Welcome 2025

As 2024 dissolves into a revelrous night,

Sunrise'2025, shall be a beholding sight.

With trepidation, though, World awaits "Tariff Trump",

Even while China & EU long for an economic pump.

Putin struck with Ukraine; Assad flees Syria,

President Yoon impeached in South Korea,

Netanyahu seizes opportunity in Golan heights,

While Turkey moves to curtail Kurdish rights.

With Truncated majority, in Japan & India, parties win,

Detente with China now seen as a win-win.

Bangladesh-Pak Nexus and Manipur in flames,

India faces challenges in neighborhood games.

Libya the new battleground; Europe's right-wing rise,

Volatile uncertain world the consequent high price.

From Military, Biological & Trade wars, conflict merchants' gain,

Hope our prayers for a Happy world, in 2025 don't go in vain.

Hat Tricky: Ab Ki Baar Coalition Sarkar

 

While Prime Minister Modi, set an ambitious slogan for the NDA of “Ab Ki Baar 400 Paar” with the BJP targeted to win 370 seats on its own, he has to remain content with a number of around 240, against 303 seats won in 2019. Aided by his pre-poll allies adding around 50 seats more, the NDA reaches a figure of around 292, higher than the milestone of 272 needed to form a government. BJP on its own won higher no of seats than the opposition INDIA (Indian National Developmental Inclusive Alliance) block at 234 with the Indian National Congress – its largest constituent – winning 99 seats – a resurgence, though, from the 52 seats that in won on 2019. The mandate for the BJP is thus clear is to form a coalition govt.

73year old Modi shall, thus, stake claim to power at the centre for the 3^rd time equalling the record of the first Indian Prime Minister, Jawaharlal Nehru. While he had set a figure of 75 years for retirement, in 2014, to edge away elderly statesmen within his party, the same rule may not apply to him. In fact, Home Minister, Amit Shah, has said that the BJP shall be led by Modi in the 2029 elections too.

The spirited fight by Akhilesh Yadav, with 37 seats, in UP & Mamta Banerjee, with 29 seats, in West Bengal changed the contours of the elections. The SP & TMC thus emerged as the 3^rd & 4^th largest parties. That the DMK would do well, in Tamil Nadu, against a fractured opposition was always on the cards & the results did not disappoint. On the other hand, the Central belt of India, from Gujarat in the West to Odisha in the East with states like MP & Chhattisgarh in between, blessed the BJP with nearly a clean sweep accounting for 84 of the 87 seats – 33% of its total no. of 240.

Intriguingly, nearly all pollsters got the exit poll nos. wrong, denting their credibility. The huge swing in the stock markets post the release of exit polls & the slump on 4^th June post the release of electoral results, trapping amateur retail investors in the bargain, shall keep the rumour mills churning.

BJP Strategy:

The figure of 370 was deliberately chosen as a “message” to enthuse the cadre “messenger’ & remind the electorate about the abrogation of Article 370 in J&K, to buttress the BJP’s National Security credentials. The consecration of the Ram Temple at Ayodhya, in Jan 2024, was specifically timed for the General Elections. Unfortunately, for the BJP, Balakot, in 2019, appears to have created a stronger impact on voting as compared to the 2 aforementioned issues that formed the bedrock of the BJP campaign. Mid-course correction & a pivot did not help either.

Modi, now, would have to lean on the clutches of at least 2 of his allies – the TDP with 16 seats & JD(U) with 12 seats. Both Chandra Babu Naidu of the TDP & Nitish Kumar of the JD (U) have a history of allying themselves with the opposition earlier & hence cannot be trusted to give unconditional support.  Both of them are experienced politicians, who had asked for “special Status” for AP & Bihar earlier & are capable of extracting their pound of flesh. “Special status”, though, is unlikely to be conceded as fiscal incentives to a particular state could make investments in the neighbouring ones unattractive. Now that the BJP has won Odisha, “special status” to either Bihar or AP would strictly be a “no go”. Ministerial berths & financial packages may be the barter on offer.

Leading a minority government, is a fresh experience for Modi, habituated as he always was in leading majority governments, for 12 years, as the Chief Minister of the state of Gujarat (2002-14) & 10 years as PM (since 2014). He will now be forced either to transform himself, into Atal Bihari Vajpayee avatar, to lead a coalition govt., or nudge the break up of some opposition parties, luring them via the crumbs of office or threatening them via the Damocles sword of the Govt. - agencies like the ED, CBI etc. It will be interesting to see which path he pursues, especially after the electoral reverses he suffered in Maharashtra, as a consequence of the salami slicing of the Shiv Sena & the NCP. Every leader is interested in leaving behind a favourable legacy & Modi, especially in his 3^rd term, would be more so.  

