Ronnie05's Blog

Indian Telecom Net Subscriber Growth Slow Down

Posted in Industry updates by Manas Ganguly on September 21, 2011


The relentless growth rate of Indian telecom subscriber addition finally seems to be tapering off. After 12 quarters of double digit sub adds, most of it in the range of 15 million and above, net subscriber adds have hit a 6.67 million figure in July 2011, which is equivalent to the May 2007 level. The GSM net sub adds have tumbled from a 17.16 mln in November 2010 to 5.34 mln (excluding Tata and reliance numbers) in August 2011. That is a drop of 2/3rds in 10 months. This would be putting serious pressure on the revenues and earnings of Telcos.While they have started increasing tariffs to shore up profits, slowdown in new users may yet affect their revenues going forward. The total GSM users base to 611.75 million at the end of August 2011 and the total mobility figure topped 858 million even as tele-population stands close to 900 million at 892.55 mln. In an earlier report Informa Telecoms and Media had predicted the number of active mobile subscriptions in India to rise to 1.159 billion by the end of 2012 making it the largest mobile marketin the world eclipsing China. The Indian telecom market already has a higher subscription penetration rate (75%) compared to China(69%). However, from a revenue perspective, the Indian and Chinese markets paint a very different picture. Informa Telecoms & Media projects that by the end of 2013, the Chinese mobile market will be worth approximately US$107.5 billion, as compared to India’s mobile market, which is set to be worth approximately US$35.5 billion. China’s mobile data market by the end of 2014 will be worth more than the entire Indian mobile market. The intense competition dominating India’s mobile market has made its impact on mobile ARPU, which is on average nationwide now US$3, as compared to China where mobile ARPU is just over US$10. Informa projects that India’s mobile data market will be worth approximately US$9 billion in 2014, up from US$2.3 billion in 2008 as subscribers in urban areas increasingly use their handsets to access multimedia services, and utility type services such as mobile payments and banking become more widespread in rural areas and smaller towns.

Key strategic initiatives by Telcos in India now revolves around data services – the operator views non-voice services as being intrinsic to its growth strategy as its customer base continues to grow and as it seeks to offset the ongoing fall in voice revenues. The rising popularity of messaging services, future availability of 3G/DO services and strong growth of mobile Internet and broadband will boost mobile data revenues in India during the next five years.

Out of the total 858.37 Million subscribers, 601.73 Million subscribers were active subscribers on the date of Peak VLR for the month of July 2011. The proportion of VLR subscribers is approximately 70.65% of the total wireless subscriber base reported by Telcos. Ever since the introduction of MNP, roughly 2% (15.54 mln subs) of the mobile population have opted out of their older service providers to join others.

Data: Informa, COAI, TRAI

Net Subscriber Growth Slowing down! Telcos need to re-think

Posted in Industry updates by Manas Ganguly on July 9, 2011

Mobile subscribers growth is slowing down. If it was a lingering doubt that i had expressed in my last post, May 2011 subscribers data adds a solid brick of evidence that subscriber growth is decelerating.

Highlights of the May month numbers have been:
1. 13.35 Million new mobile subscribers were added taking total tally to 840 Mln.
2. Wireline subscribers reduced by 0.15 mln – the tally stands at 34.40 mln.
3. As of May 2011, there are 554.75 Million Urban subscribers as compared to 294 million rural ones.
4. Urban Teledensity (154%) is nearly 5 times higher than rural (34%).
5. There are 2 urban subscribers for every one rural mobile subscriber in India
6. Mobile Number Portability requests increase from 85.41 lakh subscribers at the end of April 2011 to 105.70 lakh subscribers at the end of May 2011.
7. Active wireless subscribers in May 2011 stand at 588.13 Million, which is about 70 percent of all mobile subscribers!
8. Broadband subscription reaches 12.12 Million in May-2011 from 12.01 Million in April-2011.

While ARPU has been southbound for a while now, the trend that is building up is a slow down in subscriber acquisition as well as MNP numbers starting to look up. For 2 quarters, Telcos have tried their muscle in trying to stop subscribers from jumping ship. However, with absence of improvement in quality of voice and data served, users are now making the shift. AN example here is that of Videocon which was languishing at an ARPU of Rs.8.5 and now to add to its miseries are customers as they jump ship. A reported 1.86 lakh subscribers exercised MNP in Videocon this month.

The growth now on is to come from the rural segment and there are choices that the TRAI and DoT are considering to encourage operators to travel deeper into rural India. Two options are currently being considered, one of them being subsidies to Telecom operators as an incentive for furthering the rural reach. The other option is about utilizing the Universal Services Obligation Fund (USOF) fund chest which is around Rs.20,000 crore currently to fund rural expansion. I guess we would see something on this front before the end of the year.

Whichever way it is Innovation at reaching out and monetizing telecom services has been a bottleneck and with the wellspring of net subscriber adds slowing down, it will be interesting to see how operators fare on a lot of operational and profit counts!

