Now, Cell Companies Come Calling On Rural India

[city02 63]

http://economictimes.indiatimes.com/articleshow/749009.cms

SUMEET CHATTERJEE

NEW DELHI: Faced with the prospect of growth in the mobile phone user base hitting a saturation point in big cities, domestic cellular service providers are gearing up to delve deeper into under-penetrated rural areas.

With income levels rising due to robust agricultural output and the rural economy moving into the mainstream market, mobile phone operators are eyeing the countryside to maintain the scorching pace of growth.

“Nearly 70% of India’s population lives in rural areas and yet, most mobile phone service providers are not there,” said TV Ramachandran, director general of the Cellular Operators’ Association of India (COAI).

“The telecom revolution will have to make a wider impact, not only to bridge the digital divide, but also to sustain the high growth rates that we have witnessed in the last couple of years,” Mr Ramachandran said. “Service providers are now increasingly realising this, and are looking at the rural market as the next step in mobile phone growth.”

India’s mobile phone market has grown rapidly in the last couple of years on the back of spiralling income levels and falling phone tariffs and handset prices, making it one of the fastest growing markets globally. The country has 36m mobile phone users, up from just 10m a couple of years ago. About 1m new mobile phone users are added every month.

However, the share of the rural market in the country’s mobile population is less than 15%. Recent figures show that new monthly additions are slowing down, as operators see signs of stagnation in prime urban markets. The mobile sector saw 1.3m new additions in April, down from 1.9m the previous month and 1.6m in February, according to COAI. This has sent alarm bells ringing in the industry with companies exploring ways to invade virgin territories.

“The companies will have to go to rural areas. There is just no other way out,” says Dilip Modi, chief executive officer of Spice Telecom, one of the leading private sector mobile phone services provider.

“I believe that in order to step up growth levels, we will have to venture into untapped markets and also reach more and more subscribers in existing markets,” he added.