India talking: Indian telecom in 2009
A media report in June 2009, revealed a survey finding that in spite of global economic slowdown, the demand for mobile phone connections grew consistently to record a profit of 20 per cent over the last fiscal.
SPEAKING AT the recent TED conference, Indian Minister of External Affairs Shashi Tharoor cited this example. He was driving into the rural interiors in Kerala to his friend’s farmhouse and there was no trace of any human settlement within 10km of its radius. Exhausted when they finally reached, his friend asked if he would like to have fresh coconut water. Although Tharoor said yes, he wasn’t sure if ‘fresh’ coconut water ‘immediately’ was possible. After all, there was no one but them in the radius of 10kms.
Surprisingly, his friend picked up his mobile phone and placed the order to a man sitting on top of a coconut tree. Tharoor was not only surprised to get fresh coconut water but also with the fact that the rural interiors actually had such a robust network connection and even more so, a guy who sells coconut for a living had a mobile phone. Such tremendous has been the growth of the Indian telecom industry.
A media report in June 2009, revealed a survey finding that in spite of global economic slowdown, the demand for mobile phone connections grew consistently to record a profit of 20 per cent over the last fiscal. The survey carried out by Voice and Data, a telecom industry journal of CyberMedia group observed that with the new service providers in the market, the competition will cause a drop in the rates and also with big players turning towards rural markets, the industry is most likely to log higher growth rates.
The urban teledensity (number of mobile phones per 100 people) in India has crossed the 100 per cent mark as indicated by the department of telecom (DoT) this month. This means that there is at least a cell phone with each person. This growth in teledensity was recorded over the 85 per cent in March this year and 60 per cent in March 2008. These numbers easily convey the triumph of the Indian telecom sector. Today, there are 500 million mobile customers in India.
Surprisingly, as per Telecom Minister A Raja’s written reply to the parliament this month, Himachal Pradesh tops the list of urban teledensity at 219 per cent. Second comes in Kerala with 156 per cent followed by Delhi at 154 per cent. Chennai and Mumbai registered 143 and 125 per cent respectively.
With popular service providers like Vodafone, Airtel, Reliance and others now competing to provide services at even a paise per minute, the tariffs has hit an all time low resulting in unprecedented 15 million customers signing up every month. Moreover, with Airtel’s offer of flat 60 paise per minute on roaming is accelerating a drop in the roaming charges by other major service provider companies. This tariff war has caused a dip in profit per cent in the last two quarters by mobile operators. These companies are now turning to develop a strong hold on the rural markets in India. Although this will mean an increase in spending by them, it is necessary to sustain their growth in the market.
The rural market should not fail these companies as this segment had been untapped till now and almost 70 per cent of mobile users are registered in the urban areas. Given the low tariffs and mobile handset rate, the rural market penetration seems the most obvious and lucrative option.
Mobile operators believe that along with rural markets, the urban area will continue to be a source of profit considering the large scale migration that takes place to the cities. These companies are also hopeful that a wide range of attractive value added services will generate substantial revenue for them.
Bharti Airtel’s deputy chief executive officer Sanjay Kapoor had recently said that the urban markets can never become obsolete. “For a player like Bharti, we are steadily moving away from being a pure telecom player to a lifestyle company. As these new services (banking, mobile commerce, money transfers, TV and high-speed Internet on mobiles) come in, urban areas such as metros are large markets that are yet to be tapped. This is true of all highly developed markets like London, Tokyo and New York,” he said.
Aircel, a relatively new player in the market chose to expand in spite of being fully aware of urban market saturation and intense competition in the telecom industry. They are treading their confidence on the belief of their superior value added services.
“Our research revealed that customers need real and relevant content and we are growing in these places by offering superior data and value added services,” said Aircel CEO Gurdeep Singh.
This year has also been historical because of launch of 3G services in India. State-run Bharat Sanchar Nigam Ltd (BSNL) launched the country’s first 3G services early this year ahead of the private players, who still await spectrum through the auction process. BSNL CMD Kuldip Goyal said 3G services customers would have three monthly subscription options of Rs 350, Rs 650 and Rs 1,350. They would be offered a plethora of services like live TV, high-speed mobile broadband and movie downloads.
With such tremendous competition in the CDMA and GSM categories, it will undoubtedly be exciting to watch how the 3G market will unfold and shape itself up when private players enter.
In recent times of economic recession, when every sector recorded unimpressive growth numbers, telecom was perhaps the one sector which played a key role in maintaining a decent government balance sheet. The government earned Rs 8,307.85 crore from mobile telecom operators by way of licence fees in 2008-09. During the first six months of fiscal year 2009-10, the DoT has already collected Rs 4,112.30 crore.
Research predicts that by 2013, the mobile subscriber base in India will rise to 771 million from 500 million in 2009. The mobile market penetration is projected to increase from 38.7 per cent in 2009 to 63.5 per cent in 2013.
