Mumbai: People shopping at retail outlets run by Future Group may soon be able to make mobile phone calls for free.
The group, whose companies run stores such as Big Bazaar and Food Bazaar, is entering the mobile phone business as a so-called virtual operator.
The idea is to allow customers to pay less for airtime as it has become a grocery item such as rice or sugar, said chief executive Kishore Biyani. The company plans to roll out the business next year. “We are not in a hurry. We have just begun talking with some network operators,” Biyani added.
“We plan to offer free outgoing calls to customers who buy food, groceries, clothes and mobile handsets from our stores,” he said.
Future Group will also sell the service to other customers at tariffs that are lower than those offered by other telcos because it will not incur any costs related to infrastructure or air waves.
A virtual operator, also called a mobile virtual network operator or MVNO, provides mobile voice and data services by buying talktime in bulk from licenced cellular service providers, without having to set up the infrastructure for a network.
New business: Future Group’s Kishore Biyani. (Ashesh Shah / Mint)
Virgin Mobile, owned by billionaire Richard Branson, kicked off the MVNO business in India this year, buying airtime from Tata Teleservices, which offers services under the Tata Indicom brand, and selling it under the Virgin brand.
The venture got regulatory approval recently after regulators decided to consider it a franchise agreement, in which Tata Indicom pays Virgin for using its brand and the British company acts as a dealer and sub-brand for its partner.
Virgin Mobile, an MVNO pioneer, has about 4 million customers globally.
Future Group, which has interests in real estate, logistics and media, has appointed consulting firm McKinsey and Co. and UK’s Value Partners Group Ltd as advisers for the business.
Future Ventures Ltd which has filed its prospectus with stock market regulator Securities and Exchange Board of India, or Sebi, is likely to invest in the venture.
Biyani, 47, said the group would not need too much capital to start the business. “It should be less than Rs100 crore.”
Deepankar Sanwalka, who heads the consumer markets team for global consultant KPMG in India termed Biyani’s plan a novel concept in the retail business that would benefit customers.
For retail chains such as Future Group’s Pantaloon Retail India Ltd, the business could be a “discount play” aimed at customer segments such as women or students, said another consultant, who asked not to be identified because he advises several companies in related businesses.
Annukka Kisski and Heikki Hammainen of Helsinki University of Technology, who have published a research paper on the MVNO market in Finland, said in their report that basic mobile subscription would become a commodity product and the competition would revolve around prices as markets mature.
Finland is the most saturated mobile phone market in the world with almost everyone in the country having at least one mobile phone.