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A global leader in the CDMA equipment space, ZTE has made significant headway in the Indian market. The company's multi-pronged strategy has proved beneficial and enabled it to bag equipment contracts from the leading players. Going forward, the company's key focus areas will be value-added service (VAS) solutions, research and development (R&D) and 3G equipment. In a recent interview with tele.net, Dr D.K. Ghosh, chairman and managing director, ZTE Telecom India, discusses the company's performance so far and the future thrust areas. Excerpts...
What has been ZTE Telecom's biggest milestone in the past five years? Which have been its key contracts in the Indian market?
ZTE entered the Indian market in 1999 and currently has 1,500 employees, of which more than 80 per cent are local. It has sales offices in Gurgaon, Mumbai and Bangalore; an R&D centre, after-sales and training centre at Bangalore; and a factory and logistics centre at Manesar. Our target is to be a leading player in Indian telecom and play a constructive role in its growth.
ZTE has a glorious track record. Sales have soared from $104 million in 2004 to $210 million in 2005, $475 million in 2006, $700 million in 2007. For the second year running, ZTE has been ranked amongst the top 10 equipment vendors in telecom in India. We are market leaders in the CDMA, NGN and broadband segments. We are GSM systems suppliers to Aircel, Tata Teleservices Limited, Idea, Spice and RCOM, and CDMA suppliers to Bharat Sanchar Nigam Limited (BSNL), Shyam-Sistema, and others.
ZTE recently bagged a $100 million contract for supplying GSM solutions to China Mobile's Pakistan subsidiary, popularly known as CMPak. The order requires ZTE to deploy its solutions for CMPak, mainly in central Pakistan comprising eight cities and regions, including Multan, Faisalabad and Lahore. The deal will see ZTE deploy its M8206 base station, using a unified total IP hardware platform. The solution is easy to install and is expected to provide benefits like power consumption, quick installation, easy maintenance and extension, and rapid network evolution.
What will be the organisation's key focus areas in the next couple of years?
As a major equipment supplier to the Indian telecom and IT services industry, ZTE will offer what the service providers want. The focus areas of the Indian telecom industry in the coming months and years would remain expansion of their 2G and 2.5G services and installation of 3G lines. At the same time, service providers would have to ensure proper and effective billing and content provision. Our work is to ensure that service providers get the best equipment in all these areas at the most competitive prices. Also, we will ensure that the equipment we offer is based on cutting-edge technology that is available globally. But our equipment would also be unique with regard to reliability. In this, our global experience would be of immense value for Indian service providers.
How is ZTE countering the stiff competition from key global vendors such as Nokia Siemens Network, Alcatel-Lucent and Motorola?
The only way we can stand up to global competition is to have a reputation for equipment that is of the highest quality and reliability, is competitively priced and delivered on time. We have teams of highly qualified professionals, both Chinese and Indian, and they are deployed to be available at a moment's notice. Our organisational and technological capabilities are world class.
What are some of the key challenges faced by ZTE in the Indian market?
The key challenges include rapid changes in technology, financial constraints of service providers and bureaucratic problems in equipment import and taxation. Dwindling margins and southward-bound pricing are also major challenges.
What are some of your initiatives on the 3G and broadband fronts? Do you expect these technologies to take off in India?
We have no doubt that 3G will take off in the country, once the teething troubles in licensing and allotment of spectrum are overcome. We at ZTE are ready to make our offer for 3G equipment and help in installation as soon as service providers are ready for their rollout. We are already competing for BSNL's order for 3G lines.Broadband growth has not been as envisaged in 2007, when the government declared it as the Year of Broadband. But we feel that with the government's approval of wireless broadband technologies like Wi-Max, this will now take off.We are closely watching the scene and interacting with potential service providers. We recognise that the visual media will be more relevant in this country than mere voice or data. In that respect, wireless broadband and wireline broadband would provide a big push to the economy, especially in rural areas, provided all stakeholders work together to make this service affordable and replete with relevant content in local languages.
Are you planning to set up a manufacturing unit in India? What are the opportunities and challenges associated with this?
The opportunities are evident as India is and will continue to be the second largest market for telecom services in the world.Local manufacturing would help improve the confidence level of our clients and also help us cut delivery times. But these advantages would be available only when the government policies regarding import of components and subassemblies are clear-cut and taxation rules are transparent and simple.
What kind of investments do you make in R&D? Do you intend to scale these up?
R&D investments are a crucial part of our business plans and we keep investing larger and larger sums in this sector. As a global supplier, we have to be ahead of our competitors in technology. R&D remains a key focus area for the company.ZTE spends about 10 per cent of its revenues on R&D activities. The company has 16 R&D centres, including seven centres across the globe outside China. About 40 per cent of its workforce comprises personnel from the R&D department ZTE's focus is on providing competitively priced products without compromising on quality.
Keeping that in mind, in spite of the Indian telecom market being one of the fastest growing high-potential markets in the world, operators still face issues such as high capex/opex and low average revenue per user. Therefore, ZTE aims to position its value-added services (VAS) portfolio as a solution to mitigating these issues. The company is a global leader in VAS. Its solutions are deployed in 70 networks worldwide and support about 320 million subscribers. Its VAS portfolio includes data and content solutions, operating platforms, and voice and messaging solutions. The company terms these offerings as part of its "Any Service" offerings. Going forward, the company plans to develop line interception systems to assist defence and security personnel in tracking telephone conversations.
What are the company's plans for its handset division?
For handset manufacture and supply, any company these days has to be circumspect. The level of competition is very high and new technologies are sweeping out old and established manufacturers. However, the mass market in the country would continue to be in the areas of creating and supplying low-cost handsets with local-language keyboards. A rapidly growing area is touch and handwriting recognising handsets. In India, with its many languages and scripts, handset makers would have to be highly innovative to cater to such a diverse market. ZTE has sold a total of 16 million handsets in the Indian market and is ranked number six after Nokia, Samsung, LG, Sony-Ericsson and Motorola.
What are the key emerging technology trends globally?
Mobile handsets and laptops are fusing in the global scenario. And it won't be long before one can use handsets while travelling and switch over to the landline once at home or in the office. Mobile TV and internet protocol television are going to be the major attractions in the next five years while home theatres would soon replace the regular TV sets. The convergence of technologies and services would decide the future.
Where does India stand vis-a-vis other Southeast Asian countries in terms of technology adoption?
Such comparisons are irrelevant. Each country has to take its own decisions. India is ahead of many Southeast Asian countries in terms of market size, though in broadband and 3G adoption, some others like Malaysia and obviously Singapore have far outpaced India. But the next five years would see rapid changes, with India catching up on the technology front, apart from the very size of its mobile market. India is ahead of many Southeast Asian countries in terms of market size, though in broadband and 3G adoption, some others like Malaysia and Singapore have far out-paced India. But the next five years would see rapid changes, with India catching up on the technology front.
