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Kripa Raman

The last year saw hectic activity on the mobile telephony front: Unified licensing, the big fight between CDMA and GSM players, et al. A few miles down, statistics show that technology alone doesn't determine fortunes. In a sense, it is st ill an equal fight.

IT is now almost a year since the launch of Reliance Infocomm's `Monsoon Hungama' offer, which really set the momentum for its growth to the 7-million subscriber mark today. And the success of the mobile technology CDMA, or code division multiple access, has been attributed largely to Reliance's drive. Indeed, at first glance, Reliance appears to be the only player to have carried home the torch as far as CDMA is concerned.

The other noted player in the CDMA arena, Tata Teleservices, and its subsidiary Tata Teleservices (Maharashtra), have lost almost 5,000 digital mobile subscribers and almost 10,000 fixed line subscribers in April 2004. Although the company says it was getting its defaulting customers off its books, it is still a significant number. Obviously one wonders whether there isn't much of a market for additional CDMA service providers. But isn't the CDMA industry showing better growth rates compared to GSM, one might ask. It is, but the rates are only marginally higher, and don't really spell dramatic growth considering CDMA has a smaller base.

So, taking the mobile market as a whole, and considering the CDMA subscriber base after about a year's meaningful existence (of CDMA services), one can perhaps make out a case for it not being the success it was expected to be. Does this mean subscribers are not so enamoured by the features of the services that CDMA players offer or is it that one player is successful and the other major player is in the process of getting its act together?

eWorld tracked subscriber statistics for April 2004, the first month of the financial year and found figures that indicate quite a few interesting trends in the telephony access market. They also offer a quick snapshot of which player and what technology is headed where in the industry.

April, the leveller?

Although the CDMA services (they started off as limited mobility services) grew by leaps and bounds soon after the entry of Reliance Infocomm, their growth rate seems to have abated, and stands now at almost the same level as that of their GSM counterpart. In fact, once the wireless, wireline and limited mobility services were brought under the umbrella of the unified licence, wireless tariffs, whether of GSM or CDMA, started to find the same level, says a telecom industry analyst. "Of course we are considering the base or homing state of the industry, the rates they settle to, and not particular plans that individual operators come up with from time to time." The result is that CDMA digital mobile growth rates have started to slow down.

April figures issued by the Association of Basic Telecom Operators (ABTO) show that the CDMA players (excluding state-owned Bharat Sanchar Nigam Ltd), at the end of the month, had over 7.4 million subscribers and that they had grown 4 per cent during the month. Even March showed better growth rates, with the private CDMA mobile base growing 6 per cent during the month.

The GSM industry, including that of BSNL, had a subscriber base of over 27 million as at end April during which month it grew 3.8 per cent, according to figures issued by the Cellular Operators Association of India (COAI). "This is not much below 4 per cent, the digital mobile growth rate of the CDMA players during the month," says the analyst. "And one must remember that the CDMA players, with a much smaller base, should be showing a higher growth rate." Thus, the GSM mobile players added almost 9.9 lakh subscribers in April while CDMA digital mobile players added around one-third that many, at 2.59 lakh subscribers. "Still, although a smaller base should typically show larger growth, especially in the early period of its operations, it is difficult to say which of these industries is doing better," says another analyst. One (GSM) consists of older and more familiar names; whereas one could say that almost all the growth in the CDMA sector comes out of the almost singular effort of one player — Reliance Infocomm."

Reading the revenue picture

According to COAI's compilation of the revenues, average revenue per user (ARPUs) and costs for private GSM operators, the ARPU of the GSM industry for the quarter January to March 2004 was Rs. 431.99. This however, is after excluding BSNL. ARPUs for the CDMA industry have not been issued. However, Reliance Infocomm accounted for 6.7 million of the 7.4 million private CDMA mobile connections as of April end. (The largest GSM player Bharti has 6 million connections).

Reliance's fixed wireless phones and terminals included, its total base stood at around 7 million as at April end. The company had, during the announcement of its quarterly results in April, said that its ARPU was Rs 523 per subscriber (presumably referring to its latest figures, of March). Going by the ARPUs and connections that Reliance has announced, Reliance Infocomm's monthly revenue must have been Rs 365 crore. This includes revenues from fixed-wireless terminals and phones (FWT and FWPs) as well. Thus Reliance has the largest wireless base as well as the highest revenues as well for perhaps March.

