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Mobile Subscribers Yearwise comparision

A Wide Gap - China still ahead, though India shows rapid growth

October 15, 2006
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India is currently the fastest-growing telecom market in the world. With the impending release of spectrum for 3G services, and the government's increased focus on rural telephony, the sector is poised for further expansion and development. However, a recent TRAI study comparing the telecom sectors of India and China suggests that India still lags behind. tele.net examines the key performance indicators of the telecom sectors in the two countries.

Fixed and mobile subscriber base

  • As of March 2006, China was the largest telecom market in the world with 769 million users.
  • This was 5.5 times larger than India's telecom subscriber base.
  • Over the decade 1997-2006, China added 289 million fixed line subscribers and 395 million mobile subscribers, while India added 32.2 million and 92.7 million subscribers respectively.
  • Compared to China, India's fixed line performance has been weak. In 2005, while China's fixed line subscriber base rose by 12 per cent over the previous year, India recorded only a 1.9 per cent increment. China's fixed line expansion was mainly on the wireless platform.
  • In contrast, the growth in mobile services in India over the past few years has been phenomenal. Since 2001, India has been making mobile additions at a faster rate than China. In 2005, India's mobile subscriber base grew by 78 per cent over the previous year, while China added 55 million new users, a 16.42 per cent increase over the previous year.

Consumer usage of telecom services

  • Minutes of usage (MoU) of GSM and CDMA-based services are much higher in India compared to China. This could be attributed to the lower tariffs prevalent in India.
  • For the GSM prepaid and post-paid segments, China's MoU per subscriber is 214 and 524 respectively for the year ended December 31, 2005. In India, the corresponding figures are much higher at 308 and 675 for the year ended March 31, 2006.
  • India's MoU per subscriber in the CDMA segment was also substantially higher than China's.
  • SMSs are a major contributor to telecom growth in both countries. In China, approximately 304.65 billion messages were sent in calendar year 2005, resulting in a total revenue of over $3.72 billion.
  • However, in China, the average number of SMSs per subscriber per month was 37 compared to 40 in India.

Earnings of telecom companies

  • Given that there are only six Chinese telecom players compared to India's 12, the former have been relatively more successful at revenue generation. During calendar year 2005, China's telecom companies registered a combined total revenue of $72.7 billion against India's $19.5 billion for the financial year 2005-06.
  • In spite of higher MoUs, India had a lower average revenue per user (ARPU) than China in all the segments except for basic services in which Indian ARPUs were almost twice as much.
  • For the prepaid and post-paid GSM segments, China had ARPUs of $19.98 and $5.94 respectively, while India averaged $14 and $6.
  • Not surprisingly, Indian telecom companies had comparatively low EBITDA margins. In the basic service segment, India registered an EBITDA margin of 41.36 per cent (based on the earnings of BSNL and MTNL) compared to China's 50.48 per cent.
  • Similarly, Chinese mobile service providers had an EBITDA margin of 49.85 per cent, while the Indian average was 31.33 per cent.

Expenditures of telecom companies

  • Both China and India plan to increase their investments in the telecom sector.Chinese companies have projected investments of around $23 billion during 2006, while Indian telecom companies are expected to invest up to 15 per cent more.
  • Indian telecom companies incurred higher operating expenditures per subscriber than Chinese companies in the basic and mobile segments.
  • While China's opex per subscriber was $4.23 and $4.73 for basic and mobile services respectively, India had much higher costs of $8.52 and $5.49 per subscriber.
  • For capital investment in expansion and upgradation of telecom networks, though Chinese telecom operators invested larger sums than Indian telecom companies, the latter parted with a larger proportion of their revenue.
  • Currently, the capital employed per subscriber for basic services is much lower in China, $153, compared to India's $370. In contrast, the capital employed for the mobile segment is lower in India, due to higher capacity utilisation.
  • Chinese companies earned higher rates of return on capital employed than Indian companies. While Chinese basic service providers and mobile service providers receive 13.25 per cent and 21.9 per cent returns respectively, Indian service providers receive only 8.1 per cent and 7.42 per cent.

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