The Main Takeaways from the elections:

·         Without internal contradictions between the Central & State level leaders in UP – perhaps, related to succession planning in the post Modi era – clashes between Thakurs vs Rest of BJP support base within the State & the absence of RSS cadre on the ground, the BJP would have won 30 seats more in the state, helping it cross the 272figure mark on its own. The Double Engine Sarkar of charismatic leaders Modi & Yogi, supported by a well-received Ration scheme, lost out to the “constitution under threat” propaganda of the opposition – that appears to have attracted more Dalits into the fold who feared the loss of Reservation Benefits - & the badly received “Agniveer” scheme, that entails absorption of only 25% of the inductees, into the Armed Forces, after 4 years.  BJP President JP Nadda’s controversial statement that the BJP can do without the RSS, would continue to haunt them & a reconciliation could be attempted to prevent recurrence of a similar demoralising results.

·         That the BJP lost Faizabad - that houses the temple town of Ayodhya - despite the emotive Ram Temple issue – highlights the success of the new found caste calculus of the SP of fielding a Dalit leader in a non-reserved constituency. Similarly, the loss of Smriti Irani from Amethi to KL Sharma of the Congress.

·         The salami slicing of Maharashtra Parties – Shiv Sena & NCP – appears to be have been rejected by the electorate with Uddhav Thackery & Sharad Pawar faring better than Eknath Shinde & Ajit Pawar. Hopefully, this shall impose some moral rationality on the BJP going forward.

·         While the rise in voting percentage, in Jammu & Kashmir, from ~25%, since 1989, to > 50% is welcome, the election, from Baramulla, of Engineer Rashid – arrested under the Unlawful Activities (Prevention ) Act & lodged in Delhi’s  Tihar jail -  could raise challenges as do the victory from Khadoor Sahib, of Amritpal Singh – Head of the Pro Khalistan Waris Punjab De, locked up at Dibrugarh, Assam, under the National Security Act & Sarabjit Singh Khalsa, Beant Singh’s son from Faridkot (Reserved) constituency, Punjab. Beant Singh was the Sikh bodyguard who assassinated Indira Gandhi in 1984. An electoral victory may not hasten their release from prison though.

 

Expectation on Way Forward:

·         The Prime Minister’s victory speech emphasizing on the necessity of “attacking corruption” indicating the likely replication of Xi Jinping’s playbook, in China, to strengthen his position further.

·         The angst of the electorate in the Hindi heartland on the “Agniveer” scheme could force the govt to rework on the scheme although, in all honesty, it was a sane attempt at rationalizing Defence expenditure & reducing the average age of the frontline soldiers.

·         The 2.1 Lakh crores dividend from the RBI, higher by 1.25 Lakh crores (~0.4%) of GDP, announced has the potential to reduce the fiscal deficit from 5.6% to 5.2% close to the 5.1% announced in the interim budget. Hopefully, the govt. continues with its fiscal glide path & capex drive rather than be driven astray by the electoral results & allies demands.

 

Conclusion

It is to the credit of the Indian electorate that they have strengthened the hands of the opposition – a necessity for a vibrant Democracy. Eternal vigilance is the price of Democracy with an activist civil society, media & the Judiciary too acting as a watchdog.

At the same time, by restricting the Congress to 99 MPs & the INDIA alliance to 234, the electorate has expressed no confidence in them in leading the govt. By reducing the BJP to 240, albeit higher than the INDIA alliance’s 234, but less than the magic fig. of 272, the message, clearly, is a directive to run an inclusive govt. based on the principle of consensus. While an attempt to break the opposition ranks & parties to sail beyond the 272, is always an enticing, though morally reprehensible alternative, the saner preferable option would be to converge on a Common Minimum Program, revitalize the moribund Parliamentary Standing Committee System to arrive at consensus-based decision making. In the days ahead, it will be interesting to see how each of the Parties draws on these lessons & strategize their way forward.

Lessons on Leadership Series: Julius Caeser

Perusing the biographies of great achievers in history often offers distilled knowledge not only on “what to do” but also on “what not to do”. After all, as John Maxwell, the best-selling American author on Leadership once averred “It is said that a wise person learns from his mistakes. A wiser one learns from others’ mistakes. But the wisest person of all learns from others’ successes”.

Julius Caeser is one such magnificent historical figure whose life is a story of great resilience, fulfilled ambition, despite suffering from epileptic attacks & finally a tragic death on the ides of March. 

“Veni, Vidi, Vici; I Came, I Saw, I Conquered”                                    Julius Caeser 

Brief History of Caeser:

Setback 1: Born in 100 BC, Julius as a kid was stripped of nobility as his father ended up supporting the wrong side in a civil war & hence was forced to start his career as a lowly soldier. A brave soldier & a good leader of men, he rose through the ranks to become a key lieutenant of Crassus – the richest man in Rome - & helped him suppress the revolt of the slave army led by Spartacus.

Lesson 1:

(a) Effectiveness on job accords upward mobility, even if denied / withdrawn a silver spoon.

