ravi_patent 28 Report post Posted April 5, 2010 http://economictimes.indiatimes.com/Opinion/Interviews/Safawis-target-100-m-more-RCOM-users-in-1000-days/articleshow/5761997.cms?curpg=1 Syed Safawi is just 100 days into the corner room of Reliance Communications, but he has already launched a strategic shift at India’s second-largest mobile phone firm. The chief executive officer (wireless business) says the tariff war plaguing the companies could well be over because new launches are getting more rational on the tariff front. Putting employees on top of the priority list, he has redefined winning as improving the revenue market share to 20% over the next three years from the current 12%. RCOM has set itself a target of getting its next 100 million customers in 1,000 days, which Mr Safawi believes can be achieved with its current pace of growth. Mr Safawi is changing the compensation structure in the company with an emphasis on target-linked pay across the board. The rewards and variables will no longer be on annual basis, but quarterly, he tells ET in an exclusive interview. Excerpts: It has been 100 days since you took over. What is your take on RCOM? We have mapped out where we were as a company, and having figured that, have chalked out a strategy of where we want to go, and how to get there. We have launched R2.0 — R stands for resurgence, reformation, revival and even Reliance, while 2.0 is the new version of the company. We are on a transformation journey, a 360 degrees initiative of being new. Is the new strategy, R2.0, born out of the realisation that RCOM was losing market share? Reliance topped subscriber additions in the first three months of last year, but since then has slid down. It is beyond that. R2.0 is about a change in strategy. We wanted to see if customers were the benchmark, or if it is something larger than that. R2.0 will measure our business health differently. We have just unleashed a new vision for RCOM, which we will make public within the next week to 10 days. Just what will change? We defined winning differently. Earlier, winning was all about customer market share, but now it will be only about incremental revenue market share leadership — this is a change in the way RCOM operates. We have defined nine strategic pillars and six enablers , which will get us there and also laid down the measures to define success. For example, some of the nine strategic pillars are say distribution — we are new into GSM, have a long way to go and therefore must enhance distribution. In CDMA, it is about value creation . Here, it is linked to handset and how do we play the handset game. Another critical pillar is people. Enhancing our network, customer experience are some of the enablers that will get us there. Everybody in the organisation will be measured against these parameters. RCOM has also automated its operational structure. A person sitting in Mumbai can see national, regional, local, cluster level and even picture what is happening at the site. If my traffic/customer base is dropping, or revenues are coming down at the site level, this can now be measured. Revenue market share has to come from the traffic and customer market share at each site — the performance of the organisation is a buildup of that. Next big change is everybody in the organisation, from foot soldier to the CEO, will have a significant portion of their salaries linked to meeting revenue market share leadership targets. This will no longer be calculated annually, but on a quarterly basis. If you are in a hyper competitive environment, you have to win every day and an annual performance linked incentive is therefore irrelevant. We have further empowered our employees as their performance targets and data are all SMS linked — the employee can pull out his performance data via SMS, evaluate where he stands and calculate his reward. How will RCOM attract better talent? The industry perception that the best of talent does not go to Reliance , is this a concern? The changes over the last 100 days should be testimony that we are changing and attracting best talent in the industry. The people who have joined us in our top management are all from competition. R2.0 is also employeecentric and proof we are changing with regard to our employees . The reward system we have put in place shows we are not only seeing a reformed RCOM, but also the new look and face to a transformed RCOM. What are the customer targets as part of R2.0? Next 100 million customers in 1,000 days. This can be met at current growth rates. It is therefore about incremental market share and this is a huge strategic shift. We are comfortable with current growth rates and we will retain it. We are not walking away from customer share, but focus will be on the quality of customers and what we need to do to increase usage. How do you increase the quality of customers? CDMA, your core base, suffers from a perception problem. On CDMA, we are upgrading handsets to give better choices to our customers. On GSM, we are increasing the quality of customers by focusing on revenue earning customers. For example, our focus will not be limited to acquiring a customer, but also giving him recharge options. Then you get much better quality customers from day one. Other telcos, whose tariffs are not as low or competitive , are doing equally well, or even better. Does the customer really understand a few paise lower here and there? On the acquisition side, all operators are adding the same level of