18 May, 2005

India likely to miss bus on 250m phone users by '08 - The Economic Times

India likely to miss bus on 250m phone users by '08 - The Economic Times MUMBAI: As India greets yet another World Telecom Day, telecom minister Dayanidhi Maran’s target of achieving 250m telecom subscribers by ’08 increasingly appears to be a mirage, rather than a vision. Industry observers are sceptical of meeting the minister’s target within the given period. The scepticism is based on hard numbers. The current total subscriber base is about 100.15m, of which mobile users accounted for 53.65m as of April ’05. To reach a target of 250m within the next 36 months, India needs to add 5.5-6m subscribers per month. Currently, India adds less than 2m subscribers per month, except for the addition of 2.03m users during April ’05. Industry officials are not sure whether the remaining month-on-month customer target of 3m will be met in the next three years. ”The market is not looking as big as before. I think there is a lot of hype around. We are over-estimating India’s demand,’’ an official at a telecom company said. Going by the current trend, the growth in the telecom subscriber base depends solely on mobile telephony. The mobile subscriber base has exceeded the fixed line base of 46m. The teledensity of the country as of April ’05 stands at 9.26m. The 55% year-on-year growth in the mobile subscriber base over the March ’04 numbers of 33.6m makes India one of the fastest-growing countries in the world. ”But we need a higher growth rate to reach the ambitious target set by the minister,” say industry officials. As growth rates in the saturated urban markets slows down, the rural market is being touted as the new engine of growth. Reliance Infocomm and Bharti Tele-Ventures are moving into the hinterland with a target of setting up infrastructure across 5,000 towns in the current fiscal. The idea is to match the presence of Bharat Sanchar Nigam (BSNL), which tapped into the latent potential for communications in rural areas to become one of the top three mobile players in the country. ”It’s okay for BSNL to go rural since they are not concerned about profit and loss. A private player needs to first check on the return on investments,’’ industry sources said. However, Kamal Nanavaty, COO, Reliance Infocomm’s wireless business, feels that the target of 250m by ’08 is achievable, provided handsets are available at Rs 1,000 or less. “Give me a handset that is affordable, and we can achieve the target,” he says. His rivals in other cellular companies do not share the same confidence. “Are you saying that once the subscriber gets a handset of around Rs 1,000, then about 50% of the population will go mobile? The price elasticity is not endless,” he said. Another operator feels that India may be able to meet the target by ’09, rather than ’08. “Of course, this is subject to the fact that all the problems that plague the sector today, such as scarcity of spectrum and high taxes, are sorted out,” he said. As one industry observer puts it, ”The government better come out with a more concrete plan to achieve the target.”

Read more!