30% of new mobile users are from rural areas: TRAI
The Hindu, New Delhi, October 9, 2008: The Government has set a target of 500 million telephone users by 2010, of which about 200 million are expected to come from rural areas.

The rollout of mobile services in rural areas is beginning to bring in the numbers for operators. Compared to a trickle of rural subscribers just a few years back, operators are now getting more than 30 per cent of their new mobile users every month from villages.

While operators got 25 million new users across the country during the quarter of April-June 2008, 8 million of those came from rural areas, according to data released by the Telecom Regulatory Authority of India.

There are now 70 million mobile users in villages (out of a total 300 million) compared with 40 million in September 2007 (out of 209 million).

It's not just State-owned telecom companies which are going to the remote areas. Nearly 75 per cent of mobile users in villages are now owned by private operators.

Growth rates

Analysts said that the share of rural telecom consumers will continue to increase as operators have initiated an aggressive roll-out plan to cover remote areas of the country. This is primarily driven by a slump in the growth rate of the mobile user base in the metro and urban areas.

According to the data released by the Cellular Operators Association of India, Circle C and Circle B States such as Bihar, Kerala, Madhya Pradesh and Punjab are showing better growth rates compared to the metros. Therefore, most of the mobile operators are investing heavily in setting up infrastructure in these circles.

Market watchers also pointed out that with as many as five new operators planning a pan-Indian network, they will be banking on the unconnected villages to get them a foothold into the market. The Government has set a target of 500 million telephone users by 2010, of which about 200 million are expected to come from the rural areas.

Cost driver

The biggest driver is the availability of low-cost handsets. According to a report from US-based research and analyst firm Yankee Group, mobile handsets costing less than $50 account for 62 per cent of all imported units.

"A number of factors including, but not limited to, service provider competition, service quality, brand affinity, effective marketing and distribution, device vendor competition, increasing per-capita GDP, and general demand factors such as choice, are driving growth. The broadening availability of ultra low-cost handsets (defined as sub-$35) is also becoming one of the key drivers to subscriber growth," the Yankee Group pointed out.

ARPU declining

But this also means declining average revenue per user (ARPU). GSM operators' ARPU per month has declined 9.3 per cent from 264 in March 2008 to Rs 239 in June. For the CDMA segment, ARPU was at Rs 139 in June compared to Rs 159 in March.