Telcos plan Rs 60,000 crore expansion

The investment will finance mobile networks, infrastructure growth

Indian telecom companies are investing over Rs 60,000 crore in 2007-08 to finance a massive expansion of their mobile networks, infrastructure and subscriber numbers.

The money being invested in just 12 months is equivalent to 60 per cent of the cumulative investments in their wireless mobile business since the sector was opened up for private investment in 1995.

As many as 80,000 new towers are in the process of being built across the country, almost doubling the number of towers in existence (1,00,000). 
 

A CALL FOR GROWTH (Major telecom investors in 2007-08)
Reliance Communications	16,000-20,000
Bharti Airtel	12,000-14,000
Hutch-Essar	8,000-10,000
Idea Cellular	6,000
Tata Teleservices	6,000
BSNL	5,000-6,000
All figures in Rs crore *Source: COAI, company and investment reports

In 2007-8, the target is to add around 80 million new mobile subscribers "" more than half the current total mobile base "" taking the total figure to 230 million.

Said T V Ramachandran, secretary general of Cellular Operators' Association of India, "What operators did in the last 16 years in terms of investment and expansion, they are now squeezing that in just one year."

Ramachandran adds that with over 7 million customers being added every month and with state-owned BSNL now on track for growth (after controversies over new orders for equipment have been put to rest), monthly additions are expected to hit 10 million in the next few months, so that even the conservative 230 million figure could be breached.

Telcos are following a three-pronged strategy: to double and triple subscriptions in rural areas and small towns, which account for a large part of the new investment, woo new customers in these markets with cheaper entry-level mobile service packs and bundle cheap phones.

Reliance Communications, which had a presence in 1.5 lakh villages and 4,000 towns a year ago, plans to increase its coverage of villages three-fold to 4.5 lakh and of towns by over six times to 25,000 by the end of this financial year.

Bharti Airtel has more than doubled its expansion and coverage in non-census towns and villages from 101,000 in June 2006 to over 2.43 lakh in June this year. Hutch executives say they are adding over 1,000 towers every month, of which half are in towns with a population of less than 2 lakh.

Overall, telecom analysts say the population coverage of mobile services is expected to go up from 55 per cent in the last financial year to around 80 per cent by the end of this fiscal.

These efforts are being backed up by cheaper entry costs. In May, Bharti halved the price of its pre-paid life package to 495, forcing competitors like Hutch and Reliance to follow suit.

These packages now account for nearly a third to a fourth of the subscriber base and are the key products for smaller towns and villages. And to woo buyers, Reliance is promoting CDMA handsets at rock bottom prices, with black and white handsets retailing for Rs 777 and colour for Rs 1,234.