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Indian mobile users to touch 120 mn by 2008

The number of mobile phone subscribers in India is likely to rise to 120 million by 2008 because it has the cheapest call rates in the world, an industry body said on Monday.

India's $5.0-billion (Rs 25, 255 crore) mobile phone sector, billed as one of the fastest growing markets globally in this decade, has eight million (80 lakhs) users spread across some 1,500 cities and more than 60,000 villages.

The main driver for a more than 100 per cent growth each year in the past six years has been falling tariffs in a sector where a dozen money-losing firms have launched a fierce price war to grab market share.

"The number of cell phone users in India is expected to climb to 120 million (12 crore) by 2008 from 10 million (one crore) by the end of 2002," T V Ramachandran, director general of the Cellular Operators Association of India, told a news conference.

"We have absolutely the lowest tariffs in the world and they can fall (further) by up to 20-30 per cent."

The eight-year-old sector has the lowest rate of $16 (777.44) a month for a 300-minute talk time plan compared with $21 in China and $77 (3741.43) in Brazil, COAI officials said.

Cellular firm officials said they planned to invest Rs 250 billion or Rs 2.5 billion ($5.1 billion) over the next five years to broaden coverage and add new customers.

Ramachandran said tariffs would fall further if the government released more bandwidth to reduce the cost of setting up networks and cut revenue-share license fees.

Mobile operators pay between 8.0 to 12 per cent of their revenue as licence fee compared with no license fee in China. And they shell out between 2.5 to 4.5 per cent of revenue as bandwidth charges to the government against just 0.02 per cent in China, he added.

Asim Ghosh, managing director of the Hong Kong-based Hutchison group's Indian cellular venture, said India's regulatory mechanisms had failed to keep pace with the changing environment in the fast-paced sector.

"We are now down to a few, very patient long-term investors who are still hoping for some sanity in the regulatory policy," Ghosh said. "But you can snap a rubber band only so far...most companies are still profit negative and cash flow negative."

A host of big players including private equity investor E M Warburg Pincus and Singapore Telecommunications have entered the Indian telecoms sector despite heavy losses because the country has one of the lowest tele-densities in the world.

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