Davos 2017: Reliance Jio Will Be A Major Player But Not The Only One, Says Sunil Mittal
Sunil Mittal laments the lack of regulatory action on Reliance Jio’s free offers
The last few months have seen a bitter battle in the telecom industry with the entry of the Mukesh Ambani-backed Reliance Jio Infocomm Ltd. In December last year, Ambani announced the extension of Jio’s free services till March 31, after providing 90 days of promotional offers since the the launch last September.
Chairman of Bharti Enterprises, Sunil Bharti Mittal, says the entry of a new player was bound to cause some degree of disruption, especially given the scale of investment and size of Reliance Jio's parent. Accordingly, he had expected promotional offers to last 30-60 days, but not seven months. Mittal was speaking to BloombergQuint’s Menaka Doshi on the sidelines of the 47th World Economic Forum in Davos, Switzerland.
We expected voice to be thrown in for free since it was being talked about for a long period of time. You can sample it for 30-60 days, but to do it free for seven months. Clearly they haven’t got the attention they wanted and they haven’t been able to stabilise their network.Sunil Bharti Mittal, Chairman, Bharti Enterprises
Survival Of The Fittest
Subsequently, revenue has taken a hit but Mittal says that Airtel, by its own estimates, has held up better against competitors Vodafone India Ltd. and Idea Cellular Ltd. Airtel has seen its revenue market share rise, he adds.
The good news is that among the players in the market other than Reliance Jio, our revenue market share is at a lifetime high of 33.2 percent. We are gaining market share. The smaller or value players, they are not investing, networks are in a bad shape. Most of them are struggling. We believe that we will do better in holding up as compared to Vodafone or Idea.Sunil Bharti Mittal, Chairman, Bharti Enterprises
According to Mittal, a strong network, good management, strong brand, and first-mover advantage in launching 4G services in India two years ago will esnure that Airtel holds up against the ‘Jio onslaught.’ But the prospects of growth look dim at the current juncture, he says.
Regulatory Response
In the meanwhile, Airtel along with two other incumbent players Idea Cellular and Vodafone India, have been engaged in a regulatory tussle with Reliance Jio on two fronts – the extension of free services by the Ambani-backed company and Reliance Jio’s contention that the incumbent players have not provided sufficient points of interconnection (PoI) as per the licence service agreement. These two cases are now pending before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and the Department of Telecom (DoT) respectively.
Earlier, the Telecom Regulatory Authority of India (TRAI) had recommended a Rs 3,050-crore penalty on Airtel, Vodafone and Idea in response to Reliance Jio’s complaint. The incumbent players subsequently approached the DoT which has set up a committee to look into the matter.
Defending the Airtel’s response to Reliance Jio, Mittal says, “In 4 months they (Reliance Jio) have more interconnect point that Vodafone or Idea have in 22 years.”
We have a period of 90 days from your (Reliance Jio’s) request to give you PoIs and we do it in nine days, nine hours at times and yet face a penalty, I think it is unfair.Sunil Bharti Mittal, Chairman, Bharti Enterprises
The fact that the company had to move to TDSAT against Reliance Jio’s freebies is indicative of the fact that the regulatory response to the same has been far from adequate, Mittal says. Pointing out that TDSAT has in the past been prompt in delivering justice, he remains hopeful of some resolution though that may be along-drawn process.
The regulator needs to be cautious of supporting the new players while ensuring that the industry does not suffer at large. This would have not passed in Europe or the U.S. There is no doubt that pricing like this would not have been allowed. There would have been regulatory action within days to stop something like this.Sunil Bharti Mittal, Chairman, Bharti Enterprises