Its Revenues This Time

VoicenData Bureau
New Update

The second volume of V&D 100 survey on service providers has thrown up

quite a few very interesting observations. The biggest highlight of fiscal

2005-06 was mobile overtaking fixed service revenues. The previous year,

2004-05, saw total mobile subscriber base beat fixed subscriber numbers in the

country. A little deeper probe reveals that there was a huge difference between

the revenue growth rate of the two-3% in fixed versus 57% in mobile. Actually,

the subscriber growth rate was even more skewed-13% in fixed as against 74% in

mobile. If there was anybody who had doubts about how the Indian population at

large will adopt to mobile technology, this should be the final verdict. And

there is growth happening everywhere-in metros and in smaller towns, as well

as among the tech savvy as well as those who are generally perceived as highly

tech apprehensive like the plumbers and the roadside tea vendors. Operators and

vendors need to keep this always in mind for any strategy or planning they do.


The other interesting observation is that fixed phone connections, which the

dooms day predictions, had started writing off, is growing. In terms of revenue

it went up by a mere 3%, but in terms of subscriber base, it is almost 13% in

the 2005-06 fiscal. There is clearly quite a bit of value that fixed connections

offer. While incumbent MTNL lost subscribers, BSNL managed to increase its

subscriber base. Therefore, even with the onslught of mobile services, consumers

are holding on to their fixed phones. The ball now lies in the operators'

court as to how can it make a fixed line useful for the subscribers. Obviously

the operators will have to also ensure that being in the fixed line business is

profitable for them. With Internet and broadband now being given a special push,

and as content and applications start adding value to the Internet owners, there

is surely a business case for fixed lines worth considering seriously. Just to

add here is the amazing growth of the private players such as Tata Teleservices

and Reliance, which managed 120% and 139% growth respectively, albeit the fixed

wireless route.

Another interesting finding of the survey is in terms of revenue growth at a

time when tariffs have been dropping. There was a lot of noise when operators

said that reduction in tariffs, which was being largely driven by the Government

and TRAI, would hit revenues. The result is just the opposite of that. National

Long Distance and International Long Distance, where we saw the maximum tariff

reduction, has grown by 45% and 87% respectively. Clearly, there is a huge

unfulfilled demand that is waiting to be catered to.

If we make this a technology comparison, let's say CDMA versus GSM, then

Reliance revenues has grown by 110% and Tata Teleservices by 91%, while most of

the GSM operators were able to grow between 25 to 55% only. While international

technology giant Nokia has gone out of its way to create doubts on the future of

CDMA, the technology seems to be lucky for Indian operators. Those who will

piggy back CDMA operators take note of this-whether you sell equipment, or

value added solutions to, CDMA could get you more money than many of us would

like you to believe.


According to the V&D100 survey, the overall money made by private players

(Rs 43,491 crore) from telecom services just about caught up with the revenues (Rs

44,371 crore) that government owned service providers made. This piece of data

is going to give more courage to those private players, both in India and

overseas, who believe that private telecom operators can make money and grow in

India. The challenge for the incumbents is going to go up, and the subscribers

are going to get more choosy.