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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.
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.
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.
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.
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.
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.
Base of Cellular companies (as on 31 March 99)
Base
Kerala
Orissa
Rajasthan
Bihar, Himachal Pradesh, Orissa, Assam, and North East
to start its operations in Assam and North East.