(b) Emerging an inspiring leader of people & making self, indispensable to one’s boss generally assures success.

Crassus returns to Rome, triumphantly, hoping to be made Consul – the powerful Chief Executive of the Republican Government & the Senate and Commander in Chief of the Armed Forces – only to find his opponent Pompey claim credit for the suppression of revolt.

Post the successful campaign, Crassus wanted tax breaks for his businesses while Pompey wanted lands for his legionnaires & with each undercutting the other led to a stalemate in the Senate. Preservation of self-interest & taking care of one’s support base is not a new occurrence after all.

Caeser took advantage of the stalemate & offered to have both the proposals passed by the Senate, if made Consul. He also offers his daughter in marriage to Pompey to cement the alliance. Starting off as a frontline soldier he had by now, in 59 BC, manoeuvred to become part of a Triumvirate, ruling Rome – alongside Crassus & Pompey.

Lesson 2: Life offers opportunities to all but only the successful seize them to fulfil their destiny.

That Caeser uses local goons to silence the intransigent Senate into passing the proposals is indicative of his dictatorial tendencies – a precursor to what he was to eventually become. He uses the profits from the businesses run by the triumvirate to buys a palace. Ergo, power leading to upward mobility & property acquisition is not a modern phenomenon.

Setback 2: By 58 BC Crassus & Pompey strike back, strip him of his position & reduce him to the status of a Governor of a distant province Hispania (Spain). Undeterred, Caeser, creates a fresh opening, attacking Gaul – present day France, Belgium, Switzerland & parts of Germany - albeit without the Senate consent & occupies a territory that had always eluded Rome. He reckons that a Military success & consequent land & treasure conquest, shall bring him back into the reckoning.

Lesson 3: Success awaits those who convert adversity into an opportunity

Caeser’s campaign in Gaul is the stuff of a legend cementing him as one of the greatest strategists the world has ever seen. His surprise attack on Gaul, as part of his “Divide & Rule” policy prevented unification of different tribes under a single leadership. Spurred on by the success, he cuts himself off from the Roman Logistics chain & marches forward towards further conquests till he meets his match in Vercingetorix, who initiates the “scorched earth policy” to deny him food supplies, even while issuing a clarion call to the other Gaul tribes to unite. Even the best, encounter, at least once in life, competition that makes one a better & sharper version of self.

Caeser, along with his Lieutenant Mark Antony, return the favour by building a 11-mile-long wall around the town of Alesia - where Vercingetorix & his troops were stationed. Hearing of Gaul reinforcements coming in, Caeser builds another wall around the first one, with his troops protected between the two walls. He does not think like most Generals would have opted for a retreat, especially, when the opposition enjoyed a more than a 2: 1 numeric advantage. Caeser led a pincer movement vide an outer wall breach & disintegrated the invading Gauls’, forcing their retreat, before taking Vercingetorix captive.

Lesson 4: Out of the box thinking, calculated risk taking as part of strategic leadership key ingredients of success.

Caeser, now focusses on image building, dispatching the “Gallic Commentaries” describing his victories in a neutral third person to create an image of a “hero” back home. Treasure is dispatched to be spent on free food to the Roman people, gladiatorial games & festivities – akin to bribery – to enhance his popularity & he succeeds only to create unease amongst his opponents.

Crassus, not a great military strategist, in a search for competitive relevance, tries to replicate Caeser’s success in the Eastern sphere, only to die in Parthia (Persia). It is important for leaders to be self-aware of their strengths & weaknesses. Not sticking to one’s core competence & indulging in delusional campaigns only leads to sorrow.

On the contrary, Pompey, the new Counsel, a great general & a consummate politician, slyly influences the Senate to applaud Roman soldiers’ success in Gaul but order stripping Caeser of his command & instructing him to stand trial.

Lesson 5: Unbridled Marketing of self always risks creating avoidable powerful enemies.

As Caeser “crosses the Rubicon” – a river in northern Italy, in 49 BC, Pompey & the Senate abandon Rome & flee towards Brundisium, a port in South-East Italy, where ships take them to Pharsalus, Greece - where Pompey’s legions spread across the Republic - & not in Rome - had been ordered to converge to take on Caeser.

Instead of taking over Rome & announcing a pyrrhic victory, Caeser changes course towards Brundisium to cut off Pompey – to finish the challenge once & for all - but fails by a whisker. Undeterred, he orders his troops to make boats, lands in Greece & defeats Pompey, forcing him to flees to Egypt.

Brutus, a senator & son of Caeser’s mistress, Servilia, is however pardoned despite siding with Pompey. Ironically, much later, Brutus is part of the cabal that assassinates Caeser. No wonder, leaders prefer flawed followers who are loyal, to honest people with questionable loyalty.

Asking Mark Antony to return to Rome & maintain order, Caeser pursues Pompey.

Lesson 6: Focus on goal & tenacity often attracts success.

