Maxis Berhad’s CEO says Aircel will launch 4G technology in Q4
Talk about Aircel these days and all you get to hear is the controversy surrounding former telecom minister Dayanidhi Maran or rumours about an exit by its current promoter Malaysia’s Maxis Berhad. But beyond these issues, the company has been quietly rolling out its mobile services, trying to establish itself as a pocket Internet services provider. The company has recently effected a rejig in its top brass to remain relevant in a highly competitive market. Aircel with 64 million subscribers is currently the fifth largest GSM mobile operator. Business Line recently met Maxis Berhad’s CEO Sandip Das to know how the company is shaping up in a tough telecom environment.
While the entire telecom industry is up in arms on spectrum and auction related issues, Aircel has not been vocal at all. What’s the reason for being quiet?
Aircel is being viewed as a serious player particularly in the data play and therefore others may make it difficult for us. We have an equal amount of incumbency and equal number of new licences so we are sympathetic to both sides. So we tend to agree with what’s being said by both the older players and the new operators. We are all half way through our business plans and based on that we made investment but, suddenly, if the policy changes dramatically we will have to evaluate our position. No one wants to pay out more. If the licence fee goes up it will kill the golden goose. All that worked for us till now in the voice segment should continue to ignite the market.
Given the gloom in the sector do you think its end of growth story for telecom?
Today is the first day towards the next 600-700 million broadband connections. There’s data tsunami waiting to happen and therefore growth in telephony will continue. Today with Long Term Evolution (LTE) technology you are creating an eight-lane information highway and the whole data thing is going to explode. Voice has matured but telephony by no way is over. That’s why we have made an effort to position ourselves as the pocket Internet company. In Maxis our view is to make Aircel stronger financially and whatever restructuring has to happen will happen but it will not change our purpose to make it the leading player in data.
Everyone talked about 3G in a similar way but it has been a damp squib. What gives you the confidence that LTE will work?
Expectations and execution of 3G has been wrong. But that does not dilute demand for data that waiting to happen. In voice market, India had 40-50 million users for the initial 6-7 years. What changed it was that operators created a half cent business. Now Government is looking at how it can make more money; incumbent operators are protecting their turf but no one is setting a national goal as to what will happen when we get to 700 million broadband users. We give connections and then what? The Government of Malaysia made the Managing Director of Malaysian Airlines a Minister and his role is to drive the economy. Then they made the grand plan on how telecom can deliver services in sectors like health, education. Where is that grand plan in India? Our biggest problem is bridging the digital divide but unfortunately we are only talking about licence cancellations and short-term goals.
But are not operators also to blame for the mess?
Everyone is to be blamed. It is difficult for the government also because the moment they make a policy, it’s taken to court.
What will Aircel do to change things?
My frustration is that we need to deliver on these things but last 18 months have been very tough. But we have taken the first step by rationalising our 3G price and it is sparking off demand. You will see more initiatives from us towards the fourth quarter. LTE will be launched in the fourth quarter.
Three top players in the market collaborate and share resources to drive down costs. But Aircel is standing alone. Isn’t that tough?
It’s not easy but you will see us concentrating on a few areas. We can’t play across all segments but we will choose data segment and offer value.
What is your strategy for making devices affordable?
We are still drawing our device strategy. I am talking about bringing in devices that are relevant. In a months time you will see us making announcements related to device.
Aircel had planned to create two separate entities: Netco for managing network infrastructure and Opco for operations related activities. What’s the status?
We are ready but at the end of the day it takes two to tango. But the recent Supreme Court order quashing licences has thrown this plan out of gear.
Many consider Aircel as an industry outsider, especially when it comes to industry associations such as the COAI. Why is that?
I wouldn’t say I am an outsider but I would say we pretty much have our own opinion. Sometimes I feel industry forums have not been representative of smaller players.
What’s your take on the rules being drafted for the upcoming 2G auctions?
At this point of time we are asking for our right to get 6.2 Mhz for which we have gone to TDSAT and then we are waiting to see how the spectrum charges will go. It’s a wait and watch for us.
You had signed an agreement with Infosys for mobile apps. How is it going?
Very early we decided to set up our own apps store and then we partnered with Infosys. Then over time we outlived that thing and now we are moving to different level on software development. Infosys will do a part of it but we will have other partners.
Will your investments be lower given the uncertainty in the sector?
Last year we spent $3.5 billion on network. We have rolled out 2G and 3G network, we have installed 8,000 nodes. So we have built the infrastructure. We will now do LTE and augment 3G network.
Will Maxis stay invested in Aircel?
Given the uncertainty in the telecom sector, valuations are all over the place. Why should someone who has heavily invested suddenly pull out? Our objective at the end of the day is that we want to create a strong property. Will a merger make the company stronger, or will we buyout someone, or we might bring in a strategic partner, for example, in the data business.
Or we could even look at an IPO because it has become difficult to get loan from banks. All these options are available.
Licence cancellation has disrupted plan to create new entities — Maxis Berhad’s CEO Sandip Das