Telecom: Providing a voice to masses - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Telecom: Providing a voice to masses

Mar 24, 2009

Have you wondered why telecom companies are going all out to spread their business across India? Or have you wondered why so many companies have applied for telecom licenses in recent times? The answer is opportunity. In this article we will take a look at how India's subscriber base has changed over the years. But, before going to the numbers, we shall briefly take a look at the structure of the Indian network. The country is broken into 4 segments- Metros, Circle A, Circle B and Circle C. These are further segregated as follows:

  • Metros Chennai, Delhi, Kolkata, Mumbai
  • Circle A - Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Tamil Nadu
  • Circle B Haryana, Kerala, Madhya Pradesh, Punjab, Rajasthan, Uttar Pradesh (E), Uttar Pradesh (W), West Bengal and A & N Islands
  • Circle C Assam, Bihar, Himachal Pradesh, Jammu & Kashmir, North East, Orissa

As such, the country is broken up to in to 23 service areas - 19 telecom circles and 4 metros. Apart from the four metros, the Indian states/regions have been divided into three circles (Circle A, B & C), based on their economic development, with Circle A being the relatively more developed regions while Circles B and C are the lesser developed regions.

Now, going back to the growth in subscriber base. To get a sense of how the subscriber base has changed over the years, we can take a look at the chart below. We have indexed the number of subscribers to 100 (as of January 2003).

Source: CMIE

The above chart shows the circle-wise change in total number of outstanding subscribers (GSM subscribers only) over the past five years. We can clearly see that the growth in subscriber base in Circle C has been the fastest. This is followed by Circle B, Circle A and subsequently, metros. Even the total change in number of subscribers has been the lowest in metros. This has been due to the relatively faster penetration in the three circles.

To get an overall perspective as to how things have changed, we can look at the chart below.

Source: CMIE

At the end of 2003, metros had a share of nearly 32% in the country's total GSM subscriber base. On the other hand, Circle A, Circle B and Circle C had a share of 37%, 28%, and 2% respectively. Five years later, the scenario completely changed. Metros now have a share of about 15%, while Circle A, Circle B, Circle C have a share of about 36%, 37% and 13% respectively.

While factors such as favourable demographics and higher disposable income are reasons for strong growth in the lesser developed states, one cannot ignore the fact that the low cost of services (lower average revenue per user charged by the telecom companies) coupled with low handset costs have added to the growth in subscriber base. In addition, telecom operators have entered and increased focus on less developed and rural markets in recent times vis-a-vis metros and bigger cities.

Equitymaster requests your view! Post a comment on "Telecom: Providing a voice to masses". Click here!


More Views on News

Sorry! There are no related views on news for this company/sector.

Most Popular

It's the Beginning of a New Bull Phase in Smallcaps (Profit Hunter)

Feb 24, 2021

Last time the smallcap index crossed 19k a big correction followed. Here's what makes it different this time.

Make Rs 5,000 Per Day Trading the Market (Fast Profits Daily)

Feb 25, 2021

In this video, I'll show you how to get started on the path to daily trading profits.

The Hidden Tesla in My Great Indian Wealth Project (Profit Hunter)

Feb 23, 2021

An Indian company founded three decades ago in a garage caught my attention...

Gold 65,000 and Silver 84,000 in 2022

Feb 26, 2021

In this episode of the Investor Hour, India's #1 trader, Vijay Bhambwani, talks to us about the stock market, his new targets for gold and silver, the best long-term investment opportunity, and a lot more.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Mar 5, 2021 (Close)