Ronnie05's Blog

Indian Telcos need to redefine a few paradigms to milk the 17million/month Indian Telecom Markets

Posted in Industry updates by Manas Ganguly on September 7, 2010

The Indian Telecom Industry continued its massive roll outs unabated in the month of July 2010 adding 17 million new subscribers taking the total tally of Telecom Subscription to 688.38 million of which 652.42 million are wireless customers. This thus takes the teledensity to 58.17%. The Chart below captures the rise, rise and rise of the Telecom Subscriber numbers.

India: Net Subscriber Adds ( A Graphic)

However, a 17 million number may not be all good news for everyone in the market. Another independent Industry survey by JuxtConsult, dishes a slightly contrarian view to the 17 million connection party stating that one out of every three mobile connections in India is not in active use. In fact, JuxtConsult claims that 355 million connections are being used regularly. Here are the details of the study findings:

 There are 304 million mobile subscribers in India, using 355 million connections ‘actively’
 Avg mobile users per household is 2.05 and avg ‘active’ mobile connections per user is 1.17
 Household level penetration of mobile phones is 61% , individual level penetration is 26%. Tele-density at all India level stands at 31%, with urban tele-density way ahead at 54%
 Rural India accounts for almost as many ‘active’ mobile subscribers and subscriptions as urban India – rural users show the same propensity to take up ‘multiple SIMs’ as urban users, but lower propensity to have ‘multiple mobile users’ in the household
 2 out of 3 mobile using households are still ‘single mobile user households’
 4 out of 5 mobile users are ‘single active mobile connection users’. The user base of active ‘multiple mobile connection users’ is around 59 million

This establishes that the actual market is far less promising than the headline numbers.The earlier situation of 14 Telcos bloodying it out for market shares in a hyper-competitive market with .5 paise per second plans was always an unsustainable strategy. I have blogged about the fruitlessness of cost based competition except for ruining the Profit and Loss statements of the incumbents and not providing any teeth to the challengers who don’t have the scale to challenge the incumbents in footprints.

The Thought to take the growth of the telecom sector meaningfully is as follows:

1. Define Telecom services beyond voice and data to items of daily use. (Mobile health, Ticketing, Finance). Voice and Data are commodities and services need to be structured on these which will allow consumers to do more for which they are ready to pay more.
2. Ability to redefine the distribution paradigm. It is always not necessary that the Telcos exert channel control even to the last mile. Alternate distribution channels will be the key here. (Leverage Fertilizer companies channel, leverage choupals, have alternate distribution agreements)