Delhi, Maharashtra most profitable for telecom: Study

NEW DELHI: Delhi, Maharashtra and Tamil Nadu are the top three circles in

terms of profitability for offering basic services, according to a study

conducted by Frost & Sullivan. Delhi is the only circle where returns on

investment were expected within the first ten years of operation.

A report on "feasibility of fixed line service projects" by Frost

& Sullivan put the Delhi Circle on the top as far as profitability is

concerned, while the Maharashtra and Mumbai metro circles were considered the

most viable in terms of revenue and investment.

The Maharashtra Circle ranks second in profitability. Other circles among the

termed eight most profitable circles were Karnataka, Gujarat, Andhra, Kerala and

Punjab.

In case of projects in the Delhi circle, the returns on investment (RoI) were

expected from the fourth year onwards in three operators scenario, whereas the

same are likely in the fifth and sixth years of operations for the rest of

category ‘A’ circles like Tamil Nadu, Karnataka and Andhra.

The RoI in the first year of operation in Delhi is -24.1 per cent, while in

Maharashta and TN it is -21.8 and -21.9 per cent, respectively. In the fourth

year of operation the RoI in Delhi is 2.9 per cent and that of Maharashta and TN

is -1.1 and -6.8 respectively. The RoI in the 10th year of operation is 80.4 for

Delhi, while that of Maharashtra and TN is 57.5 and 48 per cent, respectively.

"What makes Delhi circle different from other circles is the relatively

high revenue per line and the low investment. However, if the number of

participants is more than four, the payback is unlikely within the same

period", said Anil Joseph, head of telecommunications practice at Frost

& Sullivan.