Low rates hurt mobile operators

NEW DELHI: Falling tariffs are tempting Indians to talk more than ever on their mobiles, but are eating into operators' revenue per customer, the telecoms regulator informed.

The average monthly usage for India's 27 million customers rose to 298 minutes by the end of September from 266 at the end of June, the Telecom Regulatory Authority of India said.

At the same time, average revenue per user, a key measure of the financial health of the wireless sector, fell 1.14 percent to Rs 516 from Rs 522 over the three months.

"This trend appears to emerge due to a gradual decrease in tariff for cellular services," the regulator said in a statement.

India enjoys some of the world's lowest call rates as carriers, many losing money, cut charges to win subscribers in one of the world's fastest growing markets.

Rates as low as Rs 1.30 for a three-minute local call have doubled the user base in the past seven months and the number of customers is expected to touch at least 100 million by 2005.

But even that 100 million would be just 40 percent of China's existing subscriber base.

But with other markets maturing, India -- where only two percent of its billion people have a mobile phone compared with 60 in Europe -- is attracting major world telecoms players.

Rock bottom call rates have also boosted the number of phones -- both landline and wireless -- to 6.48 for every 100 people by September, 10.4 percent more than the previous quarter.

Growth in connections will help the country achieve its target of seven phones per 100 people more than 15 months ahead of the scheduled date of March, 2005, the statement added.

There are more than a dozen telecoms firms competing in India's cut-throat wireless market. Several have large foreign equity ownership.

TRAI also said the number of Internet users rose about 5.5 percent to 3.98 million at the end of September.

© Reuters