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Updated: December 24, 2011 22:14 IST

Mobile phone market heads for consolidation

Sandeep Joshi
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Wynncom and Fly Mobile are jointly selling around 3-lakh units per month, SAR Group Founder and Promoter Rakesh Malhotra said. Photo: Special Arrangement
Wynncom and Fly Mobile are jointly selling around 3-lakh units per month, SAR Group Founder and Promoter Rakesh Malhotra said. Photo: Special Arrangement

Established players improve their sales, thanks to their pricing and products strategy

Consolidation of the mobile handset market seems to be approaching fast. One such indication came last week when homegrown SAR Group, makers of Wynncom brand of mobile phones, took controlling stake in the Indian arm of U.K.-based Fly Mobiles.

The company is now looking at more such opportunities that will help consolidate its position in the domestic mobile handset market.

Industry experts say a part from top global brands, There are at least 100 ‘serious' domestic players engaged in fierce competition to sustain in the mobile phone market, now at around 1.5-crore units per month.

With their margins coming down and foreign players regaining their position, more and more Indian players, which are importing handsets from China, are looking for an exit route, according to industry experts.

“In 2011, we saw established players like Samsung and Nokia improving their sales, thanks to their pricing and products strategy as they focussed on feature and smartphone categories…This trend is likely to continue in 2012 when the sector is likely to grow by 15 per cent to cross Rs.50,000 crore revenues from around Rs.40,000-45,000 crore in 2011,” SAR Group Founder and Promoter Rakesh Malhotra told The Hindu.

Pointing out that in 2010 when around 1.5-crore mobile subscribers were being added every month, the handset market saw all sorts of domestic players jumping into the fray, Mr. Malhotra said now the things had changed and the market was awaiting a big churn where only established domestic players would survive.

“The Indian brands are sandwiched between global players and the grey market...the mobile handset market needs a major shake up as there is no place to grow. We will see companies being taken over or exiting the market,” he noted.

Stating that the SAR Group would target ‘value' players like the Fly Mobiles, owned by U.K.'s Meridian Group, as consolidation takes place, Mr. Malhotra said though they had acquired 55 per cent stake and management control in the U.K.-based Fly Mobiles' business in India and SAARC nations, both would continue to exist as separate brand with Wynncom targeting rural areas and towns and Fly focussing mainly on urban areas. In 2012, Wynncom and Fly Mobile would have 2.5 per cent market share in the Indian market. Today, they both are jointly selling around 3-lakh units per month, he added.

SAR Group also wants to leverage Fly brand's presence in the overseas markets like Russia and the UK by exploring more exports markets besides consolidating its position in the SAARC region. “Fly Mobiles have long standing investments in research and design capabilities in China and Korea and by synergising our product development and R&D capabilities we will have a definitive competitive advantage in the market,” Mr. Malhotra added.

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