virgin mob final

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Done in mumbai

EXECUTIVE SUMMARY

Virgin, a leading branded venture capital organization, is one of the world's most recognized

and respected brands. Conceived in 1970 by Sir Richard Branson, the Virgin Group has gone

on to grow very successful businesses in sectors ranging from mobile telephony, to

transportation, travel, financial services, leisure, music, holidays, publishing and retailing.

Virgin has created more than 200 branded companies worldwide, employing approximately

50,000 people, in 29 countries. Revenues around the world in 2006 exceeded £10 billion

(approx. US$20 billion).

Virgin Mobile enters India through pact with Tata Teleservices

Initial launch in 50 cities; offering SIM card-based CDMA service



Comes calling: Sir Richard Branson, Chairman and Founder, Virgin Group, and Mr Anil

Sardanah, Managing Director, Tata Teleservices Ltd, at the launch of ‘Virgin Mobile’ in

Mumbai on Sunday. – Shashi Ashiwal

Mumbai, March 2 Sir Richard Branson on Sunday launched the Virgin Mobile brand in India

through a franchise arrangement with Tata Teleservices.

TTSL, which is the second largest CDMA operator with 22 million customers, will sell the

youth-based mobile service under the brand name of Virgin Mobile.

The financial arrangements between the two companies were not disclosed, but an official

said TTSL would be paying Virgin what would be in the nature of a royalty fee.

Virgin will not be entering India as a Mobile Virtual Network Operator (MVNO), as feared

by some of the existing telecom operators, said Mr Anil Kumar Sardanah, Managing

Director, TTSL, at a news conference here.

An MVNO is an operator that does not own infrastructure, network or spectrum but leases

these to offer services. Virgin operates as an MVNO in all its global markets. At the news of

Virgin launching in India, the Cellular Operators Association of India had written a letter of

complaint to the telecom authorities.

Big investment:

This is Virgin’s seventh launch globally and its largest investment to date in India, said Sir

Richard, noting that the Indian market was very attractive, growing like none other in the

world.



The Virgin group and TTSL have also jointly established a company ‘Virgin Mobile India

Ltd’ to develop the new branded service. The investment details of this company were not

disclosed either.

The Virgin youth service aims to acquire 5 million subscribers over the next three years,

during which period it will become profitable too, Sir Richard said.

“The estimated population in India of people between 15 and 30 years is 400 million, almost

six times the whole of the UK population; and these numbers promise to be a lot of fun,” Sir

Richard said.

Mr Jamie Heywood, Deputy CEO, Virgin Mobile India, said there were 215 million Indians

aged 14-25 and over the next three years there would be 50 million additionally. In all,

revenues from this segment then would be over Rs 35,000 crore, he said.

To begin with, Virgin Mobile will be launched in 50 cities, and in a year’s time in over 1,000

cities. Specially designed handsets in the Rs 2,000-5,000 range would be offered by TTSL,

but customers are free to buy CDMA handsets separately, since Virgin would be offering a

SIM-card based CDMA service, the first such offer in India, said Mr Heywood.

Problem

Difficulty in capturing Telecom market in India

Objectives

1. To analysis compitetiveness



2. To study different targeted segments

3. To study the marketing and penetration of the product

INDUSTRY PROFILE

The telecom network in India is the third largest network in the world meeting up with global

standards. Presently, the Indian telecom industry is currently slated to an estimated

contribution of nearly 1% to India’s GDP.

Introduction

The Indian Telecommunications network with 500 million connections is the third largest in

the world and the second largest among the emerging economies of Asia. Today, it is the

fastest growing market in the world and represents unique opportunities for U.S. companies

in the stagnant global scenario. The total subscriber base, which has grown by 40% in 2005,

is expected to reach 950 million in 2012.

