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PIR: Telecom Service Trends - TRAI quarterly report on performance indicators shows growth all around

April 15, 2005
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The Telecom Regulatory Authority of India (TRAI) has recently released its quarterly report on the performance indicators for various telecom services for the period October-December 2004. The following is a summary of the growth pattern and performance of fixed, mobile, internet services and value-added services mentioned in the report.

Performance of fixed line services
There were a total of 44.8 million fixed lines (including WLL-F)) in the country as of December 31, 2004. The total urban and rural direct exchange lines (DELs) stood at 31.93 million and 12.94 million respectively. This segment registered a 2.24 per cent growth, with approximately 1 million new lines being added during the quarter.

Fixed line services are being provided by the two PSUs –­ Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) –­ and five private players. The private players are Reliance Infocomm, Tata Teleservices Limited (TTSL), Bharti Tele Ventures Limited (BTVL), Himachal Futuristic Communications Limited (HFCL) and Shyam Telelink.

The quarter ended December 2004 saw an increase of 2 per cent in the share of private operators with a corresponding decline of 2 per cent for BSNL over the previous quarter. The share of MTNL remained the same. In terms of subscriber base, BSNL and MTNL enjoyed 81 per cent and 9 per cent market share respectively while the private operators held 10 per cent share.

The fixed line segment also saw an addition of 265,234 public call offices (PCOs). The total number of PCOs in the country stood at around 2.5 million as of December 31, 2004. Of this, 70 per cent belonged to BSNL while 11 per cent belonged to MTNL. The share of private operators stood at 19 per cent.

The quarter saw the addition of 13,152 village public telephones (VPTs). While 13,182 VPTs were added by BSNL, private players HFCL and TTSL (Andhra Pradesh) reduced their VPTs by 28 and two respectively. By the end of the quarter, there were 537,238 VPTs in the country. A total of 70,253 villages remained uncovered as of December 31, 2004.

Performance of mobile services
As of December 31, 2004, the mobile subscriber base (GSM and CDMA) had touched the 48 million subscriber mark. There were 37.4 million GSM subscribers and 10.6 million CDMA subscribers. A total of 5 million subscribers were added in the quarter, representing a growth of 11.67 per cent as against 13.87 per cent in the previous quarter.

Change in market structure
The quarter ended December 2004 saw the mobile subscriber base cross the fixed line subscriber base on an all-India basis. As of December 2004, Reliance Infocomm and BTVL held licences for mobile services in all 23 service circles. Reliance Infocomm was offering services in all its service areas except Jammu & Kashmir. Bharti Cellular started services in Uttar Pradesh (West), West Bengal and Orissa and was providing services in 20 circles. It was set to start services in Bihar, Assam and the Northeast at the end of December.

BSNL offered services in all its 21 service areas while TTSL and Hutchison held licences for 20 and 13 service areas respectively. Hutchison Telecom started operations in West Bengal and provided services in 13 circles at the end of the quarter. TTSL rolled out services in Rajasthan, Bihar and Orissa and was providing services in 11 circles.

Mobile service trends
Several distinct trends emerged in the mobile (cellular and WLL-M) service segment. In the GSM space, the share of prepaid subscribers stood at 74 per cent as of September 30, 2004. Though the prepaid segment dominated the scene, the postpaid subscriber base maintained a faster rate of growth. Beginning March 2004, the post-paid subscriber base grew by 32 per cent whereas the prepaid subscriber base grew by 26 per cent.

The quarter ended September 2004 saw a decline of 7 per cent in the all-India average revenue per user (ARPU) for GSM operators over the previous quarter. The ARPU for the quarter was Rs 404 compared to Rs 436 for the quarter ended March 2004. The lowest blended ARPU of Rs 355 was in circle B while the highest, Rs 476, was in the metro circles. The ARPUs of BSNL and MTNL, which were higher than those of private cellular operators in the past, became almost equal in September 2004.

The difference in ARPUs between post-paid and prepaid was narrowing down as a result of availability of low rental post-paid tariff plans in the market. In September 2004, the post-paid ARPU of Rs 707 was 2.37 times the Rs 299 prepaid ARPU. This figure was substantially lower than the post-paid ARPU in March 2004, which was 3.36 times the prepaid ARPU. Such differences between postpaid and prepaid ARPUs were found to be the highest in the metros.

On revenue per minute, the report found no major change since March 2004. The revenue per minute for the quarter ended March 2004 was Rs 1.35.

Cellular usage pattern
Besides the decline in ARPUs, the quarter ended September 2004 also saw a decline of about 7 per cent in the minutes of usage (MoU) per subscriber per month for GSM services. In September 2004, the MoU stood at 302 as compared to 322 in March 2004. The highest MoU per subscriber was observed in Circle A at 326 while the lowest was observed in Circle B at 249. In the post-paid segment, the highest MoU per subscriber was seen in the metros at 656. The highest MoU per subscriber in the prepaid segment was seen in Circle C at 257. The incoming-outgoing call ratio was 64:36.

As per the data provided by GSM service providers, on an all-India average, subscribers sent about 30 SMSs per month. Also, the overall proportion of roaming revenue to the total revenue for GSM operators was 12.08 per cent.

Performance of internet services
At the end of the December 2004 quarter, 180 internet service providers (ISPs) were operational in the country. BSNL managed to retain its top position with a market share of 30.8 per cent and reported a subscriber base of around 1.7 million against 1.5 million reported during the previous quarter.

MTNL moved up from third to second position with a subscriber base of 940,000 against 915,000 in the previous quarter. It had a market share of 17.42 per cent. Videsh Sanchar Nigam Limited, with a market share of 17.16 per cent, slipped to third position with a subscriber base of 935,000 against the 985,000 seen at the end of the previous quarter.

Sify retained its fourth position and held a market share of 14.16 per cent during the quarter with a subscriber base of 772,000. Data Infosys remained at fifth place with a market share of 4.56 per cent and a subscriber base of 248,000.

Overall, the internet subscriber base grew by 6 per cent during the quarter. As of December 31, 2004, there were 5.45 million subscribers compared to 5.1 million at the end of the preceding quarter. The number of subscribers accessing the internet through "always-on high speed" connections (less than 256 kbps) reached 654,000, representing a growth of 108 per cent over the previous quarter. The number of broadband subscribers with a download speed of 256 kbps or more stood at 46,638 at the end of December 31, 2004. Also, a total of 9,216 cyber cafes were added during the quarter, of which 8,304 were franchised by ISPs.

The ISPs reported revenues of approximately Rs 2.55 billion during the quarter. The ARPU per month for internet usage was Rs 167. Based on the reports of 39 ISPs, the average MoU per subscriber per month was approximately 275.

Internet telephony
The Department of Telecommunications (DoT) had given permission to 121 ISPs to offer internet telephony services as in December 2004. Of these, 51 have started providing these services. The total MoU of internet telephony increased from 36 million in the previous quarter to 43 million at the end of December 2004.

Performance of other value-added services
Public mobile radio trunked service (PMRTS): The PMRTS subscriber base increased from 25,694 in September 2004 to 26,153 in December 2004, registering a marginal growth rate of 1.79 per cent. The metro cities accounted for 70 per cent of the total subscribers. Delhi led with 8,926 subscribers, followed by Bangalore and Mumbai with 6,685 and 3,618 subscribers respectively. In terms of number of subscribers, Procall led the way with 7,916 subscribers followed by Arvind Mills and QuickCalls India.

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