Setback 3: On reaching Egypt, Caeser is presented with Pompey’s head by the Pharoah Ptolemy, wanting to endear himself with Caeser & seeking his support in his war against his estranged wife Cleopatra. Caeser refuses & is imprisoned.

Cleopatra releases Caeser & with his support wins the war against Ptolemy. An intellectual & a linguist, Cleopatra attracts Caeser’s interest & they marry.

In 46 BC, on hearing that Mark Antony, a valiant soldier, but not an able administrator, was unable to control food riots, Caeser returns to Rome. He offers clemency to the Senate - to secure some noble Romans to his side to run an efficient administration – with his appointment as a dictator for 10 years, as a quid pro quo, in contravention of the Roman constitution that had a provision for 6 months only. He appoints Brutus as Governor of Gaul & Rome & leans on him for legislation & governance, leading many to believe that he was the chosen successor.

He restores order to the Senate, sets in place a good Public Distribution System & keeps the public engaged in gladiatorial games. He creates jobs by building Temples, Libraries, & a New Harbour, initiates reforms by introducing the solar calendar & offers an inclusive outreach program of citizenship for the people of Gaul - not treating them as prisoners of war.

Lesson 7: Great Leaders are not only brilliant strategists but able & inclusive administrators too.

Cleopatra, meanwhile, arrives in Rome, with Caeser’s son Caesarion & likely plants, in his mind, the seeds of monarchy, nipping in the bud Brutus’ political ambitions. Caeser, thereafter, exhibits narcissistic traits, building statues of himself alongside Roman Gods, declaring his birthday as a public holiday, wearing a Purple Robe, once reserved for Roman kings & declaring himself dictator for life. That sets for his assassination & the famous “Et Tu Brute” on 15^th Mar 44 BC.

Conclusion

Despite, suffering the consequences of the wrong choices made by his father, Caeser’s rise was predicated on his relentlessly pursuit of his ambition to become Counsel for Rome. It is not surprising, therefore, that success embraced him not once but twice. A brave soldier, a still greater leader of his men, a brilliant military strategist with an ability to think out of the box solutions & an able administrator he definitely was, but his propensity for unilateral action marked him out as a person with a dictatorial tendency – a trait acceptable for the military field, but not while running a civil administration. In his later years, he descended more into narcissism even while suffering from epilepsy. It was Rome’s tragedy that the civil war that followed Caeser’s assassination led to the destruction of the very Republic that people like Brutus tried to protect. Caeser’s nephew, Octavius Caeser, became emperor, in 27 BC.

Lesson 8: The road to hell is often paved with good intentions

Interim Budget of FY 2024-25: Financially Prudent, Poll Ready sans Fireworks

 

Finance Minister, Nirmala Sitharaman, presented a surprisingly austere, fiscally prudent, political budget, a vote on account, before the impending general Elections. The less than 1 hour speech, was bereft of big bang announcements, unlike the last interim budget of FY 2019-20, presented by Piyush Goyal, that had the PM Kisan Scheme of Rs 6000 each, benefitting around 12 Crore Indian Farmers & a Tax rebate of Rs 12,500 for the salaried class, earning under Rs 5 lakhs, helping them become “tax Free”. Write off of pending taxes up to Rs 25000, per head, for cases between 1962-2010 & Rs 10,000 for the period 2011-14 was announced, through its impact on polls is difficult to predict; it will help clean the Income Tax books though.

Some announcements for the segments identified by the PM under the Acronym GYAN (Garib, Yuva, Annadata, Nari) - as the focus of this government, as a counter to the caste census demanded by the opposition – was expected but the FM merely reiterated the existing schemes, without adding any new pronouncements.  

It was a “political budget” that promised a White Paper on the mismanagement of the economy prior to 2014, & listed the achievements of the BJP, over the last decade. Expect the white paper to be weaponized during the elections.

A financially prudent budget it definitely was. The Revised Estimate (RE) for the Fiscal Deficit for FY 24 was lower at 5.8% Vs the Budget Estimate (BE) of 5.9% & pegged at a still lower 5.1% for FY 25, in line with achieving the glide path of 4.5% by FY 26 – a prudent macroeconomic strategy against the backdrop of a volatile global environment. The drop in Gross Borrowings, therefore, to 14.1 Lakh crore & Net to 11.75 Lakh crore, to “crowd-in” Private investment, was rewarded by the bond Market, with yields dropping by 10 basis points, akin to a Rate cut & Banks gaining, expecting a Marked to Market (MTM) Treasury gains.  A sovereign ratings upside is not expected, though, as the govt. believes that the International Rating agencies continue to remain biased.

The Govt. may still surprise with off budget announcements:

·         The free food grain scheme for the 80 cr. Garib populace has been extended, for another 5 years, pre-budget - to aid the marginalized suffering from a K shaped recovery.

