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ShareVsevolod Rozanov, president & CEO, Sistema Shyam Teleservices Ltd (SSTL), spoke to DNA about the company's plans for its mobile service branded 'MTS', the importance of the India market, its IPO focus, and spectrum policy, among other issues. Russian conglomerate Sistema is the majority partner with 74% stake in SSTL, while the Shyam Group holds 23.5%. The remaining 2.5% is with the public. Sistema is the largest public diversified corporation in Russia and the CIS, managing businesses in telecom, consumer services, media, healthcare, retail, real estate and technology sectors. Excerpts:
On the company's expansion plans:
We are launching our sixth circle (in Bihar) this week. By the end of this year, we are gong to cover a large part of the country and by the end of the next year we want to close commercial rollout.
On Mumbai and Bangalore rollout:
Rollout in Mumbai, Bangalore and Delhi is definitely expected by the end of this year.
On subscriber target:
We already have 13 lakh subscribers in India. We have targets but won't disclose them. Subscriber numbers will depend on the speed of rollout. There's always a dilemma between the quality of rollout and speed. We are very much for quality.
On the ambition to become the No 1 mobile player in India:
At this stage, it will be too premature for me to say that we want to be No 1. Right now, we are No 10 in terms of subscriber numbers out of 16 players (laughs). So, there's a long way to go. But, of course, we want to be one of the top players in India.
On the significance of mobile number portability for new players:
We are keen to have it fast, but we don't think it will help anyone a great deal. We experience extremely high level of churn even now. I think the churn level may be high till two to three months after the introduction of number portability, but after that, it will come down to previous levels. I would say that number portability is an opportunity for the new players. But it won't lead to significant changes in the market share of the telcos.
On 3G (third generation) services:
I think it's exciting and necessary. I am glad that we will be able to offer the same services without any 3G (as a CDMA operator).
On the proposed reserve price for 3G spectrum auction (raised from Rs 2,020 crore to around Rs 4,000 crore):
We are not affected by it because we don't need to bid for 3G. We are already able to do it (offer 3G-enabled services) with CDMA technology.
On the CDMA focus of the company when everyone else is going the GSM way:
Nobody is shifting to GSM. CDMA players are only launching an additional technology (GSM). You cannot deprive 100 million subscribers.
On the GSM plan of the company:
There's no GSM plan. For us, it is very clear that CDMA allows a new player to do well. I'm not speaking about the existing players -- they already have good spectrum and good coverage.
On the company's average revenue per user:
We are not disclosing our ARPU levels yet. Probably, we will be releasing the figures at the end of this year.
On the company's fixed line telephony and broadband plans:
We are offering fixed line in Rajasthan. It has been a legacy business there and offers a good revenue support. Other than that, we do not have any plans at the moment.
On the possibility of tie-ups with MVNOs (mobile virtual network operators):
At this stage, no-one has approached us for such a tie-up. We could consider such an arrangement if there's additional capacity with us. But if the number of subscribers double in three years, I don't expect a lot of free capacity. In Europe, MVNOs emerged as a successful model as there was so much infrastructure with telcos and they realised that they didn't need it.
So they decided to make better use of infrastructure that they didn't need. I don't think the MVNO model will be big in India as there isn't excess capacity. One can say that looking at the quality of networks and the number of call drops.
On spectrum allocation policy:
We need transparency and clarity in the spectrum allocation policy. The rules should be predictable. Even if the rules are changed, we should know how and when. And we expect fairness towards the new players.
On the investment planned for the India market:
We are talking of $5.5 billion for the complete pan-India rollout. That is an aspirational figure, it can be higher or lower. It will take roughly five to six years.
On initial public offering:
At this stage, we don't have any exact plan. But, when we are close to a pan-India rollout next year, we could look at it. But all of that would depend on the financial market conditions.
On the global best practices that Sistema has brought into the JV:
It's more of the soft factors... That would include our focus on business processes and customer excellence. Many of the existing players have legacy issues. For us, it's clear that we must learn from their experience and try to be more efficient.
On the significance of the first Indian (Rajiv Mehrotra) joining the Sistema board:
It indicates Sistema's commitment to strategic investment into India. Sistema sees India as one of the most important non-CIS markets for its expansion.