The COAI compilation highlights that the January-March '04 average ARPU for the largest GSM player Bharti, with 6 million subscribers, was lower than Reliance's, at Rs. 444.43. This indicates average monthly revenues during the quarter for Bharti was at Rs 266.8 crore. The comparable average monthly revenues figure for the GSM player with the highest ARPU, Hutch (ARPU for January-March 04 was Rs 497.85) is Rs 230 crore.

"Now we can read this in various ways, taking everyone's numbers at face value," says an analyst with a broking firm. "One is that Reliance Info subscribers are actually paying much more than the competitive packages appear to be. The other is that they may perhaps be paying less tariff than GSM users on the whole, but that their usage of voice and other services is very high. This is also possible because the Reliance phone is used more than the others for connecting to the Internet, also its data and entertainment services are much more advertised and publicised. There is a good chance that these services might see a heavier usage with Reliance."

In fact, the GSM players' ARPU has, with access deficit charges (ADC) and the like, naturally decreased over the last year, the decrease being steeper towards the end of the financial year. Their average yearly ARPU for April' 03-March'04 was Rs 451.35, higher than their average ARPU for the last quarter, at Rs 431.99.

Some interesting tidbits

Other interesting points can be gleaned from the figures. While COAI has shown subscriber growth in April at 3.8 per cent for GSM, the largest growth rates have been registered by two stragglers of the recent past — BPL Mobile Cellular with an astounding 7.17 per cent growth and MTNL with a 4.82 per cent growth. Although both these companies have smaller bases and ought to show higher growth rates, they have fared much better in the recent months as compared to their earlier records, when the first had the robustness of its financials under question and the second was not exactly known for its dynamism.

As at April, the Bharti group has a nearly 25 per cent share of the GSM user base, the Hutch group and BSNL were almost at par with 19.85 per cent and 19.73 per cent market shares. (See pie chart accompanying story for market share details of players.)BSNL, in fact, has showed the smallest growth in April, a mere 1.93 per cent. "In just one-and-a-half years it was challenging the number two, and now it appears to be going slow. BSNL is unpredictable, everything depends on the state of issue of tender and other bureaucratic impediments," says a senior official with the company.

ARPUs are dependent both on circle and operator, it appears. A high networth circle need not yield the same ARPUs. Hutch's Orange service in Mumbai has an average ARPU of Rs 608.27 per month for January-March 2004, whereas BPL Mobile in Mumbai showed a corresponding figure of Rs 362 and Bharti Cellular Rs 373. In fact, BPL Mobile's ARPUs for Maharashtra and Tamil Nadu are higher than that of its Mumbai circle, a surprise, since the latter is considered to be a more premium circle.

Other unlikely tidbits emerge from the statistics. Reliance, which operates GSM cellular services largely in the North-East and in `financially non-premium States' such as Bihar and Orissa, has shown a bumper ARPU of Rs 607 per month for a State such as West Bengal (not even Kolkata) as high as that of Hutch in Mumbai.

Hutch has consistently high ARPUs across its circles, as though it has skimmed the top cream and kept it to itself.

For Idea Cellular, the highest ARPUs are not from Delhi but from Gujarat, followed by Andhra Pradesh.

As mentioned earlier, the figures also show that in the CDMA arena, Tata Teleservices and its subsidiary

Tata Teleservices (Maharashtra) have lost subscribers. The company has put this down to cleaning up its client portfolio and getting rid of defaulting subscribers. However on account of a good growth of its fixed wireless service, it has added 67,279 subscribers in April, bringing its base to 1.7 million.

Smaller CDMA players are in fact not doing too well, with Shyam Telecom's net additions being only 25 in Rajasthan. With Reliance Infocomm, its largest numbers are in Delhi (9 lakh), Mumbai (7.49 lakh) and Andhra Pradesh (6.65 lakh), Gujarat (5.14 lakh) Karnataka (5 lakh) and West Bengal (5.14 lakh).

Churn rates and fraud rates are, however anyone's guess, as nobody reports them. In fact the incumbents' figures are not all reported. BSNL figures do not form part of ABTO figures; and ARPU rates have not been provided for BSNL or MTNL.

kripram@thehindu.co.in

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