T E L E C O M S

Hutchison’s remarkable progress in the tough India cellular market is seen as a triumph over adversity, and

subscription numbers are climbing fast.

By Bilal Khan

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On January 26,2001, an earth-quake measur-ing 7.8 on the

Richter Scale struck theIndian state of Gujarat.The damage was immedi-ate and massive with vil-lages and towns reducedto rubble. Amidst thedestruction, only onetelephone network was left standingand fully operational—Fascel, theHutchison joint venture.

The network’s voice and SMS(Short Message Service) capabilitiesplayed a significant role in the mas-sive relief efforts that followed the earthquake. Fascel immediatelyswung into action, rushing in spe-cialised equipment to provide localmobile communications. For twodays after the catastrophe, calls werefree. The company also gave hand-sets and airtime to relief agencies,and waived charges on incoming callsto government officials. Fascel alsoset up mobile Public Call Offices,which handled 15,000 calls per dayduring the aftermath, and a toll-freehelpline was established so that worried relatives could send freemessages to any other part of thecountry. The entire operation was anexercise in masterful managementunder deplorable conditions.

Today, Fascel is the largest operatorin India outside the four major citieswith more than 260,000 subscribers.

The dramatic eventsassociated with Fascel’srise over the past yearexemplify the Hutchisoncellular story in India.It is characterised bydedication in the face ofstiff challenges, an un-wavering commitmentto the customer and asteadfastly focused long-

term view fully supported by its partners in India. It is a story that hashelped change the face of communi-cations in the world’s second mostpopulous nation.

SPREADING THE WORDMumbai provides an insight into the telecommunications phenomenonthat is sweeping across the wholecountry. The city is festooned withbillboards advertising Hutchison MaxTelecom, Mumbai’s leading cellularoperator. Mobile phones havebecome an integral part of life formany of the city’s 18 million resi-dents, in particular the thrivingbusiness community.

Local courier companies and salesforces use them in the field, with textmessaging playing a particularlyimportant role. Fisherwomen rely onthem to take dockside orders; execu-tives keep up to date with their customers, colleagues and the latestcricket scores. Even priests are occa-sionally seen sporting a mobile enroute to prayers. In short, the mobile

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phone has drastically altered thelifestyles of the people of India, andHutchison has been a driving forcebehind this change.

When the Group first entered thenewly liberalised Indian mobiletelephony market in 1995, the signswere not particularly encouraging.Growth in fixed line communicationwas (and still is) fraught with difficul-ties. Tele-density hovers at around3.5% nationally, and owning a fixed-line phone in India is something thatonly wealthy people can take forgranted.

In 1995, pessimists felt that cellulartelephony would not gain mass accep-tance. They could not have been fur-ther off the mark. With its relativelylow infrastructure costs and ability toreach isolated areas, mobile technolo-gy has come as a life-changing oppor-tunity. Rural residents no longer needto travel to the district Post Office toplace a phone call, and city dwellerscan relax in the knowledge that theyhave an alternative option to longwaiting periods for a land line.

India now boasts over 5.5 millioncellular subscribers, and the markethas grown by more than 80% in thepast year alone. In this remarkableenvironment, Hutchison, in partner-

ship with local companies, has estab-lished itself as one of the leadingnational operators.

THE RIGHT NUMBERSWith over 1 million customers (morethan 20% of the total cellular popula-

tion), the Group’s affiliates jointlyconstitute one of the largest cellularsubscriber bases in India. BetweenJanuary and November 2001, the baseincreased 70% against a 60% industrygrowth rate. Furthermore, almostthree-quarters of the Group’s growthhas been organic.

Asim Ghosh, Managing Directorof Hutchison Max Telecom, believesthat the Company’s success is due toits keen focus on the customer: “Weset out to create a business that isconsumer friendly,” Ghosh says.“Recognising that many local usersare on tight budgets, we moved froma customer-focused to a customer-driven organisation, establishing a‘low-cost-structure’ business model thatis very sensitive to consumer needs.”

In the process, Hutchison helpedrevolutionise the concept of customerservice. In 1995, Integrated VoiceResponse (IVR) systems did not exist in India, and customers wereserviced through face-to-face orpostal interaction. “We began asteady programme to introduce IVR

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The mobile phone has entered all walks of life in India, serving as a valuable communications tool for both business and leisure.

