Virgin and Tatas telecom alliance

By siliconindia staff writer   |   Monday, 15 January 2007, 06:00 Hrs
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MUMBAI: Tata Sons Chairman and Richard Branson of the Virgin empire plan to come together for the telecom industry in India. Sources say that Virgin group is in talks with Tata teleservices to launch the Virgin mobiles in India.

Globally, Virgin Mobile's business strategy is to act as a MVNO (Mobile Virtual Network Operator), which buys bulk space from an existing wireless company and resell it under the Virgin brand. However, this model is not yet allowed in India.

Nonetheless, Virgin plans to become an exclusive franchisee of Tata Teleservices, which is permitted in India. This will give rise to a new form of entity that will be largely owned by Tata Teleservices. However, things are going as planned for the venture and there is a probability that Virgin Mobile would be launched in April this year. However, none from the Tata Group were available for comment.

Tata Indicomm will be the mass market brand, while Virgin would be the youth brand pitted against brands like Hutch. This is because Tata Indicomm is not popular and not appealing to the consumer. Tata Indicomm has already established itself in the mass market category while Richard Branson's touch could bring in more subscribers.

This alliance comes at a crucial juncture when Dayanidhi Maran, Union minister of communications and IT, is trying to promote passive (mobile tower sites) and active infrastructure (branding, service alliances) sharing. This accordingly would help companies to reduce its cost of rolling out services. Though wireless subscribers in India have already crossed the 100-million mark, making India one of the top five markets in the world, still more than 50 per cent of the population is to be covered by mobile services.

For the Virgin brands, this is part of his strategy to expand his businesses, telecom, radio, food and beverages, financial services, in India. In 2005, Branson launched his airline Virgin Atlantic's flight services in India while Tata Teleservices pioneered the CDMA technology platform in India and it serves 13 million customers in over 2,500 towns.

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