Tata Tele eyes spectrum, capex with GSM move5 min read . Updated: 21 Jan 2008, 12:25 AM IST
TataTele eyes spectrum, capex with GSM move
TataTele eyes spectrum, capex with GSM move
Wireless phone services firm Tata Teleservices Ltd, or TTSL, which has so far offered its services on CDMA (short for code division multiple access) networks, now plans to start services based on the rival GSM standard. TTSL, which had nearly 22 million subscribers at the end of November, the latest data available, lags competition despite having the backing of the Tata group, the second largest private sector conglomerate in the country.
In an interview with Mint, his first since the government’s decision to allow the company to offer GSM-based services, Anil Sardana, its managing director, says the decision to shift to this technology was driven by regulatory benefits GSM players enjoy and lower capital costs of such networks.
Sardana, 47, who took charge of TTSL in August after a stint at Tata Power Co. Ltd, expects his company to break even in less time than it took some of its bigger peers to do so. Edited excerpts:
The two largest CDMA-based mobile service providers (Reliance Communications Ltd and TTSL) are getting into GSM operations. What is the rationale behind moving into GSM and how is it going to impact your CDMA operations?
Getting into GSM does not mean there is any problem with CDMA or its future. Only thing is that one wants to harness the advantages associated with GSM. The foremost advantage is the regulatory aspect. The existing (norms) are so much in favour of GSM. No where in the world have CDMA networks had such an inferior ratio of spectrum allocation as the 1:2 ratio here. (In India, CDMA networks are allocated half the spectrum given to GSM operators on the premise that CDMA is a more spectrally efficient technology.)
It is very obvious there is absolutely no level-playing field for CDMA and considering the fact the field on the other side has been made so advantageous to GSM players, we have decided to move to that side and make use of those advantages.
Can you elaborate on these advantages?
The prime advantage is spectrum. If you drive a Mercedes, will the government anywhere in the world say that you would get double fuel for the same rate (compared with someone driving another car)? I keep hearing only one line, CDMA is supposed to be more spectral efficient. If that is the case, allow us to pass the benefit to customers. Why is the (GSM) technology being favoured with two times the spectrum? It’s totally unfair.
We have done a simple like-to-like comparison. Assuming that I have three million subscribers in a particular circle and assume somebody in GSM was also three million at a given point of time in the same circle, if we have 4.4MHz to be cleared, then they have 9.8MHz or 10.2MHz.
How about the benefits of a large ecosystem of GSM mobile handset makers and infrastructure providers?
First, the regulatory issue has been a major cause (for wanting to shift). Then comes the associated issues of capex (capital expenditure) versus the opex (operating expenditure). When you, as an operator, go to shareholders, the shareholders compare the balance sheets. When in the balance sheet they see that you are spending so much more of capital cost and the competition is not, they ask why.
We have done a ball-park figure (analysis) that compares what we are today and where a GSM operator was (would have been). At the same situation (as we are today), a GSM player would have spent somewhere about Rs10,000 crore less than us. Besides, he is saving Rs1,000 crore (that goes) in (to) the bottom line every year. Is that a level-playing field when it comes to the stakeholder’s perspective?
Tell us about your GSM plans.
It is too early; we haven’t got the spectrum yet. I think it is wrong to assume that every thing has happened.
But are you going to migrate your CDMA customers once you have the GSM-based operation?
I don’t want to say anything at this stage. Customers by virtue of their choice can always do that; by virtue of force, certainly not.
What is your view on the spectrum allocation to Reliance Communications?
Since the matter is sub judice, I would not say anything on the matter. But we have taken a clear position that we are the first applicant after the policy was announced. So, we should have priority in spectrum (allocation).
Policy was announced on 19 October and first applicant applying for crossover was us.
What is your view on the whole thing of asking existing service providers to return extra spectrum?
We are one of those who have filed the petition saying that people who have got more should return it. It is very clear that they (GSM operators) are saving tremendous amount of capital expenditure and operating (expenditure) which is against the level-playing-field concept.
Is there a danger of spectrum hoarding taking place in the way new players have applied for spectrum?
We, in Tatas (at the Tata group) have always welcomed competition. So, I am only saying we have nothing against competition. Now (deciding) who is a serious player, who is not is not our job, but a policy maker’s job. They should look at that aspect. We are saying that it should be taken back from those players who have got spectrum beyond 6.2MHz.
You have been lagging the competition in the telecom business for a long time…
It is not that we have been lagging in the telecom space. We are the only player in India that has (a presence in the) end-to-end canvas of telecom field. It is only that we have multiple companies and at times people mistake that as being deficient. It is not when you add TTSL, TTML (Tata Tele Maharashtra Ltd), VSNL (Videsh Sanchar Nigam Ltd), Tata Sky and software service that we provide through TCS (Tata Consultancy Services Ltd).
We are the only player which has the entire concept of telecommunication. We started our mobile telephony business in January 2005 and we are the fastest growing operator. According to Trai (Telecom Regulatory Authority of India) data, our growth has been above 85% on a year-on-year basis. Where as for other operators, it has been above 17% to 20%.
TTSL has been losing money...
(The) profile of TTSL, as it was planned, clearly suggested that it will have a particular way of growth. Some of the players you today see as more profitable are 13 and 14-year- old players. When did the break even happen (for them)? I can only tell you we will have much better and much faster period in terms of break even.