 ·       In Sept 2023, the Women's Reservation Bill, granting 33% reservation for Nari (Women), in Lok Sabha & State Legislatures was passed by Parliament.

·         Expectation of an inflation adjusted upside announcement for the Annadata (Farmers) from Rs 6000 to Rs 8000 was belied though.

An increase in the capex budget, to a perceived auspicious number of 11.11 lakh cr. (3.4% of GDP), is however welcome ­ - as public expenditures multiples are large - as is the Tax to GDP ratio rise to 18%.  A 1 lakh cr. scheme for rooftop solar, for 1 crore households, to enjoy 300 units of free power per month & sell the excess, thereafter, to the grid, & earn a potential Rs 15000 per annum, which the Secretary TV Somanathan, claimed has a potential to create 1 crore installation & maintenance jobs in principle sounds good in the absence of details, as do the Long-term interest free loans with a corpus of 1 Lakh cr. for funding R&D Budgets. Interest free long term capex loans to states of 1.3 Lakh crores – - an extension of an existing scheme - is, however, welcome, as is the extension of certain sunset clauses. The preferential 15% Manufacturing tax rate, ending on Mar 31^st2024 & has, rightly, not been extended, as corporates too cannot seek unending timelines.

The Numbers

 Takeaways:

·         Nominal GDP Growth from 273 Lakh Crores in FY 23 to 297 Lakh crores in FY 24 - a growth of  8.8% & real GDP growth of 7.3% projected - indicates presence of a low inflation deflator. A higher inflation deflator would reduce Real GDP & challenge the "Fastest Growing Large Economy" tag. Tax Revenue grew by 10.7% (1.22 Multiple of Nominal GDP Growth of 8.8%) 

·        A Nominal Growth of 10.5% from 297 lakh crores in FY 24 to 328 Lakh cr. in FY 25 & Tax Revenue growth at 12% - a multiple of 1.15 projected, close to the 1.22 multiple of the previous year - a rational no. against the backdrop of a likely drop in Excise Revenues. In May 2022, Excise Duties on Petrol & Diesel were reduced by Rs 8 & Rs 6 per liter respectively & a further drop as a poll sop, masquerading as an attempt to tame inflation, is not unlikely.  

·         Capital Expenditure as a % of the Budget goes up from 17.6% in FY 23 to 23.6% (Rs 11.11 Lakh Crore) in FY 25 which is welcome.

·         Effective Capital Expenditure has increased to around 31% in FY 25 - about Rs 15 Lakh Crore (11.11 + 3.85 Lakh cr. as Grant in aid for creation of capital). Add the likely 3.5 - 4 lakh crore PSU capital expenditure loads up to an impressive figure of around 18.5 Lakh cr. which is impressive.  

·         Primary Deficit which used to near zero, pre-Pandemic, has moved into positive territory which needs to be addressed.  This could also be since off-balance items have been included in the budget since, leading to more transparency though.

The Concerns

·         India spends 25% of its total Budget of 47.65 Lakh Crores on Interest payments, 16% on Security - 13% on Defense & 3% on Home Ministry - & 2.4% of communications, which are central subjects. While One Rank One Pension (OROP) increased the Defense Pension outgo, the Agni Path scheme, launched in 2022, is an attempt to rationalize the pension payout & lower the median age of the armed forces. Reduction in Central debt, as a % of GDP, & hence interest outgo should be the prime aim of the government, going forward.

·   About 2% of the Budget goes towards civil pensions & 8% towards subsidy. The New Pension Scheme NPS 2004 was an attempt at reducing civil pensions apart coupled with the steady decrease in central government & PSU employment since 1996.

·      With around 31% of Budget as Effective Capital Expenditure & with 53% across the aforementioned items, leaves only around 16% for all other Ministries, nullifying the oft repeated argument that the size of Govt. is large.  In fact, India needs greater state capacity even as we refrain from creating white elephants.  The example set by Government of Singapore is a good template to follow.

Furthermore:

 ·         In a volatile Northern & Western border scenario & with China’s India encirclement encompassing Maldives too, the dip in the Defense Expenditure is inexplicable.

·         While weeding out bogus beneficiaries to rationalize subsidy is always welcome, the steep drop in nos. for 2 consecutive years, is troubling, as rural distress is palpable with the ill effects of El Nino & the increase in the no. of people dependent in Farming increasing from 20 cr. in 2019 to 24 cr. in 2021 due to the pandemic, impacting incomes.

Conclusion:

Nirmala Sitharaman, equaled Morarji Desai’s record of presenting 6 consecutive budgets & shall be remembered for launching the 15% preferential Tax on Manufacturing & reducing corporate taxes to a competitive 22%, in 2019. Both were off Budget announcements & those who aver that her interim budget lacks “fireworks” should not be surprised if the aforementioned trend continues.

