Viom Networks is India's largest independent cellular tower company and is a joint venture between Tata Teleservices and Quippo Telecom (a Srei Group Enterprise). Quippo Telecom, along with its partners — IDFC, GIC Singapore, SBI Macquarie, Oman Investment Fund and others, owns 46 per cent of Viom Networks along with management control. It has 40,000 towers and a tenancy ratio of 2.4.
In an interview with Business Line , Mr Sunil Kanoria, Vice-Chairman and Managing Director of Viom, talks on its proposed restructuring, the tower business in India and the road ahead for the company.
Below are edited excerpts:
When we acquired the tower business from Tatas in 2009, there was huge growth. Roll outs were happening. We rolled out 17,000 towers in one year. When we merged, there were a lot of people and all got absorbed. No change was required then. We, in fact, added people.
But during the last year or so, growth of new towers is almost negligible. Last year we built hardly 2,200. While towers are built once; it is the tenancy that comes in. Earlier we were building towers. No we need to manage and maintain them.
We are evaluating where to utilise the people — in operations and the services side.
Maximum what we can absorb we will. We are trying to re-train and upgrade their skills. Wherever it is not being possible we need to rationalise.
So would that mean that there will be job cuts?
It's difficult to come to a number. We are re-training people on other activities. We have 40,000 sites and these have to be managed. It is not that we don't need resources. We just need a different type and a different skill set.
If we are able to turnaround the existing people, train and upgrade, we will use them. And wherever, we find that we will not need them, we will prune them.
Any pruning so far?
We have pruned around 10 to 15 jobs in the last few weeks.
What are the other rationalisation measures that you are taking?
The other is cost management at the sites.
A major challenge is that towers use generators that need diesel. In many circles it's a big challenge. In markets like Bihar, UP, Bengal, the challenge is fairly high. We are trying to use technology, trying to automate, bring in the use of renewable energies and solar energy to reduce dependence on generators.
By how much do you expect costs to come down through such measures (like using alternate energy)?
At least 10 to 15 per cent; if not more. The Government has also mandated that by 2015, 25 to 30 per cent of the towers run on renewable energy. We are definitely, looking at how to go about that.
There have been reports of a strain in relations between the Kanorias and Tatas. Viom's chairman, Mr Subodh Bhargava, resigned recently too. How true are these?
It's a figment of imagination. We never had any issues. Mr Subodh Bhargava was an independent Chairman. He was not a Tata man.
When we acquired the company from the Tatas, the bid was a 49 per cent stake with management control. We paid for that. The agreement and the contract gives the Kanoria family the right to management. That was the proposal based on which the partnership happened. Neither Tatas nor us will violate it.
What is the way forward, now that the 122-odd 2G licences have been cancelled? Tower companies were banking on these new licences a lot.
The growth in the business will happen only when there is clarity in the sector. Unfortunately in the last one year, the sector has been badly beaten. With the Supreme Court cancelling licenses, it has put everything into a limbo. There is huge growth required. The impact will start to emerge. There is a huge shortage in coverage. Networks are poor. We may not be adding new towers. But we are adding tenancy. People are coming into infant sites.
So how long before you expect to see growth in the sector?
If there is no clarity, the consumer will ultimately suffer. The clarity, I think, will happen soon whether it takes six or nine months that we do not know. But it should happen. Post that growth should happen. Data should expand.
I think we would see that people who can sustain and survive over the next one year will see growth in late 2013-14. That growth will come primarily for more tenancy and coverage. I think it is important for the next one year or so to focus on cost management.