India in the 100 mn Club

Thanks to a series of price wars, accompanied by a steep fall in entry-level

handset prices, India entered the 100 mn club becoming the fifth largest country

in terms of mobile subscriber base behind only to Russia, Japan, US, and China.

In India, GSM subscribers account for 75.3 mn while CDMA-based subscriber

number stands at 25.3mn.  In another

related milestone, the GSM subscriber base, globally, touched 2 bn, of which

India's share is 83 mn.

It is also interesting to note that 90% of the current subscribers became

mobile after the beginning of 2003. Thanks to the explosive growth, the overall

tele-density in India stands at 13.54%. If one were to go by the government

estimates, 85% of the geographical area of the country will be covered by mobile

telephone by the year 2007. It is also estimated that subscriber growth rate

could rise as high as 32% by 2010. There are all indications that India's net

addition per month will surpass China later this year.

The Accelerators



India being a highly price-sensitive market, the main reason for this

landmark is the steep fall in cellular tariff. According to an estimate, there

has been a 93% reduction in call tariff since 1998.

The other important reason is the availability of entry-level handsets at

sub Rs 2,000 level. Added to this is the fact that all operators have been

hugely successful in bundling handsets with connections, making it more

attractive to subscribers. While there is the euphoria of achieving the 100 mn

landmark, the situation on the non-voice revenues of operators is an area of

concern. While Chinese operators earn 44% of their total revenue from SMS,

ringtones and WAP downloads, Indian operators are still hovering around the 10%

mark. It is hoped that with the launch of 3G services in India, the data

component will rise substantially owning to increased usage by corporate mobile

users.  The huge milestone can also

be attributed to the aggressive marketing campaigns done by mobile operators,

especially Tata Indicom, offering attractive schemes.

Some of the government decisions including the migration to revenue share and

corporatization of BSNL, were responsible for creating a competitive atmosphere

necessary for the growth of the telephony market in India. Last, and more

importantly, WLL, thanks to Reliance, despite all the controversy it generated,

gave the needed push to the mobile market at a time when mobile phones were

beyond the reach of the common man.

Hurdles Ahead



But in the race toward numbers, quality has remained an area of concern.

According to a TRAI study, operators need to focus on improving their quality of

services. It is being felt that the recent DoT notification asking operators to

follow a strict verification process, may slow down the connection uptake, which

is not a good thing for a growing industry. It is hoped that COAI and AUSPI, who

have set up the Apex Advisory Council for Telecom in India to oversee the

subscriber verification process, work towards a smooth process to avoid this

situation. 

Another area of concern has been the slow progress on the rural mobile

telephony front. Rural teledensity continues to remain at around 2%. Most of the

growth has happened in urban areas and if the target of 250 mn by 2007 is to be

achieved, the private operators need to extend their urban success story to

rural areas.  Meanwhile, the

government also aims to provide mobile access to all villages with population of

more than 5,000 by the year 2006 and more than 1,000 by the year 2007.

These targets are not difficult to achieve but depend on whether private

operators will be willing to cooperate with state telcos on this.

Sudesh Prasad



sudeshp@cybermedia.co.in