Launch of the Production Linked Incentive (PLI) Scheme in 2020 & bringing in off budget items into the General Budget, during the Pandemic Times, when Fiscal Deficits of all countries worldwide were rising - and Rating Agencies were looking away - timed in greater transparency. Her latest Interim Budget sans fireworks is definitely “financially prudent” as a “Vote on Account” ought to be.

Airtel Versus VI Versus Jio: Differentiation on Strategies

 

The Indian Telecom space has shrunk into a 4-player market – with stronger private players, Airtel & Jio pitted against financially weaker players, Vodafone Idea (VI) & BSNL + MTNL in which the govt., incidentally, has stakes too, Other-players like Tata Teleservices, ACT, Tata Play, Hathway etc. continue to operate in significant yet specialized spaces. Jio meanwhile differentiates itself with Airtel via its Stand Alone (SA) 5G rollout, while Airtel’s NSA (Non-Stand Alone) rollout has led to cost optimization.

Even as the stronger players are competing in the 5G space, VI continues to suffer a funding winter, impeding even its 4G expansion drive. BSNL, meanwhile, has secured a GoM (Group of Ministers) clearance, in May 2023, to issue a PO (Purchase Order) to TCS for supplying a home grown 4G equipment solution, manufactured by Tejas Networks, for 1 lakh sites & managing the same over the next 10 years; 20% of the sites shall be deployed by state run ITI. This “Made in India” initiative, if successful, along with keeping Chinese gear manufacturers like Huawei & ZTE out of the Indian market, is expected to aid national security.

But with 5G equipment of established players like Nokia, Ericsson etc. being deployed by the Stronger 2 - even while the weaker 2 are forced to focus only on 4G roll out - & with BSNL nudged to deploy an untested 4G solution, it is safe to posit a shift in Market shares due to the non-level playing field thus created.

The other notable data points regarding the Telecom landscape are as follows:

1.       Return on Equity (ROE) for even profitable telcos is in single digits demanding an increase in tariffs. A steady increase towards an ARPU of Rs 300 - from under Rs 200 now - appears to be WIP (Work in Progress).

2.       Telecom penetration in Urban markets has crossed 130% while remaining shy of the 60% mark in rural.  Markets like Mumbai at 79% VLR (Visitor Location Register) – the lowest across the country – or Delhi at 82% but with a high 272% telecom penetration should nudge Telcos into evaluating quality gross adds to reduce Customer Acquisition Costs (CAC).

3.       Over the period Mar 2022 to Mar 23, while Wireline subscriber nos. showed growth across circles. wireless base has grown only across Metros & Category-C circles, while degrowing across Category A & B circles. As growth in metros is largely rotational churn – alluded to in point 2 above - focus on Category C circles like Bihar, with a 55% telecom penetration is a logical strategy to be implemented albeit after conducting a cost benefit analysis. Category B Circles like UP (East & West) & MP with 66% penetration could find acquisition focus.

4.       Of the 114-crore wireless & around 3 cr. Indian wireline base, there are 84 cr. broad band customers – a large potential base waiting for innovative e-Commerce & media disruptions.

5.       No large System Integrators (SIs) or consulting companies work with a majority of Indian SMBs (Small & Medium Businesses) – around 7 cr. in nos., accounting for around 30% of GDP. They are, therefore, looking out for a trusted partner to offer them bundled solutions & Telcos are uniquely positioned to make it happen to accelerate digitalization.

6.       On Broadband, Telcos are working on a capex light model of leaning on the Local Cable Operators (LCOs) to achieve a faster rollout velocity.

7.       Device shipments are slowing down because of the rise on prices & hence replacement cycles are extending. This could impact 5G rollout plans.

Against such background, it would be interesting to evaluate the strategies being pursued by different players.

Telco Wise Strategies:

Airtel has decided to focus on the following 5 vectors:

·         Focus on Quality Customers:  The top 150 towns in the country account for 40% of the Telecom market & over 80% of the Postpaid, Broadband & Home convergence products & 95% of the B2B market. Airtel has also identified 60,000 high potential villages of the total 6.4 lakh villages in India, apart from the top 150 towns, for a disproportionate focus.  

o   Rural penetration continues with the focus on smartphone share & not necessarily 2G customer acquisitions for ARPU upsides.

o   Increase in the minimum pricing plan from Rs 99 to Rs 155 is as much an attempt at an ARPU increase as it is to accelerate SIM consolidation, as multi sim customers also have wallet share constraints.

o   33% of the postpaid base has a 5G handset against a 10% 5G penetration of the total base of 33.5 crores; therefore, postpaid business shall ride on 5G apart from attracting customers into the 599 “Family plan” to accelerate further.

o   Faster rollout of new home passes & convergence of broadband, linear content & Xstream – aggregating 20 of the 35 odd OTT apps under one plan. Airtel already has 3 crore homes, across these 150 cities, using one or more of its services.

o   Omnichannel focus – across own stores, installation teams, digital marketing focus - on these 150 cities, to drive synergies in sim delivery or broadband & DTH installations. Expansion of single seater own stores across key cities to reach the customer directly.

o   Account management of top 500 businesses – mapping of key decision makers, understanding their needs & solving their problems by bringing a full suite of solutions.

