March 3, 2016
Virgin Mobile Telecoms Ltd. will be launching a branded service in India in conjunction with Tata Teleservices Ltd., following years of speculative talks with operators.
In a stunt typical of the Virgin chairman, Sir Richard Branson jumped on Sunday from the 20th floor of the Hilton Towers hotel in Mumbai – though with wires to break his fall – and this time managed not to rip his trousers, all in the name of unveiling the logo for Virgin Mobile India.
Virgin are finally able to tap into India’s vast potential for growth with this revenue-sharing deal with Tata Teleservices, after having (reportedly) been in talks with operators such as Mahanagar Telephone Nigam Ltd. (MTNL) and Bharti Airtel Ltd. over the past three years, trying to negotiate a deal.
As the deal with CDMA-based Tata is non-exclusive, Branson has felt free to ply for business, targeting one of the GSM-based operators, which account for most of the country’s subscribers.
As the Indian GSM network is full at the moment, Virgin are looking to offer services only once new operators and companies start to work under their freshly-approved licences and spectrum.
Other operators in India have been concerned aobut Virgin Mobile’s entry into the Indian market, as Branson’s business its MVNO (mobile virtual network operator) strategies in other countries, in which they target the youth market with value-added services like music, games, and ringtones.
The Indian government regulations do not allow MVNOs at the moment, and Virgin’s branded franchise agreement with Tata doesn’t involve the giant setting up its own subscriber management and billing systems, which MVNO are what service providers need to run their operations.
Tata Teleservices will instead continue to use its Tata Indicom brand for mass-market services, but will target consumers aged between 14 and 25 with Virgin Mobile-branded services.
For every user that signs up as a Virgin Mobile customer, Tata are to pay a fee to Virgin, and with the brand set to launch in 50 cities (extending to over 1,000 cities by the end of the year) the pay-off for both companies looks to be huge.
Analysts predict that the 14-25 demographic will yield 50 million new subscribers in India over the next three years.
The new venture is targeting a 10 percent share of those users, with 5 million subscribers bringing in revenues of INR350 billion (US$8.76 billion) by 2011.