(By Anupam Saxena and Nikhil Pahwa)
Virgin Mobile may exit from its Indian JV with Tata Teleservices: citing sources, Money Control reports that Tata Teleservices may buy out Virgin’s stake in the JV company, and that the buyout will take place over a period of time, with the stake slowly reducing from “15% to 9-10%”. The report says that Virgin Mobile India will however, continue to use the ‘Virgin’ brand name for three years, for which Tata Teleservices will pay a royalty. Readers might recall a statement made by Tata Teleservices in 2008, stating that it has the exclusive rights to the Virgin brand name in India, and Virgin was unable to ink cross-operator tie-ups for mobile telephony.
Switch to 2011, and the market is now grappling with an unhealthy mix of scams, rock-bottom pricing (initiated by Tata Docomo), multiple SIM cards and customer retention with Mobile Number Portability. Also note that despite being launched with much fanfare and quirky ads targeting the touch, the Virgin Mobile partnership hasn’t really set the Indian market ablaze; while Tata Teleservices doesn’t break out subscriber numbers separately for Virgin, the active usage data reflects rather poorly on the company. We were told by a spokesperson last year that Virgin Mobile was being run by a team within Tata Teleservices.
Financials For FY09
This talk of sale comes three years after Virgin Mobile started operating as a franchisee brand of Tata Teleservices. According to a Directors Report for the year ending March 31st 2009 filed by the company with India’s Registar of Companies, Virgin Mobile India Private Limited reported net revenue of Rs. 3,223,913,000, a Loss before Finance Expenses, Depreciation, Amortization and Taxation of Rs. 4,077,183,000, and a Net Loss for the year of Rs. 4,398,808,000. We haven’t been able to find a directors report for the year ending March 31st 2010 with the Registrar of Companies.
Virgin Mobile India Private Limited was incorporated in India on March 30th 2007 as Red Bottle Telecommunication Consultancy Private Limited, as a 50:50 joint venture company promoted jointly by Virgin Investments Mauritius Limites and Tata Teleservices Limited. The name was changed to Virgin Mobile India Private Limited on December 18 2007. The company started commercial operations from March 2, 2008.
In 2009, Virgin Mobile made an exit from the US market, where it had a JV with CDMA carrier Sprint Nextel. Virgin had sold its majority stake for $483 million, however, Sprint still uses the brand for its prepaid services.