Virgin Mobile Offers GSM Services in India

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Virgin Mobile said on Thursday that it has tied up with Indian mobile operator Tata Teleservices to offer mobile services in India using GSM (Global System for Mobile Communications), the more popular mobile technology in the country.

The service has been rolled out in five services areas in southern India. By an arrangement with Tata, Virgin is using the Tata network to offer its branded services.

Virgin is already offering services using CDMA (Code Division Multiple Access) technology through Tata since 2008.

Virgin did not disclose the number of CDMA subscribers it has in the country.

Tata, a CDMA player, started last year also offering services on the GSM standard under the Tata DoCoMo brand, to take advantage of the booming GSM market. NTT DoCoMo is a key shareholder in Tata Teleservices.

At the end of September last year, 371 million subscribers used GSM, in contrast to 101 million subscribers using CDMA, according to data from the Telecom Regulatory Authority of India.

Virgin is rolling out services using the GSM standard even as the Indian mobile market is getting overcrowded, according to analysts. A number of other foreign mobile companies, including the Indian joint ventures of Sistema and Telenor, have recently launched services in India.

Their entry has triggered off a tariff war with voice rates as low as 0.01 Indian rupees (US$0.0002) per second. Earlier, voice calls were typically charged by the minute.

The Indian market is saturated with operators, and new entrants will not have a significant impact on the share of the established players, said Kamlesh Bhatia, a principal research analyst at Gartner.

Price cuts will decrease the profitability of mobile services companies, analysts forecast. Idea Cellular, a large mobile services provider, said on Thursday that its "average realized rate per minute" dropped by 9 percent between the third and fourth quarter of last year, because of the tariff war.

Virgin joined the price war by announcing low voice and SMS (short message service) rates. The company is, for example, offering 2,000 local and nationwide SMSes for free for 30 days for a payment of 33 rupees.

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