Wish to raise tariffs by a few paisas ahead: Sunil Mittal

Q: What will Airtel do at the upcoming spectrum auction?

A: We did a big participation in the last round and have tanked up enough spectrum in all the circles perhaps barring one. We have got a good nice fall-back situation already built-up on the spectrum that we picked up from last time.

In fact we took more spectrum than what was required last time just in anticipation to have very little pressure on this auction. Having said that, we would like to have more spectrum. Data is growing. Being the leading market player Airtel needs to have more spectrum to service customers so we well be participating and we look forward to picking up some more chunks.

Q: Are you expecting aggressive biding? Will there be too much demand what kind of spectrum pricing should we look at?

A: Hard to say. I mean already the watermark has been raised significantly from what Telecom Regulatory Authority of India (TRAI) has recommended. Our hope was that the government will go with the TRAI recommendations, which in my point of view was already high. Let the market determine the price but clearly the government has decided to raise it up and I do not see prices rising too much in at least some of the bands and geographies but bidding is always uncertain. You never know.

Q: Are we going to see a corresponding increase in tariffs?

A: Tariffs should have been going up. In a year, year-and-a-half in the last two auctions my company alone as spent over USD 6 billion. The pricing power is not in the market, there are too many players. Many of them are marginal players, dying out; they are only in few circles. Until the market consolidates itself, pricing power does not come back. And I am not talking about pricing power that is going to be a bother for the customers because raising 5-10 paisa per minute or per megabyte does not even hurt an individual customer very much. However in the overall scheme of things, it generates enough cash for companies to invest in technology, invest in networks, go to rural areas. So, to be honest one wish I have is that we can gain few paisas over the next year or two.

Q: You spoke of too many players in the business. It isn’t a new phenomena, we have been discussing this for several years now. I remember few years ago in Davos you told me that any market can support maximum six players -- that is the global average that experience has shown. We are much more than that, the M&A guidelines are out and we aren’t seeing any consolidation?

A: Yes, because first of all six is really not the average, six is perhaps an outlier, most of the places it is three or four at the most. India being a very large country can probably have five or six. So, two or three very strong players, one or two in the middle and one struggling player. So, one BSNL plus four private players would be an ideal situation.

Now, why M&A is not moving forward is on account of a lot of pending issues; trading, sharing. Lot of people don’t want to buy companies – that is buy the assets -- but they want to buy spectrum or customers. Take the case of Loop where we were willing to buy the customer case but that permission never came through. More clarity around M&A and in particular, spectrum trading and sharing is required.