AIRTEL MAGIC – SELLING A PRE-PAID CELLPHONE SERVICE

THE INDUSTRY STRIKES BACK Contd..

In January 2002, Spice allowed national roaming named Spice Quicky on its pre-paid card. In late 2002, in the light of price slashes by Bharti, Hutch and BPL, MTNL also slashed tariff rates of its Dolphin cellular service in Mumbai and Delhi, in order to sustain its market in these circles. Escotel, one of the leading cellular service providers in UP (West) launched roaming services (both incoming and outgoing) for its pre-paid card subscribers in late 2002. It announced plans to extend these services to its other circles as well.

In mid 2002, Idea Cellular Ltd. planned to focus on creating brand awareness and launched an aggressive advertising campaign with an ad-spend of Rs 630 million (7% of its net revenues). The company developed new TVCs to highlight the company's tagline ‘Liberation through idea.'Apart from its advertising strategies, the company announced plans to offer various value-added services that included games on mobile, SMS in 9 languages and pre-paid roaming facility. However, the company decided against the usage of celebrity endorsements for its pre-paid cellular service, Idea ChitChat.

Bharti's competitors launched various promotional campaigns for their brands – many of them copying those of Bharti's. While Spice awarded free talk-time to winners of a Soccer World cup related promotional event, the subscribers of Idea ChitChat in Andhra Pradesh could win gold coins, watches and talk-time under a special scheme.

However, the most severe competition was witnessed in the area of tariff reduction. In the Karnataka circle, Spice reduced tariff rates on its pre-paid cellular cards, Simple and Uth in mid 2002. According to the new rates, Simple subscribers were required to pay Rs 1.49 (30 seconds) both for incoming and outgoing calls (24 hours a day) and Uth subscribers were required to pay only Rs 0.5 (30 seconds) at night as against Rs 0.75 charged previously. In September 2002, Spice even offered interesting and even useful information like train timings, astrology, news, movie tickets, cricket updates, stock market news through its brand, Genie. With Hutch Essar entering the Karnataka cellular market as the fourth operator in 2002, both Bharti and Spice were devising strategies to retain their respective positions in the market. The case was the same in Andhra Pradesh (AP), where Hutch entered in August 2002. 

Hutch⁸ was becoming a formidable competitor for Bharti in many circles. With its aggressive marketing and promotional campaigns and a range of value added services, Hutch had garnered considerable shares in many circles by mid 2002.

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