Nokia Solutions and Networks (NSN) is a market leader in the Indian broadband equipment market. Despite regulatory uncertainty and slow growth in the telecom sector, the company witnessed steady growth in 2012-13. With the acquisition of Siemens’ stake in the former joint venture (JV), NSN intends to provide more value to its customers through innovative offerings. In an interview with tele.net, Sandeep Girotra, vice-president and head of India region, NSN, talks about the company’s performance, challenges in the sector and future plans. Excerpts…

What was the rationale behind acquiring Siemens’ stake in the JV? How will it affect the company’s operations going forward?

The acquisition of Siemens’ 50 per cent stake in the JV was a decision taken by the Nokia Group and it is best-suited to comment on this. However, what I can refer to is what Nokia and Siemens have publicly stated as the rationale for this. Stephen Elop, president and chief executive officer of Nokia had said: “With its clear strategic focus and strong leadership team, Nokia Siemens Networks structurally improved its operational and financial performance. Furthermore, Nokia Siemens Networks has established a clear leadership position in long term evolution (LTE), which provides an attractive growth opportunity. Nokia looks forward to continue supporting these efforts to create more shareholder value for the Nokia Group.”

Joe Kaeser, Siemens’ chief finance officer, had said: “With this transaction, we continue our efforts to strengthen our focus on Siemens’ core areas of energy management, industry and infrastructure as well as health care. The full acquisition of Nokia Siemens Networks by Nokia offers an attractive opportunity to actively shape the telecom equipment market for the future and create sustainable value.”

NSN is committed to its strategy of using focus, innovation and quality as key building blocks for the company’s success. The acquisition by Nokia has not affected NSN’s operations in any way and it continues to be business-as-usual for us. We remain focused on becoming the global specialist in the mobile broadband space and continuing with the tremendous progress made by the company during the first year of its two-year restructuring programme.

  How has NSN performed in the past one year in the country?

NSN is the market leader in the Indian mobile broadband segment and is among the top two players in the overall mobile telecom infrastructure segment. According to industry estimates, the company has 26.3 per cent share in the wireless infrastructure segment and 39.3 per cent share in the managed services vertical. It recorded significant growth in the mobile broadband space in the last four consecutive quarters. The company has performed well with respect to its 2G, 3G and LTE equipment as well as managed services portfolios and has signed deals with seven private operators.

 What were the key achievements of NSN India during 2012-13?

Despite 2012-13 being a difficult year for the telecom industry, NSN managed to expand its market share and widen its customer and product portfolio. The company also improved its service quality (key performance indicators) and enhanced its operational efficiency during 2012-13.

Some of the company’s operational highlights are:

• Set up a vendor-operated service management capability centre in Noida, which offers proof-of-concept to ensure superior end-user service experience for mobile broadband

•  Manufactured 3G and LTE products locally

•   Partnered with one of the largest operators in India to ensure dynamic capacity management and tariffing

•   Won a contract from Bharti Airtel to build and operate its LTE-time division duplex (LTE-TDD) network in Maharashtra and provide LTE-TDD six pipes radio and end-user data devices. It also commercially launched the circuit switch fallback technology in Airtel’s LTE network in Pune, which allows voice fallback from LTE-TDD to GSM.

•  Introduced new technologies in the Indian market in January-June 2013, including:

•  Virtualisation of core/home location register for various operators and other core customers

•   Multiradio for three operators

•  Wi-Fi network integration and core set-up for seamless Wi-Fi offload for two operators.

 Moreover, in 2012-13, the company won several contracts (non-public) for:

•  Dynamic capacity management and allocation for 2G/2.5G networks

•  Core upgrade and modernisation to IP

•  IP transformation of transport and backhaul networks

•   Radio modernisation using multiradio base stations

•   Dynamic capacity and pricing management platforms

•    Wi-Fi deal with two operators

•   Security solutions deal with one operator

•   Customer experience management deal extension

•   2G and 3G infrastructure

 What proportion of the global business and revenues do NSN’s Indian operations contribute?

In 2012-13, NSN’s global and Indian revenues amounted to Euro 13.4 billion and Euro 737 million respectively.

 What are the key trends in the telecom equipment industry?

Globally, mobile networks are expected to profitably deliver 1 GB of personalised data per user per day by 2020. In order to achieve this, mobile networks need to undergo a fundamental transformation. According to NSN’s Technology Vision 2020, the networks must support up to 1,000 times more capacity, reduce latency to milliseconds, ensure that networks are self-aware, personalise the network experience, reinvent telecom operators for cloud and reduce total energy consumption.

The recent trends witnessed in the Indian telecom industry are in line with global developments. The industry is likely to witness the following trends in the medium to long term:

•   Data traffic will witness continued growth

•   3G will continue to grow and emerge as a significant broadband technology in the next few years

•    2G will continue to be relevant for the Indian market for the next few years

•    Network modernisation is likely to be a key focus area

•    Managed services/outsourcing will evolve from being network-centric to end-user service centric. The partnership between operators and managed service providers is likely to become more interdependent

•  LTE-TDD is likely to gain traction in the next two years due to synergies from other global case studies and increased ecosystem development.

 What are the company’s key focus areas? Which telecom segment is witnessing the highest demand?

•  3G capacity and coverage expansion

•   Customer experience management

•    Managed services and expansion into newer areas like service management

•    New technology upgrades like single RAN and IP RAN

•    Security-related solutions.

 How has the network equipment space evolved in the past few years?

The telecom network equipment market has witnessed sluggish growth in the past one year. We have maintained our market share and made a strategic entry into a few areas like Wi-Fi, IP-RAN and security solutions. In addition, we have improved our bottom line through operational efficiency improvements, which will help the company take advantage of the market when it opens up to more infrastructure investments.

 What are some of the challenges faced by vendors in India?

It has been a challenging year for telecom vendors as well as operators in India. Though we have seen some positive developments that helped ease the pressure on the industry, some challenges still exist from a vendor’s point of view:

•  Lack of regulatory clarity about issues like mergers and acquisitions

•   Uncertainty related to the security and preferential market access policy

•   Unavailability of contiguous spectrum, which makes the development of more efficient technologies difficult

•   Capex slowdown owing to market uncertainties.

 What are your views on the local content requirement policy? What will be the impact of the government’s decision to procure network equipment from domestic manufacturers for security-sensitive projects on the company’s business?

The government is currently in the process of revisiting and reviewing the policy. We are in talks with various industry bodies on this issue and will continue to express our points of view through these discussions. Meanwhile, the company plans to focus on becoming a strong domestic manufacturer of telecom equipment and will support any positive move in policy building that is expected to strengthen the Indian telecom sector. We would like to reiterate that NSN is already one of the largest domestic telecommunications manufacturing companies in India and our facility at Chennai recently received the Rajiv Gandhi National Quality Award for large-scale manufacturing in the country.

How will the Nokia-Microsoft deal affect the company’s business?

We remain focused on executing our strategy, completing our restructuring and delivering industry-leading  innovation to our customers.