Financial Daily from THE HINDU group of publications
Monday, Jan 06, 2003
Info-Tech - Telecommunications
`More than 3-4 operators unviable' Mr R.A. Venkitachalam, Chief Operating Officer, BPL Mobile
COIMBATORE, Jan. 5
WHEN BPL Mobile launched its cellular phone service in Tamil Nadu Circle (excluding Chennai city) about five and half years ago as the first service provider, mobile telephony was something of a novelty and status symbol that the wealthy loved to flaunt. The high cost of mobile handsets at that time - a basic model was priced around Rs 27,000-Rs 28,000 - and the prohibitively high airtime rate of about Rs 16 per minute for an outgoing call gave cell phones an aura that one could only envy at.
But since then the industry has seen a sea change and the entry of more operators has led to fierce competition and the airtime rates have become so affordable that people in Tamil Nadu now top the list of airtime users in the entire country - 600+ minutes per subscriber a month as against the national average of 350-400 minutes per month per subscriber.
In an interview to Business Line, Mr R.A. Venkitachalam, Chief Operating Officer (COO), BPL Mobile Cellular Ltd, Tamil Nadu and Kerala, speaks about his company's growth and the future of BPL Mobile. Excerpts:
You were the first to start the mobile phone service in Tamil Nadu (other than Chennai). How will you describe your growth during this period?
BPL Mobile has been involved in the growth of the market very aggressively. While in the first three years a lot of "concept selling" was necessary, in the last two years we have seen the market adopt to mobile telephony at a much faster rate. It has been facilitated mainly by the MOTS Prepaid cards, competitive tariff and expansion of footprint. The comparative reduction in the entry cost, including the cost of the mobile handset, has also helped the increase in penetration.
What is the investment made so far by your company and what is your subscriber base. What are your future plans?
During the last 5½ years, we have made substantial investments in the State particularly in areas like network hardware, market support infrastructure, retail presence & category education.
The total investments are in the range of Rs 700 crore to Rs 800 crore as on date. With the current subscriber base at 1,60,000 and growing very rapidly, we plan to further expand the network capacity in the existing towns in the immediate future. We are also working on a plan to expand our presence in more than 20 additional towns shortly.
There is a perception that most of the mobile service providers are in the red. Have you started making profit? If so, from when onwards?
The mobile service providers have made very large investments in infrastructure and in the form of licence fee. We are progressing as per our business plan and are performing well and enjoy the most-healthy EBITDA levels amongst mobile operators in the country.
Do you think there is potential for two more operators in every mobile circle? Can they run the business profitably?
We believe that while there is a large opportunity that exists in the telecom space, thanks to the opportunity to achieve higher telecom penetration levels, it is not feasible for 5-6 operators to co-exist and provide excellent service levels and also be healthy and viable, since as a business it may be a huge challenge. When we examine telecom markets worldwide, we see that more than 3-4 operators is not a viable scenario anywhere.
What according to you are the policy initiatives the Centre should take to make the industry viable.
We believe that the most important initiative required is to ensure the level playing ground for the various operators in the telecom space. Also, certain anomalies that exist need to be rectified - for example Chennai and rest of Tamil Nadu are two different circles as per licensing terms for mobile telephony.
How do you view the tariff rate announced by Reliance? Do you feel that it would seriously impact the mobile phone tariff? Has the mobile rate hit the bottom?
The tariff announced by WLL operators is an introductory offer. We would like to wait and watch further developments in this area, before taking a more definite view. We need to keep in mind that the mobile telephone rates in India, and more particularly in Tamil Nadu, are the lowest in the world.
Tamil Nadu customers average airtime usage is nearly twice the national average. Is there any specific reason for that, other than low airtime tariff?
This is mainly due to very competitive airtime rates. We have also seen that the customers who are now coming into the mobile category are using slightly lower amount of airtime. More and more customers are now using short messaging, voice mail and other facilities extensively.
There is a feeling that BPL Mobile is not growing in Tamil Nadu as much as its competitors. Is that true? While Aircel has overtaken you in terms of number, Airtel says that is has crossed 50,000 in a short span. Are you stagnating and if so why?
BPL Mobile, Tamil Nadu has been growing at an attractive rate both in numbers and revenues on a consistent basis. Most importantly, we have been rated as the best performing network as per the TRAI survey in the QOS survey ratings.
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