Vodafone
India is prepared for increased competition, post Reliance Jio
Infocomm's entry, said its new chief executive, Sunil Sood. But instead
of looking at what rivals do, Sood said that the company would focus on
its own operations and strength. Edited excerpts:
What are your views on the state of the telecom industry?
There has been far more clarity than before ... understanding that spectrum has been constrained ... that is why you have laws like spectrum sharing and now trading in a few days. There are far more auctions of late and discussions with defence for swapping and harmonisation.
Are you interested in sharing?
Spectrum sharing is great because if we can pool in our resources and use the airwaves, it will help us consolidate and give users a better experience. Our regulatory team is currently just trying to understand some finer points in the guidelines because we clearly don't want to get into agreements with other operators to find later that we have violated some guidelines.
What are the areas of confusion in sharing rules?
Wherever there are liberalized and unliberalized airwaves, there are certain nuances, there could be certain permutations and combinations which we want (the government) to clarify. Only once we have clarity will we go up to someone and talk. Every operator is short on spectrum, especially in dense population areas. We will be looking at ways to enhance our spectrum pool.
You views on competition, especially as Jio enters the fray...
It wasn't the competition I was worried about either in the past or today. It is spectrum fragmentation which hassles us. Coming to your 4G question, I wouldn't like to comment because I do not know what he is going to do, but look at what we are trying to do and what are our strengths. We have a 20-year-plus history here. In these years, we have built a big brand that takes years to build.
Do you anticipate a tariff war post Jio's entry?
We have to prepare ourselves for whatever happens. I charge a premium over my competition. We have seen competition in the past. Despite 8, 9, 10 operators in some circles, there is already a deep sense of consolidation. 90% of the incremental revenue is got by the top three operators of that circle.
You have 4G capabilities in only five circles. By when do you expect to increase your presence?
We expect to roll out all our sites by first quarter of next year in all the five circles we have the spectrum in. Due to economic parameters, such as handset penetration and data consumption, we are launching (4G services only) in these circles. Wider adoption of 4G will take some years.
Will you focus more on 4G in upcoming auctions than 3G?
We will focus on both. 3G is what is required right now and 4G is what is required in future.
What's your capex plan this fiscal?
Last year, under Project Spring, we invested close to $1.2 billion. We expect it to be similar this year.
Vodafone has spoken about as being natural consolidator in India. Are you considering it?
As of now, M&A rules are not favourable. The other big factor is that the debt levels of smaller players continue to spiral and is out of control. So it depends upon the price at which the owners are willing to sell at.
What steps are Vodafone taking to improve call drops?
The government has asked us for a precise list of buildings we want (to put up telecom towers), specific location for sites. So, for Delhi, we have given a list of 200-plus buildings and sites. The government has told us to ensure we share sites. The minister (Ravi Shankar Prasad) has said it should not take more than September to come back to us, so he has been very proactive. For Mumbai, he has asked us to explore MTNL locations. In Bangalore, sites are not that big a problem; it is three of us on the same 3G network.
How has the transition been for you -- from chief operating officer to CEO? What changes have you brought to Vodafone India?
I am changing the way people approach each other, I am trying to remove the 'sir' culture. I am also focussing on the following: customer experience, especially with data growth. Our principal task is to educate subscribers on how to use data. Then, competitive intensity and how to judge peoples' performances. We have our own targets but a more important thing is how have we done vis-a-vis our competitors. Also, cost consciousness. Being a multinational, we have a tendency to become fat. We need to be prudent and optimise. So, I have to ensure that I don't develop any fat because of the so called 'multinational' costs.
How will you cut costs?
I need to beef up in some areas and reduce in some others. As voice is not growing that big now, business is shifting to the newer area, so I must put more resources into the newer areas. Unless severe automation takes place, we don't see our headcount falling. Now, I also have the licence of a payment bank. That is the business side we need to invest in. There have been exits at the top, coinciding with your elevation. There is always change and we as a company always have said that change is good. So, some people have worked here for plenty of years and they have decided to move on. We have one of the lowest attrition at 15-16% and the industry attrition is 20%.
