scorecardresearch
Download the latest issue of Business Today Magazine just for Rs.49
Sunil Bharti Mittal on 5G, Airtel Digital and OneWeb

Sunil Bharti Mittal on 5G, Airtel Digital and OneWeb

The Founder and Chairman of Bharti Enterprises opens up about overcoming challenge after business challenge, Airtel and his next big bet

Sunil Bharti Mitta, Founder and Chairman Bharti Enterprises -- Photograph by Yasir Iqbal Sunil Bharti Mitta, Founder and Chairman Bharti Enterprises -- Photograph by Yasir Iqbal

He has seen it all. Sunil Bharti Mittal is among the earliest pioneers in connecting hundreds of millions of Indians and laying the foundation for a massive digital backbone across the country. In a rare interview, the Founder and Chairman of Bharti Enterprises opens up to Business Today’s Global Business Editor Udayan Mukherjee about overcoming challenge after business challenge in his journey to emerging as one of the most successful entrepreneurs of this generation. Welcoming the recent measures to support Indian telecom service providers, the telecom czar says the next frontier for him is OneWeb—a company that aims to deliver broadband satellite internet services worldwide. Edited excerpts:

UM: I often think that if you were not in telecom, you would be a boxer or a wrestler. That fighting spirit... where did you get it from?

SBM: Perhaps because we are fighting all the time, [it] looks like we are surviving and fighting continuously. The cycles have been such in our industry that one has to deftly manoeuvre the surroundings, the markets and technology. But I would say it has been a great effort of the team that we were able to pull [through] each time we faced adversity. You do your business, you fight in the market, you lose market share, gain it, the profits go up and down, but the life of Airtel has been very challenging, to say the least. I am glad that we are here today—much stronger, much sharper in our focus towards customers, and a reasonably healthy balance sheet.

UM: Well, you have come up on top, but on a bad day do you feel that ‘I could have chosen any sector and made a success of it’?

SBM: It is true... when you reflect on a life well-lived. I guess everybody is dealt certain cards and all we can do is make the most of the ones that have been dealt to us. I came into telecommunications way back in 1982, when the private sector was not a part of it. It was [the] bastion of public sector units—ITI factories producing equipment and DoT running fixed-line services. Phones were a rarity—if you got one out of turn it [meant] a great deal of celebrations. I have walked this journey right from the early days of telecom reforms. This is what I have learnt and this is why I am sticking with it.

UM: Has it changed for the better after the recent relief package from the government? Or has it only delayed the formation of a duopoly between you and Reliance Jio?

SBM: Well, you know, the Prime Minister said something very important: that this is a decisive government. And I think nothing demonstrates this more than the telecom package. We require a very strong leader and stable government to deal with a Black Swan event like the one which India faced. We are 1.3 billion people and we were staring at the prospect of India going down to two private sector operators. I think that would have been a very bad outcome for the country.

I am glad that the package was unveiled. There are two pillars of this package: administrative reforms, [about] which we have been trying to get [the government’s] attention for the past 20-25 years. There were issues like storing customer forms and papers in warehouses... regular audits of those papers... We have gone back again and again [to the government] but never got its attention. Items like those have gone away, bank guarantees have been rationalised, [the] KYC issue has been rationalised. A lot of administrative reforms, which were in the area of ‘ease of doing business’, have been done and, thus, they must be lauded.

The second part is the financial side. There is an industry player that is not being able to pay up the government dues [and this] adds stress on the other dues from banks and markets. Something needed to be done and the government came up with a big package, of a moratorium and also the interest on that period of moratorium, to be offered as equity.

This is a rare event to save the industry that is vital for the future of our country. I would say we should celebrate what has happened here. I would take a lot of comfort in the way in which the government has moved very quickly to save the sector from a near duopoly.

Will this solve the problem? Perhaps not. A few more steps are necessary and I was heartened to hear the telecom minister say that this will be the first round of reforms and there are more to come. So, we remain hopeful.

UM: One of those could be the ‘One Time Spectrum Charge’ matter, which is coming up soon at the Supreme Court. Are you hopeful that this too will be decided in your favour?

