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For all practical purposes, the year 2000-01, was the first business year for
most companies. For the first time, they actually concentrated on issues like
network quality, marketing, tariff, revenue assurance–issues that are related
to business and not regulation. The result is for everyone to see. Here is an
in-depth look at the financial performance, subscriber growth, significant
market changes, and industry issues in 2000-01.
Performance
The total billed revenue in the year 2000-01 was Rs
3,865.29 crore. While circles accounted for 49.79 percent, metros accounted
for 51.21 percent.
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The total net revenue or adjusted gross revenue that
gives a more accurate picture of the industry stood at Rs 3,040.61 crore.
The adjusted gross revenue, on which all the service providers calculate
their revenue share to the government, actually, is the total billed revenue
minus the passthrus, the service tax and the revenue accrued through the
sale of handsets. This appears to be the industry size.
The circles have caught up with the metros in terms of
revenues. At the end of 2000-01, the revenue was almost equally divided. Out
of the total figure of Rs 3,040.61 crore, the metros contributed 50.62
percent while the circles contributed 49.38 percent.
The total subscriber base as on 31 March 2001 reached
3.57 million, up 89 percent from a figure of 1.88 million on 31 March 2000.
Some of the circles with low penetration registered extraordinary growth.
The subscriber base in West Bengal and Rajasthan grew by more than 200
percent each. Drop in tariff as well as handset prices drove the subscriber
growth. The drop in rentals will drive it in 2001-02.
Most of the subscribers added last year were prepaid
subscribers. With rentals being as high as Rs 400-Rs 600 (They have come
down only recently), most users with low usage preferred prepaid. In a
market with low churn, prepaid suited the service providers as well, most of
whom were just looking at adding the subscribers as the short-term strategy.
Many service providers ran big campaigns for pre-paid, with separate brands,
separate marketing strategies, and even separate advertising agencies. The
result: about 70-80 percent of the new users in circles and 60-65 percent
new users in metros went for prepaid.
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With a low Average Revenue Per User (ARPU) typically,
more prepaid customers meant lower ARPU for service providers. In the year
2000-01, the nationwide ARPU stood at Rs 731 rupees per month. Mumbai tops
the list as the highest ARPU. However, surprisingly, the circle average is
not too lower than the metro average as far as ARPU is concerned.
The ARPU actually dropped in the last two quarters. It
dropped drastically in the third quarter. Apart from more prepaid new
customers, the drop in tariff also contributed to the drop in ARPU. The ARPU
for prepaid stood at Rs 450 per month while that for postpaid stood at Rs
970 approximately over the entire year 2000-01.
However, the drop in ARPU of own customers was offset by
growing roaming revenue by the service providers. In the last quarter, this
figure as a percentage of total revenue was as high as 30 percent for some
metro operators, while it was about 22 percent for the circle operators.
Going a step further, this figure in circles is a little non-uniform as
cities like Bangalore and Hyderabad had a trend similar to the metros.
Services
| MOBILE PHONES: Shades of Grey |
Grey market rules. Still.
Mobile Brands in Indian Market
|
The marketing effort of cellular service providers in
metros and circles alike was focused on just one objective: adding more
subscribers. Few marketing campaigns were targeted at increasing usage or
increasing awareness. Notable exceptions were the campaign of Hutchsion Max
in Mumbai. Escotel in UP (West) and Kerala also did some awareness campaigns
towards the end of the year.
Despite little marketing, SMS usage caught the fancy of
Indian cellphone users. By March 2001, Mumbai users exchanged as many as 5
lakh messages per day and Delhi users about 4.25 lakh messages per day. That
is more than one SMS per user in Mumbai and a little less in Delhi. Since
then, it has been growing exponentially. The average SMS usage in Bangalore
is estimated to be even higher, though there is no data available.
In SMS, it is person-to-person communication that
accounts for more than 85 percent of the usage in the major cities. Only
about 10-12 percent usage is for information services. News and the cricket
score continue to be the top favorites.
Though WAP services were launched by a few service
providers, it is yet to capture the popular imagination. This is because of
a number of factors, foremost among which is a lack of application. Slow
connection coupled with high airtime also makes it a costly proposition.
Handset availability, which the service providers have traditionally blamed
elsewhere as a deterrent for WAP taking-off, is not a negative factor here.
