Right Place, Right Time…

l You

have announced the boldest Infocom initiative in the country in terms of its

scope, scale, and spread. At the end of two years, when your rollout would be

complete, what distinct and converged market segments do you see Reliance

Infocomm staking claim to?



Our end game is to reach the individual, the office, and the home. What we are
talking about is connecting all the 640,000 villages and all 2,000 odd towns and

cities in the country to each other and to the world–spanning the domains of

voice, data, video, and value-added services. The US has only about 100 out of

700 cities with the 1X technology that provides the benefit of mobile voice,

data, and video. In India, we are targeting 100 % of the country. Ours is a

complex architecture of domains, functions, facilities, coverage, and services.

l And

the market segments you are targeting?



You see, one cannot directly compare Reliance Infocomm with any of the existing
players. Our service levels and approach would widely differ. We would be

present in mobile telephony, wireline telephony, NLD, ILD, Internet services,

video services, data centers, managed network services, video-conferencing,

specialized enterprise-related applications and the like. Presently, it is

difficult to categorize or even list the full scope to which our infrastructure,

technology, and applications can be put to use. It is continuously evolving.

l Your

launch largely focused on consumer offerings. What’s in it for the

enterprises?



We chose to start with the consumer mobile revolution through Reliance
IndiaMobile service that will reach out to 90 % of India’s population and

eventually every Indian. After this, by mid-2003 we will start off with our

enterprise revolution in which we will provide 100 mbps Ethernet links to every

desktop and device in half a million enterprise buildings initially and

eventually ten million commercial buildings. This will empower every enterprise

by making transactions efficient, functions seamless and new economic

opportunities abundant. We will talk more about this later in the year when we

rollout our enterprise services.

l What

about the convergence space?



By end-2003, the consumer convergence revolution would be kicked off by
providing high speed Ethernet links to homes initially in four cities and

eventually to each of the 80 million homes all over India.

l When

do you plan to launch your NLD and ILD services?



The network is ready. The mobile services will start commercially in March.
Between now and February we will have around 200,000 launch partners who will

test the network and provide valuable service feedback. Bookings start from

January 15, 2003 onwards and the Dhirubhai Ambani Pioneer Offer closes on March

31, 2003. The NLD and ILD services should also start simultaneously.

l What

about your interconnect agreements with other operators?



You see, globally, there has been no case of any operator who has been denied
interconnectivity. It defeats the sole purpose of reaching communication to one

and all. So, we expect to work it out with all the operators. And we expect

cooperation from all. Basically, interconnect agreements cannot be denied.

l Aggressive

pricing is good for entry. But do you see a point when you would consider

increasing the rates? How do you see these things panning out in the mid to long

term?



I would rather call it appropriate pricing–pricing at a point where the market
sees value in going in for the service. We are driven by late Shri Dhirubhai

Ambani’s vision of making communications affordable. There have been enough

examples of companies, not only in the communications segment but even in FMCG,

who have come in with the sole purpose of skimming the surface. And inevitably

they have got wiped out. Does that mean that we are forever going to pursue the

lowest price strategy? No. We have our own capital productivity norms. In a

country like India, it is important to look at cost-volume trade-offs.

l What

was the reasoning behind the decision to go in for CDMA, considering that CDMA

has not met expectations in some of the places? How will this work out?



We have gone in for CDMA 2000 1X technology and tested it enough before deciding
on it. As a company, we have a record of sorts in trying out new technologies

and being phenomenally successful at them. In the oil and gas industry, when

everyone said it is unviable, we went ahead with deep-water drilling…and the

results are obvious. We believe technology is only one part of the user’s

experience.

Two cooks may turn out vastly different dishes from the

same set of 10 ingredients. It is the interplay between technology, systems,

network, processes, and the like. We don’t know what was missing in the other

cases. So don’t blame it on CDMA. Korea and US have been able to exploit it

well. And as for 3G on GSM, Europe is reportedly facing lot of problems. It is

our mix that is going to deliver the customer experience. CDMA 2000 1X is more

data-capable. It opens entirely new possibilities–like developing applications

on the J2ME platform, all of which can have a multiplier effect.

l How

do you plan to balance GSM on the one hand through cellular license and CDMA on

the other? Do you plan to merge the two into Reliance Infocomm?



No. They are run and managed as separate companies and we don’t plan to
integrate them. Incidentally, we are making money and are profitable in our GSM

businesses.

l What

is the basis of your business strategy? How does it translate into returns?



We don’t see Infocom as being different from any other business. For us,
affordability is the key issue because only with affordability do you really

sell and expand the market. So far all the voice and data services were privy to

a privileged few. We believe that only a certain percentage of the overall

income is spent on communications and it comes in a hierarchy of needs. We have

our own proprietary thinking in terms of what that money is. We then work

backwards from there and look at the volumes that are possible. If you work

backwards, this business also has capital expenditure, and operating expenses

and then you factor in your returns. At Reliance, we never work for anything

less than 20% to 35 % returns. All the risk assessments and weightages that we

do, we target 35 % and in the worst case 20 % returns. It is exactly the same

for Infocom too. We are not treating this as a new economy kind of a business.

Every business has to make money.

l Reliance

has a reputation for ‘capital productivity’. How does it work in this

business?



In my view, it is to be viewed as a holistic process… of course, at the end of
the day, the simplest way to think about it is–what is your overall cost per

sub, per cable km, per BTS Tower, which are the overall components. Because we

work backwards from the customer, we are forced to target a capital productivity

number. The customer can pay only so much, these are our operating costs, we

need so much returns–so we have to build this at such and such cost.

Only then do we start worrying about the where the

market is, what can we do to build it, what’s the architecture, what are the

components, what are the specs, what kind of value engineering do we need, etc.

That’s how the whole process works…. Within the Infocom business, as we are

dealing with IP, it is possible to trade volumes because most of the partners

are looking at the total amount of money they can get from this project.

l Do

you have a Plan "B" to fall back on in the eventuality of facing a

hurdle–regulatory or otherwise?



We are in this business for the long term… we are looking at a 20-year
timeframe where we can add value. We continuously believe in learning everyday

and updating our plans. We have an infinite number of plans…. A, B, C, and so

on. We have invested for the long-term, not to sell out to somebody or make a

quick buck. We think India is very unique. It is a one-time opportunity in the

lifetime of a country. We had deregulation and open entry policy combined with

some stabilization of technology and a huge market waiting to be explored. It

gives you a historic opportunity….. We are just lucky to be in the right place

and at the right time.

Easwardas Satyan