Free outgoing call creates a new price threshold

MUMBAI: The bugle was sounded for a fresh battle on Thursday in the booming Indian telecom market.

‘Don’t stop Mobile’, a new scheme unveiled by Tata Indicom across 20 circles that allows customers to make free outgoing calls for a period of 2 years to any Tata Indicom Mobile or Tata Indicom fixed phone. It allows a maximum outgoing talktime of 3,600 minutes (60 hours) to another Tata Indicom phone.

It was only in October last year that Tata Indicom had coined a new free incoming scheme called “non-stop mobile” which forced its competitors to follow suit quickly as new subscribers emerged to enlist for the Tata scheme.

The October scheme enabled subscribers to stay connected for two years without paying rental every month.

“We have started to get some scale”, declared Darryl Green, chief executive officer of Tata Teleservices Ltd at a function to launch the latest scheme.

Tata Tele is placed sixth in the pecking order for mobile phone operators in the country.
But its ambition is to become the leader in the field and this has sparked the company’s top brass to uncork innovative schemes regularly to rustle up new subscribers.

Would it spark another war? The CEO has a different take - “I don’t think of it in terms of a war; what we are doing is to make it affordable”, he says.

But making it affordable to the bottom of the pyramid in India is also a paying proposition.

According to Darryl, the margins before depreciation and interest is pegged at an astounding 60%.

For a country that started mobile telephony at tariff rates at Rs 16 per minute to free outgoing calls today, these are heady times.

Are they making profits, would be the first question posed by analysts doubting this strategy. Darryl maintains that the free incoming callers for two years provide them some revenue, which is far above expectations. “We have watched the non-stop incoming scheme very carefully,” he says.

Indicom earns average rate per user (ARPUs) of Rs 200 each from the free incoming scheme users. “We are very proud. We have started to gain some scale,” says Green. “It is the fastest growing pre-paid product in India with the unique 100% offering,” he claims.

The Indicom chief is definitely feeling elated by the response he has received so far. “We are in a business, we need to make some money too and a 8-10% growth in revenues every month is welcome,” he says.

With the new scheme, the Tata group company hopes to rustle up a fresh stream of mobile phone users to jump on to their Indicom bandwagon who are first time users and also jump on board from other service providers.  Telecom marketing has changed over the years. And mobile phone players such as Tata Indicom have played a role in re-defining the space.

“Are we in the telecom industry”, Darryl poses a question and ventures to answer his own question. “I believe, we are in the fashion industry”, he says in half jest. And the new launch is part of the ‘spring collection’ he adds.

To enlist new customers to its 9 million customer base that includes 5 million mobile phone subscribers, the company is obviously betting on prospective subscribers to also make calls to users from other telecom operators, where it can charge a fee.

Its novel two year free incoming scheme for pre-paid mobile service phones has worked well, forcing other telecom players to make similar offerings.

The Tatas have also struck a novel deal by getting Chinese handset makers to service their requirement which is cheaper than the Koreans, Japanese and tenh European handset manufacturers.

“Let’s zest tell you don’t stop talking,” Darryl says, in half jest, to his new phone subscribers.