“Initially this direct-to-sell and satellite internet will complement the terrestrial services, but obviously competition will intensify over a period of time on satellite internet services,” says Gurmeet Chadha, Complete Circle Consultants.

Starlink has been a success and we have seen the success largely in area of cars, mobility, and space. So, the concern is that if Starlink would have come to India, it could have really damaged the prospects of Jio and Bharti. But what has happened is that they have tied up with Airtel. So, the fear now is that Airtel will be a partner rather than a competitor. For Jio, of course, competition will intensify. But I see the progress, a gradual progress. I see the progress largely in areas of space and remote India. I do not see this in a sense is going to be entering into the data challenge, which in a sense is the bread and butter for the current incumbent players. So, Starlink is coming with Bharti. Starlink looks like since there is no equity or anything like that, they will go slow. The focus could be rural area, remote areas and space, which is where strategic initiatives have been taken and that in a sense will allay fear for at least Bharti in the near term. You have two options. You can say I do not agree or you completely agree.
Gurmeet Chadha: No. So, I am of the view that this will complement the existing terrestrial services offered by the domestic players because if you see the basic plan of Starlink, India is a very price-sensitive market. Our ARPU are currently about $3, about 230, 240, 250 rupees right now for Bharti. The Starlink basic plan starts, let us say from Nigeria, it starts at about $25, $30. In the US, it starts at about $50, which is much-much higher. So, initially this direct-to-sell and satellite internet will complement the terrestrial services, but obviously competition will intensify over a period of time on satellite internet services.

Secondly, India also has about 30-35% of the population, roughly about 40 crore people with no internet access.
Now, these are typically rural areas and areas with difficult terrain where towers are difficult to put up, especially, for example, like Northeast, etc.

And it will also find applications in defence and enterprise segments also. So, my view is it will complement and also symbolically distribution tie-up. Right now, it does not say exclusive. So, we do not know whether it will also tie-up with Jio or not.

So, it is incrementally positive for Bharti which anyways is doing very well. It is one of the better performing stocks what we have seen in last a few months and increasingly the sector is becoming a duopoly.
The other thing also is about you know Bharti Hexacom’s role over here because that seems to be the preferred play when you talk about India’s wireless growth story. It does give you that pure play exposure to the two high growth businesses of Airtel which is wireless and home brand or home broadband business.
Gurmeet Chadha: Oh, absolutely, I agree and that is the reason even that it has been getting very positive coverage and upgrade from including global foreign brokerages firm, also on point of Bharti coming back to it, if you see the next two years the free cash flow could actually go up to almost 50,000 crores. So, what is happening now is that you have a third player which is incrementally losing market share.

I mean I think yesterday I saw if my memory serves me right almost 15 lakh users again gone. So, we are into a duopolistic mode where one player increasingly doing better.

Nigeria business seems to have stabilised their digital and broadband business, also even in broadband if you see the basic plan starts at $5, so that is doing very well and you will gradually see significant debt reduction.

So, once an industry consolidate into largely two-player that is when the benefits start accruing and just see the performance of Bharti in last two-three years once.

So, from 21-22 they started generating 15,000-20,000 crores free cash flow and then see the performance of the stock. So, I am pretty constructive. I do not see any reasons to be worried. One concern was it will directly compete. I think that seems to be now getting addressed that now it will more be a partnership model.

The other thing, of course, is also what it means for the competitors. What about a Jio and Vodafone here?
Gurmeet Chadha: See Jio, also as I said the agreement does not say it is exclusive, so we will have to wait and also there has been some concerns in the past where Jio had opposed administrative auction of spectrum, satellite spectrum.
They actually requested for auction way because Jio has also invested significantly, almost $15-20 billion.

But globally the preferred route has been administratively because of the cost of auctions being very high and the government seems to be preferring the administrative route rather than giving the auction route which probably it may not be immediately positive.

But let us see, I am saying it is too early to comment. As I said it will complement Bharti and Jio rather than directly compete against this and also you get access to better technology and so on.

One is Starlink getting access to Airtel in terms of retail network reach. Second thing is also Airtel is also gaining out of it in terms of access to technology and etc.

So, it seems to me a complementary and win-win situation. We will see how it unfolds. So, Vodafone I have always said it looks very difficult now in terms of from an equity shareholder point of view.

The firm may still be able to survive and may be a going concern, but incrementally now it is looking very tough unless there is some big investor coming in with significant equity dilution.

It seems like we spoke too soon. I think there is room for all because there is just now a flash coming in from agencies that Jio is also going to bring SpaceX’s Starlink high-speed internet to its customers. So, it seems it is one for all.
Gurmeet Chadha: Yes, absolutely.