India needs 3 private players in telecom: Airtel CEO

Bharti Airtel CEO Gopal Vittal on Wednesday asserted that a large nation like India needs three private players in the telecom sector, and hoped the government would take measures to offer relief to the industry that is facing "serious financial stress".

The comments assume significance in the backdrop of Vodafone Idea's desperate struggle to stay afloat.

Aditya Birla Group chairman Kumar Mangalam Birla had in June this year 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.

Speaking at the Q1 earnings' call, Airtel CEO Gopal Vittal said, "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."

"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.

The top boss of Airtel was responding to an analyst query on how the company perceives industry structure to be in the next 1-2 years, and whether the Sunil Mittal-led telco is prepared for a two-player market, if the situation arose.

"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," Vittal said.

Flagging the "extremely low" ARPU (Average Revenue Per User) in the Indian telecom market, Vittal 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," Vittal said.

If ARPU rises, then industry repair can "certainly happen", he noted.

Having three private players in the telecom market would be an "appropriate outcome" for a country as large as India, he said, adding that substantial investments have already been infused by the industry.

"I would love to continue to see a three-player market... 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," Vittal said.

Photograph: Ajay Verma/Reuters