American Tower Corp (ATC) CEO Tom Barlett has said the “structural and process reforms” for the telecom industry recently announced by the Indian government would help cash-strapped Vodafone Idea (Vi) turn around and boost investments.
Kolkata: American Tower Corp (ATC) CEO Tom Barlett has said the “structural and process reforms” for the telecom industry recently announced by the Indian government would help cash-strapped Vodafone Idea (Vi) turn around and boost investments.
“We’re hopeful that it (read: measures taken by India’s Union government) will now give Vodafone
(Idea) some more air in their tires to be able to turn around and continue to – or increase the overall investment that they have in the marketplace…and if that’s the case, we would see a really good construct for gross new business increasing in the marketplace,” Barlett said at a recent Goldman Sachs event in the US.
The ATC chief executive is also “cautiously optimistic” about the telecom market in India, and believes the US-based telecom tower company will be “able to get back up into those mid-single-digit types of growth rates in the not-too-distant future”.
Earlier this month, the government announced a four-year moratorium on adjusted gross revenue (AGR) and spectrum payments, a move that offers Vi significant cash flow relief as the telco can defer cumulative payout of nearly Rs 1 lakh crore – around Rs 25,000 crore annually – over the next four years.
Loss-making Vi has been weighed down by Rs 1.91 lakh-crore of net debt, of which as much as Rs 1.6 lakh-crore is to be paid to the government. It has also been losing millions of customers every quarter due to its inability to invest adequately in expanding its 4G network. This is also since Vi has still not managed to close its targeted Rs 25,000 crore fundraise.
Barlett said India’s telecom sector had “been through a tough space for operators in the past two to three years,” but recent relief measures taken by the Indian government provide a “great backdrop” for the industry, and that now “it’s a case of being patient.”
The ATC chief executive also underlined that telecom operators in India have a “significant amount of debt” and that “most of it is to the government.”
Barlett, expects India’s top two telcos, Reliance Jio and Bharti Airtel to “continue to invest heavily in the market. “It’s a big market…they have new spectrum in the marketplace, (and) my sense is that they’ll have more new spectrum in the marketplace, and more flexibility in terms of how to use it.”
Bartlett also said the government’s decision to extend the tenure of spectrum licences (from 20 to 30 years) offers telecom operators “more comfort on rolling out infrastructure within each one of those bands.”
He said that though ATC had witnessed “outsized net growth” when it originally entered the Indian telecom market, the company’s growth eventually was “clamped down” as the Indian telecom market underwent “consolidation” and went “through some of the regulatory patch issues.”
Bartlett, though, said that ATC still witnesses “good” gross additions “just because of the dynamics of how many people are there and what’s being deployed” by the telecom operators in India.
“I’m hopeful that a lot of that churn is going to be largely behind us and that now all of the customers there, including state-owned BSNL, are going to now be able to turn the spigots on and start to reinvest back into the market,” Bartlett reportedly said.
