You are on page 1of 14

W16555

VIOM NETWORKS: TRANSFORMATION AND THE NEXT PHASE

Atri Sengupta, Yogesh Misra, and Maninder Singh wrote this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.

Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-09-14

In February 2016, Viom Networks Limited (Viom), “India’s largest independent [telecommunications]
tower company, with over 42,000 towers across India and the highest tenancy ratio in the industry,”1 was
on the edge of an upcoming merger. Since its founding in 2009, Viom had witnessed many ups and downs
due to the rapidly changing circumstances in the telecommunications (telecom) industry. The company was
involved in building and managing telecom towers for telecom operators, as well as installing their
antennae. Its services benefitted the telecom operators, who converted the capital investments that may
have been required for setting up their own towers into operational expenses.

Viom had faced a particularly difficult time when a host of external and internal factors caused an exorbitant
financial net loss of approximately US$63.36 million, 2 with accumulated debt exceeding $1.59 billion in
fiscal year (FY)2012/13. After becoming chief executive officer (CEO) of Viom in July 2012, Syed Safawi
initiated a strategy to transform the business. That journey ended with a net profit of $27.12 million in 2015
(see Exhibit 1).

The growing profit of the company motivated wireless communication infrastructure giant American Tower
Corporation (ATC),3 the world’s largest independent telecom tower company, to acquire a 51 per cent share
in Viom. The changeover was scheduled for April 2016. Viom also had an ambitious profit projection of $73
million in FY2016, which was expected to produce significant and lasting changes. Moreover, the dynamism
of the telecom industry consisted of both threats and opportunities, and these posed further uncertainty. How
would Viom deal with these challenges?

THE COMPANY AND THE CRISIS

Viom was a joint venture between Tata Teleservices Limited (Wireless TT Info Services Limited) and
Quippo, a Srei Group enterprise. Formed in 2009, Viom’s mission was to provide shared telecom
infrastructure solutions to all telecom service providers.
1
“About Us,” Viom Networks, accessed January 19, 2016, www.viomnetworks.com/about-us.html.
2
All currency amounts are in US$ unless otherwise specified.
3
“Welcome to American Tower,” American Tower Corporation, accessed January 22, 2016, www.americantower.com
/corporateus/global-country-selector/index.htm.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 2 9B16M147

In order to meet growing market demand and optimize infrastructure costs for the industry, telecom
operators were allowed to share towers; that is, multiple telecom players were allowed to install their
antennae or base transceiver stations on a single tower. This concept improved the mobile network rollout
speed for telecom operators, reduced mobile network rollout costs, and improved connectivity. Most large
telecom operators had created independent tower companies, making their balance sheets asset-light. These
capital-rich independent tower subsidiaries of telecom operators served as serious competitors against
independent tower companies.

Because all of Viom’s customers were telecom operators, the company was directly affected by developments
in the telecom sector, which experienced explosive growth as well as intense competition from 2000 to 2010.
To prevail against the competition, better customer service was the most important measure of success. In this
way, telecom players were forced to focus on telecom infrastructure for better network coverage, in which
independent telecom infrastructure (tower) companies played a significant role.

By the end of 2012, the number of towers had increased to 500,000 to provide signal penetration to about
90 per cent of India.4 The year 2012 was a watershed year for the telecom industry. Judicial, regulatory, and
environmental factors significantly affected individual telecom operators and the telecom tower industry in
general. On the judicial front, the telecom industry was hit by the Supreme Court of India’s judgment on
the second-generation (2G) spectrum scam, which resulted in the cancellation of 122 telecom licences that
had been issued to many of the new telecom players in 2008.5 These cancellations led to telecom policy
paralysis in the government.

Setting up new towers to cover the remaining landscape became a challenge for a variety of reasons, such
as land scarcity, and increased public perception about health issues caused by radiation emitted by telecom
antennae, which led to resistance from local communities. Moreover, new taxes levied by local
municipalities increased the cost of Viom’s operations.

The Supreme Court’s judgment and the telecom policy paralysis, as well as other regulations and security
concerns raised by the Ministry of Home Affairs of the Government of India, caused investment in the industry
to decline significantly, which led to market stagnation. These factors did not create many adverse effects for
the tower companies that were owned by larger telecom players, but independent tower companies were
severely affected; for example, Viom experienced a 20 per cent revenue loss because many of its clients lost
their licences.

