Ronnie05's Blog

ADA (Reliance Telecom): Exercising Muscle to gate crash into the GSM party

Posted in Industry updates by Manas Ganguly on February 2, 2009

Airtel execs and business managers are withering hard times and so will it be over the next 3 months. The 33% market share GSM Telco in India faces its touchest competition on the Indian turf till date: Reliance GSM national roll out. Interestingly in East India, where both these service providers compete in the GSM space, Airtel trounces Reliance by a factor 2x – 3x! This could however be explained by lack of emphasis on GSM by Reliance and a hindrance in terms of pan India absence. (Airtel has been blaring its pan India presence in Ads)

After its launch on December 28, 2008, Reliance has taken the battle to the Airtel camp. So long a majority player in the CDMA space, Reliance is using its CDMA business infrastructure, retail outlets and distributors and reach as a starting point. That effectively reduces the roll out cost and time most significantly. Reliance GSM coverage between launch and today has crossed 14,000 towns and the goal is to reach 24,000 towns and 600,000 villages across India linking the widest diversity of 1 bn people on the planet. this was the fastest network rollout in the world within a span of 11 months, 6 months ahead of its schedule. It took 15 years for other competitors to achieve the same coverage.

The opening gambit at Reliance is free talk time to users worth 450 minutes over a 90 day period (5 minutes per day). It could make a sweep at the lowere end of the customer pyramid and there are some serious numbers there. Reliance and Anil Ambani are hoping that after the honeymoon of 90 days, it would have a sizeable volume based on churn from other operators as well as new net adds.
So this would be battle toyal between two companies played on the low tarriff and subscriber addition turf. Reliance has made its opening move with a talk time discount. Very soon, this promises to be an all out tarriff war. Airtel would look to reduce the churn and Reliance would be exteremely aggressive on customer acquisitions. Going back to my blog on Customer loyalties, with very little separating and differentiating Airtel from the challenger, Reliance in terms of service, network and consumer loyalties, Airtel could bleed. Reliance will try to limit its cost of acquisition.
However, the question remains, HAD AIRTEL DONE BETTER ON CREATING LOYALTIES IN CONSUMERS by building its loyalty and service credibility, it would probably have been lesser worried about the churn it would be facing in near time future.
References:
http://convergence.in/blog/2009/01/24/reliance-gsm-mobile-customer-experience-launch-beats-expectations/
http://convergence.in/blog/2009/01/23/reliance-communications-lackluster-q3-arpus-down-8-qoq/

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