Arpu from broadband around the same as for land connections at PSU telcos.
As landlines retreat, the country’s two public sector telecom companies are betting on the internet to keep their cash registers ringing. Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) have seen good uptake in their broadband internet services business.
Between April 2008 and February 2009, BSNL saw its landline connections fall by 23 lakh. It now has 2.92 crore landline connections. But on the broadband front, the firm added about a lakh of subscribers every month in 2008 and now has 26 lakh subscribers across the country.
MTNL, which covers Mumbai and Delhi, added 50,000 broadband subscribers in 2008 and lost 1.5 lakh landline connections in the same period. It has over 36 lakh landline connections and over 6 lakh broadband subscribers.
Landline connections fetch an average revenue per user (ARPU) of Rs 600 per year each. PSU firms together cover 80% of landline connections in the country. Both companies say broadband connections make up for landline losses. “The loss in landline connections is being recovered through the launch of broadband services, where the average revenue of Rs 600 per user is roughly the same as that from a landline,” J Gopal, executive director, MTNL, said. Though MTNL’s broadband additions are lower than the number of landlines lost, Gopal expects the numbers to rise as penetration levels increase. Broadband contributes over Rs 250 crore a year to MTNL’s revenues.
A BSNL official said, “Due to the boom in mobile telecommunications, landline usage has been impacted. However, in recent times, there is a trend of people using their existing telephone connections or going for new connections for broadband access and not for making calls.” BSNL, too, earns an ARPU of Rs 600 from its broadband services.
The two launched these services for home users in January 2005. The uptake had been rather slow for want of affordable personal computers. In 2008, BSNL and MTNL tied up with Novatium and HCL Infosystems, respectively, to provide computers at Rs 7,000 with broadband connectivity. The moves acted as a driver for the consumption of broadband internet.
Nishna Biyani, an analyst with Prabhudas Lilladhar, said, “PSU telcos have an edge over private ones as they own huge fibre-optic cable network. This would help them roll out broadband services on WiMax technology in rural areas. This is where private players will bear huge costs.” Biyani said that broadband market penetration will reach about 18% from the current 5% in another three years.
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