MTS: The Super-Fast Mobile Operator

MTS, the largest mobile phone operator in Russia, entered the highly lucrative Indian market in December 2008 through Sistema Shyam TeleServices (SSTL), a joint venture between Sistema of Russia and Shyam Group of India. During the past year since its launch, the company has recorded astonishing growth in the region, adding new telecom circles and announcing new milestones in customer growth almost every month.

Here is a detailed picture of MTS' activity in the region reflected through the words of Vsevolod Rozanov, president & CEO of Sistema Shyam Teleservices Limited.

Since the launch of MTS in India, what milestones have the company achieved?

As a new telecom operator in a highly competitive market, we've done exceedingly well in gaining patronage of consumers for the MTS brand. We have been rapidly scaling up our reach both in terms of subscriber growth and geographical area. We were recently recognized as the most successful new telecom operator in India at the Infocomm CMAI National Telecom Awards by the Ministry of Telecommunications & IT, the Government of India. We strive to provide the most cutting-edge superior technology to consumers at the most competitive prices.

We have established a strong base with nearly 2 million subscribers in Rajasthan, Tamil Nadu, Kerala, West Bengal, Kolkata and the Bihar-Jharkhand circles. We are successfully going forward with our operation plan.

We were among the first to introduce R-UIMS on CDMA in India, which delinked the mobile handset from the operator. We have also become the first CDMA operator in the world to adopt future-ready 1X advanced technology that will provide users with superfast data speeds and the ability to access voice calls as well as data services at the same time.

On the pricing front, our MTalk plan has waived off processing fees on all recharge denominations so subscribers can get full talk time on even a recharge value of Rs.10 or less. We have always given customers better value for their money through our various schemes including the minute-millionaire, STD calls at just 35p per minute, ISD calls to Russia at up to half the industry rate, unlimited free first minute on local intra-network calls in Kerala for six months, unlimited free local intra-network calls in Rajasthan for 999 days, etc. We also bill on a per-second basis instead of per-minute basis.

Which are the next prospective markets in India for MTS?

We are already present in six telecom circles and have recently launched our services in Jharkhand. We are planning to launch in Delhi, Bangalore and Mumbai soon. With licenses to operate in all 22 telecom circles in India, we continue to progressively expanding our footprint and will have a nationwide footprint by mid-to-late 2010.

What are the demands from your subscribers?

In the short term, the consumer demands simplicity, honesty and value-for-money in product pricing, which has been a major appeal in our tariff schemes. In the long term though, quality of service is again equally important. We have seen consumers choosing MTS over other networks for want of better connectivity, fewer call drops and less network congestion. And our technologies and network capacity meet all these demands comfortably. Among the recently emerging demands are faster data services and compelling value-added services (VAS). Our superior CDMA platform is already equipped to provide unmatched data speeds. We will also be rolling out meaningful & peerless VAS propositions very soon.

Recently you won the National Telecom Award for being the most successful new telecom operator in India. What were the contributing factors for this recognition?

The award is in recognition of MTS establishing itself as a strong challenger brand in the market. We attribute this achievement to the incredible global brand value of MTS, which enabled us to win the confidence of mobile users in India and cross the milestone of a million customers at an outstanding pace. The award also recognizes our roadmap for unprecedented future growth and establishes us as a player who has the force to bring changes to the market and to Indian customers.

What is the driving force behind the "One MTS, One India" plan in selected towns?

Our brand is built on the value that consumers need uncompromising quality at a simple and honest price. The "One MTS, One India" plan, like all our other offerings, emulates this philosophy. With a uniform tariff, it allows consumers the flexibility of talking at one price point across India, wherever MTS has a presence. There is no hidden cost. By launching MTalk plan, we have further provided more value to our customers by giving full talktime on every recharge for life with great MSaver discount options.

We are committed to significantly improving mobile penetration in India. Our mission is to help new users to adopt mobile telephony, which will happen only if we offer them the service at affordable prices. Such revolutionary low pricing also helps us drive more of the existing mobile users to try our superior services and network.

How are you going about your pan-India plan? Will you be able to offer such a service covering all of the telecom circles in India?

