Indian booming telecom market: next destination for Global players

India's mobile phone market is red-hot, adding nearly seven million customers a month, latest figures showed. It is also stirring global interest in the auction of the country's fourth-largest wireless operator.
Already, four players -- including Vodafone, the world's top mobile phone company -- are jostling for a position in the multi-billion dollar race for India's Hutchison Essar, controlled by Hong Kong-based Hutchison Whampoa.
The Indian mobile market has "great potential," Britain's Vodafone said.
India added 6.8 million new mobile subscribers in November, the latest month for which figures are available.
"India's mobile subscriber base is increasing phenomenally every year -- one customer is added every second," Communications Minister Dayanidhi Maran said.
India now has more than 183 million telephone subscribers, of which over 140 million are mobile customers.
"By 2010, India will have more than 500 million mobile subscribers from the current base," Maran told a conference of top telecommunications executives in New Delhi last month.
"India's mobile subscriber base is increasing phenomenally every year -- one customer is added every second ... By 2010, India will have more than 500 mobile subscribers from the current base."
Dayanidhi Maran, Indian communications ministerThe contest for Hutchison-Essar got going in earnest last month, when Hutchison Whampoa, controlled by Hong Kong's billionaire tycoon Lee Ka-shing (李嘉誠), made it clear it wanted to sell out its 67 percent stake in the Indian mobile company, which has 22 million subscribers.
As new bidders jump into the fray, the valuations for Hutchison-Essar have zoomed to over US$20 billion.
However, this hasn't deterred the potential suitors, which include a clutch of Indian companies such as Reliance Communications, India's second-largest mobile phone company, and the Hinduja group, with interests from oil to banking.
Indian steel-to-shipping group Essar, which holds the minority 33 percent stake in the company, is another possible bidder, while other companies such as Maxis Communications of Malaysia and Egypt's Orascom have also been mentioned.
India has come a long way from just a decade ago, when teledensity -- the number of phones per 100 people -- was around three in the country of 1.1 billion people.
By November 2005, teledensity had risen to 11 and that climbed by November last year to 16, the Telecom Regulatory Authority of India said.
"There has been a steep growth in teledensity in the past 12 months," the telecom body commented.
India is now the world's fastest growing major mobile market, outpacing even China, analysts said.
A no-holds-barred price war is helping drive the cost of calls down to as low as two cents a minute, and a mobile connection can cost as little as US$4 a month.
Nevertheless, profitability of the sector is strong.
Second-quarter net profit of Bharti Tele-Ventures, India's largest mobile phone company by subscribers, rocketed 79 percent to 9.34 billion rupees (US$207 million) from the same period a year earlier.
The company's profits jumped due to nearly a doubling in its number of subscribers.
Short-term, the Indian government wants mobile subscribers to grow from 140 million now to 180 million by the close of this year.
Global phone companies and handset and telecoms equipment makers are looking intently at India because teledensity in China has already hit 29 per 100. They reckon that India will follow the same path.
Right now the mobile revolution in India is mainly confined to the cities, where not only the upper and middle classes have phones but also delivery men, rickshaw drivers and domestic servants.
Mobile phones have been "an agent of change in India," said T. V. Ramachandran, director general of the Cellular Operators' Association.
Last month, the world's second-largest mobile phone maker, Motorola, launched its "Made in India" handset, with design and software done in India, which it billed as the "common man's mobile" with a price tag of 1,700 rupees.
Maran lauded the Motorola initiative, but said companies should be looking at introducing a phone priced at less than 1,000 rupees.
"That will be the right phone for the mass market in India," Maran says.
It's all a vast change from the early 1990s, when India had only five million phone connections and making a call was a tortuous experience.
Home owners had five-year waits or longer for installation of a phone.
Public phones were either non-existent or broken. Offices never had enough switchboard lines so phone calls had to be booked and the phone network often collapsed under the load of calls.
The situation began to change when the government revamped its telephone policy in the late 1990s.
But now the real prize for telephone companies lies in in the vast rural market where nearly 70 percent of the population lives.
Telephone penetration in India was 25 per 100 people in urban areas and as low as 1.6 per 100 in rural areas, Maran said.
"The rural market is going to be the accelerator for growth in the telecommunications sector," he said.

Source: Taipei Times