ix months into his new role as the Chief Executive Officer of Sistema Shyam Teleservices (SSTL), Dmitry Shukov describes his experience in India as 'amazing'. In his interview with The Hindu , Mr. Shukov points out the challenges faced by the Indian telecom sector such as clarity on policy issues such as spectrum pricing and M&A guidelines. He also speaks about why the company stayed put in the country when a lot of foreign players shut shop here after cancellation of licences. Edited Excerpts:
How have your last six months as the head of Indian operations of SSTL been?
The experience here in India has been amazing. India is a huge country in terms of population, especially in comparison with the countries in which I have worked before. As a telecom professional, I found that India is one of the best telecom markets in the world because of its size as population is the basis for any telecom business. Hence, India presents huge opportunities for telecom operators.
Secondly, Indian economy is growing. While there might be some temporary problems, the country’s economy will continue to grow.
Another trend that I have noticed is that Indians are very much interested in data services, especially the youth. Today’s youth is very keen on data, and that is why we think our focus on data could be very productive for our business in the future.
As far as my personal impression is concerned, the main impression for me is the Indian people. The people here are very positive. They are warm, emotional, and very enthusiastic.
What about the telecom industry? You joined when the company was facing a lot of hurdles. What strategies did you have in mind then, and did you need to change it along the way?
No. The strategies were established before my tenure, and I believe them to be absolutely right. We should now assure our stakeholders that our team can manage and reach business targets. Now we have one target that is to break even. We plan to break even by fourth quarter of 2014. We are focussed on this.
Also, the Indian telecom market is very competitive. Too much competition is not good for business. So that is the challenge for my practice. In my opinion, regulatory environment could be more positive for operators in the country.
What are SSTL’s plans as far as possibilities of merger and acquisitions are concerned, once the M&A guidelines are put in place?
We are looking for partnerships in the India. It depends on finding the right partner who will help us grow our presence and business to a national scale. But we need to get clarity on M&A rules, only then we’ll be in a position to finalise anything.
For expansion, we also need clear and fair access to the spectrum. After that, believe me, we can show a good story in India. We are ready to make serious investments; we are ready to expand our presence in India. But in this case, everything depends on rules and conditions.
Despite everything, SSTL has been very positive about operations in India and has stayed put. What are the reasons for this?
Our head Vladimir Evtushenkov (Chairman of Sistema) is very keen on India. He likes India very much, and sees lots of opportunities here. Due to his positive vision, we are confident about our growth story here despite some temporary hiccups.
With data becoming your priority, will voice and handsets take a back seat?
We are a data-centric company. Our marketing focus as well as investment is data-centric. On the device, I would just say wait … may be a week or two more. We’ll be coming out with a slew of smartphones this year. While the bulk of our revenues still come from voice, the market is now becoming stagnant. The share of data is growing, and that of voice is shrinking. It is a normal evolution.
The government has allowed 100 per cent FDI in telecom. How do you see that playing out for you?
Presently, our focus is on operational efficiency. As far as FDI is concerned…there are no problems for us now. We are happy with our equity structure. We do not have any problems with our promoters and stakeholders. Yes, we think about it (of increasing stake in the Indian venture), but we are not stressing over it.
How do you plan to compete with 3G services provided by operators along with LTE services?
Now, we have launched 3GPlus network, which is based on Evolution-Data Optimized (EV-DO) Rev. B Phase II technology. With this, we can offer high-speed data services of up to 9.8 Mbps to our customers. This will help increase the number of customers as well as consumption of data on our network. We are the first telecom operator in the country to provide ubiquitous 3GPLUS network coverage across our 9 circles.
Where do you see the Indian telecom market heading? Do you see stability returning anytime in the near-future?
I do not see the market stabilising any time soon. There is no problem with the market here in terms of subscribers and other things, only regulatory hurdles need to be taken care of. The market is very much dependent on the regulator.
In fact, stability of any industry, be it the steel industry, coal industry or auto industry, depends on the government. If the government puts out stable long-term policy for the industry, they will thrive. It is like laying a road. Only if you lay the road, development happens on both the sides of the road. But laying the road is responsibility of the government.
The same way, it is government’s responsibility to set up these policies for the telecom industry to thrive. So, the ball is actually in the government’s court. Investments in telecom sector are very long-term. Hence, each investor should have absolutely long-term stable conditions, without which it will get difficult.
What clarities are you seeking from the government?
Not only us, but the entire industry is awaiting clarity on M&A policies and spectrum auction policies. These are very critical aspects.
