Prime Minister Narendra Modi’s assurance to Bharti Airtel Chairman Sunil Bharti Mittal about the government’s neutrality in the telecom sector, in a pivotal meeting held in September 2018, proved to be a significant turning point for the revival of the Indian telecom major. Mittal delved into this transformative encounter during an interview with the Economic Times, providing an in-depth reflection on the trajectory and growth of his company since then.
In the conversation published on Thursday, Mittal highlighted that Airtel’s burgeoning market capitalization, which now stands at a staggering USD 100 billion, is indicative of India’s stable and promising economic landscape under Prime Minister Modi’s leadership. This milestone reflects not only the success of Airtel but the robust health of the Indian economy as well.
The introduction of Reliance Jio into the telecom market in 2016 brought seismic shifts within the industry. Jio’s offering of free voice and data services put immense pressure on existing players. As a result, the earnings before interest, taxes, depreciation, and amortization (Ebidta) of competing companies began to plummet. The unsustainable tariff reductions forced upon the industry led to three companies seeking intervention from the National Company Law Tribunal (NCLT).
Faced with this challenging scenario, Mittal sought a meeting with Prime Minister Modi, both in his capacity as an operator and as Chairman of the GSM Association (GSMA). During the discussion, Mittal conveyed the urgency of the situation to Modi, expressing his concerns over the severe distress the industry was undergoing. “I told PM Modi that the situation is very alarming, ‘I will fight in the marketplace, but I can’t fight the government,’” Mittal recounted, underscoring the dire straits faced by the telecom giants.
Prime Minister Modi’s response was both emphatic and reassuring. He assured Mittal that the government would maintain a neutral stance, focusing solely on the nation’s welfare. “The government will not tilt towards either side. Whatever is good for the country will be done. You fight in the market …I don’t have a view on that. But from the side of the government, you can be sure that the government will not take sides,” Modi stated. This assurance provided Mittal with the much-needed confidence to move forward, marking a pivotal moment for Airtel.
Mittal revealed that this interaction served as an inspiration for him, propelling him to reassess the business from a renewed standpoint within the existing regulatory framework.
. “Sometimes you need inspiration, I needed that, there was a very strong message from the PM to fight in the market,” he said. This reassurance enabled Mittal to perceive the competitive environment through a different lens. “Maybe lower tariffs were better for it politically; lower tariffs were better to democratize the data services. You start to see things in a different context because you are reassured that there is no agenda here,” Mittal elaborated.
This paradigm shift spurred Airtel’s remarkable turnaround, boosting it from a market cap of USD 19 billion in 2019 to over USD 100 billion by 2024. This growth narrative stands as a testament not only to Airtel’s resilience but also to the favorable business environment fostered under the current government. “To my mind, a lot of statements that this government is only favoring a few are all absolutely misplaced. To my mind, this USD 100 billion market cap is a testimony to what India is today, not just my company,” Mittal asserted, emphasizing the broader economic stability.
Furthermore, Mittal noted the influx of international capital into India, attributing these massive valuations to the stable and functional economy helmed by a competent leader. “Money is pouring into this country, a lot of capital is coming in. These massive valuations are a function of a stable, solid, functional economy under a very solid leader,” he added.
Mittal proudly pointed out that Airtel is the first first-generation company to cross the USD 100 billion market cap threshold on May 27, 2024. This landmark achievement underscores the company’s relentless dedication and strategic vision.
However, Mittal also addressed the impending challenges within the telecom sector. He hinted at a forthcoming tariff hike, driven by the need to bolster the company’s Average Revenue Per User (ARPU). “We need to have an ARPU of Rs 300. Below this, the balance sheet will not be strong enough to fully serve the digital vision of India. We are at Rs 200 now; it needs to go up. The timing of the hike depends on the market,” he indicated.
This interview with Economic Times not only highlighted Airtel’s monumental achievements but also shed light on the strategic decisions and governmental support that played a crucial role in the company’s resurgence. As the telecom industry continues to evolve, the narrative of Airtel’s comeback remains a compelling example of resilience, strategic alignment, and the critical role of inspired leadership.
