Financial Daily from THE HINDU group of publications
Sunday, Sep 04, 2005

News
Features
Stocks
Port Info
Archives
Google

Group Sites

Home Page - Regulatory Bodies & Rulings
Info-Tech - Telecommunications


Telecom market: India ahead since it's so far behind

Sudhanshu Ranade

Chennai , Sept. 3

INDIA is one of the fastest growing telecom markets in the world, according to a June 2005 study paper of the Telecom Regulatory Authority of India.

The data in the report, however, tell a very different story. According to these figures, relating to the period from 1997 to 2005, the reason why Indian telecom is today growing faster is simply that China did many years ago what India is doing today.

The total number of cellphone subscribers in India now is a little above 52 million. China achieved this level more than five years ago, in early 2000.

As a result, while India has been growing faster than China in terms of the rate of growth (2,677 per cent between 2000 and 2005, as compared with a mere 310 per cent for China), it is China that is growing faster, much faster, in terms of the number of new subscribers added each year. China added on an average more than 50 million new subscribers each year over the past five years; the corresponding figure for India is only 10 million.

In terms of sheer numbers, in terms of the additional number of mobile phone subscriptions sold each year, the Chinese market is 5 times as large as the Indian one.

If, apart from new subscribers added each year, one considers the business opportunity inherent in simply having a larger subscriber base, the Chinese market in terms of revenue per year is 7 times as large as in India, the number of mobile phone subscribers in the two countries being 349 million and 52 million, respectively.

There is another sense in which China is ahead. Though Indians use their mobile phones more often, and for longer periods, than do the Chinese (330 minutes per year in India vs 297 in China), the average revenue per user (ARPU) in China is higher than in India in all categories except for GSM (global system for mobile communication) post paid, in which the difference is anyway slight, amounting to no more than $ 0.16 cents ($20.18 in China versus $ 20.34 in India).

China leads in all other categories, and often by a large margin. ARPU for GSM and CDMA (code division multiple access) is $9.69 as against $9.04, for CDMA $10.31 as against $5.74, for GSM $9.62 as against $8.89 and for GSM prepaid $6.77 as against $5.25.

The combined effect of these two factors, a larger subscriber base together with higher ARPUs, is, of course, reflected in larger profits raked in by Chinese companies.

Though China too has an element of competition in the mobile phone segment, in the sense that there is more than one firm providing services, all the firms in business in China are state-owned, and this seems to have limited the degree of effective competition among them.

The Indian market, too, can be expected to see some degree of consolidation or collaboration or weeding out over the years, in an effort to counter the revenue implications of having a small number of subscribers in conjunction with lower ARPUs.

It is in this context that Mr Ratan Tata's proposal of levying a fairly stiff charge for the allocation of spectrum is to be viewed.

One need not be unduly cynical about this proposal since it is possible to argue that reducing the number of players in the market could in the long run make for a more energetic supply-driven expansion of mobile phone use in India.

The flip side of this picture is of course higher tariffs. But these, already low, yet continue to fall.

Therefore, as in the case of air transportation in respect of mobile phones too the jury is still out on whether and how long and how many of the present players in the market will be able to keep their heads above water, while generating on an ongoing basis the surpluses required for further expansion/ modernisation.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page



TMB Ltd

Stories in this Section
AP gets Rs 5,500-cr export-oriented refinery — ONGC-MRPL also to set up SEZ at Kakinada with IL&FS


MPCB slaps `cease work' notice on mill property developers
MFs cautious about expanding investment universe
Asian textile nations to join hands to rule global markets
FDI in paper sector: Finnish co may take lead
Telecom market: India ahead since it's so far behind


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line