Live Issue... Branding battle rages as India's telco market expands

A major branding battle is under way following the opening up of India’s telecoms sector. Tata DoCoMo, Aircel and MTS have become the latest players to enter the market. Those in the process of rolling out their services in the next few months include Unitech Wireless, which recently appointed Leo Burnett and ZenithOptimedia to handle its nationwide launch.

The new telco players are planning aggressive campaigns while the older players are busy guarding their territory. According to GroupM, the estimated telecoms adspend for 2009 is expected to reach US$419 million, a 15 per cent rise on 2008.

The primary strategy of the new telcos is based on pricing and segmentation. Arvind Sharma, chairman of Leo Burnett South Asia, which recently won the creative business of Unitech Wireless, says that telecom consumers in general have an enormous amount of inertia and tend not to switch brands. “New entrants are either dependent on new consumers or lower-end consumers who are looking for a deal,” he says. “The challenge for them is the marriage of an attractively priced product with an upscale brand image. How does a brand avoid looking cheap?”

Tarun Singh Chauhan, executive director of Lowe Lintas, which handles telco Idea Cellular, agrees. “India has some really strong brands already in this space offering a great product. Therefore, the offering new brands are making is price-based, which will hurt them at some stage.”

According to Sharma, among the new entrants, Tata DoCoMo, a joint venture between Tata Teleservices and NTT DoCoMo, has made an impressive entry. The telco launched its mobile services on 10 July and has introduced a per-second tariff scheme, a first in India. The scheme seems to have gone down well with low-spending consumers. In fact, it has been so successful that in September alone Tata DoCoMo added four million subscribers, more than market leader Bharti Airtel, which added only 2.5 million. Even though Tata is rumoured to be losing money, it has already launched services in 10 ‘circles’ (licence regions) out of the 23 it has been granted.

Besides its lucrative pricing, clear segmentation and aspirational advertising (its logo created by Wolff Olins can be read both vertically and horizontally) seem to have helped the quick take-up.

Its competitor MTS, owned by a joint venture between Sistema of Russia and Shyam Group of India, launched its service in March and has managed to net only two million subscribers in six circles. Experts say that MTS has not witnessed the success seen by Tata due to lack of a sharp proposition and segmentation. “It has an appeal that is broad and generic and does not say enough about MTS as a service provider,” says Sharma.

The established players like Airtel, Vodafone, RCom, Idea and BSNL are sticking to big-spending strategies that include sports sponsorship and advertising.

Chauhan says there is no change in Idea Cellular’s marketing strategy. “We have a long-term plan and vision for the brand in place and we are moving towards that direction. Price is a tactical issue and being addressed if needed.”

He adds that Idea, like other big telcos, will continue to sponsor cricket events and awards shows.

A telco marketer on one established brand, who did not want to be named, believes the new telcos are simple burning money. “Having 14 telcos in one market is not sustainable. Most big telcos already have 60 to 120 million subscribers and are too far ahead.”

But with India’s telco market predicted to double from its current 346 million subscribers to 730 million by 2013, there are plenty willing to take a risk on it.

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This article was originally published in 5 November 2009 issue of Media.