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Idea and Tata Indicom are still trying to get the right number...
A
German scholar once said, “Even strongest have their moments of fatigue.” K.M. Birla and Ratan Tata, the two behemoths of Indian Inc. would definitely nod their heads in silent approval, if not disagree completely. The two may be taking strides in global business arena, with Ratan Tata acquiring Corus and K.M. Birla gobbling up Novelis, however, a glance at Indian telecom sector and it’s not tough to comprehend what fatigue we are referring to. Tata Teleservices (Tata Indicom) and Idea Cellular, the respective telecom service companies of the giants, are having a trying time connecting to customers as they agonise over 5th and 6th positions, respectively.But, why are we talking about their agony, when the reference is to the No.3 player. Interestingly, No.2,3,4 players; Reliance, Hutch and BSNL are so close to each other in terms of subscriber base that they can easily be clubbed as one (see chart). Now, while these players are also far from the No.1 slot, their individual might in specific circles, at least grant them a level of leadership in the sweepstakes.
Coming back to Idea and Tata: Not only they are far behind the giants like Airtel, Reliance, Hutch and BSNL but both the players have also failed to grab a minimal 10% market share despite the strong growth exhibited by the sector in the past two years.
In spite of having the Tata Group’s deep pockets, its worth-a-million-dollars tag along with the celeb couple – Ajay and Kajol as its face, Tata Indicom has failed to make a place for itself in the CDMA space, alongside Reliance’s leadership position.
“A high quality 3G-ready network and an extensive
branded retail presence are sources of our competitive advantage...” says Ashok Sud, President –Corporate Affairs, Tata Teleservices. The past month witnessed the service provider go on a advertising binge positioning its service as one that ensures ‘Clarity in Communication’. The group has also earmarked Rs.4,000 crores for expansion during 07-08. Idea, on the other hand, showed renewed energy after the take over by Birlas but real numbers are not happening for this marketing events friendly player. Its model is to strengthen its presence in its existing circles (it operates in 13 of them). However, where Bharti, BSNL and Reliance control all 23 circles, Idea lags behind with just a 60% presence in the telephony market of India. The two laggards of the telecom sector aside, even players like Hutch, BSNL and Reliance are far behind the market leader – Airtel which is ahead of the trio by a huge margin. With monthly subscriber additions touching an all time high of seven million, Bharti continues to lead with over two million additions in June 2007. With telecom sector redefining the meaning of growth, let’s see how the players arm themselves against the mighty Airtel. If they continue at the old snail pace, a bigger danger called Vodafone might dwarf them even further...Edit bureau: Devdeep Singh
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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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