I'm writing this article amidst all that speculation about the much hyped Virgin Mobile's India plans. Its only a matter of days now and then we'll see the world's most successful MVNO entering India (ummmm.....Grrrrr......uhhhhhhh through a non MVNO route). There's no doubt about Richard Branson's excitement about India as a business opportunity, Virgin's full fledged India foray was only a matter of when if not how. Virgin Music is planning an FM foray, Virgin mobile already present through multi branded mobile retailing JV with essar, Virgin Travel also mulling India entry etc. But i just cant help but write about its much hyped foray into Indian mobile space. One has to ask the question that if not MVNO route then which is it going to follow ?? (Because MVNO's arent allowed in India till date). Cross holding of more than 10% is also not allowed between service providers, so the 50% JV with Tatas doesnt allow Virgin to enter market with its own branded services. The Route which they are supposedly taking is the Franchise one (Remember Pizza Hut to Yum Restaurants). So the Virgin-Tata JV company is to become a franchise of Tata Indicom. Smart !!! Very Smart !!! Yet another case of a corporate entering the Indian telecom market through a backdoor route. I bet some months after the launch of ops, some arm twisting - some Branson visits - some threats of other british investments withdrawn will result in DoT allowing MVNO's (Does the story remind someone of Reliance and what happened in 2000)
So will a franchisee license allow virgin to sell its own branded phones ?? I Dont think so. It should be either Tata or Virgin-Tata cobranded phones & services. Will a supposedly high ARPU targetting virgin mobile want to get its brand associated with a mass market brand. What happens to its brand equity after it does get a MVNO license and is allowed to sell products & services under its own brand. If that was the story about one side of the coin, lets look at the other side, which thankfully looks brighter. Is there a business logic behind its India entry ? Lets analyse this in parts.
- Virgin is entering a market which is adding around 8mn subscribers every month. Every major operator is adding more than 1 Mn a month here. Its total world subscriber base today stands below 15mn. In such a scenario, if Virgin goes for a pan-India foray, it shouldnt take more than 3 years for it to double the subscribers. What we are talking is, in just 3 years there is a possibility that Virgin's India subscriber base far exceeds its cumulative subscriber base in its entire operators in the rest of the world. This looks a real possibility. If i were a virgin shareholder, i would jump up and down when i hear this analysis.
- The Second question: Is there a captive market for the much talked about virgin's services ?? Virgin till date has been hugely successful (and ofcourse profitable) with its VAS offerings. It plots success for similar strategy in india. I think this would be an ideal recipe for disaster. For Example, try selling(even promoting) a rescue date feature here and you wont stick around for long. It should learn something about Indian values & culture. The Target audience for its present VAS offerings look very limited in India. I'm telling this because, they are blindly launching 2 of their popular VAS offerings in UK & US in India (the rescue date feature being one of them)
- The Government wants to clear the route for MVNO licensing to get around the problem of spectrum crunch. Dont be too shocked if government offers sops on the platter to these companies or to the whole concept of Active Infrastructure sharing for that matter.
- Learn from Singapore: Well in the quest for hugher ARPU's, it shouldnt alienate its TMS. In short learn from Singapore. Positioning itself as a premium brand will ensure long leaves for its employees for sure.
Having said these, i do actually believe that Virgin will be a success in India but albeit in a much lesser scale than what Mr.Branson believes(atleast in the short to medium term). Virgin Mobile in India, will present him a second opportunity to crack the Asian market, after its bitter exit from Singapore in 2002. The Competition wont be quiet either. Vodafone sure knows how to tackle Virgin and its surge thanks mainly to the experiences it learned in its home market. Indiatimes (8888) will grab any opportunity to enter the wireless segment and till date, apart from yash raj films, no one has so much local Indian content as Indiatimes, so dont expect it to keep quiet either. The other side of competition will surely come from existing operators who will leave no stone unturned to expose virgin's backdoor foray and make its initial few years, surely the ones to remember. If i were Richard Branson, i would take all this and even more to double my existing world subscriber base in just 3 years.
6 comments:
Hmm .....
Santy baba ... thats sounding like a real consultant giving his unbiased analysis on the hottest topic of the industry
And true to point out this ... a few branson visits, a few threats to pull british investments, might result in DoT permitting MVNOs in India ...
Moreover, a country like India, where brand loyalty is defined by sheer price, I am really not sure how would virgin position itself. If it positions itself as a premium brand like it does in its parent companies, there would be a very few takers, if it positions itself as a mass market brand, then its diverting from its business model and its core competencies.
Well said, that India is adding about 8 m subscribers every month, but the point to note is that how many of them are willing to pay a little extra for virgin
clearly the market is nowhere except Metros. Adding to that the fierce competition that it might face from Indiatimes, Yash Raj Films & existing operators, the picture is not that rosy ...
Anyways ... a very well drafted article and Keep it up santy baba ...