According to Broadband Policy 2004, Government of India aims at 15 million broadband

connections and 18 million Internet connections by 2012. The wireless subscriber base has

jumped from 33.69 million in 2004 to 62.57 million in FY 2004-2005. In the last 3 years, 99

out of every 100 new telephone subscribers were wireless subscribers. Consequently,

wireless now accounts for 74.6% of the total telephone subscriber base, as compared to only

40% in 2003. Wireless subscriber growth is expected to bypass millions new subscribers by

2012

The wireless technologies currently in use are Global System for Mobile Communications

(GSM) and Code Division Multiple Access (CDMA). There are primarily 9 GSM and 5



CDMA operators providing mobile services in 19 telecom circles and 4 metro cities, covering

2000 towns across the country.(2008)

Major Players in the market

There are three types of players in telecom services:

• -State owned companies (BSNL and MTNL)

• -Private Indian owned companies (Reliance Info comm, Tata Teleservices,)

• -Foreign invested companies (Vodafone, Bharti Tele-Ventures,

Escotel, Idea Cellular, BPL Mobile, Videocon, Spice Communications)

BSNL:

On October 1, 2000 the Department of Telecom Operations, Government of India became a

corporation and was renamed Bharat Sanchar Nigam Limited (BSNL). BSNL is now India’s

leading telecommunications company and the largest public sector undertaking. It has a

network of over 45 million lines covering 5000 towns with over 35 million telephone

connections. The state-controlled BSNL operates basic, cellular (GSM and CDMA) mobile,

Internet and long distance services throughout India (except Delhi and Mumbai). BSNL will

be expanding the network in line with the Tenth Five-Year Plan (1992-97).

The aim is to provide a telephone density of 9.9 per hundred by March 2007. BSNL, which

became the third operator of GSM mobile services in most circles, is now planning to

overtake Bharti to become the largest GSM operator in the country. BSNL is also the largest

operator in the Internet market, with a share of 21 per cent of the entire subscriber base



BHARTI:

Established in 1985, Bharti has been a pioneering force in the telecom sector with many

firsts and innovations to its credit, ranging from being the first mobile service in Delhi,

first private basic telephone service provider in the country, first Indian company to

provide comprehensive telecom services outside India in Seychelles and first private

sector service provider to launch National Long Distance Services in India.

Bharti Tele-Ventures Limited was incorporated on July 7, 1995 for promoting investments

in

Telecommunications services. Its subsidiaries operate telecom services across India.

Bharti’s operations are broadly handled by two companies:

The Mobility group, which handles the mobile services in 16 circles out of a total 23

circles

across the country; and the Infotel group, which handles the NLD, ILD, fixed line,

broadband, data, and satellite-based services. Together they have so far deployed around

23,000 km of optical fiber cables across the country, coupled with approximately 1,500

nodes, and presence in around 200 locations. The group has a total customer base of 6.45

million, of which 5.86 million are mobile and 588,000 fixed line customers, as of January 31,

2004. In mobile, Bharti’s footprint extends across 15 circles. Bharti Tele-Ventures' strategic

objective is “to capitalize on the growth opportunities the company believes are available in

the Indian telecommunications market and consolidate its position to be the leading

integrated telecommunications services provider in key markets in India, with a focus on

providing mobile services”.



MTNL:

MTNL was set up on 1st April 1986 by the Government of India to upgrade the quality of

telecom services, expand the telecom network, introduce new services and to raise revenue

for telecom development needs of India’s key metros – Delhi, the political capital, and

Mumbai, the business capital. In the past 17 years, the company has taken rapid strides to

emerge as India’s leading and one of Asia’s largest telecom operating companies. The

company has also been in the forefront of technology induction by converting 100% of its

telephone exchange network into the state-of-the-art digital mode. The Govt. of India

currently holds 56.25% stake in the company. In the year 2003-04, the company's focus

would be not only consolidating the gains but also to focus on new areas of enterprise such as

joint ventures for projects outside India, entering into national long distance operation,

widening the cellular and CDMA-based WLL customer base, setting up internet and allied

services on an all India basis.

