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TECH TALK: 3GSM Mumbai: 0 to 150 million

February 7th, 2007 · No Comments

A number of speakers at 3GSM discussed the growth in the Indian mobile phone users.

One of the first factors was the National Telecom Policy 1999 which allowed for third and fourth operators in a circle, and enabled all operators to move to a revenue share regime from a high licence fee one. After that, the Calling Party Pays system helped accelerate growth further with its introduction in May 2003. This ensured that receiving calls and messages became free. In addition, the entry of Reliance Infocomm with its Rs 500 offer to go mobile forced other operators to compete by lowering tariffs. After that, the IUC charges were reduced and the unified access licence was introduced.

Later, in 2005, the IUC and ADC charges were again reduced. All these reductions helped bring voice call tariffs to more affordable levels. Finally, Tata Indicom led the operators in launching the lifetime offer in December 2005. In parallel, mobile phones prices were falling and their capabilities were increasing.

Taken together, all of this created a very strong hockey stick growth curve for mobiles in India. India has the lowest voice call pricing in the world. Operators have learnt to be profitable at Re 1 per minute by bringing their cost of operations to half of that. In India, the lack of penetration and the pain of getting land lines also helped accelerate the growth of mobile subscribers, along with the prepaid model.

I remember the early days when mobiles were introduced in India. In 1995, voice tariffs were Rs 16 per minute. The mobiles were thick and big. The screens were limited to a few lines, and were black and white. What a change to todays mobiles which are multimedia computers! Also, in India, mobiles have become an extension of ones lifestyle for the youth. SMSing has become a way of life. Mobiles fill lifes empty moments.

Put it all together and you have the makings of a dynamic industry. The combined market capitalisation of the top Indian operators exceed $20 billion (nearly $700 per subscriber). There is a bidding war underway for Hutch, with at least three entities interested. There is still a lot of growth left in the industry both in terms of breadth (number of users) and depth (ARPUs). The future is as exciting as the recent past.

Tomorrow: Looking Ahead


Tags: Tech Talk