Reliance Industries' telecom foray may have dominated the news and the telephony landscape this year. But quietly sneaking up was a very aggressive Bharti.
The telecom major has applied for licenses for new circles that will establish it as a pan-India player and has its finger in almost every part of the telecom pie today: from cellular to basic telephony to international telephony and bandwidth services.
Bharti has also seen its fortunes rise on the stock market, with share prices having doubled over the last one year.
Sunil Bharti Mittal, Bharti's Chairman and Managing Director, is undoubtedly the man to watch for in the telecom sector.
Gritty and ambitious, he promises to turn Bharti into one of the biggest telecom companies of India, and he more than half way there.
In an interview with Special Correspondent Priya Ganapati, Sunil Mittal assesses the current telecom landscape and looks at what the future holds for consumers and Bharti.
At the end of the year, how do you assess the telecom landscape in India?
I think it has been one hell of a run in telecom. The growth has been stupendous and we continue to be growing fantastically, adding 18-20 million mobile phones in the country, which is more than what we have done in the last eight years.
So we are going to be signing off this year on a very high growth note.
The competitive intensity has been very high, so some fallout of that is bound to happen. Some smaller companies are bound to get consolidated or just hurt if they don't get consolidated.
The regulatory movements in this sector have been legendary this year. We have had some unbelievable regulatory movements to the extent that it looks horrifying if you look at it from outside India.
But I think that is also settling now and I think we have come almost to the end of the regulation changes.
So how does the Indian market compare to that of China now?
In terms of absolute numbers, India is way behind China, but in terms of trajectory, it is on the same lines as China.
We are exactly where China was in 1997 and if you plot the trajectory we are moving up the same way, perhaps faster for India now.
China went up to 4-5 million new phones a month. We are touching 2 million now. The fact is that China is now coming down to about 3 million phones a month, while India is slowly rising to that number.
India would be about 200 million phones in five years maybe and China will be 400 million, but the difference will be half and not one tenth like it is now.
How has this year been for Bharti? What have been the ups and the downs?
On the one hand there's been a lot of competitive pressure. Reliance has launched services. BSNL has launched its services. These are the two big, mega events. Unified licensing has been ushered in.
On the other hand, Bharti launched a number of projects last year that had to be consolidated. The growth has been very good for Bharti. Our first quarter results were very good and our second quarter results were better. (Second-quarter profit tripled from the first-quarter net of Rs 310 million.)
We hope to carry on with that despite the pressures in the market. I think we are realising the dream that we had set for ourselves: to be amongst the top telecom players in India.
I think eventually four players will survive in India, and Bharti has a ticket to be one of those four companies.
In terms of downs, it has been very competitive out there in terms of market share, market leadership. . .
I would also say that the regulatory changes have been quite baffling and those things are thankfully behind us now and we are looking forward to stable growth.
Regulatory changes are the biggest factors to reckon with for telecom companies. Considering the pace at which it has been changing in India, how do you plan your business strategy for the future?
We try to work ahead of the policy that the government lays out. Sometimes we are dealt a good hand and most of the times we are dealt a bad one.
And the idea is to be very nimble and flexible to adapt to the changing environment. Consider, for example, the way the government brought in unified licensed.
But we have adapted to it. We have applied for new licenses and we have converted one of our existing licenses into a unified license. We anticipated this move earlier and we are ready to fight this battle right in the marketplace.
Under the unified licensing regime you have licenses for five new circles and have recently acquired 27.5 per cent stake in Hexacom, a cellular telecom operator in Rajasthan. One question comes up regarding your growth. Is Bharti growing too fast?
We are, and we are not apologetic about it. In this industry you need to grow fast and all the investments we have made in the last two years need this kind of growth and we will continue to do so.
The question then is whether we are managing this growth? The answer is that we have put 16 new projects in the last 18 months and all of them are now very stable.
Yes, we are growing fast and we need to grow fast. Lots of people mention that we have bitten more than we can chew, but we have demonstrated that we can handle it all.
We want to be India's most preferred telecom provider and be known for our presence in the marketplace in terms of size and tenacity and be admired for the customer service that we provide.
Bharti also triggered off a price war in the cellular sector a few days ago by cutting tariffs again. Is price going to be the only fighting point in the battle between companies?
Price has never been our fighting point. We have always been keen on delivering value to the customer. In Western India, we felt we needed to kick up our operations by giving some special sops to the customer.
We have also had to respond to some of the competitive moves in the market.
Do we see the possibility of more tariff reductions in the future?
Not much. I think we have come down to mere paise now. A five paise here, a ten paise there. We have really hit the rock bottom of the barrel now.
If at all there is a reduction, it could be five or ten paise. But I think that the customers will be enjoying the low tariffs which are there today for a very long time now.
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