Have few solid operators, encourage consolidation: Mittal

Barcelona: Most regulators still live in "analogue world", India's telecom tycoon Sunil Bharti Mittal said today, nudging them to allow consolidation while underlining that a large number of operators does not ensure greater competition.

Large countries only need three service providers while smaller nations could be covered by two carriers, he said. The comments come days after his company, Bharti Airtel announced acquisition of Norwegian company Telenor's India unit.

Also, its smaller rivals Vodafone and Idea Cellular are considering merging. "Governments have got it wrong for too long. Regulators have always felt giving out new licences means more money for the government and more competition for the customers. It's quite the contrary," he said delivering a keynote address at the Mobile World Congress here.

The Airtel Chairman said one doesn't want a situation where there are one or two "healthy" operators, while another similar number struggle while other "three or four are in the ICU".

"You really want a few sustainable solid operators, who can put out the investments that are required to deal with the new technologies, demand of data, the speeds that you want. It's extremely important that the regulators re-calibrate demand," he said.

Mittal cited examples from the US and Europe and said these issues are of concern to the telecom industry globally. "In Africa, again and again when I meet regulators and ministers, they talk about issuing new licences.

The time for a licence and 500,000 base stations creating a value is over. You can give as many licences as you want but please allow consolidation," he urged. He expressed delight that Indian government is comfortable with the country having five operators now, from 12 a few years ago.

"Probably it will be down to 4, let's see where it ends up," he said. Telecom Secretary J S Deepak had said yesterday that the fresh round of consolidation unfolding in the Indian telecom market is likely to yield five major players ensuring "enough competition but not fragmentation of spectrum".

Most competition and communications regulators still live in an "analogue world", Mittal said, adding that they need to realise that more operators does not mean more competition.

"My opinion to all regulators around the globe is have few solid operators and encourage consolidation," he said, adding, it is important that players get a reasonable return on their investments.

Mittal also made a reference to the high tax rates for the telecom industry. "...spectrum is still very expensive, the taxes, duties... all these issues put together load our industry 30-45 per cent taxes depending on which part of the world you are in," he said.

Mittal, who is also the GSMA Chairman, said the operators need to come together to build common infrastructure. "The return on capital deployed is fast coming down," he said.

"In countries like India, you are looking at low single digit return on capital employed. You might as well put the money in the bank and get a decent return and go out and play golf rather than spend this 400 billion a year on hard capital expenditure that you do."

He regretted that the only time people or customers remember operators is when there is call drop or speed of data session.

"Our industry is building too many different highways. Every operator wants to build his own network. I think it's time for us to start looking at how to create the next course. Every car manufacturer does not build his own roads, you need to have common infrastructure," he said.

He added that GSMA, which represents telecom players and operators globally, has a group together to see cost of networks can be reduced dramatically to provide more value to customers.