Arun Gupta is the CEO of United Telecom Limited (UTL). He did his MSc in Engineering (Advanced Electronics) and joined the prestigious Indian Telecom Service in 1982. While he also holds a MBA in finance, he is an international expert on digital electronics and was the architect of the first national internet backbone of India. He spoke with Terence Lee of THT Perspectives on the road ahead for UTL.
What are the biggest challenges for the telecom industry and UTL?
Telecom sector requires 24-7 uninterrupted power supply. With power cuts of as long as 16 hours per day, it is a challenging task
to maintain services. It not only inflates the cost of operations but substantial capital investment as well and in power backup
systems become indispensable. Notwithstanding that, the UTL network elements are powered by the power backup systems which are sufficient to cope with the need of uninterrupted power.
An important threat to telecom sector is the grey route operations in case of international calls. It has an adverse affect on the revenues of the telecom operators. In addition, the revenue accrual to the exchequer is also siphoned off. Effective steps need to be taken in the direction of curbing such illegal operations. Reducing the international calling rates, ensuring the requisite through the legal routes, et cetera will pave the way for elimination of grey route.
In today’s world, growth of telecom sector depends on the growth of wireless networks, which in turn is completely dependent on the frequency spectrum. The telecom sector, therefore, is required to be facilitated with sufficient frequency spectrum by curbing its hoarding.
What are your future plans for improving services, prices and extending your reach in Nepal?
Our continuous endeavour is to provide affordable and quality services to the masses. Our services are presently available
in every zone, spread over 44 districts from Mechi to Mahakali, which could only be possible due to the valuable feedback and
support from our esteemed customers. We are in the process of further strengthening our network as per customer demand. The network operates 24-7, providing interruption free service, even during severe load shedding. We have various plans, including expansion of the network in more districts of Nepal.
What is the latest status of the royalty row? How do you plan to tackle this issue?
The initial royalty commitment to the Government of Nepal, as a part of our licence, was based on the projected earnings of the
company with the presumption of implementation of licencing provisions in totality by the licensor. This did not happen and hence
the company has been suffering losses from the beginning. Subsequently, licences were awarded to several other telecom operators and the company lost the benefit of being the first private player. Due to cascading effect of delayed or non-implementation of licencing provisions, UTL continued to suffer accumulated losses and was unable to generate projected revenue as per business plan.
All other telecom operators, who did not face problems as UTL, are paying the royalty only at 4 per cent of their gross revenue. It is evident that the level playing field was not available to UTL. The royalty at 4 per cent of gross revenue, at the same rate as other operators are paying, has already been regularly paid by the UTL up to the financial year 2009-10. Government of Nepal decided in March 2006 to waive off the committed royalty in excess of 4 per cent of the gross revenue for the first three years of licence period 2002-05. It was also decided that the royalty for 2005-06 would be decided on the same basis as the previous three years, and that the future royalty rates would be re-negotiated, taking into account the adverse impact of delay in regulatory and operational problems faced by UTL. We are hopeful that the Government of Nepal will initiate the process of re-negotiation of the committed royalty in accordance with the March 2006 decision.
How do you see the competition in the telecom sector? What are the major areas that you plan to work on to compete and increase market share?
The competition in the telecom sector is growing rapidly. The existence of any individual players of telecom sector has to be in terms of both quality and price of the service offered. The customer base is increasing day by day, but the spectrum allocation does not match the telecom operator’s need. So, the government needs to strive to provide the additional spectrum required for the expansion of telecom network in Nepal. UTL, like other operators, is planning to cater to the needs of the corporate institutions like banks, colleges, NGOs, INGOs, government and private sectors, et cetera through Closed User Group (CUG). We are planning to expand our services in rural areas as well.
What kind of policies would you advocate to make the telecom sector more viable and vibrant?
Globally, the telecom sector has significant contributions towards gross domestic product (GDP) of any nation. The business environment should be conducive to the growth of the sector; and the facilitations should match the requirements for smooth
expansion and customer-oriented services. We do have faith and hope that whatever environment is offered will be competitive, problem-free and seamless. We will work towards offering better value services to the consumers than what is currently available.
Where do you see UTL in the highly competitive telecom sector? What are your plans for the future?
UTL has provided various telecom services at the lowest rates. Our products include unlimited internet service at just Rs 500 plus tax, wireless internet facility, national lease line circuits, international private lease circuit, et cetera. We have been the pioneer in providing lowest rates of international calls amongst all telecom operators, enabling families in Nepal to talk to their loved ones living in other countries.
UTL charges only 75 paisa per 15 seconds for calls to India. For calling America, Malaysia, Singapore, China, Hong Kong, South Korea, Bangladesh and Canada, call rates are just Rs 4 per minute and Rs 12 for calls to Qatar. Our U-SIM is provided at just Rs 267; wherein one gets the talk time worth Rs 100 (for any network world over) and SMS worth Rs 100. With recharge of Rs 300, one can get one U-SIM free with Rs 150 talk value for any network in Nepal; UTL to UTL local calls at 50 paisa per minute, 30 paisa per SMS and STD at Re 1 per minute. We have also introduced the flat call rate across the nation — 99 paisa per minute within UTL network and Rs 1.50 per minute to any other network within Nepal.
UTL subscribers in Nepal now have the advantage of choice of handsets available in the market, congestion free network, excellent voice quality and lowest call rates. UTL will come up with new services very soon and we will offer even better value for money to our customers. UTL strives to be the first choice among all the telecom operators for the people of Nepal.
What kind of CSR activities is UTL involved in?
UTL has invested Rs 6 billion worth of huge investment and contributed Rs 2.44 billion to the exchequer in terms of taxes,
duties and levies by the fiscal year 2009-10. The revenue generated from operations has been reinvested in Nepal only. As
our corporate responsibility commitments, along with our advertisements, we have started disseminating messages of
national interest on social issues.