'We missed the first wave, we hope to make it big the second time'

Ravi Sharma

Twenty years ago, a French telecom company brought to India its first digital telephone exchange through a technology transfer agreement with ITI. But some where along the way, Alcatel of France lost out to aggressive rivals like Nortel Networks and Lucent Technologies.

In the last four or five years, however, the 13 billion euro (Rs 74,295 crore) telecom equipment company has begun to get its connections right. Spread across 10 locations in the country, the Rs 1,400 crore (in 2003) Alcatel India is setting itself ambitious goals. Ravi Sharma, managing director & president, South Asia, Alcatel, spoke to Business Standard about the company's growth plans. Excerpts:

Alcatel was one of the earliest players in the Indian telecom market. Despite the early start, it was overtaken by others. Why?

It is not really so. In fixed line telephony, we are still the market leaders with a 50 per cent market share. It is true that in the mobile telephony sector others have moved ahead. But with our entry into the western region with Bharat Sanchar Nigam Limited, we will be clearly at an advantage.

What delayed Alcatel's entry into mobile telephony in India?

We first forayed into the global system for mobile (GSM) infrastructure industry in 1997 with a local operator. We set up our network in eastern Uttar Pradesh, Bihar and Orissa.

Unfortunately, the licence of that operator was cancelled. This led to loss of market share for us and by that time most other operators had already tied up with other companies for their infrastructure requirements.

How did Alcatel come to India in the first place?

In 1993, Alcatel formally entered India through a joint venture with the Delhi-based B K Modi group to set up a manufacturing unit at Delhi. It later bought out Modi's stake in 1999, as the Indian partner could not invest further in the business at that time.

Alcatel in India operates in three segments: fixed line communications, mobile communications and private communications. The fixed line group includes transmission backbones, broadband and fixed-line based Intelligent Network (IN) platforms. In mobile communications, we recently entered GSM networks.

This segment also includes wireless transmission and mobile telephony based IN (intelligent) platforms. Private communications covers PABX, enterprise business solutions, BPO software development and turnkey and satellite technology.

Can you tell us about Intelligent Networks (IN) and how these will help a company like BSNL?

IN assists telecom companies to offer a host of value added services like calling cards, number translation, routing services, roaming and enterprise networks.

For instance, calling card services will enable BSNL to extend its services to the masses without any permanent telephone subscription and in turn increase its revenues. It is estimated that between 10 per cent and 20 per cent of the revenues of telecom operators in the developed markets come from value added services.

Alcatel is currently implementing the largest Intelligent Network (IN) platform in the world for Bharat Sanchar Nigam Limited (BSNL), with a capacity of 30 million virtual calling cards. This will enable BSNL to accelerate its deployment of differentiated value added services in different market segments.

The IN platform is being deployed in Kolkata, Bangalore, Hyderabad, Ahmedabad and Lucknow. The three-phased contract (worth Rs 160 crore), which is in the second phase of implementation, is scheduled to be completed by the end of this year.

Apart from BSNL, Alcatel is also providing the IN platform for Videsh Sanchar Nigam Limited and for Tata Tele Services Limited. The latter's platform will be constructed on a mobile network.

How different is the Indian market from other developed markets?

The Indian market is one of the fastest growing markets today, led by a major growth in the mobile segment. Therefore, we need to strengthen our focus on that area.

How do you plan to do that?

As I mentioned earlier, we have not been very strong in mobile communication infrastructure in India. We are looking at this segment to drive growth. In the fixed line segment, we would be concentrating on broadband.

In private communications, we are planning to ramp up our call centre software development as well as infrastructure projects in the energy industry and for the railways.

The mobile revolution has happened in India. Why does Alcatel want to focus on this now?

India's mobile subscriber base is expected to double in the next five years. Therefore, even though we missed the first wave, we hope to make it big the second time. We are currently providing infrastructure for BSNL's GSM network in Maharashtra, Gujarat, Chattisgarh and Madhya Pradesh.

While the first million lines will be rolled out by Alcatel in this first quarter, around three million more lines will be laid by the end of this year by ITI. BSNL's GSM network in the north and south is provided by Nortel, while Nokia supports its network in the east.

We are hoping that a successful implementation of this network with a major player like BSNL will encourage private GSM players to opt for our services.

In the last three years, Alcatel has claimed 25 per cent share of the global greenfield mobile operations. We would like to repeat the same success story in India.

Alcatel had also introduced mobile handsets in India, but they seem to have d is appeared What went wrong?

Alcatel introduced handsets in India about six years ago, when almost 80 per cent of the mobile handset market in India was grey. So it was not a priority to build our presence aggressively here. Now that the legitimate market is becoming big, we have re-focused our strategy and are coming back in a big way.

What are you planning?

Globally, Alcatel has formed a joint venture with TCL for manufacturing handsets. We are looking at a renewed thrust from this tie up. Four handsets were introduced last year and 20 new models will be introduced this year. We will be setting up after-sales service centres extensively in the country, along with augmenting our distribution network.

For advertisement and promotions in the first six months of this year, $2 million has been allocated. We are looking at increasing our market share from 2 per cent to 6 per cent of the 33 million handset market, by the end of this year.

How important is the private communications division in the company's growth strategy?

This division covers two growing segments: enterprise and BPO software and turnkey infrastructure projects. We are also a major supplier to the Indian Spare Research Organisation for ground and space segment equipment.

We are looking at setting up new offices for our software arm Genesys and setting up a special project group for the turnkey projects. We are currently setting up the signalling and telecom infrastructure for the Delhi Metro (DMRC), worth an estimated euros 50 million (Rs 285 crore).

What are your plans for broadband?

We believe that growth in fixed line services will come primarily through broadband. With major investments in broadband on their way, we are expecting this segment to take off. Alcatel is the world leader in the broadband sector with an over 40 per cent market share.

All key telecom players "�Reliance, BSNL, MTNL and the Tatas "� are looking for broadband solutions, which include triple play (voice, data and video). Although there is nothing concrete on the board yet, we are expecting major growth once broadband networks start rolling.