·         Obsession with customer experience: Drive down interactions across customer touch points – store, call center, web, app, social media etc. – as every interaction is interpreted as company’s fault over lack of understanding consumer needs awaiting correction.

·         Build Digital Businesses: Airtel currently offers strong digital offerings which include CPaaS, Airtel IQ, Cloud, SDWAN & Aps. Partnership with Axis Bank & DMI Finance & API integration with the Airtel Thanks app thereof, has helped Airtel Finance to offer instant loan disbursals, flexible EMI options & credit cards to customers, through a proprietary ML & AI product with an assured end-to-end post purchase digital experience management.

·         War on Waste:

o   Network costs: 66,500 sites identified for specific actions around energy, rental & reengineering costs reduction. NSA (Non-Stand Alone) 5G technology has been an effective cost optimization strategy – as it gives them a 30% higher coverage as compared to 5G SA (Stand Alone).

o   Sales cost: Identify & address inefficient channels – up to a retailer level - with high costs of gross addition or high churn.

o   Capex: Stopped capacity investments on 4G as a 30% traffic offload observed on a site where 5G has been launched.

·         Capex: Investments on wiring up towers, data centers & home passes would continue in the years ahead even while wireless 5G investments could tail off post this year.

Vodafone Idea, on the contrary, faced with severe funding headwinds, impeding investments, is into the following strategy:

·         Improve cash generation in existing businesses & drive monetization of new revenue streams:

o   Increase ARPU by driving 4G penetration: As on Mar 2023, VI 4G covers over 100 crores of Indian population. As only 54% of its 22.59 crore base is 4G enabled, it promotes the differentiated “Hero unlimited plan” to prepaid consumers which offers unlimited night data & weekend data rollover across TV & Digital. Likewise, it has rolled out incentives for 2G customers to upgrade to smartphones by offering cashbacks on monthly recharges & 0% EMI on device financing in partnership with OEMs & NBFCs.

o   Postpaid: While consumer postpaid base is stable, M2M postpaid segment has been growing; postpaid now accounts for around 10% of its base. VI Max data plan which offers more data, entertainment & privileges is promoted.

o   Refarming 3G spectrum into 4G: Company closed 26700 sites during the year & most of these sites now has one carrier of 2100 MHz deployed for 4G

o   Digitalize customer touchpoints & distribution channels.

o   Strengthened partnerships & integrated all content on the VI app across Music, Videos, Gaming, Education & Jobs - freeing consumers from downloading multiple apps - & improving revenue & profitability too.

·         Focused investments on 17 priority circles accounting for 98% of its revenues & 93% of Industry revenue.

o   Acquired 850 MHz of mid band 5G spectrum (3300 MHz) in its 17 priority circles and 5,350 MHz mmWave 5G (26 GHz) spectrum in 16 circles, with a plan to introduce 5G services when funding is in place.

o   Acquiring additional 4G spectrum across 1800 MHz, 2100 MHz and 2500 MHz bands in 3 circles of Andhra Pradesh, Karnataka and Punjab.

·         Drive Enterprise business from Telco to Tech Co:

o   Continues to strengthen engagement with customers with a range of offerings like Vi Secure, Integrated IoT, Managed SIP, and Vi Business Plus bundled mobility offering.

o   Industry first IoT lab to test & certify IoT devices, built in partnership with C-DOT, for promoting standardization & interoperability as per ”OneM2M” standard in the country.

·         Provide superior customer experience:

o   As per TRAI “My Call” app for 25 of the 29 months between Nov 2020 to Mar 2023, VI had the highest rated voice quality.

o   They may also be working towards a device agnostic strategy based on the insight that while feature phone works only on 2G, some smartphone customers use no / low data & hence the need to address consumer need devoid of device.

·         Drive Differentiation through partnerships:

o   On VI app a new channel “BYTES” launched in partnership with NDTV for providing snackable content, gaming launched in partnership with OnMobile to play daily tournaments, & eSports on VI Games in partnership with eSports startup Gamerji.

·         Use more, Pay More:

o    VI is not too keen on increasing the minimum pricing plan fearing greater churn; instead, it is evaluating tweaking the unlimited plans by charging more from consumers using more.

Jio, which had disrupted the Telecom industry by launching 4G earlier, has gone for an

·         Aggressive 5G Stand Alone (SA) drive, even as it continues to push for a “2G Mukt Bharat”.

o   For Market share gains in mobility

o   Enhanced customer engagement via enhanced video experience & ARPU upside thereof.

o   Accelerate Fixed Wireless Access (FWA) called “Airfibre“ for Homes & SMBs. Launched the 198 plan nudging customers, even with a broadband connection of competition, to use it as a back-up to avoid missing out on the action during the IPL season. While this connection plays a role similar to a 2^nd sim in mobility, the idea is to win over those customers eventually away from competition. More traction for this plan has been seen in Tier 2/3 towns though because of affordability.

o   Deployment platform solutions at scale for Enterprises.