By when will the payment bank be up and running?
We are yet to receive the letter from the RBI. We have about 18 months to launch it.
What are your views on the state of the telecom industry?
There has been far more clarity than before ... understanding that spectrum has been constrained ... that is why you have laws like spectrum sharing and now trading in a few days. There are far more auctions of late and discussions with defence for swapping and harmonisation.
Are you interested in sharing?
Spectrum sharing is great because if we can pool in our resources and use the airwaves, it will help us consolidate and give users a better experience. Our regulatory team is currently just trying to understand some finer points in the guidelines because we clearly don't want to get into agreements with other operators to find later that we have violated some guidelines.
What are the areas of confusion in sharing rules?
Wherever there are liberalized and unliberalized airwaves, there are certain nuances, there could be certain permutations and combinations which we want (the government) to clarify. Only once we have clarity will we go up to someone and talk. Every operator is short on spectrum, especially in dense population areas. We will be looking at ways to enhance our spectrum pool.
You views on competition, especially as Jio enters the fray...
It wasn't the competition I was worried about either in the past or today. It is spectrum fragmentation which hassles us. Coming to your 4G question, I wouldn't like to comment because I do not know what he is going to do, but look at what we are trying to do and what are our strengths. We have a 20-year-plus history here. In these years, we have built a big brand that takes years to build.
Do you anticipate a tariff war post Jio's entry?
We have to prepare ourselves for whatever happens. I charge a premium over my competition. We have seen competition in the past. Despite 8, 9, 10 operators in some circles, there is already a deep sense of consolidation. 90% of the incremental revenue is got by the top three operators of that circle.
You have 4G capabilities in only five circles. By when do you expect to increase your presence?
We expect to roll out all our sites by first quarter of next year in all the five circles we have the spectrum in. Due to economic parameters, such as handset penetration and data consumption, we are launching (4G services only) in these circles. Wider adoption of 4G will take some years.
Will you focus more on 4G in upcoming auctions than 3G?
We will focus on both. 3G is what is required right now and 4G is what is required in future.
What's your capex plan this fiscal?
Last year, under Project Spring, we invested close to $1.2 billion. We expect it to be similar this year.
Vodafone has spoken about as being natural consolidator in India. Are you considering it?
As of now, M&A rules are not favourable. The other big factor is that the debt levels of smaller players continue to spiral and is out of control. So it depends upon the price at which the owners are willing to sell at.
What steps are Vodafone taking to improve call drops?
The government has asked us for a precise list of buildings we want (to put up telecom towers), specific location for sites. So, for Delhi, we have given a list of 200-plus buildings and sites. The government has told us to ensure we share sites. The minister (Ravi Shankar Prasad) has said it should not take more than September to come back to us, so he has been very proactive. For Mumbai, he has asked us to explore MTNL locations. In Bangalore, sites are not that big a problem; it is three of us on the same 3G network.
How has the transition been for you -- from chief operating officer to CEO? What changes have you brought to Vodafone India?
I am changing the way people approach each other, I am trying to remove the 'sir' culture. I am also focussing on the following: customer experience, especially with data growth. Our principal task is to educate subscribers on how to use data. Then, competitive intensity and how to judge peoples' performances. We have our own targets but a more important thing is how have we done vis-a-vis our competitors. Also, cost consciousness. Being a multinational, we have a tendency to become fat. We need to be prudent and optimise. So, I have to ensure that I don't develop any fat because of the so called 'multinational' costs.
How will you cut costs?
I need to beef up in some areas and reduce in some others. As voice is not growing that big now, business is shifting to the newer area, so I must put more resources into the newer areas. Unless severe automation takes place, we don't see our headcount falling. Now, I also have the licence of a payment bank. That is the business side we need to invest in. There have been exits at the top, coinciding with your elevation. There is always change and we as a company always have said that change is good. So, some people have worked here for plenty of years and they have decided to move on. We have one of the lowest attrition at 15-16% and the industry attrition is 20%.
By when will the payment bank be up and running?
We are yet to receive the letter from the RBI. We have about 18 months to launch it.
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