Telecom operators need ‘more freedom’ to control network, says Robi CEO Rajeev Sethi

Providing more freedom to the operators to control their network system will increase the quality of service and ultimately, the clients will benefit, said Sethi

Published : 22 Feb 2024, 08:36 PM
Updated : 22 Feb 2024, 08:36 PM

Telecom operators in Bangladesh should get rid of the mandatory involvement of a third party in expanding the network, believes Rajeev Sethi, the chief executive of Robi.

Sethi thinks the authorities should provide the operators with such opportunities that they have the liberty to 'control their network system from the beginning to end’.

It will increase the quality of service and ultimately, the clients will benefit, according to him.

Sethi, who leads two brands - Robi and Airtel, earlier worked as the managing director and CEO of Grameenphone in Bangladesh.

He has long experience of working in the telecom sector in India and also worked in Myanmar.

Although content with the overall competitive environment in the telecom sector in Bangladesh, Sethi perceives the tax and other controlling policies as hindrances to expanding the sector.

Instead of the regulator fixing the service prices, it should be left to the market to decide, he urged. "The market will determine its course."

Sethi recently sat down with and spoke candidly about different issues in the telecom sector.

He shed light on profit and loss, as well as on the issues that customers suffer from, like call drops. Last year, Robi raked in a record revenue of Tk 99.42 billion, the highest in its history, yet the profit after tax was relatively low at Tk 3.21 billion. Could you explain the factors contributing to this record revenue and the reasons behind the modest profit margins?

Rajeev Sethi: I think a couple of things, the first one on the record, A, this is the highest ever revenue, which is obvious for a growing company. Every year the revenue will be higher than last year. But the important part is our growth this year has been one of the highest we've ever had.

And not only in Bangladesh we are the fastest growing company, but in Asia Pacific, the quarter 2 and quarter 3 numbers indicate we are the fastest growing company in the entire region. And this in the current macro situation, where there are challenges, I think it's a remarkable performance of the company. So very happy about that.

About the profitability you mentioned, the number is around what you mentioned, 320 crores or so. This is low as we speak. Again, this is a significant increase over last year.

It's around 75%, if I remember the numbers correctly, higher over last year. We know we are not where we should be. There are multiple reasons for that.

The cost structures are very high here. And the kind of challenges which we have between the revenue and the profitability, the tax structure which we speak about, there is a minimum 2% tax, despite being a smaller company. I think those are things which are not helping us reach the profitability level which we desire.

But this year again our ambition is pretty high to continue the momentum. I cannot speak about forward-looking because we are a listed company. But hopefully, we will be able to significantly improve our profitability this year too. Robi experienced a significant increase in internet customers last year, shifting the revenue ratio from calls to data to 60:40. What drove this substantial increase in data revenue?

Rajeev Sethi: Bangladesh is still in a very unique position, where voice is still at this high level. If you look at neighbouring countries, say if you look at Thailand or India, or I come from Myanmar, I was working in Myanmar earlier. The contribution of voice is much smaller than this.
One reason for that is still there are significant non-smartphone users in Bangladesh. It's higher than other countries. The pure voice handsets. So I think that is one thing which is keeping voice higher than neighbouring countries. What’s the reason behind the sudden increase in the number of internet users? Are they shifting from other operators' services to Robi? Or do people have an increased capacity to use smartphones and mobile phones due to a rise in their purchase capacity?

Rajeev Sethi: This shift to data, I would not rather call it a shift, this increased use of data is a natural phenomenon. If you get a device which is data capable, you know more and more content is coming on data. People live their lives on data today. Yesterday I was traveling somewhere, and there is this India and England match happening. I was watching it on my device.

So more and more of those use cases are happening. And especially in a country like Bangladesh where fixed penetration is limited. Fibre to home is very very limited. Limited to only large cities. In case people have to be entertained, it's on a mobile phone. In case people have to be educated, it's on a mobile phone.

In case people have to connect with their families, anyways, that's on mobile phones. So by structure, more and more data would be used by more and more people. If anything, this will be accelerated rather than slowing down.

But the good part is voice is not decreasing. For an operator, we need to sell both. We have invested significantly in our voice infrastructure. So the voice also, in case it holds or grows, it's good for us. So thankfully voice is, I would not say stable, but it's not declining at a rate at which it has declined in the neighbouring markets, which is good news for telecom operators. Technically, we are ready to implement it. We’ve been hearing about 5G for a long time. That doesn't seem to materialise yet. What are the obstacles to introducing 5G, and how critical is it at the current stage?

