Telecom Person of the Year 2009 : India should invite global telcos to set up factories here and give them fantastic incentives

Manoj Kohli, CEO and joint MD, Bharti Airtel, one of the most successful
CEOs in the Indian telecom industry, has many achievements to his name.

Under his leadership, Airtel grew better than the industry average and
crossed various milestones. Driven by him, the company has a major rural focus
and around 60% of its customer additions are coming from these areas. The
company has also crossed the 100 mn subscribers mark. Under his stewardship,
Airtel launched 3G services in Sri Lanka and is now actively looking at overseas
markets. Excerpts from the interview:

What is your outlook for the telecom sector in the next five years?

I believe that the telecom sector will be among the top three sectors in the
country. Already, we have moved ahead of FMCG as a sector and you will soon see
this sector moving far ahead of many other sectors. On a five-year frame, I feel
that the sector will have great prospects because rural India will pick-up more
because of central government's focus on exclusive growth, and the corporate
sector as well as SMBs will grow well. So, the prospects for the next five years
are extremely attractive. But at the same time, we have to keep in mind the
intensity of competition and its impact on the sector. Therefore, the sector
needs a lot of maturity and prudence in terms of viability and tariffing. I hope
all the major players in the sector will be mature and prudent in taking
long-term oriented decisions. If this happens, not only will the size of the
sector grow but so will the viability.

What are the specific challenges the sector is going to face in the next
five years?

The sector will have to enhance the business models and make it more and
more viable for higher competitive intensity and lower tariffs. So, business
models have to become more lean and cost-effective, if the viability of the
sector has to be robust.

Have this kind of hurdles happened in the past in other developed markets?

This is an unprecedented situation which no other country in the world has
gone through. So, we in India cannot even refer to any case studies because this
itself is a case study. Therefore, we have to find innovative solutions which
will apply to the Indian market. Since no other developed market has gone
through this situation this is an exciting and innovative opportunity for us.

On the 3G front, are you really positive for the next one year?

We believe that the government is positive and committed to 3G auction in
this financial year. We hope that it happens as early as possible. In my view,
by the end of the calendar year, the auction should happen. So that by the end
of the financial year, spectrum is allocated and license fee is paid. Our 3G
strategy is ready, and I believe that it should be very effective in India, and
help us to increase our brand acceptance as well as market share. We have
completed 3G trials in three cities. We will be launching 3G services within six
months of the allocation of spectrum.

What are your expectation from the government/regulators so that the
growth trajectory of the service providers continues in the coming two to three
years?

Our expectation is only in two areas. First request is in the area of
affordability. We believe that 31% taxes and levies on the Indian customers are
too high. So, we have appealed to the government to reduce it systematically and
may be bring it down to 10% or 15%. This would be good for the Indian customers,
especially rural people who can use more telecom services, and we can
immediately pass on the benefits to the customers.

Our second request is that we need a long-term roadmap for spectrum in the
next five to ten years which will help the industry grow. If by 2015 India has
to reach the mark of 1 bn customers, then there is an urgent need a roadmap
defining which city needs more spectrum, which parts of the country needs more,
how much each player should have, etc.

Are you happy with the current situation of telecom manufacturing?

It is not a very good story for India. Personally, I am a manufacturing
person, and I think the government should definitely encourage more
manufacturing in India, like the Chinese government is doing, and thus bring in
lot of employment opportunities and positive capacities to the country.
Fortunately, we have a very good business model. I think telecom manufacturing
will also be a six sigma in India. I want to appeal to the government that they
should invite all the global telecom manufacturing companies to set-up factories
here, and give them fantastic incentives. These initiatives can make India a
telecom manufacturing hub of the world. Today, lot of companies are going to
China and I think, India as a country needs to do much more because there is a
lot of potential.

What are you recent initiatives on the broadband side?

Broadband has to be a quality experience. Customers need three things: high
technology, high speed, and good quality experience for browsing and downloads.
We are focusing on the top ninety-five cities, but not on the masses. Broadband
is not a mass business for us. It is actually a cherry picking business. Many
other countries did the unbundling of the local loop at an early stage, and
that's why broadband has expanded so fast. In India, unbundling was never done
and hence, private companies like us had to build copper and fiber networks
afresh. It is not easy and also very expensive. We have to be careful that we
get reasonable returns on investment. We are doing it differently. Recently, we
have outsourced the entire broadband network to Alcatel-Lucent and it is going
up very well. So, we are changing the business model for broadband, so that we
can grow faster. Broadband is definitely a major plank for our future product
portfolio.

What will be the future of MVNO and MNP in India?

We are very clear that MVNOs and new players coming into the wireless area
do not have a business case We don't understand why these MVNOs and new players
are entering into the Indian market, and what kind of margins will they make. As
far as MNP is concerned, Bhrati Airtel is very positive about it. We have just
two requests to the Indian government. First, MNP should be national and it
should not be limited to few cities. Second, it should also cover fixed line
because fixed line has no other option. I think MNP will help us attract many
customers of other players as well, and it will be beneficial for us too.
Especially in the initial six to twelve months, it will be very attractive but
after one year, MNP won't have much impact.

Arpita Prem & Baburajan K

baburajank@cybermedia.co.in