In view of adopting more cautious and stringent course in the wake of the recent terror attacks, wherein easy availability of prepaid mobile connections without strong records of the subscribers came under scrutiny, mobile companies have now made the prepaid process stricter. This in the long run will also help keep an accurate check on the count of the prepaid mobile users.
While poverty, unemployment, education, health and hygiene still remain a challenge for the government to fully claim for the status of a developed nation, the huge success of telecom industry and its continued growth ensures that technically India has shown a brilliant progress and a well-connected India hopefully in some way will help address such unresolved issues at least to some extent.
A media report in June 2009, revealed a survey finding that in spite of global economic slowdown, the demand for mobile phone connections grew consistently to record a profit of 20 per cent over the last fiscal. The survey carried out by Voice and Data, a telecom industry journal of CyberMedia group observed that with the new service providers in the market, the competition will cause a drop in the rates and also with big players turning towards rural markets, the industry is most likely to log higher growth rates.
The urban teledensity (number of mobile phones per 100 people) in India has crossed the 100 per cent mark as indicated by the department of telecom (DoT) this month. This means that there is at least a cell phone with each person. This growth in teledensity was recorded over the 85 per cent in March this year and 60 per cent in March 2008. These numbers easily convey the triumph of the Indian telecom sector. Today, there are 500 million mobile customers in India.
Surprisingly, as per Telecom Minister A Raja’s written reply to the parliament this month, Himachal Pradesh tops the list of urban teledensity at 219 per cent. Second comes in Kerala with 156 per cent followed by Delhi at 154 per cent. Chennai and Mumbai registered 143 and 125 per cent respectively.
With popular service providers like Vodafone, Airtel, Reliance and others now competing to provide services at even a paise per minute, the tariffs has hit an all time low resulting in unprecedented 15 million customers signing up every month. Moreover, with Airtel’s offer of flat 60 paise per minute on roaming is accelerating a drop in the roaming charges by other major service provider companies. This tariff war has caused a dip in profit per cent in the last two quarters by mobile operators. These companies are now turning to develop a strong hold on the rural markets in India. Although this will mean an increase in spending by them, it is necessary to sustain their growth in the market.
The rural market should not fail these companies as this segment had been untapped till now and almost 70 per cent of mobile users are registered in the urban areas. Given the low tariffs and mobile handset rate, the rural market penetration seems the most obvious and lucrative option.
Mobile operators believe that along with rural markets, the urban area will continue to be a source of profit considering the large scale migration that takes place to the cities. These companies are also hopeful that a wide range of attractive value added services will generate substantial revenue for them.
Bharti Airtel’s deputy chief executive officer Sanjay Kapoor had recently said that the urban markets can never become obsolete. “For a player like Bharti, we are steadily moving away from being a pure telecom player to a lifestyle company. As these new services (banking, mobile commerce, money transfers, TV and high-speed Internet on mobiles) come in, urban areas such as metros are large markets that are yet to be tapped. This is true of all highly developed markets like London, Tokyo and New York,” he said.
Aircel, a relatively new player in the market chose to expand in spite of being fully aware of urban market saturation and intense competition in the telecom industry. They are treading their confidence on the belief of their superior value added services.
“Our research revealed that customers need real and relevant content and we are growing in these places by offering superior data and value added services,” said Aircel CEO Gurdeep Singh.
This year has also been historical because of launch of 3G services in India. State-run Bharat Sanchar Nigam Ltd (BSNL) launched the country’s first 3G services early this year ahead of the private players, who still await spectrum through the auction process. BSNL CMD Kuldip Goyal said 3G services customers would have three monthly subscription options of Rs 350, Rs 650 and Rs 1,350. They would be offered a plethora of services like live TV, high-speed mobile broadband and movie downloads.
With such tremendous competition in the CDMA and GSM categories, it will undoubtedly be exciting to watch how the 3G market will unfold and shape itself up when private players enter.
In recent times of economic recession, when every sector recorded unimpressive growth numbers, telecom was perhaps the one sector which played a key role in maintaining a decent government balance sheet. The government earned Rs 8,307.85 crore from mobile telecom operators by way of licence fees in 2008-09. During the first six months of fiscal year 2009-10, the DoT has already collected Rs 4,112.30 crore.
Research predicts that by 2013, the mobile subscriber base in India will rise to 771 million from 500 million in 2009. The mobile market penetration is projected to increase from 38.7 per cent in 2009 to 63.5 per cent in 2013.
In view of adopting more cautious and stringent course in the wake of the recent terror attacks, wherein easy availability of prepaid mobile connections without strong records of the subscribers came under scrutiny, mobile companies have now made the prepaid process stricter. This in the long run will also help keep an accurate check on the count of the prepaid mobile users.
While poverty, unemployment, education, health and hygiene still remain a challenge for the government to fully claim for the status of a developed nation, the huge success of telecom industry and its continued growth ensures that technically India has shown a brilliant progress and a well-connected India hopefully in some way will help address such unresolved issues at least to some extent.
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