Rajeev Sethi: 5G is a known technology now. It's not something which is difficult to master. Yes, it takes a bit of time to roll it out.

That is one part of it. But if we take a step back and say whenever we move from 1G to the next G, 2G to 3G to 4G, why are we doing this? It's not just a technology upgrade. At the end of the day, there are millions of customers whom we serve.

So this upgrade of technology, how does it help us serve these customers better? So I think that is the main focus for us. 3G to 4G, there was a significant use case. From 3G to 4G, the experience which normal customers like you and me had on video streaming, for example, I gave you that example of watching that cricket match seamlessly.

I was in this inauguration or signing ceremony in Mirpur Stadium. From there to my home in Gulshan, it's a 30-minute drive. I was watching that match seamlessly, not even with one second of buffering.

That is what 4G enables. That's not possible on 3G. So there's a very significant use case on that.

From 4G to 5G, the use cases from an end customer are limited. Your video streaming experience would not get dramatically different. You will still be able to watch the cricket match the way I am able to on high definition.

What 5G does is, in my mind, two specific things. First is, it increases capacity significantly. So once data volumes increase, there may be a use case for a telco to deploy 5G spectrum to increase the capacity because the data demand is very high.

The second one is, it reduces latency. Latency is when I click on this and the response I get, it reduces that. That is used in specific purposes for end customers. For example, in case I'm a gamer, we play multiple games. Not me, my young friends play that. Then latency is very important.

But again, for those multiplayer mobile games, 4G is good enough. But for other use cases, like we speak about automation, factory automation, 5G would be important. But then that's more of an industrial use case.

So, long story short, from an end customer point of view, 4G is good enough. Once there's a capacity constraint, 5G should be used. And when new use cases come in, we saw this Apple Pro, that new device which has come in.

Virtual reality and stuff like that. Those are areas where when the demand for that grows, there may be more need for 5G. Currently, the need of customers in Bangladesh, the current 4G is brilliant to support them.

I must say, it's equal to, if not better than those countries. I'm not only talking about Rovi, I'm talking about the entire industry. So, I think we should be proud of that. Having worked in India, led Grameenphone in Bangladesh, and recently worked in Myanmar, how do you evaluate the telecom sector's environment in Bangladesh compared to these experiences?

Rajeev Sethi: See, if you look at the entire telecom industry here, the good part is it's structured well. In a sense, there are three main players. There's one government operator which is small.
Three main players, which is, in my mind, the right number for a market like ours. Too many players we've seen in India, it went through a turmoil. There were 10, 11, 12 players at one point of time.

Nobody was making money. And the result was customers were suffering. So, having the right number of players is important.

I think that is the good part here. Three strong players. And what it also does is, it enables, it facilitates competition.

The three of us are supremely competitive against each other. And what it does is, ensures that the customers get a good deal. Both in terms of pricing and also in terms of service.

So, the market structure is good to enable that. So, in that sense, what BTRC should do is to facilitate that. In the past, we've seen that BTRC also went into pricing regulation and stuff like that. In my mind, that should be left to competition. In case there were lesser competitors, possibly there was a need for regulation. More of regulation.

But in case if the market is competitive, which we are seeing, then the need for regulation goes down. And from our side, there are complex situations or the considerations which we have. For example, our cost structures are very, very different.

And they are constantly changing. We need to keep all of that in mind while deploying our products in the market. So, I think one is that, in case BTRC, like it has done in the past, except for the few months in between, stayed away from pricing regulation is a good thing.

Another good part is, BTRC says that they are not a regulator, they are a facilitator. I think that's a very good stance. Because all of us are here to ensure that Bangladesh gets the best telecom services.

Because all of us know that every percentage increase in telecom penetration increases GDP by half a percentage. I think that's a benchmark I read somewhere. So, growth of telecom is a fundamental requirement for growth of the country.

So, I think that is so very important and BTRC recognises that. I think those are the good parts. Having said that, I think, unlike other countries, many other countries, here the entire telecom ecosystem is subdivided into many components.
There are too many licences here. For example, if we have to increase our transmission capacity between two locations, we can't lay our own fibre, even if we want to lay our fibre. I'm not talking about a fibre to a customer.

But even within our infrastructure, we have to connect two towers. We have to rely on a third party. And that third party is not very well developed in Bangladesh.

It's not a competitive market. So, that becomes some kind of a roadblock in our ability to deploy more infrastructure. Are you advocating for changes in the telecom sector's current scenario in Bangladesh? If so, what changes are you proposing?

Rajeev Sethi: Even, for example, if I have to connect between us and Graminphone, we can't do it directly. It has to be through an interconnect. These are very, very unique to Bangladesh. And there is no reason for this to happen.

