Within just two weeks of Virgin Mobile's entry into the Indian market, pre-paid mobile tariffs have started spiralling southwards. While Virgin launched with an aggressive scheme which allow subscribers to get paid for receiving incoming calls, Bharti Airtel has raised the battle pitch for the pre-paid mobile market by slashing airtime tariff to 50 paise a minute for its Delhi subscribers. The reduced tariff will be available for all mobile-to-mobile local calls. Pre-paid subscribers can avail themselves of the new scheme by buying a recharge coupon worth Rs 56 every month. The move comes after the Tata-Virgin combine raised the bar by launching mobile schemes for the youth segment offering airtime at 50 paise a minute. Most of the other mobile operators are charging Re One per minute on their pre-paid cards.
Mr Shashi Arora, CEO - Bharti Airtel Ltd. (Mobile Services), Delhi & NCR said, “We at Airtel have always been at the forefront in introducing best in class products and services for our consumers. This latest endeavour is towards making tariffs more affordable and within the reach of all income groups. We are sure our customers would find this opportunity very cost effective.”
However, the Virgin Mobile offer seems to be still more attractive as it allows subscribers to call fixed line users also at 50 paise a minute, besides getting paid for incoming calls. The Airtel offer is limited to mobile-to-mobile calls. The other difference is that while the Airtel offer does not give any talk time with the Rs 56 voucher, Virgin has a recharge coupon for Rs 50 with a talk time worth Rs 39. “Virgin Mobile branded services offer the best value for money for youth who call and text a lot. The way we do this is by rewarding them both for making outgoing and receiving incoming calls. Customers who make a lot of calls, will benefit from our 50 paise to any local network offer. Many third party experts agree that we offer great value for money.
For example, in a report released by Morgan Stanley earlier this month, they found that customers who made 140 minutes of outgoing calls could save up to 25-30 per cent if they used Virgin Mobile,” said a Tata Teleservices spokesperson.
More than 70 per cent of the 200 million mobile subscribers use pre-paid cards and they tend to change operators. Lifetime validity cards were launched just over a year ago by all the mobile operators in a bid to arrest the high churn rate, which is around 4 per cent. GSM operators are confident that they are ready for the Virgin blitz. Bharti Airtel, BSNL, Vodafone and Idea Cellular are internally gearing to up the ante in terms of pushing their own youth-oriented initiatives. “We are enhancing our youth-oriented advertising and marketing initiatives. Our entire customer service platform is based on self-service, where customers pick and choose what they want without actually interacting with a human interface and is aimed at the youth segment,” said an Airtel executive. Another GSM operator said that it was waiting for Virgin Mobile to unveil its complete range of value-added services. “It is still early days and we will react once the entire package is unveiled,” said a Mumbai-based operator.
Market watchers said that with more than 44 per cent of the user base falling in the youth segment, every player will be eyeing a larger share. GSM operators are taking comfort in the fact Virgin Mobile is on a CDMA platform which means subscribers will not be able to change the operator. “Youngsters like freedom, but the offer from Virgin will mean that one would be locked up on Tata Teleservices’ network,” said a GSM operator. GSM operators also said that the offer from Virgin to offer money for receiving calls works to their advantage because they also end up earning revenues. “About 80 per cent of the mobile base is on GSM and it is more likely that it will be a GSM user who will be calling a Virgin Mobile user. So a 10-minute call could mean earnings of at least Rs 5 for GSM operators,” said an industry expert.
However, what is working in favour of Virgin Mobile is that no other company can probably afford to replicate its advertising and communication strategy. While Virgin can be irreverent and funky since it is targeting only the youth, other mobile operators have to create a brand image for their larger mobile user community. GSM operators will also have to bear a huge cost if they were to match Virgin's offer to pay for incoming calls because of the large existing user base. Sources close to Virgin said, “Our entire proposition is based on simplicity and flexibility. This is backed by strong market research which clearly indicates that the youth are looking for an overall proposition, not a piece-meal approach that exists in the market today.”
With many new operators set to enter the fray Indian mobile market can expect more interesting days ahead.
With many new operators set to enter the fray Indian mobile market can expect more interesting days ahead.
5 comments:
Good analysis and the reality forutunately now is that mobile marketing is finally become niche in the true sense of the word..quite honestly for all the claims by the big operators GSM or CDMA the reality is there appeal and their marketing is striking similar not to mention neither has an outstanding proposition to talk home about...so jaded has the consumer become that the only thing that's keeping churn under whatever level of control is the affinity to their mobile numbers - and its only a matter of time with number protability around the corner..trust me when that comes the picture wont be pretty nor will the claims of any of the biggies :) i hope TRAI makes it mandatory for operators to report churn post that..
Only the Lonely!
I agree with you. Mobile Number Portability will change things to a large extent but given the cartel that exists among the existing players, the real punch will come when new players roll out.-tkt
For starters, no Indian subscriber is bothered about the technology--be it GSM or CDMA. All that they do is opt for a service based on the brand--Airtel, Vodafone, Reliance etc.
It does help to have a Virgin brand as part of the portfolio for Tata. That's because the group has made a series of goof-ups in its telecom venture from Day 1. Hopefully, they do not screw it up all over again.
Agreed tkt, number portability will change things. But what makes you believe that BSNL will let it happen in a hurry? Also, i won't be surprised if the Indian consumer goes back to the original operator within a year of porting. After all, there is not too much to choose between in the quality of service.
Virgin has not made any significant change in the way mobile services are priced. The 'get paid for incoming' is probably a good ply to attract new subs but may not work in the long run.
telecomguru's observation that subscribers are not bothered by technology is not entirely true. Its not the technology per se but the image created by the CDMA operators of it being a poor man's phone that is driving away the more lucrative user to GSM. There will not many executives who would own a CDMA phones and thats one of the reasons why now Tata and RCOM are looking to enter the GSM space.
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