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NTT Docomo Not Happy With Tata’s Performance In Joint Venture; Plans To Exit?
Japan’s NTT Docomo which holds a 26% stake in Joint Venture (JV) Tata Docomo with Tata Teleservices is disappointed with Tata’s performance. According to Docomo, Tata has has not performed up to the promises made when signing on the Joint Venture. Hence, it is contemplating either a complete exit or increase its own stake to a controlling one.
What went wrong? India may be witnessing a very healthy growth rate in terms of subscribers, but, a closer look reveals significant number of those users are dormant. These users do not add to the bottom line. Additionally, Tata has realized the true revenue stream lies in data consumption.
India is now witnessing a paradigm shift wherein revenue matters more than subscriber numbers. In Tata’s case, the number of customers giving poor revenue was more than 10 Million. When Tata tightened the playing field, they lost these subscribers. Its total subscriber base crashed down to 80.2 Million from 90.9 Million in just a year! Tata’s loss has been a direct boon to smaller telecom firms like Uninor who managed to add customers. In case of Uninor it was about 19 Million, despite it going through a very bad case of infighting & may itself face a break-up soon.
Owing to such drain perhaps, Tata decided to shift its focus on the CDMA based pure data-only mobile services. However, NTT Docomo feels this move is insufficient. Industry insiders feel that while mobile broadband may offer a lucrative option to make money in the short-run, in India, good old GSM based voice calls is where the real money lies. While the GSM sphere has managed to speed ahead with a 24% rise in customer base, Tata has been the only company to actually bleed customers.
Tata Docomo had always been at the forefront when it came to explore alternate means to jack-up revenues. Through innovative Value Added Services (VAS) it has managed to carve a niche for itself. Will this setback spell doom for the JV?
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2012-08-10 00:20:26
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