Essar Telecom ties up with Virgin Group
The idea is to get into a co-branding pact for Essar Telecom’s retail stores christened "The Mobile Store".
By TNN |
MUMBAI: The Essar Group, after sewing up a joint venture with Vodafone last week, has now roped in Richard Branson’s Virgin group.
The idea is to get into a co-branding agreement for Essar Telecom’s retail stores christened The Mobile Store. Virgin group will allow “The Mobile Store” to display “Virgin” brand under a licencing agreement and avail of technical and consultancy services for a fee, Rajiv Agarwal, Essar Telecom Retail CEO and director said.
The 75 exclusive telecom stores now sell handsets & accessories, mobile connections & recharges, entertainment products like MP3 players, gaming devices and value added services. Other than providing these services to Essar’s rival GSM and CDMA operators like Airtel and Reliance Infocomm, the group is hoping Virgin will attract the younger generation into the stores.
The tie up will roll out with Essar leasing space across the country to set up shops and Virgin helping them design it, provide training to sales staff and co-branding the stores. Robert Samuelson, Virgin management’s director of telecom & media says when the government allows foreign investment in retail stores, the group is keen to buy a minority stake in the company.
Explaining the rationale behind the venture, Samuelson said, in developed markets, customers are shared equally between telecom operators and stand alone retail chains.
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By April this year, Essar group will add 125 stores to take it to 200 stores and 2,500 by 2010. The stores will be build in three formats: 250-300 square ft stores, 500-700 and 1,200 sq ft. ‘‘Our plan is to make these stores an interface between the handset maker and the service provider. The company will eventually own the customer irrespective of any service provider,’’ Agarwal said.Both Virgin and Essar are betting on the growing phone replacement market. The replacement time for a phone has been narrowing from 24 months to 18 months as compared to 12 months in UK and US. In Japan, the replacement period is 9 months, Samuelson said.
To strengthen the sales, the group is close to entering into an alliance with GE Capital to lend money to customers to buy handsets and get repaid in installments.
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