Airtel shifts focus, to exit non-core biz for digital growth, says Sunil Mittal | Mint Interview

In an exclusive interview with Mint, Sunil Bharti Mittal, chairman of the conglomerate, said the enterprise segment of Airtel could potentially value at $10 billion and disclosed plans to align Bharti’s stake in Airtel with that of SingTel in the future. 

Amid these strategic shifts, Mittal acknowledged the competitive pressure from Elon Musk’s Starlink in the satellite broadband space, advocating for the immediate allocation of satellite spectrum ahead of the new telecom law’s enactment. 

He also touched on various facets of Bharti Group’s operations, including partnerships with OTT platforms, the potential listing of its payments bank, and the dynamics of competition and collaboration within the telecom sector.

Edited excerpts:

Q: How do you envision the future of Bharti Group’s diversified businesses?

Airtel is increasingly embracing a digital identity beyond traditional telecommunications, with a successful banking venture and potential to convert its tower company into a subsidiary. It currently owns 48% in the tower business. 

We’re focusing on areas where we’ve achieved significant growth, like our operations in Africa and satellite investments. However, we’re moving away from sectors like insurance, food, and skilling due to their lack of scalability.

Q: What does becoming a digital company mean for Airtel? Are there significant valuation opportunities?

It’s not for the valuation, that becomes a by-product. It is to sell more products and services to our customers, especially enterprise customers, whether it’s cybersecurity solutions, security CPass. That part, to my mind, is job well done. We don’t produce everything ourselves. We have platforms for music, video platform. 

We’ve established partnerships with major platforms like Amazon Prime, Netflix, and Disney, which have significantly enhanced our content offerings. Additionally, our digital products, including CPass, IQ, and a comprehensive suite of digital services, are poised to become a major source of revenue, potentially generating multiple thousands of crores.

Can any of these businesses become billion dollar engines?

It’s hard to do this navel-gazing, but I would say ultimately from the connectivity suite, it’s the foundation, which is in itself a very big business. There are multiple other businesses that are developing, especially in the area of enterprise. We’re at $3 billion today has the potential to go to $10 billion. 

India is a large country and everybody wants to be finding more solutions and connectivity, which includes the global business. DTH business is not going to scale to those heights that one thought. We are growing a little bit but it’s a small business now. And then the bank and the digital area that’s very exciting.

Q: What are the plans for listing the payments bank?

At some point in time in the future, but not in the near term.

Q: Why isn’t Airtel taking the lead in raising headline tariffs for mobile phones?

We’ve gradually increased tariffs, maintaining a premium over competitors. Look at our ARPU, it is the highest in the industry. But as I said here in Mobile World Congress, I think seven years back, you need to be at ₹300. First pitstop was ₹200, that has taken five-six years. But it’s taken a long time and the costs have gone up, inflation has been there. So that ₹300 probably I don’t know whether it’s relevant today or not. But at least let’s get there.

Q: Should spectrum allocation for satellite not wait for govt formulating rules of the new telecom act? Are you advocating for it?

Yes, we are. We advocate for immediate spectrum allocation to facilitate non-mobile activities, which can proceed without waiting for new regulations.

Q: When will OneWeb’s satellite services launch in India?

We are ready now, just waiting for the final permissions from the government. FDI has been clear now. That process will roll forward. The Mehsana satellite network portal is ready, we’ve done some trials, everything functions very well. Now the spectrum assignment has to be done.

How do you see competitors like Starlink?

Starlink is formidable competition, you can’t underestimate them. But everybody has a space in the market. Our main focus is on B2B, and not in B2C at all. So its military, navy, army, oil and gas enterprise, warehousing, industrial applications, cellular backhaul, that’s where we are focusing.

Q: Regarding Indus Towers, are you considering purchasing Vodafone Group’s stake?

No, I think we need to get a decision on the third operator because it’s a very large tenant on the Indus Towers. Unless that is clear, there’s no point making a move. So let’s see how that pans out, and if we see some stability we may do that.

Q: Vodafone Idea continues to struggle. How do you see the market evolving from three players now?

India is a large country of 1.5 billion people, it can easily support three telcos, and if we include BSNL, it will be four. Vodafone Idea is having a board meeting today, let’s see what they come up with. There are currently two strong operators, but can there be three strong operators, lets see.

Q: Telcos have been asking OTT players for a fair share, but we don’t see much movement in that direction?

It has to move. The US is looking at it, Europe is looking at it, and India has to look at it. Ultimately, you have to see that six companies are consuming 60% of the traffic. The apps are not going to invest trillions of dollars. The telecom industry is going to put $1.5 trillion in 5G, somebody has to contribute towards that. So we remain hopeful, when it happens I don’t know.

Q: Can partnerships be a way for middle ground or perhaps an equity investment?

We already have partnerships with everyone – Google, Facebook, Meta, Microsoft – we have deep relationships with each one of them. We are having multiple meetings with them here. So there is no bad blood. All we are saying is that contribute towards the infrastructure building, we can’t be the only ones responsible. Even if they invest in my equity or competition or the network, that’s as a different matter. For equity, they’re going to make gains. Google came as investor at ₹700 (stock price) and it went to ₹1100, so they made a lots of money. That is not a substitute for this.

Q: Can telcos threaten to cut access?

No, but the regulation has to come through.

Q: The equity balance with Singtel in Airtel, by when are you looking for an equal holding, maybe two years?

Singtel has made an announcement that they would like to equalize with us which we are fine with. Ultimately Bharti Telecom which is 40%, I would want that to be the only vehicle holding all the stake in Airtel between us and SingTel. SingTel has some stake outside, we have some stake outside. The idea is to eventually bring it there (equalise) or make some sales in the market. It’s their need, not ours. I have not checked the timeframe with SingTel but whenever they’re ready, they can do it.

Q: Can subsidies from USOF not come into play for telcos in this space?

We’ve said many times that is something the government has to decide. Its 5% of the revenue of the industry, all we want is to be spent in the right places. Maybe they want to give device subsidies, do whatever they can, to support the digital ecosystem, and that’s where it should be applied to.

Q: Do you think 5G monetization is still some time away?

There’s so much happening, use cases are now developing. It’s a matter of time, you will start to see some applications developing fairly soon. I mean, if you go around MWC, its actually mind boggling what all is going on, you can’t even absorb what’s being shown. With AI capabilities, a lot is going on. So let’s hope sooner than later our networks will be ready. By March we’ll complete our entire cycle. Whatever is left will be done next year, right.

Q: How do you see the Indian economy panning out as we go into elections?

You can see even here in the Mobile World Congress, the engagement, the discussions with almost all senior leaders, at an industry dinner with the King of Spain, India is toast of the world. Everybody’s talking about Indian political stability. political leadership, political leader of a country, economic momentum, FDI. I genuinely say this, that India’s moment has come and we need to see that. Its a collective effort of the nation, everybody in business or government needs to come together.

Q: Government’s policies on promoting production through PLI have also worked in India’s favour?

There’s so much traction that has come through in the last three to four years, one could have never imagined. India is now being talked as the manufacturing destination, which was not the case. It’s not just the 2-3% subsidy, but the government’s high focus on manufacturing along with approvals, land availability and electricity on priority, also add to the mix.