Virgin Mobile + Tata Indicom force to issue MVNO licenses

Finally, the executives in the Tata boardroom have woken up and took a bold step to let UK’s Virgin Mobile operate on their CDMA network without waiting for any MVNO license from DoT 🙂 Tata Teleservices will benefit from the deal as their mobile network is currently underutilized. Exactly a month ago, in a somewhat lengthy post, I had said Telecom is not a viable business for everybody and instead ambitious business houses should take the MVNO route.

Analyzing the deal closely, Virgin will act as a franchisee of Tata Teleservices [It is not TTSML] and resell its CDMA-based mobile services. However, the exact difference between a MVNO and a franchisee are not clear 😉 Virgin expects to add some 5 mn subs in the next three years (about 1.1% market share in 2010). Company also expects to break even in three years indicating that a 1.1% market share and this pricing would be sufficient for break-even levels.

Virgin mobile is mostly popular in the pre-paid segment amongst the youth in countries where it operates, a direct competition to Vodafone in India. Virgin is pricing outgoing calls at Rs1/minute for the first two minutes and Rs0.50/min after that. his compares with current rates of Rs1/minute for incumbents. I really doubt if the Indian youth will go the Virgin way as most of them don’t like to get locked on to unappealing CDMA handsets [one of the worst characteristics]. Virgin should also consider striking a deal with one of the GSM operators.

As usual, empty vessels [COAI] were making noises to block the deal but looks like there are no stops for the Ferrari lover Ratan Tata 🙂

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