And, according to Cellular Operators Association of India (COAI), India's GSM operators, excluding Reliance Communications, added 11.18 million mobile users in April. Though these numbers point to a phenomenal growth in the Indian telecom sector, it isn't reflecting much in the telcos' business today, when it comes to profit.
Now, the sector is passing through a consolidation phase as profit margins are sliming with high operational costs and telcos are forced to diversify their offerings to sustain business with more priority on value added services (VAS) such as data and broadband; and also hoping on 3G to improve their profitability and business.
For telecos, the worrisome picture is clearly depicted by their quarterly and yearly earnings. Among the top operators, Anil Dhirubhai Ambani Group (ADAG)-led Reliance Communications (RComm) reported Rs. 4,655 crore net profit for the quarter ended on March 31, 2010 with a 4 per cent decline in yearly revenues from Rs.22,948 crore in March 2009 to Rs.22,132 crore this year.
However, RComm's total subscriber base has continued to grow from 72 million in 2009 to 102.4 million in March quarter, which constitutes about 17.7 per cent of the total market in India. Despite the subscribers' increase, the company's Average Revenue Per User (ARPU) per month fell from Rs.149 in December 2009 quarter to Rs.139 in March quarter.
On the other hand, Bharti Airtel's net profit declined in the last quarter of 2009-10 for the first time in the last three years. Though Bharti's total subscribers reached 127 million by March 2010 with a 24.6 per cent market share, its net profit during the last quarter fell by 8 per cent at Rs.2,055 crore. Like RComm, Bharti's ARPU has also dropped from Rs.230 to Rs.220 per month in the quarter ended March 31.
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