Chandan Ghosh, Aircel: The risk taker

06 August 2012 | Kavit Majithia

Risks must be taken if wholesale is to survive, says Aircel’s head of business solutions, Chandan Ghosh. Here he shares his views with Kavit Majithia on the shifting paradigm between the wholesale segment and the rest of telecoms.

 




Chandan Ghosh is, by his own accord, a risk taker. When he’s not immersed in the world of wholesale telecoms and fighting against the threat to his long distance business, he can be found hurtling around Delhi’s infamous and anarchic roads on his Harley Davidson. Even undergoing open heart surgery in April 2011 hasn’t stopped Ghosh from enjoying a Scotch or two, or partaking in a bit of "unconventional cooking".

It takes a brave man to walk away from a lucrative position at one of the largest telecoms companies in the world, Bharti airtel, to join a company at least three times smaller in a business department largely revered as dying.

Ghosh did precisely that when he took his position at Indian company Aircel in 2007 as head of its long distance and wholesale business. His motive? That he didn’t want to sit at Bharti, simply count the money and reflect on his own success.

Ghosh felt he had to prove to himself that his accomplishment at Bharti, where he was an integral figure in the company’s campaign against the Indian monopolies, was "not a fluke".

His career in telecoms spans some 33 years, during which he has held roles at major telcos such as BT and former Indian incumbent VSNL, before grabbing the chance to head up Bharti’s international long distance business in 2002. He eventually went on to establish this as the company’s wholesale arm.

When Aircel approached him several years later, he admits his audacious instincts took precedence over logic. "It was the biggest risk of my life," says Ghosh. "I had built Bharti’s voice business up to $1 billion in five years and I could have stayed at the company for another five years with relative ease. I chose not to."

Ghosh had a huge task on his hands. Aircel at the time was 11th in the mobility space and had "no assets whatsoever". "I was expected to go in and establish a unit fit to compete with Indian industry giants like VSNL, Tata, Bharti, Vodafone and Reliance."

Bharti and the other larger players still dominate Aircel in the wider telecoms landscape, but the company "is now neck and neck with Bharti airtel in the wholesale segment", according to Ghosh.

The changing landscape of wholesale

Under Ghosh’s leadership, Aircel has rolled out a pan-India optical fibre backbone and implemented over 400 IP MPLS PoPs for wireless and wireline solutions across the country. Ghosh, however, is well aware of the limitations he faces.

Ghosh is openly blunt about the challenges facing wholesale and equally as honest about why the segment is not performing as well as it has done in the past. In his opinion, the gap between wholesale and other areas of a telecoms business is caused by "a lack of awareness".

"Nobody understands the wholesale business," he says. "This is fine for us from an independence point of view, but when you need support or investment, top management would rather invest in mobile or other parts of the business that they understand because it’s within their domain. Rather than invest a million dollars in my business, they will invest in the local business because they have never tried to understand wholesale or its value."

And Aircel’s outspoken chief of wholesale has news for top management at telcos across the board. "ARPU is now beginning to fall, even in mobility and for normal telephony. Most value-added services that are generating profitability, such as roaming, signalling and long distance, require wholesale leadership to negotiate the best possible prices. People need to start thinking about wholesale products as increasingly valuable commodities for mobility."
 
The hard truth that Ghosh has had to accept, which also serves well to underline how different his time was at airtel in comparison to Aircel, is how market conditions are working against the segment now, as opposed to for.

In 2002, the Indian telecoms market was on the verge of big changes with the break-up of monopolies and the internet revolution - and Ghosh found himself at airtel in the hot seat. This time round though, he’s had to adapt Aircel to operate under declining cost structures and thin margins.

He certainly attempts to maintain some of the optimism he had back in 2002, and is reluctant to paint a picture that undervalues his segment. The shift towards data, he boldly claims, lies "for all practical purposes, in the domain of the wholesale long distance piece". "Whether you have normal pipes or you are putting fibre capacity between two long distance locations, you are ultimately bringing internet capacity from ISPs and reselling it in the country."

