No easy foothold for foreign companies in Indian mobile market

My take on the road forward on 3G in the country: The new entrants versus the established players

http://www.livemint.com/2008/01/06121309/2008/09/22215427/No-easy-foothold-for-foreign-c.html?d=2

Very well written Devidutta!

In fact you have closed on all macro issues regarding the 3G subject. My take on the issues brought up...

1.The problem that has been with the Indian telecom operators is that most of them have taken the lowest cost route to the consumers.

2.The call rates are ridiculously low and the operators are bent over for adding subscribers. (always not a profitable level)

3.Operators have not really looked into the quality of the services and the coming of Number Portability would create a churn amongst dissatisfied users.

4.The new license holders starting to launch their services would create more competition.

5. Absence of a PAN India footprint would be a serious limiting factor for the new entrants (both 2G and 3G). However operator infrastructure sharing and collaborations can be used to tide over these problems.

6. As far as the 3G spectrum is concerned, the entrenched players would try to make it a price game.

7. This is because the existing operators know least tariff route the best. Their business models support enonomies of scale!

8. For a foreign entrant, the best differentiating route would be quality and exclusivity of service!

9. 3G is not something that would go down to the rural areas in a hurry

10. Instead if the cities are focus, then the clear point of differentiation is service. Trust me 3G needs more than Service. It would probably also thrive on exclusivity.

11. Thus profit models would have to centred on the broadcast/feed quality and customer centric services. There is a business model out there.

12. A dog fight with the Airtel/Vodas of India would mean loss of blood. Thus the new operators would need to avoid a tariff fight.

13. On a later day, once these operators get their critical mass going, they could look at expansion to tioer 2/3 and so on...

Retail Special: Coming Up, New formats, Specialities

http://www.livemint.com/Articles/2007/12/09222808/Retail-special----Coming-up.html

( The first part of a discussion with Mr Kishore Biyani on the sustainability of the retail revolution in India)

Mr Biyani,

Thanks for ushering in the Retail revolution in this country. Two questions that i have at this time in the context of 2010: the watershed year. In this era of shareholder value and ROI,

Question 1:How do you think that the skyrocketing realty prices will impact the retail chains?

Question 2: It is expected that the current financial turmoil would continue well into 2009/10. Do you see retail being impacted by lesser consumer spends?

Question 3:I very much buy into the speciality retailing as the next point of differentiation. However, without trained and qualified personel behind the "speciality retailing", it would be a false bet.

Your Comments sir...

Is there something wrong with ICICI?

(My first interactions on issues of Banking. Though i am not well versed with Banking sector as a whole, but my comments on banking are more from an economy and effect-on-economy perspective. Full article on http://www.livemint.com/2008/09/22083329/Is-there-something-wrong-with.html)

Hi Tamal,

What happens when a growing economy de-regulates critical sectors and industries? I am not against de regulation, infact i am a proponent for it. However, i am commenting upon the trend of market skimming. The pattern that emerges when a critical sector is de regulated and FDIs allowed to flow in, is that there are quick investments in the economy. Most of this investment is attractive, not necessarily sustainable. Attractive means immediate or medium term profit based investments. Long term investments require rigour, discipline, intent and time. They would not be attractive initially and would give you average benefits over the medium and long term. They are not a function of Sales Targets and Pressures. In trying to skim the market and extract the most in profits and Dividends many companies only create a small affluent urban base.This is unsustainable in tough conditions when the small base doesnot deliver. I dont intend to say exactly the same about ICICI bank. However, your point on wholesale versus Retail deposits and structured derivatives and high growth and leveraged equity avers to the thought. I do think that ICICI bank is one of the biggest pillars and powerhouses of the financial eco system, but one gets the feeling that ICICI bank could also have bet it wrong.

