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N. Ramakrishnan

CHENNAI, June 23

IN the first full month since it launched its cellular service in Chennai, the State-owned Bharat Sanchar Nigam Ltd (BSNL) has clocked a 74-per cent growth in subscribers in May over April, while the total cellular base in the city grew by 3.96 per cent month on month, according to figures released by the Cellular Operators Association of India.

Hutchison Essar South Ltd, which launched its service last July, has lost 6,310 subscribers - a 10.8 per cent drop over its subscriber base in April 2003. RPG Cellular Services Ltd and Bharti Mobinet Ltd, the Bharti group company that provides the AirTel service in Chennai, have seen their subscriber base increase marginally. RPG added 552 subscribers and Bharti 921, month on month.

BSNL launched its pre-paid service in the first week of April and the post-paid service in mid-April.

Buoyed by the response to its service, BSNL officials are hoping that their network and capacity expansion plans are speeded up. However, the private cellular operators say that they are not unduly worried. They say that while their subscriber numbers are net of churn - the subscribers who either switch operators or go totally out of the network - BSNL's churn figures will show up only after three-four months of the service becoming operational.

Mr S.S. Iyer, Chief General Manager, BSNL, Chennai Telephones, told Business Line that at present, BSNL's subscriber base has increased to 71,000 of which nearly 60,000 are pre-paid customers. BSNL is expected to shortly come out with a package to attract post-paid customers from the corporate sector to help increase the post-paid base.

Mr Iyer admits that the response is a little more than expected and to cater to the growing demand, the BSNL corporate office has been approached to speed up the capacity and network expansion plans. Chennai Telephones has asked its headquarters to increase the network capacity from 1.3 lakh lines by another two lakh lines before the end of this financial year. Simultaneously, Chennai Telephones plans to appoint two more dealers and another 14 distributors shortly. With this, the dealer network will go up to four and the distributors to 24.

Mr A. Subramanian, General Manager - Marketing, BSNL, Chennai Telephones, said that Chennai Telephones had planned for a subscriber base made up of 60 per cent post-paid customers and the balance pre-paid customers. However, the market response showed otherwise, with pre-paid customers accounting for nearly 80 per cent of the total subscriber base. Although cellular operators would prefer more of post-paid customers than pre-paid ones, as the former bring in more revenue, the advantage with pre-paid customers was that the money was paid in advance while operators would have to collect the bill amounts from post-paid subscribers. "We will match the market and will be fully ready to meet the demand," Mr Subramanian said.

According to the COAI figures, RPG's subscriber base went up to 1,78,995 in May from 1,78,443 in April; Bharti's to 2,16,253 (2,15,332) and BSNL's to 56,557 (32,499). Hutchison Essar South's base went down to 51,718 from 58,028. Chennai's cellular base increased to 5,03,523 (4,84,302).

Mr Ramesh K. Narain, General Manager - Marketing & Sales, Bharti Mobinet, said that the churn in subscribers would be visible only after three months. This was so because the pre-paid cards had a 30-day validity and a 60-day grace period. The average industry churn was 7.5-8 per cent for pre-paid customers and 2.5-3 per cent for post-paid.

Industry experts point out that BSNL's advantage was in terms of its roaming coverage and charges. This would probably explain the large number of pre-paid customers, as most of them would be those who travel frequently.

Both Mr Ramesh Narain and Mr Arun Sikka, Vice President - Marketing, Sales & Customer Service, RPG Cellular Services Ltd, said that the Chennai market was not growing as fast as it ought to. This was something that baffled the operators, as Chennai had all the factors that were needed to drive the market - rates had fallen, entry costs had come down, and purchasing power of the people was high enough to allow them to buy a mobile connection.

Mr Ramesh Narain said that Bharti had, like its tie up with Nokia 3315 to offer a connection, also tied up with Motorola to offer a Motorola T190 handset, which cost about Rs 3,999 in the market, at an effective rate of Rs 2,999 to the consumer, taking into account the free air time that was being given.

Mr Sikka admitted that BSNL had done a good job in market expansion, but a lot depended on how long it would be able to sustain the roaming charges. The quality of the subscriber base and the average revenue per user were as important as the subscriber numbers, he said for the operator to maintain a healthy bottom line. However, both Mr Sikka and Mr Ramesh Narain admitted that BSNL had definitely intensified competition, and was keeping the private players on their toes.

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