While it is still not known if the argumentative Indian impacts revenues, talkative Indians sure keep revenues streaming in.
KOLKATA: While it is still not known if the argumentative Indian impacts revenues, talkative Indians sure keep revenues streaming in for the telecom firms.
Even as the average revenue per user (ARPU) continues to fall, thanks largely to the falling tariffs, the total revenue of mobile firms keeps rising. All because, subscribers spend more minutes per month on their mobile phones, shows a recent study.
“Indians love to talk. India is one of the most talkative nations in the world with an average subscriber talking over 400 minutes per month on a cellphone,” says a Macquarie Securities research study.
“India’s average revenue per minute (ARPM) is lowest in the world. But, this is not a value destroyer. This is because the low tariff is compensated by the high total minutes of usage (MOU) and the huge additions to subscriber base, and these two will be growth drivers of the Indian telecom sector,” the report says, indicating that what is lost in terms of low tariffs is more than made up by high volumes.
Macquarie Securities is the securities trading outfit of the Australian financial services conglomerate, the Macquarie Group. Over the past three years, telecos’ ARPU has slid by 3.1%.
But, despite this, quarterly revenues of Indian telecom companies have risen by an average of 16% during the period. This is the direct impact of wireless subscriber base in the country doubling to 114.6 million in the last 16 months (till July 200), including fixed wireless connections which itself grew 79%.
According to Macquarie Securities, the Indian subscriber base is poised to hit the 350 million mark by 2010 with a penetration rate of 30%. In such a scenario, Bharti and Reliance Communications will emerge leaders with market share of 23% and 22.7% respectively, the report forecasts.
The MOU per month in case of Bharti climbed from 383 minutes in June 2005 to 481 in June 2006, while for Hutch it moved up from 351 minutes in June 2005 to 392 in June 2006.
In case or Reliance Communications, it moved up from 501 minutes in June 2005 to 568 minutes in September 2005, but fell to 491 minutes in June 2006, which the research firm attributes to Reliance rationalising some of its plans that offered free minutes to subscribers and that the trend would be reversed in the next quarter.
But, even with the stratospheric rise in subscribers and total minutes of usage, mobile spending in the country as a percentage of GDP is still a lowly 1% compared to 1.3% in Pakistan, 2.7% in Malaysia, 2.6% in the Philippines and 2% in China.
The silver lining, however, was that with GDP growing, spending on mobile can only go up. In fact, the Macquarie Securities report forecasts an uninterrupted growth of the Indian mobile telephony industry till penetration touches 30%, sometime around 2010, up from 10.4% currently.
Macquarie, however, calls all talks of mobile number portability (MNP) a “chimera.” Number portability is the facility with which a subscriber can keep the same mobile number while migrating to a different service provider.
According to it, the opposition from government-controlled BSNL and MTNL, which oppose MNP on grounds of huge technological and investment requirements, will prevent implementation of number portability.
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