Several internal issues further contributed to the challenges: an initial public offering could not be
implemented in 2009 due to market turmoil; leadership changed when the first CEO of Viom, Arun Kapur,
exited in 2011 to become the president of Srei Group; there were allegations of financial irregularities and
diversion of funds to private financial institutions by the former company secretary (an allegation
subsequently disproved by independent auditors and the promoters of Viom in 2012); and lastly, the board
chairman, Subodh Bhargava, stepped down in 2012. These events created a very negative image of Viom
in the marketplace.

Viom began with 18,306 towers in 2009, expanding to build more than 42,000 towers by 2015, with a net
profit of $27.12 million in the same year (see Exhibit 1). However, the journey was not an easy one. A host

4
Shauvik Ghosh, “The Rise of Indian Telecom Tower Companies,” Live Mint, January 4, 2013, accessed February 15, 2016,
www.livemint.com/Industry/vgJwmveJPFUhy52WV8BWoN/The-rise-of-Indian-telecom-tower-companies.html.
5
“What Is the 2G Spectrum Scam?” India Today Online, October 19, 2012, accessed February 15, 2016,
http://indiatoday.intoday.in/story/what-is-the-2g-scam-all-about/1/188832.html.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 3 9B16M147

of external and internal factors during that period caused an exorbitant financial net loss of approximately
$63.36 million, with accumulated debt exceeding $1.59 billion in FY2012.

In July 2012, when Viom was facing its greatest challenges, Safawi transitioned from his role as president
and CEO of Reliance Communications to CEO of Viom. The operational excellence strategy initiated by
the new leadership enabled the organization to turn things around and report an after-tax profit of $14.66
million, as well as reduce the company’s debt by $238 million by the end of March of 2013. By the end of
the second quarter of 2015, Viom’s net profit had grown to $27.12 million.

Both the industry and the company’s promoter (Kanoria of Srei Group, which had management control of
Viom) acknowledged the role of Safawi’s leadership team in transforming Viom. Safawi credited a holistic
transformation process and investment in human capital as the key factors in this change. Many measures
were taken in the 2012–2015 journey that focused on restructuring (financial and organizational). When
Safawi took charge, employees were confused, unmotivated, and lacking direction; the organization had
been without a leader for quite a long time and its survival was at stake. The new CEO considered the
following questions before initiating a plan for rejuvenation: Was turnaround possible for Viom? If so,
should it be a financial turnaround or a holistic turnaround?

BUSINESS STRATEGY MODEL

To transform Viom, Safawi initiated several focused and planned changes, instead of introducing one single
dramatic change. The initiatives included operational restructuring, cost restructuring, organizational
restructuring, portfolio re-alignment, and a refocus on cash.

Operational Restructuring

To pursue operational excellence, Safawi introduced regular, rigorous reviews of business performance at
all personnel levels. His intimate involvement in every process energized the employees. All regional and
circle6 heads under the new system were required to present their business performance to the CEO each
month. A platform was created for immediate solutions, and brainstorming was done for all business
challenges to remove undue delays in the process; this led to integration among stakeholders, functions,
and systems that previously had not been strongly aligned.

To steer the organization towards an operational transformation, Project Outperform Market (Project OM)
was conceptualized as a comprehensive transformation program. Project OM was intended to not only to turn
Viom around, but also to promote the next wave of growth. The key mandate under Project OM was fivefold:
reduce leakage and waste through efficient site operation and asset management; develop low-cost sites;
improve and empower human productivity; improve customer management; and strengthen processes,
technology, and automation.

To ensure clear focus, operational excellence, and alignment across the organization, the Business
Transformation Office (BTO) was established to work directly with the CEO. The BTO, led by a senior
business leader, was operational for about 18 months. It drove 16 projects and 44 initiatives across all
functions and geographies of Viom. The BTO was established with technical support from one of the
leading (Big 4) consulting firms. It adopted industry best practices, and established appropriate lead and
lag measurements. The initiatives were based on cost reduction, process improvement, infrastructure health

6
Branch offices were commonly referred to as circle offices.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 4 9B16M147

improvement (Viom was considered an asset-heavy organization), revenue enhancement, cost reduction,
and cash flow improvement. The annualized financial savings from Project OM were estimated to be in the
area of $37.6 million, and played a significant role in the organizational turnaround.

