The Hindu Business Line : Keen to catch `em young

Virgin Mobile, part of Sir Richard Branson's $24-billion diversified Virgin Group, has over 15 million subscribers globally and is looking at garnering 10 per cent market share of the youth segment in India.

Virgin Mobile India, is a sub-brand mobile telephony service offered under Tata Teleservices Ltd. Virgin Mobile operates through a franchisee agreement with Tata Teleservices and offers CDMA-based wireless services.

Prior to his recent appointment at Virgin Mobile India, M.A. Madhusudan was President of Tata Teleservices. He joined Virgin Mobile India from Tata Teleservices where he worked in various capacities since 1998. In his tenure at Tata Teleservices he was an important member of the core team that which led the company from a single-circle operation to pan-India presence with a subscriber base of 25 million. As President, Tata Teleservices, and as a member of Board of Directors, Virgin Mobile India, Madhusudan was closely involved with the Virgin Mobile venture from project to operational phase.

eWorld caught up with Madhusudan for an update. Excerpts from the chat:

You say `Virgin Mobile' is not an Mobile Virtual Network Operators (MVNO), so what is the arrangement between Tata Teleservices and Virgin Mobile?

We are not an MVNO, which has been clearly clarified by the Department of Telecom and Telecom Regulatory Authority of India. Internationally, an MVNO is a service provider who buys bulk minutes from another service provider who owns network and repackages and sells under his own brand. In India, we do not yet have a clear definition of an MVNO.

Our agreement with Tata Teleservies is a brand franchisee agreement. It is based on the brand property where Virgin Mobile adheres to the quality of the product and services and does not compromise on the brand and delivers it at a standardised quality.

In terms of operations, all the revenues generated by Virgin Mobile customers are accounted under the Tata Teleservices entity. Tata Teleservices shares a percentage of revenues with Virgin Mobile.

Obviously, then, The next obvious question is, doesn't Virgin Mobile service cannibalise on the Tata Teleservices base?

Globally what are the trends on this front?

Tata Teleservices had the same apprehension before they signed the agreement with us. As Virgin Mobile operates as an MVNO in is other countries, an assessment was done on this issue. where Virgin Mobile had its presence. It was strangely and pleasantly found that there was very minor cannibalisation happening, if it were happening.

Practically, Theoretically what you say may sound good but in practicality how do we describe cannibalisation? In the first instance, there are is opportunities for both Tata Indicom and as well as Virgin Mobile to tap the market, where people are not yet customers who are equally available to both of us.

The second is where Tata Indicom customers move to Virgin Mobile, which is what I call is cannibalisation. It is too early days but we have not seen this happening.

Why is that Virgin Mobile India targeted only at the youth and not the whole population?

We are late entrants and have to focus on a specific segment to grow and build the brand.

There are about 300 million mobile customers of which 40 per cent are youth and in the next three years another 50 million enter the youth population.

Our target audience would be the existing 120 million young customers but where we expect to have 10 per cent market share would be the 50 million youngsters.

Fifty million is a larger opportunity for us because we offer our mobile services along with a handset. So it is easier for first-time users to take Virgin Mobile compared to a person who is already using another service provider since he will have to invest in the mobile additionally.

It is over six months since your launch. that you have launched What is your subscriber base?

It is too early days to talk about subscriber base, now it is being reported along with Tata Teleservices. We have seen that 70 per cent of them are already users of another service and the remaining 30 per cent are first-time users.

It is easy to make them switch from another mobile operator to ours but the challenge for us is to retain them. It is here we want to offer unique mobile features and strengthen our customer service network.

We have found 10 distinct aspects of that 10 distinct mobile behaviour and usage of amongst youth as against the from the rest of the population.

It was found from our study that youth make more and longer calls more than double the industry average (the average is Rs 155 for CDMA and Rs 210 for GSM services). Youngsters have wider calling circles, use SMS three times and higher usage of value added services twice than the industry average.

The other insights we got from the results was that both voice and SMS usage are significantly higher at weekends than during the week, they purchase new handset every nine 9 to twelve months. Branding and styling influence on young people's choice of handset and service provider.

Nights and afternoons are the time preferred by young people to make calls to their friends which benefits us as well. Both Tata Indicom and Virgin Mobile share the same network, this behaviour of our customers helps us not to overload the network. During Since nights and afternoons the load on the network is fairly less.

How have you tried to offer unique mobile features and customer service network?

We introduced the `Get paid to receive calls' for our customers by which he or she will get 10 paise for every incoming minute received they receive from any network. It is a unique proposition by Virgin Mobile to attract customers it benefits the customer and us in the overall scheme of business you pay somewhere and get the benefit elsewhere.

We focus on our customer service - our servicing agents are called `Champs'. When a customer calls, the Champ tries to solve his or her issue if not gets back to the customer with a solution at the shortest possible time.

Young people are energetic and restless if we don't offer them an end-to-end service, the customer he might not call back if his problem when his is not sorted out and we would lose him as he would switch to another mobile operator.

sleena@thehindu.co.in

Related Stories:
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Virgin Mobile enters India through pact with Tata Tele
Virgin Group to launch new biz in ‘communications’

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