The great Indian mobile race

The mobile telephony market is growing fast in India. The major three players of the market, Bharti-Airtel,Reliance communication and Vodafone are trying hard to capture the Indian market which will account for 15% of all global mobile users. Today India accounts for 7% of the total global mobile users and they believe that a growth of 8 million subscribers per month is totally sustainable. Whats more exciting is the fact that along with these 3 players, there are a host of other mobile operators who are relatively new and are willing to spend a lot of money in infrastructure and expansion. These operators are now gearing up for the next phase of expansion and growth with the top three pumping around 10.5 billion dollars(Rs 42,000 crore). The growth and expansion phase would include expanding existing networks, adding new circles and updating the infrastructure and technology. Maxis (Malaysia), which acquired the C sivasankaran’s Aircel in chennai and Tamilnadu is looking to be a pan-India operator. CDMA operator Tata-Teleservices which hopes to achieve a target of 25 million subscribers by 31st march also has some big investment plans. It plans to invest $2.5 billion in the coming fiscal, including a planned rollout of GSM services on Pan-India basis. R-comm is also planning to invest around $1.3 billion in GSM business. Today it uses CDMA technology and operates across the country. Their GSM roll-out will extend to 23 circles from 8 circles today. India is also vodafone’s largest market in terms of subscribers, which has a presence in 16 circles.In the next three years their investments will to the tune of $6 billion.

The Great India Mobile Race by Sushant Kumar

Hurdles

The Indian market today can at-most support 7 operators.This mobile race would lead to consolidation and decrease in revenues for the operators. Moreover this would lead to a lot of competition and in-efficient use of the resources. The in-compatibility and emergence of new players could accrue the problem.

The falling ARPU(Average revenue per user) level

The ARPU is down from Rs 356 in Jan-March 2006 quarter to Rs 308 in 2007 Apri-June quarter.

Close to 80 percent of user in a month are in the pre-paid category, who are referred as marginal users who do not spend much

Rates in India on a per-minute basis are among the lowest in the world. To add to that, the present telecom minister A. Raja wants to bring down the call rates to Rs 25 paise per minute.

Scope for innovation

The mobile operators will have to bring in new features and use the “Mobile technology” to keep themselves up in this competitive race. The economics of the situation puts in a lot of scope for innovation, but the technology isn’t in tune with it. There is very little you can do with a technology that has been developed to a large extent. The 8% contribution of the data services gives a ray of hope, since there is nothing much left to be done on voice (except for an increased penetration,especially rural areas).Since the awareness along with penetration of the internet and broadband increasing, the operators can surely look to cash in on the mobile, but time will only tell that this race pulls crowd in the filled stadium or will some other avenue be the host of reformation and growth. Unless some radical changes are made by new and existing mobile operators, this could turn to another unfinished race.

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