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Cellular

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VoicenData Bureau
New Update

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According to the

Cellular Operators Association of India (CAOI), the cellular industry grew from a

subscriber base of 8.82 lakh in March 1998 to 11.95 lakh by the end of March 1999. Thanks

to the growth of cellular in circles as against the negative growth in metros. However, as

per our estimate, the actual subscriber base stood at 11.4 lakh.

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The industry, as per our

estimation, grew to the tune of Rs 1,400 crore last fiscal, thus registering a growth of

12 percent over the previous year’s Rs 1,250. In the process, the cellular industry

has incurred an estimated loss of Rs 5,000 crore from its operations, so far.

The contribution of handsets to

this figure is Rs 144 crore. (For more details, see the personal communications segment,

page 104).

As far as the cellular industry

was concerned, the most impacting development last year was the initiative that the Prime

Minister had taken in terms of a New Telecom Policy, with an intention to resolve the

existing problems of the operators. Another shot in the arm was the final report of Bureau

of Industrial Costs and Prices (BICP) which was submitted to the government later last

year. Though the document has not made public, it is widely believed that the BICP report

tries to address some of the burning issues of the cellular industry. Thus suggesting two

years change in licensing tenure, more spectrum, and so on.

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The Metro Scenario

In the last fiscal the total

metro base declined to 5.19 lakh in March 1999 from the figure of 5.6 lakh in April 1998.

alt="segment_cellular2.gif (12008 bytes)" align="right" hspace="1" vspace="1"> face="Times New Roman" size="2">Like in paging, Mumbai maintained its lead over Delhi in

cellular in a year of turbulence. In the beginning of the last fiscal, the city enjoyed a

subscriber base of 2.46 lakh and this number plunged into 1.79 lakh in July 1998 and moved

upward in the subsequent months to settle at 2.28 lakh in March 1999. And, BPL Mobile with

1.28 lakh subscribers by the end of the fiscal emerged as the leader in the entire metros.

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The Delhi market also saw a dip

from 2.16 lakh subscribers in April 1998 to 1.83 lakh in August last year and subsequently

recovered to settle at 2.15 lakh in March 1999. Thus becoming the only metro nearly

recovering its base. Here, though AirTel and Essar were on a neck-to-neck competition in

the middle of the fiscal, the former could re-establish its lead by the end of February

1999.

Calcutta was severely affected

last fiscal in terms of subscriber base compared to all the other three metros. From a

total base of 51,827 in April 1988, the number slipped heavily down to 38,384 in January

1999 and started recovering from there to settle at 39,777 by the end of March 1999. In

the process, there was a substantial decline in the lead of Modi Telstra.

Chennai, in spite of the tall

claims of the operators, dipped in subscribers from 43,000 in April 1998 to 35,832 by the

end of March 1999. And, in the process, RPG could overtake Skycell in subscriber base.

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It was not in subscriber base

alone that the metros faced crisis. There was a reduction in airtime usage too. Our study

reveals that there was a 20 percent decline in airtime usage, thus highly affecting the

sales revenue of all operators. The present average airtime usage is 120 minutes. Despite

this, Essar was a company that did grow in subscriber base and revenue among the metro

operators. BPL, with more customers in its fold, kept its turnover intact. All other

operators posted negative growth.

There were reasons for this

downward swing. First, the operators started suspending all the defaulters from their base

around the middle of the fiscal. The mandatory payment of Rs 500 per subscriber per month

to the DoT made the operators to re-visit their customer profile and take strong measures

to remove defaulters. This has resulted in another good development. The operators had to

change their marketing strategies. Bundling, a technique that used to woo many customers,

had to be repealed. Two, many potential subscribers opted for a wait-and-watch strategy

due to TRAI’s initiative in revising the rentals and tariffs. Third, general economic

slowdown too contributed its due. Fourth, licence-fee related issues also affected the

performance of the metro operators. Like the basic service providers, the tough stand

taken by the then communication minister Jagmohan on licence fee issue also aggravated the

crisis of metro operators.

However, TRAI’s decision to

raise the rentals to Rs 600 per month has been a good respite for the operators. It

relieves them from the mandatory Rs 500 per month per subscriber charges of the DoT. Also

they are finding good returns from value-added services.

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Pre-paid system found wide

acceptability last year. Almost 20 percent subscribers are opting for this facility. And

the operators are finding bit solace in this system to meet their operational expenses.

The Circle Impact

Circles ruled the roost last year

as far as the cellular subscriber base was concerned. Last year, the subscriber base

increased by 3.2 lakh to reach a base of 6.76 lakh by the March end 1999. Koshika Telecom,

one of the operators in UP (West), UP (East), Bihar, and Orissa, with more than one lakh

subscribers in its network, emerged as the largest operator in the country, circle-wise.

BPL-US West follows Koshika in subscriber strength with a base of 93,776. With 85,327

subscribers, Birla AT&T stood at the #3 position.

Contd.>>>>

Subscriber

Base of Cellular companies (as on 31 March 99)
Operator City/Circle Subscriber

Base
Bharti Cellular (AirTel) Delhi/Himachal Pradesh 121,348 Sterling Cellular (Essar) Delhi 96,804 BPL Mobile Mumbai 128,711 Hutchison Max Mumbai 99,586 Modi Telstra Calcutta 21,653 Usha Martin Calcutta 18,124 RPG Cellulat Chennai 19,010 Skycell Chennai 16,822 BPL-US West Maharashtra, Tamil Nadu, and

Kerala
93,776 Birla AT&T Gujarat and Maharashtra 85,327 JT Mobile Andhra Pradesh and Karnataka 67,987 Spice Telecom Karnataka and Punjab 85,419 Koshika Telecom UP (E), UP (W), Bihar, and

Orissa
105,591 Escotel UP (W), Haryana, and Kerala 64,546 Tata Cellular Andhra Pradesh 40,943 Fascel Gujarat 48,879 Srinivas Cellcom Tamil Nadu 6,828 Evergrowth Punjab 12,051 Hexacom* Rajasthan 10,784 Aircell Digi Link UP (E), Haryana, and

Rajasthan
19,665 RPG Cellcom Madhya Pradesh 10,619 Reliance Madhya Pradesh, West Bengal,

Bihar, Himachal Pradesh, Orissa, Assam, and North East
29,725 *Hexacom is yet

to start its operations in Assam and North East.
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