By the year 2006, the Indian telecom scene would have changed a lot. Unlike today, the incumbent operators may not be dominating it. And the seeds of that change have already been sown with the large corporate houses announcing their plans to enter the telecom space in a big way. Not only are they looking at a vast geographical spread but are also drawing up huge investment plans. Tata and Reliance, the two large corporate houses in India have made mega plans for telecom and plan to give a good fight to Bharti which has been there for a longer time.

The Indian telecom space has a large number of private players in different services but only three of them—Bharti, Reliance, and Tata—are working in the integrated telecom space. (BSNL, the incumbent operator is a PSU).

Bharti, Reliance and Tata are all either providing or planning to provide entire suite of telecom services to corporates and individuals in this fiscal. They are moving with their unique business models and are optimistic about the future. The Bharti Group is banking on its cellular licenses for 15 state circles while the Reliance group is betting on its basic services license in 18 circles. GSM will be the main revenue earner for Bharti, contributing around 70 percent of its overall revenue whereas CDMA will be the main weapon for Reliance. According to sources, the company is planning to roll out services in the third quarter of this fiscal. The Tata Group, which obviously not like to be left behind, has been focussing on customer ownership with a bundled offering of access and value- added services as its key mantra.

Basic (5 circles) Cellular (15 circles) Broadband (all India through VSAT) DLD (18,000 km) ILD (limited) Internet (limited)	Basic (2 circles) Cellular (4 circles) ILD (end-to-end) Internet (all India)	Cellular (6 circles) Internet (limited)

Before looking at the key strategies of the three groups one needs to look at their respective visions. Bharti’s objective is to capitalise on the growth opportunities that are available in the Indian communications market and consolidate its position as an integrated telecommunications service provider in key markets in India, with a focus on providing cellular services. The company believes in full mobility and not in limited mobility. Rajan Bharti Mittal, joint managing director, Bharti Enterprises feels that when one can provide full mobility at a slightly higher cost and it also has the cost advantage, geographical spread, roaming facility, and value-added services then why go for limited mobility.

Reliance’s vision is to create an advanced facilities-based, intelligent, next generation communication network with terabit bandwidth that will help it leapfrog others. This will help the company to come into direct contact with tens of millions of Indians within a span of five to seven years. The company is focusing more on CDMA-based mobility, and is looking at 5 million lines to be deployed in 110 cities in its very first year of operation. Plans are also on to launch broadband network in 2,000 cities by deploying 60,000 km of OFC across the country.

Tata, which has suddenly become more active in the telecom arena with the acquisition of VSNL, plans to capture six million (wireline as well as wireless) customers by 2006 and 12 million by 2011. At present, the group is planning to focus on seven business segments, of which communications and information system contributes 12 percent of overall revenues. The company now plans to have an increased focus on communications and information system and plans to contribute 25 percent of the revenues by 2006.

All the three contenders to the P-telco throne have put much to stake and the winner will have to face stiff competition. According to Kishore Chaukar, managing director, Tata Industries, "Telecom is a long-term business and is dependent on long-term commitment, deep pockets and staying power, as the game has to be played over a period of 20 to 30 years."

We have tried to compare the strategies of the three players, in investment, technology, deployment, manpower, and marketing in detail and draw the conclusion on that basis.

Investment Strategy
n Bharti: The company is currently valuated at around Rs 5,800 crore. It has done pretty well on the investment front and has been able to attract a lot of foreign direct investment in India through SingTel and Warburg Pincus. Till date, the group has invested around Rs 7,500 crore in telecom and is planning to invest another Rs 2,000 crore in FY 2002-03, 50 percent of which will be in mobile services. Bharti is also looking to raise debt to the tune of Rs 1,500 crore within two years and is evaluating all the options like FIIs, banks, export credit agencies and the Indian market, says Akhil Gupta, joint managing director, Bharti Tele-Ventures.

Bharti has very strong relationship with international strategic and financial investors like SingTel, Warburg Pincus, International Finance Corporation, Asian Infrastructure Fund Group, and New York Life Insurance which have been with the company for a long time. This gives Bharti the crucial financial support for the long term.

The company has a debt equity ratio of 0.37 as on 30 June 2002, which translates to a funded equity of approximately Rs 5,180 crore and a debt of around Rs 1,893 crore. According to Gupta, the company is looking at a debt-equity ratio of 0.67 to 0.7.

In February, the company was very successful in the share market as the company divested 10 percent of its equity through a public issue of 18.5 crore equity shares of Rs 10 each at a premium of Rs 45 per share aggregating to around Rs 834 crore.

n Reliance: In terms of valuation, Reliance is way ahead of its competitors, Bharti and Tata. In December 2001, when Qualcomm announced taking a 4 percent stake in Reliance Communications (now named Reliance Infocomm) for $200 million, the company’s valuation was estimated to be around Rs 23,000 crore.

According to industry sources, till date the company has invested around Rs 12,000 crore and plans are to invest another Rs 9,000 crore in the next five years. So, in toto the Reliance Group is planning to invest around Rs 21,000 crore in a five-year span. Unlike Bharti, majority of the present investment is for basic services and laying of broadband infrastructure.

