India telcos need tariff hikes to boost investment: Mittal

india tariff hike mittal
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India telecom czar Sunil Mittal has once again reiterated the need to raise telco service tariffs, saying that the return on capital investment for the telecom industry needs to rise to avoid a repeat of Vodafone Idea’s financial debacle.

“We don’t need more Vodafone (Idea) type of scenarios in the country. And I think the government is fully conscious, regulators are conscious, and I think that people are also conscious that it’s very important that we have robust, viable companies who can invest in new technologies,” Mittal, who is Bharti Enterprises chairman, said during Mobile World Congress 2023 in Barcelona.

Average consumers can afford tariff hike

He gave a hint that Indian telecom operators may raise tariffs by the middle of this year, but didn’t confirm if ‘Airtel will be the first telecom operator to make the decision.

The tariff increase would not affect the common man, he said, adding that “one should compare mobile tariffs with other expenses of a common man.”

“Salaries have gone up, rents have gone up. Everything in the country has gone up except for one thing (mobile tariffs). There is no one complaining out there,” Mittal was quoted as saying by the Economic Times.

Airtel previously informed analysts that it is aiming to gradually reach Rs 300 ($3.60) ARPU in India and expect its 5G services to help achieve that. Airtel CEO Gopal Vittal recently said that an ARPU of Rs 300 is critical for a respectable return on capital investment, adding that this was something Airtel was hoping to happen in due course in the market.

India needs a third strong telco

Speaking to journalists, Mittal said that a country the size of India must have three strong operators to efficiently serve customers. “The question is, will the third be now a stronger (state-run) BSNL (Bharat Sanchar Nigam Ltd), or would Vodafone (Idea) have a place to play as well. The government has done its best. Now it is for Vodafone (Idea) to now take advantage of it.”

Mittal also maintained that older-generation 2G technology is still quite relevant to the Indian market, as 300 million users still rely on it to connect. “The 4G and 5G handset prices aren’t low enough to prompt them to upgrade. In our case, the conversion has been pretty rapid. We are now coming below 100 million (2G subscribers) for ourselves. It is the smallest pool of 2G customers, but you can’t leave them stranded,” he said.

Mittal said that India’s 5G networks rollout by Airtel and rival Reliance Jio has been faster than anywhere in the world despite the financial constraints for the industry and the fact that 5G monetisation “is still some time away and now is the investment phase.”

He also said that Bharat Enterprises’ satcom venture OneWeb will be fully ready to offer services globally by July-August. “OneWeb is now two launches away. Within March, the entire OneWeb space segment would have been completed. We got delayed by the Russia-Ukraine war. In July-August, we will be fully ready for the world, and India.”

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