Essar to invest Rs 1,200 cr in telecom retail expansion

Essar Telecom Retail has entered into an agreement with the UK-based Virgin Group for brand licensing, technical and consultancy services for its mobile phone retail chain.

Virgin will provide its expertise in branding, customer care, store operations and staff training, and will also get royalty for use of its name.

The logo `Powered by Essar & Virgin' will accompany the store name of `The MobileStore'.

Telecom retail, it seems, is the latest buzzword in India, with Essar Telecom Retail, a unit of Essar Group, planning to increase the number of its stores from 250 at present to 2,500 by 2010. The company will invest Rs 1,200 crore over the next three years in its multi-brand telecom retail stores that operate under the brand name of MobileStore.

The company will also increase its headcount from 1,500 to 10,000 by 2010 and expects to close the fiscal with a revenue of Rs 1,000 crore. With this, it joins players like HotSpot, RPG Cellucom, Pantaloon and Subhiksha, who have announced big-ticket investments to tap the Rs 35,000-crore mobile market.

“Essar Telecom will also sell mobile phone connections, accessories, new connections and provide after sales support, repairs and other services. With these offerings, we are eyeing a 10% share in the next three years,” Essar Telecom Retail CEO Rajiv Agarwal told FE.

Currently, Essar has about 1.5% market share in the country and 4% market share in the 22 cities where it operates. In Delhi it enjoys a market share of about 8%. The company wants to focus only on telecom and related products to garner this pie and denies venturing into other retail formats.

Buoyed by sales of Rs 5 crore on August 15, the company has decided to continue with its scratch and win scheme, where its promises customers a gift worth Rs 5,000 on every purchase.

“Earlier we wanted to run the scheme only for a week, but after getting a positive response, we have decided to continue it till the competition does that,” said Agarwal. The scheme helped Essar sell 1 lakh phones in a single day.