MTNL has over 5 million subscribers and 329,374 mobile subscribers. While the market for

fixed wire line phones is stagnating, MTNL faces intense competition from the private

players—Bharti, Hutchison and Idea Cellular, Reliance Infocomm—in mobile services.

MTNL recorded sales of Rs. 60.2 billion ($1.38 billion) in the year 2002-03, a decline of 5.8

per cent over the previous year’s annual turnover of Rs. 63.92 billion.



RELIANCE INFOCOMM:

Reliance is a $16 billion integrated oil exploration to refinery to power and textiles

conglomerate (Source: http://www.ril.com/newsitem2.html). It is also an integrated telecom

service provider with licenses for mobile, fixed, domestic long distance and international

services. Reliance Infocomm offers a complete range of telecom services, covering mobile

and fixed line telephony including broadband, national and international long distance

services, data services and a wide range of value added services and applications. Reliance

India Mobile, the first of Infocomm's initiatives was launched on December 28, 2002. This

marked the beginning of Reliance's vision of ushering in a digital revolution in India by

becoming a major catalyst in improving quality of life and changing the face of India.

Reliance Infocomm plans to extend its efforts beyond the traditional value chain to develop

and deploy telecom solutions for India's farmers, businesses, hospitals, government and

public sector organizations. Until recently, Reliance was permitted to provide only “limited

mobility” services through its basic services license. However, it has now acquired a unified

access license for 18 circles that permits it to provide the full range of mobile services. It has

rolled out its CDMA mobile network and enrolled more than 6 million subscribers in one

year to become the country’s largest mobile operator. It now wants to increase its market

share and has recently launched pre-paid services. Having captured the voice market, it

intends to attack the broadband market.



TATA TELESERVICES:

Tata Teleservices is a part of the $12 billion Tata Group, which has 93 companies, over

200,000 employees and more than 2.3 million shareholders. Tata Teleservices provides basic

(fixed line services), using CDMA technology in six circles:

Maharashtra (including Mumbai), New Delhi, Andhra Pradesh, Tamil Nadu, Gujarat, and

Karnataka. It has over 800,000 subscribers. It has now migrated to unified access licenses, by

paying a Rs. 5.45 billion ($120 million) fee, which enables it to provide fully mobile services

as well.

The company is also expanding its footprint, and has paid Rs. 4.17 billion ($90 million) to

DOT for 11 new licenses under the IUC (interconnect usage charges) regime. The new

licenses, coupled with the six circles in which it already operates, virtually gives the CDMA

mobile operator a national footprint that is almost on par with BSNL and Reliance Infocomm.

The company hopes to start off services in these 11 new circles by August 2004. These

circles include Bihar, Haryana, Himachal Pradesh, Kerala, Kolkata, Orissa, Punjab,

Rajasthan, Uttar Pradesh (East) & West and West Bengal.



VSNL:

On April 1, 1986, the Videsh Sanchar Nigam Limited (VSNL) - a wholly Government owned

corporation - was born as successor to OCS. The company operates a network of earth

stations, switches, submarine cable systems, and value added service nodes to provide a range

of basic and value added services and has a dedicated work force of about 2000 employees.

VSNL's main gateway centers are located at Mumbai, New Delhi, Kolkata and Chennai. The

international telecommunication circuits are derived via Intelsat and In marsat satellites and

wide band submarine cable systems e.g. FLAG, SEA-ME-WE-2 and SEA-ME-WE-3.

The company's ADRs are listed on the New York Stock Exchange and its shares are listed on

major Stock Exchanges in India. The Indian Government owns approximately 26 per cent

equity, M/s Panatone Finvest Limited as investing vehicle of Tata Group owns 45 per cent

equity and the overseas holding (inclusive of FIIs, ADRs, Foreign Banks) is approximately

13 per cent and the rest is owned by Indian institutions and the public. The company provides

international and Internet services as well as a host of value-added services. Its revenues have

declined from Rs. 70.89 billion ($1.62 billion) in 2001-02 to Rs. 48.12 billion ($1.1 billion)

in 2002-03, with voice revenues being the mainstay. To reverse the falling revenue trend,

VSNL has also started offering domestic long distance services and is launching broadband

services. For this, the company is investing in Tata Telservices and is likely to acquire Tata

Broadband.

