Manoj Gajanan Tirodkar, chairman and managing director of GTL Limited, is upbeat about the rapid pace of growth in the Indian telecom sector and the opportunities it is throwing up for network service providers. In an interview with tele.net, he talks about the challenges facing the sector and the company’s future plans. Excerpts…
How do you perceive the telecom market in terms of business opportunities?
The telecom sector is one of the most exciting markets to be in with new technologies emerging and end-users making use of handsets in more ways than before. This scenario is posing challenges for all participants in the value chain, whether it is the technology provider, the manufacturer, cellular service provider or solution providers like GTL. The challenges revolve around issues such as lowering the cost of offering cellular services, especially to users at the bottom of the pyramid who live in rural and remote areas; providing coverage to rural and semi-urban areas; improving service quality through reduced drop-outs and black spots; and providing a range of value-added services to end-users.
The Indian telecom success story is one of the biggest topics of discussion worldwide. The recent takeover of Hutch by UK telecom major Vodafone is an example of the importance that Indian telecom holds for international players. This growth rate has thrown up interesting opportunities for players like GTL. These include:
The GTL Group is playing its part in enabling this growth by offering its services along the entire network life cycle. GTL is engaged with telecom operators on the services front and GTL Infrastructure is targeting the shared passive telecom infrastructure segment. Through this initiative, GTL aims at benefiting 65 per cent of the rural population by providing better access to affordable telephone services.
What are the company’s future plans?
GTL is a customer-centric organisation. We offer network services across the entire life cycle of a network. We have streamlined our business processes and refined our product portfolio in the network services space to offer network design and planning services, network deployment, network operations and maintenance, professional services, infrastructure management and application management.
Our product and services portfolio is structured around network services and is targeted at medium to large enterprises, telecom operators and OEMs. The company’s growth strategy is centred on taking its relationships with the best technology providers and MNC customers from India to different geographies. We intend to increase our focus on value-enhancing services to improve profitability and stickiness of customers with GTL. Over the next two-three years, we plan to build capabilities through organic and inorganic means to fulfil the requirements of telecom operators and OEMs.
The service provider segment will continue to be an area of focus for both telecom and enterprise technologies as we believe that the needs of service providers are changing with their focus on IP networks. We will continue our focus on building skill sets in 3G and 4G technologies, converged communications and IP. We are also looking at leveraging our project management expertise in implementing the telecom requirements of other emerging areas like power and transportation.
How is GTL placed vis-a -vis competition?
We have the requisite scale and project execution skills to take up large projects, which we believe is a unique strength that GTL possesses. We are executing projects spread in diverse regions like the Asia-Pacific, Africa, Middle East, Europe and the US. These involve the entire spectrum of wireless technologies including 2G, 2.5G and 3G. We believe that our ability to execute projects across geographies and technologies, and our depth of service offerings is what differentiates us from our competition.
How has GTL performed over the last one year in terms of customers and market share?
The year 2006 has been one of growth and consolidation. The company has taken a quantum leap in terms of delivery capability in the telecom infrastructure space. For instance, our delivery team has successfully implemented more than 5,000 sites across various telecom circles in India for a major order from BSNL. At the same time, we have consolidated our delivery capabilities in overseas markets like South Africa, Mauritius and Thailand. In essence, we are pursuing only the most essential activities that drive value. We are eliminating lowervalue work, streamlining decision-making and simplifying our businesses and operations. Our efforts on these fronts are already bearing fruit and we intend to capitalise on our inherent advantages for global market access.
As part of the company’s strategy for Europe, GTL acquired Genesis Consultancy through IGTL Solutions, UK. The acquisition was made for a consideration of $9 million in an all-cash deal with a 100 per cent buy-out. This has given access to prestigious relationships, a huge customer base and a talent pool of over 100 skilled engineers trained on 3G platforms.
Genesis’s revenue for calendar year 2006 is expected to be $14 million and is likely to grow at a rate of about 35 per cent for calendar year 2007.
The acquisition is expected to contribute significantly to GTL’s service offerings in network management and professional services and strengthen its presence in the European market. Genesis enjoys a strong relationship with Nokia Networks for worldwide support and has a presence in the European, US and APAC markets.
The acquisition and the sharper focus on the activities of our value chain have started yielding dividends. Our capability to service global customers has increased. Today, we are taking our existing relationships and have started servicing them in international markets.
The year 2006-07 has also been one of growth and unlocking of shareholder value. Our consolidated group revenues for 2006-07 are estimated at $300 million. The group’s consolidated market capitalisation exceeds the previous year’s (200506) figures by over three times at $648 million. We have distributed dividends of $48.22 million in 2006-07 alone, and through the listing of GTL Infrastructure, we have unlocked close to $543 million of shareholder value in 2006-07 alone.
What are GTL’s key strengths?
We are India’s largest network services provider to the world. Our networking expertise, customer base, long-standing relationships, and project management skills are some of the USPs that our customers value. Having been in the business for over 20 years, we have provided solutions for telecom operators and enterprises, and established strong relationships with major equipment manufacturers in the carrier and enterprise space. We have gained hands-on experience on different technology platforms. All of this has given the company an edge over its competitors.
Due to the fast-changing industry structure, impacted by the convergence of different technologies, it has become inevitable to anticipate, rather than be opportunistic, to survive in the long run. With 3G already at the doorstep and 4G technologies in the pipeline, GTL has taken steps in that direction by acquiring Genesis Consultancy.
How do you rate GTL in terms of technology?
GTL plays the role of a system integrator. In fact, the company has extensive experience as a vendor-neutral system integrator and is among the few companies that have developed expertise on converged networks involving different OEMs. We understand the requirements of our customers and then suggest the best solution which gives a better return on investment.
After developing expertise in current wireless communication technologies like 2.5G, we have now moved on to 3G and are focusing on new areas like Wi-Max and IP. GTL is in tune with the latest technology trends and is working in tandem with the world’s leading telecom technology players like Nokia, Alcatel, Lucent Technologies, Nortel, Cisco, NEC, Huawei, Smart Bridges, Motorola and Ericsson. The relationships are built on trust, integrity and professionalism.
What are the company’s future thrust areas?
Our vision is to be the largest network service provider globally. We are rapidly progressing on our path to attain leadership in every segment of our value chain. We are also planning to take the inorganic route to further our competence in the planning and design, and operations and maintenance space. GTL is evaluating certain acquisition targets in the US and Europe. These acquisitions are contemplated with a view to enhancing GTL’s customer base, market presence and geographical reach as well as broaden its services portfolio. These activities could significantly impact and transform the existing relationships with OEMs and customers, ensuring continuous value addition to GTL and its shakeholders.
Besides the inorganic route, investments are also planned to expand our NOC facilities and train our human capital in emerging technologies.
What are the immediate concerns that need to be tackled in the telecom industry?
The immediate challenges that face the Indian telecom sector are as follows:
Telecom infrastructure requires huge investment outlays. Often, such investments turn out to be risky propositions given the rapid introduction of successive generations of new technology. Operators are occasionally faced with a situation where, even before recovering their investments in the existing infrastructure, they embark on further investments in newgeneration networks. This phenomenon is common in the mobile sector, particularly in the context of 3G services, where the high cost of licensing and equipment has left operators vulnerable at an early stage in network deployment.
In response to this phenomenon, policy-makers, regulators and operators are placing greater emphasis on alternatives to the traditional high-cost infrastructure development model by considering measures such as infrastructure sharing, domestic roaming and MVNO agreements. These measures can help reduce the financial burden on operators, accelerate the introduction of new services and facilitate the deployment of new networks while lowering barriers to market entry.
