Cell-phone operators invest Rs 2,000 cr but can recover money if users spend more air-time

Sunil Mittal says people are not talking enoughTelephony is a business of time. The longer people talk on the phone, the more the cash register jingles. Unfortunately, the fledgling cell-phone industry in India is going through amaun vrat(silent phase), with the average subscriber talking no more than 140 minutes a month on the mobile phone.In 1992, when the Union government invited bids for cellular licences, both the government and industry estimated an average air-time use of 250 minutes. This expectation shaped the bids, with the service operators committing an astonishing Rs 27,000 crore as licence fees in the 10-year licence period. In addition, the operators have to incur capital costs that may run into Rs 22,000 crore. "The projections are a joke now," says TV. Ramachandran, chief of the Cellular Operators' Association of India. Sunil Mittal of Bharti Cellular, which runs AirTel cell phone service in Delhi, says, "We expected each subscriber to spend Rs 1,800 every month." The present revenue per customer is Rs 1,100 on an average.The inevitable shake-out has begun. For Mumbai operator Hutchison Max, Analjit Singh of Max Industries, the Indian partner in the joint venture, has lowered his stake from 51 per cent to less than 10 per cent.The industry is now lobbying for an extension of the licence period to at least 15 years, and a revenue-sharing arrangement with the state-owned Department of Telecom (DOT), in which the cellphone operator splits with the dot the revenue it brings. If that happens, it is good for the consumer because the operator must then pass on a part of the benefit to the subscriber.B.V Raman of Motorola's cellular division expects cell phone usage to be spurred if India follows the Chinese model of a high monthly rental ($30 for India's $4) and a low average air-time charge (US 5 cents against India's 20 cents). That is perhaps the shape of things to come, for it makes no sense to charge only Rs 156 a month on a cellular rental when even a pager costs Rs 250 a month in rent. A high rent and low air-time charge will eliminate the tinker-tailor-plumber-cabby clientele but will encourage the well-heeled class to talk as long on the cell as on the fixed phone on the desk..preferred-source-banner{ margin-top: 10px; margin-bottom:10px;}Published By: AtMigration Published On: May 11, 1998--- ENDS ---

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Cell-phone operators invest Rs 2,000 cr but can recover money if users spend more air-time

Cell-phone operators have sunk Rs 2,000 crore but can recover the money only if users spend more air-time.

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