The Birth of a New Colossus

If you thought that the launch of Touchtel, the brand new basic telephony

service by Bharti Telecom in Delhi screams competition for Mahanagar Telephone

Nigam (MTNL) and Bharat Sanchar Nigam (BSNL), hold on. There is more to the

story than is visible to the common man waiting for private sector players to

change the rules of the so far monopolistic basic services market. But before we

go further, it is important to take a peek at the most talked telecom player’s

business strategies.

Bharti’s telecom business is divided into the services and manufacturing

segments. All its service activities are segmented into different business units

under the holding company Bharti Tele-Ventures. Bharti Cellular offers cellular

services; Bharti Telenet is in the business of providing access; Bharti

Telesonic provides long distance service; Bharti Broadband Networks provides

broadband solutions (includes Internet business and corporate services). The

company has invested a total of Rs 1,885 crore till November 30, 2001 and

intends to invest a total of Rs 3,450 crore by March 31, 2002 in its telecom

business.

However, here lie the finer points of Bharti’s plans: As against the Rs

2,097 crore plan for cellular operations and the Rs 873 crore fund for long

distance, the company’s investment plans for basic telephony in the four

telecom circles are pegged at just Rs 480 crore. This is a clear indication of

the company’s business strategy in the basic service space. The company has

gone into telecom circles that have data centric, not necessarily voice centric

operations. These circles of Haryana, Delhi, Karnataka and Tamil Nadu represent

26% of the existing basic service operation though they have mere 11% geographic

coverage. What this means is that Bharti will only concentrate on circles that

have high telecommunications revenue potential. It also aims at becoming the

leading provider for fixed-line services to the corporate sector.

So what is Touchtel?



Bharti expects Rs 100 crore revenue from its Delhi operations within year one of
operations–that is around 5% of MTNL’s present revenue. The company has set

itself an aggressive target of signing up 1-lakh customers during this period.

"Our immediate target is to shorten the timeframe for return on

investment," said Mittal. And while the company is planning to match the

registration, monthly tariff and call charges being offered by its competition,

it does not plan to make its services lucrative to subscribers by under-cutting.

Hence, the tariffs have been fixed at the same level as those of MTNL–Rs 250

per month rental and Rs 1.20 for a three-minute pulse.

Also, Touchtel will work under a plan that is different from MTNL’s

district-wise numbering plan. It has begun offering numbers under two series 85

and 86. The new service will offer business subscribers a host of advanced

facilities including broadband access on leased lines, private leased circuits,

dedicated ISDN services, VPN, Internet and web based value added services, and

convenience enhancing services like video conferencing.

Mittal has also denied allegations that the company was offering its

connections only to the creamy layer of residential and commercial customers.

"Traditionally, telecom connections are initially given in dense clusters

and then keep going down the value chain to low-usage customers and areas. We

will follow the same route, but are committed to extending services on a

non-discriminatory basis to everyone in the service area," he adds. So what

are we talking about, one may wonder.

While Mittal has indicated that it has major plans to expand his network and

end the single player situations in most states, its business strategy as

indicated by the investment plans, tells a different story. The company’s

positioning is to provide end to end telecom solutions to customers and

therefore is present across every service segment in the sector–cellular,

basic, domestic long distance, international long distance and broadband

services including Internet and VSAT services. But the key thrust of the company’s

services would be cellular. As Sunil Bharti Mittal, chairman and group managing

director says, ‘‘We seek to capitalize on the growth opportunities in the

Indian telecom market with a focus on providing cellular services. Cellular

services constitute the largest portion of the business in terms of the total

revenues and this is expected to continue in the foreseeable future.’’ Need

we say more?

SHUBHENDU PARTH In New Delhi

(With inputs from Balaka Baruah Agarwal and Dhanya Krishnakumar)