Not wanting to let go of its position in the country’s telecom space, Bharti Airtel has been launching a new plan almost every Wednesday, since a month.
Airtel, is also one of the players that was recently penalised ₹1,050 crore by TRAI on the interconnect issue with RJio. But neither the competition nor the regulatory hiccups have deterred its confidence. Airtel feels that it will overcome such issues peacefully.
In an interview with BusinessLine , Gopal Vittal, Managing Director and Chief Executive Officer (India and South Asia) of Bharti Airtel, gives a sneak peak on where the company gets its confidence from. Excerpts:
Does the word ‘free’ worry you?
As far as ‘free’ is concerned, it will not run forever; at the end of the day, everyone wants returns on investments. The fact is, we have got to ask ourselves – what is our game plan? In the last a year or so, we made a bet on rolling out 4G well ahead of the curve, even before the ecosystem was developed.
Against all odds we went ahead and did it because we felt that it was an important lead to take.
Besides, we also launched a whole bunch of apps – music, movies, games and other services. We also did pricing bands – the voice was made free at a certain price with bundles of data thrown in. Now the question is if the price point comes down, is it innovation? No, it is not. We are here to grow our market share. We do what is necessary to compete.
So you want to wait and watch before reacting to the competitor’s (Reliance Jio’s) strategy?
I just want to make one thing very clear – we are not obsessed by our competitors. We are obsessed by our customers – to make customers for life. But, we do observe our competitors and learn from them. We have learnt how to be frugal from one, learnt how to be drive a stronger post-paid business from another, and how to run an enterprise business from the third.
A penalty has been imposed on you for not augmenting PoIs to Jio. Do you think it is justified?
We have made our points: number one is the pace of augmentation – it is a regulatory obligation. We have done it for the past 20 years and we will always abide by that. We have literally within 90 days of launch (Jio), put out almost 2,000 PoIs and in five weeks, we offered staggering pace of augmentation.
Normally, as per the regulator, they allow 90 days to do this, but we have done that in five weeks. The extent of augmentation we have provided is more than two-and-a-half times that of an equivalent size of an operator for the same set of customers. It takes two parties to do point of interconnect. You offer it and the other party that needs it has to be ready to access transmission links coming to your switch centre – those were also not ready in many cases. It is an ongoing dialogue and we are confident that finally an objective outcome will emerge of it.
What if the decision is not in your favour?
We are pretty confident that we will see an objective outcome and I don’t get ahead of ourselves that “what will happen if it doesn’t”.
Does ‘free’ service impact the quality?
Anything free impacts quality of course. And, anything free determines the nature of customer you get, because you start to acquire more low-end customers who use a lot and degrade the quality.
That’s how I see from our business perspective.
Taking about quality, how have you improved your services?
There has been a lot of improvement in the last 100 days, and in the next 100 you will see more improvement because we have more spectrum in the 2100 MHz band. We have optimised around 40,000 cell sites, put in a lot of investments, and are working with the government to put more sites.
Besides we have launched ‘open network’. All these have led to reduction of anywhere between 15 and 30 per cent of call drops.
What according to you is the right approach for the 700 MHz band?
For the 700MHz, we have always said that it was not affordable. We also feel that the eco-system is still nascent and we are hopeful that there will be sensible pricing for this spectrum overtime.
We think that the eco-system needs to ripen a bit before the 700MHz is put on the block. Ultimately, the capacity of this industry to roll out networks has to been seen…if you do not have the investments for capex, then this spectrum is just sitting in your bag. If you look at the return of investment, it is less than one per cent for the whole industry, and we as a leader are on less than eight per cent, which is an abysmally low rate on return (in fact lower than some fixed deposits). Therefore, you need to get a reasonable rate of return for reasonable investment. That is why the cost of spectrum should come down.
How are apps like Wynk Music/Movies doing?
Our music business has done really well. We have bundled it with MyAirtel and its growing very well. One of the big challenges in the music business generally is piracy, and we believe that it is important to kill piracy in order to make sure labels and content providers get their fair share. On the video service, it’s been a relatively slow start, but we are now looking at how to scale it up. We are confident that we will lead that market as well. We have also got bunch of alliances like for book services, TV services and we have some of our apps as well. It is a combination of our own as well as with alliances.
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