TWO SKIRMISH FOR INDIA CELLULAR MARKET

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NEW DELHI-The apparent underdog in the race for this city's new cellular phone market seems to be gaining on its rival while it plays catch-up with its advertising.

The Indian government approved two cellular providers in the New Delhi area in November 1994. Bharti Telecom quickly became the aggressor, kicking off its marketing Christmas Day and billing its service, branded AirTel, as "Delhi's first cellular provider." But neither it nor rival Sterling Cellular, both based here, is yet operating.

"We want the dominant market share and we want to make AirTel a generic name," said Bharti Senior VP N. Arjun.

In early May, AirTel had attracted 11,000 customers while Sterling's Essar Cellphone had "close to zero" response at that time, according to Samit Sinha, VP-general manager of Sterling's agency, Clarion Advertising Services, New Delhi. Essar in April scrambled to put together a print and outdoor campaign after realizing many potential customers thought AirTel was the only game in town. And Sterling is bouncing back from its late start, claiming nearly 10,000 subscribers against AirTel's 12,200 to date.

"Even after three months of advertising, AirTel and cell phones had started becoming synonymous," Mr. Sinha said. "AirTel forced our hand by opening bookings."

By following AirTel's heavy campaigning, however, Essar was able to build on the groundwork laid by its rival, Mr. Sinha added.

Essar blunted AirTel's inroads by advertising that Essar customers can register for free; AirTel users must pay a $96 registration fee. But Essar is likely to collect an equivalent charge upon hook-up of its service as a security deposit, added Sterling VP T.V. Ramachandran.

Mr. Sinha would not reveal Essar's spending for the campaign, but said the amount was "unprecedented," topping AirTel's 1995 advertising budget of $1.6 million. Emphasizing education and customer service, ads in six of New Delhi's English- and Hindi-language dailies answer a different question every day. Name recognition is being built up with some two dozen outdoor boards. Outdoor exposure will double closer to the launch date-tentatively scheduled for next month-with a shift to an information and benefit focus, Mr. Sinha said.

For its part, AirTel at the height of its campaign plastered New Delhi with some 100 outdoor boards and posters on 500 street-lights, along with ads in three English-language dailies and the capital's leading Hindi daily.

"We dominated outdoor because cellular phones are mobile phones, and will be used predominantly by people on the move," said Sandeep Goyal, exec VP of Bharti's advertising agency, Rediffusion, New Delhi. "Similarly, we started out with a large visibility on FM radio in peak hour traffic. In a traffic jam, there would be a billboard giving the message, `This is where you'll start using AirTel.'*"

Neither company is using TV because New Delhi doesn't have a station dedicated exclusively to it.

Much of AirTel's advertising addresses very specific professional segments of the market-doctors, stockbrokers, lawyers, and local and expatriate corporate executives. One of a series of endorsement ads features the former captain of India's cricket team, Kapil Dev, a wildly popular personality-turned-businessman.

The next phase of advertising, which will continue after the product's introduction, focuses on contacting professionals through direct marketing, Mr. Goyal said.

AirTel also injected an element of fun into educating its subscribers by organizing a film festival for those who signed up for the service. The company showed three Hollywood blockbusters-"Disclosure," "Lion King" and "Clear and Present Danger"-to thousands of customers in May while cell phone giants Motorola, Ericsson, Nokia and Siemens displayed their handsets in booths outside the theater.

With import duties of 92% pushing the price on handsets to between $638 and $1,276, depending on the model, the initial market will be confined to consumers earning at least $3,188 annually, Mr. Arjun said. He added that prices are expected to drop 10% to 15% every six months as demand increases, and the duty may fall by 20% early next year.

Apart from the challenge of educating a completely new market, Essar and AirTel are vying for an audience of unknown quantity.

Market analysts estimate monthly revenue from each subscriber will total between $60 and $70, with the potential New Delhi market this year ranging from 50,000 to 100,000 people.

Subscriber numbers fall well below the 25,000 AirTel originally wanted, but Mr. Arjun said he expects a sharp rise in business after service is activated in late August. He also anticipates $26.2 million in sales in the first year, hitting $107 million by the third year. AirTel estimates New Delhi's market at 100,000 in 1996, rising to 175,000 in 1997, then slowing to 20% growth a year after that.

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