India Telecom

June 17, 2003
India's potential is 300 million subscribers: Lothar Pauly, Siemens ICM

The telecom industry is in turmoil, according to Lothar Pauly, board member, Siemens ICM Group. However, he added that the Siemens' network infrastructure group was in comfortable position, having made a small profit in the last quarter. "That was not adequate, but compared to our competitors, it is very good. We have to earn more money, which in the current environment is impossible," he added. That is the dilemma before the global telecom equipment giant with presence in over 90 countries.

When pointed out that was Nokia making good money, he agreed, "In this business we are hopeful and we want to maintain this profitability." Pauly, who is heading the communications group at the board level in Siemens, noted: "India is a fantastic market for Siemens. I am looking forward to how we are going to develop further", he adds speaking to me after he released the new range of Siemens mobiles in a fantastic function with top fashion models displaying the curves and contours of the feature rich mobile phones.

With 500,000 subscribers for mobile phones being added every month in India, the world's number two mobile phone maker would not let such opportunity slip by. "India's potential is 300 million," Pauly seemed to ruminate when he totaled the potential for his market. Earlier, he had sold communication products in many Asian countries, such as Indonesia, set up joint ventures in Eastern Europe and led the mobile networks division. Therefore, he should know where the market is and how to tackle it.

Commenting on the threat of CDMA, he said: "GSM is not losing market share. In fact, competition will help firm up the market with lower tariffs bringing in more subscribers." The fact that Indians are good conversationalists explains why the average monthly minutes of use in this country goes up and is now 224 minutes, placing India in the 7th rank in a list headed by US. Close competitor, China, may have more mobiles. However, it is ranked 10th with only 201 minutes. Probably, this market expert believes that with still lower rates, Indians will be encouraged to hang on to their mobiles much longer. Compare that with the Indian rank on ARPU - 37th in the world at US $16 per subscriber, with Japan leading with US $64.

Pauly was hopeful that Indian railway passengers would soon have GSM-R, Siemens' leading GSM technology for railway passengers. It is already in operation in seven EU countries, and is on trial in another 20. He added: "We are having intense discussions with Indian Railways for GSM-R trial. India will follow global pace." Siemens is collaborating with Indian Railways for its technology in high-speed trains and in electrification.

"Our competitors are in a weak position because we have long term commitment in India and to India and we can support our customers on a long term basis. Customers cannot be sure if some of the suppliers would be around in 10 to 15 years from now. Siemens has been in India for 130 years. With Siemens, it is a safe bet," he affirmed. This possibility is what "we will leverage."

Reverting to Siemens' profit position in these turbulent times, Pauly pointed out that his is a 'debt free company.' He nudged: "Look at the balance sheet of our competitors. We are profitable even when globally the market is shrinking - for mobile networks, the downturn has been some 15 percent though this year." He expected a 5 percent to 10 per cent increase next year.

Pauly sounded optimistic on 3G networks, despite reports that no operator was sure of success in Europe. He said: "We have a strong position in 3G and UMTS with a market share of 20 percent. We have shipped 13,000 UMTS base stations by end of April." Touching on Siemens' advantage in UMTS networks, he noted, "It is early launches in networks with our technology and equipment, the time-to-market advantage."

However, Pauly moderated his enthusiasm for 3G. "There is no breakthrough as yet, as compared to the progress GSM made in the mid 90s. Compared to GSM, UMTS is now in the stage of early 1991 that GSM was experiencing, and not the surge that GMS experienced in 1995-96." The market turmoil is still rankling in the minds of investors and therefore there is greater thrust towards upgrading networks than setting up new ones. Operators are continuously upgrading networks.