Not that I am waiting for it or I want that to happen. But, it is inevitable. Newton’s law of gravity works here too. What goes up must come down. Right now the Indian telecom subscriber addition is going only in one direction – up.
It has added a record 15.64 million wireless subscribers. Can you believe that? Those subscribers are both GSM and 
CDMA combined. Indian subscriber addition dwarfs China’s as China adds 4 million subscribers per month. At this rate it is only a matter of few years for India to become the biggest telecom market. India already is the fastest growing telecom market.
Tele-density has increased from 35.65% to 36.98%. More than a percentage point increase in a month. There are multiple reasons for such a meteoric rise. Few new players have started operations. Few old players got new licenses and are expanding. Few players like Reliance and Tata are operating in both GSM and CDMA arena.
How long is this sustainable? I would say for at least 3-5 years. India has around 420 million telephone connections right now. With an average rate of 10 million additions it will get to 800 million in 3 years. Looking at the pace 10 million is a modest rate of growth. At the end of 3 years in 2012, India would overtake China with around 780 million subscribers. China will be having 750 million subscribers.
The next 300 million subscribers are there and are ready to be connected. But, the next wave of subscribers will be from rural and semi-urban areas. All the companies in the list has to strive really hard to get to the next customers. It is the telecom companies which will face some serious heat and not the customers.
The challenges are immense when it comes to connecting the rural areas. Electricity and laying down the network are two obvious challenges. Cell towers need electricity to operate. They fall back on diesel when there is no power. This rings up the operational cost of the company. Looking at sustainable energy solutions like solar powered GSM towers is one solution. Infrastructure sharing is another option the telecom companies cannot overlook.
Growing subscribers does not necessarily mean growing revenues. In fact they are inversely proportional. Telco’s have to differentiate with some special offers. Just like what MTS India (Sistema Shyam Telecom) has offered. MTS offered 10 lakh free minutes. The minutes are from MTS-MTS calls but, the offer is catchy. And guess what, it has more than half a million subscribers already.
Or they can try something like Tata. Tata Teleservices is launching its GSM services and is planning to target high-end customers. It will be offering premium services and hope to attract some of the existing subscribers of its competitors. With the number portability just around the corner Tata might just have a winning formula.
Barring few regulations, the field is all set for a healthy competition. Let us see how many will survive the Indian telecom summer.
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Author: Sriram Vadlamani
Sriram Vadlamni is a IT professional and an avid blogger. He blogs about India business at Indianomics.com and you can follow him on twitter @indianomics (Email: sriram.vadlamani@gmail.com)Related posts:
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{ 5 comments… read them below or add one }
well, sounds like a neat story. but some numbers have to be seen in a larger context. telephone is a need, not a necessity like food and water. consumption will be driven by affordability and income opportunities it can possibly generate, to go beyond the 600 million mark.
Well slowing growth can be a good thing for the consumers. As companies will not be able to rely on growth to increase their revenues and will have to focus on retaining customers. It implies that they will have to improve customer experience.
well why are you just counting number of connections. fair enough the number of connections added in any quarter is going to come down but we still havent other values o ftelecom percolating in the market. data could be the next big thing for telecom and also play a major part in connecting rural india to the rest of the world. Telecom boom is here to stay atleast for the mid term.
@diduknow : Yes, for 3-5 years the market will boom. Beyond that the operators have to differentiate. That is where data comes in. Tata Teleservices is launching its GSM services by targeting the high-end customers. It might be offering superior data and VAS.
Boom will stay. But, what next after boom? Consolidation? Differentiation?
@sriram: tata docomo does not seem to be necessarily targetting the high end customers with their latest GSM venture with docomo (tata docomo). if you take a look at their site (tatadocomo.com/default.aspx) and especially the tariff plans, its quite clear that they have designed a very youthful and vibrant package in terms of appearance and pricing. what is your opinion?