In 2011, the Top 6 players in the Indian telecom service market- Bharat, Salience, Worldfone, Bigmo, Ideal and Tantra accounted for 93% share of India’s 800 million subscribers. With a healthy penetration level of 66% (800 million subscribers in a population of 1200 millions) and 10 millions new connections added every month; the Indian telecom sector is attracting local and international competition.
‘Slice’, the last mobile service provider with a small presence, was recently acquired by ‘Ideal’. ‘slice’ operates in the circles of Karnataka and Punjab and the buyout will help ‘Ideal’ to increase its preference from 11 to 13 circles. This provides ‘Ideal’ a much needed leg-up, as it much smaller than ‘Bharat’ or ‘Worldfone’, the leaders. Now, except for players like BPT, MTL, Siam and HTL, all other operators have a large presence in atleast 10 circles. Axcel has 11 million subscribers across 10 circles, while BPT operates only Mumbai, and MTL operated only in Delhi and Mumbai.
While, the 34% unconnected population is a possible target for a new entrants, metros like Mumbai and Delhi have penetration levels as high as 120% against a national average of 42%. A market does esist in rural India but the question is how much revenue it can bring in. With, most of the big and medium mobile phone users already locked into one operator or the other, the bottom of the pyramid is where the pre-paid components is big but Average Revenue User (ARPU) is low. In the metros the APRU is Rs.300 but fast declining.
The new entrants think India is an under-penetrated market in terms of the number of operators and there is scope for more with 3G, value added services and mobile number portability recently being introduced. Pricing, Distribution reach & service, could emerge as key differentiators for the new players. More operators could intensify competition resulting in a pressure on tariffs.