In a recent interview, S.P. Shukla, president, wireless business, Reliance Communications, talked at length about the company’s major achievements, key priorities and ambitious growth plans. Excerpts:
What have been Reliance Communications’ key achievements in the last one year?
In the last year or two, I would say that our single largest, most visible and most creditable achievement has been that we are today recognised as the second largest operator in the country. For a less than four-year-old company, this is a major achievement, given that other players in the GSM segment have been around for many years. This achievement is based on many factors. We set up our network in a very integrated fashion, encompassing the widest fibre backbone in the country, which is not visible on the ground, as well as the largest number of towers and with DTMA 1x capacity, which gives superior data capabilities. These factors were the basic foundation of our network rollout. At the intermediate layer, which is how you control and monitor an operation of massive proportions, we are the only operator in India with an integrated network operations centre in Mumbai from where every BTS tower and MSC in the country is visible to us.So, if the smallest problem occurs in any part, we are alerted by our control centre, where a light blinks indicating a problem, no matter how big or small.We thus have sophisticated capacity to handle networks and maintain the highest level of network efficiency. Network efficiency is defined by three parameters: handling the level of traffic optimally; delivering quality, which means reducing call drops and increasing signal strength and voice clarity; and how quickly normalcy can be restored following an interruption caused by external factors. So, the foundation is paramount, then comes managing the intermediate layer, and third, inducing customers to use the network. If you look at Reliance’s subscriber acquisition record, it has been simply fantastic, especially for a new operator.We were the first operator to reach the 1 million mark in net customer additions in one month (December 2005).Similarly, we were the first to announce a “OneIndia” plan on January 1, 2006 for mobile telephony; we were also the first to announce the same plan for fixed line calls; and the first to offer local calling among all state capitals, what we called the “Capital Plan”. Under this plan, subscribers could make calls among 23 state capitals at local rates. Innovations have been forthcoming from Reliance left, right and centre, facilitating growth in our customer base at a rate that has allowed us to catch up with other GSM players who have been in the sector for a number of years.
Another point I would like to mention is our superior CDMA technology, which gives users high data speed. We are the leading operator (with 90 per cent market share) in terms of data cards utilised with laptops. This is because we are able to offer uniform speed all over the country, the maximum being 144 kbps (depending on network conditions), whereas our competitors offer the GSM experience and in some cities, GPRS. However, we offer one experience all over India.So, even if you are travelling from one city to another, you will still be able to enjoy high data rates. This is a big advantage that we offer.
So, I would be hard-pressed to mention one single achievement, but all these achievements put together have made it possible for Reliance to reach where we are today.
What are the company’s key priorities in the short and long terms?
Our long-term priority continues to be to meet our shareholders’ objectives. For customers, our priority will be to offer them superb service, with seamless coverage all over India which no other operator can match. With regard to products, we aim to offer products that are both innovative as well as targeted at each customer segment.From the stakeholders’ perspective, our aim is to attain a level of profitability and an EBITDA that are benchmarked against the best in the industry.
What thrust areas has the company identified for the next couple of years in terms of target customers and product segments?
The challenge for mobile operators this year will be how to manage growth when an increasing number of customers are yielding low ARPUs. Managing growthwhile serving such customers and keeping service costs under control so that the business remains profitable is a major challenge for operators. We are perfecting our business model so that we can efficiently serve a very large base of customers. Even though they might have low ARPUs, multiplied by a large customer base these add up to a large turnover. That is where the challenge lies and this will be our priority area. Another key area will be to keep improving our systems.
What are the major areas of opportunity for Reliance and what are the challenges in meeting them?
The key opportunity areas are the underserved or unserved markets. It is very important to grow in such areas.Even today, large parts of the country are uncovered by mobile telephony. So, expansion into semi-urban and rural markets and deeper penetration via rural telephony are the big opportunities for us. And we are well geared to undertake this, as we have done substantial work on infrastructure development and hence would be able to serve such customers who are thinly spread out compared to a city environment.
The challenge will always be to meet tight deadlines and schedules, and to have a good team of people in these areas. It is also important to train them so that they give their best. As you go deeper into the rural interiors, recruiting people, training them, etc. is a continuous process. The telecom industry is the largest employer of manpower anywhere in the world. We interact with so many different people on a daily basis, with the interior of the “machine”. On the technology front, the challenge would be to keep pace with the rest of the world, to be at the cutting edge of wireless technology. Many more platforms are emerging, such as 3G, 4G and Wi-Max. The challenge is to remain in tune with the world and keep pace with it. India and Indian customers must have the best technology to meet their needs.
What are the company’s plans for increasing broadband and rural connectivity?
Our plans are on the anvil. We are looking at various options to proceed and clarity has come from the government.You will be hearing about our plans very shortly.
What investment outlay has been planned for the next few years?
Anil Ambani has already spoken on this subject in January. We are looking at investing $2.5 billion this year.
Are there plans to launch IPTV and 3G in the near future?
You will be hearing about this very soon.
How is the company placed vis-a -vis competition, especially in light of Vodafone’s entry into the already competitive space?
There are six or seven operators in the country. We have been facing competition quite well. In fact, we came in after four operators were already present.
How would you describe the company’s strengths and weaknesses?
Reliance Communications has always known the pulse of the people. We have always known the inherent workings of the Indian market. We are the largest player in the country’s service sector. In the services segment, the Reliance ADA Group is present in telephony, with over 30 million customers; energy, where we reach every home with the numbers running into millions; and Reliance Capital, which reaches millions of people through mutual funds, insurance, etc. So, the group is very deeply involved in the services sector, more than any other group is. This allows us to understand the pulse of the market and what the consumer wants. This in turn allows us to achieve better segmentation of the market so that we can develop products for each segment. If we look at it from the group’s perspective, we are the strongest financially. We are placed among the top three in terms of market cap and revenues.Also, we are known for our capability to set up projects on a very tight budget and with very tight deadlines.
