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Interview with S.P. Shukla, President and CEO, Reliance Infratel and International Projects, RCOM

February 15, 2011
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S.P. Shukla, president and chief executive officer, Reliance Infratel Limited and International Projects, Reliance Communications predicts further growth in the telecom infrastructure space, which will be driven by the tremendous growth in the wireless sector as well as the launch of 3G and broadband wireless access (BWA) services. The year 2010 proved to be highly productive for Reliance Infratel, with the company crossing key milestones such as increasing its tower portfolio to 50,000. Going forward, the company aims to offer enhanced and cost-effective services to the telecom industry. In an interview with tele.net, Shukla talks about the key trends, growth drivers and future thrust areas for the telecom infrastructure sector. Excerpts... 

What have been the key trends in the telecom infrastructure space in India over the past one year? 

The telecom infrastructure sector in India continues to witness sustained growth on the back of enhanced activity in the wireless sector. The demand for telecom infrastructure is bound to increase further with the launch of 3G and mobile number portability (MNP) services by operators, which necessitates an enhanced focus on network coverage. The upcoming BWA launches by the players who won licences in 2010 will also add to the demand for telecom infrastructure.

Also, today all wireless operators recognise the fact that infrastructure providers add tremendous value to their network rollout. They also help in the subsequent functioning of networks by providing hassle-free maintenance.

What are the key growth drivers of the telecom tower sharing industry? 

Reliance was the first operator to de-merge its tower assets from its telecom service business and thus pioneered the trend. Eventually, the trend has caught up with the other players in this sector. As far as new operators are concerned, they have entered the mobility sector at a time when established infrastructure players already exist in the market. They, therefore, want to focus on the next stage, which includes electronic deployment, customer acquisition as well as quality of services.

The key growth drivers of the tower sharing industry in 2010 were the services launched by the new operators. The past year saw 2G players filling up coverage gaps ahead of the introduction of MNP. Also, the launch of 3G services by some of the operators in 2010 created a demand for expanding infrastructure.

What would be the key growth drivers for the telecom infrastructure industry in 2011? 

All the above-mentioned factors will be relevant in 2011 as well. In addition, the launch of BWA services by the licence winners during the later part of the year will add to the demand for telecom infrastructure.

How did the year 2010 pan out for Reliance Infratel? What were some of the company’s major milestones? 

The year 2010 was highly productive for us, wherein several milestones were crossed. During the year, the number of our tower assets reached 50,000 and our tenancy ratio crossed 1.80. Taken together, with nearly 200,000 km of fibre network, we offer the most formidable portfolio among all infrastructure players in the telecom sector. We have consistently been among the top two players in this space, and our growth plans will ensure that we increase our market share in the coming quarters.

What are the future plans of your company? 

Reliance Infratel will continue to contribute significantly to the development of the telecom infrastructure sector, and will strive to facilitate provision of the most modern and cost-effective service in the sector in India.

What steps should be taken by the government to address the issues and concerns affecting the telecom infrastructure sector? 

Infrastructure is the key to growth not only of the telecommunication and information technology sector, but also of the overall growth in gross domestic product (GDP) and economic prosperity of a country. Several studies have clearly revealed that any investment in the telecom sector results in a multiplier effect on the economy in terms of GDP growth, through an increase in productivity, speed of communication, any time–anywhere access of information and data, and reduction in the disparity between the urban and rural areas.

The government can aid the development of this essential service sector by facilitating and streamlining policies for setting up towers, which often get held up due to lengthy procedures in obtaining municipal clearances, right-of-way approvals for laying fibre, etc. Availability of electricity connections from the state electricity boards is another long-drawn process in many parts of the country, which could be expedited if telecom services are recognised as an essential service just like water or electricity.

What are your views on convergence? What is the likely future scenario in this space? 

Convergence is one of the most frequently employed buzzwords today, yet different people have different perspectives in mind when they refer to convergence in business utility, personal life and consumer applications. In convergence, technology offers massive opportunities for the development of new value-added services, convenience, efficiency and the expansion of consumer choice. It certainly expands the overall market for information and communication technologies as well as related services, and is likely to be the catalyst for the next stage in the integration of the world economy. Digital technology and convergence now allow both traditional and new communication services to be provided over the same networks, which leads to increased efficiency and lower transmission costs.

With these benefits come new policy and regulatory challenges such as the setting up of manufacturing standards, facilitating cyber trade, controlling the emerging cyber crimes, and protecting consumer interests,  intellectual property rights and other public issues.

What are the issues and challenges related to convergence? 

Some of the issues and challenges related to convergence are as follows:

•  Standard fragmentation and the absence of suitable payment methods and delivery mechanisms constrain digital distribution to certain areas, which nevertheless remain relatively small.

• Given the diversity of models for content delivery depending on the sub-sector and the innovations in community management, there needs to be a stronger drive towards the incorporation of user-created content in commercial products.

However, the future of convergence is bright. If technology firms, regulatory bodies and various players in hardware, software and content come together and chalk out viable plans and policies, India has the potential to emerge as the crème de la crème in the convergence space.

Finally, how would you rate the Indian telecom market in terms of the business opportunities it offers? 

The Indian telecom market remains absolutely superlative in terms of growth. It will remain one of the fastest growing markets anywhere in the world and we still have a long way to go.

In a large market like India, different consumers are at different stages of product maturity. The segment of users that started using mobile handsets earlier is now moving from voice to value-added and data services. Just as the populace is divided into various demographic segments, so are mobile handset users. Here, the element of segmentation is based on when the consumer started using mobile services and what they have been using their handsets for.

As a result, people who first started using mobility services are now discovering new uses and applications of their mobile phones. They have become comfortable using mobile handsets for voice and have now started using the handset for connecting to the internet and for transactions such as booking of airline and train tickets. Once they become comfortable with the idea of buying or downloading ringtones on their handsets, they will also think about other services they can purchase using mobile phones. Mobile users are quick to learn and adapt, and in some time, the markets for both voice and non-voice services will percolate deeper and mature with non-voice services gaining a respectable share.

Moreover, as a company goes into the interiors of the country, the wireless medium proves to be highly advantageous in providing internet connectivity. This will help to bridge the divide between the urban and rural areas. 

Many rural areas also have difficulty in accessing the internet through fixed lines. There are people with desktops in small towns or villages where the internet connection may not have adequate speed or there might not be proper connectivity

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