Blyk's Antti Öhrling and Aircel's Gurdeep Singh at the launch of Blyk on Aircel in November 2010

Indian carrier Aircel teamed with youth media firm Blyk to launch a content and advertising service in November 2010. It represented the first deployment for Blyk outside of Europe, the firm having switched its model from ad-funded virtual operator to carrier partner after its MVNO play failed to gain the necessary traction. Blyk co-founder Antti Öhrling and Aircel COO Gurdeep Singh spoke to Mike Hibberd about the drivers behind this latest partnership, and the firms’ plans for the future.

Demographically, India would appear to be the perfect place to launch a youth-centric mobile service. For a start, there are hundreds of millions of young people there—a whopping 55 per cent of the Indian population, which is approaching 1.2 billion in total, is below 40 years of age.

Mobile penetration is over 60 per cent, and even higher among the younger population, while fixed penetration is low—and in decline. Today 95 per cent of Indians’ first telephone calls are made over mobile networks and, with fixed broadband penetration languishing in the single digits, the Indian internet experience has become, de facto, a mobile internet experience.

A regional player in Tamil Nadu since its launch in 1999, moving four years later into Chennai, Aircel embarked upon a nationwide expansion in 2005. At the end of January this year, as the seventh-placed player in the Indian mobile market, Aircel had just over 54 million customers, according to estimates from Informa’s World Cellular Information Service. More than 85 per cent of those customers are in the 14 – 24 age bracket, says COO Gurdeep Singh, with the remainder between the ages of 25 and 35.

Singh explains that his company made the youth market its target from the beginning of its expansion, placing a safe bet that mobile would be the segment’s medium of choice. As the market has evolved, the segment’s behaviour has marked it out, he says.

“The youth are far more reliant on peer recommendation,” he says. “They love to update themselves, to have real time information about what’s happening in their city. It’s important to give them a service like this in a manner that is non-intrusive, participative and permission based. That’s where we spotted the opportunity to work with Blyk.”

The Blyk on Aircel service provides a range of content to its customers, covering the familiar territories of entertainment, sport and lifestyle. Over a period of six to eight weeks, says Blyk’s Antti Öhrling, users’ preferences become clear, making way for the targeted advertising which is at the heart of the Blyk proposition.

For the time being, however, Aircel is not looking to Blyk to monetise its advertising inventory. Instead, says Singh, it is a weapon deployed in the face of rampant churn. “What’s most interesting for us is that, in a hyper-competitive market like India, this can really act as a differentiation and retention tool,” he says. “There are 14 operators in this market and churn is very high; 90 days after acquisition we retain just a little over 60 per cent of new customers. But with Blyk our retention level moves up to 89 per cent. So it’s really meeting our needs.”

In acquisition terms the service is also proving useful with member-get-member schemes, Singh says. “We have a consumer insight group which keeps in touch with the customers, making sure they find it good enough to recommend to their friends. People find this product so infectious that it is the right kind of thing for member-get-member and we see a good number of acquisitions coming through that,” he says.

So far Aircel has deployed the Blyk service in 20 metropolitan markets. By Mid-March 2011 it had attracted more than 300,000 users, and is adding in the region of 25,000 a month, Singh reveals. From the middle of this year he expects this to ramp up to 30,000 adds a month and, by 2012, he wants to see ten per cent of all rural connections and 25 per cent of all metropolitan connections joining Aircel through the Blyk offering.

The plan is that the service will be available in more than 100 cities by 2012, keeping pace with the carrier’s 3G rollout, which began in March this year. That 3G rollout, it is hoped, will improve both the service experience and the incremental revenues derived from the offering.

Currently, says Singh, Aircel ARPU sits at just $3.50, with Blyk users spending above average. “What we have seen with Blyk users is that, in spite of 3G not being there, we’re getting half a dollar extra revenue. That’s why we’re encouraged to make it the mainstay of our acquisition products going forward,” he says.

Today the service makes most use of SMS and MMS channels, with MMS being available across a wide range of handsets in the Indian market. Antti Öhrling reports that, contrary to the firm’s experience in other markets, MMS messages are proving more effective than SMS at generating response and interaction from the end users.

While the service may currently be delivering benefits primarily in the areas of acquisition and retention, the fact remains that the Blyk proposition is a media channel designed to appeal to brands that are targeting the youth market. The content distributed over the service is intended to stimulate response and, according to Öhrling, this is starting to generate results in India.

