Cell subscription to see 68% growth: Icra

According to an Icra report, the country's cellular subscription growth is expected to touch around 68 per cent in the financial year 2007. The subscriptions are expected to surge to 150 million by the end of FY07.

The reasons are growing utility of cellular mobile services, low penetration, increased coverage, higher competition and declining prices.

However, declining average revenues per user (ARPUs) is likely to result in lower growth in revenues. In spite of price declines, the outlook for profitability and margins is positive because of achievement of greater economies of scale, and lower incremental capital costs per subscriber because of economies of scale, and technology advances.

But increased competition from code division multiple access (CDMA) services could result in further price declines for cellular global system of mobile communication (GSM) services.

Nonetheless, both GSM and CDMA being wireless-based rather than wireline, rate of growth in subscription and revenues are likely to be high, thanks to the increasing utility of voice services on wireless networks.

During the first quarter of FY07 (April - June 2006), cellular subscriptions in the country based on two second-generation or 2G digital standards - GSM and CDMA - have increased 70.4 per cent (annualised) with 106 million subscriptions in June-end 2006.

While GSM subscriptions increased 53.7 per cent (annualised) during first quarter of FY07 with 78.49 million at the end of June 2006, CDMA subscriptions increased 125.4 per cent (annualised) with 27.52 million at the end of June 2006.