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SOURCE 2G Scam: Sunil Mittal tells telcos to be quiet, cooperate with agencies - The Economic Times
BARCELONA: Bharti Group Chairman Sunil Mittal on Tuesday told carping rivals to “zip up” and warned that washing of dirty telecom linen in public is harming a sector that is one of India’s few success stories.
Anil Ambani-controlled Reliance Communications (RCOM) said at the weekend that ‘old 2G operators’, euphemism for Bharti, Vodafone Essar and Idea Cellular, had “unscrupulously” and “fraudulently” caused massive losses to the exchequer and their promoters had amassed fortunes running into more than Rs 100,000 crore during the past decade by their actions.
Asked for his reaction to these comments, Mittal told ET: “One should hold their breath and not speak out of turn... All this talk amounts to unnecessary noise, which is pointless.”
“It is time to zip up and let the investigating agencies do their job,” he said in an interview on the sidelines of the Mobile World Congress in Barcelona.
The controversy-scarred telecom sector, which has seen former telecom minister A Raja being arrested and scores of officials at various telecom firms being questioned by investigating agencies, is now in the midst of an escalating war of words between rival firms. After its surprise barrage of allegations, RCOM got into an angry exchange of words with the Tata group on Monday.
Mittal, whose company is the world’s fifth-largest telecoms company by customers and has more than 200 million users across India, South Asia and Africa, expressed concern the controversies enveloping the sector were hurting it. “India’s telecoms story is to be celebrated. It is the country’s biggest success story. Too much noise and negativity is not good and it is hurting the sector in the eyes of investors,” he said.
Asked about RCOM’s allegation that incumbent mobile operators such as his had doubled their licence period to 20 years with no payment of additional fees, Mittal said the debate was pointless. “The entire process is in public domain. What took place as well as the fact sheets are out in the open.”
Mittal, one of India’s liberalisation era poster boys with an estimated wealth of around $8 billion, also criticised sector regulator Trai for issuing “irrational” suggestions, most notably its recent one that wants mobile firms to be charged a one-time fee of Rs 4,572 crore for every unit of 2G airwaves they hold beyond contracted limits.
Calculations by ET show that the Trai’s suggestion, if accepted by the government, will force the industry to pay Rs 17,513 crore. Bharti, Vodafone Essar and Idea Cellular have already slammed this suggestion, saying the Trai’s methodology of comparing 2G spectrum pricing with prices arrived at last year’s 3G spectrum auctions was flawed.
“The 3G auctions resulted in artificially high rates since there was a scarcity of spectrum,” he said. Mittal said putting 2G spectrum allocations on hold only blocked the legitimate interests of companies such as Bharti and were a key factor in jacking up the 3G spectrum prices during last year’s auctions.
The hugely successful 3G spectrum auctions have saddled telecom operators with billions of dollars in debt, and operators fear that additional payments could be financially crippling for a sector already reeling under high customer attrition, bargain basement pricing and savage competition.
“When the sector faces such crisis, we have irrational suggestions by Trai,” Mittal said, as he urged the adoption of a liberal M&A policy to facilitate much-needed consolidation in the 14-player market. “M&A laws should be absolutely free. The Competition Commission can check market dominance.”
Mittal, one of the few India telecom entrepreneurs to venture overseas, said the telecom M&A scene was undergoing a major change across the world. The sector has been one of the hottest globally in terms of deal-making in recent years. Bharti bought the African businesses of Kuwait’s Zain Telecom in a $9-billion deal last year.
“The existing business model of getting mobile permits, launching operations and then being bought up by a larger operator is over. In several countries, from Africa to Indonesia, there are no buyers for such companies,” Mittal said.
Although he ruled out plans to expand to other continents, Mittal said Bharti would expand its operations across Africa in the next decade. “Currently, we are present in 16, but Africa has 58 countries. You will see more of Bharti across Africa — definitely more going forward,” he said.
Within India, contrary to widespread speculation that large operators would snap up smaller ones to reduce the competitive intensity in the market, Mittal said he did not see merit in buying smaller new entrants. Even mergers of newer and smaller mobile phone companies was unlikely to yield success.
“Two losers cannot combine to make a winner,” he said. Mittal said that Bharti’s operations in Africa had improved in the first six months, managing to arrest falling revenues, adding millions of new customers and were on course to have 100 million customers, revenues of $5 billion and $2 billion of core earnings by 2013.
Mittal also said that Bharti was attempting to put together a pan-Africa tower firm along the lines of Indus Towers in India, a three-way venture between Bharti, Vodafone Essar and Idea Cellular. “We have invited all mobile operators in Africa to be part of this initiative. This will be the first of its kind in Africa,” he said.