SBM: Well, it’s hard to say. These things are very complicated and complex. I don’t know which way this cookie [would] crumble. All I would say is that there is a TDSAT (Telecom Disputes Settlement and Appellate Tribunal) judgment challenged by the operators, and some decision must be taken soon.

In the AGR matter, the only regret I have is that I wish we had lost this case in the first instance. We would have paid some Rs 2,000-3,000 crore and be done with it. Having won the case at the TDSAT once and again through a reference backed by [the] Supreme Court partially, we were slammed by a massive amount of money which had to be paid. This was back-breaking for one of the operators and crippling for even Airtel. Therefore, cases must be settled expeditiously. And cases that have gone in favour of the industry, if they turn around to go against us, the penalties and interest of these 10-12 years should then be seen in a more sympathetic way.

In the case of OTSC [One Time Spectrum Charge], whatever decision has to be taken should be taken. But, I want to remind [everyone] that this was government action at that time where they woke up to a price discovered many years later, [and decided] to charge it retrospectively. It is like going into a restaurant, you read the menu, place the order and when you are finished, the restaurant tells you that the prices of the meals have been changed. This is as simple as that. It’s sub judice... it’s in the courts now. The government has to take a decision; the courts have to discuss it. We just have to bow our heads and wait for the outcome.

UM: So far, the industry’s response to 5G, the reserve prices, has been very lukewarm. By how much do you think they need to be shaved off to be attractive to players like you?

SBM: Airtel has been taking a lead in 5G. We have tested networks ahead of other competitors, we have tied up with the Tatas to do a domestic Indian stack... a lot of work is going on. [It’s a] very silent preparation for us to be ready in time for the 5G launch.

I am glad that the DoT has sent back the reference for the 5G spectrum to TRAI (Telecom Regulatory Authority of India), the life of the spectrum in future has been increased from 20 to 30 years, and the spectrum usage charges for the future have been taken away. I am hoping that TRAI will finally see what 5G can do for our country, not in terms of raising more money for the exchequer, but the spin-off benefits it can have for the digital dream of our Prime Minister and our nation.

To my mind, a sensible pricing recommendation for the reserve price is most important. There are not too many buyers now—there are three private operators who have to participate in the auction. There is enough spectrum available, unlike the wars of 2010 for spectrum when we were much starved for getting spectrum or the renewals that came later, which almost decimated the industry.

I think the situation is very different now. If spectrum pricing remains high, we will not be able to buy spectrum. We should not be buying expensive spectrum. We would rather put more money into the networks, more fibre, more radios, and more networks in rural areas, and serve the communities rather than buy expensive spectrum. I am hoping this time around the TRAI recommendations will be rational.

UM: Lower by how much?

SBM: It is hard for me to put a percentage or amount. Let me give you an example. In the 700 MHz spectrum band, just 5 MHz was put up at Rs 56,000 crore [for] all India. I protested and went around saying there is no rationale for the 700 MHz band to be priced at this level. I was told, ‘No, we will have enough demand’. To cut a long story short, the auction failed. It was put up arbitrarily at a lower amount of Rs 40,000 crore or thereabouts—it failed again. Once again, it was put up for about Rs 32,000 crore, which too failed. It will probably come back to the market at about Rs 20,000 crore.

So, who has gained? We have lost 10 years for use of this vital, high-quality spectrum, which could have improved the quality of services, customers would have benefitted [and] our networks would have got relief. Importantly, our government would have got some money. This spectrum is a finite resource and is not being used by anybody.

I hope TRAI doesn’t make the same mistake that was done at that point in time despite a lot of protests from the industry.

UM: Is it possible for players like you to increase tariffs, taking average revenue per user (ARPU) to Rs 190-200? Do you think Reliance Jio will allow that to happen?

SBM: We all know that Indian tariffs are very, very low—lower than most places in the world and even in emerging markets. We are not seeking the $50-70 monthly ARPU the western world enjoys. The fact is that the current tariff levels aren’t sustainable. How far this can go will have to be seen. But yes, I would agree with you that, especially for weaker players, lower tariffs are a very large burden on them to grow.

