Dual listing was not the crucial roadblock to the mega-merger between Bharti Airtel and South African telco MTN, Akhil Gupta, deputy CEO of Bharti Enterprises, said, more than a month after talks between the two collapsed. In an interview with Nivedita Mookerji of DNA on Tuesday, Gupta blamed South Africa. Excerpts from a broad-sweep discussion:
Coming to MTN, is it all past tense now?
No, there’s nothing on MTN.
Don’t you think investment bankers advising you on the deal should have known about the outcome?
It’s an old story, why talk about it? But there are many things that nobody can predict beforehand, especially when it comes to the government stand. How can anyone predict that? It will be wrong to put the blame on anyone and say, ‘you didn’t predict it’. It doesn’t work like that.
Was the absence of a dual-listing provision in India responsible for the deal collapsing?
No, not at all. It was not dual listing. The South African government didn’t want a South African company to go into foreign hands and that’s why the deal didn’t happen.
In terms of M&A and expansion, what are you focusing on now?
In terms of our strategic intent, it very much remains. We want to emerge into other emerging markets. It’s the right thing to do. The MTN experience has only reinforced it and not weakened it. But there’s no hurry, we will wait for the right opportunity. Right now, there’s nothing on the table.
On the tariff vs quality of network debate, what’s more important?
In telecom, the customer proposition includes several things. There’s quality of service, network reach and distribution, and also tariff. Tariff is one of the elements — it’s an important element but not the only element. Therefore, if there is a tariff offering which cannot be sustained and people will crush under their own weight, its of no use to the customer. A customer wants sustainable service. And I think all these elements in a customer proposition need to be balanced. So, somebody with just one proposition will never win. You have to have a balanced approach on this.
Bharti followed rivals in per-second billing. What pushed you?
Per-second billing is just one of the plans. So there’s nothing very drastic about the per-second concept. Our view is that there are many aspects to the customer proposition. We strive to be the best on network coverage, network quality, distribution, customer service, products and application, innovation. As far as tariff is concerned, we feel as leaders we have no reason to be the lowest common denominator. But, we have to be competitive. That’s what we are doing — we are competitive but not necessarily the cheapest.
Where are we headed on telecom tariff?
Let’s first see where the telecom industry is going. Very clearly, this is the highest-growth industry today, still we are at a relatively low penetration level. Therefore there’s a long way to go. Growth is not hampered, the usage is very strongFundamentally, I think telecom is headed in the right direction. We are looking at the possibility of 3G (third generation) telecom services coming in, which will bring broadband on mobile, new revenue streams, new applications, new products that can be sold to the customers. So I think the telecom story is intact, growth is intact. As far as tariffs are concerned, this (price cuts) happens in competitive environment. As long as we can sustain our growth, provide for all the capacities and what the customer needs, we will be fine.
Will the 3G auction take place as scheduled?
We’ve already had the first pre-bid conference. The government seems to be following the timeline and there’s no reason to believe the timeline will not be kept. The Department of Telecommunications (DoT) has made it intentions clear to hold the auctions, the finance ministry wants it. So I see no reason for a delay in 3G auction. In the pre-bid conference, the DoT has ruled out the waitlist concept for 3G spectrum. Bharti chairman Sunil Mittal had sought uniform allocation of 3G slots to telcos across circles, even if it meant keeping some winning bidders in queue for spectrum... Actually, DoT has said that all the suggestions made in the pre-bid conference, including the waitlist proposal, would be considered. The whole purpose of the pre-bid conference is to take back comments or suggestions, consider it, and then come back. If it’s good for everybody, it should be considered.
Do you think 2G spectrum management and M&A rules should be clear before going ahead with 3G auction?
I don’t think so. 3G is a separate spectrum and the auction should go on. You can have any discussion on 2G. Obviously, both should be speeded up and both should be done. Let’s not wait for one for the other.
Will Singtel have a larger role in Bharti in the times to come?
It’s a very professional company and Bharti seeks whatever support it wants from Singtel in any area, like 3G for instance. It always consults whenever there’s a need but Singtel does not have a day to day direct role (in Bharti). Singtel is a very important partner for us, a strategic investor and is always available for any consultation or help.
Does the government want telecom companies to phase out pre-paid service for security reasons?
No, it has only happened in Jammu & Kashmir. That’s for security reasons, and is an extreme step. To our mind, that’s not the right step because more communication is good for every part of the country, especially where there may be some security threat.Even as it can be misused, its an acknowledged fact that mobile network communication actually helps in nabbing criminals. And I don’t think it’s right to say that the government is against pre-paid mobile service.
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