Tel­cos Should Form Sep­a­rate Cos to Pool Spec­trum: Mit­tal

GSMA chief says global mo­bile op­er­a­tors should step up re­source shar­ing to at­tract in­vestors

The Economic Times - - Front Page - Romit.Guha@ times­group.com

ON THE IN­DUS­TRY The den­sity of ex­penses in terms of capex, spec­trum is up whereas rev­enue is ta­per­ing off... in­dus­try has lost its ap­peal to in­vestors SUNIL MIT­TAL Chair­man, Bharti Air­tel & GSMA

New Delhi | Barcelona: Sunil Bharti Mit­tal, chair­man of global tele­com body GSMA, called on global car­ri­ers to pool spec­trum in en­ti­ties that could be run by third­party net­work op­er­a­tors, a rad­i­cal pro­posal that could help drive down costs in the fi­nan­cially stressed sec­tor.

Mo­bile phone op­er­a­tors all over the world need to step up ac­tive shar­ing of re­sources such as spec­trum, al­le­vi­ate the fear of high roam­ing charges, im­prove billing trans­parency and con­sol­i­date to at­tract in­vestors and boost re­turn on cap­i­tal em­ployed (RoCE), he told ET. Mit­tal, also the chair­man of In­dia’s largest telco Bharti Air­tel, de­liv­ered the key­note ad­dress at the Mo­bile World Congress in Barcelona.

On roam­ing, Bharti Air­tel will take the lead by “killing” do­mes­tic roam­ing charges from April 1, he said.

“Equally, we will also make the in­ter­na­tional roam­ing bill shock free,” he said. ET was the first to re­port on Mon­day about Air­tel’s plans to abol­ish na­tional roam­ing charges.

Mit­tal also ap­pealed to the gov­ern­ments across the world to not tmilk the sec­tor but in­cen­tivise its growth to en­sure that the un­con­nected bil­lions can be served.

“This in­dus­try in­vests a mas­sive amount of money, roughly about $200 bil­lion, in net­works a year glob­ally. Be­sides, about $50-60 bil­lion goes into spec­trum an­nu­ally,” he said. “The den­sity of ex­penses in terms of capex, spec­trum is go­ing up whereas rev­enue is ta­per­ing off, which is putting a mas­sive amount of pres­sure on RoCE (re­turn on cap­i­tal em­ployed) of this in­dus­try, which has lost its ap­peal to in­vestors.”

Crit­i­cal to im­prov­ing re­turns is the es­tab­lish­ment of net­work op­er­at­ing com­pa­nies (net­cos) that pool spec­trum be­long­ing to tel­cos and are run by third-party net­cos that have a clear for­mula for charg­ing, for ex­am­ple per MB per minute, Mit­tal said. “Net­cos and mo­bile com­pa­nies should sep­a­rate them­selves. You build one mas­sive net­work from which ev­ery­one is served. (The) Ben­e­fit is that it is not just lower in­vest­ment in capex but your spec­trum ef­fi­ciency also rises sig­nif­i­cantly. The need for base sta­tions is halved im­me­di­ately,” Mit­tal said. This will help tel­cos be­come truly dig­i­tal, mar­ket­ing com­pa­nies.

He said that some ac­tive shar­ing is on, but while “peo­ple have started talk­ing about net­work shar­ing, us­ing com­mon spec­trum, very lit­tle has hap­pened.”

He ad­mit­ted though that this pro­posal could face most re­sis­tance from gov­ern­ments, which will have to change their poli­cies and make them more lib­eral.

Mit­tal also called upon gov­ern­ments to en­cour­age con­sol­i­da­tion, which will cre­ate stronger bal­ance sheets and lead to higher in­vest­ment, es­pe­cially with 5G com­ing in two to three years. A plethora of play­ers has led to wasted ex­pen­di­ture, he said.

“(The) US has stopped Sprint and T-Mo­bile's merger, which should have been en­cour­aged. In 2008, when we (In­dia) took from five to12 op­er­a­tors, the idea was that they will serve cus­tomers bet­ter,” he said. “But in­vest­ments in net­work slowed. Video­con, MTS are gone. Air­cel and RCom will merge. Now, with Voda­fone and Idea (talk­ing about a merger), look­ing at just for In­dia, $25 bil­lion of hard in­vest­ments (are) blown off in smoke.” (The writer is in Barcelona on a

trip spon­sored by Oppo)

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