Friday, March 27, 2015

Tata Tele to Axe Down Virgin Mobile Brand

India's Tata Teleservices, a subsidiary of Indian of Tata docomo who offer GSM & CDMA voice & data services under primary brand name of Tata Docomo, with partnership from Japan's NTT Docomo is going to kill unnecessary sub-brand - Virgin Mobile.

Today I received a text message from TD-DOCOMO which says: Virgin Mobile is now Tata Docomo.

Bad part is existing Virgin Mobile users will miss some of VM's best tariff plans while on Tata Docomo.

In 2007 Virgin Group which uses MVNO model globally has partnered with Tata Tele to form a joint venture. It was a franchise model where Tata Tele sells its youth focused services under Virgin Mobile brand. Being CDMA it never saw popularity among users, though 'pay for incoming' and catchy TVCs promoted the brand to masses.
Tata Group is in the telecom space for long time from 1995, almost since the inception. Tata left the joint venture, so did AT&T and Adity Birla Group keep running the business as Idea. In 2003 Tata Tele re-entered the market as Tata Indicom with CDMA technology.

In 2008 Tata Tele decided to enter GSM space, Japan's telecom major NTT Docomo invested for 26% stakes. Tata Indicom rebranded as Tata Docomo for both GSM & CDMA services. Soon Virgin Mobile GSM was also launched. But that time the market was too fragmented due to too many operators pushing their services with lowest tariffs. Tata Tele launched Talk24 brand in similar model of Virgin with retail tycoon Future Group; it's more like a rewards program for Future Group's retail customers.

Virgin Mobile GSM also fails to move on. Tata become reluctant to it, and eventually in April 2011 Virgin Mobile planned for phase by phase exit from India, while Tata Tele can use the Virgin branding for another 3 years by paying a royality to Virgin Group. 

In the mean time Tata Docomo continues to make losses and NTT docomo decided to exit. Tata Sons was ready to buy it but Reserve Bank of India inclined to accept Tata's proposal to pay $1.1 billion for DoCoMo's near 26 percent stake in Tata Teleservices. Now Docomo have moved to international arbitration to resolve the case.

There are many stories that Tata may leave telecom sector or being a minority stake holder in a joint venture. However nothing goes true so far. Chances are Telenor, promoter of Uninor may unload Tata's stake in the venture but until a proper M&A rules come in.
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