Sistema Shyam (MTS) is one of the new operators at the forefront of the ongoing Telecom Tariff war. Recently the management interacted with the analysts and he is what they have to say about their strategy in India.
On the State of the Wireless Business in India, Management said,
Sistema Shyam has rolled out services in 8 circles. Network rollout is progressing according to plan and Mumbai and Maharashtra are the next launches. Overall, they acknowledge the double SIM phenomenon and believe a significant proportion of their subscribers fall into this category of users. While noting that the absolute fall in the overall market pricing levels is a concern, nevertheless, they are observing improvement in ARPUs.
We think ARPUs are ~Rs100.
Will the company be around in another 12 months, if they continue to burn cash at this rate ?
CEO stated that they have a 10-15 year plan for India; and not just 1-2 years. They continue to target EBITDA breakeven in 3 years and see this as achievable with 30-35mn subscribers. The company is of the view that consolidation should occur within the top 6.
Can Sistema Shyam (MTS) find a niche ?
Given the minimal differentiation afforded in voice, the company is trying to grow the data business (dongles). Their wireless broadband is priced at the same levels as other competitive offerings, however they have bundled free browsing for certain sites etc to offer better value.
Additionally, they are focusing more on rolling out EVDO based Wireless broadband [MBlaze] and has partnered with some portals as well. Reminds me of the Dot Com boom when ISPs were partnering with Portals like IndiaWorld, recall the nostalgia ?