The Hindu Business Line : `Investments in Western region beginning to pay off'

BHARTI Tele-Ventures Ltd, the last entrant in the Western region, is poised to scale the 5-million customers mark over the next six months, up 1.5 million from 3.5 million customers now. In revenue terms, the region will account for nearly 25 per cent of the company's revenues in 2005-06 as against 20 per cent last year.

The Western region that accounted for revenues of around Rs 1,600 crore last fiscal is expected to contribute Rs 2,500 crore this fiscal if the company crosses the Rs 10,000-crore mark in net sales.

In an interview with Business Line, Mr Vinod Sawhny, Executive Director, Mobility - Western Zone, Bharti Tele-Ventures, explains how an investment of Rs 800 crore in the region this fiscal, a mark up of 85 per cent over that in the previous year, is beginning to pay dividends. The company is concentrating on the 18-35 age category that is shaping the future of mobile applications whether it is music, data or video application. Excerpts:

What is targeted subscriber rollout for the region this fiscal? With only three months to go, what is the outlook, both in terms of investment and subscribers added?

This fiscal, the subscriber base of the entire Western hub taken together is expected to increase by almost 80 per cent. There will be a significant rise from the customer base of 3.5 million subscribers in the region.

The growth would be led by network enhancement — approximately 3,500 cell sites being deployed this fiscal— calling for huge investment. In the Western region, we would be increasing the investment to the tune of 85 per cent over the previous fiscal.

The Western region as a profit centre - what percentage of the group's all-India revenue pie did it account for in 2004-05? What is the target this fiscal?

Airtel is emerging strong in the Western region with a continuous market and value share gain. This is being accomplished with product innovation, a sharp focus on customer needs, investments in network quality, coverage in partnership with world-class operators such as Nokia and Ericsson, and a total focus on enhancing the customer's experience. We aim to invest Rs 800 crore in 2005-06, and roll out into thousands of towns in the Western region. This fiscal, we see the region increasing its revenue share in the company's operations and taking it closer to 25 per cent.

Are there going to be increasing instances of service providers and manufacturers joining hands to provide a combined product? Do you have any region-specific plans here?

We have entered into alliances with organisations across several sectors. For example, together with ICICI and Visa, Airtel launched a credit card on the mobile. We are also part of the GSM Association (GSMA) programme to make mobile telephony affordable. This programme has now driven the wholesale cost of mobile phones to below $30. We have already launched a number of cell-phone bundling offers in collaboration with Nokia and Motorola this fiscal. Along with the 200RC, we see cell-phone bundling offers as one of the key levers for lending an impetus to the growth of mobile market in the country.

Besides tie-ups with cell phone manufacturers, Airtel mobile has launched programmes that involve bundling with landline and broadband services.

The Hutch-Essar combine, with the take-over of BPL, now occupies two-thirds of the market space. What is your strategy to counter this combine?

In Mumbai, despite being a late entrant, we created history by being the fastest fourth operator on 1,880 Mhz to cross the one-million customer base.

We have recently installed a third switch in Mumbai to absorb the growing voice and data traffic. The new switch has the capacity to handle additional six lakh customers and will be able to complete additional one million calls during peak hours.

As for mergers and acquisitions in the sector, consolidation is a continuous process in the Indian wireless industry. Our recent alliance with Vodafone too will play an important role in taking Airtel to the next level of growth, qualitatively and quantitatively.

As a challenger in all the five circles - Mumbai, Maharashtra & Goa, Gujarat, Rajasthan and Madhya Pradesh & Chattisgarh - what are your strategies to counter competition?

Airtel is a leader in Rajasthan. In the rest of four circles, we are looking at not only gaining market share, but also expanding the market by aggressively rolling out into new towns, leveraging the Rs 200 Recharge Coupon and thus opening a wireless market to new customer segments. Our focus on introducing new products tailored to specific customer needs is a key differentiator. Providing high quality telecom services to corporates /SMEs is a key priority.

What are your plans for the rural market considering that rural market is both the way to grow and the tougher nut to crack?

We at Bharti have embarked on a significant network expansion exercise into rural areas. We are also expanding our distribution network and our products are now available across more than 3,25,000 retailers.

From the applications point of view, we launched `Future factory' - Center of Innovation to incubate pioneering mobile applications. A key focus of `Future factory' is rural applications.

The first set of applications developed by Future factory for rural segments include products such as community phone application and mandi rates to enable farmers to get the price information on commodities.

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