Looking at getting wireless licence in India: AT&T

Chief Executive Officer of AT&T, Randall Stephenson is on his first visit to India. This is his first outstation visit after taking over as the Chief Executive last month. Stephenson says, "We are also investing in undersea cable infrastructure, getting traffic from the United States to this part of the world. So, the investment is broad. It is making the capabilities our customers have in the United States available in India."

Q: Soon after taking over, he said that, you wanted AT&T to be a wireless centred company that has no wireless presence in the fastest growing market in the world! Does that worry you?

A: Does it bother me? No. Do I see it as a wonderful opportunity? Perhaps at some point. Today, we are the largest wireless carrier in the United States, it is growing in double digits, it is a USD 40 billion revenue stream, and it is the centre of who we are as a company at AT&T and so, if there are other opportunities to expand that wireless capability and expertise, outside of the US, we would look for those.

Q: Are you looking for opportunities in India as well? It is a market, which most players don't want to miss, considering the fact that we are growing at about 7 million subscribers a month. Would you be looking at opportunities?

A: Opportunity in India today is at the high-end business side of the market. We've invested a lot; we've put a lot of resources and infrastructure in place in India. We have a lot of customers in the United States, who need Indian connectivity. We are fulfilling that demand and that need today, we are growing very quickly. We grew that business 40% last year. The wireless opportunity is kind of wide open for us right now.

Q: By saying wide open, what do you mean?

A: There are a lot of different ways, you could go at this. Probably, the most obvious to us is that the government is considering auctioning off some of the 3G spectrum here, across the Indian footprint. We are going to take a hard look at that (and may be) potentially bid, who knows. We'll evaluate that, as that process gets closer.

Q: You've had meetings with government officials as well. What is the sense that you are getting? How keen do they look for allowing foreign carriers to bid for 3G licences?

A: I think this government has proven to be very open to foreign investment, particularly in telecom. I'd suggest they have liberalised the telecommunications investment situation more than any place I am aware of. We are seeing that same type of response on the wireless side, where they are looking to auction off the 3G spectrum. They have indicated that a broad array of companies would be allowed to bid on that.

Q: But would you be needing a separate licence for you to participate in that auction? In that case, would you be applying for fresh licence as well?

A: As I understand the process, you'd be required to have a wireless licence to operate in India. If you have a wireless licence to operate, you could participate in the spectrum auction. We would probably look at becoming a wireless licence here in India.

Q: But what about acquisitions? There are certain smaller GSM players here in India, who could make for potential acquisition targets. Do they not interest you or are you also looking at the possibility of say picking up a minority stake in one of the bigger carriers?

A: Well, it is too early to say. And we are not going to speculate on any M&A activity. Just suffice it to say, there are a lot of options here, doing it organically and a lot of other options.

Q: You were invested in Idea Cellular, which is now turning out to be one of the faster growing private GSM players in the country. Do you regret having exited that company?

A: Of course I do. That was something that came about when AT&T Wireless was acquired by Cingular and Cingular sold that asset. But that is what it is. We'll continue to look for opportunities in India.

Q: The opportunity that you currently have is in long-distance telephony. You were the first foreign carrier to be awarded long-distance telephony licences. What kind of a market potential are you seeing here in India?

A: We see a dramatic market potential. In fact, we have put facilities in five different cities around the country; two of those were already at capacity, we're having to augment capacity, we're having trouble staying ahead of the investment curve and so we are augmenting all of our investment plans right now in India, trying to fulfill demand. As I mentioned a moment ago, it is growing 40% year-over-year. So, we're having terrific success here.

Q: You have committed to investing about USD 750 million in 2007 across the world, how much of that investment would be in India?

A: Without a doubt, India should be the fastest growing area outside of the United States. Out of the USD 750 mn, a large amount of that is going to India. We haven't disclosed how much of that is coming to India but obviously when it is growing 40%, you can assume that a significant amount of that is going into this market.

We are also investing in undersea cable infrastructure, getting traffic from the United States to this part of the world. So, the investment is broad. It is making the capabilities our customers have in the United States available in India.

Q: The long-distance telephony market licence that you have is not attracting many foreign players here. BT is already here, we understand that Verizon has applied for a licence as well. There are also some well-entrenched Indian players? How competitive does this market look to you?

A: We expect it to be very competitive, it's very competitive in the US, it's very competitive in Europe and we expect it to be very competitive in India as well and we look forward to that.

Q: The market that you currently are in, you are not touching base with a large section of the country. What is your gameplan? Do you want to consolidate on what you currently have and then go forward to wireless or  you'd want to do both together?

A: It's not either/or, we will be very aggressive in going after the large business segment of the market, as we have success there - like you have seen us do everywhere else we go - we will move into other segments of the market. Simultaneously, we will be looking at the wireless opportunity, which is really how you approach the mass market in India. So, we will be addressing both simultaneously.