Viom had gross capital assets of more than $1.55 billion in FY2014/15, spread across the length and breadth
of India. To effectively manage and track the movements therein, all assets were affixed with radio-
frequency identification tags. Real-time operational data availability and analysis was achieved by the
implementation of a tablet-based real-time reporting system (as opposed to the existing paper and
telephonic reporting systems), and greatly enhanced operational efficiency. Technology became a
foundational pillar of the transformation. All of these changes resulted in stronger operational control and
improved operational analytics for better decision making.

Cost Restructuring

As a capital-intensive organization, Viom worked to manage its financial expenditures. Its debt was reduced
from over $1.59 million in 2012, to less than $835 million in January 2016, by way of scheduled payments
and prepayment of debts. Viom’s credit rating improved from BBB+ in FY2011/12 to A in FY2015/16.7 Viom
reduced annual interest outflow by 37 per cent by reducing its benchmark interest rate. The debt-equity ratio
improved from 5.86 in FY2011/12, to a comfortable 2.5 by January 2016.

Energy cost was the largest component of operating expenses for the organization, and included electricity
and diesel expenses for running the diesel genset. Fuel theft, coupled with operational inefficiency, greatly
increased energy costs. The energy cost was fully reimbursable by customers; however, customers refused
to pay for inefficiency or pilferage, and this led to customers contesting their bills, which delayed payments
and increased the total amount of outstanding payments.

To overcome increased energy costs and to facilitate transparency with customers and vendors, Viom formed
the Energy Strategic Business Unit (ESBU). The major responsibilities of the ESBU were to create a “should-
cost” analysis for every tower, and to drive operations to reach the levels outlined in this analysis.

Regular review of the cost structure reduced inefficiencies and pilferage, which resulted in a significant cost
reduction and increased transparency with customers. Another key initiative taken to manage energy costs was
the signing of an agreement with customers based on a fixed cost model, instead of a reimbursement model. This
agreement led to a reduction in conflicts about payable amounts, and gave Viom an incentive to invest in energy-
saving technology. All of these initiatives increased Viom’s profitability to a large extent.

Organizational Restructuring

As part of its operational and cost restructuring processes, Viom aligned its organizational structure with
its operations. To ensure seamless operations, the company focused on its relationship with its key
stakeholders: landlords. Previously, the owners of land where towers were installed had to interact with
three Viom departments (Estate Management, Projects, and Operations). Lack of integration of these three
departments led to dissatisfied landowners, which hindered the provision of undisrupted service to the

7
“About Us,” Viom Networks, accessed August 30, 2016, www.viomnetworks.com/about-us.html; “Live Ratings,” ICRA, 2015,
accessed February 15, 2016, www.icra.in/CurrentRating.aspx; A credit rating is an evaluation of the credit risk of a prospective
debtor (an individual, a business, a company, or a government), predicting its ability to pay back the debt, and an implicit
forecast of the likelihood of the debtor defaulting. Ratings of AAA and AA are considered high credit quality, and ratings of A
and BBB are considered medium credit quality; all four ratings are considered investment grade.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 5 9B16M147

customers. Information asymmetry among the three groups aggravated the situation and led to further
conflict. The role of Estate Management personnel was to identify prospective land and negotiate with
landowners to install towers on that land. Projects personnel installed the towers and Operations personnel
maintained the towers. However, under the new strategy, the position of asset manager was created as a
single point of contact for the landowners, who could then deal with one entity instead of trying to
coordinate with three discrete groups.

In addition, Viom reduced its manpower from over 2,300 to approximately 1,300 (see Exhibit 2). A new
competency framework was incorporated to align competency requirements in the changed business
environment. Viom also created an entrepreneurial mindset among its employees.

Tower Operation Centre

On an experimental basis, Viom installed sensors on 1,000 towers to gain better control of their operations.
The Tower Operation Centre then captured and recorded all activities occurring at the towers on a real-time
basis, leading to a reduction in pilferage and better operational efficiency. Based on the success of this pilot
project, it was proposed that tower operation centre would cover 100 per cent of the towers.

HUMAN CAPITAL STRATEGIES

For turning Viom around, the transformational journey began with “Viom Next,” the stated business
strategy co-created by the company’s leadership team. Safawi, who had always believed in the importance
of human capital for organizational transformation, guided the Viom’s human resources (HR) team to
ensure that human capital strategies were aligned with business transformation initiatives.

