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What is the industry currently? And where is Airtel in this area?
Network is the lifeline of our company. Therefore, we doubled on investment, last year we put in Rs 24,000 crore, this year will be put in the same amount. Cumulative investments in this activity by March 2019 will significantly exceed Rs 2 billion.
We have seen consumption increase from 1-2 petabytes per day to 25-26 petabytes in the last 15-16 months. This obviously puts a lot of pressure on the network, you see a degradation of quality in some key places.
In the last 18 months, we have more than doubled our network, we are putting a lot of fiber on the ground, improving our backhaul and base networks.
Second, introduce technology, whether by increasing the shift to VoLTE now to enhance the customer experience even further, alliances with partners such as SK Telecom to introduce automation, the # 39, intelligence in the network. For example, next month we will have an individual measure of customer network quality per customer that we can use to improve the quality for that particular customer.
We also seek to insult our NOC. We put in artificial intelligence to improve the device level experience by device.
Second major strategic pillar, this activity becomes more and more simple. So, how can we simplify our business, using technology. The price has become simple. We have a few hundred internal developers to digitize most of our operations.
Third, what is the range of non-wireless digital services that we can build. We have a big business on the B2B side, about Rs 10,000 rupees, we are investing a lot more in micro and small businesses, doubling more on domestic broadband. Last year, we made about 4-5 million pbad, this year we will make a few million.
On the side of the bank, Airtel Payments Bank. We encountered regulatory problems.
In terms of content, we have Wynk Music and Airtel TV that have already seen some 50 million downloads.
We have a data center company – Nxtra – We are now consolidating our captive needs, our own 108 CSM across the country into 12 major data sites to make us the largest data center company in India.
All of this is part of Airtel 3.0.
On the basis of all this, there are two things: one is an badytics engine that really uses a platform that we call 360 client, which we are ready to launch in the next two months.
Can you comment on the current structure of the industry?
The good news I see is that we are already in a three player market more than BSNL. In a country that has 1.3 billion customers to serve, and with three major private operators, it is the best and most sustainable structure of the industry you can have.
Today, you have Vodafone and Idea at around 40% RMS, we are at around 33% and Reliance Jio is about 20% more, in a big market, which is going to have serious opportunities growth. It is the place to be, in that sense. Obviously, the industry has suffered in the short term. That's because prices are at an unsustainable level. The price must correct. Our role is to build a profitable and sustainable business. The return on capital of the industry is also low. Thus, prices will also have to correct for the sustainable and financially vibrant industry.
Will this be a three-player or two-player market with Vodafone-Idea a latecomer as price competition is expected to continue for several quarters?
A three-player market is good for India, strong and durable.
The question we ask ourselves is, firstly: are we doing enough to build a strong network? Secondly, we generate enough cash – around Rs4.5000 crore Ebitda to finance our investments. The answer is yes.
When will the price be right?
Let's see. Jio has shown great audacity in the market and built an excellent network.
Can Airtel start the price correction?
We must think about it. This is one of the options that we offer to us.
Does the time needed for Vodafone and Idea to complete their merger and operate together will give Airtel the opportunity to increase RMS?
Any merger is a challenge in any industry. There is an opportunity through this to see if we can become stronger. Potentially, we could take some share points. What's more important to us is profitable and sustainable growth. In this difficult time in the last 12-15 months, we have kept our RMS very well.
Indian operations recorded their first loss in the quarter from January to March. Do you think the losses will widen this quarter?
If your earnings are under pressure and your costs increase, it's not very difficult to calculate the calculations. The most important point for us is, are we stripping waste and building a sustainable business. We have pretty well kept the costs over the last two years.
What were the main learnings for Airtel from the badault on Jio, which does not seem to mitigate?
A competitive environment makes things much clearer, more customer-centric. This is the biggest lesson. We have accelerated a lot in the last 18 months simply because of the competition.
This was a very good result for customers, who spent 190 minutes a day on their devices, and now spend 240 minutes a day.
Has the industry bottomed out, as far as prices are concerned?
We almost hit the bottom.
Structurally, are you making other changes to make the business leaner? Make decisions faster and reduce costs?
You take the total cost of people, that is less than 2-2.5% of total income. Which structures can help you make decisions faster. Two-three years ago, we released two layers of our system. Everything is done, we are already thin enough. One thing we did on the B2B side was that we combined our national and global business activities. We want to take advantage of both the reach and the relationships on both sides. We operated on silos.
That being said, there is an important opportunity to simplify our processes by reworking and digitizing them. With this can reduce costs. We are also looking to reduce energy costs. And the other part is automation.
Have you hired new recruits or is it still frozen?
For about nine to ten months, we blocked the hiring. We knew that many people came from Telenor India. We absorbed 350-400 people. We do the same for the people of Tata.
Unforeseen Attacks on the Tatas Affair?
Not that I know. We have received the approval of the ICC, we need the permission of the NCLT, then we move to DoT.
Does the company of TTSL interest Airtel?
We had an agreement with Tata Tele which is a different company, so we did not have any conversations with the corporate sector, which is a different company. We are not pursuing any conversation at this time.
Do you think the fees will be rationalized in the new policy?
We found that deferred payment terms were relaxed. We are a heavily taxed industry with respect to licensing fees, spectrum usage fees and the GST. Trai had recommended to reduce them, the new policy also speaks of the same thing. We hope the government will make the right decisions, that the taxes will go down. On the regulatory side, there have been ups and downs, successes and failures. Sometimes things work to your advantage, sometimes no, we take it to the chin and get to life.
