A recent report suggested that Vi (previously Vodafone Idea) is likely to hike tariff in the country by 15-20 percent by the end of this year or early next year. According to the report, Bharti Airtel CEO Gopal Vittal also agreed that the current tariffs are unsustainable. Now, Bharti Airtel’s Sunil Mittal has reiterated the statement elaborating upon exactly why the current rates are sustainable.
According to the Airtel chairperson and founder, telecom is a high capital-intensive industry and requires continuous investment to stay on top of the game. In an interview with Business Standard, Mittal spoke about the need for a tariff hike, ban on Chinese equipment vendors in telecom, and 5G coverage, among others.
Tariff hike will depend on Jio
When asked about Airtel plans to raise tariff, Mittal stated that it will depend on the biggest player in the industry. This was a nod towards the aggressive pricing by Jio, which is the largest telco in the country with more than 400 million mobile subscribers. Speaking of how the current low tariffs in the telecom sector are not sustainable, Mittal suggested that somebody has to take a call, referring to rival telcos as well as the regulatory (TRAI).
Sunil Mittal was the first to raise voice against the low tariffs in August suggesting that it’s high time to raise tariff in an industry that’s financially stressed. Airtel had a monthly average revenue per user (ARPU) of Rs 162 during the quarter that ended in September. The telco wants the ARPU to be Rs 200 per month and then to Rs 300 gradually, which is only possible through a tariff hike. However, Airtel has already made it clear that it won’t be the first to raise pricing but will follow if the competition does.
Speaking on 5G, Mittal feels that India would be a key player when the technology rolls out but it won’t happen for a couple of years at least. He also raised concern over TRAI’s 5G reserve price of Rs 492-crore per megahertz. The task force constituted by the Finance Ministry also suggested in May 2020 that the reserve price should be rationalised to make 5G affordable to all. Notably, the task force also suggested that the reserve price is much higher than that in most other countries. Mittal said, “The 5G spectrum pricing should be in such a way that it encourages investments in telecom networks. Price at the current level will not serve anybody’s purpose.”
As for the news of the ban on Chinese equipment vendors in telecom services, Mittal said, “We would comply with any decision taken by the government on the matter. Airtel has the lowest exposure to Chinese vendors compared to its rivals. It will not be a huge issue for us.”