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"I am a telecom man" - An exclusive interview with A.K. Sinha, BSNL Chairman and Managing Director [21.05.07]

AG: Mr. Sinha, it will be interesting to find out how it is possible that the government company has become the number 2 mobile operator in India, competing with major private companies on the same level?  Usually there is a stereotype that government companies cannot reach that level of success due to various barriers, and it is often true.  So what is keeping your company up and running?

AKS: So, you are surprised? Firstly, we are the oldest telecom department, tracking back to more than 150 years.  In the past, Mumbai and Delhi were separated and so MTNL (Bombay) and BSNL (Delhi) were created.

1)There is a BSNL network running throughout the country -- we are the incumbent operator, and this certainly is an advantage in the telecom business. 

2) All of our people are well trained, and we had no doubt that we could win over any competition.  And in the mobile sector we could have become number one.  It‘s just that we got the mobile license 7 years after all other operators obtained them.  Other Indian mobile operators started providing services in 1995, while we began providing services only in 2002, seven years later.  Otherwise, we could have been in the lead. So now we have more than 25 million mobile subs in GSM. Our people are technologically advanced and our reach is also out there.  

So the third factor is that we chose the rural development over urban advancement, like other operators. We believed in it and won the market.  Now of course, with the saturation of urban areas everyone wants to be rural.  However, we are not going to give up our market share there.

AG: When the 3G technology comes, what do you expect from that?

AKS: You see that we have a very well developed 2G network, and are ready to invest into 3G once the time comes, in fact, we already have procured 3G equipment.

AG: With regards to the VAS services development, how is the BSNL position compared to Bharti and other leaders?

AKS: Our VAS revenues are rising. We expect that they will reach over USD 100 million in 2006, and it is going to rise further.  With CPs we maintain a revenue sharing mode. News, TV, Bollywood are popular themes.  And we basically provide a fair ground to anyone, so there are many CPs and many franchisees there.

AG:  Is it a standard 60-40?

AKS:  I won’t comment on that, as it varies from CP to CP.

AG:  What if a Russian CP would like to work with BSNL on VAS?

AKS: Depends what is their content offering.

For example, if it is mobile gaming, everything would depend on the quality of the game and potential popularity with local users.  We have a lot of mobile games already.  What I want to mention is that we don’t provide exclusivity to anyone.  There is no exclusivity, therefore anyone and everyone can share with us.

AG: Could you share the results of your fixed line business in 2006?

AKS:  About 4-5 years ago we had good growth. There are about 6 million fixed telephones in India. For the past three years it has been decreasing.  Yet we predict that by the end of the fiscal year in March 2007, there will be some increase.

AG: What about fixed vs. mobile market development? In Russia mobile growth hit the ceiling, and broadband Internet led the wave of growth.  What’s happening in India now?

AKS: I believe that broadband development is satisfactory.  However, the overall telecom penetration in India is still very low.  In India we are the leaders.  BSNL has 45% of the market share.  On the mobile segment of the market, you see that handsets are getting cheaper. Hence, we are very aggressively promoting broadband, as well as fixed wireless convergence solutions. On ADSL side we have 31 million wireline connections.  1,100 cities in India are covered by BSNL. There are 5 million additions this year.  On the IP technology side, we are trying to promote IPTV this year.  Actually we are currently looking for some content partners in our IPTV projects. These include server-hosting, content, etc. So, with this model we are going to start very soon.

AG: Is IPTV going to be big in India? How is the position of cable operators vs. IPTV players?

AKS: IPTV is indeed there, and it is going to be very popular, because it can offer much more than cable TV.  Most of all, it is interactive and cable TV is not.  So, with on-line packaging, users will have so much more to do. On top of that we have game offerings on broadband, that’s what we recently started.

AG: Russian telecom holdings are very interested in partnering with Indian telcos, especially on the license side.  What is the best way to cooperate with BSNL?

AKS: You mean working in India?  Well, in reality we have sufficient resources to work in India. Yet we are the state-run company and therefore, the procedures of our operations are different from others.  However, we are open to any cooperation, if this is of mutual interest. I personally can meet and discuss with any interested parties.  But generally speaking, it is not that the Indian side needs money.  What we are interested in, is sharing the knowledge, creating more efficiency for our customers.

AG: Many analysts are saying that mobile business is threatening the existence of the fixed one, and many fixed operators are moving fast into the new areas, mainly convergent.  So what’s your opinion on that topic?

