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On the call

india Updated: Nov 01, 2009 21:05 IST
Manoj Gairola
Manoj Gairola
Hindustan Times
Highlight Story

With around eight-to-10 players already competing aggressively in the cellular phone services market in India, and the average revenue per user — ARPU — coming down sharply, one would have thought new entrants would be wary. However, given the moves newcomers such as MTS and Tata DoCoMo, among others, are making, you would believe there’s a lot more still to come in this market.

Check this one out. Pay Rs 499 and get one million (10 lakh) minutes of talk time free for life between two MTS customers, says an advertisement on a local FM radio channel in Delhi. Sistema Shyam Teleservices Ltd (SSTL), a new entrant, is offering services under the MTS brand. Under its scheme, the customer has to pay only Rs 200 every six months.

In July, when Tata DoCoMo launched its GSM services in India, it became the first to introduce a tariff based on a one-second pulse. Even ISD calls are charged on a per second pulse basis.

Mahanagar Telephone Nigam Ltd (MTNL) launched its 3G services in Delhi and Mumbai by offering video calls to another MTNL subscriber at 20 paise per minute. “This is at least 50 per cent lower than the tariff for plain voice call (2G service) offered by any operator. We want people to experience 3G services,” says R.S.P. Sinha, chairman and MD, MTNL.

When RCom launched its GSM sevices in February, it offered a tariff much lower than the existing ones. “In the initial phase, instead of spending on an advertising campaign, we preferred to offer more value to our customers,” says an RCom official.

Indian mobile phone tariffs have fallen by about 98 per cent in the last 11 years, from Rs 16 per minute in 1998 to 65 paise today. The ARPU, another indicator for fall in tariff, is at Rs 200 per month compared to Rs 3,000 a month in 1998. But operators believe that there is further scope for tariff reduction.

“There is scope for tariff reduction by another 25 per cent as penetration increases,” says the Asia head of Telenor Group, Sigve Brekke. Telenor Group, a Norway-based telecom giant, owns 49 per cent stake in Unitech Wireless Ltd. It will launch services by the year’s end.

Currently, there are 45 crore (450 million) mobile telecom subscribers in India. For the last one year, between 10-and-12 million new subscribers have been added every month. Moreover, with mobile number portability (MNP) getting implemented by January 1, 2010, in metros and category A circles — Gujarat, Karnataka, Maharashtra, Andhra Pradesh and Tamil Nadu — subscribers will find it easier to change operators without changing their numbers, if they wish to.

“MNP would put pressure on operators to improve their quality of services,” says J.S. Sarma, chairman, Telecom Regulatory Authority of India (TRAI).

“New service entrants will have to offer innovative schemes,” said Vsevolod Rozanov, CEO of SSTL. Gurinder Singh Sandhu, head of marketing, Tata DoCoMo, agrees, “The Indian market is cluttered. The only way is to go in with very differentiating brand promotion and unique schemes. We have received a huge response for our one-second pulse scheme.”

Telenor’s Brekke says, “We have estimated that 35 per cent of Indian subscribers have more than one SIM card. Operators can still make profits if costs are down. Customer churn is as high as 40 per cent, the highest in the world. In other markets, there was not much of a churn before telecom penetration reached 60 per cent. As a newcomer, we would target both new and existing customers.”

Not everyone, however, is convinced that more service provider numbers will work. “Nowhere in the world are there more than six players in a market,” B.K. Syngal, senior principal, Dua Consulting, points out. “In a segmented market, everything — including spectrum — gets fragmented, resulting in service inefficiency.”

Such arguments notwithstanding, new mobile service players are aggressively wooing Indian consumers. And just three days ago, market leader Bharti Airtel also announced its ‘pay per second’ plan across the country.