Darryl Green, CEO, Tata Teleservices Limited

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Mobile Subscribers Yearwise comparision

Darryl Green, CEO, Tata Teleservices Limited

July 15, 2005

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Darryl Green recently took over the reins of Tata Teleservices Limited (TTSL). He brings with him many years of telecom experience, having had several successful stints with international telecom majors like Vodafone KK, Global Crossing Japan KK and AT&T. In an interview with tele.net soon after taking over as chief executive officer, Green discusses TTSL's performance and plans...

What, according to you, have been Tata Teleservices' most significant achievements in 2004-05?

The year 2004-05 was an eventful one for TTSL. We launched operations in 12 new circles. This is the fastest ever rollout of national operations by any telecom operator in India. We crossed a subscriber base of 3.7 million. This is a major milestone for India's youngest national telecom player.

Tata Teleservices also climbed to third position in terms of incremental market share in the wireless market during April 2005. In the 12 circles where it commenced operations only a few months ago, the company has achieved a market share of 28 per cent in April 2005 compared to just 8 per cent in January 2005. This clearly indicates that the Tata Indicom brand is surging ahead, and is today one of India's fastest growing telecom brands.

Tata Teleservices marked its entry into the prepaid segment by launching Tata Indicom True Paid across all existing 20 circles. With the latest initiative, Tata Indicom has opened up new frontiers for the Indian prepaid customers by offering 100 per cent talktime on True Paid.

We have followed this up with many other innovations. For instance, Tata Indicom recently launched Indicom Gem, a stylish new mobile phone, which comes in an incredibly small and compact size and is very easy to use.

As the telecom industry is booming, we expect 2005-06 to be a fruitful year for Tata Teleservices. The potential of application-driven value-added services targeted at specific customer segments will be an opportunity to add significant revenues and will constitute a key differentiator for the brand in the coming year.

Were these achievements in line with the targets?

In December 2003, immediately after the announcement of UASL, Tata Teleservices started implementing the telecom blueprint that had been waiting for the most opportune time. Within a few days, we migrated to UASL in our existing circles and applied for licences in 12 new circles.Clearly the speed of this network rollout is unprecedented in telecom history anywhere. We have been successful in achieving a pan-Indian presence within the timeframe we had envisaged.

In addition, during the year, Tata Teleservices' retail presence will span more than 4,000 cities through 300 True Value Hubs, 3,000 True Value Shops and 25,000 True Value Express outlets. This will be the largest branded retail presence amongst telecom operators in the country. It has been an eventful decade for private telecom service providers in the country, which has seen 50 million mobile customers.

However, the real growth of telephony started in the last 12-16 months and TRAI projections estimate that by end-2007, the country is poised to have 200 million mobile customers. We are well poised to take advantage of this rapidly growing market. In a nutshell, it has been a very well-coordinated effort across all functional areas of the company, which has set an excellent foundation for us. Going forward, we will strive towards a clear leadership position in the years ahead.

What is TTSL's focus area for 2005-06?

We will improve our handset line-up with a view to increase the choice for the customer. In the years to come, a key growth driver will be data and value-added services. Therefore, as the market is becoming mature and data focused, the CDMA mobile business, of which Tata Indicom is a part, is going to grow rapidly. Till lately, mobile operators were fighting to retain their customer base on the basis of voice tariffs. Today, voice tariffs have reached rock-bottom levels. As the market has matured, mobile operators are now looking at getting revenues from non-voicebased applications.

We have recently launched innovative products such as the V-Data Card, which enables our customers to access the internet from wherever they are. We also have innovative products in the pipeline, such as "Ego", a comprehensive, integrated communication device. It does not make coffee for you, but does virtually everything else on the move! Tata Teleservices has a data-centric vision. We are confident that enhanced data offerings will increase our ARPUs. We are also developing a suite of business and youth-oriented applications for the corporate and youth wireless segments respectively.

What are the strengths and weaknesses of TTSL?

The Tata Group's commitment towards the entire telecom value chain is in itself a great strength. This, coupled with the brand name, generates a tremendous amount of trust and confidence in the minds of consumers. Even though we are a late entrant, we are reaping the benefits of lower capex per subscriber, which indeed is a great strategic advantage.