AKS: First of all, we see that broadband, wireline is going to be surging for the next 3-4 years, because people want to use Internet and other content. The broadband is saving our business actually.  And no doubt that mobile phones are the hit of the time, they are cheaper and efficient in connecting the people, especially in India. The costs of handsets came down, the tariffs came down, infrastructure costs are coming down as well – these are the reasons that provided the spread of cellular communications.

On the other hand, people still need, they want to have at least 1 fixed telephone in the family.  You know, the curious thing is when people want to talk seriously, they want to talk through the landline, because it is so much more convenient.  And this importance will remain there for a long time.  And a mobile phone has become a pocket telephone for the speed of access.

You talk, finish, put it in the pocket and nobody can see that.  For example, each family of nine requires nine mobile phones and only one landline telephone. What is good for BSNL is that we have two businesses, both fixed and mobile.

AG: What about 3G?

AKS: Well, there is a chosen standard, IMT-2000.  We are going to be there for sure.  But time will tell whether 3G or WiMax is better. 

AG: Bharti is big in outsourcing. Do you agree with that idea for mobile operator business development?

AKS: Once you start from the scratch, this model is very good, but when you have a running company that is a different picture. Thus, we outsource only in our non-core areas.  In our core areas we keep the full control.  We can’t afford to be that liberal, because we have so many people in our company. We need to train people.  We need to find jobs for technical people. Therefore, when you work very liberally there will be resentment and disappointment.

AG: What about your carrier business?

AKS: We have a license for long distance, and later started it.  With the collaboration of the local governments we laid so much of own cables.  There is also a new project, we are planning to build a pipeline from India to Sri Lanka. From that cable we will try to build our LD network, and the second cable India to Singapore. That’s being laid by the MTNL and BSNL subcontracting company – MTL Company, which is doing it. There we will have our international business. You know that international business is becoming more important and the world is getting smaller and smaller. So it makes sense to have this diversification.

AG: Actually, you are getting in competition with Reliance?

AKS:  We are not at that stage at the moment.  That stage will come later for us. The Singapore cable will be there and we’ll start.

AG: India has several large industrial groups in the market that are competing with each other in  the telecom sphere. Do you think that you all play a fair game?

AKS: Let me guide you through the whole mobile communication business roll-out.  We are an incumbent operator first of all.  A few years ago there was no regulator in India, then the regulator came, and then a few people wanted to grab that business, and fast.  You see, those operators only wanted to work with high-end customers and cities.  On the contrary, we are basically everywhere in India.  As we continued our push to rural areas, some government help was provided to us.  And this was not liked by some of the operators.  Then there are some ways to find some short cuts.

We have about 15 million lines in rural areas, where no one is going.  Now they can go on mobile. So the cost of operation is high, and people are spending much less in these areas, so we are getting some help from the government.  You get about 6 or 7 cents per minute. CPP changed the situation completely.

AG: So what is the BSNL mantra?

AKS: Our motto is “we connect whole India” and we are not going only for high end customers, but rather connect everyone without any distinction.

AG: What is your favorite ringtone?

AKS: I don’t believe in all that. I’ll do it after retirement, then we’ll see. (he smiles.)

AG: My final standard question in what is the secret to your success?

AKS: I am a telecom man, I started in the telecom department as an engineer.  In India, the telecom industry is among the most rapidly growing and it is great to be part of this business. I like what I am doing. It is very interesting. I should note that legal formalities that we need to follow slow us down.  So many regulations put us back.

Also so much change…before people were standing in line to get a phone… I know because I’ve seen it – people come to us and beg that they need it, say, on medical grounds, etc. and now our people are begging them to buy the phone…so it is a reversal.

People are simply confused, they had to run before us, and now it is vice versa. They feel that their market value reduced.  Sometimes, our customer service needs to be upgraded. We must improve that point, we need to explain how…

AG: Do you want to give a message to Standard Magazine’s readers?

AKS: The message is that telecom is the thing that connects despite the distances.  And we know that Russia has so much talent and new technologies. We are ready to work together and discuss opportunities together. As you see, there are so many new projects coming ahead. Like for example, convergence is going to be there. Digital exchanges, IP network. We’ll go there in 2-3 years.  IP network will be used only for trunk. And all procurement for the mobile will be through IP.  You see, we are going to have only new technologies.

AG: Thank you very much for your time!

March 2007, New Delhi