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Mobile boom slowing down

12-May-2005
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Mobile boom slowing down

New subscribers thinning out in saturated urban markets.

Has India’s mobile boom started petering out with the urban markets reaching saturation? While India still retains its position as the “fastest growing mobile market in the world”, latest statistics suggest operators will have to try every trick in their bags to carry the tag in the future.

During the first four months of 2005, the average monthly growth for the country's GSM operators was 3.36 per cent, down from 4.01 per cent in 2004. For the CDMA operators, the average monthly growth slipped from 4.21 per cent in 2004 to 3.01 per cent in January-April 2005.

GSM additions, which stood at 1.096 million in April 2005, with a growth rate of 2.67 per cent over the previous month, was the lowest in over a year. In February 2005, the growth in GSM subscribers for the first time fell below 3 per cent.

According to TV Ramachandran, Director-General, Cellular Operators’ Association of India (COAI), a body representing the nine GSM players, two factors – the inability of operators to share their network infrastructure and the ongoing verification drive for pre-paid customers – have been responsible for the slower growth this year.

Pre-paid subscribers account for over 80 per cent of the country’s mobile users. “The world over, pre-paids are an off-the-shelf commodity.

The authentication drive is putting off a lot of new subscribers as many suspect that it is aimed at bringing them into the income-tax net,” said Ramachandran.

Leading operators also cited this reason for fewer takers in urban pockets. For instance, according to data compiled by the COAI, during the last few months the cellular subscriber growth in metros has been hovering over the 2 per cent mark.

"Further growth will only come when we reach the smaller markets. This requires heavy capital expenditure. Infrastructure sharing (with BSNL) is the only way to tap this market and will also result in a win-win situation for everybody," he added.

Confirming the COAI's stance, spokespersons from two leading GSM operators told Business Standard that cellular growth was likely to fall further if private operators were to fail in reaching an agreement with BSNL on infrastructure sharing.

Industry sources also attribute "fewer additions" to the capacity utilisation of BSNL, which was the fastest growing player in 2004.

For CDMA, the largest fall in numbers was in March 2005, when its subscriber base fell by close to 5 per cent on account of Reliance Infocomm "de-provisioning" close to a million subscribers.

"We de-provisioned 984,123 subscriber terminals in March on account of misuse, including subscriber data verification and customer credit worthiness," Reliance executives said.

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