Airtel seconds pushing your mobile bills significantly to save telecom industry

Sunil Mittal, the chairman of India's second-largest telecom company Bharti Airtel, on Tuesday made a passionate appeal for a hike in tariffs and a cut in government levies to save the telecom industry. The czar of the telecom, Mittal underlined that while a major chunk of the industry's revenue goes to the government in taxes and levies, companies are loaded with an extraordinary debt of Adjusted Gross Revenue dues and spectrum payments.

"People are consuming average of 16GB of data per user per month. It is time that tariffs do take a tick up to make the industry viable and, more importantly, have decent and appropriate returns on capital to grow into more technology areas, to roll out more networks, and become a more viable model of sustainability in the future," Mittal stated. The statement of  Mittal comes a day after Bharti Airtel announced a capital-raise of Rs 21,000 crore via a rights issue. 

'Will not shy away from raising tariffs': Bharti Airtel chairman

Pointing out the need for a right economic model, where levies and load are conducive for the telecom industry to grow, Sunil Mittal made it clear that Airtel will not shy away from raising tariffs. Mittal said that the company has already been raising tariffs in a limited manner by pushing up base tariffs to Rs 79.

The chairman of Bharti Airtel said, "Can this go to Rs 99 eventually, my answer is yes, the question is when...In the end, we are also bound by market forces, we can't be outliers beyond a point. You can be having some premium given the strength of the brand but you can't go beyond a point where you start to hurt yourself." He justified it by adding that the industry needs to move "very quickly" to  Average Revenue Per User of Rs 200 per user per month.

"This industry needs to survive and thrive, we need to get to Rs 200 within this financial year. Eventually, this industry needs to be at Rs 300 per user per month and, in that, you can enjoy tons of data...music, entertainment, should be available to customers...we will put in a lot of stuff, but we need to get to Rs 200 points and eventually to Rs 300," Sunil Mittal contended.

The industry is granular and segmented, where some customers could be at a price point of Rs 100 with small amount of data snacking while at another end of spectrum customers could go to Rs 600-800 levels enjoying multiple offerings. Even then, the tariffs in this country will be lower than anywhere in the world," Mittal said. He exuded confidence that the industry has seen the worst in terms of tariff wars and ARPU contraction.  "In September 2016, at the launch of a new powerful competitor, we had gone below Rs 100, we are at a midpoint...about Rs 145-150...this will start to trend towards Rs 200 within this financial year," Mittal said.

Bharti Airtel announces capital-raise of Rs 21,000 crore via rights issue

On Monday,  Bharti Airtel's board approved raising up to Rs 21,000 crore by way of the rights issue, at a price of Rs 535 per share. Airtel hopes that the fundraising would be a game-changer for the company, giving it the firepower to accelerate beyond 'business as usual' by grabbing a larger market share of mobile services (including aggressive positioning on 5G rollouts), fibre to the home and data centres business. 

"As we respond to Government's call to invest more money, accelerate the digital vision of India, we also equally expect Government also to respond by having lighter touch regulation, by making life simple for telecom companies. About Rs 35 of every Rs 100 that telcos generate as revenue goes into Government levies," he said.

(Inputs from PTI)