Akhil Gupta, vice-chairman, Bharti Enterprises

The past year witnessed the successful auction of 5G spectrum and the launch of 5G services, as well as several reform-led developments. In an interview with tele.net, Akhil Gupta, vice-chairman, Bharti Enterprises, shares his views on the sector’s performance in 2022 and the future outlook…

How would you describe the past one year for the telecom industry? What were the most significant developments and the key lessons?

During the past year, the telecom industry has seen a major development in the form of the successful auction of 5G spectrum and the commencement of 5G services in the country. This, from the point of view of evolution of telecom services, augurs well for the country in the medium to long term. However, this has also added to the financial burden being faced by the industry, with huge liabilities in terms of spectrum costs and the capex to be incurred on 5G roll-outs.

In terms of lessons learnt, all stakehol­ders, including the government, must rea­lise that to expect quick adoption of new technology and investments in their roll-outs, the financial health of the industry needs to be ensured. This can only be achieved by increasing the ARPU, which, at less th­an Rs 200 per month in India, is among the lowest in the world. For the Indian tele­com industry to have robust financial health, this certainly needs to go up to at least Rs 300 over time, for which the government should not hesitate to intervene if required.

With 5G roll-outs under way, what will be the adoption trends? When do you see the technology gaining mass adoption?

5G adoption is dependent on the following three factors:

  • Speed of network roll-outs and coverage
  • Availability and price of 5G handsets in the market
  • Use cases for 5G technology

There is ongoing work on all the three above aspects. In particular, concerns have been raised on the availability of adequate use cases for 5G. However, I feel that the adoption of 5G would once again be a case of “supply-led demand”. The need for higher speeds for data on mobile networks is in itself a big use case, which over time every mobile customer would need to experience. Another big use case will be fixed wireless broadband, which for a co­untry like India with very low wireline penetration could be a very effective tool for bringing broadband to hundreds of millions of customers who are not con­n­ec­ted on wire. Other use cases in everyday life, for example, education, health care, automobile, gaming and virtual me­e­tings are also emerging and will become important in day-to-day life over a period of time. In other words, it will largely de­p­e­nd on the speed of roll-outs and the other two factors would find their own way in the market.

What are your views on the Draft Indian Telecommunication Bill, 2022? What are the key policy and regulatory issues that remain unaddressed?

The Draft Indian Telecommunication Bill, 2022 addresses some very important issues that have hindered the smooth growth of telecom in the past. The most important ones are the draft provisions relating to spe­c­trum management and right of way (RoW). In particular, RoW matters coming directly under the purview of the central government will do away with the diverse approa­ches taken at times by individual states or local authorities. These are most wel­come and must be pursued rigorously. How­ever, the draft telecom bill fails to address a few key policy and regulatory iss­ues that to my mind remain either comple­t­ely unaddre­ssed or are contrary to the act­ual requirements of the time. These are as under:

  • The introduction of a concept of usage charge payable by any person who uses the infrastructure or the services of a licensed operator or infrastructure pro­vider. This is extremely necessary to en­sure that providers who are licensed and who incur huge capex and opex are duly compensated by entities that end up using these services or infrastructure. A big case in point is over-the-top (OTT) service providers, who have been freely using the infrastructure set up by telecom service providers at huge cost without giving them any compensation. It is important that as the government rightfully recognises OTTs with an appropriate definition and brings suitable regulation, this aspect gets covered in the communications bill.
  • In light of the development of the Indi­an telecom industry and its spread to every nook and corner by private ope­rato­rs, the need for any contribution to­war­ds the universal service obligation (USO), whi­ch is proposed to be the “Telecom De­­ve­lopment Fund” in the new bill, is completely out of place. The USO contribution, especially considering the huge amount of funds already lying unutilised, must be stopped immediately and even if the government intends to retain this power, it must clearly specify the exceptional circumstances under which this po­wer can be exercised.
  • The power of the Telecom Regulatory Authority of India (TRAI) needs to be strengthened to ensure well-considered and quick decisions pertaining to the in­dustry. However, the bill has provided to the contrary and the said provision aim­ed at diluting the power of TRAI more or less completely needs to be withdrawn in totality. Hopefully considering the all-out protests and assurances by the government, this aspect will be re­loo­ked at and corrected quickly.
  • The bill must include active infrastructure in the definition of telecommunication infrastructure in Schedule V. Go­ing forward, for the best utilisation of re­sources, it may be desirable and feasible to start sharing active infrastructure bet­ween various service providers – a practice that has been enormously successful in the case of passive infrastructure and has saved billions of dollars of capex and opex.

