TOP GROUPS: The Empire Makes Its Moves

Tata group, the steel to salt conglomerate and one of India´s largest
private companies, is also the country´s second largest private sector group
in telecom business. Though not as aggressive as Reliance or as loud as Bharti;
Tatas, as of now, have a much bigger presence in the Indian telecom business
than any other private sector group. Till last year, the group also had a stake
in telecom networking products (Tata Telecom) which it has exited. Tata´s
telecom service business is spearheaded by VSNL, Tata Teleservices, and Tata
Teleservices (Maharashtra). While, TCS represents it in telecom software exports
and systems integration, and CMC, which it acquired from the government, is one
of the top network integrators of the country. Tata´s also have a stake Idea
cellular. Besides these, Tata Power Limited (a Tata group company) is engaged in
the broadband telecom business. VOICE&DATA estimates that all the Tata group
companies, which have a stake in telecom business, would have a total turnover
of around Rs 6,763. We have arrived at this by including the turnovers of VSNL,
TTSL, TTSL (M), telecom software sales of TCS, and network integration business
of CMC, Tata Infotech, Tata Elxsi, TataNet, and broadband business of Tata
Power. The Rs 6,763 crore of the group also includes Rs 402 crore of Tata
Telecom.

Apart from VSNL, still India´s largest ILD operator despite competition,
Tata Teleservices (TTSL) is currently the
major focus of the group. With a proposed investment of about 10,000 crore in
its telecom business, the group aims at expanding TTSL´s presence in 12 new
circles. A major portion of the Rs 10,000 crore would go to expand TTSL´s
network. Curently, under the Tata Indicom brand, it offers services in eight
circles—Andhra Pradesh, Chennai, Gujarat, Karnataka, Maharashtra, Mumbai,
Delhi, and Tamil Nadu.

It plans to start operating in the new circles by September 2004. Out of
which, the Punjab, Haryana, Himachal Pradesh belt; Kolkata; and Kerala are
priority geographies. The investment in the company, as of March 2004, totaled
Rs 5,995 crore. The group, excluding TTML, posted a 191 percent growth over the
last year and raked in close to Rs 700 crore with a subscriber base of around 12
lakh in over 50 cities.

TTML saw a 77 percent growth in its revenues, touching Rs 653 crore in the FY
2003–04. The company´s expansion plans involves increasing network
capacities, introducing new technologies, strengthening spread and depth of
coverage, and adding a host of state-of-the-art software platforms. Tata was one
of the first telecom players to target corporate customers with an integrated
marketing strategy under Tata Indicom Enterprise Business Unit (TIEBU). It
netted a business of more than Rs 1,000 crores in FY 2003–04.

Telecom is a major focus of the Tata group, along with steel, automobiles,
and software. However, it needs to be more aggressive than it has. Tata must
find a leadership niche for itself, something it lacks as of now.

While it is not there in the GSM business (except for its stake in Idea
Cellular that it is reportedly considering to exit) and is only a distant second
in the CDMA services, Tata´s lead in the international long distance market,
that too because of VSNL´s historical dominance. VSNL´s dominance too is
increasingly being challenged with each passing year. In this backdrop, the best
the Tata´s can do is to build up on their strong presence in the corporate
connectivity business, where they have already have a head start, thanks to VSNL
and the efforts of TIEBU.