With the vision “to emerge as an innovative telecom infrastructure solution provider and a benchmark in
operational excellence, while consistently leading in maximizing value for all our stakeholders,” Viom Next
proposed core themes and foundations for the journey ahead (see Exhibit 3). These core themes aimed to position
Viom as (a) an innovative telecom infrastructure solution provider, (b) a benchmark of operational excellence,
and (c) an industry leader in profitability over a three-year period via the use of three pillars: socially responsible
employment, a smart and embedded use of technology, and outstanding values and integrity.

Viom recognized the importance of tacit knowledge in the system that provided critical operational
continuity; hence, the company focused on developing its talent at all levels. Further, in light of the
environmental challenges and its geographically dispersed workforce, Viom adopted innovation as one of
its key values, and as a motto for its Learning and Development (L & D) team. Human Capital Strategy
was grounded on connecting with employees and building a unique organization culture with structured
competency framework, focus on employee development, transparent performance management system
(PMS), and reward and recognition.

Connecting with Employees

Viom had undergone major strategic changes several times, which created an atmosphere of rumour and
uncertainty among employees. Company leadership appreciated the need for transparency and consistent
communication with these employees. Accordingly, 15 town hall meetings (open sessions) were organized—an
average of one national town hall meeting in every quarter. In these sessions, the top leadership team, including
the CEO, addressed the employees. The team shared the business performance data for the previous quarter, set

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 6 9B16M147

up priorities for the next quarter, explained key HR initiatives taken by the company, and led an open discussion
on any questions asked by employees. These initiatives had a very positive impact on building employees’ trust
and confidence, and this was reflected by an increase in the score of employee satisfaction surveys conducted
by the Great Place to Work (GPTW) institute over the years.

Competency Framework

The Viom Competency Framework was originally composed of three clusters: cognitive, relationship, and
results. The competencies identified for the cognitive cluster were innovative thinking, strategic and
analytical thinking, professional entrepreneurship, and drive for learning. The relationship cluster
competencies included developing human resources, and effective teamwork. The results cluster was
comprised of competencies such as customer focus, business results orientation, process adherence,
excellence, and managing changes.

However, a reflection on the usage of the established Competency Framework during the execution of
business transformation strategies raised a few questions: Are the desirable behaviours of yesterday still
desirable today and tomorrow? Are there any operational challenges in deployment of the current
Competency Framework? Should the Competency Framework focus only on “leadership competencies” or
do “functional and technical” competencies also need to be evaluated and articulated? These questions
initiated a project on the revalidation of the Competency Framework in 2012. As a result, a new and more
simplified framework was developed (see Exhibit 4).

Learning and Development (L & D)

Viom’s business transformation policies were formally articulated in the company’s L & D policy, which
outlined the goals of (a) developing employees’ proficiency in current roles, (b) developing their suitability
for future roles, (c) ensuring that the workforce would be future ready in terms of skill, knowledge, and
behaviours required by Viom’s internal and external environments, and (d) facilitating employees’
alignment with the business.

L & D was internally branded with the distinct identity “Tower Academy” (with a matching logo), which
was guided by two principles: innovation and leadership. Three major L & D strategies were established:
(a) align with business priorities and be an advisor to business leaders; (b) empower field managers to
determine the development focus for their team members; and (c) provide structure for employee
development through a competency framework and an annual training calendar published at the beginning
of every financial year (see Student Spreadsheet 7B16M147). The corporate office was made responsible
for developing senior leaders and circle/regional offices for all other employees.

Viom was committed to personnel development with a dedicated training infrastructure comprised of the L & D
team, as well as capital and operational investment. Considerable investment was made to ensure that state-of-
the-art learning facilities were available, such as Tower Academy online (the learning management system),
Gyan Sarovar (the Viom library), and internal trainers (Dronacharya). Viom used multiple learning tools,
including instructional posters, micro (short two- to three-minute animated videos) and rapid learning tools,
audio-visual equipment, action learning projects, and business simulations. An annual operating plan was
devised and monthly business reviews were conducted to align L & D with the company’s business priorities.

Viom training initiatives consisted predominantly of leadership development, management development,


organizational competency development, and the creation of a talent pool. The major components of the

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 7 9B16M147

training included the following: 360-degree feedback8 and an individual development plan, exposure to best
practices, classroom training, nomination for top business school training programs, “Lead Next” (the
leadership language at Viom), a business leader assimilation program, executive coaching and mentoring,
and “The Alchemists” (an experience-sharing series, where first time entrepreneurs were invited to interact
with Viom’s managers and leaders). Additionally, the company offered “Learning Saturdays” for employee
development activities on weekends.

