Richard Branson’s Virgin group has tied up with the Essar group’s The Mobile Store for the sale of mobile handsets.
India is the fastest growing telecom market in the world, with over six million new subscribers being added every month, and mobile phones have become the largest selling durable in the country, surpassing bicycles.
But, while this business is relatively high value and high volume, it’s also fickle because the price of new models can drop by as much as 50% within six months of launch.
“We are also looking for more such partnerships in the near future with Indian companies to bring our expertise in different businesses,” said Robert Samuelson, executive director, telecom & media Virgin management UK. Virgin is a diversified group with businesses as diverse as airlines, insurance and leisure like comics, games and gambling. Virgin also provides consulting services to Fever 104, a FM radio network operated by HT Media Ltd., the parent company of Mint.
The alliance with Essar is a royalty-based arrangement with Virgin providing expertise in retailing and branding. “The tie-up is not an equity partnership,” said Rajiv Agarwal, chief executive officer, Essar Telecom Retail.
Loose branding arrangements are going to be in vogue and companies will get into multi-brand tie-ups for short-term leverage and clear exit clauses,” said Harish Bijoor, chief executive officer, Harish Bijoor Consults, a Bangalore- based brand consultancy firm. “Virgin is an image brand while Essar is a ground-level distribution brand. So there is instant synergy between the two to leverage each other’s proposition,” he added.
Essar Telecom Retail plans to set up over 2,500 stores in next three years across 600 cities.