In July 2002, when the Delhi government decided to privatise power distribution, the Tatas bagged the rights for the northern part. Having taken charge of a pandora’s box of power theft, irregular supply and corruption, they appointed Anil Sardana, one of Tata Power’s top executives, to head the show. Sardana sorted out the mess, turned distribution into a profitable business and won over consumers.
So it was not surprising when, in 2007, Sardana was picked to head the group’s telecom venture, Tata Teleservices Ltd (TTSL), which, after plenty of false starts, was beginning to lose ground to rivals just when it was getting some focus. Last November, when TTSL took aboard Japan’s NTT as a stakeholder with plans for a big bang in GSM services, Sardana was given a crisp brief: revitalise TTSL and give it a strong start in the dominant GSM platform. The message seemed to be: no more of the Tatas’ “lost my way, what next” journey through the telecom landscape that it had first entered way back in 1995-96.
Despite their financial muscle, the Tatas had lost out to nimble upstarts such as Bharti Airtel. A subscriber base of 30 million at the end of 2008 was nothing to scoff at, but that accounted for just around eight per cent of the market, well behind Airtel’s 24 per cent.
The good news was that, for some time, TTSL had been coming up tops in the Telecom Regulatory Authority of India’s quality of service survey, based on network quality. Under Sardana, TTSL decided to leverage this and kiss goodbye to the “me too” past in which telecom service providers vied to launch new tariff plans for every segment and battle over free talktime.
Keep it short and simple: have just one simple price plan nationally. “We decided to leverage our network advantage in a different way, flipping it into a price advantage,” explains Lloyd Mathias, Chief Marketing Officer, TTSL. So its GSM entry turned into a truly big bang. Instead of having a multitude of price plans servicing every possible niche of the market, Tata DoCoMo (the brand for the GSM venture) offered just one plan—a rate of one paise a second. No Plan B—or C or D or E for that matter.
This plan, coupled with the “pay per call” (and not per minute) plan introduced by CDMA sibling Tata Indicom, set the cat among the pigeons in August. TTSL, despite having GSM operations in just eight of India’s 22 telecom circles, dethroned Bharti Airtel as India’s fastest growing operator, adding 3.4 million subscribers. This was in small part aided by an aggressive advertising campaign across all media. “This would be the first time TTSL has gone in for such an aggressive marketing plan, this is possibly the most aggressive marketing campaign in the Tata Group’s history,” jokes Mathias.
But pricing was just the entrée: TTSL is yet to unleash the power of its Japanese partner NTT. “There was never a shortage of funds from the group, so money is not the reason we went looking for a partner,” Sardana clarifies. “The issue was a distinct lack of experience and sectoral knowledge. If we had to compete effectively, we needed a partner with knowledge.”
Senior TTSL and NTT executives meet at a Business & Technology Cooperation Committee every quarter. NTT’s vast experience in high-end data services is already spilling over to TTSL subscribers who are getting a host of unique data services.
TTSL has also done well with its Photon+ Internet access dongle. “Above everything else it helps take the Internet to places where wired broadband would otherwise never have gone,” Sardana says. There is also the ‘Walky’ fixed-line service.
However, some industry analysts feel that like several other players, TTSL is also playing a ‘valuation game’. “I believe TTSL wants NTT to raise its stake from 26 to 49 per cent, but wants a significantly higher valuation than they got previously. Once Tata DoCoMo is up and running and generating revenues, I expect NTT to increase their share in the company,” says a senior executive in a leading handset vendor.
But with a bunch of new competition like Aircel and MTS already operating and UniNor waiting in the wings, and with the established players focussing on their networks and distribution, what does the future hold? Mathias thinks that it is quite positive, “We are a disruptive force with our pricing plans and with Mobile Number Portability (MNP) around the corner, we have nothing to lose.”
Sardana explains that TTSL will soon have operations running in 18 of the 19 telecom circles it has rights for, spending Rs 10,000 crore in the process. Tata DoCoMo has not yet been given permission to operate in Jammu & Kashmir, Assam and the North-East. The last circle where TTSL has permission to operate but cannot start brings up Sardana’s pet bugbear. “There is a ‘perceived’ lack of spectrum,” argues Sardana, “there is spectrum but operators are hanging onto it and not operating services.”
The circle in question is the lucrative Delhi circle. In fact, in 2007, Tata Group Chairman Ratan Tata had written to Prime Minister Manmohan Singh about existing GSM operators sitting on spectrum and entered a very public war or words with Bharti Group Chairman Sunil Mittal.
Will Sardana’s strategy work? TTSL has invested heavily in network with a 100 million subscriber target for 2011. But, in the Indian telecom market, no one is ever quite sure what will happen. Sardana’s bullish attitude is an indicator that things are looking up for the Tata Group in telecom. Finally.