Financial Daily from THE HINDU group of publications
Tuesday, Aug 24, 2004
`We are open to having a strategic investor'
Mr Sandip Basu, President and CEO, BPL Mobile.
Mumbai , Aug. 23
AFTER appearing to have gone into a limbo during most of last year, the BPL Mobile group seems to be back on the roll again, starting July 2003, when BPL Mobile Cellular achieved financial closure, tying up long-term debt of Rs 1,759 crore for its Rs 3,248-crore project.
As part of `Operation Clawback', the company says that over the last seven months of the last fiscal, it has invested the equivalent of investments made over the last six years.
Mr Sandip Basu, President and CEO of the company, talks to Business Line on the turnaround that has happened at BPL.
How did BPL Mobile manage to come out of the doldrums?
We were definitely not in the doldrums; yes, we were not growing at the same pace as the market was growing. What happened was that in our State circles company (Maharashtra, Tamil Nadu and Kerala), BPL Mobile Cellular's financial closure was delayed.
Last July, we achieved financial closure for the circle. This ensured a large flow of funds by way of equity infusion and the final tranches of debt. We immediately increased and augmented our network and technology. When we compare the fourth quarter of the previous fiscal with the first quarter of the current one, our market share has grown 23 per cent to 28 per cent overall in the south. In one State circle, it grew from 17 per cent to 27 per cent and in another from 25 per cent to 34 per cent over just seven months from October 2003 to April 2004.
What is unique in your offer that subscribers should find BPL Mobile attractive?
We are either the first or second operator in all our circles, using the GSM 900 MHz band which is 1.5 times to 2 times more efficient than the 1800 MHz brand of the fourth operators. Operators with pan-India footprints have several fourth operator licences.
We are technologically very strong. We make better utilisation of existing call sequencing. We have also consciously not gone everywhere; we are focused on giving existing customers quality service. We do well in one area and then move into another. For example, in Vasai (extended suburb of Mumbai), which falls in the Maharashtra circle, there are 50 base stations in areas where Hutch and Idea do not have any. Our customers there can come to Mumbai on the same card under special roaming. On the visibility front, we have reinvented the brand.
We recently won the best operator award for 2004 among GSM and CDMA operators from Voice & Data magazine.
But how much further can you go with only four circles when other operators have pan-India footprints?
The advantage of pan-India operations is waning. You can be something in the circles in which you are present, instead of getting some circles to subsidise some of the loss-making circles, as some operators are doing.
We also uniquely have a better post-paid-to-prepaid ratio. We have managed 65:35, at worst 70:30, when the rest of the market is at 85:15. With a higher post-paid ratio, we get better revenues-per-subscriber. Our non-voice tariffs are 20 per cent of our revenues very good in a scenario where voice tariffs have been going down.
Isn't it possible you might face a funds problem again?
No. We are profitable, we have cash accruals; we are already EBITDA positive. And remember that our depreciation amounts to around Rs 300 crore annually. We have a capital expenditure plan that could be between Rs 500 crore and Rs 1,000 crore for our four circles for the current financial year, depending on the pace at which business grows.
Isn't it possible that BPL Mobile, with only four circles, could be sold off? Or are you seeking acquisitions or mergers; are you still talking to entities such as Idea Cellular?
Selling off is not a possibility. As promoters, the BPL holding company has 74 per cent stake in BPL Mobile Communications (Mumbai operator) and wholly owns BPL Mobile Cellular after having bought out AT &T's 49 per cent stake in it last December.
There is a huge opportunity for us to leverage this to approach financially strong strategic investors who are serious about the Indian cellular industry and will help in consolidation play.
As for talking to others, everything is possible in this scenario; several existing investors in various companies are looking for exit. But I don't think anything is going to happen in the next 3-to-6 months. Meanwhile we are thinking of ramping up our market share in a very big way.
As I said, we do not need to have a pan-India footprint. We can create value in the enterprise itself. Anyone who wants to joint and participate in the enterprise will get part of that value.
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