Aug 09, 2012, 07.51 PM | Source: CNBC-TV18
Advisor to Prime Minister Dr Sam Pitroda feels Indian telecom companies are obsessed with valuations and market capitalisation.
He tells CNBC-TV18 that the telecom sector will undergo a consolidation phase, wherein telcos let go of their hunt for subscribers and instead focus on transformation. “Everybody is looking at marketcap, everybody is looking at balance sheet, everybody is looking at ARPUs. But now that you are going to the next phase, there will be some transformation,” he said.
Reports suggests that strong signs of consolidation are already underway in the Indian telecom sector even as three service providers shut shop in the backdrop of the court rulings in multi-billion dollar 2G spectrum scam. In February this year, the country's apex court cancelled 122 mobile permits while passing a judgement on the ongoing investigations in the 2G scam.
However, Pitroda doesn’t feel that the telecom sector is facing some great danger. Instead, he says that telcos now have the chance to play in a role in the transformation of education, health, governance, delivery of public services and much more. “People are still focused on increasing number of subscribers, because that is how they have got their valuations up, but that story is over,” he said.
Pitroda says the next transformational phase for telecom companies, the next big leap, will come within the next three years.
Below is an edited transcript of his interview with Shereen Bhan.
Q: The government’s defense is that perception is far worse than reality as far as the India story is concerned, but people are not buying that argument anymore. The recent power cut incident tarnished India's image and reputation, in the sense it was the worst power outage the world has ever seen. As a member of the Prime Minister’s global advisory council, what is the sense about India at this point in time?
A: First of all let’s understand that India is a country of 1.2 billion. There is always something interesting, exciting, controversial and progressive goes on. The group of people as part of the Prime Minister’s global advisory council normally meets once a year. We also meet in small committees to take on specific subjects and topics to discuss.
This time the discussion really centered around four main areas. One is economic engagement, which includes business, trade, investment etc. We also discussed about philanthropy, knowledge sharing, education, science and technology, and about community engagement.
Q: But if you were to talk about India's economic engagement for instance, right after the budget practically everybody raised concerns about tax matters. We now know that the PM set up the Parthasarathi Committee to look at controversial tax related issues like GAAR and perhaps we will see Finance Minister P Chidambaram arrive at some sort of solution to deal with the Vodafone matter. How big is the tax concern now and have some of those apprehensions being allayed on the back of the steps that have been taken?
A: See we always look at short-term as well as long term. Short-term issues sometimes overshadow long-term perceptions and long-term realities. At the end of the day, India is still growing over 6% when everybody else is having all kind of concerns. Of course we are not happy that we have gone down to 6%, we would rather be at 8-10%, but those are the realities of life. So you can't really get totally hung-up on negative news all the time.
Q: As part of the global advisory council, is there a deep sense of pessimism with regards to the Indian story or is there more disappointment than hope and optimism?
A: I think as part of the global advisory council, people felt that we could do more. Lot of this publicity is unnecessary. All of these global advisors well accomplished individuals in their own right; Lord Bhikhu Parekh, Lord Bilimoria and we have similar stalwarts in every major region and we said these people should also communicate Indian stories.
Q: The talk has to be backed up with action and that seems to be the problem. When the Prime Minister took over the finance ministry, expectations were high, but at the end of the one month period not much has been delivered.
A: You cannot deliver in one month.
Q: Sure, I understand that, but I am just saying that it cannot be mere talk anymore.
A: I agree, but let me give you an example from my perspective. We have built the most powerful knowledge network in the last two years that anybody in the history of any country has built. It is a network to connect about 1,200 nodes with 40 gigabyte bandwidth. This connects all our universities, all our R&D laboratories and this allows us to collaborate in a very different way not within India but also with Europe, Asia, US and all.
Three weeks ago, I addressed 10,000 teachers at 170 locations in India sitting in Chicago. That is a very powerful tool. Nobody knows, nobody wants to talk about it, I don’t know why. This is a great story, you all have never covered it. This is a story which defines India of tomorrow.