Over his more than two decades as chairman of Tata Sons, Ratan Tata led the company into various emerging markets. Even when he retired in 2012, the legacy remained. The Tata Group’s recent entry into the nation’s fledgling chip manufacturing industry serves as the clearest example of this. The accomplishment is noteworthy since, to date, neither a local nor a worldwide giant has dabbled in fabrication within the nation. It is Tata Electronics’ first.
Even with an early mover advantage and partnerships with international players, the Tata Group was unable to establish a significant presence in one industry: telecom services. But via spectrum auctions, Ratan Tata did leave a permanent legacy here, despite his failure. He was the first to suggest that bids be used to distribute airwaves instead of a subscriber base but for a different purpose. Strong protests from the incumbents were heard about this.
When the telecom industry was first opened to the private sector in 1995, the Group entered it at the same time as Sunil Bharti Mittal did. However, the Group’s past performance makes it abundantly evident that it has never had a strategic and forward-thinking approach to the business.
Tatas attempted to acquire many circles in 1995 in a joint venture with Bell Canada, but they were only able to get Andhra Pradesh. They discovered in 1997, along with the rest of the industry, that their 1995 bid-based business model was not viable. Tatas had an additional issue because they had obtained a fixed-line licence in Andhra along with a few other firms. This was the first bad decision since, as would become clear later, fixed lines were not the way of the future for the telephone.
The Tatas approached AT&T and the Aditya Birla Group for a three-way joint venture close to 1999. A joint venture known as BATATA was established by the three partners (Idea Cellular eventually joined with Vodafone in 2018 to form Vodafone Idea). At the beginning, there were just three operational circles: Maharashtra, Gujarat, and Andhra Pradesh, with each partner holding 33% of the stock. This business began to take up gradually.
The government then introduced the idea of limited mobility licenses in 2001. This was intended to enable fixed-line service providers to function inside a service region with some restricted mobility. Unexpectedly, Tatas abandoned GSM and got in wait for restricted mobility. The benefits were preferential spectrum allocation, reduced entrance fees based on fixed line prices rather than auctions, and caller party payment, similar to fixed lines.
The Tatas joined forces with restricted mobile operators like Reliance Infocomm during the 2002 GSM operators’ battle against these companies, which they saw as little more than backdoor access into full mobile services by paying a reduced license price. Later, under a universal access service license (UASL), restricted mobility was permitted to become completely mobile by the then-telecom minister, Arun Shourie. So, the Tatas developed into a fully-fledged CDMA mobile provider.
They did, meanwhile, keep their ownership of Idea and the GSM operator AV Birla Group. The Birlas and Tatas got into a public quarrel in 2006. The former said that the Tatas’ heart was in CDMA, not GSM and that they should leave Idea since it was impeding the company’s progress. The Tatas’ GSM era came to an end thus.
From this point on, the narrative becomes increasingly captivating. Similar to Reliance, the Tatas concluded by 2007 that customers were only hesitant to embrace CDMA because of technological issues, therefore they too sought a GSM licence and spectrum. Here, they received assistance from A Raja, the telecom minister at the time, through the October 2007 dual technology strategy. The Tatas were able to rebuild their company after joining GSM by enlisting DoCoMo of Japan as an investor and relaunching their brand.
The path was difficult due to the financial and policy turbulence that followed 2012. DoCoMo made the decision to leave its joint venture with Tata Teleservices in 2014 because it didn’t think the company was progressing too well. Things became more difficult for TTSL when Reliance Jio launched in 2016, and in 2017 it sold its cellular division to Bharti Airtel without taking on any debt or cash.
Even if Ratan Tata’s attempts to enter the telecom services industry were a complete failure, it would not be incorrect to say that there were some successes. Through Tata Communications, the Group is present in the enterprise market, where it has found success.
