If you analyse case studies on strategy, business success would be attributed to one or more of these factors. First mover advantage, cutting edge technology from global leaders, big brand name, deep pockets, broad portfolio of products and services, opportunistic acquisitions etc. But if you would like to know an example of how despite all of the above , a business does not achieve success look at Tata’s telecom sector businesses. Despite everything, it is an also-ran in one of the fastest growing markets. Not becoming for India’s largest business house.

Way back in 1983, Ratan Tata had visualised entry into telecom as a part of the business plan for Tata Industries. When the government  liberalised EPABX , Tata Telecom was set up in 1989 in collaboration with OKi of Japan. Tata Telecom later entered into collaborations with AT & T in 1994 and Ericsson in 1995 for distributing and commissioning various telecom hardware products in India. Tata Keltron was the second venture of Tatas for manufacture of push button telephones, in collaboration with Siemens. The hardware side of telecom business tasted some success in the late nineties and early 2000s. Tata Keltron was a BIFR case for some time and later merged into Tata Telecom. Now the Tatas have virtually exited the hardware side of telecom having sold majority stake in Tata Telecom to Avaya in 2004. Now this company is called Avaya Global Connect.

Tata Teleservices Ltd was the vehicle through which Tatas entered the telecom services market way back in 1996. It started with basic telephony services using the CDMA technology for fixed wireless. TTL started with the AP circle. In 2002, Tatas acquired Hughes telecom , a basic services operator in Maharashtra and renamed it Tata Teleservices (Maharashtra) Ltd. TTL now has an all India footprint and offers both fixed wireless and mobile phones under the Tata Indicom brandname.

Tatas were also among the first set of licence holders for cellular services, through a joint venture with Bell Atlantic. They started their GSM operations from AP. After Bell Atlantic exited the JV, it became part of a Birla-AT&T- Tata joint venture, often referred then as BATATA in the media. In 2002, it became Idea Cellular Ltd and management control was with the Birlas. In 2006, Tatas exited this venture completely.

After initially betting on CDMA technology and exiting GSM completely, Tatas re-entered GSM once again through Tata DoCoMo in 2008. By then telecom regulatory regime had changed to Unified Access Services from separate licence for basic, fixed wireless and mobile services.Also, additional spectrum was issued in 2008 to new players, the origin of the current 2G scam. TataDoCoMo is credited with the price war that started in 2008 with per sec billing plans etc.

Perhaps unable to break into the crowded marketplace for cellphone services, Tata brought in the Virgin mobile brand in India. Virgin mobile was positioned as a national youth-focussed mobile service. Tatas took some regulatory risks by bringing in Virgin when the policies related to MVNO ( Mobile virtual network operator) were not very clear. Virgin mobile today offers both GSM and CDMA services.

As if these many ventures was not enough, Tatas acquired a strategic stake in Videsh Sanchar Nigam Ltd (VSNL) when the government of India started its divestment process in 2000-01. VSNL had a monopoly in International Long Distance telephony till 2002. VSNL , also the first Internet Service provider ( ISP) in India since 1995 and had brought internet to India. Before acquiring VSNL, Tatas also got an ISP licence and had launched Tatanova services in a few cities. VSNL is now Tata Communications. Tata Communications having lost monopolies is now hardly the money-spinner VSNL once was.

After all these years of investment, hard work and risk-taking, if one looks at the report card it is not a pretty picture for the Tatas. In cellular subscribers base Tatas are 5th behind Bharti, Reliance, Vodafone and BSNL. After the launch of Tata DoCoMo the new subscriber additions are faster. In wireline, they are again 5th behind BSNL, MTNL, Bharti and Reliance as per this report. Financially, Tatas are even worse off. TTSL continues to reel under losses. As per an ET report the accumulated losses of the unlisted TTSL had mounted to Rs 10, 991 crores at the end of March 2009. The listed company Tata Teleservices Maharashtra continues to make losses. It reported Rs 97 crore loss in the latest quarter. The other listed company Tata Communications Ltd is also reporting losses. The consolidated results show a loss of over Rs 500 crore on a revenue of Rs 11,000 crore. The Indian operations are profitable but it is the African subsidiary which is reeling in losses.

Not able to become the market leader, in a market like India, where johnny-come-latelys like Bharti have become market leaders is bad. Accumulating huge financial loss is worse. But as if these woes were not enough the Radia tapes controversy has added further to the tale of woes emanating for Tatas from the telecom business.

The Radia tape controversy has hit the Tatas where it hurts most. Tatas had a squeaky clean image in a country where corporates are known to grease the wheels of power to make things happen. Tatas had almost the image of a lotus in a cesspool.

There is nothing incriminating in the conversation between Radia and Ratan Tata. But it is quite clear that Tatas also play the same game that most corporates play to garner favours in the corridors of power and also manipulate in the choice of ministers. As it appears they were not in favour of Dayanidhi Maran , getting the Telecom ministry in UPA-II and used the services of Niira Radia to manipulate the choice of portfolios. Now there is another investigation opened up to find out the role of Tatas in funding Unitech through an advance paid for a land deal just before they had to make payment for the telecom licence.

Even in hindsight it is difficult to point out what blunders did Tatas do in the telecom business. Was it poor strategy ? Was it poor execution of strategy ? Was it poor leadership ? Was it inability to secure favours and other privileges like free spectrum by manipulating the levers of government, (which Ratan Tata himself charges some other operators)  ?

The Radia tapes have taken the sheen of Tatas a bit, perhaps, quite a bit. Now, they don’t even have the excuse of playing straight in an otherwise corrupt and crooked business environment.

Ratan Tata as he gets ready to hang his boots in 2012, would surely regret not having quit the murky telecom business earlier. It will remain a blackmark in his illustrious track record of  enormous achievements.

What will be the impact of Radia tapes on Tata brand
(polls)