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Our Bureau

Kolkata, Nov. 20 Most telecom operators reported decline in revenues from mobile services in the second quarter of 2009-10 as compared to the previous quarter despite growth in subscriber base, according to a study conducted by ICRA.

The mobile subscriber base of the industry reported 10 per cent growth during the quarter over the previous quarter. However, because of tariff war among the operators, the average revenue per user (ARPU) as well as total revenues dropped during the period. Increase in completion due to entry of new players also resulted in a drop in subscriber growth in Bharti Airtel, RCom, and Idea as against the pervious quarters, according to the study.

According to data released by the Telecom Regulatory Authority of India (TRAI), nine out of 14 telecom service providers witnessed a decline in revenues in the first quarter of 2009-10 over the previous quarter.

In the second quarter, Bharti Airtel and RCom recorded 2% and 16% decline in revenues from mobile services, respectively, over the previous quarter. The decline in revenues shows that the decline in ARPU has more than offset the increase in subscriber base, according to the study.

The launch of per second tariff by the new entrants has been largely replicated by the existing players in order to maintain market share. The profitability of mobile service providers has also been impacted by the increasing share of low ARPU subscribers, from semi-urban and rural areas, in their total mobile subscriber base.

The competition in the mobile services market is expected to increase further with the launch of mobile services by players like Unitech Wireless and Datacom over the next few months, the study points out. This would take up the number of telecom players operating in each circle to 11-12, up from six to seven now.

The mobile penetration in the urban areas (87.18 per cent as compared with 15.35 per cent in rural areas as on June, 2009), having reached near-saturation levels, addition of new subscribers is expected to take place largely in the semi-urban and rural areas. This would bring down the ARPU further, the study observes.

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