India is a high growth market with an immense potential for greater growth. Besides voice services, data services are also opening up a whole new avenue for telecom operators. Recognizing this potential, we have already invested about $1.5 billion in India, and plan to scale it up to a total capital expenditure of $5.5 billion. Also, we've earmarked significant investments in setting up our infrastructure network and partnered with the best in the industry to ensure seamless delivery of service to our growing customer base. We've maintained incremental growth in the service areas that we cover and our foray into the remaining circles will be in an equally phased manner.

Under our ambitious pan-India rollout plan, by the end of 2009 we should have a presence in 11 telecom circles, and by next year in all 22 circles across India. Though we are growing fast, let me assure you that we are not growing in haste - our various teams have been meticulously scaling up infrastructure & other resources to sustain our high momentum comfortably.

Even as we expand into newer circles, we intend to remain the preferred brand for our existing and new customers in terms of superior, future-ready technology and best-in-class tariffs.

What is your take on 3G in India?

We are providing services based on CDMA technology, and we are fully convinced that this was the right choice, because it was scalable to meet the demands of the future. Even today, we can start providing services based on high-speed data transferring, which GSM operators will be able to launch only after significant investments into 3G infrastructure development. And even when they do so, our network will stay more flexible, more secured and more scalable. From a business viewpoint, in order to enroll the same coverage on our CDMA network, we as the operator have to spend three times less CAPEX compared to standard GSM1800. For us, it means that we can provide in different regions both more capacity and more coverage than GSM operators utilizing up-to-date GSM technologies. And I would say that CDMA is still developing, and operators, together with their esteemed subscribers, receive more opportunities and new services every day.

That's why we chose CDMA versus GSM and that's why we can already give more to our subscribers today than what they can only expect tomorrow with 3G coming to the market.

What is hindering the adoption of 3G services in India?

Concerning 3G as a term, I would want to stress that 3G just means data transferring speed available for mobile customers. From this point of view, our network today can already meet this demand. The other thing is operator services, which have to follow this 'pipeline' because, without requisite services and content, mere high-speed data transferring capability is useless for subscribers. So, the adoption of 3G in the country will also depend on effectively creating awareness & clarity on its USPs, pricing, positioning, wideness of availability, etc. Steep pricing, a lack of awareness of benefits and its limited reach are among key factors preventing its uptake and are adversely impacting subscriber volumes. But we see that demand for such services exists and is growing every day. That's why we are going to soon launch a range of services based on high-speed data transferring similar to 3G.

What are the challenges faced by the telecom industry in India?

The most major challenge faced by telcos remains an overall lack of infrastructure and the limited spectrum availability, which is putting pressure on them to use this spectrum more efficiently and still maintain a huge, fast-growing subscriber base on their networks. This is putting a burden on their networks and leading to deterioration in the quality of some of the established players. However, our networks are relatively new and able to provide much superior connectivity, but still, keeping in mind our future growth, we at MTS have already become the first to adopt the 1X Advanced technology that will help us use spectrum more efficiently by 1.5 to 4 times. Lower tariffs, increasing competition, pressures on average revenues per user (ARPUs) and saturation in urban markets are some of the other roadblocks for operators in India.

What is the projected growth for the coming year for MTS India?

As a company policy, we do not yield to speculation and cannot provide a specific projected growth figure. In some of the current telecom circles we operate in, our current subscriber growth is much faster than the average industry growth in those regions. We also remain committed to scaling up our presence in all telecom circles by next year.

What new locations/services are you planning to expand?

With more people having access to advanced handsets at affordable prices, we believe that the demand for value-added services (VAS) in the form of data-rich applications will increase manifold. We have plans to make a foray into the data services market and garner a significant market share through unparalleled services. We will make inroads with our data cards and other data-related products like wireline and wireless broadband. We are also planning to launch USB data modems and high-speed data services this year. Based on our current trials, we believe that our services will be much faster than any other operator in India.

Location-wise, after six telecom circles, and having recently launched in Jharkhand, we are now headed for Delhi & Haryana. This will be followed closely by launches in Bangalore, the rest of Karnataka and Mumbai. We will cover all 22 circles by next year.

Recently you announced MTS' collaboration with IBM to launch energy-efficient datacenters in India. What immediate impact can these facilities bring to your business?

As a global telecom player with ambitious expansion plans, we are cognizant of the advantages of adopting energy-efficient operational systems, and in the process also work proactively in reducing global energy emissions. Through our collaboration with IBM, we expect our green data centers to help us achieve as much as 20 percent energy savings, besides helping preserve the environment.