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2017 will be a difficult year for margins: Sunil Mittal

Speaking to CNBC-TV18 Sunil Bharti Mittal, Founder & Chairman of Bharti Enterprises, said that the focus will be on building networks, and bringing in more technology. He was speaking on the sidelines of World Economic Forum in Davos to Shereen Bahn. Stressing how it will be a difficult year for margins, he said consolidation in the industry could lead to just 4 players surviving.

He is hopeful of volumes getting justified with only 3 or 4 players around.

Already consolidation is around the corner, he said, adding that how 80 percent of revenues are shared by the top three telecom players.

The overall revenue table won’t grow this year because of disruption in pricing, he said. Within this table, he expects Airtel to gain market share.

Talking about the debt situation, he said that there is enough cash being generated by the telco to not worry about debt. The bank debt is probably about a billion dollars, he said. “We haven’t clogged our banking lines.”

Going forward, the focus will be on network rollout and ensuring customer satisfaction.

The world is focussed on India. The country is in a great spot, he said.

Below is an excerpt from the conversation between Sunil Mittal and Shereen Bhan on CNBC-TV18.

Q: Would you qualify 2016 as the year of turbulence, as a year of disruption?

A: 2016 has generally been a tough year for the telecom industry with a lot of money gone into the spectrum, spectrum auctions coming through, moving from 3G mid-broadband to going to LTE 4G. So, it has been a very eventful year, yet it has been very tough on the industry in terms of investment cycles, return on capital, generally stock prices and the overhang of Jio’s launch which was impending for most of the year which came through in the last quarter.

Q: The buzz word here in a lot of the sessions is creative destruction, but that is not what you are seeing in your industry today, are you?

A: No, in our industry, just more of the same is happening. A big powerful has come in. It is the same products, the same services. It is not that this industry is being disrupted by a new technology. So, it is just one new player and of course, a big player. So, that creates a disruption and the smaller players, as you know, are all packing up one-by-one. Videocon has gone, MTS has gone, other small ones are finding ways and means to combine, join, exit. All sorts of things are going on.

Q: Are you going to have any role to play in any of those possible exits?

A: We always have a role to play. Sometimes, we play a passive role, sometimes we play an active role.

Q: Are you in the market to play an active role?

A: I am always open to talk and everybody talks to me. The good thing about our industry is that being the veteran of this industry now of nearly 23 years, almost everybody talks to me. So, we talk. We sometimes agree.

Watch video for the full discussion…