T E L E C O M S

With its relatively lowinfrastructure costsand ability to reach

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STRAIGHT TALK

systems, remaining particularly mind-ful of the need to educate.”

As a result, Hutchison affiliatesnow boast some of the highest stan-dards of customer service in theworld, with Hutchison Max Telecomthe only telecom company in India tohave achieved ISO 9001 certification.

ONE-TO-ONE COMMUNICATIONA vast bank of customer informationbased on surveys and feedback fromusers and dealers is preferred overinput from consultants. This directapproach enables the Hutchison affil-iates to work together with mass mar-keting initiatives. The ultimate goal isto position all of them as process-oriented, boundaryless organisations—ones that, essentially, live or dieaccording to customer judgments.

The Indian cellular market isextremely price-sensitive, which hasmade value-added services cruciallyimportant. That Hutchison has, forthe most part, managed to achievethis across its affiliates is also testi-mony to the impressive raft of

I N AN ENVIRONMENT WHEREtoo much “technospeak” often bafflesconsumers, Hutchison has remained

entirely consumer focused, building onthe fundamental values of honesty,dynamism and friendliness.

Back in 1995, Hutchison Max Telecomsuccessfully launched the Max Touchbrand following a barrage of unique andimaginative pre-launch advertising. Using‘Hello Bombay’ as the tagline, the cam-paign effectively communicated the arrivalof a world-class service with a truly inter-national pedigree by using celebritiesfrom various backgrounds to endorse thebrand and build on local relevance.

In February 2001, Orange replacedMax Touch, pulling off a major marketingcoup in the process. By successfullyreplacing a highly recognised brand with avirtual unknown in just two weeks, thecompany essentially redefined Indiancommunication strategies.

The results of the company’s advertis-ing and marketing strategy, which has setnew standards in innovation and creat-ivity, have been impressive.Hutchison MaxTelecom recently won the Mumbai adver-tising industry’s ‘Campaign of the Year’award, and competitors have often mimic-ked the company’s marketing initiatives.

Thanks to their highly focused market-ing and advertising campaigns,Hutchison’saffiliates have rapidly achieved aspirationaland premium overtones in their brandimagery, with very high brand awarenessamongst consumers.

Remarkably, this was accomplishedwithout employing the broadcast medi-um, as each brand is city or state specificand not national. Instead, billboards andprint media have been at the forefront ofmost advertising, engaging consumersthrough focused localised campaigns. InMumbai, for example, advertisementscompare the cost of a mobile phone callto cutting chai, the locally sold inexpensivetea. Similar examples are used for otherlocations.

Besides advertising, the Group has alsoraised its brand profiles through strategicsponsorships. In Mumbai, it has allieditself to the theatre, music and booklaunches—events that hold great reso-nance for the city’s middle-class citizens.

This kind of niche-sector approach hastransformed consumer perceptions, withHutchison Max Telecom becoming over-whelmingly associated with leadershipand innovation.

The Group’s development across thecountry is matched by a seamlessprogression in advertising, with a com-mon look and feel coupled to a highdegree of creative insight. The strategicdirection has been to consistently “talk”of the tangible benefits delivered in arefreshingly direct approach. That it hassucceeded with this approach throughoutthe country speaks volumes aboutthe quality of the creative work, and thestrategy of talking directly and simply tothe customer.

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T E L E C O M S

products which the Group has introduced.

Of these, the most significant hasbeen the introduction of roaming services. In 1996, Hutchison MaxTelecom was the first cellular companyto establish national roaming, andtoday Hutchison affiliates offer con-nections to over 400 Indian cities and78 countries, making it India’s toproaming operator with over 23% ofthe roaming business.

Another key service to have foundfavour with users is SMS. Hutchison’saffiliates were the first to open uptheir networks to SMS, and sinceNovember 2000 the proportion oftheir consumer base using SMS hassoared from 13% to 60-70%. Fascelcreated SMS in “Gujlish,” a mix ofEnglish and the local state language,and each affiliate has produced aninnovative SMS dictionary of words,phrases and “emoticons,” further pro-moting SMS usage.

