The wireline teledensity stood at 3.14% by the end of FY 2009-10

The wireline segment, under pressure from wireless telephony, continues to
fall in a slow but steady pace. The wireline subscriber base at the end of March
2010 remains at 36.96 mn. The wireline teledensity, by the end of FY 2009-10
stood at 3.14%. It is a dismal performance in comparison with the overall
teledensity of the country that stood at 52.74%.

The
fixed line segment revenue decreased by 23.3% to Rs 18,900 crore in FY
2010 from Rs 24,649 crore in 2008-09. Revenue of
BSNL, the market leader with
72% market share, declined by 28% at Rs 13,575 crore. Private operators --
Airtel, TTSL, Reliance Communications and TTML showed positive growth.

The little hope of the wireline segment growth lies with increasing broadband
penetration. By the end of the fiscal, India has as many as 8.75 mn broadband
connections. Wireline has registered a negative growth rate in circle A, B and C
with -3.3%, -4.5%, and -3.5%, respectively y-o-y. On the other hand, it has
registered a growth rate of 2.6% in metropolitan cities. This is a result of the
increasing penetration of broadband in cities and the emergence of home phone
concept.

Overall, the sector has degrown by 2.7% y-o-y. While, the wireless segment
grew by 49.2% y-o-y.

Private vs PSUs

The entry of private players has brought competition in the wireline
segment, otherwise dominated by PSUs. BSNL and MTNL, the two PSU operators, hold
84.8% of the wireline market.

Airtel, the leader among private players, offers a range of services to make
usage simpler and convenient for its customers. The service provider offers some
services including call conferencing, call forwarding, easy hotline, additional
number line, short dialing, caller line identification, time alarm, voice mail,
parallel ringing and many such services, which were limited to wireless
subscribers.

Bharti Airtel continues to operate in seventeen circles only. The services
provider, which is expanding its wireless operations globally, did not penetrate
in any of the new circles in the year.

BSNL, the market leader in the segment, has become a little aggressive in
luring subscribers. The PSU has recently started offering free landline
connection with a broadband connection. The PSU, which operates across the
nation except in New Delhi and Mumbai, is targeting the enterprise segment. It
has started offering exemption in security deposits for bulk demand of five or
more new connections from commercially important customers (CICs).

Besides, it has started offering temporary connections as well as casual
connections. Temporary connections are provided for a short period of time for
emergency requirements of purely temporary nature. Temporary connections are
provided for a maximum period of three months at a time for private individuals
and six months at a time for government offices. Similarly, casual connections
are provided to applicants for social, religious functions, marriages,
exhibitions for a period not exceeding thirty days.

MTNL has introduced call forwarding facility to its landline subscribers in
Delhi. Subscribers availing this facility can forward the calls coming to their
number to any other number. The PSU has recently re-launched the landline scheme
plan 1+1 on a promotional basis.

PCOs

One of the major drivers of wireline phones were public call offices (PCOs),
as everyone could not afford a telephone connection earlier. After mobile
handset become easily accessible and affordable and call rates going down, PCOs
are losing its sheen in India. It is witnessing a consistent decline. The total
number of PCOs in the country by the end of December 2009 were 5.52 mn, as
compared to 5.94 mn in September 2009, showing a reduction of 0.42 mn PCOs in a
month's period.

Private players have outnumbered PSUs, when it comes to PCOs. These players
command a market share of 65.2%, while BSNL-the largest player in the wireline
segment-command a market share of 31.2%.
MTNL has a market share of 3.6% only.

Rural Penetration

Rural India is now following urban India's footsteps. More and more
villagers are surrendering wireline connections and buying wireless devices. The
credit goes to mobile operators focusing on rural penetration and better
connectivity in urban areas.

BSNL has the highest share of rural subscription-35.28%. It is followed by
Sistema Shayam Tele services with a 13.87% of the rural market share. The
company operates in Rajasthan only.

There are 5,93,731 inhabited villages in India as per census 2001. The number
of VPTs increased from 5.70 lakh in September 2009 to 5.73 lakh in December
2009. With the addition of 37,00 VPTs in this quarter, 97% of the total
inhabited villages in India have been connected.

The segment will continue to see the fall in the near future as well. There
is no doubt that the segment will get a boost from penetration of broadband
services, which is also a focus area for the government. But how much and when,
is still a question.

Akhilesh Shukla

akhileshs@cybermedia.co.in