SSTL to be ready for listing at end of year : CEO

'Telecom consolidation will leave just 4-6 players in the fray'


KV Ramana / DNASaturday, May 15, 2010 4:25 IST Email


Mumbai: The new entrant in the telephony segment, Sistema Shyam TeleServices, which operates under the MTS brand, is gearing up to penetrate the overcrowded market by offering lowest-ever tariffs and promoting data services. Though the tariffs seem to have stabilised for now, a major consolidation is inevitable leaving about six players in the Indian telephony sector, Vsevolod Rozanov, president and CEO of Sistema Shyam, tells DNA. Excerpts from the interview:



Being a late entrant, how do you see the market for your telephony services?

Though we are a late entrant, we have already rolled out our services in 12 circles with Andhra Pradesh being the latest. With this, we have covered all the four southern states. With the current rollout we cover almost half of the country’s market. We currently have about 4.5 million subscribers. Now, we are focusing on pan-India coverage. We are hopeful of covering the entire country by rolling out services in the remaining 10 circles as well.

How much are you investing?


Typically, each circle requires about Rs 500 crore. For the 22 circles the investment should be over Rs11,000 crore. But investment was never an issue since we came to market determined to provide the best service to the customer and stay put to gain the market.



Do you see the current tariff justifying this kind of investment and when do you think you will break even?

Tariffs are stabilising in the market. We are offering service at half paisa per second. For MTS to MTS subscriber, the tariff would be one paisa for four seconds. We are looking at more usage as a key here. But in general, with the tariffs stabilising it does not look like there will be significant erosion in tariff going forward. We are hopeful of breaking even by 2013.



You have been saying that the data services remain a focus area. How much does data contribute?

Data is going to be a big differentiator for us. We have a robust network in place to offer mobile broadband services. We have already started offering data services in several key markets in the country. I think by 2012 voice will contribute two-thirds of our revenue and the remaining would come in from data. Interestingly, compared to voice the Arpu (average revenue per user) in data is higher. Though there are other players too, the data opportunity in India is huge and there is room for multiple players.



How are you gearing up for the listing?

As per the Rajasthan High Court’s order, we have to list the company. The listing process is currently on. We are talking to the merchant bankers to decide on the timing of the listing. We will be fully ready for listing by the year-end. Importantly, we should also consider the market conditions for listing.



What is your view on the 3G auctions?

We have not participated in the auctions. But we are using CDMA technology and the kind of technology that we are offering to the customers is far superior. Even for the GSM operators participating in the auction, it would take more than a year to get ready for launching the services on 3G platform. We are already capable of offering such a service with the existing technology. I think there is a huge gap between us and the prospective 3G winners in terms of rolling out the services.



Do you see the telephony market moving towards a consolidation phase?

For any market, having 12-13 players is too much. There is every reason to believe that there will be consolidation and at this stage it looks like consolidation is inevitable.



What would be the ideal number of players in a market like India?

More than that, I think the consolidation will leave just four, five or six players in the market.



Are you planning to participate in the consolidation exercise?

We are open. We don’t mind participating in the process.