Updated facts and stats on Indian Telecom: Q1,2011

Posted in Industry updates by Manas Ganguly on June 25, 2011

1. Mobile subscribers in India increased to 861.48 Million at the end of April 2011 from 846.32 Million at the end of March 2011.There are signs of the subscriber growth numbers slowing down over the highs of 22 million in November/December 2010.

2. Overall Tele-density in India reaches to 72.08% at the end of April,2011 from 70.43% of the previous month. The 70% tele-density point should now see a de-celeration of growth and the big numbers now would come for a higher CAPEX in establishing Distribution and Reach. The overall wireless Tele-density in India has reached 69.19%.

3. The overall Urban teledensity has increased from 157.32% to 159.63% and Rural teledensity increased from 33.79% to 34.47%.

4. Of the 15 Telcos operating in India, top 3 account for 50% of the market. Thus the viability of the later entrtants: S-Tel, Videocon, Uninor,Etisalat are questionable. Having invested a combined Rs.13000 crore, the ARPUs being generated by these networks are in the order of:
Uninor: Rs.39
Etisalat: Rs.26.75
S-tel: Rs.25.99
Videocon: Rs.8.5.
Such low ARPUs does not even cover the cost of acquiring a customer, which is Rs 300-400. These numbers foretell unviable operations and it will be very difficult for Telcos to recover their costs.
Ref:New telecom firms’ revenue streams turn into trickle

5. With Teledensity at 70% and Urban teledensity at 150% and 1 paise-per-sec call rates, it is increasingly clear that operators will have to leverage data services and VAS as revenue streams in the future over Voice.

6. More importantly it is the overall quality of service and VAS, content, eco-system partnerships that are going to be the ace for greater profit realization.

7. Costs are going to be chief concern in trying to access the rural 66% teledensity. There is a scope of innovation here in terms of distribution and services. Cracking the rural hinterland is hot going to happen by the same strokes that have been used so far most successfully to get to the 70% teledensity.

8. The Urban wireless teledensity has increased from 150.06 to 152.41 and Rural teledensity increased from 32.75 to 33.44.

8. Less than 5 million subscribers (1% subscribers) have opted for MNP in 6 months. What is evident is like elsewhere, GSM is the more preferred over CDMA as an option for Cellular subscribers.

10. Active wireless subscribers in VLR in April- 2011 is 583.22 million.30% of the subscribers in India are “ghosts” and that raises concern on the issue of 30% dead numbers.

11. Broadband subscription reaches to 12.01 Million in April-2011 from 11.87 Million in March-2011. Broadband refers to 256KBPS + speeds which by itself is a very low benchmark for data access as compared to other regions globally.41% of Internet connectivity in India is Broadband.

12. Average Revenue Per User (ARPU) for GSM service declined by 4.38%, from `110 in QE Sep-10 to `105 in QE Dec-10, with Y-O-Y decrease of 27%. MOU per subscriber for GSM service declined by 2.29%, from 368 in
QE Sep-10 to 360 in QE Dec-10. The Outgoing MOUs (174) declined by 1.61% and Incoming MOUs (186) by 2.92%.

13. ARPU for CDMA – full mobility service declined by 6.38%, from `73 in QE Sep-10 to `68 in QE Dec-10. ARPU for CDMA has declined by 17% on Y-O-Y basis. MOU per subscriber for CDMA-full mobility service declined by 4.73% from 283 in QE Sep-10 to 270 in QE Dec-10. The Outgoing MOUs (137) declined by 0.92% while Incoming MOUs (133) declined by 8.34%

14. The Vista of falling ARPUs and MOUs doesnot bode well for the Indian Telecom industry and places an onus on Telcos to integrate a larger basket of Telecom services to entice the customer to spend more.

Indian Telecom Story (Part XIII): Telcos signal delay in MNP

Posted in Industry updates by Manas Ganguly on July 17, 2009

The implementation of mobile number portability (MNP) is slated to be delayed further, with the telecom service providers informing the Department of Telecommunications (DoT) that the phased roll out is not possible.

Further, pan-India readiness is required for the proper implementation of call routing, according to the service providers who had met DoT officials recently. The operators also mentioned that due to delay in completion of various activities, it would be difficult to meet the timelines for MNP implementation. The DoT had earlier set a September-end deadline for the first phase rollout of MNP in the country.

The service providers are seeking an extension of the date and as delays would be considered as violation of DoT’s direction. This means that MNP would be delayed by another couple of months, sources close to the development said.

Earlier in March, DoT had selected two US companies — Syniverse and Telcordia — as technology providers for MNP in the country. Telcordia will implement the technology in south and east, while east and west would be taken care of Syniverse.

India with over 400 million mobile connections, and an addition of around 10 million per month, is second largest telecom market in the world.

For earlier updatess on Indian Telecom refer

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