Spice’s tryst with independence

Prashanth Hebbar and Ranjeet Rayen

BANGALORE: Sean Dexter CEO of Spice Telecom is a much-harassed man. One question that pops out on him from every corner is when are you going to be merging with so and so. To which he parrots out, "I am not going to comment on that since we do not react to rumors."

Rumors they may be but it does offer a logical scenario for small cellular operators to protect their turf against the invasion of a national player such as Airtel, Hutch and BSNL. CIOL, however, steered clear of these imminent questions to focus on the underlying dynamics of a local operator. This is part of a occasional series of discussions with CEOs of small cellular operators.

Perhaps Dexter’s most stoic defence comes in his listings of a small player USPs. Opportunities to exploit local markets, absence of or negligible organizational politics that may hamper quick decisions and zero worries on national branding. "We do not have to run ads on national network TVs for that matter," says Dexter.

Dig deeper into the CEO’s mind then you will see the glitter of his strategy. "Pricing hasn’t seen the bottom yet," says Dexter indicating Spice has pockets deep enough to cut further. Not that the Karnataka-Punjab operator is depending on such price wars to win the battles. Spice recently unveiled a 32K SIM card in the place of 16K SIM card. For onlookers it may seem to have come late by at least eight months when compared to Airtel for instance. Just the time for Dexter to reveal that his 32K SIMs are the only ones that can customize user interface and menu options depending on the theme.

Talk of Reliance Infocomm’s promise of "Kabhi Mobile, Kabhi Computer," Dexter comes up with a classic dismissal, "I am sort of a data heretic. I do not believe that the guy on the street who is using my mobile wants to watch a cricket match on his small cellphone display. It is just not possible." Over a period of 6 years, Spice’s marketing department has churned out enough data on exactly what kind of data is acceptable to an average cell user.

This insight on data for mobile users brings us back to the 32K SIM. With the launch of the enhanced memory SIM, Spice is offering a wider variety of Value Added Services. They are both SMS based and voice based services.

In the absence of a significant increase in revenues from voice calls, data services and VAS seems to be Spice’s big bet for the future. The 32K SIM is a key element in Dexter’s strategy. As an introductory offer older SIMs are upgraded to the new one at no cost. Later as the services based on the new SIM picks up steam, Spice can start charging the subscribers for usage.

Spice has seen several upheavals in the Indian cellular market. It understands the launch time euphoria of price cuts and freebies. "Reliance has made a promise of probable prices," says Dexter unimpressed and adds candidly, "Average consumer is no muck." His feeling towards BSNL is no different. However, he concedes, "BSNL has brought legitimacy to the cellular service at least with a segment of the consumers whom others couldn’t address."

He explains his displeasure with the TRAI’s handling of the WiLL-Cellular interconnect issue by a simple statement, "I do not know why regulator should get into issues like affordable and accessible services to masses. They should be encouraging competitive environment."

The time then comes to ask the question everyone asks Dexter. Will Spice Telecom merge with any other player? He chooses not to answer since we agreed he could. However, the writing on the wall is clear. If Spice Telecom wants to survive the game in the short term then it requires funds to grow and sustain. As a bigger group with larger subscriber base, Spice can get a better leverage against its competitors.