Clear, incisive and ready to take bold initiatives, N. Srinath, executive director of VSNL, has played a key role in steering the company on its growth path. He has also been closely involved with the new draft of VSNL’s global and future strategies. In fact, he has been in charge of VSNL’s operations since the Tata takeover of the company. In an interview with tele.net, he talks in depth about the new telecom opportunities, VSNL’s strengths and future prospects. Excerpts…
VSNL seems to be looking overseas to spread its operations. What are its plans for South Africa?
VSNL has 26 per cent equity stake in the Second Network Operator (SNO) in South Africa. SNO was awarded the licence to offer the entire range of telecom services in South Africa, except mobile telephony, in December 2005.SNO is planning to invest around $1 billion in South Africa over the next four years and will launch its operations by July 2006. Initially, services will be offered to enterprise customers and later they will be extended to retail customers.
After VSNL’s major acquisition of Teleglobe and Tyco Global Network, are there any more deals in the offing?
While we cannot comment on any specific future plans, VSNL remains open to both organic as well as inorganic growth. The current focus of the company is to consolidate its recent acquisitions and offer world-class products and services.
How has the company performed during the past one year, in terms of subscriber numbers and market share?
I cannot comment on specifics. But to give an overview, we have seen growth in the enterprise segment; we have seen growth in wholesale and in retail. I cannot say more than that.
In your opinion, where does VSNL stand vis-a–vis the competition?
In terms of competition, I would say we are well placed. To elaborate, if we look at market share, we are the world leader in terms of wholesale international voice. In enterprise data, which is still a small market, there is scope but we are easily one of the market leaders for enterprise services.On the retail side too, we are trying to expand our business. We have been strong in internet and we hope to have a strong position in broadband as well.
What are VSNL’s plans in the international long distance (ILD) segment, given that BSNL will be the company’s main competitor?
Earlier, VSNL had a significant ILD business. However, with increasing competition we have had to readjust our businessmodel. It is very difficult to compete as a standalone ILD operator in the country when others are coming in. In that context, the Teleglobe acquisition has changed our position to a large extent. From a onecountry ILD operator, we have now become a global ILD operator. The advantage of this is that we are now competing for global business and not just concentrating on one country. A presence in multiple countries has helped us draft a stable business strategy, which envisages VSNL competing in a global arena.
The acquisition of Tyco along with its 60,000 km trans-continental submarine cable network gives VSNL the advantage of not only being able to offer seamless global connectivity but also substantially leverage on economies of scale. VSNL is one of the world’s largest players in the international wholesale voice business, carrying around 17 billion minutes of traffic annually.
What are VSNL’s strengths and weaknesses?
The strengths and weaknesses apply across different businesses. Our strengths in the wholesale market would be our extensive infrastructure, through which we can deliver a wide range of services.We have strong relationships with carriers around the world and a large global customer base. This helps us leverage our strengths while going into the market.On the enterprise side, we have several advantages. One, we have the advantage of our own infrastructure. A lot of this is used in markets like India and in many cases, we have bought infrastructure and therefore bought substantial discount on the billing cost. Two, we are operating out of India, our home base. So we have a large customer base in India and experience in dealing with customers. This also means our cost structure is based on the Indian cost structure. Many global companies are trying to outsource to India to get lower cost structures.
We also have, through other group companies like TCS, strong capability in systems integration application development. Our enterprise customers are looking more and more at telecom and IT converging in terms of applications.
When that happens, we would be able to offer such converged services to our customers. We also believe in developing a portfolio of products and services that we feel are very important and attractive to enterprise customers. On the retail side, we have a very strong presence in the internet business, especially in dial-up.Further, we have, over the last couple of years developed a very strong portfolio of educationand entertainment-related services for which we have the required support infrastructure.
How would you rate VSNL in terms of technology adoption?
Over time, we have deployed various technologies and we make sure that we are constantly upgrading our networks and keeping in touch with the latest technology trends worldwide. We want to be able to service our customers in a manner that is cost effective and suits their needs. For this we have to constantly upgrade ourselves to the best technologies available.For instance, for enterprise services, we are operating on an MPLS IP-VPN platform, in keeping with international practices. So in all, we try to keep pace with the latest technologies in the market.
What are the company’s future thrust areas?
VSNL’s future thrust areas will be pushing growth in the wholesale market, continued growth in the carrier, enterprise and data space, and continued growth in our retail markets.
How do you perceive the telecom market in terms of business opportunities, in particular for VSNL?
VSNL has seen many areas of growth. On the wholesale side, we have seen growth in terms of voice traffic with tariffs coming down and subscriber numbers increasing. Consequently, there has been a substantial growth in teledensity. Further, growth has been witnessed in the enterprise segment with more and more services being offered. This phenomenon has been spreading to all parts of the country.This has translated into service providers customising various applications to suit individual customer needs. Therefore, there is a clear increase in total networking solutions delivered by service providers. We see tremendous opportunity on the retail side. We believe that a lot of the dial-up internet connectivity will be replaced by broadband application. We see growth in the broadband business with people increasingly opting for broadband. Being able to effectively clear last mile connectivity is still a challenge.However, as technologies like Wi-Max become available in the market over a period of time, we would hopefully be able to tackle this issue as well. Otherwise, as far as the telecom industry is concerned, I think what we will continue to see is a lot more consolidation. We are going to see the entry of more players in the long distance space. We will see Indian players expanding their portfolio to include new services, and some international players coming into the market and setting up operations. Apart from that, the current trends in the market will continue at its rapid pace.
The Indian market is growing rapidly on the back of rising incomes, improved corporate performance and increased awareness of IT and networking. Hence, the market can surely support the entry of new players.
