Indian price war boosts mobile take-up

9 Sep 2004

A price war among Indian mobile service providers led to a bumper month for subscriber take-up in August. According to figures from local industry groups, operators added around 1.66 million subscribers last month to take the country’s total mobile user base to almost 42 million. GSM operators represented by the Cellular Operators’ Association of India attracted 1.41 million new customers in August to bring the total number of GSM users to over 32 million, while rival CDMA networks added more than 250,000 subscribers to give them 8.6 million customers at the end of August. In addition, state-run companies BSNL and MTNL have another one million CDMA customers between them.

The price war among operators was sparked several weeks ago when one of the country’s largest mobile carriers, Reliance, cut pre-paid rates by up to 60%, reducing the cost of a one-minute national call from INR2.49 (USD0.05) to INR0.99 (USD0.02). Rival operator Bharti Tele-Ventures quickly announced its own cuts and others have since followed suit.

Operators are slashing prices in an attempt to attract new users to their networks as they expand coverage into the poorer rural areas. There has been some speculation that the country’s smaller players may not be able to survive a price war as well as the larger operators which can boast international backing, and some companies may be forced out of business as ARPU levels drop.