The year 2015 has been challenging as well as rewarding for Videocon Telecom. The company decided to scale down its operations by selling its 4G spectrum in the Gujarat and Uttar Pradesh (West) circles, to Idea Cellular. In 2016, Videocon plans to focus on the launch and expansion of its 4G services through spectrum sharing. It will also look to increase its footprint in other geographies. In an interview with tele.net, Videocon Telecom’s director and chief executive officer, Arvind Bali, talks about the company’s performance and growth strategies. Excerpts…
How has Videocon’s operational and financial performance been in 2015?
The year 2015 has been challenging and rewarding at the same time for Videocon Telecom. We crossed the 10 million subscriber mark in May across our four fully operational circles. We also registered a growth of 20 per cent and 12 per cent in our net revenues and subscriber base respectively, during the quarter ended December 2015 over the corresponding quarter in 2014.
How has been the uptake of Videocon’s data services? What steps are you taking to enhance service uptake?
Since upgrading our network to 2.75G EDGE, there has been no looking back in our data service segment. We have been able to almost double our data business in 2015 over 2014. While some of this growth is attributed to organic growth due to the 12 per cent increase in the subscriber base, the other key factor is the increase in our unique data users from 52 per cent in 2014 to around 70 per cent in 2015. Further, the average data consumption per user went up by around 65 per cent to reach 220 MB per user. Data currently accounts for 12.5 per cent of our gross revenue, and this share is growing. We are now enhancing our data capacity to accommodate more users and offer even better speeds. Further, we are offering free trial data packs to non-data users and new subscribers to increase the uptake of our data services.
How do you see the 4G ecosystem evolving in the country? What are your plans in this regard?
With more operators starting to offer 4G services in the country, there is a noticeable momentum in the 4G ecosystem. During November-December 2015, 4G handset shipments exceeded 3G handset shipments in India. With the growing smartphone penetration in India, it will not be long before the 4G ecosystem and users surpass 3G users.
We have 5 MHz of liberalised spectrum in the 1800 MHz band and, most importantly, contiguous spectrum in our circles, which is best suited for 4G long-term evolution. We plan to exercise the spectrum sharing option by pooling our network with another operator to offer 4G on a common platform. We are in active discussions with a few operators for the same and Videocon Telecom will soon start offering its 4G services.
“We plan to exercise the spectrum sharing option by pooling our network with another operator to offer 4G on a common platform.”
What are your views on consolidation in the Indian telecom market? Can the industry expect more spectrum trading and sharing deals between Videocon and other players in the near future?
We are witnessing a very interesting phenomenon of spectrum consolidation in the industry, and I think one very important factor here should be spectrum harmonisation so that this scarce natural resource is not wasted, and is put to best use. Videocon is in active discussions with various telecom operators to exercise the spectrum sharing option for offering 4G services.
What are some of the key issues and challenges that are being faced by operators?
I think the first and foremost issue is the never-ending investment in the business and the return on investment (RoI) thereafter. The telecom business demands huge investments in infrastructure and technology, while the RoI is diminishing. Spectrum scarcity is another key challenge for the industry. The presence of so many players in the market and the division of spectrum among them adversely affect spectrum efficiency and quality of service (QoS).
One of the major issues that operators are facing today is related to QoS and the resultant problem of call drops. The call drop problem occurs as the operators face difficulties in putting up new towers or maintaining the existing ones due to the fear of electromagnetic field radiation (EMF) among the people. All customers want impeccable QoS, but are not keen on allowing mobile towers to be erected in their neighbourhood. Operators cannot provide good network coverage without adequate availability of towers. The placement or location of towers in a telecom network is not randomly decided; instead, it is a scientifically designed network, wherein a certain alignment and distance need to be maintained between the towers. With even one tower getting moved out or relocated, there can be a cascading effect on the entire network in the area, which then leads to call drops. So it’s like the chicken-and-egg story – without towers no one can provide impeccable QoS, and hence there will be call drops.
What steps are being taken by Videocon to reduce instances of call drops? What are your views on TRAI’s compensation mechanism to check the problem of call drops?
Videocon Telecom entered the telecom space only about three years back. Therefore, we still have time before we reach a sizeable mass of customers and start experiencing the problem of call drops. Nevertheless, in whichever pockets we do have a problem, we optimise our network proactively in order to ensure a good QoS to customers.
What are your expectations from the government?
I think the government has been really supportive of the telecom industry and understands its needs. One way in which the government can help the industry is by declaring telecom (mobile services) an essential service. This would go a long way in dealing with the various issues being faced by operators. Further, the government could help operators in allaying the fears related to EMF radiation from mobile towers among people. It could help in the deployment of more towers, which would enable operators to offer better QoS to customers, thereby mitigating call drops.
“We have been able to almost double our data business in 2015 over 2014. The average data consumption per user went up by around 65 per cent to reach 220 MB per user. Data currently accounts for 12.5 percent of our gross revenue, and this share is growing.”
What are the company’s growth and investment plans for the near term?
In 2016, we plan to acquire another 8 million subscribers in our three circles – Punjab, Haryana, and Madhya Pradesh and Chhattisgarh. We will be investing over Rs 4.3 billion in these circles for network expansion, upgradation, data capacity building, and roll-out of 4G services by end 2016-17.