Bharti Enterprises chairman
Sunil Mittal
reportedly feels that
Vodafone Idea
urgently needs $7-9 billion
capital infusion
to survive and a patient investor who has the wherewithal to withstand negative cash flows for some years. In an interview with The Economic Times, on the sidelines of the World Economic Forum Annual Meeting in Davos, Switzerland, Mittal spoke about a range of issues including challenges being faced by
telecom companies
in India, next spectrum auction, general mood at Davos and Vodafone.
When asked how he views the current industry structure and if Vodafone is going to survive, Mittal said that it is "very hard to say." "The government has come out strongly to support Vi, converting a very large outstanding (of its money) into equity. Government owns 33.1% in Vi and would like it to be healthy but ultimately it’s in the hands of the sponsors of that company to take the final call. Vi is falling behind —there’s been a lot of market share loss…in large parts of the country, (I’m sorry to say) they don’t exist anymore," he added.
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Vodafone needs a strong investor
He said that what Vodafone needs is an investor who "can stump up the money and have the wherewithal to withstand the negative cash flows for some years because it’s a tough industry where return on capital remains very poor despite lofty valuations, stock prices." Mittal added that Vodafone-Idea needs a very patient investor. "What you have to see is the underlying return on capital…an investor who comes in to put a lot of capital into Vi has to be patient. You need, in my estimate, $7-9 billion to fill the gap which is there, and then be patient. (As for the market structure,) your guess is as good as mine."
Talking about 5G in India, Mittal said that the good news is it creates a lot of capacity, which 4G could not have given us. "Now both us and Jio have a buffer of capacity to take the next load of data consumption. It’s still a few years ahead of time but the world has moved on and India has to as well." He went on to add that India is proud to say it’s the fastest 5G rollout nation in the world.
No separate pricing for 5G, not in near future
Mittal also ruled out charging separately for 5G, at least in the near future. But he did stress on the need for a tariff hike in the telecom segment. "But I can tell you that if India has to be supported by 2-3 telecom companies — it’s in the interest of everyone, including customers, that there is a viable, healthy telecom environment. That means companies must have enough money to build new networks. 5G has been a huge load on telcos without any revenue coming through.” He further shed light on the amount of money invested in 5G. “Airtel has spent around Rs 80,000 crore (almost $10 billion) on 5G spectrum and network in the last 18 months. I would tend to assume (Reliance) Jio has spent twice (our level) on spectrum and also on network, which means approx $25 billion have been invested which is getting no revenue. So, it can’t last like this. I would say, the sooner we get to an ARPU of Rs 250 and Rs 300, it will be better for the nation’s digital dream," he said.
English (US) ·