Have regulatory changes over the last year left a bitter taste?
We have been regulated for 23 years, sometimes things have worked, sometimes not. We take it on the chin. If you do not agree with something, you go to court, in some cases we have. But it does not leave a bitter taste … sometimes it hurts you. But you have to live by the rules of the game.
Has the regulator been skewed in favor of a single operator?
A regulatory body does its job. We have to face it and move on.
Does Aircel's business involve Airtel?
It's still a small business, not much apart from the specter of Tamil Nadu. We are in a solid position on the spectrum, in the spectrum under GHz in 14-15 circles, also in the 1800 and 2300 MHz bands. Our challenge is to make the best use, potentially refarm 3G to 4G to get more capacity. Most of the Aircel customers have been distributed among the operators, so there is not much left. Our effort is to focus on our business in an organic way to lead a more sustainable and profitable business.
Do not you plan to get more funds through the sale of businesses by DTH?
No, we have a long relationship with Warburg. They came with a 20% stake. We are currently focused on organic growth of the company.
Are you considering a stake sale of Infratel after the merger with Indus?
Indus-Infratel will create the largest and most valuable company of towers, which is a logical climax. We will always be an important owner in this business because it is related to our future.
How will you reduce the debt?
The net debt towards ebidta is about 3, which is a comfortable position. We have already announced an IPO on Africa because this part of the business is doing well.
Jio will launch broadband services at home, how well are you prepared?
India is largely a very underserved domestic broadband market. BSNL would have about 23 million customers but would get very low speeds. From a private point of view, about 4-5 million homes can be covered. India has the potential to cover 15 to 20 million homes via cable or FTTH networks. India is also a large SME market that presents a great opportunity to offer fiber to locals. Not long ago, we made 300,000 to 400,000 pbades a year, 1 million last year, 2 million this year, and we are increasing our investments in the homes and offices sector.
This is a one-on-one, less elastic relationship at the price than on the mobile or prepaid side. But the opportunity is very large and one of the reasons for building the home platform is to bring the business converged and offer all the services so transparent. This creates a huge bond with customers and the churn also decreases. With a second service, the churn rate is reduced by 60% and the third by 20 to 30%, which represents an opportunity on the domestic side when we offer the full range of services.
Will you add voice services over Wi-Fi?
Absolutely. We are doing our tests to make sure that it works well. I think it should be available everywhere (off-network as well).
When do you plan to have pan-Indian Volte?
We deployed Volte in 12-13 circles. During this quarter, everything will be finished and it will then take a slow climb to get traffic. Networks must be optimized and each device must be certified.
When will Airtel come out of 3G and 3G?
In another 12-18 months, you must be wondering why do we need 3G networks? The reason is that each smartphone arrives in 4G and that if the cycle of the device lasts 18 months, there will not be anyone left with only 3G phones. You need 3G for voice, so we try to get our Volte properly, because the moment we get this 4G carries the voice, so we can rebarm 3G to 4G. The spectral efficiency of 4G is better than 3G. That said, you can still get 2G devices at Rs 300-400, so there will be large parts of people, especially in rural areas of India, the low-income geographic areas that will require 2G. So, the 2G stop will arrive much later. In rural areas of Bihar and UP, for another 5 years you will have 2G, more than half of the business is on 2G.
When do you plan to retrieve your # 1 tag that should be lost after the combination of Idea and Voda?
Idea-Voda combines less than 40% share, we are about 33% and Jio's share about 20%. Over time, there will be players of equal size, with 1-2 points here or there, we are relaxed about it. The numbers 1 and 2 are just labels, it will be fine, but in the end it is important to have profitable and sustainable growth.
The RBI prevented Airtel Payments Bank from taking on new customers. What does Airtel do about it? This seems to be a big setback for the company, what does Airtel do to mitigate it?
We continue to engage with the authorities on this and we look forward to a quick resolution. Airtel Payments Bank continues to serve more than 30 million customers and has generated an annual throughput of more than $ 7 billion. We believe that Airtel Payments Bank is well positioned to contribute to the government's financial inclusion vision and to make formal banking services deeper into the unbanked / underbanked pockets.
Has the strategy of cheap smartphones worked?
We managed to get a reasonable share of 4G devices, and this was one of the drivers of the smart phone upgrade. The good news is that we have 100 to 200 million featurephone customers going to smartphones on our own network, so we know who these customers are and find a way to get them on smartphones. That's why we made the JUMP plan and device alliances with various manufacturers.
No 4G mobile phone project, which worked so well for Jio – they broke the featurephone market?
This is speculative because feature feature clients always have the choice of buying a regular device. It's an honor for Jio to have done it and I respect how they got it done. Feature is always for the voice. For us, we always have a 2G network, so the customer has the choice to buy a regular 2G featurephone.
Will Airtel offer in-flight connectivity?
We will offer it.
What is the update on the Tikona case?
This is in the NCLT stage. It took longer than usual, it should be around the corner.
Is the 5G auction feasible?
The ecosystem is still nascent. India can not be a laggard at the global level. 5G is a high speed and low latency, which are machine applications that we have to build. We are following this closely and we will be ready when the ecosystem develops. We did 5G laboratory tests on 3500 Mhz and 2500 Mhz bands.
How is the preparation of the narrowband IoT network prepared?
We will be fully ready with IoT and the pan-Indian narrowband network.
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