customers. All top players are adding between 2.6 to 3 million and entry level tariffs are common for the industry. What is different is the base as some operators may have a higher level of postpaid customers, translating into higher revenues. Does this put new entrants such as you at a disadvantage because the older operators have a huge base and they need not offer competitive tariffs to their existing customers as these subscribers cannot shift out? Our calculations show that Bharti has 30% revenue market share, while RCOM has 12% — so, in terms of customer market share, you are second, but in terms of revenues, you are at the level of Idea Cellular. We see this as an opportunity. Our CDMA customers are the core base and we are challengers in GSM. But the difference is that your core base may not give you revenues as compared to Bharti’s core base... RCOM also has a core base of data customers — data card users. We are market leaders here by a huge margin, this is a high-speed , 3G enabled service and brings in 6-7 times the ARPU of mobile customers . So, I am driving data, am aggressive in GSM and have core CDMA base which is very stable. Both GSM and our data offerings are expanding rapidly. Our high-speed data services will soon be data available in 100 towns while our 1x data services are offered in 10,000 towns. The data speeds in CDMA are far superior — combine this with the transformation, the new vision, the new people that are joining us and the new leadership team in place. Also, for the first time, the peak capex is behind us — our capex for the this financial year is Rs 3,000 crore, but we were spending about Rs 10,000 crore each over the last two years. We are now cash positive and at a position to drive growth. In there years time, our target is to achieve 20% revenue market share. We are at the takeoff point. But if the top 3-4 players are adding same number of customers, if acquisition tariffs are same for all players, then where is the differentiator that will help increase revenue market share? The stickiness of CDMA is far greater because of the handset and churn is much less. Unlike competitors, RCOM has a portfolio that has three wings — CDMA, data services and GSM — presenting us the platform to increase revenue market share. Again, one of your wings — data — will soon be with GSM competitors too as the 3G auctions are just round the corner. But we will also bid aggressively for 3G. These services will take time to roll out. It will first come to the top 100 cities. RCOM will compete in the first 100 cities on 3G, but difference is that by then we will have our data card services in 500 cities and CDMA-based 1x data services in about 20,000 towns. Does the survival of some of the operators depend on 3G? If 3G and number portability happens, high-end customers of operators who don’t offer these services may walk away. Telcos with 3G can ride the spectrum crunch by shifting customers to 3G networks. Yes, that may be the case with some operators . For us, 3G is a technology road map. Being new to GSM, we have enough headroom to acquire new customers here outside 3G. Same with our CDMA operations. Unlike, some players , RCOM doesn’t need 3G to shift some existing customers to that platform to relive 2G spectrum crunch. We have a road map for data though CDMA. Globally, 25-30 % of revenues come from data, but in India it is only about 10%. So there is ample scope for growth. Is the debt on your balance sheet a concern ? Even with Bharti’s $9 billion loan to buy Zain’s African operations, its debt will still be only as much, or a little more than what you are carrying currently. Look at it from the historical perspective. In the last two years alone, our capex was at Rs 20,000 crore. Now, that is behind us. We have a free cash flow and this year will be repaying some of our debt. Our EBIDTAs is more than adequate to take of debt. RCOM’s fixed costs are already taken care and going forward, the company’s balance sheet will improve. We are at that point of time when the peak is behind us. What do you see as the future for telecom in India? Can tariffs fall further? What about consolidation? What is the way forward for the sector? The peak tariff erosion has already happened. If you see recent launches, they have been rational on the tariff front. Everybody has realised that we cannot sell at below cost for ever. But there will be the normal erosion based on customers coming in, tariffs vouchers, etc. My personal opinion is that, there will not be a huge erosion on tariffs in the future. We clearly see termination charges as another opportunity to reduce tariffs further — this can go down to 10 paise/minute and ultimately zero. There is some value in lowering termination rates, especially because, operators are not in a position to lower tariffs further. In an indirect way, consolidation is already happening. All new players are not going in for pan-India rollouts — they have become very cautious and are opting for select rollouts. This is the first step in consolidation . The special audit report which alleged that RCOM had under-reported revenues had a big impact in the company and even its stock prices. The audit report of other operators did not have a similar impact. Do you think the new CAG audit will set the record straight? We feel vindicated after audit reports of the other telecom companies have come out. Whatever, the audit report have picked up for all operators is an industry issue. We have been maintaining that for months now. There is nothing in out accounts that is different from other operators. We were the first, whose report came out, and the impact, it had was unfortunate Share this post Link to post Share on other sites
