rise, and, rise, Aircel

It’s time to move on

There is a new kid on the block and it is Aircel. It will be joining the crowded and fastest growing Indian telecom market. For the citizens of Tamil Nadu, Aircel is nothing new. Of the 17 million subscribers Aircel has, 10 million are from Tamil Nadu. The rest is scattered across south, north east and Jammu. There is presence but not significant.

Before you think that Aircel is a an off-shoot or a subsidiary of Airtel, let me tell you that it’s not. It is a joint venture between Malaysia’s Maxis Communications Berhad and Apollo Hospital Enterprise Ltd. Maxis holds 74% and Apollo owns 26%. Maxis has exhausted the FDI limit in Indian telecom space with its 74% stake.

Aircel for a while operated in 11 telecom circles. It operated in south, north-east and Jammu with a heavy concentration on Tamil Nadu. It was allocated spectrum to operate in all 23 circles. Following this allocation, the expansion plans of Aircel and the expansion has begun.

How serious is Aircel about its expansion plans?

Maxis has earmarked $10 bn for Aircel’s expansion plans. Of which $5bn will be spent over the next 3 to 5 years and $1bn for this year alone. It is adding a new city/circle every other week. It started its second phase with Bangalore and followed it up with a Delhi launch. Delhi already has 6 operators and has a tele-density of 90%. To launch a crowded market space of Delhi with 10 million subscribers one has to be different. How can a service provider in telecom space be different? Not lifetime validity as it is already old. It has to be lower tariffs and may be free SMS’s . Aircel did just that.

One of its new plan details :

Local call  : Re 1  for the first minute, 60 paise for the second and 40 paise from 3rd minute onwards. There are other stuff like 300 free messages for abroad and Re 1.75 per minute for calls to USA and Canada.

To gauge its popularity you just have to look around or if you are feeling lazy just turn on the TV. Every other program is being sponsored by Aircel. You can see it in the breaking news tickers too. You might have mistook it for Airtel. Even more appealing is the MS Dhoni ad. He charges a hefty sum for an ad. Just an indication of how serious Aircel is about the whole stuff. It has also sponsored Chennai Super Kings team for the inaugural IPL.But how does it stack up with the Reliance’s, Airtel’s and BSNL? I am really not too sure about that. One thing is certain. The mobile space will be a war fighting for the next customer. It is not the next million but the next customer. Getting a customer is easy and keeping him is the hard part. Many existing service provider did not pay attention to that. Adding to that is the proposed mobile number portability. Whenever that happens, all the new players including Aircel can lure the customers from the big boys.

Aircel might tap the public markets with an IPO whenever this economy settles and even have the cash to bid for 3G (requires 2020 crores as a base price). Aircel is a little ambitious with its expansion plans. It plans to touch 30 million subscribers by this year end. India already has 400+ million subscribers and from where do the next 10 million will come is a key question.  Aircel has to target new circles - mostly rural. Yet it should operate in cities to lure customers away from the big boys.

This is war and Aircel knows it.

Watch the new Aircel ad :

PS : Aircel rhymes with Airtel. Unlike Reliance I Phone this is different. There are no copyrights here. Airtel = Air + Tel (telecom I believe). But Aircel is more current. Aircel = Air + Cel (Cellular phone). 

Source : (one, two, three, four, five, six)