Indian Telecom Story (Part XVII): Inching to 500 million subscribers by September 2009

Indian mobile operators added 15.1 million users in August 2009, their second-highest monthly performance ever after 15.6 million that was recorded in March 2009. India had 456.7 million mobile subscribers at the end of August, data released by the Telecom Regulatory Authority of India (TRAI) showed, meaning about 40 percent of India's billion-plus population now has a phone. Total telecom subscriber base increased to 494.17 million at the end of July from 479.07 million a month before.

Tata Teleservices with its Tata CDMA and TATA DoCoMo GSM services recorded the largest number of net subscriber additions. New tariff plans such as per-second billing introduced for GSM customers helped it add a highest-ever 3.4 million subscribers in August.

Bharti Airtel, India's top mobile operator, added 2.8 million users in August to take its base to 108 million. Second-ranked Reliance Communications added 2.1 million to increase its base to 84.1 million.

No. 3 Vodafone Essar, controlled by Vodafone Plc, signed up 2.2 million customers to have 80.9 million.State-run Bharat Sanchar Nigam Ltd, the fourth-largest mobile firm, signed up 1.3 million to reach 57.3 million, while fifth-ranked Idea Cellular gained 1.5 million to cross 50 million.

Ref: http://in.reuters.com/article/businessNews/idINIndia-42657320090923?feedType=RSS&feedName=businessNews

http://www.siliconindia.com/shownews/Indias_telecom_subscriber_base_crosses_479_Million-nid-60534.html

Indian Telecom Story (Part XV): Net operating margins at Risk

An extension of an earlier post, which has discussed the problem of reducing operating margins for Telecom Operators in India in the of falling ARPUs and high operating expenditures; this post profiles the predicament for Airtel. If Airtel being such an established player in the market is facing a crunch in its operating margins, the performances of other marginal players and new comers could be under serious doubt!

Airtel registered a 17% YOY revenue increase. However, its quarterly sequential revenue growth seems to be tapping out at 1.19%. Thus the revenue growth is slowing down. Net profit is up 26% but that is mainly because of lower financial costs and spends. Operating profit margins are reduced from 30% in last year to 27% this year.

The concern for Airtel is that the growth in number of subscribers is hitting a plateau. With more competitors, the subscriber figures growth may actually dip. The ARPU has decreased 20.6% YOY. With both these numbers going south, it would be difficult for Airtel to keep up its performance in the next few quarters.
Applying the same analogy to other operators and the new comers, one would expect some congruence in the statuses. The overall market situation is same in all cases and thus the performances would not be very different for other operators. It is in this context one needs to evaluate the price discounting options that the new operators are resorting to. It may be a short cut to establishing a quick base but sustainability and profitability are very big questions. Couple that with the high initial spends of getting a toe hold in the market, the break even seems to be distant. Ask Virgin Mobile for validation.