Companies focus on value addition

MUMBAI, JAN. 20. The Indian cellular phone industry has been growing at a frenetic pace and the growth rate which has been sustained for the last couple of years, shows little sign of letting up.

The industry has gone through a big round of consolidation and while there were 40 operators five years ago when cellular operations commenced in India, today about a dozen remain in this Rs. 5,000 crore industry with five of these controlling 90 per cent of the 51 cellular circles operated by the private companies.

The Government-owned Bharat Sanchar Nigam (BSNL) has outlined its proposed cellular foray in the four South Indian States. It has already placed purchase orders with Motorola and the infrastructure that is being set up in the South will support 1.4 million lines in two phases.

The two phases will have an outlay of Rs. 792 crores and services are to commence around August 2002. In the first phase, 5.3 lakh lines are to be added in the four States with the largest investment being in Andhra Pradesh (Rs. 250 crores) and Tamil Nadu (Rs. 195 crores). The second phase will add another 8.5 lakh lines with a lower outlay. The network will include the latest services.

The waitlist in Kerala circle touched a high of 8.24 lakhs on December 31, 2001 and more than 4.56 lakh lines were added during calendar 2001 but 5.8 lakh applications came in.

The company has planned 10 lakh connections in 2002-03 to clear the backlog.

Another dimension was added to the industry when rates for prepaid mobile cards were announced by MTNL last week. It launched its pre-paid card `Trump' in Delhi and Mumbai. The tariff structure is effectively half the rates offered by the other operators in the circle — Airtel and Essar in Delhi and Orange and BPL in Mumbai.

It is expected that the other players will also follow suit and cut their tariffs. At the lower end, an MTNL card for Rs. 300 buys 98 minutes of talk time while it is 50 minutes for Airtel and Essar and 43.2 minutes for BPL / Orange.

The growth in the industry has come about rapidly and what is spurring this growth is also changing technology. In such a scenario, it is important that government policy anticipate this change rather than follow it.

For mobile services, third generation (3G) technology is emerging abroad but a cheaper version — the GPRS (General Packet Radio Service) is available and it provides unlicensed spectrum and provides 64 kbps speeds.

What is also important and could be the differentiating factor between players in the industry besides price is the value-added services on offer. Short Messaging Service (SMS) which was introduced last year has proved to be a big success. Other services include voicemail, faxmail, SMS, WAP and Intelligent Network (IN) systems.

BPL Mobile has launched its GPRS network in Mumbai, offering it at a flat introductory rate of Rs. 750 a month for unlimited Internet access through the mobile telephone, while waiving activation charges of Rs. 1,200.

The catch is in the cost of the handset which is priced at Rs. 10,000 now but is expected to come down.

BPL's offering is a lumpsum rate for mobile usage as well as Internet usage; BPL Mobile has tied up with an Internet service provider for offering net access through the GPRS network and is likely to tie-up with more ISPs.

The company will also offer corporate GPRS solutions _ secure wireless intranets for corporates offering them a virtual private network which can be accessed through GPRS enabled mobile handsets. This is the first GPRS service in the country, and, according to the company, among the few networks in the world to be rolled out commercially. Hutchison is also reportedly planning to unveil GPRS in all its seven circles.

At present, it has operations in New Delhi, Kolkata and Gujarat through its affiliates and also Mumbai. The company is planning to launch cellular services in Karnataka, Chennai and Andhra Pradesh in the middle of next year.

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Rising subscriber base

Figures released by the Cellular Operators Association of India (COAI) regarding industry growth show that the national subscriber base grew 76 per cent from 31.02 lakhs in December 2000 to 57.78 lakhs in December 2001. The market grew 94 per cent in 2000 at 31.1 lakh subscribers against 16 lakh subscribers at the beginning of 2000. From the present level of almost 58 lakh subscribers in the country, it has been estimated that the market will grow to 3-4 crores by 2005.

Among the players, Hutchison Max has reported 11.21 lakh subscribers up to December 2001, a jump of 82 per cent over 6.17 lakhs in December 2000. Bharti has shown a 100 per cent growth over the period to 11.09 lakh subscribers in December 2001 (5.55 lakhs in December 2000). Third on the list is BPL which has grown by 37 per cent to 8.31 lakh subscribers (6.06 lakhs) followed by Birla-Tata-AT&T (BTAL) combine which grew 133 per cent at 6.75 lakh subscribers (2.89 lakhs).

The BTAL combine figures indicate growth of more than 100 per cent in all circles where it operates — Maharashtra (134 per cent), Gujarat (118 per cent), Andhra Pradesh (143 per cent) and Madhya Pradesh (143 per cent).

The other player, Reliance Telecom, has seen its subscriber base grow from 1.48 lakhs to 3.34 lakhs, an increase of 124 per cent. This, however, could be ascribed to the fact that it is the only operator in circles like Assam, the North East, Orissa and Bihar and also had a low subscriber base. Also, MTNL crossed the 1 lakh subscribers figure during 2001 and reached a total of 1.19 lakh subscribers with 45,408 subscribers in Delhi and 73,248 in Mumbai.

Quite surprisingly, figures for the year ended December 2001 indicate that it was not the metro circles or `A' circles which grew the most but the `C' circles.

During 2001, `C' circle networks grew at 110 per cent, followed by circle `A' at 90.5 per cent, then the metros at 81 per cent and lastly circle `B' at 50 per cent.

Delhi emerged as the largest cellular market in the country with 8.74 lakh subscribers followed by Mumbai with 8.33 lakh subscribers.

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