Akhil Gupta, Vice Chairman, Bharti Enterprises
The year 2023 witnessed several notable developments in the Indian telecom space, particularly in terms of accelerated 5G roll-outs by telcos and reform-led developments by the government. In an interview with tele.net, Akhil Gupta, Vice Chairman, Bharti Enterprises, shares his views on the most significant developments in 2023, the new Indian Telecommunications Act, 5G adoption and the future outlook for the sector…
What were the most significant developments and key lessons for the telecom sector in 2023?
I believe 2023 has been a watershed year in terms of the world’s largest roll-out of 5G in India and the enactment of the new Indian Telecommunications Act. However, in terms of the underlying financial health of the sector, much still remains to be desired.
What are your thoughts on the Indian Telecommunications Act? How will it impact the sector? Are there any policy/regulatory issues that remain unaddressed?
The most significant change is that power has now shifted to the Centre in respect of the Right of Way (RoW) Rules and other similar rules under the Act. Earlier, the Department of Telecommunications (DoT) had to issue advisories and chase the states for compliance. This Act gives them the power to enact those rules and laws, which is a positive change. Additionally, there are some procedural changes related to licensing, and we will learn more about them as we move forward. An important issue pertaining to possible curtailment of TRAI’s powers was fortunately resolved and dropped at the consultation stage of the bill itself.
In my opinion, the problems that remain unresolved in the telecom sector have nothing to do with the Act. The real issue is why does such an essential service bear a tax burden that is normally applicable to “sin” industries such as alcohol, tobacco and gambling. Another problem faced by the industry is litigation. The telecom sector needs to reduce its litigation burden significantly. The intent shown by the Finance Minister in the current budget about withdrawal of demands/litigation of relatively small amounts under the tax laws bodes well. Similar intent must also be there for the telecom industry and accordingly, demands raised on account of procedural lapses or out of hyper technical interpretation of legal clauses must be withdrawn.
How has India fared in terms of 5G adoption? How soon do you see it penetrating in the rural areas?
5G adoption has been quite satisfactory and I am sure that with a rapid increase in the penetration of 5G devices, this will rapidly accelerate in the future.
The availability and adoption of 5G have led to a significant increase in data consumption – more than 20 per cent over the corresponding period last year. This has, of course, been helped by the provision of 5G as a free service beyond the data limits on 4G packs, but that is surely not the sole reason. Consumption of data has also increased due to higher speeds on 5G. While we believe that there should be no difference in 4G and 5G prices, free 5G is something totally unwarranted.
Besides mobile services, one of the significant use cases for 5G could be Fixed Wireless Broadband (FWB), which can be particularly useful in countries like India, where it is difficult to wire up every home. FWB has many potential use cases, such as for factories, businesses and individual homes.
What is your view on private networks being set up?
I believe that most businesses will turn to telcos like us instead of setting up their own standalone network, as it is not efficient to do so. I think it will become a decent part of the enterprise business.
How has India’s 5G experience been different from other countries?
India has made significant progress in terms of 5G implementation. Other nations have been relatively slow, other than countries like the US, China and Korea. For instance, Europe lags behind significantly.
How has the towerco space changed during the past year? What should be their key focus areas in the coming years?
There is one concern in this space — the health of Vodafone Idea Limited. The fate of all tower companies depends on this, and it is important to find a solution. India deserves to have three private operators, which is good for the nation and promotes a competitive environment.
What else can tower companies do? First of all, there needs to be a shift in mindset, from being tower companies to becoming digital infrastructure companies. They could look to become data centre companies, optic fibre companies, as well as explore in-building solutions (IBS). They can focus on connecting towers to the transport network in every city on fibre. Sharing any element that can be shared amongst operators is what these companies should be doing. IBS is a great example.
What tower companies or infrastructure companies can do is set up common infrastructure and offer it to operators on a white-label basis. They do not need to operate it themselves and thus avoid competing with their customers.
An important development in digital infrastructure is sharing of active infrastructure elements such as microwaves and antennas, which has started in some countries. The ultimate, of course, will be the emergence of NetCos, which provide capacity to all operators, thereby optimising capex, spectrum requirements and opex significantly. Some instances of NetCo or overall network sharing have started in Europe on a limited basis. Widespread adoption would, however, take quite some time.
In your opinion, what is a realistic ARPU?
A realistic number for ARPU would be Rs 300. Without reaching this level, it is not possible to generate sufficient returns on investment in this industry. Additionally, by the time 5G gets rolled out, we will already be looking ahead to 6G and it is in India’s interest to be at the forefront of 6G. To achieve this, there needs to be a serious repair in tariffs and levies, leading to the desired ARPUs.
Could towercos become energy prosumers now that more and more of them are producing electricity?
I do not think that with the kind of small individual electricity consumption at tower sites, tower companies becoming power companies is going to be worth it. If companies can get power from the grid, that is the best. Fortunately, power supply is becoming much better, and in most cities, diesel generators are not required now.
By the time 5G gets rolled out, we will already be looking ahead to 6G and it is desirable for India to be at the forefront of 6G. To achieve this, there needs to be a serious repair in tariffs.
What will be the key priorities and focus areas for Bharti Airtel in 2024?
Our first priority remains providing high quality broadband connectivity to all our customers across India. We want our networks to be really good quality, with more fibre, higher speeds and more resilience, and for that we intend to continue investing in this industry. We have to work with everybody to make sure that ARPUs go up and the telecom industry becomes financially healthy.
Are you looking at new investment areas or new areas?
We evaluate any new investment areas that emerge from time to time. However, at this stage, there is no firm plan in this regard.
What is your outlook for the telecom industry going forward? What do you think will be the potential growth drivers?
One of the most essential industries in the world is telecommunications, and the reason is simple – it is these networks where all the world’s innovation gets carried. Most, if not all, innovations are carried on telecom networks today, be it in the area of fintech, healthcare, education, or artificial intelligence. Therefore, when it comes to telecom networks and services, governments, regulators and industry competitors need to have a broader view to ensure that this sector remains viable and ready for the future. We can only achieve this when we keep on investing, because this industry will keep evolving and so will need more and more investment. Thus, it is our duty, collectively, to ensure that this industry remains robust, healthy and resilient.
How do you look at BSNL’s role?
Bharat Sanchar Nigam Limited (BSNL) is a case that has always had tremendous potential. Fortunately, this government appears very serious about it. The company receives substantial support from the government, such as free spectrum and large investments. To be competitive, it will have to set up 5G as well as 4G networks quickly.
