‘3G won’t have a big impact in India’

Tata Teleservices, which had so far restricted itself to CDMA (code division multiple access) services, is now all geared up to branch into GSM (global systems mobile communications) as well, just like rival Reliance Communications.

Tata Tele has set an ‘aspirational target’ of 100 million subscribers by 2011 and plans to invest $2 billion over the next two years. Most of the investment will be towards its pan-India GSM rollout, beginning with six circles by the end of this fiscal.
Nivedita Mookerji of DNA Money spoke to Tata Teleservices managing director Anil Sardana on the group’s strategies and the communications landscape. Excerpts from the interview:

Tata Teleservices is not among the top service providers based on subscriber numbers. Any aspiration to be the No. 1?
You need to map the whole stuff in the context of time. There are large operators who started in 1994. We started in January 2005. So, you need to discount 11 years. I think we have done reasonably well with 27 million subscribers in three-and-a half years. So, it’s very clear that it is only a matter of time.

You do surely have a target subscriber number…
More than subscriber numbers, we want to be recognised as the No. 1 in customer service. Also, we want to be good in segments. In some segments, we are already the No. 1 — PCO, Walky Talky and datacard, for instance. So, in segments that we started when we came in, we have not allowed anybody to go past us. (Tata

Teleservices, in a presentation to the media recently, said that it is targeting 100 million mobile subscribers by the year 2011. Of this, 55 million are expected to be from CDMA and 45 million from GSM.) While we look at the race for subscribers, where we are lower than others because of the time factor, but we have a target that in the enterprise and VAS (value added services) segments, we should achieve top honours.

GSM is next on your agenda. How will the rollout go?
Before the end of this financial year, we will roll it out where we have got spectrum, which is six circles — the southern states plus Orissa. We are hoping to get spectrum in other circles by the end of this year. We hope the government will give us spectrum. I feel that a testimony to the government’s seriousness about 3G and as a signal to the players who want to participate in 3G, it will offer 2G players spectrum. Otherwise, you will keep getting more and more new players, but existing players will not have spectrum.

What is the investment planned for GSM services?
We will invest $2 billion in the next two years on a pan-India basis. This will be mainly for GSM because the expansion of CDMA will be proportionately lesser. We already have a very good CDMA reach.

Between GSM and CDMA, which will be the preferred platform?
It’s not about what is more or less important. It’s just a matter of the value proposition that you take to the customer. Whichever value proposition is attractive to the customer, he will go for it. He will have a choice.

Have you thought of phasing out CDMA in the long run?
No, not at all. We have made such a large investment in CDMA, we see no reason why we should not continue to harness the advantage of that.

The search for a strategic ally for the tower business, who’ll own 49% stake, has been on for months. But nothing has emerged…
There’s no delay except for the fact that there have been so many policy changes in the interim. And we have been accommodating those in our business plans. We have to make sure that whatever is to be captured before the value (of the tower arm) is finally arrived at, let’s capture that.

Have you finalised on an investor? Names such as American Tower and Quipo have been doing the rounds…
No, not yet. You can’t finalise unless the business plan is ready.

What about getting an investor for Tata Tele itself? Russia’s Altimo is said to be keen…
This is pure speculation.

Will 3G change India’s telecom landscape?
These are early days. In India, voice has been the main driver. In that sense, 3G would not make a tremendous difference except for operators that manage their networks very badly today. For good networks, 2G is a good enough proposition for voice. Once use of data increases significantly, 3G will make an impact.

Will number portability benefit you?
Absolutely. We are ready with the system and would like it to come tomorrow. The proposition of the best Indian network and customer services backed by performance assurance would put us in an incredible position to gain customers. Around 50% of the customer base churns every year. If you give them a compelling reason of a good network and customer service, there’s no reason why they would not change the operator.

Tata Teleservices’ recent marketing pact with UK’s Virgin Mobile created a controversy. Now that MVNOs (mobile virtual network operators) have been approved, the noise seems much ado about nothing…
Absolutely. We maintained that as Tata Indicom is a Tata Telesrvices brand, so is Virgin.

Will the pact be converted into an MVNO, once there is a policy?
We don’t have to convert because MVNO is an arrangement where an operator comes and takes a licence. There’s no other operator here besides Tata Teleservices. Virgin is only a brand. The brand usage arrangement will continue.

How do you see the introduction of MVNOs?
It is one more step towards enhanced competition, which is a good thing.

What are Tate Tele’s M&A plans? Anything like MTN coming up?
As of now, we have no such plans. The group will evaluate opportunities when they come up in future, as it has in the past. We have done that in South Africa, Nepal and Sri Lanka. And, I see no reason why the group will not do it if there are opportunities outside.

Any geographical preference?
The group has been expanding different businesses in different countries. So, wherever the group has other businesses, it makes sense for us also to expand there. Typically, it has been like this.
m_nivedita@dnaindia.net