VODAFONE



Hutch’s presence in India dates back to late 1992, when they worked with local partners to

establish a company licensed to provide mobile telecommunications services in Mumbai.

Commercial operations began in November 1995. Between 2000 and March 2004, Hutch

acquired further operator equity interests or operating licenses. With the completion of the

acquisition of BPL Mobile Cellular Limited in January 2006, it now provides mobile services

in 16 of the 23 defined license areas across the country. Hutch India has benefited from rapid

and profitable growth in recent years. it had over 17.5 million customers by the end of June

2006. It was later taken over by the the Vodafone.

IDEA:

Indian regional operator IDEA Cellular Ltd. has a new ownership structure and grand designs

to become a national player, but in doing so is likely to become a thorn in the side of Reliance

Communications Ltd.

IDEA operates in eight telecom “circles,” or regions, in Western India, and has received

additional GSM licenses to expand its network into three circles in Eastern India -- the first

phase of a major expansion plan that it intends to fund through an IPO, according to parent

company Aditya BirlaGroup .

COMPANY MARKET SHARES:



Company Million Subs (Nov 2003) % share

BSNL 40.3 58.8

Reliance 6.1 8.9

Bharti 5.7 8.3

MTNL 4.9 7.2

Vodafone 2.9 4.2

Idea Cellular 2.1 3.0

BPL 1.4 2.1

Tata Teleservices 1.3 1.9

Spice 1.0 1.4

Escotel 0.8 1.1

Fascel 0.8 1.1

Aircel 0.9 1.4

Hexacom 0.2 0.3

Shyam Telelink 0.1 0.2

MAJOR MARKET TRENDS:



The telecoms trends in India will have a great impact on everything from the humble PC,

internet, broadband (both wireless and fixed), cable, handset features, talking SMS, IPTV,

soft switches, and managed services to the local manufacturing and supply chain. This report

discusses key trends in the Indian telecom industry, their drivers and the major impacts of

such trends affecting mobile operators, infrastructure and handset vendors.

Higher acceptance for wireless services:

Indian customers are embracing mobile technology in a big way (an average of four million

subscribers added every month for the past six months itself). They prefer wireless services

compared to wire-line services, which is evident from the fact that while the wireless

subscriber base has increased at 75 percent CAGR from 2001 to 2006, the wire-line

subscriber base growth rate is negligible during the same period.

In fact, many customers are returning their wire-line phones to their service providers as

mobile provides a more attractive and competitive solution. The main drivers for this trend

are quick service delivery for mobile connections, affordable pricing plans in the form of pre-

paid cards and increased purchasing power among the 18 to 40 years age group as well as

sizeable middle class – a prime market for this service.

Some of the positive impacts of this trend are as follows. According to a study, 18 percent of

mobile users are willing to change their handsets every year to newer models with more

features, which is good news for the handset vendors. The other impact is that while the

operators have only limited options to generate additional revenues through value-added

services from wire-line services, the mobile operators have numerous options to generate

non-voice revenues from their customers. Some examples of value-added services are ring

tones download, colored ring back tones, talking SMS, mobisodes (a brief video programme

episode designed for mobile phone viewing) etc. Moreover, there exists great opportunity for



content developers to develop applications suitable for mobile users like mobile gaming,

location based services etc. On the negative side, there is an increased threat of virus – spread

through mobile data connections and Bluetooth technology – in mobile phones, making them

unusable at times. This is good news for anti-virus solution providers, who will gain from this

trend.

Virgin Mobile Services

Product

Recharge Options

There are three types of Recharge Coupon Voucher of Virgin mobile.

