How has the financial year 2007-08 been for TTSL? What are the high points?
The last financial year has seen a kind of rejuvenation at TTSL. For one thing, the Tata Indicom business has become EBITA positive. Tata Indicom mobile services started in January 2005 and this turnaround is the shortest in comparison to other players in the market. There were more than 25 million Tata Indicom customers – TTSL+Tata Teleservices (Maharashtra) – at the end of last year. Tata Indicom’s growth in mobile telephony and also percentage share contribution through value added services as a percentage of the revenue is the highest in the industry.

For another, our network has been rated the best in quality continuously for the last six months. We have the least call drops, best data download rates and the best voice quality. In addition, we launched a new service for the youth segment with the Virgin Mobile brand. The aim is to make our customer more loyal with such segmented offerings.

To leverage the advantages of CDMA, we have launched products like USB modems. These are the first and the best in the industry with a high 65 per cent market share. Other products leveraging CDMA advantages are in the pipeline. In April 2008, we launched our new product, the cordless ‘Walky Talky’ which is available in 8 digit and 10 digit numbers and allows a customer to have a desk telephone without wires. The phone can be carried around within a radius of 10km, allowing customers to stay connected while on the move.

Going forward, we also aim to have branded value added services; for instance, we are working to make the phone’s small screen a solution provider for enterprises. The small screen will become an advertising tool for companies who want to communicate with the mass market. Recently we did a project with a lingerie company that wanted to take its brand to women customers only.

We have recently worked with companies where SAP screens are used on the handset allowing sales people to enter orders and get inventory details on real time basis using their mobile handsets.

We are also working on customer service and have decided to take this to benchmark levels by accepting voluntary fines for any deviation in the customer charter that we state but do not deliver. Culturally, we are turning things around, to live up to what we position.

What do you perceive to be the greatest opportunities and threats for the company over the next two years?
We are on the brink of getting our GSM spectrum and plan to launch GSM services as soon as the (radio wave) spectrum comes our way. Then we will be present in both CDMA and GSM segments, offering voice choices for customers on GSM and data choices for customers on CDMA, enabling them to get the best of both services. We will have dual handsets that will facilitate both technologies.

Retaining good people to manage our services on a sustainable basis is a big challenge. Attrition is therefore one of our biggest threats. We are losing employees through poaching, done with the intent of destabilising our businesses. We are working on measures to arrest our attrition and ensure that people look at being with the Tatas for reasons of personal values, rather than just for money.

TTSL has forged partnerships with different organisations: Department of Telecommunications (DoT), Indian Institute of Technology – Bombay (IIT-B) and the Multi Commodity Exchange (MCX). What is the reasoning behind these tie-ups?
We have created a centre of excellence in rural communications in collaboration with IIT-B. The reason for this is that India has approximately 50 per cent tele-density in urban areas but only five per cent in rural areas. Conventional solutions are not viable, as the average revenue per customer in rural areas is very low; we need innovative solutions a la the Nano.

We tied up with MCX and TCS and have launched mkrishi (mobile krishi) for farmers on pilot basis. The MCX / mkrishi phone provides them with guidance and information on factors such as rainfall, cost of seeds, fertilisers, when they need to cut the crops, etc. It also provides them with the daily mandi rates online, enabling them to sell their merchandise for better rates. A similar service is being offered to fishermen. The fishing community gets information on their mobiles — when to go to sea, when to refrain, weather alerts, etc. After the tsunami, the project was started as a corporate sustainability initiative and now we are giving this a commercial orientation.

How are new government policies affecting the Indian telecom market? What are the positives on this front and what is being done to improve matters for telecom companies and consumers?

There are a few areas that we are taking up with the government to ensure that the industry becomes more transparent. Some issues, like inter-connection charges (an amount that the provider pays for a call made to other telecom operators), are being discussed with the government. Today call rates are as cheap as Rs0.50-0.60, but Rs0.30 of that is the inter-connect charge. We are in talks to get this reviewed and have suggested reduction of the charges to Rs0.15. If this happens, then the benefit will be passed on to the customer and call rates will become more competitive.

What is your take on the spectrum debate? Are vested interests skewing the situation?
There are vested interests and the industry decisions are certainly skewed. We have seen the competition do things that according to us is not fair play. Certain players have been able to capture excess spectrum (radio waves used for mobile communication) and have had the advantage of savings of millions of dollars in capital and operational expenditure every year.

Some GSM players had been given spectrum in excess of what they were entitled for. We want a level playing field; either this additional spectrum should be given back or similar spectrum norms should be extended to other players. This will make sure that both the initial and the recurring benefits that had been reaped by them are neutralised and new players can enter a fair market place.

The government is opening up the sector to new players. The policy to allow the crossover spectrum (to use both GSM and CDMA technologies) is a boost for the sector. We have got our crossover licence and are awaiting the GSM spectrum allocation.

What, according to you, is the best method of spectrum allocation?
The Tata Group has always maintained that the present method of allocation of spectrum, which is by the subscriber count, is not a fair way of allocating additional spectrum. A better method would be to fix a rupee value to each new lot of spectrum to be allocated and this can be done based on a value that is slightly higher than the amount that would be needed to achieve similar objectives by investing more capital.

This value can be determined by two methods – one, benchmark it against rates offered in developed countries. Two, benchmark it against the capital that operators would need to expend if the spectrum had not been available. For example, if I don’t get additional spectrum, then I need to make capital investments of say, one billion dollars, increase the number of repeater stations and towers in order to offer seamless coverage to customers. The spectrum should be priced at a notch above that threshold.

The situation today is that radio waves are a limited resource and new players have to make investments that are multiple times more as compared to the incumbents, who made paltry investments and managed everything through radio waves. This is the asymmetrical favour that has been extended to incumbents, besides the fact that they have already acquired an unfair degree of market share. We prefer that, in terms of policy and radio waves allocation, the government is fair to the new players, enabling them to become competitive.

Are there any alternatives to spectrum technology?
Wireline is one, but newer technologies are coming in which use much lesser radio waves. When 3G is launched, we will be able to achieve much more in 5Mhz, than was achieved in 2G. Similarly, when 4G is launched, we will be able to achieve even more with lesser spectrum. This is why the government should encourage migration to newer technologies, and we are hearing these signals now.

Where do you expect TTSL to be in five years, in terms of customers and revenues? How does Tata Teleservices (Maharashtra) (TTML) fit into the scheme of things?
We expect that in five years, we will have 100 million happy customers and we will be a well-respected profitable company. Our objective is to live up to the Tata brand and ensure that customers are happy to possess a Tata product.

TTML came into being when we took over Hughes Telecom. We have made sure that TTML and TTSL conduct business without duplication. We are in different markets – TTML is in Mumbai and Maharashtra, while TTSL is in other states. However, on regulatory aspects of business, government interfaces, issues regarding policy matters, follow up on issues which will lead to improvements for customers in terms of revenues and costs, we operate as a single point interface. There is no conflict and the two co-exist as one interface and one brand – Tata Indicom.

Do you think you are going to remain as separate entities for long or will there be consolidation?
One has to wait and see, as there are several stakeholder considerations. Tata Communications was acquired with the government being a shareholder. TTML was acquired from Hughes Telecom and there are public shareholdings.

From the stakeholders’ point of view, we need to make sure that there is a value proposition in whatever evolves in the future. We are definitely working on various platforms where we can have more synergies between various telecom companies of the Group.