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Number portability will help our company a lot

Number portability will help our company a lot
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First Published: Sun, Apr 05 2009. 10 40 PM IST

Expressing confidence: Rajan says that though TTSL and TTML are late entrants in the GSM space, the good news is that the market is still growing and there is still a lot of opportunity. Ashesh Shah /
Expressing confidence: Rajan says that though TTSL and TTML are late entrants in the GSM space, the good news is that the market is still growing and there is still a lot of opportunity. Ashesh Shah /
Updated: Sun, Apr 05 2009. 10 40 PM IST
Mumbai: Mukund Rajan is among a chosen few at Bombay House, headquarters of the Tata group, who has made a successful transition from being a member of the chairman’s office to first become a director and then, early last year, managing director of Tata Teleservices (Maharashtra) Ltd, or TTML. Rajan avoided the media until late last month when he launched a slew of ultra high-speed broadband solutions. Rajan believes that when number portability kicks in, Tata Teleservices Ltd (TTSL) and TTML will be ideally placed to benefit from the churn as subscribers move to better networks. Number portability offers consumers the choice of switching to another phone company while retaining the same phone number.
Rajan spoke to Mint at TTML’s Navi Mumbai headquarters. Edited excerpts:
By the time you launch GSM (global system for mobile, a cellular phone technology) services, many of the new telecom licensees will have launched services in your circle. Won’t the market be taken by then?
True, we are late entrants in the GSM space. But the good news is that the market is still growing. It may not be so much, going forward, in metros such as Mumbai as they are getting saturated, but (in) semi-urban and rural parts of the country, including Maharashtra, the teledensity in last year alone has grown 10%. A lot of opportunity is still available. It is never too late.
Expressing confidence: Rajan says that though TTSL and TTML are late entrants in the GSM space, the good news is that the market is still growing and there is still a lot of opportunity. Ashesh Shah / Mint
But is there a market waiting for you in Mumbai?
The price-conscious segment of the market has caught on to the fact that there are different schemes at different times from different operators and so they have embraced this multiple SIM (Subscriber Identity Module) logic. Some months back, I was in Srisailam (in Andhra Pradesh) and I met this guy who lifts loads, who could have been earning Rs2,500-3,000 a month, and he had the latest Chinese (handset) which is dual SIM…and he had four SIM cards and he uses whichever service is giving him the best deal for the week or for the month.
Is this a new trend, to own multiple SIMs from different service providers?
After the shift to lifetime prepaid, people are no longer worried about losing validity. It is typically six month recharge for lifetime validity. Thus it almost becomes a commodity product like sachet packs in detergents etc: wash and move on. The same way, you use one operator’s product and move on. So even in metros, I don’t think growth is necessarily going to stop.
Even in metros like Mumbai, where there is 95% teledensity, there are new subscribers coming in...and these are owning multiple SIM cards. So even as teledensity saturates, it will slow down, but I don’t think growth will cease.
In such a scenario, what does an operator typically do?
Operators will start to look at extracting more from existing customers when teledensity starts to peak. Focus will be on value-added usage. The only big shift that could happen now is when 3G services (third-generation) are launched and mobile number portability comes into play. Those two events could see some amount of churn. So while growth in volumes is not sustainable, there is bound to be a shift between operators.
Can you comment on the markets expansion?
It hasn’t expanded that much. It might be some rotational churn by subscribers who have connections not giving up the existing service provider but have embraced a new service because they notice some value on the table. Subscribers are quick to grasp such opportunities. Though the sustainability of those customers is obviously a question mark.
What is your strategy in this context?
It is in the GSM space where this SIM-based game is played more frequently. In the CDMA space, typically the hand device is unique to the network so it is little harder to play the game. For our GSM strategy, you’ll have to wait and watch.
How soon can you launch GSM services?
We’ll launch by the second half of this calendar year. Theoretically any time between July and December, but we are trying to do it in the early part of the second half of 2009-10.
Will it be a simultaneous launch between TTSL and TTML?
TTSL received GSM spectrum before us in certain circles and they are doing it in a phased manner. When we get spectrum, we place orders with vendors so the telecom circles that get spectrum start rolling first. TTSL, to the best of my knowledge, is still to get GSM spectrum across the whole country. They are waiting for the allocation in some circles. So obviously those will happen later and others will happen before.
Why are Arpus (average revenue per user) falling?
It is true of all operators.
In your case it is Rs196 per month. Isn’t that lower than the industry?
This (is) the blended average (of wireless and wireline services). It is because of our late entry into the market, most of the high Arpu customers have typically gone with the first wave of operators. We are in that sense new kids on the block. In three years (since 2005), we picked up a lot of subscribers and our market share is quite healthy, about 14% in the wireless market.
Further the growth is now coming from semi-urban and rural areas, where the Arpus are very low. The winners in this market are those who can adjust the cost structure and operating style and strategies to the fact that new additions are coming from the new geographies.
In some ways we have learnt to survive in this industry in spite of the fact that we missed out on the first wave of rolling out mobile services… (it) is actually advantageous for us.
How do you see number portability affecting your business?
When number portability comes, the only people who can benefit are people like us. Because the higher Arpu customers who went with the first flush of mobile connectivity (are) seeking better service and better network. The best options are companies like TTML. I think balance will shift to more recent players who have created better network like us.
While TTSL has hived off its tower business and included a new strategic partner, TTML’s tower business is still a standalone business?
We were very clear that it would be hived off to a wholly owned subsidiary. We are an independent company so we went through a different process. We have received investor interest but we have not taken a decision. Those are very premium assets—the Mumbai market in particular— with newer players finding it difficult to find sites, housing society permissions in the city, this is a very valuable asset.
The Tata group has several telecom companies. But integration is yet to happen.
Mr Ratan Tata has gone on record several years back that eventually the group’s businesses will come together. But the fact is the businesses have different sets of shareholders. TTSL is unlisted, while TTML has public shareholders and Tata Communications Ltd has public shareholders and the government of India. Thus it gets a little complex. Tata Sky has Rupert Murdoch’s Star group as an investor. It is not easy to address the expectations of all stakeholders simultaneously. Directionally, it is clear what the group wants to do; operationally, we try and coordinate activities.
Some analysts say that TTSL and TTML do not have the experience to roll out GSM services.
I would strongly contest it. Actually it is more difficult to roll out a CDMA network. With the GSM launch, it will leverage a lot of our infrastructure that we have created.
How will you choose between focusing on CDMA and GSM?
We will ensure that both services will be optimally used. We will focus on both offerings. And we have a third platform—wireline platforms, very high-speed broadband. Going forward, we are a much more complete telecom services provider than most of the competition.
What will be DoCoMo’s role in your set-up? (Japan’s NTT DoCoMo Inc. recently completed the acquisition of a 26% stake in TTSL.)
Expectations at our end are extremely high. They are the first and largest 3G operator in the world.
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First Published: Sun, Apr 05 2009. 10 40 PM IST