The customers do not benefit. And our ability to offer good quality of service to the customer gets impacted because we're relying on something else. I think those are things where more unified licenses, giving operators freedom to run an end-to-end network between our customers to our systems.

We should be in a position to control that entire value chain. I think it's so very important. Because, you know, again, I'm sure you will be interested in that also. Quality of service. We speak about quality of service. Quality of service is not only dependent on the kind of equipment I deploy on my towers. From that, I have to carry all that data back to my data centre. And then send it out to the internet. Problem can happen anywhere.

I can ensure my radio equipment is the latest, the best, best capacity. But in case I do not control the transmission, I can't guarantee you a good quality of service. I think those are things which in my mind are challenges. So you don’t want the involvement of the third party?

Rajeev Sethi: It should be left open, like other markets. I'm not saying third parties should not be allowed. Obviously, they should be allowed.

But in case we can lay our fibre on our own in a more efficient manner, and we can manage our fibre better in a more efficient manner, we should be allowed to do that. For example, if you look at the tower business. Even before the regulation came in, we offloaded our towers to a third party.

Because we knew that we can't manage that well. Because our job, we believe as a telco, we are very good at understanding what our customers want. We are very good at analytics. We are very good at designing a product. We are very good at branding. We are very good at distribution.

But we may not be the best in running a tower company. That's a specialised job. It requires hundreds of people on the ground to ensure generators are running, batteries are working fine.

It's a different mindset. So therefore, we offloaded our towers to them. We were not forced to do that. The point is, in case that flexibility remains, then you are able to ensure that the quality which you are getting on those services is the best. If the third party is able to provide us the best service at a decent price, we'll take them. In case we feel they are not able to and we are able to do that better, we'll do it ourselves. Last November, operators adjusted data prices twice within a single month. Did these adjustments affect customer numbers or revenue, and if so, how?

Rajeev Sethi: I think that flexibility is important. If I put myself in a customer's shoes, which we try and do every day, the customer is inconvenienced. Because frequent changes in pricing is not loved by anyone. I mean, yes, we can talk about ourselves. We can afford to pay 50 taka more, 100 taka there. But our customers are everybody.

I mean, it's also a rickshaw puller on the street. If you go to any place, rickshaw pullers today also have a smartphone. And in my mind, their dependence on phones is higher than yours and mine.

Because in our lives, we have several other things. I have this laptop, I have a TV at home. I have several other avenues to keep myself engaged and entertained.

But for that person, mobile device is the only window to the world. And there I suddenly say, Oh, what you were buying yesterday is no longer valid. And now this is valid.

And he says, Oh, okay, I'll get adjusted to that. Two weeks later, I say, Oh, this is also not valid now. I'm changing.

Too frequent changes are bad. And in my mind, as I said earlier, it's a competitive market. Three players who are competing against each other to offer the best price, best service to the customer, leave it to us. The market will determine its course. recently, a mobile operator sought an allocation of 850 Mhz spectrum which stirred a controversy in the telecom sector. What are you thinking about it?

Rajeev Sethi: Currently, the challenge which we are seeing on 850, the way it is structured now is, if 850 in the current band, which is there, is allocated, it will cause significant interference. What I mean by interference is our customers who are there, existing customers, just because somebody else is using 850, their experience specifically on voice will go down.

They will see bad voice quality. They will see more call drops happening, which I don't think is positive for anyone. In case customers are getting, existing customers are getting negatively impacted.

I think that's the biggest challenge with the current 850. In my mind, there are smarter ways to handle that. Because if somebody is wanting 850, then the spectrum can be rearranged.
That we are moved away from that. We are moved away and our current spectrum is given to whoever is interested in that 850 band here. And we are moved up the ladder.

So that our customers are not impacted. And somebody who is wanting 850, despite the challenges of that, takes it because that's their call, I cannot comment on that. So I think there are smarter ways to do this.

And I'm sure BTRC would engage with everyone. Because it's not about one operator, it's about millions of customers who will get negatively impacted. And nobody wants that. Customers frequently complain about poor and dropped voice calls. What measures are Robi taking to address these issues?

Rajeev Sethi: So first of all, I think what we need to understand is, we use radio signals. It's not a fixed line. Radio signals cannot be 100% reliable.

It cannot be that 100 percent of the time, you pick up the phone and you make a call, it will go seamless. So that is the nature of the radio technology. That is one part.

So then there is certain acceptable amount of call drops, which are okay, for example. There are world standards to that. And in case you are below that, then you are saying that you are offering a decent quality.

