Growth prospects may raise cell operators' A circle investment

The 150 per cent growth in cellular subscriber base in the five state circles (A circle) by the end of December 2003, will lead to higher investment by operators in that region next year.

The major beneficiaries of the rise in the subscriber base in the A circle are Hutchison Essar and Bharat Sanchar Nigam Ltd (BSNL), two leading operators in the circle.

"We find the state circles to be more exciting in the next few years as in spite of over a 100 per cent growth in these circles, like Gujarat, the penetration rate is still lower in comparison to the metros. This highlights the growth potential of this circle.

"Understanding the potential of the A circle, which includes Gujarat, Hutch has made substantial investment in the last one year including Rs 300 crore alone in Gujarat. This has resulted in an over a 100 per cent rise in our cellular subscriber base year-to-year," said Sanjoy Mukherji, chief operating officer (COO), Hutch.

The A circle comprises Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu, while the B circle consists of Kerala, Punjab, Haryana, Uttar Pradesh (west), Uttar Pradesh (east), Rajasthan and Madhya Pradesh, West Bengal (including Andaman and Nicobar Islands). The C circle consists of Himachal Pradesh, Bihar, Orissa, Assam, north east, and Jammu & Kashmir.

In the A circle, the number of subscribers jumped to 80,47,766 by the end of December last year against 35,15,333 at the end of December 2002 "" an addition of 45,32,433 subscribers in the last 12 months.

In the metro cirlce "" which includes Delhi, Mumbai, Chennai and Kolkata "" the new subscriber base at the end of December was 29,50,594, much lower than that of the A circle.

"There is also a substantial increase in the number of subscribers in the B circle where against a total 25,50,223 subscriber base by the end of December 2002, 34,83,712 new subscribers have been added during the last one year," said an industry expert .

"In fact, the growth has been impressive in the Punjab and Kerala circles. Also Reliance Telecom has done well during the last one year in the West Bengal circle," the expert added.

"With the drop in handset prices and easy installment schemes provided by companies such as Nokia, getting a mobile connection has become easier in these circles. We hope to see Gujarat, Andhra Pradesh and Punjab circles witnessing major growth in the next two years," said a senior BSNL official.

BSNL also gained substantially in the Gujarat circle where it has added over four lakh subscribers in the last one year.

In Maharashtra, the total number of subscribers stand at 19,67,716 by the end of December 2003 against 8,27,737 subscribers reported a year back. In the Gujarat circle, the number of cellular subscribers stands at 13,24,502 by the end of December 2003 against 7,98,742 subscribers a year back.

"Idea Cellular has decided to focus more on the state circles as they are growing faster than the metros and other circles. During 2004-05, we will definitely be strengthening our infrastructure and especially the network coverage," said a senior Idea official.

It has been learnt that excited with its success in the Maharashtra circle where Idea has added 4,45,163 subscribers during 2003, the company is going to focus in Gujarat, where though being a leading player till a few years back, at present it has not been doing well.

Though Idea's cellular base in Gujarat has risen to 3,50,185 at the end of December 2003 against 2,40,211 at the end of December 2002, the growth is much lower than that of Hutch and BSNL in this circle. Even Airtel did better than Idea in the Gujarat circle in the last one year.