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Essar group’s retail venture, Essar Telecom Retail expects revenue of $1 billion over the next three years by selling handsets and accessories in a joint venture with Richards Branson’s Virgin group.

The company has invested close to Rs 1,500 crore in the mobile retail space to set up 2,500 outlets across the country.

"Virgin Mobile will assist the group in branding and bringing in the latest know-how,” Essar Telecom Retail CEO, Rajiv Agarwal said.

"We are bringing in one of the strongest retail brands in the world to expand. We are tying up telecom service providers and accessories makers. Virgin will help us in creating the brand,” he said.

Essar is planning to start over 600 outlets in the next six months.

However, Virgin Media, in which Richards Branson’s Virgin group is the majority stakeholder is not interested in equity participation in the venture.

"We will be providing expertise and branding and get a royalty fee out of it. We won’t be picking up stake in the venture as the Indian regulation is not allowing FDI in the space,” said Robert Samuelson, Executive Director Telecom and Media, Virgin group.

Last year, India’s mobile handset market was worth Rs 30,000 crore, and is expected to touch Rs 50,000 crore by 2008 say analysts, adding that more players might enter into mobile retailing as the demand for handsets increases.

"Over the last two years, mobile handsets are becoming one of the most attractive part of major retail outlets like Big Bazar. There is enough scope for an independent mobile retail outlet, considering the fast growth of the industry,” said a Lehman and Brothers analyst.

After soft-launching a retail shop in Ghaziabad four months ago, Essar Telecom Retail has been expanding its presence in the metros. The first phase will have 800 stores in 33 cities. Stores are being launched in Cochin, Bangalore, Hyderabad, Chandigarh and Ludhiana. Essar Telecom Retail has tied up with equipment vendors to sell handsets and is planning to provide both GSM and CDMA handsets along with accessories and value-added services like handset repairs, handset exchange and bill collection.

Email author: indulal.pm@hindustantimes.com

* Essar-Virgin telecom retail venture expects $1 billion revenues in three years

* Eying 10 per cent market share in handsets and accessory sales

* Virgin not for equity participation

*  Market size in 2006 Rs 30,000 crore; expected to touch Rs 50,000 crore by 2008