Tuesday, 1 December 2009

MTNL looks to Virgin to rescue failed 3G launch – India

Six months after launching their 3G networks in Delhi and Mumbai, MTNL (state owned) has managed to amass 1,000 subscribers for the advanced service. On any scale this is not a feasible return on investment so MTNL put out to tender the network as a franchise.

Only 2 firms actually bid for the franchise with the other bid coming from Spice Group, whose MNO operation is now a part of Idea Cellular. Spice withdrew from the bidding due to inappropriate experience (specifically 3G) rather than being outbid.

MTNL has set Virgin a revenue target of USD 51.7 million for both the Delhi and Mumbai operations (each) over a 3 year period. Revenues falling short of target will be met with a fine of 10% of the difference (between actual revenue and targeted revenue, payable from Virgin to MTNL). MTNL also reserves the right to refranchise or to increase the quantities of franchisees should Virgin not succeed.

Virgin Mobile acts as an MVNO in India or as a franchise as they are locally referred to. The operation is a joint venture between Tata Teleservices and the Virgin Group.