The Venture Intelligence Blog

Sample this from Sanjay Chandra, MD of real estate firm Unitech, in a Business Today article on his lessons from the 2008-09 crisis. ...the media really worsened the situation. The worst was when news began doing the rounds that we had defaulted on our payments to the Greater Noida Authority, even though its CEO went on television to say that we had not defaulted. ...The frustration with lenders was also huge because they were the same people who would come to you analysing your balance sheet, analysing your assets and lend you money. They came back to you after just three months and wanted to recall their money because the market perception had changed. And these were relationships which we had for years. We had a sanction of Rs 700 crore from a large public sector bank. The loan was very heavily collateralised, they were happy with the structure, but one board member objected saying that "if this comes into the papers tomorrow we will be in trouble". So, the approved loan ...

In an article for Business Standard, Unitech Wireless's Chairman Sanjay Chandra says that despite the profitability issues in the short-term, the industry's size will double in five years. ARPU numbers as reported by players currently are understated. The historical subscriber-linked spectrum allocation methodology used by the regulator in India incentivises operators to take advantage of flexibility in reporting churn and hence overstate the number of subscribers. The real subscriber number in India is estimated to be 20-30 per cent lower than that reported. This implies that the real ARPU is 25-35 per cent higher than that reported. At a 25 per cent higher ARPU, the per subscriber and per tower economics suddenly seem much more viable. Two, the total size of industry in terms of revenue is expected to more than double from the current $22-25 billion to over $50 billion in five years. In addition, the cost of new operations is much lower now than that of existing operations b...