Wireless user base to double to 265m by '10

The wireless phone subscriber base in the country has already crossed the 100 million mark and is expected to more than double to 265.2 million by 2010. Telecom operators will continue to rake in profits, even as average revenue per user (ARPU) levels declined significantly.

According to an In-Stat report, growing utility of cellular mobile services, low penetration, increased coverage, higher competition, and falling prices are main drivers of growth in subscriber base, which is estimated to rise to around 160 million by March this year.

Subscription growth is expected to be around 75 per cent this financial year.

Country's current wireless subscriber base is approximately 146.54 million, as compared with 3.6 million on March 31, 2001, according to COAI and AUSPI.

The ARPU in the country is one of the lowest in the world and is expected to decline further to $5.60 by 2010. According to the report, the fundamental reason for the decline in ARPU is the downward trend in tariff structure for subscribers due to intense competition.

The leading operators "" Bharti Airtel, BSNL, Reliance, Hutchison and Idea Cellular "" accounted for about 84 per cent of the subscriber base in 2005.

According to a recent report by Icra, for the first half of FY 2007, the combined wireless service revenues of Bharti Airtel and Reliance communications increased 60 per cent year-on-year to Rs 10839 crore.

The increase in revenue was mainly because of significant increase in cellular and fixed wireless telephone subscriptions, and increased revenues from long distance services. Lower increase in operating costs resulted in a significant improvement in margins.

For RCL, operating margins (EBITDA/revenues) improved from 26.2 per cent in the first half of FY2006 to 36 per cent in the first half of FY2007.

As the telecommunications needs of subscribers are expected to become increasingly sophisticated, the wireless industry is expected to see increased demand for value-added services such as music messaging and voice recognition products.

The trend would be enhanced by the development and supply of new data-enabled handsets at lower prices. Revenues from value-added services are expected to bridge the gap created by the fall in ARPU.