Tuesday, June 15, 2010
Opportunity for cheap broadband lost: Mittal
Telecom czar Sunil Mittal, who completed the $10.7-billion acquisition of Zain Africa last week, doesn't like to live with too much debt on his head for too long. Mittal, who runs the country's largest and now the world's fifth-largest telecom services network raised $9-billion debt for the acquisition. Speaking to The Indian Express editor-in-chief Shekhar Gupta on NDTV 24X7's Walk The Talk, Mittal said he plans to mitigate the high debt over the next few years, which could happen either through internal accruals or by selling a stake in his tower company or the parent company.
On other fronts, Mittal is highly critical of the country's regulatory environment on telecom and is all praise for Mukesh Ambani's business skills.
"We will not keep our debt too much for too long. And I don't like to have too much debt on our head. We have plans to mitigate this; these debts will come down over the next few years. Whether it comes down through the process of internal accruals or selling equity in the tower company or in the main company these decisions will happen over a period of time," Mittal said.
While Mittal is upbeat about telecom prospects in Africa where average tariffs are 20 cents a minute, he is deeply upset with regulatory affairs back home. "You know, in the garb of having more players and more competition, we have been pushed against the wall, and it has been very hard on us," Mittal said in reference to the recent Trai recommendations on 2G spectrum pricing, which was preceded by the government giving out licences to eight new telecom operators. This led to the market becoming overcrowded, leaving little spectrum with the government to give everyone and the resultant acute scarcity drove up prices at the recent 3G-wireless broadband auctions.
Mittal - who has never hidden his displeasure over the manner in which the new telecom licences were given out and the subsequent Trai recommendations - said that such measures have affected not just his company, but all established players. "People who have been serving the country for the last 15 years, providing telephony like nobody else in the world has provided, have been hit. We can't say 'don't give new licences' because that looks like we are trying to protect our turf and we have never done that. Bring competition, we are ready to fight everyone in the marketplace as we have been doing for the last 15 years; but do it on level terms, do it on terms that are fair to all," Mittal said.
Highlighting what he felt was lopsided allotment of spectrum, Mittal said: "Spectrum is given in ration. I run 135 million customers here with such a small slice of spectrum and there are people who have similar spectrum with 5 million or 2 million customers. So, there is no equity in that."
Mittal expressed his frustration over Trai recommendations, which linked 2G spectrum prices to 3G, entailing very heavy payouts by telecom operators: "There is a proposal to charge more from those who are established and bigger players. Now, I can't run with too much weight around my neck. I am a better horse in running in the market place and I can take an extra weight around my neck, but I cannot take a rock and run in the marketplace. And that's precisely what the regulations are trying to do. The regulations are being geared towards hurting the large players that they must pay more, but people who have got licences yesterday must pay nothing. I am happy if the country decides to have a punitive regime for telecom, but then let it be punitive for all," he said.
Mittal has been critical of the recently concluded 3G and BWA auctions, calling the bids "unrealistic." He has blamed the expensive bids on spectrum scarcity and faulty auction design. As a result, Mittal feels that the opportunity for providing cheaper broadband and usher in a revolution similar to voice is gone.
"There is no question. If India wants cheaper broadband, that opportunity has been bypassed. We will not have cheaper broadband," Mittal said.
Asked what he found interesting in the Ambani brothers having known them and competed with them in the market, Mittal said: "Well, I would say both have their own unique ways of delivering stakeholder value and I think both have been successful in their businesses. I wouldn't say that I am heavily or regularly in touch with them, but I admire what Mukesh has done and his vision and what he wants to do internationally and his skills of execution are, I would say, unparalleled. I was amazed, even in telecommunications, when he came in and the way he organised his telecom business was quite breathtaking. So, we have to give him credit."
Clarifying his position on his praise for Gujarat CM Narendra Modi at an industry forum in the state which kicked a storm, Mittal said: " All I would say is I was there on behalf of CII and I had to talk about his administrative capabilities. The state's economic activity was shaping up. As you know, it was an event where a lot of industrialists talked about their projects. So, from my point of view, I was talking about the administrative capabilities and the business opportunities that are available in Gujarat. It was nothing more nothing less. Now, you are in the media. I probably feel you got an opportunity that it got played up. But, it was simple: I was a CII nominee there on the stage to talk about the environment of economic activity."
Source: Indian Express Finance
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