Banks, retailers, airlines can now offer mobile services

NEW DELHI: Private players such as banks, retailers or airline companies may soon be able to offer mobile phone services by bulk purchase of airtime from telecom operators after a high-level government committee gave a go-ahead to virtual network operators (VNOs).
The move, which had been pending with the government for a long time, will enable private non-telecom entities to enter the mobile phone business, but without owning the network or spectrum.
The move is also seen to be beneficial for telcos that are having excess spectrum and have no avenue to monetize the scarce resource. These will include struggling state-owned entities such as MTNL and BSNL.
The measure will allow businesses to offer mobile voice and broadband services under their own branding as they look at a greater engagement with their customers. This would help them in building up customer loyalty.
British businessman Richard Branson-promoted Virgin Group had started providing mobile services in partnership with telecom operator Tata Teleservices (TTSL) a few years back. However, telecom lobby group Cellular Operators Association of India objected to the partnership between them. Branson had later discontinued the business.
While a VNO may price its services at almost the same price as mobile operators, a customer may gain by getting benefits on the usage. "So a multi-brand retail chain in the VNO business may offer you redeemable points on your monthly mobile bills which can be converted into cash when buying stuff," Prashant Singhal, telecom sector lead with Ernst & Young, told TOI.
"Retail giant Tesco offers such telecom services in the UK and Air Asia in Malaysia. This is for customer engagement and I expect similar initiatives from banking, retail and airline players in India," Singhal added.
Hemant Joshi of Deloitte, however, said the measure comes in late and may not be very successful. "It's a little late in the day. Competition is fierce in telecom business and tariffs are low. Personally I don't think it will be very exciting."
With the approval of the telecom commission, the move will finally be approved by the telecom minister before it is rolled out. "VNO will be able to offer all telecom services provided by a telecom operator with which it has partnered. It can sell services of more than one operator," an official source said. VNOs are expected to reduce marketing and sales costs of telecom companies, besides sharing some operational expenses too.