Telecom industry under tremendous stress; tariffs need to go up: Sunil Mittal

Bharti Airtel chairman Sunil Mittal on Thursday said tariffs need to go up amid "tremendous stress" in the telecom sector, and Airtel will not hesitate to raise prices, but it will not do so unilaterally.

The comments by the telecom czar came at a time when Airtel's rival Vodafone Idea has approached the government for a one-year moratorium on payment of spectrum instalment of over Rs 8,200 crore - due in April 2022.

Cash-strapped VIL has told the telecom department that while it is working on raising new funding for the last six months, "investors are not willing to invest in the company because they believe that unless there is a significant improvement in consumer tariffs, the health of the industry will not recover and they will incur a loss on their investment".

Mittal refused to comment on the VIL issue but conceded that the industry is under tremendous stress.

He hoped the government will ensure that India's digital dream remains intact through the provision of at least three operators.

Mittal said telecom tariffs need to go up and that Airtel would "not hesitate" in this regard, but was quick to add that it cannot be done "unilaterally".

"To say telecom industry is in a bit of trouble is actually an understatement. It is in a tremendous amount of stress.

"I hope the Government, the authorities, and telecom department...all...focus on this issue and ensure India's digital dream remains intact through the provision of at least three operators," Mittal noted.

He was speaking to reporters at a virtual event of OneWeb, a satellite communications company led by Bharti Global.

Mittal further said Bharti Airtel had raised funds timely and adequately through equity and bonds and emphasised that the company is strongly positioned to serve the market in the coming years.

"We never went into the woods at all. We are a strong company, many a times we are underestimated in our resolve," Mittal added.

He admitted that the last 5-6 years had been "brutal" and pointed out that the results are for all to see.

"Ten operators gone out of business, two merged together...gasping for breath right now," he said.

The industry needs to be healthy for embarking on 5G services, and to deliver on India's digital dream, he noted.

Asked if the company will look at raising tariffs, Mittal said, "We will not hesitate to do it, but it can't be done unilaterally."

"How long can you keep on killing each other, the point is when you have a return on capital, even by the best operator, at low single-digit and most of them struggling....I am not saying ...raising tariffs always sounds bad...just bring it back to where it was...enjoy 15 times (data) consumption, but at least come back to old tariffs," he said.

On the issue of financial stress in the telecom sector, he said, "I think the government is aware and it is my assessment that government would like to see a vibrant telecom sector. How they do it, what balm they apply to the sector is best left to the government and experts.

"I know they are concerned, and I am hopeful something will happen," he pointed out.

Mittal said the industry has to be mindful of the market, and market repair must take place.

"We had ARPU (Average Revenue Per User) of Rs 220-230 before Jio came in.

"Today, the industry is about Rs 130-ish...so significantly lower than where it was six years back and people are consuming 15 GB (data) a month (higher than before).

"So something has to give...it is unsustainable, where we are today," he noted.

The top boss of Bharti Group clarified that this would not mean a massive increase in tariff across the spectrum, as low-income users will pay Rs 75-100.

"It is not as if it will become more expensive for the lower end. But middle to high end, instead of paying Rs 250-300 maybe can give Rs 350-450...we are talking about getting past Rs 200-mark which will still be lower than six years back, and people can continue to consume 15 GB," he said.

Photograph: Shailesh Andrade/Reuters