KumaarShah 143 Report post Posted April 5, 2010 Good info and a great interview given by Syed...... Lets hope R2.0 improves the quality of the network of RGSM across the country.... 1 Share this post Link to post Share on other sites
csmart 472 Report post Posted April 5, 2010 Good info and a great interview given by Syed...... Lets hope R2.0 improves the quality of the network of RGSM across the country.... and also good handsets for CDMA at reasonable price... Share this post Link to post Share on other sites
vishalmcp 8 Report post Posted April 5, 2010 Good info and a great interview given by Syed...... Lets hope R2.0 improves the quality of the network of RGSM across the country.... and also good handsets for CDMA at reasonable price... agree with both of you...... Share this post Link to post Share on other sites
HetalDP 947 Report post Posted April 6, 2010 I think Sayed Safawi Overestimated every thing. Its Just 6 Month in Company man. Cool down!!!!!! Share this post Link to post Share on other sites
starnet 7 Report post Posted April 6, 2010 Quality of both GSM and CDMA is falling every day and here we have a CEO making tall claims. This is going to be yet another disaster for RCOM. RCOM is no longer a tier-1 player in the market like it used to be in 2003-2005. Now it is nothing more than a second grade player in the market with a third class network. Share this post Link to post Share on other sites
me_saket 73 Report post Posted April 7, 2010 his intervews clearly shows, Rcom not performing Declining subsciber Higher capex Loosing ARPU Low profits Not performing employess. no plans for GSM 3g, or Value addition to CDMA EVDO. I can only conclude that RCOM Should sell of telecom biz and move out of it. Share this post Link to post Share on other sites
rkburra 1 Report post Posted April 7, 2010 Quality of both GSM and CDMA is falling every day and here we have a CEO making tall claims. This is going to be yet another disaster for RCOM. RCOM is no longer a tier-1 player in the market like it used to be in 2003-2005. Now it is nothing more than a second grade player in the market with a third class network. I fully agree with you. RGSM is a worst network. I think it ranks No. 1 in voice break, call drop and network fluctuation. Now I moved to TaTa Docomo. Atleast I found there are no call drops and voice break when signal is available. Still some areas in Pune there are issues in network availability. Share this post Link to post Share on other sites
city02 63 Report post Posted April 7, 2010 I have heard employees complain about the 'tyranny of 9.30 am'. If they are even 1 minute late, their CL [casual leave] will get cut. Once CL is 0, then it goes to salary cuts directly! For the thousands of people not working in call centres, it seems like a draconian way to enforce punctuality. Forget revenue share, most employees are simply focussed on avoiding being late rather than contributing to the bottom line. I think there is a big disconnect between the CEO's perception of how to empower employees and the ground realities of treating them like school children or factory workers. Even absurd steps like curtailing the timings of the cafeterias [earlier open all day] have been taken under the guise of 'productivity enhancement' measures since the VC observed that too many employees were hanging out and socialising outside regular meal times! On one hand the company pays hundreds if not thousands of employees over a lakh monthly yet these same people apparently cannot be trusted to decide when they should eat! Why not focus on keeping the employees constructively engaged and fully utilised on new projects that actually improve the company's financial performance? What's next? Limiting toilet breaks since they also 'reduce productivity'! Some employees have simply started going out of the office for lunch since non-veg is prohibited in any case. For every stupid rule there is a smart loophole... Share this post Link to post Share on other sites
::Hitesh:: 1,763 Report post Posted April 7, 2010 , Is this corporate company or what ? Share this post Link to post Share on other sites
Sadikk 301 Report post Posted April 7, 2010 i dont want to mention it but.... trust me... Syed got some talent.. if he'd not.. he'd not there where he is.... Read his Name MR Syed Safawi... some might think my thinking is rather bizarre but trust me he got what it takes or wud never achieved the position... ( Strangely some of my friends says, i think like a think tank ) and this is my view on same basis... trust me and get my point... Rcom is changing..i think i can invest now in Rcom.. anyone offended?? ill remove it... Share this post Link to post Share on other sites
kalpeshaparmar 66 Report post Posted April 7, 2010 Even i think same as SAddik Bhai these is the time to catch it As it is employs from sales person to customer executive all were rude now the CEO is taking their class..... They should have got these CEO long back... Start looking for the change in behavior of the employees they shud have been treated the same..... Least we won't getting absurds answer from them now.... Three cheers for the CEO.... Employee shud be doing these And before that reaction was or Share this post Link to post Share on other sites
