India’s most lucrative market for mobile telephony companies, by revenue per user, Mumbai, could soon turn into the most competitive market in the country, with the imminent entry of two telcos (telecom companies) — Idea Cellular Ltd and Aircel Ltd, a company controlled by Malaysia’s Maxis.
The city, which has 9.5 million mobile telephony subscribers, is home to six mobile telcos, four that operate on the GSM technology platform and another two that operate on the rival CDMA one.
That makes Mumbai the market with the most number of cellular telephony firms in the country. And not too many countries have as many telcos fighting for a share of the same market.
“Mumbai has the highest average revenue per user (ARPU) of any cellular circle in India, as even the poor of Mumbai rival the middle-class in some other less attractive circles,” said Jayant Khosla, executive director, Bharti Airtel Ltd. ARPU in Mumbai for the last quarter of calendar year 2006, at Rs 460.86, is 45.84 per cent higher than the all-India average of Rs 316. Bharti Airtel has 1.8 million subscribers in Mumbai; market leader Hutchison Essar Ltd has 2.4 million ones.
“Mumbai packs a very large population in a land area of 11 million sq mt. Network infrastructure is the biggest fixed cost in the cellular-phone business, and Mumbai, with its densely packed population has a low cost of network infrastructure as compared to other cellular circles in India,” said Khosla.
“The market is already quite competitive, which had led to a fall in pricing,” said a senior executive with Hutchison Essar who did not wish to be identified. The analysts were not sure the market had space to accommodate all new firms and said the penetration of mobile telephony in Mumbai could reach 100 per cent in the next three years.
At that point, the analysts added, the eight or more telcos operating in the city would have no option but to woo each other’s subscribers to grow. For customers, the entry of new telcos will mean lower tariffs.