How has the response been to RCOM’s GSM foray?
The response has been overwhelming and has exceeded all expectations. Customer growth itself has gone up as a result of our launch. During January-April 2009, RCOM added 13.5 million subscribers.RCOM has once again created history with the launch of its GSM services and has introduced a point of inflection in the growth of the Indian telecom industry. During the same period, Bharti Airtel added 11.1 million users and Vodafone added 10.6 million. So, the numbers speak for themselves.
What is the distinguishing feature of RCOM’s GSM launch?
According to most telecom analysts, RCOM’s GSM rollout was one of the largest rollouts in the world, undertaken in a very short period of time. We received the spectrum in January 2008 and managed to complete the network rollout by December 2008. We started our GSM rollout with simultaneous launches in 15,000 cities. So, that gave us an advantage in pushing subscriber additions. As of today, we have expanded our GSM footprint to 20,000 cities. The strategy other operators adopted while launching their services was one town here and one town there. As a result, they did not have the same impact as we were able to create. For instance, a customer in Mumbai may want his family in Ahmedabad to have the same service to avail of some cost-saving schemes. But if the phone is not available there, he will end up being on two networks.
What is the single biggest challenge before the company and the sector today?
The primary goal of the industry is to create a pro-customer, healthy competition in the marketplace with an even playing field. Given that we are part of the ADA Group, customer expectations of us are very high in terms of quality of network, customer service and value proposition. Therefore, our key challenge is to come up to expectations on all three parameters. We are hopeful that with the customer-oriented regulatory approach and a level playing field in matters such as spectrum allocation, the industry will be able to offer customers a wider choice.
In which areas does RCOM need to spruce up its operations?
Taking telecom services to the hinterland is a big challenge. Network rollout always takes time as laying fibre requires many approvals and getting an electricity connection in rural areas is a challenge. As a result, operators use diesel gensets to operate towers. But it is also a challenge to fill the diesel on time.
We need to grow continuously and expand our distribution and customer service network to drive this growth. We would also like to increase rural broadband penetration through our pan-Indian high speed CDMA network which incumbent GSM operators cannot offer on their existing platform.
What is the road ahead for the company? What subscriber targets have been set for the future?
We are committed to participate in the telecom growth of the country, towards 600 million subscribers by 2011. As a major player in the sector, our immediate goal is to become a 100 million subscriber company this year.
What level of investments are you looking at over the next two-three years? Which segments are likely to receive greater thrust?
With our network rollout for GSM nearly complete, capital investment has now come down. We will now be investing in what is called “balancing capacity”, which implies that once coverage is over, what an operator needs to do is add capacities wherever needed. For instance, to cover the Delhi circle, a company will have to set up a number of towers across the place. Suppose it has more subscribers coming up in one part of Delhi, it will have to add more capacity in that region. As a result, we see capex intensity coming down as most of the rural coverage expansion has been achieved. We will now invest in capacity upgrades and quality improvements, as necessary.
Going forward, I see evolution to 3G as a major area of development. We are fully geared up for this. Our next-gen GSM network is equipped to be easily upgraded to provide 3G services. We are in a position where we can take advantage of both technologies, GSM and CDMA, to complete our portfolio.
We have been very strong on valueadded services. We were the first company to offer mobility to our customers through our R-World service. This offers mobile TV, video streaming, movie songs, etc. We did this in 2003, several years ahead of other players.
What are the company’s 3G plans? How do you expect the telecom landscape to evolve with the coming of 3G services?
While I cannot reveal the specifics of our 3G plans, 3G will allow a number of high-end services as well as wireless internet access services to be provided. We are in an advantageous position as we have a choice to go through either the GSM or the CDMA route. This gives us more flexibility in our portfolio planning and auction bidding.
Many of our value-added services, which we have been providing through CDMA, actually provide a near-3G experience. So, we already have expertise in providing the service and when 3G is available, we will be able to replicate our expertise on that platform. However, we will not allow our emotions to rule our decisions on 3G investment and will not repeat some of the over-exuberance we saw in Europe when the first 3G auctions were conducted.
The telecom landscape is less about technology and more about customer service, network quality and service innovation. Of these, 3G mainly addresses service innovation. 3G will enable operators to achieve the long-standing vision of the telecom sector, that is, a range of highend services on the move and a new screen ?? after cinema and television ?? with much wider reach and usage than the first two screens. For the sector, media companies with telecom interests will be the biggest beneficiaries.
In India, the landscape will also change as the number of available 3G slots, as per current auction rules, is less than the total licensed operators in all the circles. Thus, 3G can become a key differentiator ?? more than it has been in other markets in the world.
What new revenue-generating opportunities are likely to emerge for telecom operators over the next few years?
With the introduction of 3G, we believe that many more data-focused value-added services can be offered by telecom operators. All these services should add to revenues.
While mobile penetration has witnessed exponential growth, broadband has lagged behind. How can this issue be addressed?
Broadband could not take off in India during the initial stages as it was dependent on wireline technology. If you lay fibre in a certain area, you can provide broadband only in that area. For a country the size of India with a variety of terrains, providing broadband through the wireless platform becomes the preferred mode. With the help of high speed wireless technologies, wireless data will help grow broadband services, thereby increasing broadband penetration.
RCOM’s CDMA network is quipped with the high speed data (HSD) capability. We have recently launched HSD broadband services on our wireless network in over 30 major cities. Ninety per cent of the broadband users are in these cities today. And you have to experience the service to believe it ?? people have told us that they are getting speeds of up to 0.5-0.6 Mbps on this service. We plan to expand this service exponentially over the next few years with the increase in PC penetration in smaller cities and villages.
How will the dynamics of the sector change once players like Unitech and Videocon start operations?
We always advocate and welcome increased competition, which ultimately helps the customer. We believe that with the pro-consumer regulatory approach of the government, there is enough room for several operators to compete for subscribers from the over 1,100 million Indian population. The intensity of competition is already high and the entry of two or three more players will not change the essential dynamics of the market.
How has the global economic downturn impacted the Indian telecom industry?
There has been some impact on the consumer spending behaviour but with the high rate of additions, the impact is balanced out and the industry is able to report steady growth. All newcomers will have their own set of challenges and will have to find solutions to these.