Validity Recharge Coupon.

Top up

vPower

1- Validity Recharge Coupon table: -

Recharge

(Rs.)

Processing

Fee (Rs.)

Talk time

(Rs.)

Validity

(Days)

Service

Tax (Rs.)

Extras

200 78 100 30 22.00 50 Local SMS Free

249 41.61 180 30 27.39 300 Local SMS Free



499 44.11 400 180 54.89 99 Local SMS Free

299 217 50 365 32.89

295 10 Life Time 32.45

1- Topup Talk time Table: -

Recharge

(Rs.)

Processing

Fee (Rs.)

Talk time

(Rs.)

Service Tax

(Rs.)

10 1 7.90 1.10

25 2.25 20 2.75

50 2.50 42 5.50

100 3 86 11.00

199 0 177.11 21.89

svPower

Recharge MRP

(Rs.)

Validity

(days)

Benefits

STD Power 35 30 All STD @ Re 1/min

SMS Power 30 30 All Local SMS @ 20p/msg

ISD Power 30 30 Gulf Calling @ 3.99/min

SMS Power 39 30 500 Local SMS Free

YoYo Plan 28 30 700 min V2V 10p/min

V2V Pack 18 3 Local V2V @ 30p/min



Virgin Mobile Tariff Details

Call Tariffs Description Rs/60 Second pulse

(except for GPRC)

Local: First 2min/Day All Local Mobiles GSM &

CDMA Landline

1

3rd min onward/Day All Local Mobiles GSM &

CDMA Landline

0.50

STD All Mobile & Landline 2.4

Roaming: Local OG/min Calls made in visited network 1.4

Incoming/min All Calls from Home &

Other networks in visited

networks

1.75

sRoaming: STD OG Calls made from visited

network to home & other

networks

2.4

SMS: Local 1

SMS: National 2



SMS: Roaming 3.45

SMS: International 5

Cause of

Failure

As per the latest reports, number of mobile subscribers in India has crossed the 250 million

mark.

By April 2008, India is projected to become the second largest wireless market in the

world.

So, is it time to pop that bottle of champagne and celebrate?

Definitely. Second largest wireless market in the world -WOW!!! That’s indeed an incredibly

mind blowing statistic.

But the celebration will probably be short-lived. Why?

http://www.trai.gov.in/trai/upload/PressReleases/549/pr24mar08no27.pdf

http://www.trai.gov.in/trai/upload/PressReleases/549/pr24mar08no27.pdf



Because as the graph below shows, even though we are well on way to become the world’s

second largest mobile market, our average ARPU remains one of the lowest in the world.



As per the latest performance reports from TRAI, all India blended ARPU for GSM at the

end of the latest quarter was Rs 261 while that for CDMA was Rs. 176.

If you look at the stats over the past 9 months, they appear even bleaker. Over the past 9

months, ARPU has dropped 17.41% for GSM while it has dropped 10.20% for CDMA.

Minutes of Use (MOU) per subscriber has increased by a measly 2.2% over the past 9 months

for GSM players while it dropped by 11.56% for CDMA players.



Of this ARPU, what is the revenue breakup for various services / applications?

Here’s a chart highlighting the revenue breakup for GSM:



Here’s a chart indicating the revenue breakup for CDMA players in India

This 9 month trend is more than likely to continue. Fierce competition to add new subscribers

will continue to drive down the ARPU further. Number portability will only exacerbate the

problem - operators will need to drop prices to keep the churn rate at a minimum and stay

competitive. Voice and rental revenues - the two biggest contributors to the current ARPU,

will continue to dwindle due to market pressures and as the market matures. A Operators



will soon need to start looking for additional means to offset the ARPU deficit. And most

likely, its going to come from data services.

Problems

1. To sort out the problems of retailers:

• There were many problems observed and reported by the various retailers.