·         Aggression on Home Broadband :

o   Plans to target 10 cr. homes in 2-3 years on its dual FTTH JioFiber & FWA AirFiber strategy.

o   Use the 5G capacity secured via the 700Mhz spectrum to offer FWA broadband on demand unlike wired broadband which is dependent on availability of home passes.

·         Attack the Postpaid stronghold of competition:

o   It is now focusing more on the Postpaid segment – traditionally the strength of its competitors by launching the “Family plan” whose benefits can be shared by a family of 4.

·         End to End solutions for Enterprises & SMBs:

o   SMBs are not sophisticated buyers unlike large Enterprises & hence are looking out for an end-to-end solution – connectivity, devices, managed services, cloud enables applications. Jio plans aim to attract SMB loyalty by offering a one stop shop proposition to grow customer revenues, operational efficiencies & profitability.

o    It has made some acquisitions like C-Square Pharmacy Management Software too in pursuit of such a strategy. it bundles the software along with connectivity solutions to mall hospitals & clinics to manage their operations with the added advantage of ordering from one of their sister companies “Netmeds” to can make additional margins.

·         Disrupt the Media space via “Glass to Glass” video broadcasting solutions: Jio plans broadcasting via “Jio Cinema” from the “glass” of the camera, capturing action on the field, to the “glass” pf the viewing screen across various form factors – laptops, mobiles, tablets, TVs etc. Customers given a choice to choose a camera angle of their choice etc. are unique differentiators which provide for a truly interactive media experience very different from traditional broadcasting. Jio has won streaming rights for IPL & is thus developing new properties too. The traditional entertainment space via broadcasting and other media is likely to transform into a truly interactive and streaming based media consumption.

Conclusion

The Telecom industry has been carved into 2 groups – the cash rich telcos like Airtel & Jio – with the money & the muscle to aggressively expand 5G - & their poor Country cousins – BSNL & VI which cannot.

The richer Telcos could focus on driving down FWA cost convergence towards FTTH costs & accelerate wireless broadband penetration & ARPU upsides thereof via bundled media offers. 5G use cases development for enterprises continues for revenue upsides even as end to end solutions are offered to SMBs - who not being sophisticated buyers like Enterprises - are looking for a trusted partner – a role telcos are uniquely placed to fulfill.

Since customer experience across usage of videos, e-Mail, social media etc. across 4G or 5G is nearly indistinguishable, poorer operators would be advised to strengthen their 4G networks, where available, to protect their existing base; they should keep their 2G prices competitive too & not follow the lead of their richer counterparts in increasing their minimum pricing.

Consumer groups & the Regulators would be keenly watching these moves as they would be concerned about the risks of an evolving duopoly.

Drive Your Life & Career Like You Drive Your Vehicle

 Have you ever realized the surprising similarity between driving a vehicle and driving your life and career?

Based on experiences, arrived at the following three archetypes, albeit not exhaustive:

(1)Do you spent your entire life looking only at the rear-view mirror?

People who live in their nostalgic past, fail to see vehicles up front and could suffer accidents. They could also miss out switching lanes and zooming past - akin to MISSED OPPORTUNITIES.

ERGO Look ahead!!

(2)Are you constantly looking ahead without ever glancing at the rear view mirror?

People ought to learn from their past and prepare for the future, even as they enjoy the present.

Looking into a rear view mirror is also symbolic of learning from past experiences. Looking only ahead, without learning from the past, could unwittingly nudge you to repeat avoidable mistakes.

Look into the rear view mirror to see where your peers are and if they have RESKILLED themselves & are accelerating forward. DONT BLOCK THEIR WAY but transform yourself & push the accelerator pedal to stay ahead.

ERGO: Look ahead even while glancing at the rear view mirror.

(3)Do you look only at the row of vehicles immediately up front and not the row of vehicles 3 to 4 levels ahead?

It is possible that you switch lanes just looking at the row of vehicles ahead only to be blocked by a heavy vehicle (Bus say) ahead. You notice vehicles in your earlier lane zooming past & now regret your decision.

Like wise, you could switch lanes only to find a slower moving vehicle (auto say) blocking your way. An auto is akin to a Boss who has grown only slowly in life and would never want you to be a FAST TRACKER.

ERGO Look 3 to 4 rows of vehicles ahead before you switch lanes. STRATEGIZE!!

TAKE THE STEERING OF YOUR CAREER INTO YOUR HANDS AND ZOOM AHEAD WITH YOUR FEET FIRMLY PLANTED ON THE GEAR AND ACCELERATOR PEDALS.

TAKE CHARGE!!