On one hand some telecom operators are urging the government to provide policy backing to their legacy networks that have accounted for most of their investments so far, on the other hand some others are talking about next generation technologies including 4G and even 5G. Speaking with Pranav Mukul on the sidelines of the India Mobile Congress, Bharti Airtel’s CEO and MD (India & South Asia) Gopal Vittal said that even as majority of the company’s investments are now going into new generation telephony services, older ones such as 2G will also continue to have some traction. Excerpts:
Going ahead, do you think 2G and 3G could co-exist with 4G and 5G in India?
Even today, if you look at markets like Singapore, they still have 2G, they haven’t shut it down. It depends on what happens to the mix between feature phones and smartphones, but my sense is that you are likely to see switch-off of 3G networks faster in India than 2G. This is because every 4G device has 3G capability, so you can just use it for 4G network. The way we’re rolling out 4G, we are trying to create a ubiquitous 4G layer across the country. So you really don’t need 3G then, and once VoLTE comes on, then voice also works on 4G and you won’t need to fall back on 3G and 2G. But there will be some customers on feature phones, who will continue on 2G.
When will Airtel be ready for 5G?
You have to see this as a funnel of activities. Currently we are in the process of rolling out 4G networks, but that doesn’t mean we don’t work for what could come three or four years later. VoLTE rollout is happening as we speak. We’ve launched it in Mumbai, we will be doing a few more circles next week.
When will Airtel’s pan-India roll out of VoLTE happen?
It’s a matter of few months.
Will the deployment of Massive MIMO technology lay ground for the 5G launch?
Massive MIMO is a new technology, but it’s one step before 5G, so you can say it’s 4.5G. Basically what it does is, there is only one beam formed on a standard radio, which allows for a certain set of users. With Massive MIMO, the same spectrum can be transmitted into 16 beams, so you can dramatically increase the throughput and the capacity of the same radio unit. We are now demonstrating speeds of 600 Mbps on Massive MIMO, and the good news is that devices are already ready, you don’t need new devices. Wherever there is great congestion, we will look into bringing Massive MIMO.
Will Massive MIMO equipment have to replace the existing set up, and therefore call for additional investment?
The advantage for us is that most of our radios or the technologies in which we are investing, or wherever we invested for 3G, are ready for 4G through a software switch. The Massive MIMO will require certain different equipment, and some of the equipment that are already there will go into rural areas. So we will keep using these to reduce our overall outlay in terms of capital spending.
How much investment will it entail?
It’s still in the lab stage so it’s too early to say. We’ve already announced the Project Leap with Rs 60,000 crore, and massive investments are happening this year as we speak. We are rolling out networks in a big way, so all of this will be a part of that.
What share of Airtel’s investment is going into 4G?
Most of our investment now is going into 4G and 5G, we are not rolling out 2G or 3G networks anymore because we already have 2G coverage in 500,000 villages. We don’t need to roll out more 2G networks.
Are you planning to raise more funds for this investment given the debt levels?
We will fund it out of our operations. Our debt levels are about 2.5-2.6 debt-to-EBITDA, which is in line with most well-run global telecom companies. Whenever there is a need for capital, we will raise it, but our Indian operations generate enough cash for us to continue to invest in what is required.
Do you agree with the argument that a lower interconnect usage charge will nudge the operators to adopt newer technologies quickly?
It has nothing to do with it. Ultimately to run a network, you need spectrum, which costs the same, you need diesel and energy, you need to put stuff on rent for your towers, there are people costs – so those are all common costs and has nothing to do with tech.
Does the firm have appetite to participate in the spectrum auction where 5G airwaves will be put on the block?
As of now we have sufficient spectrum, right now we need to make sure that the spectrum that we have is utilised in rolling out networks. We’ll see if there are some places where we need to bolster our holding, but it’s still early to comment on it.