Telcos Should Form Separate Cos to Pool Spectrum: Mittal
GSMA chief says global mobile operators should step up resource sharing to attract investors
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)