Lowest mobile broadband ARPU in India, among major telecom markets, is set to add
pressure on profitability of domestic telecom operators. ARPU from mobile
broadband business of Bharti Airtel is lower than operators such as NTT DoCoMo
Japan, KDDI Japan, Telstra Australia, Rogers Canada, Verizon US, AT&T US,
China Mobile China, MTS Russia, Vodafone West Europe, SK Telecom South Korea and
others.
(Please see the chart of mobile broadband ARPU of major global
operators and Airtel at end of the article. Chart is part of a COAI document.)
Idea
Cellular 3G data incremental ARPU at Rs 79
Mobile broadband ARPU is not growing significantly in India.
Idea Cellular as on 31st December has more than 2.25 million
active subscribers on 3G platform in the month of December with an average
usage of 235 MB per month and 3G Data incremental ARPU at Rs 79.
Vodafone India, which launched commercial 3G services in
February last year, saw a huge surge in data revenues, which grew by 29 per
cent Rs 647 crore. The company provides 3G services in 683 towns and cities
across 20 circles. Its total data customers accounted to 31.2 million by the
end of December. That was 21.5 per cent of its total subscribers of 144.9 million.
One
third of 3G users face network issue daily in Indian telecom market
If telecom operators can not improve network quality, the mobile
broadband ARPU will further go down.
Lack of content available to consumers is also affecting the
mobile broadband ARPU.
According to Ericsson ConsumerLab study, 3G consumers are
facing issues due to network coverage, quality and lack of a mechanism to monitor
their usage. Around one third of 3G users faced network related issue at least
once daily. Handset battery draining faster and data connection reliability are
other major concerns.
Teens are the major consumers of 3G, and uptake of 3G is
impacting the usage of mobile broadband in Indian mobile market in a bigger
way. Mobile broadband is emerging as a gateway to their first internet
experience on smartphones. If 3G is not consumed by enterprises, it will
continue to affect the ARPU of Indian operators.
With the advent of technologies like 3G, users prefer
accessing internet on their Smartphones powered by mobile broadband despite
having multiple devices to access internet at home, because of the ease of use.
Due
to 3G, Indian telecom operators profit to decline 85% in 2011-12
According to India Government’s Economic Survey, 3G is set
to take toll on the financial health of Indian mobile industry. Profit after
tax of Indian telecom services segment is expected to decline 85 percent in
2011-12.
The significant decrease in profit is mainly on account of
the sharp rise in the industry’s interest outgo and higher depreciation charges
due to the heavy borrowings for acquiring 3G licences and rolling out 3G
services.
In India, all operators are reeling under pressure to
improve revenue and profit from 3G services which were rolled out in the last
18 months. Indian mobile operators paid around 1 lakh crore for buying both 3G
and BWA spectrum in 2010.
The India government report said growth in income from the
telecom services segment is expected to be 8.7 percent in 2011-12 and 10.6
percent in 2012-13. During 2010-11, telecom services revenue grew 10.5 percent.
Hyper competition is the main reason for marginal decline in growth between
2010-11 and 2011-12.
3G subscribers to cross 200 million in India by 2016
Recently, Evalueserve said the current inhibitors to 3G
uptake are short term in nature, and 3G subscription will increase at a rapid
pace of 30 percent CAGR between 2012 and 2016 to cross the 200 million
mark.
Along with 3G services, the number of 3G-enabled mobile
handsets will also continue to grow, reaching an active installed handset base
of 680 million by 2016. Boosted by better handsets and data speed, mobile
value-added services will also boom in the future; Evalueserve expects total
MVAS users to reach 430 million during the period.
Baburajan K
