In The report titled Indian Mobile Services Sector: Struggling to Maintain Sustainable Growth has now been released. It highlights many emerging trends in the mobile services industry. Cellular Operators Association of India (COAI) had commissioned this report from PwC (PricewaterhouseCoopers).
The report begins by stating that India has witnessed unprecedented growth of more than 700 percent, from having less than a million subscribers in 1998 to over 752 million subscribers in 2010. The industry is currently contributing nearly 2% of the nations GDP. More significant is this sectors contribution in generating 2.8 million direct jobs, and nearly 7 million indirect jobs.
The COAI PwC report also highlights some of the challenges that the telecom industry faces. While releasing the report, Mohammad Chowdhury, Executive Direction and Leader- Telecom, PwC India, said, The challenges that the Indian telecom sector faces today are unique and multi-faceted and will require innovative solutions coming from operators and regulator working together.
The FDI inflows in the telecom sector are down by almost 35 percent, and new investments by operators are down by as much as 50 percent. Operators are also being constrained by the declining financial performance. There is too much of competition, according to the report, as India has significantly high number of operators compared to global benchmarks.
Higher competition has resulted in reduction in average revenues per minute to Rs. 0.5 per call in FY2010 from a high of Rs. 7.3 per call in FY2000. To add to the woes of the operators, the minutes of usage per subscriber has also decreased from a peak of 465 minutes in FY2007 to 369 minutes in FY2010.
The report also states, There has been a significant increase in network operating expenses besides governmental fees, levies, charges and penalties adding to margin pressures for the operators. India has a significantly high regulatory levy varying between 19% to 28% of the operator revenues. Rising interest rates have resulted in increase in debt servicing costs for operators.
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