Paging

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Proving all pundits wrong, the

paging industry plunged into a deep crisis last year, posting a negative growth in the

subscriber base in cities. In the 27 cities licence earlier the subscriber base dropped

from 8.33 lakh subscribers in March 1998 to 6.70 lakh subscribers as on 31 March 1999.

However, the begining of services in circles compensated for the drop. The total base in

the country still manage to reach 8 lakh.

• The reasons for the dismal show of the industry
  
  were many. First, the paging industry opted not to give any subsidy or to go for any
  
  bundling, resulting in the end user paying full money for pagers. This resulted in poor
  
  penetration rate. Two, the general economic slowdown also affected the paging industry. It
  
  was not a good time for market development. Three, there was confusion among users about
  
  the utility of pagers and the future of the paging industry. Here the challenges were from
  
  the cellular companies. Four, the industry could not succeed in segmenting the market
  
  clearly and positioning against the hot ones. Most of the growth in subscriber base came
  
  from the low-income group and the "just employed" people. Five, barring a few
  
  companies, most of the paging companies did not take up value-added services seriously,
  
  thus resulting in the revenue from these services barely to 1.5 percent of the services
  
  revenue of the industry.
• In spite of this state of affair, the industry
  
  grew in 1998-99 to an estimated size of height="213" alt="segment_paging1.gif (18749 bytes)" align="right" hspace="4" vspace="4"> face="Times New Roman" size="2">Rs 241 crore, registering a revenue growth of 20.5
  
  percent. Major contributing factors to this growth were two. First, the spread of paging
  
  to circles. Two, there was no subsidy on the terminal-end equipment, against the practices
  
  in the previous years, thus increasing the sales turnover of every operator. In effect, it
  
  was a trend from zero cost to full cost for the end user.
• The contribution of paging in circles to the
  
  subscriber kit was around 1.30 lakh. The companies that deserve special mention are
  
  Punwire–Page Me–with its operations in 165 cities, and BPL with its spread in
  
  Karnataka, Kerala, and Tamil Nadu. However, as compared to the coverage–12
  
  circles–the contribution of circles to the total subscriber base was scanty for
  
  Punwire as the company reports only 90,000 subscribers by the end of March 1999.
• The year set the beginning of surrendering
  
  licences due to the non-viability of projects. MaxPage was the trendsetter in this case,
  
  surrendering its licence in Punjab. There are reports that Usha Martin has also
  
  surrendered its licence for three cities.

Market Players

• DSS Mobile Communications (Mobilink) maintained
  
  its numero uno position both in revenue and subscriber base. The company posted a revenue
  
  of Rs 60.49 crore and a subscriber base of 1.65 lakh, a drop of about 0.61 lakh from March
  
  1998.
• The EasyCall Group–there are four companies
  
  in the group–came to the second position with an estimated revenue of Rs 30 crore.
  
  Pagepoint is in the third position with an estimated turnover of Rs 26.40, to be followed
  
  by Punwire with Rs 26 crore (estimated) and RPG Paging with Rs 25 crore.
• RPG Paging was the only company that could reach
  
  profits at operational level in the paging industry. It has become the number one company
  
  in two–Delhi and Chennai–of the three cities it operates with around 80,000
  
  subscribers. It is rallying behind DSS Mobile in the third city, Ahmedabad.

Contd.>>>>

• According to our estimates, Microwave
  
  Communications made Rs 24 crore from its operations from last year’s operations. Modi
  
  Korea Telecom grew 5 percent from the previous year’s figure of Rs 13.55 crore to Rs
  
  14.2 crore in the last fiscal.
• Mumbai controls the #1 position in paging
  
  penetration with an estimated size of 1.5 lakh to be followed by Delhi with almost 92,000
  
  subscribers. Chennai with about 75,000 pagers is in the third position and maintained its
  
  lead over Bangalore that has a subscriber base of 63,000. Delhi, in spite of its
  
  potential, has given only a lukewarm response to paging.

alt="segment_paging3.gif (10352 bytes)" align="right" hspace="4" vspace="4"> face="Times New Roman" size="3">Pagers

Among the pager companies, it was

the year of Group Sense Ltd (GSL), a Hongkong-based company. With competitive pricing, the

company could become the dear of many service providers. GSL has allowed paging companies

to sell its pagers as the latter’s products. So far the pagers used to carry

the manufacturer’s and service provider’s name. The company, with its pager

features, scored maximum on pricing its products. The average cost of a pager was Rs

2,200.

It was a bad year for Motorola.

The company closed down its manufacturing facility in Bangalore, and lost the

top-of-the-mind image, though still the leader. Through Pagepoint and some other

operators, the Motorola products are still active in the market. The company had already

given up the paging infrastructure business in India.

The year also witnessed the

breaking away of a manufacturing JV between Casio and Bharti Telecom. Casio pagers, too,

witnessed a slide-down in penetration last year.

NEC, too, could not make much

impact in the market-place. However, NEC brands were getting a push in the market by

EasyCall Group.

Numeric pagers continued to grow

last year too. In the beginning, they had a penetration of 30 percent that came down to 20

percent in the second half of the fiscal.

The Impending Issues

The paging industry is still

compounded with certain major issues. One, it is yet to get the VSAT connectivity that was

promised in 1995. The second issue is its request for revenue sharing with the DoT and

MTNL. It is estimated that the industry generates almost 44 million calls a month from the

city operations and another 8.5 million from the circles. And, the call completion rate in

the case of paging is around 1-1.5 minute. It means the DoT and MTNL generate more money

with less traffic congestion. Thus, the industry’s demand for revenue sharing is

justified. However, TRAI has declined to take up this issue. Three, there should be a new

licence-fee structure for the remaining licence period–the first three year licence

fee were decided at the time of bidding. DoT and TRAI have yet to come out on this.

Similarly, there should be an arrangement between paging service providers and cell

operators for the calls originating from a cellphone user to the paging services.

Forecast for 1999-2000 src="../images/segment_paging4.gif" width="211" height="213" alt="segment_paging4.gif (10033 bytes)"

align="right" hspace="4" vspace="4">

The stagnation phase will

continue till September 1999. There is a strong possibility of the revival of the market

after this period. It is expected that the industry will grow 15 percent this year in

terms of subscribers.

The Calling Party Pays (CPP)

structure in cellular may bring in additional cheers for the paging industry. This may

help pagers getting the status of a utility medium that was absent in the Indian

market-place so far. Also, there is a hope that many of the defaulters will activate their

pagers with the CPP impact on the cellular industry.

RPG Paging may reach breakeven

this year. DSS may make profits at the operational level.

The favourable trend for the

two-line alphanumeric pagers is likely to continue.

Companies will put on hold all

expansion plans like the "Transnet Services" of Mobilink. It is expected that

DSS will not opt to extend its connection to 450 cities that was originally planned to be

in place by the end of 1999.

The expected revenue sharing

arrangement between the DoT and the cellular operators may also open the door for paging

companies to get the same facility which is denied to them as of now.

Companies like Eider, Beltron,

and Nice may bring out their action plan "clear" this year.

The operational cost of Page Me

services will rise in leaps and bounds unless the company brings in effective marketing

strategies to increase the subscriber base.

One cannot rule out the

possibility of licences being surrendered in cities like

Thiruvananthapuram, Patna,

Ernakulam, Varanasi, and Bhopal where the subscriber base are less than 1,700 till 31 May

1999. Thiruvananthapuram has so far attracted 600 subscribers only. In the case of Patna,

it is around 1,000.

This year will see companies selling licences to

their competitors where the later are strong. There is a good possibility of a group

buying the entire operations of another group.