 "'There's direct correlation between enhanced broadband infrastructure and GDP'")
One of the fastest-growing telecom companies in India, MTS boasts of an Indian customer base of about 11 million, which includes over one million data customers. Operational in nine circles, MTS is one of the top three data service providers in India. Dmitry Shukov, CEO MTS India. speaks about why, despite hyper-competition, he is optimistic about the future. Edited excerpts from an interview with Prerna Raturi:
As a considerably-new entrant in the Indian telecom sector, what would you say are some of the challenges and opportunities of the Indian telecom sector?
India is a fusion of many cultures, religions and languages. There is no one India -- negotiating such a scale of diversity is a great challenge. For a new company -- apart from intense competition, there are other challenges such as state of infrastructure, constantly changing regulatory environment and an ever growing crunch of availability of quality human resources. In India, it is also very important to stick to lean cost structures while continuing to think locally. What works elsewhere, may not work here.
Even with all its diversities and challenges, India is a land of opportunities. The growing middle class presents a sizeable market for companies to target. Companies across the spectrum -- right from consumer durables, automobiles, heavy industries, real estate, consumer products, telecom and so on are expected to leverage this opportunity.
One of the focuses for MTS is data-centric, voice-enabled service. Is this an India-specific or a global company strategy?
Since its entry in India 2008, MTS has been focusing on innovation to create a niche for itself in the hyper-competitive Indian telecom market. With 12-14 telecom operators fighting for marketshare, there was little room for a new comer like us.
We had to think and act quickly -- we took a strategic decision to focus on data, a market which was vastly untapped and offered huge potential. We launched our high-speed mobile broadband services under the MBlaze brand in November 2009, and today MTS is amongst the top three or four data players in the country. Along the way, we also introduced numerous innovations such as prepaid broadband and free national roaming for all MBlaze customers.
If one looks at the Telecom Regulatory Authority of India’s (Trai’s) June 2013 report, the broadband penetration in India stands at about 1 per cent as against the wireless tele-density of 70.71 per cent and 15.09 million broadband connections as of April 2013. The National Broadband Plan envisages a provision of 160 million broadband connections, including 60 million wireless broadband connections, by 2014.
Hence, there is a huge opportunity for the growth and proliferation of high-speed mobile broadband services in the country.With wireline penetration on decline, mobile broadband is best positioned to satisfy the growing market demand for internet across India.Given such a market opportunity, MTS already offers high-speed mobile broadband services in more than 450 towns across India and is continuously expanding to other areas across all its nine circles of operations -- Delhi, Kolkata, Gujarat, Rajasthan, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal.In fact, in the last month, MTS has launched high-speed data services in more than 100 new towns across the country.
MTS has considerable visibility in tier-II and tier-III towns. What was the reason for MTS to look beyond metros and bigger town circuits? How has the deal paid off in terms of turnover?
Telecom penetration has reached near saturation in the urban markets and the next phase of growth is believed to come from semi-urban and rural areas. In fact, there is constant evolution in terms of how telecom services are being consumed in India. India is no longer a pure voice market; data is being consumed in a big way, be it in tier I, tier II and tier III towns.
MTS has adopted a focused approach to address growth in the data market. At one end, the company is constantly expanding its HSD presence across India. In the past one month alone, we have made significant strides in markets such as Rajasthan, Tamil Nadu, Kerala, West Bengal and so on. Our data services are now available beyond the district headquarters in some of the smallest and remotest areas. The aim is to provide ubiquitous network coverage coupled with aggressive tariffs to our customers.
One the other hand, the company is rolling out key customer engagement programmes targeting the rural markets.MTS Saheliis one such initiative that has been launched with the objective of taking cellular services closer to rural customers, women in particular. The initiative was piloted in West Bengal and has received an extremely positive response. We are now planning to take it to other markets as well. Another initiative we recently launched was the concept ofMitrastores -- retail touch points in rural and semi urban areas.
There has been an added emphasis on value-added services (VAS) across all service providers. How has MTS risen to the challenge? In your opinion, how much do you see the sector grow in the next few years where VAS is concerned?
It has been said that data is the next big thing in telecom. A lot of industry reports suggest there is direct correlation between enhanced broadband infrastructure and GDP. From a telecom operator’s perspective, I see three elements aiding the growth of data services in India -- broadband accessibility, quality content and affordable devices.
We are working on all these aspects. We are constantly increasing our HSD footprint, focusing on innovative VAS and working with device companies to enhance our Smartphone portfolio. In fact, almost a third of our revenues come from data and VAS services, which is the highest for any telecom operator in India.
Talking particularly about VAS -- in addition to staples such as caller tunes, wall papers, trivia and so on, we offer an evolved range of value-added services such as Live TV, Video on Demand and Games on Demand. Having said that, there is still a strong need to inform and educate the consumers about the vast benefits of internet. In-addition, there is also a huge potential to drive data consumption, through download of content in regional languages.
I am sure with greater awareness levels amongst customers and a proliferation of smartphones in the country, we will see a further uptake in data consumption. Given these realities, I am optimistic about the future.
A highly technology-intensive sector, do you think Indian telecom sector stands up to the global challenge?
India is one of the fastest growing telecom markets in the world. It is at par with any other market if one talks of technological advancements. In fact, in certain areas, India has been a pioneer in telecom technology. For example, MTS India is credited to be the first telecom operator in the world to commercially launch the CDMA EV-DO Rev.B Phase II network. We had launched this state-of-the-art network in Jaipur and there are plans to take it to other cities and towns across India. To do the same, we are waiting for the third carrier (1.25 MHz) from Department of Telecom and once that happens, the Rev.B Phase II network will be rolled out to many more cities across all our ninecircles of operations.