Training needs were identified based on organizational and individual analyses, which included input from
leadership surveys and competency assessments as part of the PMS, based on a competency-rating scale
(see Exhibit 5). Employee development plans were created based on these same competency ratings, as
well as self-nominations by the employees.

Viom adopted a 70:20:10 methodology for providing training. Experience (70 per cent) included on-the-job
learning. Exposure (20 per cent) involved learning through discussions with others (lessons learned/coaching).
Education (10 per cent) corresponded to formal knowledge transfer (instructor-led/web-based learning).
Management followed the Kirpatrick model9 in evaluating training effectiveness.

The Performance Management System

The PMS served as the basis for differentiated recognition and identified employees’ developmental needs.
The process began from the day an employee joined Viom. Viom adopted a “role-goal-map” approach, in
which key result areas (KRAs) were mapped against each role stemming from four perspectives of the
balanced score card method.10 The assessment followed an online system, which captured employee
performance and capability on a bi-annual basis. The KRAs and key performance indicators (KPIs) of all
employees, from the CEO to the front-line employees, were aligned to the organizational goals and captured
on one sheet.

To measure senior management’s effectiveness, the 360-degree appraisal system was incorporated, which
meant that all senior managers and managerial-level employees were assessed on certain identified
competencies by themselves, their supervisors, peers, customers, and team members. The leadership
competencies were identified based on the company’s Leadership Competency Framework, which included
factors such as driving excellence, analytical problem solving and decision making, business acumen,
building capabilities, process excellence, and managing relationships. For instance, an asset manager’s
performance metric was designed to capture seven critical aspects, and was monitored with an Asset
Manager Performance Dashboard, which was reviewed on a weekly basis. This ensured alignment of all
asset managers with key objectives, and fostered a good person–job fit (see Exhibit 6).

Reward and Recognition

PMS led to reward and recognition for high performers. The rating system had five levels: 5 (outstanding
contributor), 4 (significant contributor), 3 (effective contributor), 2 (low contributor), and 1 (non-
contributor). These ratings served as the basis for performance bonuses and salary increments. The reward

8
The 360 Degree Feedback process allowed employees to receive confidential, anonymous feedback from the people who
work around them. This typically included the employee's manager, peers, and direct reports.
9
Kirkpatrick's four levels of training evaluation model essentially measured (a) the reaction of the student—what they thought and
felt about the training; and (b) the learning—the resulting increase in knowledge or capability.
10
The four perspectives of the balanced score card method were: financial, internal business process, learning and growth,
and customer.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 8 9B16M147

and recognition policy was the basis for promotion, as well as monetary and non-monetary rewards. Profit
sharing, competitive compensation, a flexible benefit plan, a stock appreciation rights (SARs) scheme, and
other awards and benefits were some of Viom’s people-centric approaches. Viom participated for the first
time in the Hewitt Compensation Survey to benchmark itself with the industry in order to design a
competitive pay package. Under the flexible benefit plan, employees were offered the option to design their
own compensation packages; they were eligible to choose certain components of their compensation—apart
from the base pay and the provident fund.

All employees at the level of senior manager or higher (about 200 managers) were given the opportunity to
be indirect owners of the company through the SARs scheme launched in October 2013. Under this scheme,
virtual stocks of Viom were vested to all eligible employees. Employees who had completed a minimum of
18 months with the company and one appraisal cycle, and also consistently received ratings of 3 or more,
were eligible for promotion. According to Viom’s promotional policy, about 15 per cent of employees were
considered eligible for promotion every year, depending on the availability of positions/roles.

Other HR Initiatives: Creation and Development of the Talent Pool

Viom was committed to developing young talent as the future leaders of the company, ensuring functional
expertise and higher retention of talent. The attrition rate of high performers was found to be less than 10 per
cent, about half of the normal attrition rate. Several initiatives, including the CEO Club, the Asset Manager
Career Progression, and the Diploma Engineer Trainee, were undertaken in this regard (see Exhibit 7).