“On average we have been getting 27 per cent response rates,” Öhrling says. “It’s a little higher than what we expected and so we’re very happy. Because we are interactive we can develop the content on a continuous basis. Within a minute we know whether or not something has worked and I think that, with Aircel, we’re just starting to explore all the opportunities we have.”

Öhrling says that, of all the content made available over Blyk on Aircel, advertising is generating the strongest interactions from users, which chimes with statistics the company has published showing that the Indian mobile advertising market grew by 217 per cent in 2010, compared to 93 per cent worldwide. “Beyond the advertising,” he adds, “we’re finding that the local content, things closest to people’s hearts, that’s what’s getting the best responses.”

In Blyk’s early deployments the company discovered that brands were preferring to use the medium for market research rather than direct marketing. But in India, Öhrling says, the service appeals to brands more in terms of stimulating purchases. “I would say that, for the brands, it brings the user much closer to the purchase than any other medium, and that’s what they feel is very exciting,” he says.

Many of the launch brands for the Indian service are lifestyle firms, beverage and clothing brands, for example. Smirnoff, Red Bull and Bacardi have all run campaigns across the Blyk platform in India, as have Diesel, Levis, Durex, Apple and Nokia. Diesel and Apple both enjoyed response rates of over 50 per cent for the first messages in their campaigns, while Nokia didn’t fare quite so well, with just 13 per cent.

The relationship between Blyk and Aircel is exclusive for the “long term”, the companies have said, meaning that the rest of the market is off limits to Blyk. The firm will no doubt be hoping that Aircel parent, Malaysia’s Maxis, will be sufficiently impressed to want to roll out similar services across its other territories.

“The parent company is watching closely,” says Gurdeep Singh. “Maxis are very excited about the service and this is something they will explore later on, possibly taking it to other group companies.”

If the service proves successful, it will no doubt spawn imitators in the Indian market. But Singh argues that the Blyk platform has the edge. “We evaluated lots of other things before signing up with Blyk,” he says. The platform is an edge, but the knowledge of how to run the service is an edge too.”

Part of the NSN deal covers Kolkata

Nokia Siemens Networks and its competitor ZTE have both announced contract wins in the high growth Indian market. NSN said it has secured a deal to supply, deploy and manage an HSPA+ network for Indian carrier Aircel in three of the nation’s telecom circles; Punjab, Kolkata and rest of West Bengal. The win is an extension of the firms’ existing relationship, that sees NSN manage Aircel’s GSM/EDGE network in six Indian circles. Aircel is a subsidiary of Malaysian player Maxis.

The surge in smartphone ownership that has been seen in the most advanced markets in the world is starting to occur in India, said Urs Pennanen, head of India Region for Nokia Siemens. “Our solution will help Aircel address the surge in data traffic due to growing use of smartphones as well as generate new revenue opportunities through its delivery of a superior experience to its subscribers,” Pennanen added.

“With mobile broadband we want to provide unique services based on innovative data and value added services,” said Gurdeep Singh, COO or Aircel. He added that the new network should also improve the quality of Aircel’s voice offering. The value of the deal was not revealed.

Meanwhile Chinese vendor ZTE said that it had been contracted by Aircel to build and deploy a software-defined radio-based 3G network. ZTE stressed the importance of Aircel as a partner to the firm, with Huang Dabin, CEO of ZTE India, describing the deal as “significant for ZTE in the Indian market.” He continued: “ZTE will continue to invest in and remain committed to the Indian market, especially since our Indian customers are regarded as strategic global partners.”

Aircel sells towers to GTL for $1.84bn

Indian communications infrastructure operator GTL Infrastructure is to take over the tower assets of local carrier Aircel in a deal valued at $1.84bn.

Under the agreement, GTL will take over 17,500 existing towers and will take over rights to roll out 20,000 more.

Aircel’s move is expected to be replicated by other operators across the Indian mobile industry as they attempt to drum up funds to participate the country’s forthcoming auction of 3G spectrum. The latest official date given for the auction is for this month, but after numerous delays this may be postponed yet again.

It seems Aircel’s plans to capitalise on 3G data services are already underway. Last week the operator tapped up application services firm Infosys to build it an application store catering to Aircel’s almost 30 million mobile subscribers.

Infosys will use its white label app store platform Flypp to power the shop front, which will host mobile applications drawn from an Infosys-managed ecosystem of independent software vendors.

