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Pay-per-call: Another ‘lose-lose’ move from Tata Teleservices?
The mobile service offered from the house of Tata was never known for aggressive marketing. However, this time around, Tata Teleservices has come out with a plan with the potential to start an immediate price war. Tata Teleservices, which provides CDMA mobile services, has launched a new plan called "pay-per-call", which would charge a fixed amount for a single call irrespective of its duration.
 
Under the new plan, CDMA subscribers of Tata Teleservices would pay Re1 for any local call and Rs3 for calls outside the city, irrespective of the duration. New subscribers need to pay Re1 per day to avail this offer while existing Tata Teleservices subscribers need to make an additional one-time payment of Rs96, the release from the company said. It, however, does not specify how long this ‘special offer’ is valid for.
 
At present the call rates across the industry are in the range of Rs0.50 to Re1 per minute for local calls and Re1 to Rs1.50 per minute for national long distance (NLD) calls. 
 
The new offer from Tata Teleservices, however, is not completely unexpected. According to reports, Tata DoCoMo, the newest entrant in the GSM mobile space, has been receiving very good response from subscribers for its pay-per-second plan, shown by the 2.26 million new additions to its subscriber base in July. Tata DoCoMo’s plan is in contrast with the "pay-per-minute" plans offered by other GSM operators, which may have helped the company to gain a foothold in the crowded mobile services business.
 
About 80% of the new subscribers from Tata DoCoMo could be subscribers switching from existing operators or using multiple SIMs or handsets. New launches initially focus on high-ARPU penetration geographies and therefore are less likely to acquire first-time users, says Motilal Oswal Securities Ltd, in a report.
 
 
Minute-based billing results in granularity benefit of about 15% to 20% for operators, but Tata DoCoMo has been passing on the same to subscribers, in order to gain market share. Other operators however have not replicated the pay-per-second billing plans.
 
 
So the question remains, why has Tata Teleservices introduced this new pay-per-call offer? One reason is to increase and retain its CDMA subscribers, who were likely to shift to Tata DoCoMo's pay-per-second plans. Second, as per the new spectrum criteria decided by the Department of Telecom (DoT), the spectrum an operator can get would be decided by the number of its subscribers, which has been forcing the operators to make an extra effort to retain subscribers or inflate the subscriber numbers.
 
 
India's mobile user base has risen 25 times over the past five years and research firm Gartner expects it to touch 737 million by 2012. In July, a whopping 14.38 million wireless subscribers were added by mobile operators taking the total wireless user base to 441.66 million in the country.
 
 
"Tata Teleservices' new offer is likely to be a loss-making one. Since interconnect cost per minute is Rs0.20 for local calls and Rs0.60 for NLD calls, Tata Teleservices stands to lose money, once the call duration exceeds five minutes," says Anand Rathi Financial Services Ltd, in a report.
 
 
"The daily fee from new subscribers joining Tata Teleservices or the one-time payment from the existing subscribers would not materially alter the economics of this offer,” the report added.
 
Officials from Bharti Airtel, India's largest mobile services provider, were not immediately available for comments.
 -Yogesh Sapkale with Pallabika Ganguly [email protected]
 

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Placements Improving
The slowdown that had hit the job market badly last year is a thing of the past. Companies are making a beeline back to campuses. “Recruitment from good campuses turning out MBAs, ought to pick up pace in 2010. Companies from all sectors (except engineering) are ready to hire as this segment (engineering) has still not revived from the slowdown,” claims Hitesh Oberoi,chief operating officer and co- founder, Naukri.com. 
 
 “In sectors like infrastructure, insurance, healthcare and telecom new project hiring is taking place,” says Mr Oberoi. Naukri.com runs Naukri JobSpeak, which gives an index of job listings added to the site every month by recruiters who are clients of Naukri.com. “The job index in July 2008 was 1000 and it went down to as low as 640. But now the job index has improved and it is 700 and should go higher in September,” says Mr Oberoi.
 
But companies are not interested in increasing headcount in a major way—only in replacement for attrition as manpower has reached optimum level, he adds. Also, recruiters have now become very cautious in selecting candidates and are even tightening their control on the fixed salary increases. “They won’t like to give a 20% increase this year as they did in the past and the companies will like to restrict hikes to more reasonable levels. Even freshers might not see a hike in their salary packages this year,” says Mr Oberoi.
 
New hires might not get good packages but there is scope for better incentive plans, compensations and bonuses if the companies perform well in this fiscal year, says an industry expert. “We will be recruiting at least 30-40 freshers in the year 2009 and last year we have recruited a similar number. In the first quarter of this financial year (Q1 FY 10) there were no recruitments but after that we have resumed recruitments,” says Arvind Sharma, chairman India sub-continent, Leo Burnett.
 
As the fast moving consumer goods sector has reported a robust growth in the past few quarters, it is also reporting good recruitments in this sector. “We have recruited a lot of freshers during campus selection in 2008 as the FMCG segment did not face any slowdown and we looking forward to do the same this year also,” says Leena Nair, Vice President HR, Hindustan Unilever Limited. Mr Oberoi also points out that if the economy revives again, growing at 8%, then there will be the same mad scramble in hiring.
 
 

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