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Telecom sector poised for 96% growth; cellular operators dial ‘innovation’

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Telecom sector poised for 96% growth; cellular operators dial ‘innovation’

Following a combination of regulatory changes, value-add services and lower tariffs, the telecom sector has grown beyond projections made in early ‘03. 2004 is all set to witness new records in the Indian mobile market, driven by aggressive competition among GSM operators. A new study published by research firm Gartner, titled ‘India's Mobile Growth Story Continues,’ suggests that cellular connections will reach 56 million by end-2004, representing 96% growth over the current year.

Observing industry trends, innovation and differentiation rules, which helps drive the market. In recent times, Hutch launched first-of-its-kind mobile Hutch shops, the company’s answer to an identified customer need to access customer-care shops closer to their location; AirTel announced a waiver of roaming rentals for post-paid subscribers and launched all-India recharge coupons; IDEA Cellular’s innovations range from SMS in nine languages, music messaging in English, Hindi and Telugu, ‘Chitchat FLEXI’ – India's first daily-prepaid card, ‘BUZZ99’ rental plan to National roaming at Rs.1.99 for post-paid customers.

Going by industry reports, Bharti Cellular is far above the other players. “The cellular subscriber base is set to cross the 36-million mark, and if the current trend is any indication of the latent potential of the sector, we are on course to achieving 100 million subscriber base within the next two years,” says a senior executive with Bharti Tele-Ventures. “The growth of over 100% witnessed this year is expected to continue next year. I am certain that the industry will witness a three-digit growth next year as well.”

Gearing up in the aisles to give Bharti Cellular serious competition is IDEA Cellular; its Delhi operations crossed the 4-lakh subscriber base last month, now boasting 28% market share in the Delhi & NCR region.

Looking at a broader perspective, where does IDEA Cellular rank in the national numbers’ game? “The GSM market in India is pegged at 22 million. IDEA stands at 2.3 million in the national footprint, which is roughly 11-12% market share. However, we are present only in five circles, not in the entire landmark of India, and in the regions where we operate, we hold 35% market share,” comments Sukanta Dey, Chief Marketing & Commercial Officer, IDEA Cellular Ltd.

With a substantial increase in market share, will IDEA cash in on the surge in sales by increasing their ad budget? “Advertising budgets are no doubt the function of revenue, but it does not depend on sales. We do not increase/decrease ad budgets based on our sales figures. At IDEA, we launch new ad campaigns based on the brand’s positioning and our marketing strategy,” explains Dey.

Elaborating on the marketing strategy, Dey tells exchange4media, “We believe in a mass marketing strategy. The character of the brand is innovation; we believe in offering cutting-edge products to our consumers. So each time we implement a new value-add scheme, we would ideally like to make a public announcement on the same. So our advertising is geared on this concept.”

Asked if IDEA Cellular is looking more at events or at traditional advertising to build the brand image, Dey replies, “We use a mix of both on-ground events and traditional advertising. In traditional advertising, our focus is on television. Hoardings and event sponsorship add to the local flavor. At the local level, the spotlight is on festivities; for example, Ganesh festivities are big in Maharashtra. This way, we can prolifically target potential consumers.”

It is not just Airtel or IDEA. The Indian cellular industry is poised for an explosive growth. Although cellular penetration is still low in India at 2.7%, the Yankee Group’s Global Subscriber Forecast Report projects that the Indian market will have 3.5% cellular penetration rate by end-2005. This is further compounded by a Frost & Sullivan study, which forecasts that the Indian Telecommunication market is projected to grow at a record CGAR (combined annual growth rate) of 13.42% in the next five years despite the current slowdown in the world telecom market. The teledensity in India is expected to cross 10% with the ongoing aggressive push of communication facilities by operators.

In the meantime, cellular operators are dialing ‘innovation’ in the numbers game.


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