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For telecom, it was the year of connections

27-December-2004
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For telecom, it was the year of connections

The timing was perfect: 2004, when private telephony completed 10 years in India, was also the year when the number of mobile users exceeded the number of fixed-line connections in the country.

As against 44.31 million fixed-line connections, latest Telecom Regulatory Authority of India (TRAI) data show there were 46 million mobile subscribers at the end of November 2004, more than a third of them having been added during the year.

The breakneck pace of growth is expected to continue well into the future. Bharti Group chief Sunil Mittal predicts mobile connections alone will surpass the 100 million mark in the next two years and reach 200 million in five years.

India became a key driver of the world mobile market in 2004 with global companies such as Nokia, Motorola and LG drawing up plans to pour hundreds of millions of dollars into making mobile handsets in the country.

Airtime usage, too, shot up after tariffs took a tumble during the year. For GSM phone users, usage per subscriber rose 45 per cent to 322 minutes per month at the end of the first quarter.

The price war was initiated by Reliance Infocomm in the third quarter of 2004, resulting in tariffs declining by over 30 per cent.

“Tariffs have fallen nearly 50 per cent since the beginning of the year and are expected to fall further. This may put pressure on our bottomline," said SD Saxena, director (finance), Bharat Sanchar Nigam Ltd (BSNL).

The cellular industry made a case for further tariff cuts through a reduction in the access deficit charge, which is paid by them to BSNL for taking telephony to rural areas. The debate is expected to stretch into 2005.

The year began with the resolution of the controversy regarding unified access licences and allowing WLL (limited mobile) operators to offer 'full mobility’ services.

The other topic of debate, raising the foreign investment limit to 74 per cent from 49 per cent currently, is still to be resolved, with the differences between the Left parties and the government causing delays.

Besides, the home ministry also raised objections, alleging threat to national security, a charge that has been dismissed by the finance ministry and the department of telecommunications.

Telecommunications and IT Minister Dayanidhi Maran started another debate on the merger of BSNL with Mahanagar Telephone Nigam Ltd. The verdict will come in March when the advisors submit their recommendations.

Consolidation in the private sector went on, with minor glitches like a delay in the completion of Hutch's acquisition of the Sivasankaran-promoted Aircel in Chennai and Tamil Nadu in the absence of government clearance.

Singapore Technologies Telemedia and TM International, the investment arm of Telekom Malaysia, also announced their intention to acquire a 47.7 per cent stake in Idea for $390 million.

On the other hand, France Telecom exited BPL Mobile, while others like Vodafone, which were earlier present in India, started scouting for investments.

In addition, private players like Bharti and Tata Teleservices acquired licences for a countrywide rollout which is expected to push up the subscriber base further.

Among the new licence holders, Bharti has been the first off the block having launched services in Jammu & Kashmir and Orissa and is targeting to be the only player, after BSNL, to have a footprint in all 23 circles in the country.

Consumers are expected to be the winners once again in 2005, with BSNL and MTNL expected to unveil a price war in the broadband market when they launch their services in mid-January. The state-owned players are expected to offer 256 kbps connections at Rs 500 a month, which is at least 30 per cent cheaper than most existing operators.

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