What trends do you see in telecom tariffs in the future?

As stated earlier, the revenue per customer needs to significantly go up from less than Rs 200 to at least Rs 300 per month over the next few years for the telecom industry to be in the financial health that will promote competition and allow it to make investments on an ongoing basis as per the ongoing evolution of the industry.

The towerco space has evolved significantly over time. What should be the key focus areas in the coming years to drive growth and profitability?

The towerco space has indeed evolved significantly over time and, in fact, passive infrastructure is now no longer confined to towers but has to be referred to as “digital infrastructure”, which covers many other aspects in addition to just towers. This would include fibre networks – na­tional and international long distance, undersea transport network and fiberisation of the towers linking to the nearest transport network. Towercos are transforming themselves into digital infrastructure providers and are getting ready to offer the enlarged infrastructure that wo­uld be required in the telecom industry over time with the aim of sharing it amon­g the various service providers on a non-discriminatory basis. These would also in­clude elements of active infrastructure, whi­ch can be easily and feasibly shared am­­on­gst operators.

For the quick roll-outs of 5G networks, which are primarily on 3.5 GHz spectrum, hundreds of thousands of new small cells would be required since propagation on this high band is very limited. Besides, these small towers would need to be connected to fibre as there would be no space on them for microwaves. This is in addition to the fact that today, less than one-third of towers are fiberised, which needs to go up to at least 80 per cent in the next few years given the massive increase in data traffic, thus providing big opportunities to digital infrastructure providers. No doubt, these also require very large investments and pose new challenges, particularly with respect to RoW permissions.

As chairman of the Digital Infrastruc­ture Providers Association, I am pleased to confirm that our members are fully committed to meet these challenges and put up all the required investments. Accordingly, I believe that the future of the digital in­fra­structure industry is bright, especially as the government seems committed to ensu­ring healthy competition amongst service providers with three private sector players and BSNL/MTNL.

What will be the key priorities and focus areas for Bharti Airtel in 2023?

The key priorities and focus areas for Bharti Airtel for 2023-24 will be the quick roll-out of 5G services across the nation with the aim of covering the entire country by the end of fiscal 2023-24 and pursuing the digitalisation journey covering every aspect of our working and offering to ensu­re best-in-class services to our customers.

What is your outlook for the telecom industry going forward? What are the potential gro­wth drivers?

The Indian telecom industry is set for a new chapter with 5G roll-outs across the country in the next 12-18 months. I have no doubt that the percentage of 5G handsets in smartphone shipments will continue to grow rapidly and it is just a matter of time that, as in the case of 4G, all smartphones will come with 5G. It would ensure rapid adoption of 5G. With increased sp­ee­ds and a very large variety of content already available, the consumption of data is bound to increase, resulting in increased revenues for the overall industry. This pro­cess of in­c­reased revenue should further accelerate as more use cases for 5G are in­troduced. One area that has strong potential with the advent of 5G is wireless broadband, which will be the need for a huge number of households that do not have access to wireline (fibre) connectivity and relatively low monthly revenue. However, for this potential to be realised, the industry’s financial health needs to improve significantly. This can be achieved with an urgent increase in ARPUs and a much-needed rationalisation of levies through the abolition of the USO, a reduction in the GST rate and refund of un­utilised GST credit to the industry.