Hutchison also took the lead inproviding value-added services byregularly sending Privileges bookletscontaining the latest offers from lead-ing international and national brands.

Alliances have been forged with thetop hotel chains and the finest restau-rants and shops, providing customerswith a bounty of attractive offers. Onaverage, there is a remarkable 15%redemption rate and the favourite cat-egories are dining, holidays, shop-ping and entertainment. In Mumbaialone, over 125,000 customers haveutilised these offers, which are nowbeing replicated elsewhere so that,on an all-India basis, customers canbenefit locally and when roaming.

“The products we develop on ourown are exciting and totally relevantto the market,” says Ghosh.

For example, the innovative VoiceRecognition Service enables sub-scribers in Mumbai to access real-timenews, stock market information, andcricket scores via a single number.The product has been developedusing a cutting-edge platform thatallows users to interact with the sys-tem in a manner closely resemblinghuman conversation. The user-friendlyinterface hides the complexity of thetechnology, which allows the systemto be navigated using commonwords, like “cricket.” More than Perseverance in a difficult market has borne fruit for Hutchison.

India is mired in the fixed-lineera with low penetration andunreliable connections.Analogue telephone exchangesare outdated, costly and inefficient. Fixed line tele-density is less than 2% and itcan take years to get a connection.The Group entersthe Indian market throughHutchison Max Telecom—a JVpartnership with local companyMax India.

PRE -1992

The Mumbai licence is issued in November andHutchison Max Telecom movesquickly to build a network.

1994

Hutchison Max Te lecom launches the Max Touch brandfollowing an advertising campaign in which celebritiesendorse the “Hello Bombay”tagline. Cricketer SunilGavaskar makes the first callon July 16 to Analjit Singh,Chairman of Hutchison MaxTelecom.This is followed by asoft launch in September andcommercial operations begin in November.

1995

In December, Max Touchbecomes the first operator tobundle airtime and handsets.Handsets retail for aboutUS$1,400, while calls cost aprohibitive US$0.52 perminute.The bundling strategyreduces costs and has animmediate positive effect oncustomer offtake. Subscribersnow talk more and are motivated to stop using cellphones as pagers.

Hutchison Max Telecom alsobecomes the first to establishnational roaming services.

1996

In August, for the first timeever in India, Hutchison MaxTelecom introduces prepaid cellphone cards over the counter,without the need for paper-work or documentation,further increasing mass accessto mobile communications.

1997

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80,000 voice samples went into itsdevelopment and, amazingly, theplatform understands various IndianEnglish accents.

KEY STRATEGIESHutchisonÕs remarkable progress inIndia has proceeded with a mixtureof commitment and caution.

When the Group initially enteredthe Indian market in 1992 throughHutchison Max Telecom, the Companytook just 10 months to build theMumbai network, a characteristicallyspeedy approach that was to serve itwell in the years to come.

But when the market opened upfurther in 1996, with regional licencesbeing offered by the Government,Hutchison chose to sit out of the bid-ding due to its concerns over bothlicence terms and high fees.

ÒWe are risk takers, but measuredrisk takers,Ó says Ghosh. ÒSitting outwas a wise decision for Hutchison.Ó

GhoshÕs understated commentsmask the critical nature of the situa-tion, in which back-breaking licencefees pushed operators to the wall andseverely stunted the development of

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The company becomes thelargest roaming operator network in India.

Citing concerns over tenureand fees, the Group elects tosit out on bidding for newlyoffered regional licences.

1998

The Indian Government introduces a new NationalTelecom Policy, replacinglicence fees with a revenue-sharing scheme and extendingthe licence period from 10 to20 years.The move sets thestage for Hutchison and itsIndian affiliates to go on anacquisition drive.

1999

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20002000 20012001After the January 26 earthquake in Gujarat, Fascel isthe only telecom operator leftfully functioning.

On July 31, Hutchison affiliates are allotted threemore licences to operate 1800 MHz services in thestates of Karnataka and AndhraPradesh, and in the city ofChennai.

September heralds thelaunch of Yahoo SMS services inMumbai and Voice Command islaunched in November.

