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The burgeoning wireless phone industry is strengthening its presence and thereby eaten into the wireline services. There are no new takers for wireline phones across the country. The significant trend during the last fiscal was that most of the private operators stopped expansion in wireline segment since they feel that the growth in wireless sector will continue forever.

By the end of March 2009, total fixed subscriber base stood at 37.01 mn, 6% less than the previous fiscal. In FY 2007-08, subscriber base was 39.41 mn. The decline in subscriber base could be attributed to the fall of two Mumbai headquartered giants- Reliance Communications and Tata Teleservices  Maharashtra, which showed a decline of 72% and 37.9%, respectively. Reliance subscriber base reached 0.11 mn by the end of FY 2008-09 from 0.4 mn, while TTML fell from 0.87 mn to 0.54 mn during the period.

The subscriber base of market leaders-BSNL and MTNL, has plunged, but with a lesser rate. However, their subscriber base is still very high as both of them command a total of 88.9% of the market. The subscriber base of BSNL fell from 31.55 mn to 29.35 mn by the end of FY 2008-09. But despite the fall of 6.9%, BSNL continued its leadership position with 79.3% of the overall market share. The company also registered a dip of 7.7% on the revenue front, from Rs 20,500 crore to Rs 18,918 crore.

However, three players in the segment gained ground. Lead by the telecom market leader, Bharti Airtel, Tata Teleservices and Punjab based HFCL were the biggest gainers. The subscriber base of Airtel grew by around 20% to 2.73 mn. Similarly, TTSL subscriber base grew by 18.75% to 0.38 mn capturing a market share of 1%. HFCL Infotel, on the other hand, has witnessed a growth of 25% with a subscriber base of 0.2 mn.

Desperate Times
There was a 3% fall in subscriber base of MTNL from 3.68 mn to 3.57 mn in FY 2008-09, while the overall revenue of the public sector, MTNL decreased to Rs 3,230 crore from Rs 3,555 crore, showing a decline growth of 9%.

During the last fiscal, MTNL launched various attractive tariff plans to lure the customer, including unlimited calls between Mumbai and Delhi on MTNL phones. IP based Internet telephony Bol Anmol service is also provided by MTNL for making international telephone calls. MTNL is offering this service at lowest rate of Rs 3 per minute for calls to USA, UK, Canada, Singapore, and Australia. MTNL also launched IPTV services in Delhi.

BSNL's One India plan, which offers to call any number in the country at Re 1, is a huge success. The company is also looking forward for broadband market in rural areas. It is the country's number one Internet service provider with 17 lakhs subscribers. Recently it has launched Sancharnet card. The Sancharnet Card is a prepaid Internet access card with features like self-registration for Internet accesses ID choice, renew of existing Sancharnet account and a wide range of Internet access packages.

While for Airtel, Landline Zero monthly rental plans seems to have worked, where users pay only for the actual duration of the call measured in pulses beginning from the time the call matures. The innovative, which offers broadband and voice in a single package, was also gave the needed fillip.

Growth Catalysts
The growth of private player is completely attributed to urban areas. In the urban wireline market, 17.74% of the market share is occupied by the private players, which is nearly 5% higher than their total market share.

The growth is driven by enterprise segments, which are migrating to private players in search of quality service and suitable tariff plans. BSNL and MTNL have come up with tariff plans especially designed for the enterprise users, but due to lack of aggressive marketing it is yet to take off. Under a plan targeting enterprise customer, the security deposit can be exempted for bulk demand of five or more new connections.

However, in rural areas, BSNL continued to be the king. Despite targeting rural telephony in a big way the market share of private players is almost negligible with 0.34%. Rest of the share lies with BSNL.

Public Call Offices have also played a pivotal role in the success of private players. The total number of PCO connections in the country is 5.9 mn. The private players dominate the space with a 64.74% market share.

The Future
In the next five years, future of fixed telephony will continue to be with the public operators. Airtel, the market leader in the wireless phones with a subscriber base of 93.92 mn by the end of FY 2008-09, does not have any plan to increase its market share in the fixed line as well.

However, the present growth of MTNL subscribers shows enough reasons for worries for the operator. Airtel, by the end of year, had a market share of 7.4%, while MTNL is just a little ahead with a market share of 9.6%. Can Bharti Airtel overtake MTNL in coming years? Our next year's analysis will have a clear picture.

Airtel presently operates in Andhra Pradesh, Delhi, Gujarat, Haryana, Karnataka, Kerala, Kotkata, Madhya Pradesh, Maharastra, Mumbai, Punjab, Rajasthan, Tamil Nadu, Chennai, Eastern Uttar Pradesh, Western Uttar Pradesh, Uttranchal, and West Bengal.

Interestingly its nearest rival TTSL despite having presence in Bihar, HP, Orrisa – other than  Andhra Pradesh, Delhi, Gujrat, Haryana, Karnataka, Kerala, Kotkata, Madhya Pradesh, Maharastra, Mumbai, Punjab, Rajasthan, Tamil Nadu, Chennai, Eastern Uttar Pradesh, Western Uttar Pradesh, Uttranchal, and West Bengal-where Airtel operates, have only 1% of market share.

The reason is the 360 degree aggressive marketing and branding of Airtel and bringing broadband and telephone services under one umbrella. A part of the success goes to array of services like innovative handsets, call conferencing, call forwarding, easy hotline, additional number line, caller line identification, time alarm, voice mail, parallel ringing etc.

The other major telecom player Reliance is nowhere in the picture, as far as fixed line is concerned, with a market share of just 0.3%. Reliance lags behind regional players including HFCL and Sistema Shyam, which operate only in Punjab and Rajasthan respectively. Neither the Reliance's Next-Gen 'Intelligent FSK' technology nor the ambitious Community and Free call club worked. Reliance has been focusing more on the wireless front, especially on the recently launched GSM.

Akhilesh Shukla
akhileshs@cybermedia.co.in