THE LEADERSHIP AND CULTURAL FRAMEWORK

A high-performing and result-oriented culture was fostered at Viom, and policies were set accordingly.
Career progression for employees, L & D, and the PMS were given primary importance. The competency
assessment cycle, conducted every January, was separate from the KRA assessment that was usually done
in April of each year. The major objective of the competency assessment cycle was employee development.
The aim of the cycle was to create a stress-free environment, where discussions could be undertaken with
employees on personal development and skill enhancement. Measuring both individual performance and
potential was considered essential for organizational performance.

However, while focusing on turnaround, team collaboration had not been given due importance in the
appraisal, and the top leaders agreed that this could adversely affect team culture in the future. A senior
manager explained:

[Initially, we gave] priority to individual excellence over the team for ensuring growth of the
organization. We do not deny the significance of team performance in the functioning of any
growing organization like [Viom]. We have initiated this with informal team projects; [for
example,] our employee teams participated in volunteering for CSR initiatives [involving flood
relief in the states of] Jammu, Kashmir, and Chennai.

Visibility, transparency, and relentless communication acted as drivers for fostering a collaborative and
high-performing culture in the organization. Viom aimed to balance results/performance with an employee-
friendly atmosphere. Organizational and supervisory supports were reflected in an employee satisfaction
survey, conducted by GPTW, even after the announcement of acquisition by ATC. Viom’s employee
satisfaction score increased from 61 per cent in 2013, to 83 per cent in 2015.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 9 9B16M147

Viom had received significant attention in the media since its inception, due to past mergers and various rumours
about leadership changes, which produced a sense of uncertainty among employees. Therefore, top management
opted to communicate directly with employees to avoid unnecessary “grapevines” of misinformation. This
communication style was also given priority in the leadership team’s monthly review discussions.

In addition, to communicate changes in management strategy, a communication package accompanied by


a bundle of PowerPoint presentations and videos was created and uploaded onto the company’s intranet to
provide further clarity. In order to disseminate information throughout all levels at Viom, senior leaders
from the corporate office, nominated as circle mentors, percolated down the leadership thoughts on the
current status and expected strategic moves of the company on a regular basis. Management introduced
group meetings, detailed one-on-one or one-on-few communications, small group discussions, and a help
desk for handling queries.

Since 2012, Viom followed a centralized decision-making process, where most financial decisions required
approval from the corporate office. However, management realized that to ensure sustainable business
transformation, empowerment of employees at all levels was required. As a result, local leadership teams
(at regional and circle offices) were authorized to approve spending up to $16,700 for managing operations.

Viom faced considerable challenges due to geographical dispersion and strict contracts with customers.
Providing 24/7 service through geographically dispersed employees and partners resulted in gaps in
communication, process adherence, knowledge dissemination, field discipline, trust and relationships, and
the safety of employees affected by travelling to remote locations. A mobile app was created in-house and
used to remove bottlenecks and bring transparency to the system. In addition, an online learning
management system, micro learning videos, and telecom and video conferencing were used to reduce
knowledge and communication gaps due to geographical dispersion.

Viom was also concerned about promoting diversity by practising inclusive hiring. Equal opportunities
were given to female employees to hold leadership positions in the organization. Women’s participation in
the workforce and their career growth were encouraged with a “women first” policy in all internal job
postings. However, female employees were not deployed for field activities due to safety considerations.

Viom received several prestigious awards, including the Golden Peacock Occupational Health and Safety
Award for 201311 and various other awards.12 Transformational initiatives, along with these awards,
elevated the company’s image in the minds of both its internal and external stakeholders. All stakeholders
unanimously believed that Viom’s success was primarily due to Safawi’s leadership. Safawi stated, “I
believe in inspirational leadership. Leaders must know [their] organization and employees in depth. In the
journey of the transformation of Viom, we inspired employees . . . by creating a supportive environment.
We brought self-belief and pride in employees so that they could deliver the desired results.”

VIOM: THE NEXT DILEMMA

Viom was expected to face two new challenges as of April 2016: (a) ATC acquired a 51 per cent stake in
Viom, which suggested that further changes were looming; and (b) changes in technology and governmental
policy regulations were likely to affect the dynamics of India’s telecom industry. How would Viom deal
with these new challenges in order to enable growth ahead of the industry curve?

