How would you rate TTSL’s financial performance in 2010-11? What were the critical factors that affected the company’s growth and performance in the year gone by?
The single biggest factor affecting our growth has been the availability of spectrum for newer entrants into the business as compared with the more established companies in this space. For instance, we have not been able to launch our GSM services in a crucial market such as Delhi, where we are yet to receive even the start-up spectrum. Despite these limitations we continue to strengthen our GSM business faster than the market.
Your investments for business expansion seem to have no bounds. What’s the logic driving these investments, especially in the context of shrinking margins in the telecom business?
A new generation of smartphones and devices such as tablets is changing the lives of individuals and the way corporations do business on the net. New enterprises are emerging in the telecom landscape and they are making the most of this changing paradigm. Traditional telcos need to transform themselves in line with this trend if they are to remain viable in the long run.
TTSL, like many similar companies around the world, is making the same transition. New services are necessary for both growth and profitability given the intense competition in traditional revenue streams. TTSL’s main investments in the last few years have been towards expanding its network and services capability in 2G and now, 3G technologies.
While we make this transition, we are constantly focused on improving the profitability of our traditional businesses, principally by optimising revenues and costs though a variety of initiatives. Better customer segmentation, the best mix of services, reduced costs to market, improved service to our customers, investments only in profitable areas and control on capital expenditure through the sharing of networks with other operators — these are the important programmes we have running.
The Tata DOCOMO effect has brought plenty of cheer for TTSL. How do you see this panning out in the days ahead?
Tata DOCOMO is one of the fastest-growing services in the market today in spite of the disadvantages TTSL faces on spectrum availability. We expect to continue to build on the success of this value proposition in the future.
Is there a case for bringing together TTSL and Tata Teleservices (Maharashtra)? Do you see that happening anytime soon?
In essence, we are already achieving many of the benefits of an integrated entity within our existing corporate structures. This could also pave the way for any future bringing together of these entities, if we decide to do so.
You have bet big on the ‘Keep it simple, silly’ ad campaign. Has it had the desired effect?
What do you see as the big challenges facing TTSL as it seeks further growth? Also, how does the company see itself evolving over the next five years?
Many traditional services are being commoditised and new realities are emerging, often driven by enterprises that are not traditional telcos. This means that communications companies have to think differently about what services they plan to provide in the changing value chain, and how they will keep their customers satisfied while managing both growth and profitability.
Being able to successfully manage this transition, while improving profitability in existing services, is the critical task before us. This will mean new business models supported by new organisation structures, technologies, skills, processes and more. We also believe that, with the partnership between the Tata group and NTT DOCOMO, we have many of the necessary building blocks and capabilities to pull this off successfully.
The markets of the future will be driven by new devices, services and applications. We see an opportunity here of playing a role beyond that of a voice or bandwidth provider. We see ourselves as a complete solutions provider to both individual and enterprise customers, with a suite of innovative products and services created around their emerging needs.
This interview is a part of the cover story of the August 2011 issue of Tata Review in which ten Tata CEOs talk about the past, present and prospects of the companies they head: