Sharp upsurge in mobile usage due to free incoming regime

Mumbai: The implementation of the calling-party-pays (free incoming) regime has prompted a sharp upsurge in both subscriber addition as well as mobile usage in India. The country's mobile market has seen a sharp acceleration, both with jump in usage and a pick-up in net subscriber addition since May 2003.

It is expected that the trend will continue given the under-penetration of mobile services and rising affordability. Also, Indian tariffs are now among the lowest in the world. Growth in mobile subscription is led by the implementation of the incoming-free regime, the launch of Reliance's WLL/CDMA services and higher affordability with lower tariffs, says a report by CLSA Asia-Pacific Markets.

The mobile industry is headed for a consolidation as leading players like Bharti, Reliance and the Tatas are strengthening their position, which may finally enable the market to have stable pricing, the report added. India's GSM mobile segment has witnessed three consecutive months of frenetic growth, with net additions now crossing the 1-million mark in July 2003.

"We have been surprised by the GSM net additions which continue to be ahead of our expectations," the report said. "This strong momentum has been ahead of our expectations and led by the implementation of the calling-party-pays regime."

The strong pick-up in net adds has come as a surprise and it is expected that the trend to continue given the under-penetration of mobile services and rising affordability. Indian tariffs are now among the lowest in the world. Besides subscriber addition, usage has also shown a sharp upswing.

Given the strong momentum in new additions, it is forecast that leading players like Bharti will increase their GSM subscribers from 4.6 million to 6.1 million in FY04, a 98-per cent growth.

In Bharti's case, the momentum in net adds had fallen during the period of BSNL's launch. However, in line with the industry, post incoming calls becoming free, Bharti has witnessed a sharp pick-up in subscribers in the last three months.

Even the revenue forecasts for Bharti have risen by 17 per cent for FY04 and it is expected that the company will report a profit of Rs 2.4 billion. "Bharti's net additions have been particularly strong and we expect the trend is likely to continue," the report said.

Prepaid spend has stabilised at current levels of Rs 330. In this segment, competitive levels are high and there could be launches of aggressively priced tariff packages. The Bharti stock had risen by 78 per cent in the last three months.

Besides subscriber addition, usage has also shown a sharp upswing as reflected in the 53-per cent increase in Bharti's prepaid minutes of use. At 70:30, the ratio of incoming:outgoing is still high in the case of prepaid and Bharti expects this may come down as usage rises.