Virgin and Tata – Losing the Virginity
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That Richard Branson’s Virgin group had plans to enter India was knows for a while now. The entry is announced now. Virgin will be entering India in collaboration with Tata Teleservices. Virgin will be using its brand name. And Tata will be providing the infrastructure.
Globally, Virgin Mobile is a Mobile Virtual Network Operator (MVNO). What that means is that it does not own any radio spectrum or mobile infrastructure, but merely resells the mobile service under its brand name. An MVNO buys spectrum minutes from other operators in bulk. And then rebrands and resells it, under its own brand to the consumers.
Operators who own their network spectrum and infrastructure are known as Mobile Network Operator (MNO). So an MVNO can work using any of the technologies of MNO, like GSM, CDMA, UMTS etc.
In India, MVNO operations are not allowed, so the company has entered into a branding joint venture with Tata and will be selling their services using Tata’s CDMA network.
The already white-hot Indian telecom market is set to see some more action with the entry of Virgin. Call rates in India are already lowest anywhere in the world. Virgin has now started a new incentive by giving the user credit worth 10 paise fro every one minute of incoming call that he received on
the Virgin phone. This credit can be used for other services on the Virgin phone.
Tata Teleservices native CDMA brand, Tata Indicom had failed to attract the youth. Through this relationship, Tata is looking at gaining the youth of India as its customers. Globally, the brand Virgin stands for rebellious, energetic young men and women. And the same is target audience and end customers for this JV.
On the launch, Richard Branson said in Mumbai
“Virgin Mobile is targeting the youth, aged between 15 and 30 years, estimated to be around 400 million, which is almost six times the size of that in the US. The usage of this sector is also high with urban youths’ mobile usage standing at around 360 million minutes compared with the industry average of 160 million minutes, while their SMS usage is four times more than the industry average”
The company plans to cover around 1000 cities by the year end. The target is to reach around 5 million customers in three years, at which point, breakeven will be achieved.
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