Passhy
well kudos to your article santy bro. i do agree dat branson may play the bully and force a mvno scenario but the point is what mvno aproach will the regulators adopt the one like hong kong where they have made it mandatory for all operators to share 40% with an mvno or like australia where they only force prominent players to share or will it be like japan which is indifferent to the mvno's or like argentina flooding the market with mno license to avoid mvno or like italy where they have mvno's till 2011. well its a wait n watch scenario till then it seems like a distant dream. well the reactions of the exsisting operators wont be too good either with vodafone- airtel cartel or the AUSPI, COAI will all disuade the govt to allow this approach in a market which has the highest no of operators per circle.
well if we look at the facts true garg saab style then i think out of the exsisting suscriber base of 237mn 50% are the youth which is what virgin mobile seems to be targeting,also not forgettin that we are the youngest nations in the world i think the tms holds a lot of pottential.
well virgin would have to provide services which are regional and hold the perceived value promise as utility driven vas is still a distant dream in this majorly entertainment foccused market. they would have to tie up with film industries from all over the diverse country like ours i.e tamil and telegu industry in the south,bengali and bhojpuri in the north and ofcourse who can forget bollywood.
where as price senstivity of the not so loyal indians is concernd virgin would have to come out with
1. customised handsets to suit the market which is predominantly driven by low feature handsets dat do not support vas, so affordability is the key
2. also the 2 platforms for vas delivery i.e data and voice at rs3 and 6 respectively will have to be reworked as far as the price is concerned. they could shift the burden off the subscriber by gettin the mobile advertising platform involved.
also the voice platform in regional language will be the driving factor as the average indian does not understand english text instructions so well due to low literacy and poor analytical skills.
so i think a market which can add 83mn suscribers in the last fiscal and is at no 3 in the world just about to overtake usa and is still at 24% teledensity has lot of scope to accomodate the likes of virgins,vodafones, t-mobiles, telefonica movistars and the likes of them yet to look eastwards. rememba the sun rises in the east and this time it truly has.
A GREAT ARTICLE KEEP US POSTED SANTY
-- RAJESHWAR
Nice article santy .....
What i can perceive is that the virgins strategy has always been to invest in diverse portfolios like the music etc. If it doesnt get the required ROI it seems to backoff like it had done in Singapore. Also some other entities like the Virgin Records sold to EMI.
So Virgin may be at first investing in diverse entities by cashing on its brand image and later on divesting the unsuccessful entities.
But considering the fact that the pace at which the Indian telecom industry Virgin Mobile has to do well, At firstit will use TATA infra so it doesnt incur the high initial invest which other companies had to face. Besides this as rajeshwar pointed out, as indias major subsciber will be youth oriented it may give players
like Bharti stiff competition.
One more thing i would like to point out is that Virgin mobile in Europe has always bagged the best awards for the best customer satisfaction, and its customer care service has been gr8. In India this is one major disadvantage all the Operators are facing lets see If Virgin can make this better.
Good Article Santy keep it up...!!
Very well said prashant, virgin's indian journey is surely going to be rocky. Two Excellent poits raised by rajeshway & menon in their comments. 1) Customer Service as an USP and 2) using Mobile Advertising to subsidize VAS.
There is no doubt that Virgin has the capability to fully leverage on these two aspects but the question is, does it have the willingness and patience to do it ?? Hope it wont get caught in the landgrab that is presently ON in the market and may customer be the eventual winner.
Santosh.
hey nice article as said by other friends.. well even i think that the major emphasis virgin would concentrate on is customer centric VAS services and its huge advertising. but another thing to notice it is the competition from other vAS players. Since there would be a lot of pressure from operators like Vodafone and bharti to regional VAS players for creating innovative services counterfieting virgin's strategy. It can be a big battle ground but definately the clear winner would be the one who is customers choice...well also with its international exposure and various services virgin definately has an edge but ia m sure Indian players wont just sit back..so easily lets wait n watch....
Nice article and equally nice comments...actually very informative ...good to have different point of views....so finally virgin is in India ..the launch was made special by sky walk and some skirt tossing by ever young Mr Richard Brenson..and now even DOT has kind off given a green signal so soon we would feel the presence of a world class mvno(sorry to use this word)services in India......i feel virgin foray in India is a win win situation both for company and suscribers...virgin with its experience in customer service and vas services will set many new bench marks and will also give a much needed botox shot to TTSL portfolio..Virgin has already mentioned schemes like.....A user will be paid 10 paise for an incoming call that is more than a minute long ..call rates @ 50paise and cellphones in the range of Rs.2000-5000...etc.. so perhaps we can see some innovative and useful vas services like ..m commerce etc getting a push. Targeting the youth is a very smart option that the company has made and i hope to see better handsets being provided with the CDMA connections . The opportunity for Virgin is huge here with more than 50% of India's population is under 25 years of age.
This is Virgin Mobile's seventh launch globally and the company's largest investment yet in India .( Virgin also has Virgin Fever and Virgin healthclubs in India). Looking at there strategy Virgin mobile want to deliver a more tailored, more relevant offering for a single, distinct segment.
However it is a fact tht u cannot have a baby without labour pain ....same is the case with virgin....they have to not only maintain their synergy with TTSL but also have to make sure tht a smart metro youth chooses Virgin over other strong brands like Vodaphone ..Airtel etc...It would be exciting to see the transformation of Indian telecom market...however one thing is for sure ....the already king Indian customer now has one more service to rule upon...
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