But until 3G penetration becomes significant, it’s unlikely that the types of applications in Aircel’s store will be anything like those now common to the iPhone and Android app stores, seeing as all of Aircel’s subscribers are currently equipped with 2G GSM handsets and generate a monthly ARPU of $2.36 according to Informa’s WCIS database. Instead we can expect to see mobile money and SMS-based m-payment applications, which are already driving data revenues in the emerging markets.

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Aircel to launch app store in India

Even the emerging market operators are looking for a slice of the app store action. Indian operator Aircel said Tuesday it has tapped up application services firm Infosys to build it an application store catering to Aircel’s almost 30 million mobile subscribers.

Infosys will use its white label app store platform Flypp to power the shop front, which will host mobile applications drawn from an Infosys-managed ecosystem of independent software vendors.

But it’s unlikely that the types of applications in Aircel’s store will be anything like those now common to the iPhone and Android app stores, seeing as all of Aircel’s subscribers are still equipped with 2G GSM handsets and generate a monthly ARPU of $2.36 according to Informa’s WCIS database. Instead we can expect to see mobile money and SMS-based m-payment applications, which are already driving data revenues in the emerging markets.

Gurdeep Singh, COO of Aircel, said the Aircel Application Store “Will offer consumers a broad selection of most relevant applications to choose from in the most convenient manner be it through voice, SMS, GPRS or the internet on your mobile.”

India’s mobile operators are still holding out for an auction of 3G spectrum, which is expected to take place this month, but may well be delayed again.

Indian operator Aircel has sigend a deal worth $400m with Chinese infrastructure vendor ZTE to expand its GSM coverage.

Aircel, majority owned by Malaysia’s largest telecoms operator Maxis, has an estimated 13.6 million subscribers according to Informa Telecoms & Media making it the country’s fifth placed carrier.

Aircel has ten operational networks running in India, with a further 11 planned or in deployment, leaving eight remaining potential licences up for grabs across the country.

India is growing at a staggering rate. It is the second most populous country in the world, and is expected - if current growth trends continue - to overtake China before the middle of this century. It is a young country; of the estimated 1.14 billion people living in India at present, about 40 per cent are under 15 years of age and 54 per cent are under 24. The median age is 25 years old.

The economy is diverse, though characterised at the moment by a booming services sector, boosted in no small part by the ranks of firms from ‘developed’ markets taking advantage of the cost savings associated with outsourcing and off-shoring their operations to the subcontinent.

The economic strength of India and Indians is undoubtedly on an upward curve, though ARPU is low by Western standards ranging from $4.60-$8.90 per month according to Informa Telecoms & Media’s World Cellular Information Service. Falling ARPU figures in India though are compensated by surging growth. Penetration has more than doubled since June 2006 and stood at 21.67 per cent in March 2008. With 242 million mobile phone subscribers nationwide there is plenty more scope for growth.

Launched at the 3GSM World Congress in Barcelona last February, the initiative aims to make instant messaging on mobile networks as ubiquitous and popular as text messaging.

Fifteen operators: China Mobile, Orange, Telefonica, TeliaSonera, TIM, T-Mobile, Turkcell, Vodafone, and India’s Aircel, Bharti, BSNL, Hutchison Essar, Idea, MTNL and Spice, signed initial Letters of Intent earlier this year, designed to make progress in the rollout of personal IM services that will work across networks.

Yesterday the GSMA announced new additions to this list. In Malaysia, all three GSM operators – Celcom, DiGi Telecommunications and Maxis – have agreed to launch interoperable IM services during 2007. Meanwhile, M1, SingTel Mobile and StarHub in Singapore will start to plan the development of interoperable IM services. India’s GSM operators, which announced that they would adopt personal IM in February, are planning to launch commercial services in early 2007.

“Personal IM, combines the very best of the mobile and Internet worlds, and will soon be enriched with pictures and multimedia,” said Rob Conway, CEO of the GSM Association. “It offers the immediacy of IM, underpinned by the same core GSM principles that have made SMS so popular; ease of use, security, reliability, interoperability and cost transparency. Asian mobile operators are laying the foundation of the long-term success of IM.”

“We in Bharti Airtel are greatly excited about the potential for mobile IM in India,” added Manoj Kohli, president of Bharti Airtel. “We are actively participating in the COAI Special Committee on IM, which comprises all Indian GSM operators, and is working for an interconnect hub solution to ensure seamless IM interoperability between all mobile networks.”

In addition to the progress in Asia, mobile IM software providers, such as Colibria, Ericsson, fastmobile, Followap and Oz Communications, are supporting the GSMA initiative with a ‘white label’ service offering that will ensure operators can launch services that enable customers to send messages across networks.