We need to be more agile, we need to improve our speed to market, we need to build even more strongly on our urge for innovation – all these are areas for improvement.

Is India on course to reach the target of over 200 million subscribers by 2007?

The Indian telecom market is extremely competitive. This competition will continue to spur growth, particularly in the wireless segment. Already in the metros, the number of mobile connections has overtaken landline connections. Within the next four to five years, both CDMA and GSM will have equal market share. The real growth of telephony has started in the last 12-16 months and projections estimate that by end-2007, the country is certainly poised to have 200 million mobile customers. I agree with this projection.

What do you feel are the main concerns facing the industry today?

Spectrum allocation and lack of clarity about the path of introduction of 3G services are the main concerns.

What, in your opinion, is a realistic solution to the current spectrum controversy?

First, it should be very clear among all telecom operators that, being a scarce national resource, spectrum should not be allocated free to any telecom operator.Our chairman, Mr Ratan Tata, has suggested that the government could charge a licence fee for 3G services and assign spectrum to the operator who pays the highest revenue share. The objective of the entry fee is to provide a disincentive for hoarding or inefficient use of spectrum. An all-India allocation would enable smoother rollout of 3G services.In case demand for spectrum exceeds supply, the government should assign spectrum to the operator who pays the highest revenue share, in addition to an entry fee of Rs 15 billion.

What would you term as the strengths and weaknesses of the Indian telecom industry?

It is a well-known fact that the telecommunications ministry has estimated the total subscriber base, including fixed line, at 250 million by 2007. According to telecom analysts, the market will grow fast – by about 2010, the teledensity should be 40 per cent from around 10 per cent at present. However, despite the stupendous growth in mobile telephony that has enabled it to overtake fixed lines, the country is still lagging behind in terms of telecom density. At present, mobile coverage is confined mostly to the urban areas. The coverage in rural areas is very limited and mostly incidental along the highways. Hence, the regulator has proposed a mobile network coverage plan that would enable 75 per cent coverage of the population by 2006 compared to 20 per cent at present.

To increase rural penetration, TTSL has rolled out fixed wireless terminals (FWT) in rural areas. With this initiative, under the USO agreement, Tata Indicom has become the first private operator in the country to install residential lines (FWT) in villages with a population of less than 5,000.

How do the telecom markets of India and China compare?

Both markets will follow a similar growth trajectory. Currently, China is higher on the growth curve. On the aspect of technology, both India and China are at similar levels and in both countries landline facilities are poor, as is the rural network. India will soon accelerate in closing this gap.

How is TTSL placed to push broadband growth in the future?

While telecom continues to be the fastest growing market, we believe that broadband will also offer a huge market in the next two or three years. Our sister company, VSNL, is well positioned for market leadership in conventional broadband and we will cooperate with VSNL under the Indicom brand to meet customer needs.Finally, we believe that deployment of EV-DO will fulfil many broadband requirements with the huge benefit of being wireless. So the introduction of 3G services is very exciting in this area.

What will be the key market trends in 2005?

There will be pan-Indian rates and calling schemes. Value-added services will continue to gain in popularity as allowed by higher data speeds.

What are TTSL's long-term plans?

Under the USO, in order to increase penetration in the rural areas, Tata Teleservices has started rolling out FWT in nine circles. Secondly, we will try and push the group's foray in the telecom business, to integrate its various offerings into one saleable proposition. TTSL's coverage will expand to some 2,500 towns, double the current reach, to net an additional 6 to 7 million subscribers over the next 12 months. Tata Teleservices will be aggressive in terms of reach and service offerings.

The launch of service in our new circles happened over the last four-five months. The customer response has been quite encouraging, with as many as 22 per cent of new subscribers opting for Tata Indicom during this period. Tata Indicom would be in a position to meet the telephony needs of 25 per cent of subscribers in the country. Tata Indicom is a brand which will enable customers across India to do more, and live more! Our exciting suite of products and services, our excellent modern telecom network and our nationwide reach will make this brand the most preferred alternative amongst consumers across the country.