Tata Teleservices, the telecom arm of the Tata Group, recently announced big expansion plans for its existing circles in the country and is moving into newer territories nearly every day. The company is also increasing the number of its base stations and cell sites along highways to strengthen what company officials call its backbone.

Tata Teleleservices has also acquired a universal access service licence (UASL) for 12 new circles in Bihar, Haryana, Himachal Pradesh, Kerala, Kolkata, Madhya Pradesh, Orissa, Punjab, Rajasthan, Uttar Pradesh (East and West) and West Bengal where it plans to launch its services by September 2004. At present the company serves over 18 lakh customers in over 112 towns and plans include expanding to over 1,000 towns in 20 circles by March 2005.

Last month Tata Teleservices announced an investment plan of Rs 446 crore for the state of Andhra Pradesh and has already invested over Rs 2, 000 crore since its operations began in the state.

With this expansion, Tata Indicom will be present in 166 towns in AP by the end of 2004. It also plans to add 300 new cell sites to the already existing 160 cell sites by the end of the year.

At present Tata Indicom offers services in 21 towns in AP. The new expansion will take it across the three geographical regions namely Telengana, Costal Andhra and the Rayalseema region.

Mohini Bhatnagar spoke to Prabhat Pani, the COO of Tata Teleservices, Andhra Pradesh and Karnataka circles on the comprehensive future plans of the company in the state.

Can tell us about your expansion plans in a comprehensive manner?
We are looking at a large roll out in next six months. We aim to be present in 166 towns in this period. Besides towns we also aim to cover highways in an extensive manner. We feel this is an area where we should be able to not only match players like Airtel and Idea but also exceed their coverage. Covering highways means having a backbone, which is a prerequisite for being able to provide coverage. Hence right from Vishakhapatnam on one side to Tirupati on the other side and similarly through the central part of the state from Vijaywada to Hyderabad and from there to Warangal we will be able to provide highway covereage to 27 percent of towns in the state. This doesn't mean that we don't look at town outside this area. For instance we have recently covered Nizamabad, which is not on any of these highways and intend to cover many more towns other than those on the highways. But covering the highways means that small to very small towns on the highways get covered.

Where do you see your growth coming from?
Our market is equally split amongst our three products, the fixed line based on fibre or copper, the fixed wireless product and mobile product. We see our wireless part growing rapidly and within that the mobile segment.

The big gap in our offerings is a prepaid mobile product. Even though we offer a prepaid card on our fixed wireless phone we think it is more important to have such a product in the mobile segment. At present the prepaid segment in AP comprises about 80 percent of the mobile market. We realize that there is a huge market for this. We have not launched our prepaid product till now as we were not sure that we could quickly scale up to the required levels. But all that is over now. We are now in a position to scale up operations in the desired time. I am happy to say that in a few weeks from now we will be launching our prepaid mobile card in the AP market.

What kind of growth are you looking at this year?
We are looking at doubling our customer base this year, which means nearly doubling total revenue. However, once we get into the prepaid segment our revenues are sure to drop but we should make it to the double mark.

How do you stand vis a vis competition?
We feel we are very competitive. Our rates are 20-30 percent lower than our competition. The only gap we had was in geographical covereage, which we intend to cover.

We also stand at a great advantage over other GSM players vis a vis our spectrum. Pure GSM players are limited by the variety of services they can offer since GSM is not as spectrum efficient as CDMA is. We are in the process of introducing new products such as the push to talk phones, very popular in the west plus as well as our Nokia 3105 phones on which customers can play as many as 1000 games.

A large base of customers who are using these applications cannot be serviced adequately without using technology that supports data. Our belief is that our technology will differentiate us from other players in the future and shortly you will see CDMA players going ahead of pure GSM players simply because the technology supports greater data.

We will be able to provide a host of products and services that use high-speed data. Consumers ultimately look for value for money products. In the long run the service providers who offer that something extra will win out. We feel that in the near future we will be able to offer our customers a great number of features such online gaming facilities etc.

Why this sudden burst of expansion?
We earlier had a basic service license due to which we could only provide fixed line services. This was subsequently modified into a limited mobility license by the government.

With the coming of the unified license regime we can now provide an entire gamut of services, which earlier could not be offered under a basic services license or under a cellular telephony license. Now that we have a cellular product we feel we should be present in all geographies not only within the state but in all states.

The Tata group is planning to expand in all the states it is present in. We now have twelve circles in all. Though we are present in six states we cover eight circles since Mumbai and Chennai are treated as separate circles by the Department of Telecom.

With the addition of the 12 new circles we will have a total of 20 circles. By December 2004, this year we will be present in all prominent new towns in the new circles we are entering.

How much will you investing on an all India basis?
We are looking at an investment of Rs about 10,000 crore on all India basis. We are coming in with new products also. We have recently launched fixed-line cordless phones that contain features like Internet connectivity with inbuilt modem and an inbuilt battery.

Do you feel Tata Indicom suffers from a positioning problem and that the brand positioning is not clear?
Tata Indicom was until recently associated with one kind of service and its original avatar was only in fixed line. Now the brand is moving into being an umbrella brand for many services. Since we have been in complete mobile services for only six months its not surprising that our positioning in the mobile market is not clear. However, we are in the process of becoming more directed and focused. People will see a lot more customer care focus and a more advertising coming from us in the next six months and our focus will also be sharper and clearer than what it is today. Possibly the Tata Mobile brand stands for a lot more for the Tata part of it than Tata Indicom. But that is all set to change.

What is your distribution set up like?
Because of our wide range of offerings and customer segments we use different distribution channels. And this is for all post paid. We don't have a prepaid mobile offering yet.

For the large corporates we have a direct corporate team of our own whose approach is to provide total end-to-end solutions. It could be a combination of our various offerings or custom made solutions.

For the SME and the SOHO segment we use more specialized channels, as this segment requires bandwidth. Some of them require close user group (CUG) while for individuals or retail customers we have channels, which comprise franchisees or dealers who have teams of trained sales staff and retail channels who sell by walking in. At the moment we have 15 franchisees in Hyderabad.

On the sale of our recently launched fixed wireless product we do some initial hand holding and send someone from our organization to explain the working of the product, its features etc mostly because its anew product that we have launched in the market.

What technology have you been using?
We have been using wireline and wireless technologies where physical connectivity is provided. We provide these in twelve towns in the state. Fixed wireline technology has traditionally supported more data though in the past six months wireless technologies have started supporting high-speed data as well. And even though wireless technology may not support applications such as ERP even now, it is adequate for SMEs, home and office or what is called the SOHO segment. Even cyber cafes work well on CDMA 1X used by us.

Lucent is one of the vendors providing that technology and we have decided to stay with them as our ties with them are five to six years old and we have a large number of cell sites or base stations spread out across the state based on Lucent technology. On the basis of this it will be easy to expand on that and grow.

What do you feel is the future for the mobile industry?
Mobile talk rates are already very low and may not go down further. However, there is talk that the access deficit charge may be removed altogether and in that case talk rates may go down to pre ADC levels. As the regulatory framework becomes stronger with costs becoming transparent and there is the linkage between price with cost distortions in the pricing structure will go away. For one thing private telecom players are in a better position than they were before with the govt. There is now a greater degree of parity between private players and PSU telecom players. Today we get a hearing and our issues are being taken up.

What position are you looking at in the AP market two years down the line?
We are looking at leadership in Andhra Pradesh in the next two to three years. We already have five lakh customers overall, which is among the top three in the state. Once we get into prepaid our numbers should grow rapidly.