By September, HutchisonIndia affiliates have 1 millionsubscribers and rising fast.Between December 2000 andNovember 2001, HutchisonÕstotal India affiliate baseincreased 75%, all organicallygrown.

2001

In January the Group acquires49% of Sterling Cellular, whichoperates the Essar brand in theDelhi metro circle. Its Indianpartners, principally EssarTeleholdings, own the balance.

In Mumbai, the Orange brandis launched on February 14 toreplace Max Touch.

In July, Usha Martin Telekomis acquired, covering theKolkata circle under theCommand brand.

In September, the Groupacquires an interest in Fascel,the top cellular operator inGujarat, operating under theCelForce brand.

Also in September, Orange-world mobile Internet servicesare launched, allowing access toa wide range of information viaOrange WAP phones.

2000

T E L E C O M S

the cellular industry. By 1998, com-mentators were forecasting the deathof the sector as most foreign playersbailed out. Ghosh notes that it wasHutchison’s long-term commitment—along with its understanding andexperience of the same business else-where—that enabled it to keep faithand therefore remain in India.

With the Indian cellular market setto open up further this year, theGroup will face more competitionand challenges. A recent move toallow landline service providers tooffer mobility has antagonised thelarger cellular operators, further proofthat India’s regulatory environment isnot for the faint hearted.

“This is a market that requires alot of stamina and back-breakingeffort,” says Ghosh, “but if you havethe vision, the commitment and aclear strategy, results will come. Ourbasic approach is to take the longview, but execute like hell for theshort-term results.”

PAYING DIVIDENDSThe Group’s commitment to Indiabegan to pay dividends in 1999, whenthe Government overhauled theindustry’s regulatory structure tofavour a competitive environmentthat would stimulate affordable, effec-tive telecommunication for all citi-zens. The new National TelecomPolicy replaced fixed licence feeswith a revenue-sharing scheme andincreased the licence period from 10to 20 years.

“The market structure changed toone that suited a long-term playerlike Hutchison,” Ghosh confirms.

Almost immediately, Hutchisonembarked on an expansion pro-gramme, acquiring stakes in threelicences through joint ventures. TheGroup acquired interests in SterlingCellular in Delhi, Usha Martin inKolkota and Fascel in Gujarat. In nine

months, Hutchison established itselfas one of the country’s major players.

Hutchison’s ability to forge strongalliances with like-minded Indian partners has been a key aspect of its success. The Group’s partnersinclude Essar Teleholdings, Kotak, theHindujas and Max.

“All our partners are amongst theearliest investors in India, and arecommitted to building shareholdervalue through customer focus,”Ghosh says. “They also possessstrong market intuition and under-stand the realities of building a bigbusiness in this country.”

Hutchison’s presence in the affili-ates has also facilitated the alignmentof strategies and processes over the

past 18 months. Customer service,sales and marketing are all areas thathave seen swift harmonisation, andthe next stage will see the establish-ment of a single corporate entity withcommon branding.

In July 2001, a Hutchison jointventure acquired three additional cel-lular licences for the high-tech statesof Karnataka and Andhra Pradesh andalso the fourth metro city of Chennai,with a strong exposure to the South.Hutchison affiliates now enjoy a foot-print of 23% of the national popula-tion, which in turn has 50% of thepurchasing power. “The Group hasan exquisitely focused and premiumfootprint,” Ghosh enthuses.

The Group’s phenomenal devel-opment in India also owes much to aworkforce that has set new standardsin innovation and dedication. A pal-pable sense of verve runs through theranks at Hutchison Max Telecom’sMumbai headquarters, where thestrategy has been to recruit and retainthe brightest minds. Their inspiredcreativity drives the progress of thebusinesses, and Ghosh is fulsome inhis praise of the employees.

“This is a company with atremendously motivated group ofpeople. The esprit de corps and work ethic are simply remarkable.Throughout the Group, we have one of the country’s best workforcesand we have a tremendous restless-ness to learn further,” says Ghosh.“The goal is to be a leading player,not just in India, but to do things that are leading edge by any interna-tional standards. We shall definitelypersevere.”

Across the social spectrum, everyone’s talking.

Hutchison’s abilityto forge strong

alliances with like-minded Indian

partners has beena key aspect of its

success.

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