Telecom Circle

Indian telecom market is currently the most attractive telecom market with a lot of interest being shown by foreign players. Since in India, the fixed line subscribers are not even 10% of the mobile subscriber base, in this article, I am going to talk about mobile subscribers and its market only.

The country was divided into 23 circles when the mobile phones were introduced in the country. Separate licenses were given out for each of the circles in 1994. The circles were classified as Metros, A, B or C depending upon the revenue potential for the circle with Metros & A circles expected to have the highest potential. The following table lists the current telecom circles and the mobile subscriber base in each of them:

The figures below are a snapshot of key operator indicators by for GSM (Click on the image to view it clearly)

The figures below are a snapshot of key operator indicators by for CDMA (Click on the image to view it clearly)

There are many innovations that have helped reduced the cost of ownership of mobile phones. The figure alongside (source: TRAI) is a snapshot of how the subscriber base increased as the tariffs reduced due to innovations and government interventions. India is the now the second largest market in terms of mobile subscriber base after China but still it is at 48% teledensity and adding 15-17 million new subscribers every month.

Indian market is not only the most attractive but also the most competitive with over seven operators in each circle and another five new operators likely to start operations in the near future. Nowhere in the world does any country have so many carriers. The dominant players are Airtel, Reliance, Vodafone, BSNL (state owned), Idea and Tata. Reliance and Tata offer CDMA technology while all the other players are in the GSM space. GSM has a 75% share of sbscribers and now even Reliance and Tata have either launched or in the process of launching nation-wide GSM services. Apart from the current players, there are several new players like Aircel, Unitech-Telenor, Shyam-Siestema, Etisalat that have got the license and spectrum to launch mobile services in several telecom circles. Shyam-Siestema is the only player to launch CDMA services while all the new operators are in the lucrative GSM space. The adjoining figure gives the market shares of the operators in India. It is a fragmented market with the biggest operator (Airtel) garnering only 23% share.

ARPU (Average Revenue per User)

India is a predominantly prepaid market (93% of all subscribers are on prepaid) with low ARPU and high minutes of usage(MoU).The GSM ARPU is Rs 144 (~ USD 3.2) per month with a usage of 411 minutes per month in the quarter ending Dec, 2009. Similarly, CDMA ARPU stood at Rs 82 (~USD 1.8) with a usage of 318 minutes per month. There is a wide disparity in the rural and urban teledensity with rural teledensity at 20% vs. urban teledensity of around 103%. The chart below gives the progressive wireless penetration in rural and urban areas.



Regulatory has played a big role in development of Indian telecom market by brining in the competition at the right time and by removing bottlenecks. However, there are a few pending issues that still need to be resolved like the 3G spectrum auction and allocation, Mobile Number Portability and 2G spectrum allocation policy.

Given the low tele density in the country, the subscriber base is expected to grow at a brisk pace. Government expects the mobile base to cross 600 million by 2010 and most of the new additions are expected to come from rural areas where the mobile penetration is still low.

(All the data is sourced from COAI, AUSPI and TRAI which are the leading industry associations and regulatory bodies)

Resources on India Telecom Industry

1. India Subscriber Database – Circle-wise, operator-wise from year 2000 onwards (updated till Apr’10)

2. Presentation on India Telecom Market

2. Download the latest TRAI report (Released Jul’10) to access key telecom indicators

3. ARPU Revenue Analysis – Oct-Dec 09-FINAL- Circle-wise ARPU data for GSM networks

4. Case study on How Indian Carriers make 40% EBIDTA margins at 2 cents a minute

5. Report (based on actual numbers) on Internet Usage in India – Comviva India Mobile Internet Study

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