Reports about Aircel’s sale is “mere speculation”, says Maxis CEO Sandip Das. In an interview with Mansi Taneja and Surajeet Das Gupta, he notes broadband will trigger a tide of growth for the industry. Edited excerpts:
It is almost a year since 3G mobile services were launched. But, the uptake has been quite low, so what kind of strategy will you have? How do you plan to become a pan-India 3G player after the government declared 3G roaming agreements as illegal?
When the early 3G auction were being done in Europe, couple of countries really bid very high on 3G auction, which happened almost a decade ago. But those auction numbers forced the operators to price 3G much higher than 2G.
But at that point of time, the 3G ecosystem had not settled down, the prices of phones were very high and the content was not compelling.
In India, we are perhaps in a similar situation, networks are still getting rolled out, penetration of devices is low, we have to give it some time. The leap time from 2G lasted well over a decade, in 3G the time is going to be shorter and in BWA (LTE), it will be much shorter. Right now, we are in data investment mode time, results will take time. The whole ecosystem has to be developed.
When the spectrum auction started, the auction prices far exceeded what operators and even the government expected. As a result, people had to work within constraints. We took 13 circles in 3G, which were our area of strength. On top of that, we tried to duplicate that with BWA spectrum, but instead of 13, it became 8.
The fact is that we have enough and more for us to do where we have our licenses. The issue is to develop content locally, roaming helps. But, at this point of time, our strategy has been clear. We will wait to see what happens in roaming front.
We have over 1 million 3G subscribers now and we are expecting that number to grow.
You have recently restructured your company. What is the new structure like and what is the driving force behind it?
When multiple investments are happening by all companies, logically we are moving towards shared network of infrastructure. That is the reason why we paved the way for restructuring of our company.
We are pioneering ‘OpCo’ and ‘NetCo’ structure, where in future sales, distribution, customer facing areas will be separated. We took this call 6 months back.
We expect network utilization of 20-25 per cent in next 2 years.
The new telecom policy (NTP) talks about that, which is a step in the right direction. We are beginning to see how companies are sharing infrastructure.
Our company Maxis in Malaysia has started Ram active radio sharing, we have asked the 4th operator to come and roam with us, which would cut down lead time on their investments and monetize our network.
When we did our 2G rollout, we could have managed with one-third of towers if we had shared our infrastructure that time as after a while it became a business of rooftops.We were the first ones to start sharing of networks.
As of now, we have two divisions in the company, they are not separate companies. The existing policy needs few changes for that to happen, so we are eagerly waiting for the new policy.
‘OpCo’ is now placing demands on ‘NetCo’ for network but being very careful and saying if I can pay for this, I will take it and on the other hand, ‘NetCo’ is saying it is not a mindless rollout, this is what resources going to cost you. Having build the network, if network finds that capacities are not going to be filled up even in the business plan in the next 3-4 years, it will go and offer it to competitors and start monetising the networks.
We have a head of both the divisions, currently am engaged in hiring somebody to head ‘NetCo’, which could come out of the company and merge with other NetCo companies. Yes, we have started sharing of network and have signed with number of companies, different states and different markets.
Our trials are already on, so that when the new policy comes, we will be ready.
There is been an exodus at the top management level after the restructuring exercise? How has this impacted the operations and how many employees were impacted because of the restructuring?
Some of the changes have been happening….Over a 4-5 years circle, every organisation goes through a refresh, recently two large Indian telcos had gone for major organisational changes, which is far more larger that what appears to be on our case. We are now building skills and strengths and getting ready for next phase. We have taken a very brave decision…when you do new things, everybody asks.
How has been the journey so far in Aircel? What is the next big thing for you in India?
The company has been through 2-3 phases. Pre-2005 and then in 2005, when the new shareholders came – Maxis and Sindiya Securities as joint shareholders and then we had the build out phase.
Given the fact that we were coming as one of the 6th or 7th or the 8th player every month, one thing that worked pretty well for us was that we positioned ourself very sharply as a pocket internet company.
You can see how voice market is maturing and if you look at real voice users, the figures are probably around 500 million in real terms, we recognized that the next big phase of data market is about to emerge.
In the second phase, we grew our nationwide network and positioned ourself as a pocket internet company and followed it up with the auction process which was perhaps the most significant watersheds in the Indian telephony industry.
We spent close to Rs 10000 crore on 3G alone, then we invested in BWA spectrum. The plan is clear -- build a nationwide 2G network and have a strong data infrastructure.Our 3G network is the most modern currently, it is HSPA+ and then, we are banking on BWA.
We are now ready for our third chapter. In one year, if you look at percentage of our revenues that came from non-voice services, it has come up from bottom of ladder in the industry to one of the highest in the industry at 18 per cent. The future is data. The next tsunami of growth will be broadband.
What are your plans on BWA? When will you launch your services?
It is all a journey, you can’t switch on a network and expect business to come in.There are not much LTE phones, not much TDD-LTE network across the world, it will take time. The moment the critical mass comes in, then data will be all over the place. We are working in the background to pushing some of the ecosystem issues and right now, we are a bit preoccupied with our 3G investment to settle down correctly, automatically BWA will be a natural extension.
We have invested over Rs 5,000-6000 crore including spectrum for BWA in the first instance. About 44 per cent of our revenues in Malaysia come from non-voice, we are ready to bring all that content in India.
What has been the total investment in Aircel till date? And what is the plan going forward? Is there any proposal to change the ownership structure?
We have invested Rs 45,000 crore in the company. We are not a fly by night operator. It is a serious investment and is an endorsement of company’s confidence.
We will be making a fresh investment of Rs 7500 crore, which will be a mix of debt and equity.
There is no proposal for change in ownership and we are not up for sale. These reports are mere speculations.
Government is all set to announce new merger and acquisition ruled. Would you be looking at acquisition in future?
There is a feeling that there are larger number of players than it should be in the telecom market and there is an inevitability of consolidation.
Acquisition always remain a possibility if it is better for organisation and it will be shareholders pregogative. At operational level, our job is cut out and we are focused on that, which is why we have restructured our company.
How much has the Maran-CBI thing impacted the company?
Well, it is a much larger thing. First of all, the whole telecom industry is reeling under all these issues. It is a larger, its a more global issue. And obviously when reports come out about us in the newspapers it sort of ..the question always looms large amongst them employees because is sort of affects them.
But at the business level, we are continuing to focus on what we can which is to make sure that the consumers get the best service and all that. I think as a large, the largest Foreign investor and somebody who has substantially contributed in this country, I think the coverage of our sister organisation has perhaps not been upto the mark. We have not got what is due to us.
I have built just across the road, just across the floor a Maxis acamdemy which none of the telecos in India have which is an altar of high quality training. It is because of the Maxis value.
Maxis is a company which 15 years ago built a 44-storey building with training facilities, restaurant factilities, top class working, there are innovation centres. All of these things we want to do here. This academy is a foundation of the seat of culture. End of the day those are the more important things.
It is important to see Aircel in the right light and the right pedigree.
There are things that we can do something about... there are things we cant do some thing. I would be wrong to say we are not affected. But we are fighting.
I am extremely extremely proud of my team.... This is not a time for the faint hearted. And despite all that is being said in the newspapers about us as a company, our guys are focussed, they are continuing to put in the hardwork.
There is the highest FDI involvement, we are hiring people. Why should I be hiring senior people, why should be we be building a top deck... How much more should I go out and show signs of development, and in the process we are underming a company that had a very very sharpt strategy.
