Virgin Mobile Goes to India

After years of talking about it with various operators, Virgin Mobile Telecoms Ltd. is finally taking the plunge and launching a branded service in India with Tata Teleservices Ltd. to tap into the market's vast potential for growth. (See Virgin Launches in India.)

Having reportedly held talks with operators including Mahanagar Telephone Nigam Ltd. (MTNL) and Bharti Airtel Ltd. (Mumbai: BHARTIARTL) during the past three years, stunt-loving Virgin chairman Sir Richard Branson was in Mumbai Sunday to jump from the 20th floor of the Hilton Towers hotel (with the aid of wires, unfortunately) to unveil the logo of Virgin Mobile India, which will operate under a revenue-sharing deal with Tata Teleservices.

Virgin's deal with CDMA-based Tata is non-exclusive, and Branson is already talking about also tying up with one of the GSM-based operators, which account for the bulk of the country's subscribers.

"It's a pain to do GSM at the moment because the network is completely full," he told reporters. The Indian government has recently approved new licenses and spectrum for several operators and new companies, so "when the new GSM players start rolling out their services, we would look to offer similar services on GSM as well." (See Indian Gov't Grants Mobile Licenses.)

Virgin Mobile's entry into the Indian market has raised concerns among India's other operators as Branson's business is well known for its MVNO (mobile virtual network operator) operations in six other countries, targeting the youth market with value-added services such as music, games, and ringtones.

Currently, Indian government regulations prohibit MVNOs, but the branded franchise agreement with Tata doesn't involve Virgin setting up its own subscriber management and billing systems, which MVNO service providers need to run their operations.

Instead, Tata Teleservices will continue to use its Tata Indicom brand for its mass-market services, but will offer Virgin Mobile-branded services specifically to consumers aged between 14 and 25. Tata will pay a fee to Virgin for every user that signs up as a Virgin Mobile customer. The brand will launch initially in 50 cities, extending to over 1,000 cities by the end of the year.

Indian operators are continuing to pick up the pace, adding a record 8.77 million wireless subscribers in January for a total of 242.4 million. Tata Teleservices had 22.54 million wireless subscribers at the end of January, giving it a market share of 9.3 percent.

The 14-25 demographic is expected to yield 50 million new subscribers in India over the next three years, and the new venture is targeting a 10 percent share of those users -- 5 million subscribers bringing in revenues of INR350 billion (US$8.76 billion) by 2011.

— Nicole Willing, Reporter, Light Reading

Be the first to post a comment regarding this story.
Sign In