Why are the CEOs Going?

Within 2 months the telecom industry saw resignations of CEOs of five top telecom companies operating in the Indian market. It neither appears routine nor accidental. Coincidental? May be. And that's enough reason for some raised eye-brows. We may ignore the raised eye-brows for the movement of these executives but can it be ignored if the executives are moving out of the world's second largest telecom market? And when? At a time when the Indian telecom industry is going through a difficult period-for the last two years marred by corruptions, scandals, controversies, policy uncertainty and increasingly bleeding operators.

It is quite normal for executives to put in their papers and join a rival firm at a higher position, but the irony in the current situation is that these executives cannot join a rival company at a higher position. Why? Simply because they are the top guys in their respective companies, which happen to be the biggest in their own fields. So, quitting to join rival companies does not look like a probable reason, better paychecks? May be.

Picture this: Sanjay Kapoor, CEO of airtel India and South Asia; Sandip Das, CEO of Maxis; Naresh Wadhwa, president and country manager of Cisco India, Fredrik Jejdling, India head of Ericsson, and Cui Liangjun, CEO of ZTE India quit India operations in a span of just two months. The first three quit their positions while the other two have shifted their locations to out of India. In both the cases, the Indian telecom industry is going to miss the service and expertise of these executives who are industry veterans and a power house of business acumen.

Though movements do happen in any industry but when it happens within a very short span of time and the business leaders completely leave their current profession or current operational market, the industry becomes sceptical. And when these people leave a market that is going through a rough phase, the stakeholders tend to speculate. Why are they leaving? Is the focus shifting from the Indian market?

 

 

Sanjay Kapoor, CEO, India & South Asia, Bharti airtel

The biggest jolt was felt in the industry when Sanjay Kapoor, CEO, India & South Asia, Bharti airtel, the country's largest telecom operator, put in his papers in the second week of January, 2013. This was not the kind of gift the industry was expecting in the New Year. He had served the Bharti group for almost 15 years and most importantly, he was handed over the CEO hat when Bharti was in a very critical juncture. The company was expanding its international operations outside of Indian subcontinent and entering African markets. Kapoor was asked to look after India as well as South Asia.

Kapoor joined Bharti Cellular as its COO in 1998 and soon took over as its CEO to develop the Delhi Circle as the foundation stone of airtel's growth. Sanjay has held several leadership roles since and has been instrumental in shaping the growth of airtel. As CEO, India & South Asia, he led key transformations including the launch of airtel's new global identity-giving it a fresh, youthful and vibrant face, realigning the organization from a technology-facing to a customer-facing one for enhanced synergies, agility and customer elasticity. He played a key role in shaping the organization from being a voice centric business to a mobile internet company, with forays into 3G, 4G, WiFi etc. The launch of "airtel Business", an enterprise brand; conceptualization and implementation of airtel Money as a new strategic business; and the launch of airtel's first ever employer brand "Jobs never done before".

Highlights

Though movements do happen in any industry but when it happens within a very short span of time and the business leaders completely leave their current profession or current operational market, the industry becomes sceptical.

And when these people leave a market that is going through a rough phase, the stakeholders tend to speculate. Why are they leaving? Is the focus shifting from the Indian market?

On Kapoor's resignation, the company said, "he has decided to pursue his future aspirations outside of Bharti". But in one of his last speeches in the public platform at Voice&Data's Telecom Leadership Forum on December 6, 2012, Kapoor had mentioned that Bharti airtel is in his flesh and blood and he had indicated his wish to work for the company for many more years to come. The speech was so elaborate and emotional that, it seemed, perhaps he had already decided to quit the company. It sounded more like a farewell speech. But then why did he resign? If industry rumors are to be believed, Kapoor did not want to report to global CEO Manoj Kohli, once again following a restructuring exercise that may eventually end up combining the Indian and African operations.

 

After Kohli was sent to head airtel's Africa operations, Sanjay Kapoor, who was reporting to him till then, got a leg-up to be the CEO of the India business-a far, far bigger operation.

Both of them then started reporting directly to founder-chairman Sunil Mittal.

Now, in the latest reorganization, according to sources within the company, Kapoor was offered the position of deputy global CEO, under Kohli-a position that's above Gopal Vittal's-who, too, directly reports to Sunil Mittal. For some time, there were rumors that Kapoor may also be shifted to lead the African operations. But it would have been humiliating, as per industry watchers, as Kapoor as CEO, India & South Asia, was looking after the biggest market for Bharti and Africa is a much smaller market than India.

The African market contributes just over $2 bn to Bharti airtel's total annual revenue of $15 bn. Coming back to Indian operations, though the revenue is on the rise, the company's net profits are on a continuous decline for the last 12 quarters; and its painful for any CEO to accept this. But then the market condition in India is in such a bad shape that every telecom operator is bleeding profusely, a CEO cannot alone be blamed for this. But again, technically, the brunt has to be borne by him, and it creates dent in the carrer graph of the executive.

However when the company issued a statement on the reshuffle at the top deck, the message was clear. The focus areas of Kapoor's succesor Gopal Vittal, another industry veteran and a former Bharti employee, would be on "enhancing market share and margins along with growth of alternate revenue streams including 3G, data, airtel Money and Value Added Services." For the record, in the last two years airtel has failed to gain significant momentum in these services.

