Mittal pushes for increase in tariffs, wants cut in levies

NEW DELHI: A day after announcing capital-raise of ₹21,000 crore via a rights issue, Bharti Airtel chairman Sunil Bharti Mittal on Monday made a passionate pitch for hike in tariffs and a cut in government levies to save the industry.

Mittal said while 35% of the telecom industry’s revenue goes to the government in taxes and levies, the firms are loaded with an extraordinary debt of adjusted gross revenue (AGR) 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 said.

Levies are far too high in the telecom sector, Mittal said, adding that “levies and load on industry need to be brought down” for India to truly realize its digital vision.

Mittal made it clear that Airtel will not shy away from raising tariffs. He argued that tariff changes effected by Airtel over the past few months are a “testimony” that the company has indeed “run out of patience”. In a rare move, the Bharti Airtel chairman attended an hour-long investor call, answering queries related to the rights issue as well as those pertaining to the sector.

Asked if Airtel will take the lead in raising tariffs, Mittal said the company has already been doing it in a limited manner by pushing up base tariffs to ₹79. “Can this go to ₹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,” Mittal said. Airtel will be “vigilant” and “happy to take small baby steps, which could even be first and foremost compared to others”, he said.

The industry needs to move “very quickly” to Arpu (average revenue per user) of ₹200 per user per month.

The industry is granular and segmented, where some customers could be at a price point of ₹100, with small amount of data snacking, while at the other end of the spectrum, customers could go to ₹600-800 levels enjoying multiple offerings.

The comments came a day after Airtel’s board approved raising up to ₹21,000 crore by way of the rights issue, at a price of ₹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 of mobile services, fibre to the home and data centres business.