Teledensity to reach 18% by 2009

MUMBAI: Teledensity in India is expected to increase up to 18 percent by March 2009. According to the CRIS INFAC report on telecom services, in unit terms, the telecom subscriber base has been forecasted to grow at a CAGR of 27 percent to touch 212 million by March 2009, driven largely by continuing growth in the mobile service space.

From a meager 2.8 percent in March 2000, the teledensity increased to eight percent by September 2004.

CRIS INFAC expects that the telecom services industry revenues will double from an estimated Rs 49,400 crore in 2003-04 to around Rs 1,00,000 crore in 2008-09. Mobile services will contribute more than 85 percent of this increase with the remainder being contributed by Internet services and leased circuits.

According to CRIS INFAC, mobile services, which accounted for almost 95 percent of the additions made to the telecom subscriber base in 2003-04, will account for 90 percent of the additions to the subscriber base over the next five years as well. Consequently, by 2008-09, mobile subscribers are expected to account for nearly 75 percent of the telecom subscriber base, up from 43 percent at the end of 2003-04. It has also forecasted the mobile subscriber base to increase from 33.3 million at the end of 2003-04 to around 155 million by 2008-09, at a CAGR of 36 percent, and the subscriber base of fixed services to increase from 42.6 million to 56 million during this period.

CRIS INFAC research head Rajnish Rastogi said, "The growth in the mobile subscriber base will be driven by supply-side factors like increase in coverage by operators, strengthening of marketing and distribution networks, and increasing affordability of mobile services due to rising income levels and declining tariffs".

He added, "As per our estimates, the mobile subscriber base would be in the range of 140 million -170 million by March 2009 depending upon the extent of coverage expansion and decline in cost of service."

According to Rastogi, mobile service providers are expected to invest to the tune of Rs 65,000 crore — Rs 70,000 crore over the next five years, as compared to Rs 35,000 crore in the last five years.

CRIS INFAC expects the blended ARPU of mobile operators to fall to Rs 296 per month by 2008-09. (Blended ARPU is the weighted average of pre-paid and post-paid ARPU). Mobile tariffs for local and long-distance calls will continue to drop, driven by a decline in regulatory costs and increasing competition amongst operators. In spite of a steady decline in ARPUs, the profitability of mobile service providers is expected to improve, due to economies of scale and the expected decline in regulatory costs. CRIS INFAC expects the same the gross ARPU of fixed services operators to decline to Rs 543 per month by 2008-09.

"We believe that the regulatory environment will improve further with the proposed unification of licenses for all telecom services and a reduction in the regulatory burden on the industry in terms of charges such as license fee, Access Deficit Charge and spectrum charges," Rastogi said.