UM: You have tried to do a very innovative structure with Airtel Digital but you have not monetised your digital assets. What’s the eventual game plan? It looks like you have many potential unicorns embedded within Airtel Digital right now.

SBM: Well, I think this is a silent revolution happening within Airtel. Our digital part of the business is making strides and you are perhaps right that it’s not unveiled to the market in terms of monetisation or its valuations.

But if you look at Wynk—our music offering—it has very high traction. Our other digital properties—cybersecurity packages and our digital payments bank among others—have a very high degree of engagement, monthly active users and transacting users. All of this supports the larger mother ship Airtel, reducing churn, satisfying users, making them prefer us over others. So, I would say we will keep on building it the way we are currently. Our alliances with Netflix, Amazon... Google and Facebook are all very robust.

I believe that at the appropriate time we will separately unveil our digital revenues and I can only say we would be surprising the market on a pleasant side, when they see what has been achieved within the digital part of Airtel.

UM: Will you monetise them piece by piece and in what kind of a time frame?

SBM: Well, I am not sure we will monetise it, because in the end the monetisation vehicle is Airtel, which is the parent company and that’s a listed share, a currency we have to use from time to time that is available to us.

So, I don’t think it’s necessary for us to get people as investors into digital, which is called Airtel Digital Ltd. But the option remains: that’s a company which is a separate unit within Airtel, 100 per cent owned by Airtel. And if somebody comes with a big fat cheque to say we are willing to place a bet on Airtel Digital alone and we don’t want the connectivity piece, that’s a conversation to be had.

But, currently we are not inviting or engaging with anyone to invest in Airtel Digital.

UM: Speaking of digital brings me to your mentorship of your son, Kavin Mittal. Were you and he disappointed when Hike Messenger had to be stopped?

SBM: I don’t have a process of mentoring any of my children in the strictest, formal mentoring scheme of things. They are very independent. I was fiercely independent of my parents. I started my life very independent of anybody, and they have all carved out lives to their own liking.

Hike as you know had a glorious run for a period of time and was valued as a unicorn, raised a lot of capital, created a lot of impact. And to fight the might of WhatsApp or Facebook Messenger, I think a lot of credit goes to him.

He has a very sharp, high quality mind, understands technology 100X better than I do, and has pivoted his company to something else now. I keep on occasionally hearing from him whenever I meet him. He lives a separate life away from the large family enterprises and he is now into something else in his company called Hike, and let’s see how the new pivot moves. He remains confident and the good thing is that these children are growing into young, energetic adults with a lot of experience behind them in how to deal with the world. The experience of Hike Messenger going through a glorious run and then having to struggle is a lesson you don’t learn in business school and that is invaluable to my mind.

UM: And what’s next for you Sunil, because you are in your mid-60s right now. Is there still time to squeeze in another roll of the dice, something other than telecom? One big last bet?

SBM: You can ask this question every few years and the answer will be yeah, I am probably close to that point and then you do something else. We were busy on two fronts: one was stabilising Airtel, which was extremely important, and I personally believe we are in a good place there.

The other is something we picked up in the midst of the high wave of the pandemic in the UK called OneWeb, which is a company I was associated with right at the beginning along with other founders... which went into Chapter 11 and we, along with the UK government, have revived it.

OneWeb is now close to achieving a dream of serving the world through very high quality, low latency broadband connectivity from space. And by April-May next year, we will have a full-scale global telecom network in space, with 648 satellites.

I am an executive chairman in that company, as also the largest shareholder. Shravin, my other son and Kavin’s twin, is the lead director engaging from Bharti’s side. He is taking a big role there. We will be having a very, very important contribution to the space industry; importantly connectivity for those deprived of any chance of getting connectivity in the next 10-20 years—in the deserts or in the Himalayas or deep in the forest or indeed in maritime and aviation [sectors]. All this is going to change rapidly in terms of connectivity through the next year onwards.