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In FY 2008-09, the telecom services industry steadily charted the growth path at nearly the same pace as it did the previous fiscal. Rollout of 3G services by government-run companies and operators expanding their coverage to virgin areas of the country were significant developments. The total revenue clocked by the services industry in FY 2008-09 was Rs 1,57,542 crore, a 20.7% growth against revenue earnings of Rs 1,30,561 crore in FY 2007-08.

In the last fiscal, cellular services contributed the most to the total revenue in the services space. The segment alone contributed about 60.5% of the total earnings, followed by fixedline. However, growth rate in the cellular space came down to 24.4% from 36.4% thanks to falling ARPU in rural areas, where operators added majority of their new subscribers. This apart, the decline can be attributed to various factors. Downward revision in tariffs in near-saturated metros where people have access to connectivity can be one reason, indicating that the operators will have to intensify their rural strategy to dig gold.

The country had been adding 10-12 mn new subscribers every month. The total wireless subscriber base stood at 391.76 mn at the end of the fiscal. Since in metros like Delhi and Chennai mobile penetration has crossed 100% mark, the growth is now to be driven by rural and smaller cities, with an inclination towards VAS. VAS contributed on an average about 10% to the total revenue of operators. The market is witnessing a trend of higher data consumption and VAS providers are convinced that in two-three years' time this trend may lead to a higher contribution to operators' revenue from VAS. Competition has led to fierce tariff war, thus leading to falling ARPU. With some operators like Idea Cellular recording an ARPU of Rs 254.

The market share of fixedline has been shrinking over the years. Even as the segment continued to be the second highest contributor to the overall services earnings, it saw a degeneration of 7.6% with revenue of Rs 24,649 crore. In FY 2007-08, the revenues had fallen by 11%, but due to fixedline broadband strengthening it position, things have begun to change for fixedline.

A segment that grew faster than the cellular segment at a rate of 48.2% is NLD. The year gone by witnessed highs and lows in the NLD space, and regulatory moves tickled the market. Trai and DoT have taken many initiatives to boost the Indian NLD market. Some new players received the NLD license to rollout their service, making the fight tougher.

 Broadband has been vying for a larger market share. It recorded about 40%, a rate which is not fast enough to meet DoT's target of 20 mn broadband connections by end of 2010. This anyway seems unrealistic seeing that India reached 6.22 mn broadband subscribers by the end of March 2009.

The V&D Top10 Service Providers' tally for the last fiscal saw some movement. Bharti Airtel nudging BSNL to second place was a significant one. The private operator earned Rs 36,962 crore, a 40% growth as compared to BSNL that saw a 0.4% dip in its revenue. In FY 2008-09, Reliance Communications and Vodafone retained their positions and stood at third and fourth spot.

Idea Cellular, that had acquired Spice during the financial year, steered its way ahead from sixth to fifth place and displaced Tata Communications. On the other hand, Tata Communications slipped to the sixth place. The next four slots were intact-with companies holding the same positions as FY 2007-08.

Revenue earnings by TTSL, MTNL, Aircel and TTML were Rs 6,739 crore, Rs 4,487 crore, Rs 3,425 crore and Rs 1,929 crore, respectively.

The need to communicate kept the telecom services industry moving, despite the financial slowdown during the fiscal. A bloodier price war awaits the market as greenfield operators make their debut in the Indian market. With 3G spectrum auction consummating by the year end, a lot more data consumption is on the cards. At the same time, ARPU will continue to fall. The financial year ahead poses new challenges of identifying new subscribers and markets.

vadmail@cybermedia.co.in