Indian telecom services grow 21%

DQC News Bureau
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The Indian telecom services industry revenues grew by 21.3 percent to touch Rs 130,561 crore in 2007-08 as it its subscriber base grew by 66 percent to add 100 million new subscribers, according to CyberMedia’s Voice&Data annual survey of the telecom industry.

The revenues of cellular, fixed line, national long distance (NLD), international long distance (ILD), broadband, VSAT and radio trunking were added to calculate the size of the Indian telecom services industry.

Cellular revenue contributed a major chunk of telecom services revenue followed by fixed line and ILD. According to the 13th annual V&D100 survey, around 59 percent of the telecom services revenue came from cellular business that touched Rs 76,608 crore in FY 2007-08. This represents a growth of over 36.4 percent over Rs 56,183 crore earned in the previous year.

Significantly, the majority of new subscribers are now coming from towns and villages with populations of less than 20,000. The mobile network now covers over half of the nearly six lakh towns and villages. The mobile services can now be bought from nearly a million outlets—a number that far exceeds the number of FMCG or even the postal outlets. Expansion into rural areas, lowering entry price of owning a handset through attractive offers and customer retention efforts helped ramp up subscriber-base and revenues.

The second biggest contributor to the telecom services business was the fixed line contributing 20.4 percent to the entire services business. The fixed line business, however, recorded a de growth of 11.6 percent to reach Rs 26,692 crore in FY 2007-08 from Rs 30,190 crore in FY 2006-07.

ILD, on the other hand, contributed around 8.8 percent of the telecom services to touch revenues of Rs 11,532 crore in the last FY, up from Rs 11,506 crore in FY 2006-07. NLD segment grew at 35.4 percent to contribute about 7.5 percent to the telecom services business with revenue of Rs 9,732 crore in FY 2007-08 up from Rs 7,186 crore in FY 2006-07.

Broadband showed a phenomenal growth of 162.7 percent to touch the revenue of Rs 5,359 crore in FY 2007-08 from Rs 2,040 crore in FY 2006-07. Though the revenue from broadband saw a robust growth, this is not true for the subscriber base. The subscriber base grew from 2.5 million in FY 2006-07 to 3.9 million in FY 2007-08. VSAT and radio trunking together contributed 0.5 percent to the telecom services revenue.

A booming economy, easing of entry barriers to mobile access and lowering of tariffs fuelled the growth in a year when the country added over 104 million new subscribers making India the second fastest growing telecom market in the world. Recent government policies aimed at creating affordable connectivity for common man across the country also served as a catalyst.

Indian telecom services industry
Category Revenue (Rs. crore)  
  FY 2006-07 FY 2007-08 Grwth     %age
Fixed line 30,190 26,692 -11.6    20.4
Cellular 56,183 76,608 36.4     58.7
NLD 7,186 9,732 35.4     7.5
ILD 11,506 11,532 0.2        8.8
Broadband 2,040 5,359 162.7     4.1
VSAT & Radio Trunking 576 638 10         0.5
Total 1,07,681 1,30,561 21.3     100

Source: Voice&Data

Commenting on the telecom revolution in the country, Prasanto K Roy, Chief Editor of CyberMedia’s business publications said, “With India’s telecom tariffs still the lowest in the world, there’s enormous and sustained growth beyond the metros. So telcos see huge opportunity in the two-thirds of Indians still untouched by the mobile phone revolution. They need to keep leveraging SMS, data, and other value added services, and finding other innovative ways of remaining profitable despite the low and falling ARPU (average revenue per user).”

“The year ahead needs to see some pending issues settled for telecom: such as the introduction of 3G and number portability in the mobile arena, and the abysmally low broadband penetration, in the fixed-line space,” added Roy.

The Top 10 by revenue

The top five players in FY 2006-07 retained their positions in the year under review. Even with a 12.1percent decline in revenues, BSNL hung on to its number one position with revenue of Rs 35,296 crore. Bharti Airtel with revenue of Rs 26,436 crore is at the second spot. Reliance Communications and Vodafone with revenue of Rs 18,638 crore and Rs 15,477 crore are at nuber three and four respectively.

Idea Cellular moved to number six in FY 2007-08 from number eight in FY 2006-07 with revenue of Rs 6,720 crore. Tata Teleservices has come down to number seven and MTNL slipped seventh position in 2006-07 to number eight.

The top five players based on cellular subscriber base were Bharti (62 million), Reliance (46 million), Vodafone (44 million), BSNL (41 million) and Idea cellular (24 million).