Four Phase of IIPM Global Plans
Perhaps it was nothing but the ‘Divide and Rule’ trick that made the British rule the Indian subcontinent for centuries. Dividing the region, on the basis of caste, colour and above all religion not only gave them a superb control over its natives, but also kept stuffing their treasure chest. It just appears that the thought seems to be swaying Aircel (a 76:24 JV between Malaysia’s Maxis Communication Berhad and India’s Apollo Hospital Ltd.) too, in the same direction!
‘It’s time to move on’ is what Aircel (which has recently become a pan-India operator) is professing these days. And all by dividing customers on the basis of demographics (region, age, likings, et al)! It is in fact this approach that’s making a lot of people to sit up and take notice of this new kid on the block. But the question is will the company be able to make a mark for itself and give established players a run for their money?
Though Aircel kicked off its operations from the Tamil Nadu circle in 1999, it was only in January 2008 that the company was awarded a pan-India licence and a chance to paint India red and blue. Growing steadily from just four circles (Tamil Nadu, Chennai, North East and Assam), in which it’s already a market leader, the company at present has operations in 14 circles out of the total 23 circles. In fact, as part of its strategy, Aircel has just earmarked a whopping $10 billion (over a period of 3-5 years) for expansion. All to take its subscriber base from 17 million (market share of 5%) to a whopping 30 million mark by the end of 2009 and make its presence felt across India. Well, it is has started the journey from the Delhi circle and by April, Aircel wants to see its flags flying high in Mumbai as well and is then planning to look towards UP, East and West.
But then, won’t Aircel be perhaps the eight (or even the ninth in many cases) service provider to offer its services in certain circles? Isn’t there already an overdose of competition in these circles with very little scope for a newcomer? Moreover, according to a latest report, as the competition ramps up, telecom players, who are in pan India expansion mode, might see their profitability taking a big hit. “We expect the high capex, network opex and subscriber acquisition costs to weigh heavily on the margins of telecom players expanding pan-India (Idea, Vodafone and Aircel), on alternative technology (RCOM, Tata Tele, BSNL and MTNL) or launching fresh operations (Unitech, Datacom, Shyam, Loop, Swan, STel),” says the report by Kotak Securities. Further, many even fear that in the current market scenario, given the high penetration levels, it will be extremely difficult for a new mobile service provider to venture into a new territory and survive. So, has Aircel really done its homework before taking a deep plunge into an ocean full of hungry sharks?
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Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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