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SSTL: Strengthening its market position through attractive data offerings

Company Stories , November 29, 2013

To consolidate its position in the Indian telecom market, Sistema Shyam TeleServices Limited (SSTL) has entered the 3G space by launching  the 3G PLUS mobile broadband service. The 3G PLUS service is based on the evolution-data optimised (EV-DO) Rev. B Phase II platform, which enables the operator to offer data download speeds of up to 9.8 Mbps.

The launch of 3G PLUS shows SSTL’s increased focus on the data business, where it offers services under the MBlaze brand. In this space, it plans to provide improved coverage and high speeds at low prices. The operator has priced its broadband service 20 per cent lower than its competitors. For example, it is offering post-paid subscribers 10 GB of data for Rs 875 per month as compared to Rs 1,000 being charged by other service providers. Further, customers can avail of 10 GB of free data for the first 30 days. Several other tariff plans are available at monthly rentals of Rs 700 (5 GB of free data per month) to Rs 1,399 (20 GB).

To drive the uptake of its 3G PLUS service, SSTL is strengthening its handset strategy. The operator has partnered with device manufacturer Micromax to launch six to seven handsets in the next two to three months. These will be EV-DO-cum-GSM handsets that will provide consumers the option of retaining their GSM number and using SSTL’s network for data services. The smartphones will be priced between Rs 5,500 and Rs 16,000. Beginning January 2014, SSTL plans to sell 60,000 to 70,000 smartphones per month. In addition, the operator is offering feature phones starting from Rs 1,399 bundled with 15 GB of free 3G PLUS data. In addition, SSTL is working with application developers and third-party content providers to develop local content, which is more relevant for users.

Elaborating on the company’s data strategy, Sandeep Yadav, head, data and smartphone business, SSTL, says, “SSTL is witnessing maximum growth in data business from Tier I and Tier II cities. The average data usage per customer in Tier I and Tier II cities is as good as that in metros. Therefore, we will aggressively push our 3G PLUS service in these markets without ignoring Category A cities, which comprise metros and the top 10 cities.”

Yadav adds that in the post-paid segment, SSTL will target high net worth individuals, and small and medium enterprises.

 Focus on data

Going forward, SSTL is aiming to significantly increase the contribution of data services to its total revenues. In the quarter ended June 30, 2013, SSTL witnessed a decline of 26 per cent in its data card subscriber base. The company attributes this to the closure of operations in 13 circles. For the quarter ended June 30, 2013, SSTL’s non-voice revenues (which include data and valued-added services) stood at slightly over Rs 1 billion. As compared to this, in the second quarter of 2012, the operator’s non-voice revenue stood at about Rs 1.26 billion.

According to Yadav, before the closure of operations in some circles, SSTL held about 55 per cent market share in the prepaid dongle business. Going forward, the company plans to replicate this success in the post-paid segment by garnering two to three times the market share it had in the prepaid segment. It is targeting year-on-year incremental revenue growth of 50 per cent in the data segment.

 Challenges

Despite having an aggressive approach to drive its 3G PLUS service, the operator faces competition from established 3G service providers such as Bharti Airtel, Vodafone India and Reliance Communications. These operators have the lion’s share in the data services segment. Moreover, these operators have significantly lowered 3G tariffs over the past year and a half to expand their data subscriber base. With several price cuts, the tariff war in the 3G segment has intensified.

Further, with the expected entry of Reliance Jio Infocomm Limited (RJIL), which is known for its disruptive marketing strategies, the industry is expected to witness significant churn in the 3G data segment. RJIL is expected to offer 4G services at competitive prices, which would encourage existing 3G users to migrate to the 4G network.

SSTL expects that the Rev. B technology, which enables higher data download speeds, will help it offer an enhanced service experience to consumers at affordable prices. Yadav points out that the operator had earlier launched data services using this technology in Jaipur and garnered 50 per cent revenue market share from data services.

In all, SSTL has prepared a strong road map to establish a firm foothold in the telecom space.

 
 

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