Sandip Das, CEO, Maxis Berhad & director, Aircel:

When Sandip Das, CEO of Maxis Berhad and director of Aircel was replaced from his current position, the industry was similarly taken aback. Last month, Maxis announced the appointment of Johan Dennelind as its new CEO effective July 1, 2013, succeeding Sandip Das. Some analysts have been quoted as saying that the change at the top deck was to bring some ‘fresh blood' into Maxis while Das would focus more on Aircel. Das is a name to reckon with in India as well as international telecom business. He had earlier said, at the sidelines of an industry event in Delhi, that the regulatory and policy uncertainties could ‘completely destroy the business case' of telecom companies here and undo the success the sector had enjoyed for over a decade. "We want spectrum to be given up to 6.2 MHz which is our legitimate right. That's the contract which we signed with the government and it can't be changed mid-way after having invested billions and creating so many jobs," he had cited policy uncertainty as a big hindrance to the telecom growth in India. But for the last couple of years the company has witnessed lots of disturbances, both in its business as well as with the people who run it. The entire top management of Aircel has resigned and joined some of their rivals. The most noted development was the quitting of Gurdeep Singh, COO of Aircel, who had been running the show for the last 5 years. He then joined Reliance Communications as CEO of its wireless division.

Besides, Aircel has been embroiled in one controversy or the other over the past few years starting from the arbitration proceedings initiated by its earlier promoter C Sivasankaran. The latest allegations involving former telecom minister Dayanidhi Maran and the home minister P Chidambaram's son has only vitiated the environment for the company.

Naresh Wadhwa, president & country head, Cisco India:

One more stalwart of the industry who left the company after spending more than 15 years, the last six years at the helm of it, is Naresh Wadhwa, president and country manager of Cisco India. Now he has expressed his interest in starting his own venture that will be into infrastructure business related to technology. The company, despite being a dominant market leader in most networking segments, the last eighteen months have been turbulent for the networking major, which is seeing increased competition from the likes of HP and Dell.

Worldwide Cisco saw lower than expected profits in 2011 and as a cost-cutting measure, Cisco was forced to reduce annual expenses by $1 bn. In FY2011-12 the company has posted a revenue of `7,096 crore compared to `7,010 crore, registering a paltry growth of just 1.2%.

Besides, Cisco's R&D unit in Bangalore, one of the company's largest, has not delivered as per expectations, experts believe. "Off late the company has slowed down in terms of innovations and new product offerings, and this has resulted in other competitors eating into its market share," said a Delhi based research firm. According to its 2012 annual report, it spent 5.8% less in R&D compared to 2011. Besides, many of its partners allege that Cisco is no more helping them in getting new deals as well as in offering market support.

Cui Liangjun, CEO, ZTE India:

For the last few years, slowly and consistently, two Chinese telecom gear manufacturers-Huawei and ZTE-have been making inroads into India giving global counterparts like NSN and Ericsson a tough fights. While Huawei is growing, both in terms of revenue and clout, it is felt that ZTE is loosing stream. The last one and half years, in fact, have been tough for ZTE and it's failing miserably in the Indian enterprise solutions market. It has impacted the company so much that few key members of the enterprise solution team have left. They attribute their departure to ill-equipped resources and substandard product offerings. Not only that the company had to ask around 500 or 30 percent of its workforce to leave, it also lost significant market share in various products like server solutions, storage, and products including routers, video-conferencing solutions, video surveillance, data centers, optical equipment and traffic control systems.

The Indian telecom industry, no doubt, is in troubled water, but yet offers an immense potential to be tapped. Few CEOs have left but are replaced quickly enough. They have an uphill task to accomplish but at the same time the industry needs to introspect on what went wrong

Moreover, as a cost cutting measure, the company is considering undertaking contract manufacturing in India instead of self manufacturing. The company has a plant in Gurgaon manufacturing fixed line broadband equipments. Overall, ZTE's India revenues have declined from 8 percent of its global revenues a few years ago to 5 percent now due to a depressed market. And to add to the woes, CEO Cui Liangjun has quit India operations. He will continue to be associated with the company though. He is also known as Steven Cui in India. He has been associated with ZTE India for the last 5 years at the helm of its affairs. He is believed to be going back to China.

Fredrik Jejdling, country head, Ericsson India:

One more movement in the Indian telecom space fuels frustration and brings pessimism in the industry. The departure of Ericsson India chief Fredrik Jejdling. The Swiss telecom gear maker has shifted Jejdling to sub-Saharan region as its chief. Though it could be a mere coincidence, it well is not sitting well with industry watchers. The company's performance too has been failing industry estimates for the last few quarters. In FY2012 the company's revenue dipped 5.3% to clock `5,844 crore compared to `6,173 crore a year back. Besides the regulatory impact, the company has been facing steep competition from its counterparts, mostly Huawei.

The Indian telecom industry, no doubt, is in troubled water, but yet offers an immense potential to be tapped. Few CEOs have left but are replaced quickly enough. They have an uphill task to accomplish but at the same time the industry needs to introspect on what went wrong. And how they can bring fresh perspective and new business propositions to sail through the difficult times.

Now, though the captains have left, the ship can not be allowed to sink and the Indian telecom industry, that has gained so much from the expertise of these telecom stalwarts, will definitely get over this and make a move as it has done in the past.

                                                                                               Gyana Ranjan Swain

                                                                                      gyanas@cybermedia.co.in