The company is looking at a debt-equity ratio of 2:1 in the next five years. The group is also open to bringing down its equity from present 96 percent to over 45 percent over the same period. According to industry sources, Reliance is likely to go for an IPO within a year of launching its services.

n Tata: The company plans to invest Rs 12,000–14,000 crore in the next six years. It is looking to invest around Rs 9,000 crore in six basic services circles— Andhra Pradesh, Delhi, Gujarat, Maharashtra, Tamil Nadu, and Karnataka. The company has already invested around 1,500 crore in its Andhra Pradesh operations. Recently, it made another strategic investment by acquiring 50.83 percent equity in Hughes Tele.com in a unique deferred payment deal. Tata’s will also make an open offer to acquire another 28 percent stake.

The company plans to invest a total of Rs 3,500 crore on long-distance and value-added services, of which Rs 2,600 crore have already been invested for getting 45 percent stake in VSNL, the largest ILD service provider in the country. VSNL also possess the DLD license, for which the work has already started.

On the cellular front, Idea, in which Tata has 33.33 percent stake, has invested around Rs 900 crore in circles of Andhra Pradesh, Gujarat, Madhya Pradesh, and Maharashtra. Idea is planning to invest around Rs 1,400 crore of which Rs 700 crore will be invested in Delhi.

Comments: Reliance leads both in terms of investment made till date and investment planned for future.

Technology Strategy
n Bharti: A strong cellular company, Bharti has opted by default for GSM (900 MHz and 1,800 MHz) technology. All its new networks in eight circles are GPRS-ready and the company is busy testing the network. Even the networks based on 900 MHz in seven circles are upgraded or planned to be upgraded to GPRS. The GPRS network will open up host of services and provide data speeds of around 30–50 kbps. In the new cellular circles, the company has selected Motorola, Siemens, and Ericsson as key vendors. For cellular operations, the group has gone for common software in all circles. The company has opted for Keenan’s billing system, Oracles’s CRM and ERP, SAS’s data mining, and Subex’s fraud detection tools.

On the basic services front, the focus is more on corporate customers as this will help boost the topline. Being a strong GSM company, Bharti currently has no plans to provide WLL(M) in any of its five basic circles. The company has installed IN and plans are to offer IN-based solutions. On the VSAT front, the company has opted for FTDMA technology of Gilat.

Bharti’s long-distance network (both ILD and DLD) is based on the TDMA technology. The company has plans to deploy IP for ILD for which RFP has been floated. For long distance Bharti has opted for Alcatel (ATM switch), Siemens (Switch and IN), Nortel (SDH), Corning (fiber), and Keenan (billing system).

n Reliance: The company is betting big on CDMA. It has got an FSP license across the country (except in J&K, A&N, and North East) and plans are on to deploy WLL(M) services. On the FSP front, the company is planning to deploy CDMA 2000 1X technology which supports both voice and data services. It provides up to twice the capacity of earlier CDMA systems (with even bigger gains over TDMA and GSM), helping to accommodate the continuing growth of voice services as well as new wireless Internet services. Second, it provides peak data rates of up to 153 kbps (which can go up to 307 kbps), without sacrificing voice capacity for data capabilities. For wireless infrastructure, the company is in final stages of talks with Nortel, Lucent, Samsung, and LG. According to sources, Reliance is into a very aggressive negotiation and may clinch the final price of $70–80 per line, which is far less than what Tata recently got from Lucent.

On the wireline side the focus is on broadband for providing high-speed Internet access. The company has been slow on the GSM technology upgradation as the focus is more on CDMA. On the NLD front, the company is planning to deploy SDH over DWDM and on the ILD front plans are to deploy TDMA as well as IP-based infrastructure. On the wireline front, the company has opted for Ericsson switches whereas for transmission the company has chosen Nortel. Initially, in 40 cities, the company is deploying digital switches of Ericsson which are IP-ready.

On the billing front, Reliance has opted for ADC and Intec Telecom systems. It has chosen ADC’s Singl.eView as its convergent billing platform for its broadband wireline, wireless, and IP/data services. Singl.eView is a complete revenue transaction, billing and service management solution sitting at the core of the OSS and BSS.

On the handset front, the company is planning to sign up with LG and Samsung, and one more vendor from the trio—Hyundai, Kyocera, and Sanyo. According to sources, LG is in the process of signing an agreement for supply of around 8 lakh handsets (maximum focus on low- and medium-end handsets) worth $100 million. Even Samsung would be signing shortly for the supply of high-end CDMA handsets.

Parallely, Reliance is also working on manufacturing CDMA handsets in the country. According to sources, the top officials in Reliance feels that it makes business sense to manufacture handsets in the country even if there is a requirement of 2 million handsets ever year in the country.

n Tata: The group is a strong proponent of CDMA and has been very successful in Andhra Pradesh. The company was to the first to commercially offer limited mobility services in the country. In terms of technology, the company has opted for CDMA 2000 1X. In terms of wireline switch, the company has opted for Alcatel (Delhi and Tamil Nadu circles), Lucent (Gujarat and Karnataka circles). For wireless, the company has opted for Lucent.

