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Monday, October 14, 2013 Interview with R.K. Upadhyay, Chairman and MD, BSNL Face to Face , Wednesday, 09 October 2013 With a clear agenda for 2013-14, Bharat Sanchar Nigam AShok Hindocha M-94262 54999 Interview with R.K. Upadhyay, Chairman and MD, BSNL Face to Face , Wednesday, 09 October 2013 With a clear agenda for 2013-14, Bharat Sanchar Nigam Limited (BSNL) is taking steps to regain lost ground. The company plans to focus on broadband and 3G services as well as network expansion and capacity addition over the next few years. In an interview with, R.K. Upadhyay, chairman and managing director, BSNL, talks about the company’s key focus areas and strategies going forward. Excerpts… How has the company performed over the past year? What were the key achievements? The company has performed well over the past year. BSNL is an integrated telecom service and solution provider. We have the largest 3G network (spread over 1,300 cities) in the country and are the leading player in the broadband space as well. In the broadband segment, we have a market share of 65.78 per cent and the company is present in 628 district headquarters, 6,003 block headquarters, 4,417 cities and 169,201 villages. BSNL launched wireline broadband services in 2005. At present, the company offers these services across district and block headquarters, and major cities and villages. It provides wireline broadband services at competitive and affordable tariffs. These services are available at a minimum speed of 512 kbps and a maximum speed of 24 Mbps. The company also provides triple-play services on fibre-to-the-home technology. In addition to vanilla broadband services, we offer value-added services including IPTV, games, and video- and audio- on-demand. BSNL’s wireline broadband services also support major government programmes like the provision of high speed broadband to universities and colleges (a project undertaken by the Ministry of Human Resource Development) and extending broadband to various police stations and common service centres (an initiative of the Department of Electronics and Information Technology). Moreover, in the wireless and fixed line businesses, BSNL has performed better than other telecom operators. Overall, the company has witnessed positive growth and aims to improve its performance in the years to come. What are the company’s plans for 2013-14? We have an ambitious plan of adding 15 million 2.5G and 3G subscribers to our network across the country. We also plan to replace time division multiplexing (TDM) exchanges (which are over 12 years old) with next-generation network (NGN) equipment, which is currently being procured. NGN equipment will not only help in providing various services to customers but also help the company reduce operational costs. Migrating all main automatic exchange (MAX) switches, provided by the Centre for Development of Telematics (C-DOT), to MAX NGN switches is also on the agenda. This will entail upgrading all C-DOT digital switching systems-MAX to a VoIP network by deploying a network indigenously developed by C-DOT. What progress has been made by the company in terms of financial recovery? Revenues from the mobile and broadband businesses have increased over the past three years. These revenues are expected to increase further, driven by 3G and mobile broadband services. We have also taken various measures to reduce costs. What are the projects planned for 2013-14? The key planned projects include: •Expanding our GSM network •Migrating the existing TDM switches to NGN equipment in the fixed line space •Expanding the IP-MPLS network •Executing various projects for the Department of Telecommunications – the Network for Spectrum initiative, the 1 of 3 10/9/2013 7:25 PMNational Optical Fibre Network project (for which BSNL is the impleting agency), and establishing a GSM network in left-wing extremist areas. What is the company’s strategy to tap the fast growing mobile broadband space? What are its initiatives in the wireline broadband space? With the launch of 3G services, the bandwidth offered by existing GSM networks has been enhanced significantly. The bandwidth of a network depends on the overall telecom ecosystem comprising content generators, network providers and end-user device suppliers. The absence of any of these elements is likely to have an adverse impact on service penetration. However, currently all the elements of the telecom ecosystem are in sync. Therefore, BSNL is focusing on expanding its network across the country by providing quality services at affordable prices. Our efforts have paid off and we currently offer 3G services in over 1,300 cities and towns. We plan to continue to focus on the 3G segment to tap the fast growing mobile broadband space. How has the uptake of 3G services been? What are some of the key trends observed in this space? Though operators launched 3G services with high expectations, the technology has not caught on owing to the absence of a sustainable ecosystem. Although 3G end-devices are available, they are not affordable. Moreover, utility- centric applications and rural content are unavailable. The situation has improved somewhat, with operators focusing on services such as m-wallet and m-health. Today, operators are pulling out all stops to drive 3G uptake without compromising on capex and opex. BSNL is also taking various initiatives on this front. What are the company’s plans for the rural sector going forward? Over 70 per cent of the country’s population lives in rural areas. As per the National Telecom Policy, 2012, rural teledensity is expected to increase from 35 per cent to 60 per cent by 2017 and to 100 per cent by 2020. Moreover, affordable and reliable broadband-on-demand services would be launched by 2015. The company is present in 581,968 villages (98.04 per cent of the total inhabited villages as per Census 2001) through village public telephones. We offer CDMA services in over 400,000 villages, 2G/3G GSM services in over 350,000 villages and wireline broadband services in over 170,000 villages. We have also developed mobile VAS such as Mandi Bhav, which are targeted at rural customers. The government recently allowed 100 per cent foreign direct investment in the telecom sector. How will the move impact the company’s business? This development is expected to increase the confidence of foreign players in the Indian telecom space and bring in the much-needed foreign investments. Also, the move can help bring in funds, which are urgently required by the sector. This will help the industry provide better quality of services and drive the adoption of latest technologies. The company welcomes this development. How do you see the Indian telecom landscape changing with the finalisation of the unified licence regime? The announcement of the unified licencing regime is a strategic step. The delinking of spectrum from licences will help operators contribute significantly to the growth of telecom services in the country. Large operators may procure a pan-Indian licence while medium-sized players may decide to operate in a limited number of licensed service areas. Smaller operators may choose to operate within secondary switching areas where spectrum is not required. I foresee a positive impact of the regime on the Indian telecom landscape. What are the key challenges faced by the company? What steps have been taken to address these? Last year, we faced several capacity-related issues in the mobile and broadband segments. To counter this, we have procured additional capacity in both the segments and have eliminated capacity constraints in the network. We are selecting NGN equipment to upgrade our fixed line network to an IP-based network, which will provide both fixed line and broadband services. What is the future outlook for the Indian telecom industry? The voice market is stable, with growth mainly coming from Category B and C circles. Broadband is expected to emerge as the key growth driver for the industry in the future. Data services on both wireline and wireless technologies are picking up. The internet subscriber base is also increasing and going forward, telecom operators are expected to focus on internet services to compensate for the stagnation in the voice market. Also, the increased uptake of social networking, banking, security and health-based VAS is expected to provide additional income to telecom operators. 2 of 3 10/9/2013 7:25 PM

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