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Target-200 mn GSM users

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CIOL Bureau
New Update

Shailendra Bhatnagar



NEW DELHI: India's GSM mobile user base is expected to touch 200 million customers by 2007 as firms ramp up networks in rural areas and slash rates to woo customers in the hotly competitive market, a leading industry body said on Tuesday



With more than 52 million users, India's fast maturing mobile services sector is already the world's fastest growing wireless market as cut-rate tariffs are pulling in some 1.7 million new customers each month.



"The Indian GSM cellular industry has matured with most GSM networks making profits and are well positioned to reach the 200-million mark by 2007," a joint statement by the Cellular Operators' Association of India (COAI) and consulting firm PricewaterhouseCoopers said.



New Delhi-based COAI represents nine carriers which control more than three-fourths of the booming mobile market.



India has about 40 million GSM users and about 12 million CDMA users. The overall number of mobile customers is forecast to cross 80 million by December, and the government has set itself a stiff target of about 250 million telephone users by 2007.



Most industry officials and analysts expect the target to be met in time as carriers such as Bharti Tele-Ventures Ltd., 28 percent owned by Singapore Telecommunications Ltd., are expanding their reach to 5,000 cities and towns by December from about 2,100 now.



The world's cheapest call rates and penetration of just five mobiles per 100 Indians is fuelling growth in the galloping market.



The industry has grown at a compounded 85 percent each year in the past six years mainly on the back of falling tariffs that have dropped 37 percent a year during the last four years.



"The world is now plugged in to look at the Indian model," Sunil Mittal, chairman of New Delhi-based Bharti, said. "We are at a point where we can pick up substantial momentum."



Mittal added the government needs to drastically cut license fees and other levies and allow private carriers to share the telecom infrastructure owned by state-run Bharat Sanchar Nigam Ltd. to fan growth.



The telecom sector is one of the highest taxed industries in India with carriers paying up to 20 percent of their net revenue as license fee, spectrum charges and duties.



As a consequence, the industry's cash flows do not meet expansion costs and the cost structure remains high even a decade after services were launched.



"This industry is taxed at par with five-star hotels," Mittal said.



But soar-away growth has attracted nearly all global handset firms and equipment players to India as most of these companies are facing low demand in many western markets.



To soak up Indian demand, handset giants Nokia and LG Electronics Inc. have firmed up plans to start phones manufacturing in Asia's fourth-largest economy.

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