India's mobiles swamp fixed lines

PUBLISHED : Saturday, 09 August, 2003, 12:00am
UPDATED : Saturday, 09 August, 2003, 12:00am

Handset numbers are about to surpass traditional connections in the capital

A significant new chapter in the phenomenally successful growth story of India's mobile phone industry opens next week when the number of handsets in the nation's capital will surpass fixed-line connections.

Mobile operators in New Delhi are adding about 100,000 subscribers every month and, by next Friday, will have more than two million subscribers, just more than the number of land-line connections.

Among New Delhi's private operators easily the most dominant is Bharti Telecom, with more than one million subscribers. Next is Hutchison Essar with 700,000 and Idea Cellular with 192,000. A late entrant, the government-owned phone company MTNL has 125,000 subscribers.

Bharti, the largest mobile phone company on the subcontinent with a customer base of 2.5 million, has the largest national market share - at 28 per cent - and its lead is widening by the day. At the start of this year, two out of three consumers joining mobile phone services chose the Bharti network.

If people are rushing to buy mobile phones, it is partly because they missed the late 1990s rush for handsets. In June, the number of subscribers nationwide touched 15 million. The Gartner Group estimates that by 2006, India will have 44 million subscribers, making it the third-largest market in Asia, after China and Japan.

New Delhi itself was pipped at the post for the distinction of being the first city in India with more mobile-phone subscribers than land-line connections by the northern city of Chandigarh in May.

The surge in subscribers is the result of entry costs coming down to rock-bottom levels. Handset costs have plummeted and subscription pricing has come down, with cheap pre-paid cards proving popular. But it is falling tariffs - the result of fierce competition for market share - that are responsible for the mobile frenzy. The price of calls is the lowest in the world, about half a cent per minute from an earlier figure of 2 cents.

Last January, all mobile operators slashed their mobile-to-mobile long-distance tariffs by two-thirds. For the first time, calls beyond 500km between two mobile subscribers became cheaper than those using a fixed line.

This itself was an aggressive counter to the ultra-low rates being offered by two of the latest market entrants: Reliance Industries, India's largest private sector company, which launched a discount national mobile service in New Delhi in December and the state-owned fixed-line operator BSNL, which began offering mobile services across India (excluding the capital) last October.

In May, the price war entered an even more intense phase. Operators cut the mobile-to-fixed long-distance tariff by 41 per cent. For the first time, long distance calls made on a mobile became cheaper than those made from a land line.