GSM growth slows in April - revenues rise, but for how long?

10 May 2004

The number of people with GSM-based mobile phones in India stood at 27.15 million at the end of April, a rise of 3.8% or 1.5 million on the previous month, but official figures from the Cellular Operators’ Association of India (COAI) show that the rate of growth is slowing as operators struggle to contend with high costs and inherent network constraints. India has the fastest growing mobile sector in the world, but new subscribers are being attracted by low call rates and the operators are unable to generate sufficient income to fund expansion programmes to more remote rural areas. Although GSM operators reported a 30% rise in revenues for the year to 31 March 2004 to INR83.08 billion (USD1.86 billion), from INR64 billion, industry watchers fear that the effects of high taxes in the industry could stunt future growth. Cellcos are required to pay as much as 25% of their annual income to cover licence fees, spectrum charges and other taxes. The country’s leading GSM service provider is Bharti TeleVentures with 6.76 million users, ahead of Hutchison Whampoa’s local unit with 5.39 million and the government-controlled BSNL with 5.36 million. Users of the rival CDMA service, promoted heavily by Reliance Infocomm and Tata Teleservices, reached 7.41 million by the end of March.