On the DLD front, Tata is planning to go for DWDM on all the major routes. Very strong in the international long-distance segment, Tata’s plan to continue with its dominance and plans to deploy VoIP switches along with the existing TDMA infrastructure that the company currently possesses.

On the cellular front, the group has representation in Idea Cellular.

The Group is opting for GPRS network in Delhi where plans are to launch the service in a few months time. In the older circles of Maharashtra, Gujarat, Andhra Pradesh, and Madhya Pradesh, the company is yet to take a decision on making the network GPRS-ready.

For the new venture on VSAT, the company has opted for MFTDMA technology of Viasat.

Comments: As of now, the groups are by and large equally strong on the technology front. However, in the long run, CDMA can have a definite cost advantage over GSM.

Manpower Strategy 
n Bharti: As of June 30, 2002, the company has an employee base of 4,654. Mobility group has an employee base of 2,660 whereas Infotel group has a base of 1,876. The corporate office has a total of 118 employees.

n Reliance: The telecom operations of the group will be taken care by Reliance Infocomm. For organizational purposes Reliance Infocomm is divided into 12 regions. Presently, the company has recruited around 2,500 people and plans are to have an employee base of around 10,000 in couple of years.

To overcome its weakness on the retailing front, the company has gone for the best talent in the industry and till date the company has recruited around 200 people from HLL, the number one FMCG company in India. The company has also recruited a large number of employees from other FMCG companies located in India.

n Tata: The group, as of now, does not want to be a conglomerate but and wants to run business separately. The group feels that this is a good model as it offers different products and services at a differential price catering to the differential needs of customers.

Comments: Bharti’s structure has been working well and it has deployed all projects in record times. But both Tata and Reliance are busy recruiting people who will make difference in days to come. Since, Reliance is weak on the retailing side, it is recruiting a lot of people from the FMCG sector.

Marketing Strategy
n Bharti: The Group believes in the number game and not the revenue game. It had 1.44 million subscribers (as on 31 March, 2002). This accounts for around 22.4 percent of the total subscriber base of India which is remarkable. But although the group is number one in terms of subscriber base, it has not been able to top in terms of revenues. Hutchison, with a subscriber base of 19.7 percent has around 25 percent of the total cellular revenues in the country.

Bharti has created a strong brand identity for AirTel but is still fighting for TouchTel and IndiaOne.

With the cellular market becoming aggressive, Bharti has to come out with innovative services in order to create an impact in the market as BSNL as well as WLL(M) services from Tata and Reliance are knocking at its doorsteps.

n Reliance: The company is planning to enter the market with a bang and take the competition by surprise. In the very first year, the company plans to capture 6 percent of the total convergence revenue and 30 percent by 2006. According to sources in the industry, the company is planning to deploy NLD and ILD services in the country by September and basic services in the third quarter of this fiscal.

The company has many innovative marketing schemes up its sleeve and the stress will be more on attractive pricing scheme never heard of in the past. The company is planning to use its captive shareholder base of 3.5 million and would like them to convert them to Infocomm subscribers with an attractive offer.

The company plans to flood the market with different handsets and is planning to launch around a dozen model from each vendor at six months interval. The handsets will provide voice, SMS, VMS, WAP, and color screen.

n Tata: In India, nobody can beat the Tata brand which has the highest brand recall in the country and it will help when the company plans to market its WLL(M) service in new circles. The company plans to launch a world-class service and plans to provide a full range of service consisting of all elements of value chain. The group will focus on appropriate mix of fixed/wireless and voice/data services to customers. As the company moves along it will provide value-added services too. It is planning to compete on superior product quality, customer care and innovative bundling of services.

VSNL, a Tata Group company has been very poor in marketing of its ILD and Internet services in the country. Now, with the coming of private operators, the company is focussing more on sales and marketing, strengthening customer interface by creating dedicated call centers and paying more emphasis on CRM, billing and IN systems.

The company will directly sell its services to the corporates whereas franchisees and distributors will focus on SMEs and home segment. Distributors will sell wireless terminals whereas fixed wireless and wireline terminals will be sold by franchisees.

Comments: The Indian market is a price-sensitive market and one who can keep the prices low will be the winner. Reliance’s sheer scale of volume will help it offer prices that can be difficult for other players to match. Tata is a well known brand but is yet to integrate its operations which will provide economies of scale. Bharti has an early bird advantage but now they have to focus on leveraging its brands through innovative schemes.

Conclusion
Reliance is racing ahead in comparison to Bharti and Tata. It has a clear edge over its competitors as far as the financial muscle goes. On the technology front, Tata and Reliance are ahead due to CDMA but Reliance has the edge on the cost front too. And though weak in marketing, Reliance is busy recruiting the best talent in the industry.

Pravin Prashant

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