11
“Golden Peacock Awards: Occupational Health & Safety (GPOHSA),” Golden Peacock Awards, accessed February 20,
2016, www.goldenpeacockawards.com/occupational-health-a-safety-award-gpohsa.htm.
12
“Industry Recognition,” Viom Networks, accessed February 20, 2016, www.viomnetworks.com/recognition.html.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 10 9B16M147

EXHIBIT 1: FINANCIAL RESULTS (CONSOLIDATED) FROM FY2011/12 TO FY2014/15 (IN US$)

Year Ended Year Ended Year Ended


Year Ended
March 31, March 31, March 31,
March 31, 2014
2015 2013 2012
Gross Income 785,704,975 781,319,520 914,346,690 920,741,760
Less: Energy and Other
268,853,200 280,032,280 302,096,400 295,171,200
Reimbursement
Net Income 516,851,775 535,068,000 612,250,290 625,570,560
Expenses 225,478,770 235,650,360 260,059,470 328,934,400
Profit/(Loss) before
291,373,005 299,417,640 352,190,820 296,636,160
Amortization
Depreciation and Finance
Charges
Depreciation and
140,149,460 136,457,370 148,962,000 171,830,400
Amortization
Interest and Finance
123,972,970 145,921,260 177,118,380 187,649,280
Charges
Exceptional Items 33,780,760 11,763,240
Profit for the Year, before
27,250,575 17,039,010 14,347,200 (62,843,520)
Taxes
Provision for Taxes (Net)
Profit/(Loss) for the Year 27,250,575 17,039,010 14,347,200 (62,843,520)
Cash Profit for the Year 160,618,095 168,825,310 138,230,880 60,074,880

Source: Company documents.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 11 9B16M147

EXHIBIT 2: WORKFORCE STRUCTURE, ORGANIZATION STRUCTURE, AND KEY STRUCTURAL


ALIGNMENT (FY2011/12 TO FY2015/16)

Employee Productivity
Particulars FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16
Tower 40,403 40,634 41,956 42,344 42,594
Tenancy 91,261 85,008 90,091 100,289 113,145
Workforce 2,321 1,563 1,433 1,383 1,299
Tower/Employee 17.4 26.0 29.3 30.6 32.8
Tenancy/Employee 39.3 54.4 62.9 72.5 87.1

Organizational Restructuring Field Structure in FY2010/11

Cluster Head

Cluster Lead Cluster Lead Cluster Lead Cluster Lead


O&M Project SA EMG

Site Engineer Site Engineer


O&M Project

Technician

OEM

Revised Field Structure in FY2012/13

Senior Asset Manager

Asset Asset Asset


Manager 1 Manager 2 Manager 3

Technician

OEM
Source: Company documents.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 12 9B16M147

EXHIBIT 3: THE VIOM NEXT STRATEGY

Viom NEXT

CORE THEMES
Innovative 
Benchmark in 
Telecom  Industry Leader 
Operational 
Infrastructure  in Profitability
Excellence
Provider

FOUNDATION  Socially Responsible Employer of Choice
PILLARS
Smart and Embedded Use of Technology

Outstanding Values and Integrity

Source: Company documents.

EXHIBIT 4: VIOM COMPETENCY FRAMEWORK: OLD AND NEW

Relationship 
   Cognitive Cluster  Result Cluster 
Cluster 

Innovative thinking   Customer focus 
Learning and 
Viom Competency  developing people  Strategic and  Business results 
Framework:  analytical thinking   orientation 
December 2009  Professional  Process adherence 
Effective teamwork entrepreneurship   and excellence 
Drive for learning  Manage change 
   People Cluster  Cognitive Cluster  Result Cluster 
Viom Competency  Managing  Analytical problem 
Drive for excellence 
Framework:  relationships  solving 
September 2015  Building capability  Business acumen  Process excellence 

Source: Company documents.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 13 9B16M147

EXHIBIT 5: RATING SCALE FOR CORE COMPETENCY

Low Moderate High


1 (Novice) 2 (Learner) 3 (Competent) 4 (Proficient) 5 (Expert)
Does not meet Partially meets Meets Meets Exceeds
requirements requirements requirements with requirements requirements
stretch consistently

Source: Company documents.

