Business – Bharti Airtel’s CEO Manoj Kohli
Joji Thomas Philip
With the latest round of tariff cuts impacting the financials of all companies, Bharti Airtel’s CEO Manoj Kohli talks to ET NOW on the road ahead and how India’s largest telecom company plans to respond to competition. Excerpts:
Bharti Airtel’s shares crashed close to 7% despite posting profits. The stock has closed at year’s low and has lost 18% this year. Are you concerned?
At Bharti, we don’t look at our performance based on the reaction of the stock markets. We look at the real market and we are satisfied that we have improved our marketshare even as competition is heating up.
But, your market share has fallen over the past 12 months…
When we refer to market share, we refer to revenue share. Bharti accounts for about 32.7% of the mobile sector’s revenues. This indicates the quality of our customers are better and that their usage is higher. Over the next few quarters, our primary objective is to improve our revenue market share.
How long do you expect the ongoing price war to continue? What is Bharti’s strategy ?
The tariff war is set to continue for the next few quarters. This will lead to a natural and spontaneous consolidation in the Indian telecom industry. It is very difficult to predict as to how many operators will survive the price war, but the larger operators will emerge stronger. Also, tariff war is not a new phenomenon — we have seen several such rounds in the past. We will not get into offering irrational pricing or free minutes. Our response will be segmented. We will rollout specific tariff plans for select geographies and certain segments of our customers… The company has a three-pronged strategy for growth. The first is to remain the leader in market share — both subscribers and revenues. We are also working towards creating new revenue streams. Bharti is already one of the lowest cost producers of telecom minutes in the world and our objective is to become the most efficient operator in the world.
Is the honeymoon period for Indian telecom sector over considering all the recent developments?
I do not agree with that. This sector remains robust and offers a great growth potential of touching a billion mobile customers. The tariff war is a temporary phenomenon as we have seen similar incidents in the past. The sector will bounce back soon — in the medium to long-term perspective, telecom holds massive opportunities for growth.
Bharti has cash reserves of over Rs 6,000 crore. The base price for pan-India 3G spectrum is Rs 3,500 crore and even if the bids were to go up to as high as Rs 5,000 crore, Bharti can meet it from its reserves. Does this imply that you will not be required to raise funds for the upcoming auctions?
Probably yes, but I cannot comment on that. We will definitely participate in the upcoming 3G auctions and this opens up a new revenue stream for us. Yes, we have cash in our balance sheet, but for strategic reasons, we cannot reveal as to how much of it will be utilised for the 3G auction. We maintain our earlier position that Bharti will rollout 3G services by October 2010, if the auctions are held on time.
There has been a freeze on 2G spectrum allocations for the past couple of months. This may continue for the next one or even more quarters. Bharti’s adding close to 9 million new customers every quarter. Can you sustain this growth without additional spectrum allotments?
It has been several months since we and the industry have been allotted 2G spectrum. This sector requires regular flow of spectrum to support growth as well as the quality of services. Since airwaves allocation has stopped, we have been forced to install more towers and take other steps that have increased our capex. A majority of the growth is coming from rural India and we are not confronted with a spectrum scarcity in these regions.
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