• Delay in activation,

• Problem of hanging of handsets,

• Connectivity,

• Settlement of claims,

• Lack of advertisement, etc

• There is no regional office and customer care centre of Virgin Mobile in near locality

which was the main complaint of retailers.

If these problems are solved on regular basis it would definitely help in the penetration of

Virgin Mobile in the market.

2. To sort out the problems of the exciting customer

• There are huge complaint from the customers such as

• Network problem

• Lack of availability of RCV



• No proper information from the Customer care

• No variation in the plans(i.e. SMS, TT)

• Its CDMA phone does not have many features

• Lack of the availability of the GSM sim

3. To sort out the problems of the potential customer i.e. marketing

• Publicity but no availability of the product

• Only CDMA phone available

• No variation in the plans.

SUGGETIONS

AND RECOMMANDATION

Company should do advertisement in Hindi being the most effective language in

Indian scenario because in India the Mother tongue is Hindi and most of the people

not know English so that the advertisement in Hindi are most successful.

Company should to launch the new Topup coupons in which the talktime should be

full.



The schemes & compensation of retailer should provide at the time.

Company should provide the trained FOS who regulate the multimedia handsets.

Virgin have large number of retailers but it is not supporting and take care all of them

equally which results in increasing discontentment among all the retailers because it is

not possible for a company to support all of them equally. Company should take some

positive action against it.

Company’s executive should visit at retailers and distributors on regular basis.

They should pay proper attention towards checking of various components of pc

before end user delivery. Otherwise it tends towards defame of brand name in

comparison to rivals.

Need of customer care center as the consumer base of Virgin Mobile is increasing

with tremendously fast pace

Proper attention should be paid for advertisement planning otherwise it may lead to

problem for distributor as well as company.



Company should tie up some event management company to organize various

promotional activities like canopy, carnivals.

Company should make policy for fixed end user price for all retailers and distributors

so that fair game will be played and retailers and distributors not to compromise on

their margin.

Questionnaire

1. What is your view on the Market potential of Virgin product?

a. Lowb. Mediumc. High

2. What is your view about the market potential about R.C.V. of Virgin Mobile?

a. Lowb. Mediumc. Highd. Can’t Say

3. Which Company’s R.C.V. gives most Commission on setting ?

a. Virginb. Reliance

c. Idead. TATA



e. Airtelf. Vodafoneg. B.S.N.L.

4. What is your view on Market potential of high price R.C.V. ?

a. Lowb. Mediumc. High

5. What is your opinion about the R.C.V. talk value ?

a. Goodb. Satisfactoryc. Can not Say

6. What is your opinion about the Extra Services provide by V.R.C. t the same

price?

a. Good

b. Satisfactory

c. Can not Say

7. Setting of R.C.V. with increase only by the setting of Handsets.

a. Yes

b. No

8. What your promotion activity for product and service?

a. Road shows

b. Direct selling

c. Cable Ad.

d. Banners

e. Customer scheme

f. word of mouth

g. Ad in newspaper

9. How much your satisfied with Virgin product & service?

a. Satisfactory

b. Unsatisfactory

c. Can not Say

10. Which promotion activity is most effective ?



a. Insertion

b. Canopy

c. Ad in Newspaper

d. Direct marketing

e. Depend upon Market condition

11. Do you satisfying with commission and schemes of Virgin Mobiles?

a. Satisfactory

b. Unsatisfactory

c. No comments

12. Which way you are preferring more to recharge the Virgin phone.

a. R.C.V.

b. E.V.D.

13. How much you sell the Virgin product in (Rs.)

a. Below 1000

b. 1000-5000

c. 50000-10000

d. 10000-25000

e. 25000-50000

f. 50000 above.

14. Which mode do you have for recharge the Virgin Mobile phone ?

a. R.C.V.

b. E.V.D.

c. Both

15. Which Company’s product you are selling more?

a. Virgin

b. TATA

c. Reliance

d. Idea

e. Airtel



f. Vodafone

g. B.S.N.L.

virgin mob final

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