Transformation of telephones from a luxury to a necessity today has led to the materialisation of huge opportunity in the sector. The appearance of organised players that are expanding via franchise route is further fueling this opportunity. Explore....
Gone are the days when phones were just considered a mode of communication. Today, the usage of the phones has extended to multimedia messages, music and games; internet connectivity, and value added services. To cash-in on the rising demands for these services, various domestic and foreign telecom brands are rapidly opting for the franchise route to reach out to the wider consumer base. Growing economy, sheer size and diversity of the population, rise in the disposable incomes, change in the lifestyle and the advent of modern retailing offer tremendous franchise opportunities in the country. This article gives an insight into the Indian telecom industry (product and services) and the opportunity it holds for the aspiring entrepreneurs.
Growth in Telecom industry
The constant growth of the subscribers’ base in India is offering in-roads to take up the franchise model and emerge as a sure short winner in the industry. As per the annual report 2009-10 of Telecom Regulatory Authority of India (TRAI), the telecommunication sector in India has been witnessing highest growth rates in the world. This high growth rate was achieved with the service providers’ ability to offer innovative and low tariff plans, which has lead to the massive expansion of the subscriber base.
According to Srikant Gokhale, CEO, The MobileStore, “For modern trade retail, the industry is still nascent with just about 10 per cent share of the market. Therefore the potential is huge and with the Smartphone revolution, the modern retail trade share is all set to grow significantly in the next two years.” He further added that for the handset brands – the majority of revenue will come from the Smartphone category. The convergence of Information, Communication and Entertainment will drive the handset market. Evolution of 3G technology and other advanced technologies will drive the Application world on the phones. 2011 will see the launch of Apple iPad, iPhone 4, Moto Atrix and several new gadgets and technology in the country.
Franchising is the offering the best and the most lucrative opportunity not just to the franchisors to reach out to the distantly located consumers but also to the ambitious entrepreneurs. As Gokhale says, “Franchise route for expansion is historically the most successful medium to expand operations in minimum time and at multiple touch points. At The MobileStore, we believe that our learnings which have now transformed into some of the ‘best practices’ in the industry shall help both us and our franchisees to make it a ‘win – win’ model.” The telecom industry of the nation is emerging as an unparallel force that is lead by an army of telecom service partners that are wooing young population of the nation to partner with them and help them in expanding their service base.
Franchising in Indian telecom industry can be studied from two perspectives. One franchise players offering telecom services and the others offering telecom products. Telecom service providers like BSNL, MTNL, Vodafone, Airtel, Reliance Mobile, Spice Hotspot, Aircel, Uninor, an Indian venture of Telenor Group, Tata Indicom, Mobile Magic and so on are charting out their presence across the nation through franchise route. Whereas companies Nokia, Motorola, Sony Ericcson, The MobileStore, Virgin Mobiles, Samsung, LG and few more have also extended their footmarks in India by setting up retail service centres and exclusive brand outlets through franchise model.
Nokia has one of the largest distribution network with presence across 1, 90, 000 outlets. These include over 650 Nokia priority dealers across the country and nine Nokia 'concept stores' to provide customers a complete mobile experience. Tata Indicom also enjoys a pan-India presence through existing operations in all of India's 22 telecom Circles. Besides this, BSNL has recently has opted for a franchise model to monetise its Rs 8,313.80 crore investment on securing pan-India Broadband Wireless Access (BWA) spectrum. The company has opted for a franchise model on a revenue-sharing basis to use this spectrum. The company has short-listed three companies namely Teracom, Starnet and Take Solutions as its franchisees and will be responsible to distribute BWA spectrum in their respective territories.
Selecting a franchise and getting benefited!!
Aspiring entrepreneurs that are interested in getting associated with any of the telecom service provider and be a part of this thriving domain, all they need to have is the branded retail experience, handling exclusive of reputed brands and looking at investing in multiple stores. The investment to get started with a franchise business in the telecom industry may vary from company to company. For instance, Nokia requires Rs 20 -25 lakh while The MobileStore needs Rs four to five lakh to set up the outlet and Rs two to 2.5 lakh of working capital the franchise. Area to open the outlet may range from 500 sq. ft to 1, 500+ sq. ft.
As far as the training and support is concerned, the franchisees are often provided with soft skills, product features, systems and processes and latest technologies training. Franchisees also leverage SOP manual, distributor support, Solution Specialist/Promoter, if store meets criteria, POSM, retail planogram, dummy display devices, live demo devices, as per policy, schemes and promotions.
In spite of the accelerating expansion by the organised players of the telecom industry, the refurbishment of the telecommunication equipments are still left to the unroganised sector. Guarantee of original or genuine spare parts is still lacking in the industry, thereby leaving enough room for the new entrants from the organised sector to tap this niche segment of the telecom sector.