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India’s Mobile Subscriber Growth Continues

India's mobile subscriber growth continues with the country adding 16.3 million new subscribers in May, according to data released by the Telecom Regulatory Authority of India (TRAI).

The country added 11.6 million subscribers in May last year.

The total number of mobile subscribers in the country as of May 31 this year were 617.5 million, TRAI said on Monday. The number of fixed line subscribers however continued to shrink, dropping to 36.4 million from 36.8 million a month earlier.

About 55 out of every 100 Indians now have telephone connections, up from 39 per 100 a year ago, according to TRAI. The data from TRAI is however provided by operators, and may include a number of connections that are not in use by customers, as well as customers that have more than one connection.

However, there is not a lot for mobile operators to cheer about in the TRAI data, analysts said.

Indian mobile operators have been expanding in less lucrative rural markets, while market share gains in urban markets have nearly plateaued. With about 14 operators in the market, a tariff war has also broken out, resulting in voice rates which are at times below Indian rupees 0.01 (US$0.0002) per second.

The addition in May is also lower than 16.9 million mobile subscribers added in April and 20.3 million in March, though these variations reflect surges in subscribers during aggressive rollouts by new operators, rather than a downslide in the market, said Kamlesh Bhatia, a principal research analyst at Gartner.

Bhatia, however, warned that it may be difficult for the country to continue to add a large number of connections every month in a year from now, as demand will plateau.

Lower average revenue per user (ARPU) and declining average minutes of use per user are also reflecting on the finances of mobile operators. India's largest mobile operator, Bharti Airtel, reported a decline in profits and flat growth in revenue for the quarter ended March 31, even though its customer base grew 35 percent over the same quarter last year.

Bharti Airtel's ARPU for mobile services was down to 220 rupees in the quarter, 28 percent lower than 305 rupees in the same quarter last year.

Unexpectedly high bids for 3G spectrum by these operators has also put pressure on the funds available to them for expansion, including for rolling out 3G services, Bhatia said.

New rules under consideration by the Indian government will also require some of the operators to pay at 3G auction rates for additional 2G spectrum they are using.

Reliance Communications, India's second largest service provider, said on Sunday that it was selling off its mobile towers to decrease debt and fund expansion. It also plans to sell off a 26 percent stake in the company.

In May, Bharti Airtel, added 3 million users to take its subscriber base to 133.6 million users. Reliance added 2.8 million to reach about 108 million subscribers and Vodafone's Indian joint venture, Vodafone Essar added 2.6 million subscribers in May.

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