The differentiator in delivering these services, according to Ghosh, lies in providing an enhanced quality of service, or the best latency at an acceptable price. This expertise again, "lies in the wholesale long distance business," says Ghosh.

Bypassing wholesale?

In such a stagnant market, Ghosh’s industry experience could prove valuable in exploring new opportunities in data. Unfortunately for Aircel and Ghosh, everything that his division can do to become more profitable is becoming increasingly dependent on other areas of the business.

With the increasing migration to IP, he identifies a company like Apple as the main catalyst in making elements of international wholesale completely redundant. "Apple devices have made it so easy to use the internet," he says.

"With smart devices you have applications like Viber and Facetime where you use IP end-to-end. The access device is also IP as is the terminal device. With these sorts of applications you are not touching any elements of international wholesale."

He believes there will never be a scenario where such services make a 100% migration to IP, but even a 50% take-up could see the international wholesale carrier business "completely vanish". Ghosh believes this potential loss of wholesale is more likely to occur in more advanced markets.

"It is the countries that are not advanced in such technology, and were initially slow in adopting network infrastructure where the wholesale business will survive. Countries that are modern will need to adapt to something very different."

A higher level of integration between wholesale and mobility is something Ghosh believes is essential for the sustainability of both business sectors.

This could prove sound advice if Ghosh is correct in his assessment that every telco in the world has aspirations to become an internet company.

"They have seen the immense success of Google, Amazon and Facebook, and the big boys want to replicate that success," he says. "Right now, there is an intense responsibility on the part of the telco to ensure devices are constantly connected because people are accessing the internet all the time and a bigger integration is vital."

Ghosh urges wholesale operators to start becoming more proactive in identifying which areas of the business are on the verge of collapse and how they can be replaced.

"We’ve seen the clouds form, and now it’s time to carry an umbrella," says Ghosh. "Where death is imminent in certain areas, it’s time to kill that service and replace it with a value add. We need to do this before our customers replace us with something else."


Aircel  


History:
The Aircel Group was formed in 1994 to offer affordable mobile services in India. It began operations in 1999 and in its first decade of operation focussed upon south India. In 2005 the company began an expansion and set its sights on becoming a Pan Indian operator. During October 2010, Aircel completed its footprint with presence in all 23 Indian telecoms circles.

Ownership: Aircel is jointly owned by Malaysia’s Maxis Communications (74%) and Apollo Hospital of India.

Head of Aircel Business Solutions: Chandan Ghosh began his career over 30 years ago at Xerox Corp, and has worked at HCL, GTL, British Telecom, Bharti airtel and Aircel.

Services: Aircel Business is the enterprise unit of Aircel that serves international and Indian telecoms markets. It’s services include internet access, national and international private leased circuit, global MPLS, data centre, VoIP, cloud backup, SaaS, mobility solutions and wholesale.

Network: Aircel Business connects to over 190 countries worldwide and covers the whole of India with 400 PoPs. On the mobile side, Aircel has GSM presence in all 23 telecoms circles, 3G licences in 13 circles and BWA licences in nine circles.

Topics: Aircel, Chandan Ghosh, wholesale



Comments

  • Thanks for the excellent feedback on this article. Chandan was a joy to interview and I hope to maintain our relationship for years to come.

    Kavit Majithia Sep 03, 2012

  • Chandan and Bankim both are right in their own contexts. But i dont entirely agree with Bankim since i see a wide market in the future since the business is getting matured day by day and when any business gets matured then you have a lot whole of possibilites to survive and automatically room for new entrants.

    I run KraTEL Communicaitons a Wholesale and Retail Voip and other telecom products provider based out of Germany ofcourse not as big as Aircee or Bankai but pretty decent. When we entered it was the same thought but as of now we are doing pretty well and infact even trying to help new entrants espcially in the middleast and Africa who are keen to enter in this business. Since if you do not have new entrants and new business their is no competition and if their is no competition then their is no knowledge shared or consumers educated and if consumers are not educated then their is no growth .

