The Hindu Business Line : Recession and telecom

As most corporate honchos rack their brains wondering how to sail through the slowdown, D. Sathish Babu, founder of Chennai-based mobile phone retailer UniverCell ( www.univercell.in), is charting a course to make use of the opportunity provided by the market downturn.

“Global recession is good for telecom,” claimed Babu, during a recent e-mail interaction with eWorld. Owing to recession, prices of various commodities have gone up, while some companies have reduced workforce. “All these can cause people a lot of worries and they will want to share their thoughts and worries with others.” This means they will often need a communication device, and that is where the mobile handset and recharge coupons — UniverCell’s main business focus areas — come into play.

While it could be eerie for most of us to think of the airwaves filled with anguish, Babu, however, is positive that telecom retailing will not be affected due to the recession. “As of now, we have not been affected by the slowdown. Sales might slow down slightly during 2009. But we are looking forward to garner high business this festival season,” he says.

His optimistic thoughts seem to echo those of telecommunications analyst Jeff Kagan and President of Insight Research Robert Rosenberg. “After all, this is how we communicate and stay in touch,” Kagan had said, referring to telecom devices.

And Babu knows that with telecom moving north, the demand for handsets has to follow. He is also betting on the fact that India is one of the fastest growing mobile markets in the world. “India is next only to China in terms of market growth,” he says.

To ensure growth, Babu has also decided on his focus area. “Growth will be from tier III, IV and V towns. Telecom operators are currently focusing on increasing their coverage even in towns with population of just 4,000. We have ‘Operation Bharath,’ whereby we have plans to expand in rural markets. By 2009, we will penetrate towns with population below 20,000 through our own stores as well as through franchisees.”

No matter how the telecom wind blows, the entrepreneur can be credited with spotting trends early on. In 1997, he set up UniverCell to sell post-paid mobile connections. “Soon we realised that there was a dearth of proper retail outlets for mobile phones in Chennai and that customers went to the grey market for variety.”

That was when Babu saw the potential an organised mobile retailer has, and in 1999, the company decided to enter mobile retailing. “We opened Chennai’s first mobile retail store at Alwarpet, an upmarket location, offering consumers what they could never get in the grey market — good ambience, cordial service, mobiles with bill and warranty as well as after-sales service, and all at a fair price.” Since then, UniverCell has matured with the market. From the days when mobiles were a status symbol — with incoming call being charged around Rs 17 a minute — to the gadget becoming commonplace, or as Babu puts it, “a device of the mass”, UniverCell made waves in the city.

Today, mobiles are used for more than just communication. “People use it to listen to music, radio and even watch TV, for transactions, sending e-mails and for capturing videos and pictures.”

It, therefore, does not come across as hollow when Babu claims “UniverCell is as old as mobiles in Chennai.”

But the entrepreneur is adamant that he will not let the age factor slow down UniverCell. “We continue to focus on the product knowledge and customer service skills of our sales personnel. Our stores will be renovated to provide better live demo experience. We will continue to innovate in the area of mobile retailing.

“Training will play a major part in retaining our mobile expertise. We will be putting our people through in-house and on-the-job training before inducting them into the organisation. We will continue sending our people to various summits and seminars,” he says.

The retailer seems to have a clear understanding of the target customers — youth, the largest market for mobiles in the country — and the way to tap into their pockets.

“Today’s youth look at mobiles not just as a tool to communicate but as a reflection of their personality. The youths of India are conscious of value. We have provided music-vending kiosks in all our major stores through which people can buy legal content from a selection of 1,00,000 songs. We will continue to source products focusing on the needs of today’s youth. Of late, we have been bundling legal music — audio, of various new movies and providing them free to consumers, along with additional memory.”

The young are more informed about the latest in mobile technology nowadays, he says, and more people are switching to mobile handset providing instant e-mail, such as HTC and Blackberry.

“Today, one in four consumers wants mobiles that have touch-screen facility. Consumers are more demanding now than the early days.”

The growth in mobile market has brought competition. MobileStore, Hash10 and Subiksha, to name a few, have opened outlets, apart from the national players. But Babu does not seem to be perturbed by the presence of new faces on his turf. The market is big enough for several players, he asserts. It can accommodate national, regional and the general organised trade and all “will survive”.

Competition is a necessary evil, he says, before sharing his war strategy. “We will continue to take care of our customers and hope the customers will take care of the competition.”

To take on the competition more effectively, UniverCell has tied up with several network operators. Earlier, they had one tie-up.

He adds that UniverCell’s service orientation makes it a force to reckon with. “Irrespective of whether you buy a mobile at our store or not, you can come in and see a live demo of all phones — from the entry-level ones to the top-end ones, such as Apple, HTC or Blackberry. Also, you can call for a live demo at your doorstep,” he says. But he concedes that the high cost of real-estate and the lack of availability of (affordable) retail spaces have become a cause of concern.

dmurali@thehindu.co.in

Related Stories:
Sales of high-end mobiles decline
UniverCell in talks with pvt equity players
UniverCell stores in Bangalore

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