 "Sandip Basu")
Loop Mobile, erstwhile called BPL Mobile, has been in the telecom sector for more than 16 years and has more than three million subscribers in the Mumbai circle. Boasting of meeting and exceeding TRAI benchmarks, Loop Mobile recently changed its brand look with a new theme "Going for Great". With a number of new services, the service provider is looking at positioning itself as a service provider to service providers where network opportunity is concerned. Sandip Basu, Managing Director and CEO, Loop Mobile India, traces the growth of the telecom sector in India and outlines the future opportunities and challenges in the sector. Edited excerpts from an interview:
The company started as BPL Mobile in 1995, changed its name to Loop Mobile in 2009, and is present in the Mumbai circle. What's next in store for the telecom service provider in terms of increase market penetration?
The Mumbai market has reached 100 per cent penetration in terms of voice; but the penetration of GPRS/data services is 25-30 per cent for some of the matured operators and 10-15 per cent for new operators. Therefore, there is a huge growth that is going to come from growth in data usage and revenue.
The operators will have opportunity to earn not only from the access of data but also from other M-Commerce, machine-to-machine (M2M) and mobile advertising tie-ups.
How challenging is it to get a bigger share of the pie in as competitive a market as the Indian telecom sector? How big is Loop in the Mumbai circle?
Loop mobile holds 9 per cent revenue market share in Mumbai and is looking at growing this further with new acquisition mix targeted at all segments of customers especially enterprise, corporate, and high net worth individuals port-ins from other networks. In the recent past, the telecom industry has gone through a sharp decline in tariff, realisation and ARPU and there had been stagnation in revenue. The factors that contributed to this impact are now dissipating. Hence, a price correction is expected over the next couple of years. This correction will be by way of tariff increase as well as reduction in promotional benefits.
As far as the Mumbai circle is concerned, the revenue has been stagnant for some time which is expected to change now. It is the mix of profiles of customers Loop Mobile has, which will help garner a bigger share. The limitations that we have now like absence of 3G data service, pan-India footprint, not present on national media etc are going to be resolved going forward and we should be able to offer next generation data services, advertise on television through split advertising. We would have our product and pricing, sales and distribution, and brand strategies in place to get the maximum benefit of anticipated upsurge in telecom sector.
There are talks about another telecom major looking at acquiring Loop Mobile. How much truth is there in this?
This is merely market speculation and is without any basis. We are looking towards continuing the Mumbai operations smoothly.
As someone who has been in the sector for close to 19 years, how has the face of telecom services changed over years? How do you see it change in the near future?
When mobile telephony was launch back in 1995, the outgoing call tariff was Rs 16 a minute; incoming was Rs 8 a minute, post which industry witnessed “free incoming” & “lifetime validity”. Later for rural expansion and to fuel growth amongst new first time users, low end handsets drove the market growth. From here data will drive customer usage. It is estimated that data will grow threefold from 170 MB per month per unique user to 500 MB per month. India is expected to have one of the fastest growth rates in the data segment over the next five years, to be driven by low cost mobile handsets and new technologies (3G/4G). Today, only 30 per cent of customers use data and in another three-four years, it is estimated to be 50-70 per cent usage and eight years down the line, it might be 100 per cent data usage.
Voice penetration will be restricted to penetration in lower age group. Multi-devices usage will become a norm – mobile, tablet and laptop. Though 3G has had a slower start it will gradually rocket into newer innovative services converging on the mobile phone such as all utility and infotainment services like video calling for holding business meeting, training, interview, consultation, seminars, distant health and education etc.
This will change the way we work.
The highly penetrated telecom market is expected to see more of qualitative than quantitative changes, especially a market such as the Mumbai circle, which is more than 100 per cent penetrated.
After the exit of new operators and stabilisation across circles, correction in tariffs up to 20 per cent cannot be ruled out in next two-three years. Growth in data is going to drive the industry. It is expected that India will have one of the fastest growth rate in data segment over couple of years.
Multi-SIM usage over voice will decrease, but multi-SIM through usage of multiple devices (handsets, tablets, data dongles, laptop) will become a norm. Penetration of GPRS/data services which is about 30 per cent in leading operators and about 10-15 per cent in others would jump up to 65 per cent in next decade.
A multi-fold growth in consumption of data is also expected from current level of 100 Mb per subscriber per month to at least 1 GB per month. However, the enablers would be smartphones in affordable range of Rs 5000, network speed through newer technologies of 3G/4G and content ecosystem.
Monetisation models will also evolve as operators cannot become dumb pipe providers charge only for data access. Alternate models will require to evolve where they charge only for content with no access charges or only for transaction.
What opportunities do you see where network is concerned especially given the fact that data consumption grows and convergence of devices and medium happens?
From a network opportunity perspective we would want to position ourselves as a service provider to other service providers. Therefore we would always look at creating such large capacities and ubiquitous coverage that we will be the preferred partner for other service providers. Our network dimensioning would be from that perspective.
Also with the convergence of devices and with the next generation networks being data guzzlers, there will be pressure on service providers network will be humongous whether it be the RF interface, the backhaul, the core or the last mile. Hence that much more an opportunity for shared services in this area to optimise investments.
With machine-to-machine connectivity growing, how do you see the demand for network grow and differ in future?
The M2M industry in India is at a very nascent stage and we are yet to see this growth area making any significant contribution to the telecom service providers’ revenues.
One of the many enablers for this growth area is going to be 3G/4G services. In the short term we don’t see it putting any demand on the network with the current 3G/4G data penetration not being significant. However going forward service providers will require investing in capacity augmentation including preparing their network/systems to be M2M ready.
Even though 3G/4G will be a significant enabler for M2M services there are other contributing factors like location based positioning technology, readiness of M2M devices manufacturers for the Indian marketplace that will require to fall in place for making a viable business model.
Wi-fi has evolved as an important strategy for operators. How does Loop Mobile plan to cash in on the opportunity?
Wi-fi has worked for other operators offering 3G/4G services in other markets and will play a role in the Indian context as well. Loop Mobile is also working on offering WiFi as an add-on product to its current product portfolio and it will also serve as an off-loading strategy when we launch 3G services in the coming year. To this end we will either look at working with partners in this space or with other service providers who have their own localised installed capacities.
What are the challenges that you see in the telecom sector in India in the next couple of years in terms of connectivity and network reach?
There are multiple challenges we see in this sector in the coming year, from a regulatory and from a viable business model perspective. From a regulatory perspective even though there has been some movement from the government in the recent past but there are still a few areas where there is clarity required, for example on spectrum availability, pricing mechanism for new spectrum going forward, MVNO policy etc.
Also from a business model perspective there would be challenges like the right acquisition business model in a data centric market, stability in realisation for data/voice services in the long run and having a robust business model. Also, on the product side there will be competition from international OTT players putting pressure on our voice/messaging revenues. Hence service providers will require adapt their business models accordingly.
