Wednesday, 5 March 2008

Virgin Mobile India to be derailed by Vodafone

A few days after going live with sell mobile phones in India, the world’s fastest-growing market, it seems like Sir Richard Branson faces being derailed by Vodafone. On Sunday, Sir the Virgin Group unveiled a partnership with Tata Indicom, under which the Indian company will market a mobile service aimed at young consumers using the Virgin brand.

However, a very powerful industry group, which includes Vodafone, the world's largest mobile operator, has now demanded that the Indian Government declare the deal void. The Cellular Operators Association of India claims Virgin is entering the market via the backdoor as an illegal "mobile virtual network operator" (MVNO), where it effectively buys mobile capacity wholesale from Tata and sells it on under its own brand - a model not permitted in India.

A spokesman for the Indian Department of Telecommunication said that Virgin could be ejected from the Indian market. "The spectrum [used by the Virgin-branded mobile service] was allocated to Tata. It is up to Tata to intimate any transfer of that spectrum to the department," he said.

Virgin runs virtual networks in six countries. When it launched in 1999, Virgin Mobile UK was the world's first MVNO – breaking with tradition by not having its own network but using another service provider's. Being denied access to India's explosive growth would be a severe blow to Virgin. While Western markets are largely saturated, it is estimated that more than 870 million of India's 1.1 billion population are yet to own a mobile.

It is only two years since India raised the ceiling for foreign ownership in telecoms groups to 74% from 49%, a move that led to a flood of new investment. The Indian authorities have received more than 550 applications from more than 45 domestic and foreign firms to launch mobile services in the country. (source: Timesonline)

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