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Indian mobile phone companies go mass market

What do cellular phone companies have in common with betel leaves?

Nothing by a long shot. But one Indian mobile phone company is using the humble spice-laden, red-staining betel leaf called "paan" that is used as a digestive aid to go mass market.

It represents the fledgling mobile industry's effort to shake off the popular view that mobile phones are only for the rich.

"Saada (ordinary) paan -- Rs 3, Airtime Rate -- Rs 1.78," declared an advertisement of Hutchison Essar in Wednesday's edition of New Delhi's Hindustan Times newspaper.

The price represents a real comedown for an industry, which charged up to Rs 16 a minute when it started in 1994.

"The idea is to expand the category of users. Earlier only the breadwinner of a family could have a cellular phone. Today he can think of phones for his wife, his two kids and probably even his driver," Sudershan Bannerjee, chief executive officer of Hutchison Essar said.

"We want people with cellular phones to talk more and those who do not want them to go and buy them," he said.

Hutchison Essar, in which Hongkong's Hutchison Whampoa and India's Essar group hold stakes, earlier this week unveiled new plans to lure customers with 40 per cent lower tariffs.

The New Delhi-based cellular operator introduced Talk295, a plan, which allows customers to make and get calls at Rs 1.78 a minute for a minimum monthly billing commitment of Rs 295.

It unveiled two other plans, Talk Easy and Talk795, which have tariffs pegged at Rs 1.98 and Rs 1.48 a minute for varying minimum monthly billing commitments.

WOOING CUSTOMERS

Hutchison is not alone here. Mobile companies across India, more so in the cities, are mounting aggressive drives to attract customers either by positioning their services innovatively or introducing tailor-made plans with attractive tariffs.

Late last month, the two main cellular companies in Bombay -- Hutchison Max Telecom and BPL Mobile -- flagged off the race for lower tariffs by announcing cuts in various tariff plans in a bid to expand their market.

Hutchison Essar's main rival in New Delhi, Bharti Cellular of New Delhi-based unlisted telecoms group Bharti Enterprises, quickly followed suit to unveil its range of subscriber plans on Tuesday.

Under its new "dream plan", Bharti will charge Rs 1.15 for every 30 seconds of incoming and outgoing airtime. Bharti too announced a slew of tariff plans for various customer profiles.

"We are targeting fence-sitters who have stayed away from owning a mobile because of a perception that it's expensive," said Sanjay Kapoor, chief executive officer of Bharti Cellular.

Both Hutchison Essar and Bharti have slashed security deposit charges for new connections to Rs 1,500 from 2,000 bringing down another major entry barrier for first-time users.

Mobile tariffs have been falling since the late 1990s and have helped the industry expand its subscriber base. In February, mobile firms in the two main cellular markets of Bombay and New Delhi slashed tariffs to around Rs 2.80 a minute from four.

India's mobile subscriber base grew 88.7 per cent year-on-year to 3.7 million at end-April 2001 but analysts and industry officials say the numbers are still way too low for its billion-plus population.

Analysts say the numbers spell potential for huge growth and not surprisingly firms are pulling out all stops to exploit it.

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