Indian telcos acknowledge need to change

Shiv Putcha/Ovum
OvumOvum recently attended “Convergence India 2011,” an industry event in New Delhi, which had an interesting conference lineup with various industry speakers from across the spectrum.
 
The major theme was that while the industry has achieved much success to date, it is facing several challenges including reducing margins and minutes of use.
 
There is still room for growth in basic services, but operators are increasingly focused on penetrating new segments. They are particularly focused on moving away from the “all you can eat” models to usage-based models for data services.
 
There were also discussions about penetrating industry verticals with new services such as mobile banking. All of these discussions reflect an industry that is maturing and beginning to look beyond the subscriber acquisition battles that have defined it to date.
 
One consensus at the conference was that while the Indian mobile telecom industry is a remarkable success story and has revolutionized communications in the country, the industry is now facing several challenges.
 
Several milestones have been achieved, with over 750 million connections and over 500,000 towns and villages covered. With nearly 60% penetration, monthly connections averaged just under 20 million in 2010.
 
Moreover, the Indian market has witnessed some of the most intense competition in the world, alongside pioneering business models that include examples of collaborative infrastructure sharing, managed network and IT services, as well as very lean distribution networks.
 
We agree with Indian operators such as Uninor, which believe that there is still room for growth in basic services as operators push further into rural areas. However, the industry is right to look for new growth opportunities, as this phenomenal connection growth masks several issues of concern, most notably shrinking ARPU, declining average price per minute, and declining minutes of use per subscriber.
 

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