Business Daily from THE HINDU group of publications
Friday, Nov 20, 2009
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Business Daily from THE HINDU group of publications Friday, Nov 20, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Info-Tech
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Interview Web Extras - Telecommunications
Mr Mahesh Prasad Adith Charlie Mumbai, Nov. 19 Despite all the hoopla around per second billing, it may not be the most viable plan for majority mobile telephony users in the country, believes Mr Mahesh Prasad, President of Reliance Communications. At RCom, he is responsible for its wireless, mobile data and content services as well as Reliance BIG TV. In an interview with Business Line, Mr Prasad dwelt upon a host of issues, ranging from why average revenue per user is no longer a relevant performance indicator for telcos to issues relating to the current merger and acquisition rules in the industry. Excerpts: With so many operators including RCom having adopted a per second billing plan, do you think it is going to be the norm going forward? Per second billing as a concept is not new in the country. It is also not ideal for everybody, especially those whose average outgoing call stretches to over 50 seconds. When we launched ‘Simply Reliance’, it would have been easy for us to get sucked into only offering per second billing. Instead, we offered Re 1 for three minutes use for ‘long duration calls’ while for standard call durations, it was 50 paise per minute. Clearly, there are short duration callers who stick to one paise billing and we wish to service them. People whose average outgoing call is under 25 seconds get the best value in per second billing. However, such users constitute a very small minority as the average call duration in India today is 58 seconds. With the 3G auctions coming up, what is RCom`s strategy going to be? Would you bid for a pan-India licence? As a company, we have never shied away from a pan-India footprint. However, we always assess every opportunity, and not always stick to the overarching vision of the company to be a pan-India player. However, with 3G there are too many variables at this point to say whether we would go pan-India or bid for specific circles. A lot also hinges on the bid price. With 12-15 operators being planned in every telecom circle, do you think that there is a need to rework merger and acquisition norms in the telecom space? Competition is welcome in any industry as it benefits consumers at large. However, when this means 12-15 players in every telecom circle, it becomes a bit too much.
Wireless telephony is a long-term business which requires both tangible and intangible investments. It takes years to build a strong network and to get to the quality that customers expect. Otherwise we end up getting into the mess that we are in now. Many new players neither have the network capability nor the brand strength. Hence, tariff cut is the only way they can compete. Therefore, consolidation in this space is imminent. The market automatically will decide on the number of players and it will boil down to how many players can sustain the competition onslaught. We believe the current norms should change and are happy to see that there are already talks underway on how M&A norms can be tweaked. Falling ARPU (average revenue per user) levels continue to be a concern for the industry, especially with initiatives such as per second billing. How do operators work around this? Customer spend on mobile telephony has not really changed in recent times. Due to the irrational pricing strategy adopted by certain vendors, customer ARPUs have been split between one and three operators. Having said that, ARPU is only one of the key performance indicators and is no longer of much relevance today for the industry. We are more concerned about other indicators such as revenue per minute, minutes of usage, capacity utilisation, the churn factor and the quality of customers being added. More Stories on : Interview | Telecommunications | Reliance Communications Ltd
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