Two parallel and perhaps unconnected developments at Bharti Airtel today led its scrip to jump and close 5 percent higher on the bourses. The company today announced that its CEO for India and South Asia and a 15-year veteran, Sanjay Kapoor is leaving. Kapoor’s exit follows a series of resignations by key top Bharti officials.
The second development, which was being speculated about on the exchanges today was a possible increase in tariffs by both Bharti and Idea Cellular. Neither company responded to Firstpost queries on the matter.
Telecom industry insiders point out that a large scale reshuffle of Bharti’s top deck could be partly because the company wanted to “infuse fresh blood” into the data business—it has traditionally been strong in the voice market but now that future growth lies in data, a different mindset is perhaps needed to drive this growth.
A Bharti statement announced to appointment of another veteran, Gopal Vittal, as CEO in place of Kapoor.
Vittal rejoined Airtel in April 2012 as Group Director – Special Projects and has spent time across the Singtel Group in South Asia/Australia, Softbank and Silicon Valley understanding emerging trends in data and internet space.
The statement made it clear that among Gopal’s focus areas would be “enhancing market share and margins along with growth of alternate revenue streams including 3G, Data, Airtel Money and Value Added Services.”
It is just a coincidence then that the market began buzzing about a possible tariff hike too today? A weakened competitive environment (where some telcos are reducing footprints across geographies) and the recent outgo on various spectrum charges for telcos has already led to expectations that tariffs will be increased.
Bharti and Idea may well take the lead in increasing voice tariffs but there is no indication till now about whether any increase is imminent or on the quantum of a hike. Mobile phone operators have not increased voice call prices in the last three years despite voice calls accounting for about 85 percent of revenues.
But an online story in the Economic Times this afternoon attributed the sharp increase in Bharti’s share price to a buzz that sector regulator TRAI has given telcos a clean chit in a tariff hike case.
“According to a sales note by a brokerage, there were concerns that TRAI would investigate tariff increases for anti-competitive behaviour. The brokerage, quoting industry sources, said that it seems TRAI has said that tariff increases are fine and not a sign of cartel. According to the sales note, tariff hikes in voice should be visible in some circles by next week,” the ET story said.
Either way, be prepared to pay more for speaking on your mobile soon.