As a considerably-new entrant in the Indian telecom sector, what would you say are some of the challenges and opportunities of the Indian telecom sector?
India is a fusion of many cultures, religions and languages. There is no one India -- negotiating such a scale of diversity is a great challenge. For a new company -- apart from intense competition, there are other challenges such as state of infrastructure, constantly changing regulatory environment and an ever growing crunch of availability of quality human resources. In India, it is also very important to stick to lean cost structures while continuing to think locally. What works elsewhere, may not work here.
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Also, in India, profitability improvement through innovative business models has become a necessity. While operating in the market here, special care needs to be taken to ensure the adoption of a variable cost model at every point, as it helps to further drive greater business efficiencies.
Even with all its diversities and challenges, India is a land of opportunities. The growing middle class presents a sizeable market for companies to target. Companies across the spectrum -- right from consumer durables, automobiles, heavy industries, real estate, consumer products, telecom and so on are expected to leverage this opportunity.
One of the focuses for MTS is data-centric, voice-enabled service. Is this an India-specific or a global company strategy?
Since its entry in India 2008, MTS has been focusing on innovation to create a niche for itself in the hyper-competitive Indian telecom market. With 12-14 telecom operators fighting for marketshare, there was little room for a new comer like us.
We had to think and act quickly -- we took a strategic decision to focus on data, a market which was vastly untapped and offered huge potential. We launched our high-speed mobile broadband services under the MBlaze brand in November 2009, and today MTS is amongst the top three or four data players in the country. Along the way, we also introduced numerous innovations such as prepaid broadband and free national roaming for all MBlaze customers.
If one looks at the Telecom Regulatory Authority of India’s (Trai’s) June 2013 report, the broadband penetration in India stands at about 1 per cent as against the wireless tele-density of 70.71 per cent and 15.09 million broadband connections as of April 2013. The National Broadband Plan envisages a provision of 160 million broadband connections, including 60 million wireless broadband connections, by 2014.
Hence, there is a huge opportunity for the growth and proliferation of high-speed mobile broadband services in the country.With wireline penetration on decline, mobile broadband is best positioned to satisfy the growing market demand for internet across India.Given such a market opportunity, MTS already offers high-speed mobile broadband services in more than 450 towns across India and is continuously expanding to other areas across all its nine circles of operations -- Delhi, Kolkata, Gujarat, Rajasthan, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal.In fact, in the last month, MTS has launched high-speed data services in more than 100 new towns across the country.
MTS has considerable visibility in tier-II and tier-III towns. What was the reason for MTS to look beyond metros and bigger town circuits? How has the deal paid off in terms of turnover?
Telecom penetration has reached near saturation in the urban markets and the next phase of growth is believed to come from semi-urban and rural areas. In fact, there is constant evolution in terms of how telecom services are being consumed in India. India is no longer a pure voice market; data is being consumed in a big way, be it in tier I, tier II and tier III towns.
MTS has adopted a focused approach to address growth in the data market. At one end, the company is constantly expanding its HSD presence across India. In the past one month alone, we have made significant strides in markets such as Rajasthan, Tamil Nadu, Kerala, West Bengal and so on. Our data services are now available beyond the district headquarters in some of the smallest and remotest areas. The aim is to provide ubiquitous network coverage coupled with aggressive tariffs to our customers.
One the other hand, the company is rolling out key customer engagement programmes targeting the rural markets.MTS Saheliis one such initiative that has been launched with the objective of taking cellular services closer to rural customers, women in particular. The initiative was piloted in West Bengal and has received an extremely positive response. We are now planning to take it to other markets as well. Another initiative we recently launched was the concept ofMitrastores -- retail touch points in rural and semi urban areas.
There has been an added emphasis on value-added services (VAS) across all service providers. How has MTS risen to the challenge? In your opinion, how much do you see the sector grow in the next few years where VAS is concerned?
It has been said that data is the next big thing in telecom. A lot of industry reports suggest there is direct correlation between enhanced broadband infrastructure and GDP. From a telecom operator’s perspective, I see three elements aiding the growth of data services in India -- broadband accessibility, quality content and affordable devices.
We are working on all these aspects. We are constantly increasing our HSD footprint, focusing on innovative VAS and working with device companies to enhance our Smartphone portfolio. In fact, almost a third of our revenues come from data and VAS services, which is the highest for any telecom operator in India.
Talking particularly about VAS -- in addition to staples such as caller tunes, wall papers, trivia and so on, we offer an evolved range of value-added services such as Live TV, Video on Demand and Games on Demand. Having said that, there is still a strong need to inform and educate the consumers about the vast benefits of internet. In-addition, there is also a huge potential to drive data consumption, through download of content in regional languages.
I am sure with greater awareness levels amongst customers and a proliferation of smartphones in the country, we will see a further uptake in data consumption. Given these realities, I am optimistic about the future.
A highly technology-intensive sector, do you think Indian telecom sector stands up to the global challenge?
India is one of the fastest growing telecom markets in the world. It is at par with any other market if one talks of technological advancements. In fact, in certain areas, India has been a pioneer in telecom technology. For example, MTS India is credited to be the first telecom operator in the world to commercially launch the CDMA EV-DO Rev.B Phase II network. We had launched this state-of-the-art network in Jaipur and there are plans to take it to other cities and towns across India. To do the same, we are waiting for the third carrier (1.25 MHz) from Department of Telecom and once that happens, the Rev.B Phase II network will be rolled out to many more cities across all our ninecircles of operations.