The Indian service providers have failed to forge
effective alliances to serve the needs of users in an emerging data centric
world. The services available over SMS are the most primitive and not of
high quality. In fact, news is sometimes a day old in a city like Delhi.
Also, not many of their alliance partners are too happy with the
partnerships. Overall, this has not been a priority for most service
providers. Hutchison Max in Mumbai, again is an exception. If the situation
remains like this, it is not possible to even think of building revenue
models around information services.
The other utility services like dial a cab, dial a pizza
etc have few takers.
Overall, quality of services improved a little. However,
customer care is yet to improve much. In India, most service providers do
not have a process where a high usage subscriber gets preferential treatment
over a low usage subscriber. As a result, though the overall satisfaction
rate is high (as the cellular customer care is much better than that of BSNL/MTNL),
the high usage business users are a dissatisfied lot.
Industry Issues/Trends
-
Consolidation continued throughout the year. Bharti
completed acquisition of its stake in JT Mobile, now called Bharti Mobile.
Hutchison bought stakes in Fascel, the Gujarat operator and the Swisscom
stake in Sterling Cellular, the service provider in Delhi. -
The major issue before the industry was the government’s
decision to allow the fixed line service providers to offer limited
mobility, which the cellular service providers thought would pose a
challenge for them. Though the debate is still on, BSNL has launched the
service in some areas and quite a few private operators are likely to
introduce it. Though it would create some impact on the cellular service
providers in some circles, it is unlikely to be a major issue. -
While incremental network expansion operation was
undertaken by many service providers, little new technology was introduced
by the operators. Only two operators went for GPRS implementation. Services
are still to begin. -
The government also announced its plan to issue a fourth
license in each metro/circle. BSNL/MTNL are/will be the third licensee. -
Though MTNL entered the cellular service fray in the last
quarter, the only impact it made was on drop of cellular tariffs in these
two cities. The PSU has not been able to market its brand Dolphin. -
The cellular industry shared an interim 15 percent
revenue with the government for the entire year. However, TRAI has since
then announced differential rates for different circles and metros. - Most cellular service providers bid for the fixed license in their
respective circles. More than business objectives, it was meant to preempt
the competition by getting the spectrum allocated to them.
Ranking 2000-01
2000-01
Provider
(No. of circles)
(Rs Crore)
Base
Cellular Ltd (1)
Max Telecom Ltd (1)
Mobile Comm. Ltd (1)
Communications Ltd (2)
Cellular Ltd (3)
Cellular Ltd (1)
AT&T Ltd (2)
Mobiles Ltd (2)
Ranking 2000-01
Mobile Comm. Ltd (3)
Ltd (1)
Cellular Ltd (1)
Telecom (7)
Cellular (1)
Martin Telekom Ltd (1)
Cell Ltd (1)
Ltd (1)
Ltd (1)
India Ltd (1*)
Digilink Ltd (3)
Cellcom Ltd
| *Operational |
Source: V&D Estimate |
Cellular Subscriber Growth
Cellular Subscriber Growth
| Cellular Subscriber Growth |
|||||
| Metro Circle | Service Provider | Brand Name | Mar -00 | Mar -01 | Growth |
| DELHI | Bharti Cellular Ltd | Airtel | 184110 | 328390 | Â |
| Sterling Cellular Ltd | Essar Cellphone | 148220 | 218070 | ||
| Mahanagar Telephone Nigam Ltd | Dolphin | NA | 10211 | ||
| Total | Â | 332330 | 556671 | 67.5 | |
| MUMBAI | BPL Mobile Communications Ltd | BPL Mobile | 173017 | 258453 | Â |
| Hutchison Max Telecom Ltd | Orange | 146292 | 252053 | ||
| Mahanagar Telephone Nigam Ltd | Dolphin | NA | 8032 | ||
| Total | Â | 319309 | 518538 | 62.39 | |
| KOLKATA | Usha Martin Telekom Ltd | Command | 41558 | 71591 | Â |
| Spice Cell Ltd | Spice | 48478 | 90453 | ||
| Total | Â | 90036 | 162044 | 79.97 | |
PRADESH
Ltd
Ltd
Ltd
PRADESH
Ltd
EAST
NADU
(EAST)
(WEST)
Ltd
BENGAL