Indian telcos likely to raise tariffs in 2013

Summary:Amid a plateau in subscribe growth, the industry may be stabilizing and allowing operators more room to raise fees which could help relieve their bottomline woes.

India's mobile subscriber growth plateaued and mobile saturation abated in 2012--signs of an industry stabilizing which could mean room for tariff hikes.

telco-satellite
Indian telcos likely to raise tariffs in 2013.

At the end of December 2012, the number of GSM subscribers was 786.64 million, according to figures released Monday by the Telecom Regulatory Authority of India. This was less than one percent higher than the corresponding period the previous year.

In 2012 mobile saturation, known as teledensity, dropped by 4.5 percent to 70.82 percent. This is a tale of the city and the village. A 6.34 percent rise in rural teledensity (39.85 percent) helped to offset a 10 percent drop in urban teledensity (149.9 percent).

Sridhar T. Pai, CEO of research firm Tonse Telecom, told ZDNet the smaller telcos were scaling back their operations, while regulatory changes were stifling others.

"This is typical of market hitting a phase of maturity and the beginning of the end of hyper-competition," Pai said. "Once policy is firmed up a major phase of consolidation will kick in."

He said operators will boost their revenues by raising tariffs, increasing the average revenue per user (ARPU).

In 2012, ARPU--a key metric for the telco industry--barely rose from 96 rupees to 98 rupees. There was an 8 percent increase in the overall amount of calls made by subscribers every month, to 174 minutes; and subscribers increased the number of SMSes sent per month, from 36 to 38.

However, in recent days, Pai said, India's two biggest telcos, Airtel and Reliance have raised charges by 22 percent and 30 percent, respectively.

"Consumer price elasticity is now inert. This means, if prices are increased further , call volumes are not noticeably dipping," he said.

This could even help to solve some of the telcos' long-term debt woes. For example, Airtel reported its debt stood at US$11.7 billion as of March 2013.

"Ideally this trend will continue across the board for mobile voice," Pai said. "It is positive, as the ARPU will scale further and hopefully over time will pull some of these beleaguered telcos out of the red." 

Meanwhile, quarter-on-quarter, the number of CDMA subscribers decreased by 20.53 percent to 77.74 million. 

The biggest affected was Reliance, which lost 16.12 million customers in the last quarter of 2012, but still retained 50 percent CDMA market share.

The total number of wireless subscribers at the end of 2012 was 864.72 million, a 4.62 percent drop on the previous quarter.

Topics: Telcos, India, Networking

About

Mahesh Sharma earned his pen licence in his homeland, where he covered the technology industry for ZDNet, SMH, Sky Business News, and The Australian--first as an FTE, and later as a freelancer. The latter fueled his passion for startups and empowered a unique perspective on entrepreneurs' passion to solve problems using technology. Armed... Full Bio

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