India telcos to remain profitable despite falling ARPU: Reports

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Telecom operators in India have something to cheer about. Not only will the subscriber base continue to increase in the coming five years but they would continue to make profit in spite of falling ARPUs, says a report published by IE Market Research.

Falling ARPU is the foremost concern of India telecom operators, at present. ARPU levels continue to fall at an increasing rate 19.7% industry average ARPU growth in Q1 2009. At present the blended ARPU for Indian industry in March 2009 was Rs 220. As a result, operators are focusing more on data and value added services to meet the revenue deficit caused by fall in revenue by their core business -- Voice.

IEMR’s forecast says that total wireless subscribers in India will cross 800 mn in the next five years time. Bharti Airtel will continue to be the market leader. "By combining historical trends with the current market conditions, our forecasting model predicts that the number of total wireless subscribers in India will reach 876.6 mn by 2013," says the report.

Bharti-Airtel's subscriber base will increase to 239.9 mn in 2013, occupying a market share of 27.4%. It would be followed by RCom (Reliance Communications) with a market share of 18.1% and subscriber base of 158.8 mn. Vodafone Essar will have 151.6 mn mobile subscribers by the end of 2013.

As per the prediction BSNL will loose its market share to the other operators. BSNL's market share will decline to 7.3% in 2013.

The grave concern for Indian telcos would be falling ARPU. ARPU levels in India will continue to fall across operators over the next several years, predicts the report. Industry average monthly ARPU will decline to Rs 240 in 2013.

As per the report RCom will continue to receive the lowest ARPUs in India's mobile operator space. The company's monthly ARPU will decline to Rs 201 in 2013. On the other hand, although RCom will continue to be the most profitable operator in India, it will still see its EBITDA margin (calculated as EBITDA/reported revenue) deteriorate from 39.3% in 2008 to 38.2% in 2013.

The report predicts that Bharti-Airtel's EBITDA margin will improve from 31.9% to 34.2% over the forecast period, 2008 - 2013.

akhileshs@cybermedia.co.in