EXHIBIT 6: PMS SCHEDULE, PROCESS, AND KRA-COMPETENCY WEIGHTING GRID

(A) PMS SCHEDULE: FY2014/15


Target Time Activities
May 2014 Goal Setting
KRA and KPI finalization as per Balance Scorecard
Every employee KPI-aligned with business targets
Oct 2014 April 2014–September 2014 performance appraisal
Appraisal on defined KRA and KPIs
April 2015 October 2014–March 2015 performance appraisal on defined KRA and KPIs
Annual appraisal: Competency Framework
May 2015 Performance rating finalization

(B) PMS Process

Matrix Manager Reviewer


(MM) Assessment Assessment
• Against • 50%
pre-defined weighting • Average of
• 50% MM and
KPIs and to FM • Approve
weighting FM score
comp score MM and
to MM
(Scale of 5) FM score
score
Functional Manager Final Score
Self (FM) Assessment
Assessment

(C) KRA: Competency Percentage Weighting Grid

Leadership Level KRA (Weighting) Competency (Weighting)


Band 1 (Highest) 50 50
Band 2 60 40
Band 3 70 30
Band 4 80 20

Note: PMS = performance management system; KRA = key result area; KPI = key performance indicator.
Source: Company documents.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.
Page 14 9B16M147

EXHIBIT 7: OTHER HUMAN RESOURCES INITIATIVES

Hiring Policy: For identifying talent, the company focused on lateral entry and preferred internal over external
hiring. In cases of unavailability of talent internally, external candidates based on employee references were
given priority before going to open market for recruitment. The selection process involved technical tests,
behaviour-based interviews, and personal profiling (psychometric tests).

CEO Club: For future leadership roles, Viom identified potential employees—promising potential “people
managers” for the organization. The company created a high-potential development program (CEO Club) aimed
at developing talent pipeline for critical roles. Potential was defined in terms of the employee’s aspirations,
alignment with Viom (i.e., adherence to organizational values and engagement, defined in terms of “say, stay,
and strive”), ability (ratings according to the Viom Leadership Competency Framework), and agility (role, location,
and function mobility). The assessment was done by both internal stakeholders (business heads and human
resources) and external experts, in the form of a development centre.

DET: The Diploma Engineering Trainees (DET) scheme was a one-year long training program for newly hired
DETs from colleges across India, in which young talents were developed to take up the critical roles of asset
managers. The program was intended to identify young, promising individuals as soon as possible and groom
them with respect to organization-specific competencies for future leadership roles. Individual performance was
reviewed on hard metrics.

Asset Managers’ Career Progression: Viom focused on career planning for asset managers with the intent of
identifying and enhancing the skills of high-potential asset managers of each circle (roughly 10 per cent of the top-
performing asset managers from each circle) in a phased manner, and preparing them for higher roles. Initially, 52
asset managers were identified for a year-long program based on PMS rating and competency assessment.
Source: Company documents.

EXHIBIT 8: COMPARING FINANCIAL PERFORMANCE

Profits from 2011 to 2016 ~ US$ 850 Million Reduction in Halved Debt Coverage Ratio
FY2016/17 Debt
Year PAT (US$ Year Net Debt (US$ Year Debt to EBIDTA
millions) millions) Ratio (US$
millions)
CAGR 73%-->

2011/12 −63 2011/12 1,572 2011/12 5.32


2012/13 14 2012/13 1,369 2012/13 4.06
2013/14 17 2013/14 1,089 2013/14 3.69
2014/15 27 2014/15 980 2014/15 3.38
2015/16 (Est.) 75 2015/16 (Est.) 723 2015/16 (Est.) ~2.47
In Line with Industry Best Returns Increased Seven Times Delivered Lowest D/E in Company
History
Fiscal Year ROCE (%) Fiscal Year ROE (%) Fiscal Year Net Debt to Equity
Ratio
2011/12 7.1 2011/12 −20.7 2011/12 5.16
2012/13 12.3 2012/13 5.0 2012/13 4.71
2013/14 12.8 2013/14 6.8 2013/14 4.32
2014/15 13.1 2014/15 12.2 2014/15 4.38
2015/16 (Est.) ~18.0 2015/16 (Est.) ~38.2 2015/16 (Est.) ~3.68

Note: PAT = profit after taxes; EBIDTA = earnings before interest, depreciation, and taxes; D/E = debt-to-equity; ROCE =
return on capital employed; ROE = return on equity.
Source: Company documents.

This document is authorized for use only in Prof. Meeta Dasgupta and Prof. Ankur Roy's Strategic Management-II./ PGPM course at Management Development Institute - Gurgaon, from
August 2017 to September 2017.