DraftFCB Ulka has added another Tata brand to its kitty. It will now handle Tata's GSM business, a joint venture between Tata Teleservices and DoCoMo of Japan.
The company is being called Tata GSM for now because the brand details are still to be finalised. Confirming the news to afaqs!, Sanjeev Bhargava, chief operating officer, DraftFCB Ulka Delhi, reveals that the agency won the business following a creative and strategy presentation.
It is learnt that both the agencies on the Tata Teleservices business, Contract and DraftFCB Ulka, were reviewed for the GSM business. The media duties for the account continue to be with Lodestar Universal for the moment, but sources indicate that these could also be reviewed if necessary. Tata GSM will be handled out of Delhi.
The agency also looks after Tata Consultancy Services (TCS) and Tata Teleservices (Maharashtra) Ltd (TTML), which spearheads the Tata Group's presence in the Indian telecom sector, providing services in Maharashtra, including Mumbai, and Goa. TTML is handled out of Mumbai.
Contract, the other agency on the Tata roster, handles the creative duties for Tata Teleservices Ltd (TTSL).
Entering a cluttered segment
Till now, Tata was present only in the CDMA segment of the telecom space. Its CDMA brand, Tata Indicom, is part of TTSL.
In November 2008, after it decided to step into the GSM segment, Tata entered into an agreement with Japanese telecom major NTT DoCoMo, and the Japanese company acquired a 26 per cent stake in TTSL for US$2.7 billion.
A quick look at the Indian telecom market today reveals that there are nine major players, Airtel, Reliance, Vodafone, BSNL, Idea, Spice, BPL, Aircel and MTNL. Another six players, not counting the Tata-DoCoMo venture, are waiting to enter, mainly through mergers and acquisitions.
Bharti Airtel is the leader in the GSM space in India at the moment, but recent entrants such as Reliance have already begun to eat into its share. Reliance is already the leader in the CDMA segment.
Of the new entrants, Unitech-Telenor and Loop are eyeing the GSM space, while Sistema Shyam Teleservices is looking at CDMA. The CDMA route is shorter and quicker than the GSM one in terms of brand building because there are only two players - Reliance and Tata Indicom - in that space as of now.
The nine existing players in the Indian telecom space are already fighting for around 300 million subscribers, and soon, with seven more operators entering the field, the fight for the estimated 400 million subscribers is going to become grim indeed.
In such a situation, how easy is it going to be for TTSL to introduce its new GSM offering? In reply, Bhargava of DraftFCB Ulka charts out the logistics and says that telecom penetration in the country is only 30 per cent as yet - "that means we still have 70 per cent to go! That only implies that there's still a lot of room for other players."
What about making space for the brand per se? Bhargava says, "Tata is a strong brand in India and stands for trust. DoCoMo, however, is relatively unheard of in India - its superior technology is what makes it stand out. The brand will have to carve out a niche for itself in the market. At the functional level, differentiated products are what could help it move forward."
According to analysts, the telecom sector is the only one which remains quite salient even in these turbulent times. And so many new players waiting in the wings are possibly testimony to the accuracy of their analysis.
Apart from being the least hit by the slowdown in the economy, the telecom as well as the FMCG categories are the only categories to have witnessed a sustained ad industry growth rate. According to industry estimates for the year 2008, Bharti Airtel leads in the telecom space with an aproximate ad spend of Rs 200 crore; Vodafone spent around Rs 150 crore.