The last two years have been a big one for the telecom industry since Reliance Jio stepped into a different segment altogether, two telecom giants finalised their merger and took the top spot from Bharti Airtel, and many small telcos were shown the exit after they weren’t able to survive the competition. Recalling all of this and commenting on the present state of the telecom Industry, Sunil Bharti Mittal, Founder and Chairman of Bharti Enterprises spoke at length about how a small marginal change might strike back profitability into the sector.
In an interview conducted by Economic Times personnel, Ajaya Sharma, Sunil Bharti Mittal said that telecom industry remains the backbone of a nation like India. With such a vast population and most of them relying on networks and using smartphones, telecom is going to play a huge role in the times to come as a digital economy will be based on this ecosystem only. The Bharti Enterprises leader also added that telcos in India have always depended on volume which has helped them in reducing prices, unlike other countries. He also highlighted that affordability has increased 10x times for data and 1.5-2x for voice calling tariffs. He further said that with few marginal tweaks, the industry could be brought back on the track of profitability.
The executive also added that right now industry persists in a “sweet spot” as every form of digital media is depending on telecom. Talking about the tariff and profitability in the sector, he said, “The industry yearns for two things to get the right margins -- volume growth and pricing increase. One equation that has been very well set now is the volume growth. The volume has grown tremendously and that is why I am saying it is good news that the tweaks required on the pricing side is very small.”
When asked about the timeline, Sunil Mittal said that that in the last two years the pricing part of the equation has grown “brutal” and it is hard to predict when the industry might crawl its way out of the swamp. When asked about how the company has dealt with the competition which emerged two years ago, Sunil Mittal said that in such crucial times, good companies reshape themselves and put out better and improved products into the market. He said, “So, you have seen a complete rewriting of the order of the market and in that companies like Airtel have shaped themselves as a much more leaner and a fighting fit machine than ever before.”
Further, speaking about consolidation in the sector, the chairman said that it is crucial for the digital mission that the telecom industry return to its healthy state. Assuring the public, Mittal said that in a few year’s time correction will happen and the companies will be able to reap rewards of consolidation then. He said, “Very large investments are required as this is a capital-intensive industry. 5G is knocking on the doors of this industry, it is not going to be too long from now when the 5G spectrum investments, network investments will start coming through. It is in the interest of the nation that we have three healthy sustainable telecom players.”
The Bharti Chairman concluded the interview by talking about 5G and said that being the chairperson of GSMA right now we are watching countries like China and Nordic nations take up the technology and we are also tracking all the developments.