India may be home to the fastest-growing large cellular phone market but growth last year fell short of a target of 100m subscribers set by a regulatory body three years ago.
The country’s mobile phone subscriber base at the end of 2005 was estimated at 76m, significantly lower than the goal set by the Telecom Authority of India in March 2003.
Industry sources say, however, that recent changes in pricing as well as in policy will drive the sector to match a new revised goal set by the government of 200m mobile users by the end of 2007.
To meet this goal, the sector will have to add about 5m customers a month, accelerating current growth of nearly 3.5m subscribers per month.
In late December, most of the country’s mobile phone operators adopted a scheme that allows customers to receive incoming calls for a lifetime for a one-time fee of Rs999 ($22.50) – a move that will prop up subscriber numbers since users will not have to cancel their service if they cannot afford to pay for outgoing calls.
“There will be less churn in the pre-paid market,” Prashant Singhal, telecoms industry head at Ernst & Young said. He noted current churn rates in the pre-paid market were as high as 80 per cent.
The government has also been pushing for fixed and wireless operators to adopt a uniform “OneIndia” rate that would apply to calls anywhere in the country and scratch the current model of different tariffs for local and national calls.
Reliance Infocomm, the Indian mobile phone operator, earlier this month announced it would charge customers one rupee a minute for calls anywhere in India. Other operators have yet to follow suit, but analysts say it’s more than likely they will.
Apart from the pricing changes, the government in October raised the foreign direct investment cap in the telecom industry to 74 per cent from 49 per cent.
The UK’s Vodafone responded immediately to the policy change, snatching up a 10 per cent in Bharti Tele-ventures, the country’s largest wireless company, for $1.5bn.
Last month, Malaysia’s Maxis Communications acquired a 65 per cent stake in Aircel, one of India’s smaller mobile phone operators, for $1.08bn.