the largest telecom businesses in Africa. What are the lessons that India and the world can take from Airtel Africa?
We are also showcasing how India’s direct benefit transfer schemes are helping the masses.
Africa is usually a two player market somewhere in some cases, it is two and a half. India is slowly coming to that. But India of course is much much bigger than those African countries. We have maintained that a three-operator scenario is the ideal one. Even China has three. But certainly 10 to12 operators, which was the case in India some years ago, was the wrong model.
Africa is 100 per cent 4G. But we haven’t been able to pull out the older layers since Africa has a lot of handsets supporting older tech. 2G and 3G are also running. Nigeria and a few other countries have started 5G rollout.