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This story is from June 29, 2016

Bharti Airtel chairman Sunil Mittal in favour of Google tax

On the sidelines of an ICC meeting in Paris, Mittal spoke at length on the need to fight protectionism, which is on the rise in the West even as Prime Minister Narendra Modi is opening up Indian business in India. Excerpts:
Bharti Airtel chairman Sunil Mittal in favour of Google tax
Sunil Mittal. (TOI file photo by Amrendra Jha)
Billionaire Sunil Mittal has never shied away from taking on the role of an industry representative even as he built the world's third-largest telecom company. Having led telecom industry associations and the Confederation of Indian Industry in the past, he was recently elected chairman of the International Chamber of Commerce. He has taken charge on the eve of the world's largest industry association's centenary in 2019, and has drawn up an ambitious plan to restore the credibility of business by bringing up the agenda of jobless growth and supporting efforts of western governments to come down on tax avoidance by global giants.
On the sidelines of an ICC meeting in Paris, Mittal spoke at length on the need to fight protectionism, which is on the rise in the West even as Prime Minister Narendra Modi is opening up Indian business in India. Excerpts:
Do you think consolidation is finally happening in the telecom industry in India?
Having 12 operators was something that was not planned or in the minds of anybody. Nowhere in the world have you had a situation like that. Net result: you have expensive fragmented spectrum and everybody is scrambling to make ends meet. We have been talking about consolidation for years, finally it is happening. Videocon is out — their spectrum has been bought out by us. Aircel has sold their 4G spectrum to us and is merging with Reliance Communications (RCOM). MTS, too is merging with RCOM. Uninor, Telenor and the Tatas, we believe, are looking at various options. Of course, Reliance Jio will come into the market and create more pressure. So other than BSNL and MTNL, you will see four operators and that would be an orderly market structure. My view is that in 24 months, we should be there because markets are going to get very tough. Those who are not investing in data networks or data spectrum are going to be left far far behind.
Are you happy with the government's policy on spectrum? What are the issues the telecom industry is facing?
In terms of availability, I must give full credit to the government. The pricing is way off but what can the government do? They tell us 'you traded the prices high'. Our answer is we were in a no-win situation. I had customers live on my network and we had to bring back our own spectrum. Spectrum has become very expensive and spectrum is for 20 years, and not forever like in the US. So you have to amortize 5% every year, add 10% interest. On the other side, tariffs are very low although equipment costs are the same. The only thing that saves us is the scale, and thankfully, Indians can enjoy lower costs.


