India’s northeastern states, racked by militancy, are set to get a better communication network and an array of handsets. India’s largest modern trade mobile phone seller The Mobile Store will begin setting up franchise stores in the seven states, a model it has chosen to tap uncharted territory. Chief executive Himanshu Chakravarti told ET that the company was earlier reluctant to get into the franchise model due to challenges around management of supply chain, logistics management and security.

“Northeast is one of the big franchise business opportunities areas, but it’s a troublesome territory to approach. We will have several franchisees and master franchisees for some of the states,” he said. The retail chain currently owns 800 stores that sell multiple brand handsets with 10% on the franchise model.

The company’s move fits well with the telecom regulator’s proposedRs 2,918-crore investment plan to boost voice and data coverage in the northeastern states, where connectivity is much lower than the national average. The Telecom Regulatory Authority of India (Trai) has suggested that the government will require a large investment in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura that have an average tele-density of 40%, which reduces to 10% in villages.

Trai has recommended 2% discount in licence fee, charged annually for those telecom operators who cover at least 80% of the habitations with a population of 250 and subsidies for installation of solar power units at telecom towers.

The Essar Group-owned mobile retailer, which holds a 27% share of the modern trade mobile phone retail, is happy with its leadership position in the north, south and eastern regions of the country, but doesn’t have any aggressive expansion plans in the south, which is dominated by regional players.

Chakravarti said over the next 12 months, the retail store is planning to upgrade around 100 of its existing retail outlets into lounges that allow the customer to try out smartphones from various brands before making a choice.

The move will cost the company, which gets around 93% of its sales from smartphones, aroundRs 30 crore which it plans to source from internal accruals.

The retailer is planning to add around 40 new stores a year, based on opportunities in different states and may look at various funding options through equity and debt, said Chakravarti. “We won’t go in for an IPO though.” It is planning to also aggressively push the sale of post-paid mobile connections, including data plans, as well as of accessories in its stories to boost footfalls, he added.



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