    But i even see pretty clear how major players want to kill the new entrants with tough terms and conditions and kill the competition so that they can monopoly which is not a good health for the industry.

    EMKAY Aug 19, 2012

  • While "wholesale bandwidth", may disappear, it will emerge in a new avatar as ultimate, more data will require more bandwidth. Bandwidth in the access which increases as we go from 2G to 4G, will also require a higher capacity backhaul and transmission networks. So probably the best strategy is to keep with the times and evolve the Network as well as the Products, sold based on the networks, in tune with the current and immediate future requirements.

    Protip Ghose Aug 14, 2012

  • Truly inspiring!

    Sourish Aug 13, 2012

  • A nice article. Even internet will require bandwidths, thus while devices could drive up internet bandwidth reducing whole sale bandwidth business, it it important to strngthen the last mile to be able to handle very large bandwidths and there seems to be a major opportunity there as Operators have to upgrade their 2G backhaul extensively, in days to come.

    Protip Ghose Aug 13, 2012

  • A ship in a harbour is safe, but this is not what a ship is built for.. way to go!!

    Abhishek Aug 13, 2012

  • I agree with Kavit, i always get inspiration from Chandan on how to take risk and grow constantly.

    Priyang Patel Aug 13, 2012

  • Very Insightful article. Mr. Ghosh truly is the risk taker. His leadership is very valueable at this difficult time in the Telecom industry.

    Anindita Samanta Aug 13, 2012

  • I am partially agreeing with chandan's view. Wholesale Voice is no more trading business as it was earlier when any new carrier was welcomed easily before one decade, since last 7 years being President & CEO of Bankai Group i am observing that international voice volume is increasing. Bankai was new entrant in Voice business and we have achieved from 100 Million Minutes PA to 5 Billion Minutes PA in 6 years with Revenue growth from 9 Million in 2006 to 90 Million in 2011 and with constant Gross margin.

    This become possible because we adapted right strategies of choosing customers, regions, vendors and controlled cost structure. Our technology business gave us tremendous value addition to win our customers and vendors and now we are literally moving towards growth in three verticals Voice carrier Business increasing 40-60% YOY. Developed our own Intellectual properties to support our existing customers and now we are entering in to Mobile Commerce Business with partnership model.
    But i am fully agree with chandan's view if someone wants to start Voice carrier business now or existing carrier wants to get stabilized their growth they need to come out of trading mentality and do something innovative, need real-time intelligent platforms which monitors and act as revenue assurance to the business and maintain top line.

    Yes the Internet Voice models like skype,Viber and other similar is direct threat for operators because they are bypassing operator's voice network but for skype and viber also profits comes from paid voice customers only who gives them remarkable profit. In my view the free minutes from these Internet Voice companies created more awareness for international calling.

    2010 Skype Revenue $860 million in total 2010 revenue, with much of that coming from 12.8 billion billable minutes of use, Of course most of Skype’s traffic is not billable, accounting for 194 billion minutes (Free) of PC to PC use.

    Again all operators should act well in National DATA network to provide good amount of quality internet to their wireless customers through 4G/LTE, International DATA companies will make deal with first 100 voice carriers to carry the international Voice traffic and carriers will act as arbitrage partner, so there will be no room for new entrant in coming years in Voice carrier Industry and market will consolidate. But at the same time small carriers who are having less than 1 Billion Minutes PA opportunity and business they should get out or diversify in to new similar businesses like, enterprise VOIP etc...

    The first 100 carriers will have great opportunity to enjoy long term growth in business but till this scenario comes they have to invest huge amount of funds to stay in first 100 carriers.

    As chandan righty said about operators but i suggest to Voice carriers they should have 5 years of forward thinking to develop in house technology as well keep Voice volumes intact growing by adopting new way of interconnect and d

    Bankim Brahmbhatt Aug 11, 2012