When will the data component in revenues outstrip voice?
Data is about 24-25% at present. I think the tipping point will come in 36 months, which is around 2019. If you talk to Reliance Jio, they will say 80% from day one. People are not making that many calls, most of the time they are browsing and sending messages and watching movies and television. With 4G network, lives have changed considerably and, of course, 80% is still YouTube. With data, the realization is 25 paise per MB. Data realizations will go down but consumption will go up. Today, people are consuming about 850-870MB a month. We expect it to go up to 1GB in 3-4 months.
Will you be looking only within India or will you continue to look outside? What's happening in Africa?
We are already there in many countries. We have just come out of one country, we may close Sierra Leone. In Africa, we have sold our towers. We do find opportunities in some of the markets to consolidate. The time is over when you got a licence and only had to put up 50 base stations. I could point out Ghana, where we are No. 3 and even the player No. 2 is hurting. So something has to happen in that market. In Rwanda again, we are number three. We went too late and there is a new player coming in. There we need to buy or sell. So in India too, we need to restructure. No point carrying on losing money. Sri Lanka is another market where there are five operators -the last two, us and Hutch, are hurting. We have a small market share. There is no embarrassment in saying we need to check our actions on what we did some years back and we need to fix that. In Bangladesh, we have done it.
Will you look at business outside India for growth?
Right now, no. (But) it will never be never. We have a lot of investment coming up in India and right now the word is 'in country' consolidation.
On payments bank, does it allow whatever you wanted to do with Airtel money? Several applicants have dropped out ...
It allows us to do all that and more. The companies that have dropped out are the ones that do not have distribution networks. We don't see this as a money making exercise; we see it more as a customer retention tool. We don't expect revenue from deposits but a bit of revenue from transactions. Then we will add third-party services. Ultimately, a customer who has money on the phone will stick with the operator — that is going to be the bigger game from a telecom operator's perspective.
You spoke about fighting jobless growth at the ICC. How do we go about doing that?
You cannot stop the march of technology. But we should not land in an area where we get people out of jobs, create a crisis and then look at things that need to be fixed. Are we going to use machine learning to get 5 million truck drivers out of trucks or do we address food productivity and water shortage? If you go back to the time of the Luddites, they burnt machines, but the new industries created jobs. The railways itself created millions of jobs. Today's technology is not replacing jobs and a lot of jobs are being done by artificial intelligence. The present generation is happy dealing with an app rather than a person. We need to figure out ways and means to find replacement of those jobs in other avenues. Switzerland recently had a referendum on having a universal basic income, which was rightly rejected. India has its MNREGA, the UK has the dole. Every government is concerned about a minimum level of sustenance for people. India and countries in Africa are not welfare states and, at the same time, healthcare and education are getting expensive. How can all these come through without investment and trade?
Are you seeing an increase in protectionism?
Protectionism is something that we all need to be worried about. Protectionist voices are rising in many countries at a time when India is opening up. Countries which have enjoyed decades of economic growth are today talking about some kind of protectionism. That needs to be fought openly. We need to talk to politicians. We are not against something being done for the masses by the government, but the fuel for that has to come from trade — income tax, customs duty, excise, service tax, all these need to come for fuelling the social agenda. If we want to shut businesses out because we are a large economy and can afford to be an insular economy, it just does not work. You can stop immigration through short-term measures, but in the long term you cannot stop it. People will take the small boats and come. People in sub-Saharan Africa, India, Bangladesh are not looking for the same lifestyle, they are just looking at a decent living.
You also spoke about digital trade being a focus area for the ICC ...
The ICC will play an important role in shaping the agenda for the digital age. We are urging businesses to comply with the OECD's calls for paying taxes. We support BEPS (base erosion and profit shifting, an OECD mechanism to address tax avoidance) and we are very keen that companies start to pay taxes in the places where they originate business. India has introduced a tax this year on Google. In the UK, customers have started objecting to Starbucks not paying any tax. Social awareness is becoming very high. They say we don't sell anything here, you download an app and pay five dollars, which goes abroad and there is nothing here. That is what India is trying to address with the equalization tax. I am in favour of that. Sometime back in France, (former) president (Nicolas) Sarkozy was on a table with Eric Schmidt and 10-12 digital players. And the issue was, 'You have billions of dollars going from France and not one dollar coming in as tax'. The day after, (current French President Francois) Hollande has called 12 of us again. Schmidt will be there and John Chambers is coming in and I think the topic will be similar. Eventually, you cannot have a situation where you will have trade with a country but not pay any taxes.

Are you referring to Vodafone?
I would say that this is an amazing situation where the buyer got away. Hutch should have been caught at that time. The seller's shut down, his company has closed and everything has gone. The government's decision now to announce that GAAR won't be applied until April 2017 is a brilliant move. What we are saying is that as long as there is clarity, don't dodge taxes? Look at all the big large digital companies, they are sitting in Ireland. In the end, the burden of those taxes should not come on everyone else. On the other hand, the government has to make tax rates more benign.
Is net neutrality also on the agenda?
The question is how do you define net neutrality? You saw the Facebook campaign — of getting someone who was never on the internet by paying for internet. This (debate) will go on. Every country will find its own level. The issue of gatekeeping or throttling speed is something no company can do without losing business. But equally, somebody has to find the standards. If there is an autonomous driverless school bus with schoolchildren in it and is getting data, and elsewhere someone is streaming music. If there is a malfunction, do you provide data to the driverless bus? You do. There has to be prioritization in certain situations like robotic surgeries. Prioritization or network management is the right of an operator to ensure that system does not collapse or to ensure that certain emergency services keep running.
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