During his over 20 year tenure as chairman of Tata Sons, Ratan Tata successfully spearheaded the group’s entry into several sunrise sectors. The legacy continued even after he retired in 2012.
This is best illustrated by the Tata Group’s recent foray into the country’s nascent semiconductor manufacturing sector. The achievement is by no means small as, so far no global major or any domestic conglomerate has ventured into fabrication in the country. It’s the first by Tata Electronics.
However, there’s one sector where the Tata Group could not make a mark despite an early mover advantage and tie-ups with global majors – telecom services. However, even in failure, Ratan Tata did leave an enduring legacy here by way of spectrum auctions. He was the first to advocate that airwaves be allocated through bids – although for a different reason – rather than linked to subscriber base. This was met with strong opposition by the incumbents.
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The Group entered the telecom services sector way back in 1995 when it was opened up to the private sector, ie, around the same time when Sunil Bharti Mittal made the entry. However, the Group’s historical trajectory clearly shows that it always lacked a clear and far-sighted approach towards the business.
In 1995, in a joint venture with Bell Canada, Tatas bid for several circles but succeeded in only getting Andhra Pradesh. Like the rest of the industry, by 1997 they realised that the business model, based on a bid they had placed in 1995, just did not work out. Tatas had another problem since they had, along with a handful of other companies, also acquired a fixed line licence in Andhra. This was the first wrong choice as fixed lines were not the future of telephony, as was quite evident later.
Close to 1999, the Tatas approached Aditya Birla Group and AT&T for a three-way joint venture. The three partners launched a JV called BATATA (later Idea Cellular which in 2018 merged with Vodafone to become Vodafone Idea). Each partner had 33% equity and, to begin with, had just three circles of operations – Maharashtra, Gujarat and Andhra Pradesh. This business slowly picked up.
Then came 2001 when the government came up with the concept of limited mobility licences. This was supposed to allow fixed line service providers to operate with some limited mobility within a service area. Suddenly, Tatas jumped the bandwagon from GSM and joined the limited mobility queue. The advantages available here were lower entry fee based on fixed line price rather than auctions, preferential spectrum allotment and like fixed line, it had caller party pays.
When the GSM operators were fighting the limited mobile players in 2002, which was viewed by them as nothing but backdoor entry into full mobile services by paying a lower licence fee, the Tatas threw in their bit with the limited mobile operators like Reliance Infocomm. Later, the then telecom minister Arun Shourie allowed limited mobility to go fully mobile under a unified access service licence (UASL). The Tatas thus became a full-blown CDMA mobile operator. However, they continued to hold their stake in Idea, along with the AV Birla Group, which was a GSM operator. The year 2006 saw a public spat between the Birlas and Tatas, with the former alleging that the Tatas heart was not in GSM but in CDMA so they should exit Idea as it was hurting the company’s growth. Thus, the Tatas ended their GSM chapter.
The story here onwards became even more interesting. By 2007, much like Reliance, the Tatas realised that subscribers were simply unwilling to accept CDMA due to problems with the technology and again like Reliance applied for GSM licence/spectrum. Here, the then telecom minister, A Raja aided them through the dual technology policy of October, 2007. After entering GSM, the Tatas were able to restructure their business by inviting investment from Japan’s DoCoMo and launched their brand afresh.
The tumults of market as well as policy post-2012 made the journey tough. In 2014, DoCoMo decided to pull out of the joint venture with Tata Teleservices as it didn’t see the business making much headway. The launch of Reliance Jio in 2016 made things tougher for TTSL, which finally sold out its wireless business to Bharti Airtel on a no-debt, no-cash basis in 2017.
Though Ratan Tata’s initiatives in the telecom services sector failed miserably, it would not be wrong to conclude that this tryst did bear some fruits. The Group succeeded in the enterprise business where it’s present through Tata Communications.
From: financialexpress
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