Obviously, it will mean that possibly one customer somewhere may face a call drop. Our objective is to minimise it. If I remember the numbers correctly, call drops are roughly 0.5 now.
Which is the best in the industry. In fact, when we reported it to BTRC a few months back, they asked us to double check that. They were shocked to see such a good number.

So 0.5 means, 1 in 200 calls will get dropped. Which is a brilliant number. And which is much below the threshold, which the globally accepted thresholds are. So yes, call drops do happen. Unfortunately, that's the nature of the radio signals. But at the current level, it's a very low level and much below the accepted threshold worldwide.

And also what we've done is, in the recent past, we've introduced VoLTE, which is Voice over LTE. It's using our 4G spectrum to offer voice to customers. And what it does is, it significantly improves the voice quality.

You hear voice like an HD quality voice. A brilliant quality. And the call drops go down even further. With two new subsidiaries already launched, does Robi have plans to open more?

Rajeev Sethi: No, I don't think we will be needing more subsidiaries at the moment. And if I may take this opportunity to explain why did we do that. I think it's important to focus on that. It's not just creating more companies. You know, if I look at just telecom connectivity business, you and I are end consumers. We use our phones for our personal business.

Then there are enterprise customers. Customers like Walton, Brand, anybody, any bank. Their need is different from the need you and I have.

On basic connectivity also. Apart from that, they also need solutions. Solutions can be on basic ERP solutions, for example, or security solutions, or any such thing, which is suited for that industry and that company.

So what I'm trying to say, the nature of their need of that specific customer segment is different from a mass consumer segment. And therefore, it requires a different kind of a mindset, a different kind of an organization, a different kind of skill set from the core telecom business. And we thought it will make good sense for us to create a separate company, which is solely focused on that.

Their entire life depends on serving the enterprise customers in the best possible manner, including connectivity and other solutions, including cloud. The idea is to bring even more focus on that. To be honest, within the core telecom business, because it's a small percentage of business, it doesn't get the attention it deserves.

Creating a separate company, giving its separate CEO and its own management will bring more focus. And I believe Bangladesh has significant opportunity in enterprise business in the next few years. I'm seeing in India, I mean, one of our shareholders says, the enterprise business has multiplied.

I do not remember the exact number, but it's I think 3x or 4x in the last five years. So that's the kind of growth which is happening. Because the solutions which I spoke about are becoming more and more mainstream amongst the enterprise segments. The government is talking about building a Smart Bangladesh. How do you intend to contribute to this initiative?

Rajeev Sethi: A lot of smart people here [in Bangladesh]. So I think it's blessed with that. To be honest, the kind of talent we have here is brilliant. So I say it is making a smart Bangladesh for smart people and using smart people.

So it is the talent which is here. How do we leverage that better as we move forward? I would also add to that is smart regulations. I think if all of that comes together, there is no way smart Bangladesh dream could not be achieved.

From our side, we are continuing on this journey, which means the right kind of investment. We are doing that. Even this year, we would see significant investment in further improving our network capacities.

We did last year too. And I'm happy to tell you that from last year when we ended, we offered the best experience on data. I mean, there are different claims being made by different people about size, biggest, fastest, stuff like that.

I'm not going into more details, but I can tell you confidently on internet, Urobi offers the best experience. Period. All components put together.

I think that is something we'll continue to do. And we'll continue to invest in that direction. And the other part which I, the new companies which you're talking about, those will also enable us to fulfil that dream of Smart Bangladesh.

Because Smart Bangladesh will also need smart enterprises. Smart enterprises will need smart solutions. And that is what Accent Tech will do for us. We believe that as a company, which is into business, and business purpose is to earn money. That is why we are into business.
That is one part. But the core purpose of Telecom is to positively impact societies, wherever we work. And I think that is what gives us so much of meaning to our work.

That is what excites us. Because, I mean, I can be selling anything. I'm not disrespecting any industry, but I can be selling a soap and a shampoo and a cigarette and anything.

That is fine. That also serves a purpose. But the way Telecom industry touches people is huge.
And I think that gives meaning to our job. And leveraging this platform to enable people who may not have adequate opportunities in life, we spoke about girls in madrasas, is something which we are so happy to do. In fact, I would say that we are not doing enough.

We should be doing more of that. And that is what we are trying to do. Getting more and more of these opportunities to work with partners who are into this field to ensure that everybody gets a good platform.

It doesn't really matter whether you are in Bogra or you are in Boston. It really doesn't matter. You are in Singapore. If you have an idea, if you have a thought, if you have a need, our platform should be in a position to provide you that opportunity. And that is what keeps us excited.