Salt of Goodwill

One of India’s most trusted business names, Tata Group, is a long-term
player in the industries that it is in. Traditionally perceived to be a slow
mover, the company, however, has a big asset–public goodwill. Even in areas
like the North and the East where private sector is viewed with a lot of
suspicion, Tatas have been an exception, thanks to their ethical way of doing
business and social commitment.

Public goodwill could be the biggest advantage to start with, in a consumer
focused service business like telecom services. But, only to start with. The
group has to move fast in order to catch up with the pure-play telecom players
like Bharti, smart foreign companies like Hutchison–the two other groups in
our list–and the yet to join, Reliance, known for its clever

way of doing business, and extraordinary project management skills.

Tatas have shown the will to move fast. Last year, the group acquired two of
the public sector companies in the infotech/telecom sector that were
disinvested. Videsh Sanchar Nigam Ltd, India’s sole international voice
telephony service provider, was successfully bought by the group. That single
move at once brought them to an advantageous position vis-a-vis the competitors.
The story after that, though, has not been smooth, with the group being accused
of diverting VSNL’s cash reserve to its fixed line business, Tata Teleservices.
Though perfectly legal and ethical, this was an immature decision by the leading
group which is placed much higher in the public eye than any of its competitors.
However, the group managed to come out of the crisis well.

This year may see the IT services arm–TCS–go public. That will ensure
that the company will have a lot of money to invest. The telecom business badly
needs that.

With VSNL’s monopoly being challenged, things will not be smooth for the
group. Also, it still has a long way to go in building a significant footprint
nationally in the mobile business. On the other hand, the goodwill of its brand
in the entire nation would mean that it has to leverage on that, in cases
combining marketing and distribution of other goods with those for telecom
services.