Thanks Manas

Of Infrastructure and Capital Statements II

(extending the discussion with Raju Narisetti, the Editor of Mint, my views on the bad quality of the infrastructure is extended thru ths discussion. http://blogs.livemint.com/blogs/romanticrealist/archive/2008/09/01/killer-roads-in-india-and-rethinking-the-death-penalty.aspx?CommentPosted=true#commentmessage )
Hi Raju
Capital Punishment is a compelling thought. However is that a panacea of the corruption evils? Hardly! In my views, i tend to agree with Arm Chair guy. The bad quality of roads is just the precuror. From environment to poverty to health care, education and business and more... bad governance prevails everywhere.Corruption is omnipresent! To take the points i suggested a little further
1. As a corporate executive i have metrics, tolls, reviews and score card. I am evaluated on the basis of that.
2. For a business as large as 1 billion people and a trillion dollar economy, where are these management/administration fundamentals? Who does the check? Where are the audit reports
3. Media has been up in arms trying to go after such issues, but that is more from a sensationalizing stand point.Good media is impartial and we seriously need media to start educating the millions.
4. There is this office of the president/governor.That to me is a complete drain on the exchequer unless they can take the position, of safeguarding the public interest. Can they do the audits?
5. I again come back to my previous claims. Socially responsible people need to review and evaluate the government and the officials...Media is to be the voice of the people / neutral medium and the enabler is to be the gubernatorial offices.
I know the constitution doesnot provide any framework on this.. But then we need to start some where.
Finally on the roads infrastructure front, extending Arm Chair guy's thoughts... If a Samsung can Guarantee its TVs, the road contractors must guarantee the quality of their work. If it fails within the guaranteed time, they need to redo without being paid... Manas

Subhiksha: A perfect "go bust"

(Having observed the operational dynamics of Subhiksha, 2 years back, it had struck me that this was not a sustainable mode of working. Over the next 2 years that seed has actually taken long roots. In fact many of the retail chanels in India are not on sustainable models and are trying to over spend each other. This post, happened after 7/8 days of the Retail Realism one and bear my thoughts and ideas substantially if not fully)
Read article at http://www.livemint.com/2008/09/05001546/Subhiksha-not-paying-some-bill.html
In continuation to an article that appeared in Mint some time back.. "bringing back retail realism" (http://www.livemint.com/2008/08/27002851/Bringing-back-retail-realism.html) , I had listed out a number of points on just how high and how much the retail exuberance is irrational. Subhiksha to me is the best and the biggest example of "how to get retail management wrong". To list down the bullet points on this
1. Unmindful Expansion: Subhiksha took a lot of pride on matters of number of stores opened per day/per week/per month...
2. ... without Consolidation: Very few stores would have been profitable in terms of cash flows
3. Flouting all possible rules in Retail management.
4. The staffing and the personnel quality was pathetic but the pay was very good.
5. The terms of business were not always ethical or right minded.
6. Whither Inventory management?
7. Footfalls, turnaround and turnover being the guru mantra: Subhiksha never understood its customers
8. The only USP was discounts... hardly a sustainable competitive edge!
9. Your vendors only have a limited leash...expecting infinite credit cycles to make up for your ROIs is hardly good vendor management
10. Downstream supply chain was not integrated. Bulk buying is not a source of advantage.
11. Diffused focus: Subhiksha sold fresh vegetables, medicines, groceriezs, mobile phones, accessories and more.. where was the focus? How robust was the business model and the manpower to handle such diversity?
Now i hear CDIT format stores under the Subhiksha aegis... When will you learn Mr. Subramanian? Bottomline: No one "buys out" a sick horse. At this rate... Mr Subrmanian.. you would go bust!

Realty Sector, Investments and a possible growth story

(This post deals with a view about realty sector players in the Indian Market,especially DLF. Read full details at ... http://www.livemint.com/2008/09/05003413/DLF-yet-to-start-work-on-Mumba.html)

Hi Madhurima

No one contests the financial might and lobbying abilities of the collossus, DLF.However in the regime of increasing interest rates and plataeuing consumer demand, (read recessionary symptoms/ slowdown), i am not surprised that DLF is going slow.

1. As of now, it seems that DLF has invested more than it is comfortable with in a horizon which is uncertain. Consumer demand is not exactly the shade of pink it used to be.

2. While partnerships with other real estate cos, would help DLF tide over the credit/cash crunch, yet the cash flows from exiting projects would not be as promising.

3. There would be some inventory (ready to move in, unsold properties) which DLF would be stuck with.

4. Hence the delays and slow execution...

5. Compare it with players such as Indiabulls etc, who donot have significant inventory at hand. Hence they can continue to invest, from their P&L standpoint.

6.One thing that really beats me is most of the projects that are being advertised, are targetted to the Medium High level consumer. We havent heard of mass housing schemes. Thats where most of the real estate companies are missing the trick.

7. Mass housing solutions (i remember Brazil having done one of these projects successfully) would be key to spurring growth in this sector in the years to come.

8. Besides, the development at the tech parks and SEZs that has happened has been much unplanned and infrastructurally bottled up. One just needs to see the Cybergreens/Gurgaon and Hyderabad at peak hours to understand how badly the projects were concieved.

9. Bottomline... Cos like DLF will have giant successes and those irritating nags that will be a cash drain. DLF probably needs to look at more economical solutions catering to wider audience solutions in "building India".

Thanks