Telcos' growth doubles in two years
By siliconindia   |   Tuesday, 08 May 2007, 19:30 IST
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Mumbai: The total revenues and net profit of the top six Indian telecom players, Bharti Airtel, Reliance Communications, BSNL, Hutchison Essar, MTNL and Idea Cellular, more than doubled during the last two years, says a Business Standard report. Increasing demand for mobile phones, a fall in the handset prices, a favorable revenue-sharing regime and a drastic reduction in technology cost besides infrastructure sharing and outsourcing are the impetus for the growth of these telecom players. The total revenues of the six telecom companies that account for over 90 per cent of the market have grown to $22 billion (Rs 90,700 crore) in 2006-07 from around $10 billion two years ago. The net profit of the companies, estimated at $4.4 billion (Rs 18,130 crore) in 2006-07, is up from $2.5 billion (Rs 10,300 crore) two years ago. The government is estimating the mobile figures to touch 500 million by 2010 and the revenues touch $50 billion by 2010, a compound annual growth rate of 31.5 per cent. BSNL, the largest telecom player in India, reported revenue of over $10 billion (Rs 41,200 crore) in 2006-07 and net profit of over $2 billion (over Rs 8,240 crore). Bharti Airtel, the private sector telecom giant, reported revenue of $4.4 billion (Rs 18,349 crore) in 2006-07, and hopes revenue to be around $7 billion (Rs 28,840 crore) during this financial year. Reliance Communications, the third largest player marked revenue of $3.50 billion (Rs 14,420 crore) and net profit of $765 million (Rs 3.152 crore) for the 12 months ended March 2007. A UBS Investment Research report states that when the mobile penetration crosses 10 per cent (it is currently around 13 per cent), there is a significant increase in the mobile user base and usage. This results in increasing the mobile revenues. The sector’s phenomenal growth also negates the effects of declining average revenue per user (ARPU). According to research firm iSuppli, ARPU was about $7 in 2006 and will fall to less than $5 by 2011 as rural penetration increases, Three-fourth of the subscriber base consists of pre-paid customers who yield low revenues. Both Bharti and Idea rose by 10-14 per cent in 2006-07 while the ARPU is declining, minutes of usage for. Value-added services such as SMS, MMS, gaming and call management services now contribute nearly 5-10 per cent of the mobile revenue. “Technology costs have reduced drastically. While the cost was around $400-500 per subscriber in 1999, it is now a little over $100. Besides, towers now consume less power than earlier and can be erected at a lower level, thus reducing capital expenditure costs,” Alok Shende, VP, ICT Practice, Frost & Sullivan told Business Standard.

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