At 234 million mobile users and a total of 273 million phone subscribers as of December 31, 2007, India is among the fastest growing telecom markets in the world.
With teledensity at 23%, there is ample scope for the customer base to rise and tariffs to fall
MUMBAI: At 234 million mobile users and a total of 273 million phone subscribers as of December 31, 2007, India is among the fastest growing telecom markets in the world. Over the past few months, monthly growth in mobile telephony numbers has averaged 8 million.
Experts believe that soon this may touch 10 million since most of the population is yet to be covered by telephony. The current teledensity is only 23.89%.
It’s not just the growth in subscriber numbers that has put India on the forefront of the global telecom arena. Consider the changes in telecom tariffs as well. In 1995, a local call from a mobile phone cost as much as Rs 32 per minute, and one also paid a hefty amount for receiving calls. Now, outgoing call tariff has dropped to Re 1 per minute (on an average), and incoming local calls are free. Who knows, to what level the tariff will drop in the years to come?
Consumption in the telecom sector has reached a new height already. According to Cygnus Business Consulting & Research 2008, the mobile population would touch between 325 million and 350 million by 2008-end.
Since only about 2-3% of the rural population has access to mobiles, the next level of growth is expected from the rural areas.
Currently, the GSM (global system of mobile) segment comprises 72% of the overall wireless market, while the rest 28% subscribe to CDMA (code division multiple access) services.
With the phone tariff falling consistently, average revenue per user or ARPU has been on the decline too. The all-India blended ARPU per month declined by 7.4% from Rs 297 in June 2007 to Rs 275 in September 2007. The drop in the prepaid ARPU has been higher at 7.3%, as against 3.5% in postpaid.
After more than a decade in the telecom sector, players have woken up to another aspect of the business that could be a money spinner. That is, operators are hiving off their tower business into separate entities, and then roping in investors and even planning IPOs to add value.
However, the sector does have its set of concerns, such as the decline in number of fixed phones. The wireline or fixed phone subscriber base declined to 39.25 million in December 2007. It is led by PSUs, with the state-owned Bharat Sanchar Nigam Ltd dominating with a market share of 82%.
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