Indian GSM mobile phone growth slows in April '04

COAI says growth is slowing down due to lack of sufficient revenue to fund the cost of setting up new networks in unserved areas.

India's booming GSM mobile phone sector slowed in April with just about a million users signing up in the month because of network and cost constraints, an industry body said on Friday.

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Last month, more than 1.5 million users entered one of the world's fastest growing wireless markets lured by rockbottom call rates.

The Cellular Operators Association of India (COAI) , which represents 11 telecom firms, said its user base at the end of April stood at 27.15 million, up 3.8 per cent from March.

"Growth is slowing because operators are not able to generate enough revenue to fund the cost of setting up new or expanding networks to remote and unserved areas," TV Ramachandran, director general at COAI, told Reuters.

Industry experts say demand is tapering in cities and towns where mobile facilities are concentrated nearly 10 years after they were launched, while large rural swathes remain untapped.

To boost their user base, operators are now targeting people with lower incomes by cutting tariffs further and subsidising handset costs. But the impact of the strategy has been limited so far, Ramachandran said.

"In areas where we're already present, low-end customers are still not comfortable with the kind of levies and tariffs that are prevalent in the sector."

Despite the slow growth, there is still significant demand in the country where only three in 100 people own a mobile phone compared with more than 20 in China and more than 60 in Europe.

India's leading GSM service provider, Bharti Tele-Ventures Ltd has 6.76 million users or a quarter of the market.

The Indian mobile phone arm of Hong Kong-based Hutchison Whampoa group is the second-ranked player in the industry with 5.39 million customers while state-run Bharat Sanchar Nigam Ltd slipped to third place with 5.36 million.

The companies compete with Reliance Infocomm, 45 per cent owned by Reliance Industries that provides mobile services based on CDMA technology.