BASIC SERVICES: Hughes Gives Tata an Edge

In the ongoing telecom battle, both Tata Teleservices (TTSL) and Reliance

Infocomm expect to provide stiff competition to the cellular service providers

with their WLL offerings. While Reliance recently announced its launches with

much fanfare, TTSL, already operating in the Andhra Pradesh circle, extended it

to Delhi, Tamil Nadu, Karnataka and Gujarat. However, for both these players

gaining the No. 1 spot in the lucrative Maharashtra circle looks like the

ultimate prize.

The reasons are not too difficult to fathom. For one, this circle includes

India’s financial capital Mumbai, which has one of India’s largest

fixed-line telephone subscribers (23,10,000 as of March 2002) as well as mobile

subscribers (15,12,296 as of December 2002). Besides, Mumbai and its satellite

townships house some of the biggest corporate house in India, which contribute

significantly to the coffers of telcos.

TTSL’s strategies in Maharashtra Introduce Tata Indicom brand name in Maharashtra Change company name from Hughes Tele.com (India) Ltd to Tata Teleservices (Maharashtra) Ltd First phase roll out in 5 cities (Mumbai, Pune, Nashik, Nagpur and Aurangabad) in Q1 FY2004 Reach 5,00,000 subscriber base from current 2,05,000 (fixed line & WLL) by FY2005 Target 13,000-14,000 PCO booths in entire Maharashtra for WLL services

In addition, a host of independent surveys have indicated that after the

cities of Mumbai and Delhi, the rest of Maharashtra (excluding Mumbai) have the

potential to record the highest growth in tele-density. Again no surprise, since

Pune is one of India’s premier IT and BPO destinations, while a host of other

B&C class cities in the state are in the country’s top industrial bracket.

Even in the cellular segment, this circle had 8,27,737 subscribers as of

December 2002, higher than some metro counterparts. No wonder, both Tatas and

Reliance are so keen to capture the Maharashtra circle to grab much of the WLL

pie.

However, the first round seems to have gone to TTSL, especially after its

acquisition of Hughes Tele.com (India) Ltd (HTIL) on 6 December 2002. The Hughes

acquisition has enabled TTSL to gain a foothold in Maharashtra without making

any substantial operating investment. Admits Ajay Pandey, COO, TTSL (Maharashtra),

"We have been able to leverage HTIL’s existing state-of-the-art

infrastructure in 9 cities in Maharashtra and one in Goa." Translated into

figures, this would allow TTSL save to the tune of Rs 1,500-1,800 crore which

naturally gives it a huge advantage over its competitors. In fact, TTSL itself

has invested over Rs 2,000 crore in the AP circle and to the tune of Rs 1,000

crore in each of the rest.

TTSL has also obtained by default the 80 MHz spectrum allocated to HTIL.

Besides, with HTIL already holding the Maharashtra license, TTSL did not have to

go through the rigmarole of a new license application. Thus, it could bypass the

mandatory SDCA rollout obligation under which it had to cover 15 percent of the

SDCA in the first year itself. Also, with an up and running company like HTIL,

TTSL did not require any major changes in the internal organization structure.

Moreover, with the lessons accrued from its WLL experiences in Andhra and four

other circles, TTSL does not need to reinvent the wheel for Maharashtra.

Last, but not least, HTIL’s existing customer base of 2,05,000 in

Maharashtra has now been transferred to the TTSL roster.

HTIL has been particularly strong in the corporate segment (more than 80

percent of its total customer base), especially in Mumbai. TTSL now expects to

gain a strong foothold into this segment and this could give it a big business

advantage what with the margins here being on the higher side as compared to the

retail segment.

Besides, changing the company name to Tata Teleservices (Maharashtra) Ltd and

extending the Tata Indicom brand across all TTSL circles, its overall plans

would entail investment to the tune of Rs 350-400 crore. While in Mumbai, the

company would concentrate mainly on leveraging 80 percent of Hughes’ existing

corporate clients, it also realizes that cutting much teeth into the retail

segment may be a little difficult here in the beginning, considering the huge

amount of subscribers already in the GSM fold. Therefore, there would be this

tremendous emphasis on the rest of Maharashtra, with the company expecting to

double its current subscriber base by FY2004-05 mainly by setting up a robust

channel and dealer strategy and customer showrooms in cities other than Mumbai.

While targeting the PCO booths in Maharashtra for both fixed line and WLL

services, TTSL hopes to repeat its successes in similar endeavor in Andhra

Pradesh.

Ultimately, only by May 2003 one can say with certainty who would be the No.

1 in the WLL game in Maharashtra as by then both Reliance and TTSL would have

their services up and running. But what can be said without doubt is that for

now TTSL with HTIL in its fold is definitely the first out of the block. Can

Reliance do a catch-up is now the moot question?

Mumbai Bureau