>> Monday, March 9, 2009
Despite the current economic gloom the mobile phones business in India is continues to surprise and continue to boom. Led by worlds lowest call rates and availibility of cheapest handsets this is one sector which promises continued growth in otherwise troubled times in Indian economy.
To give you some insight to the kind of acclerated growth being seen in India' mobile market, let me highlight some key numbers. In January of 09 alone a the mobile market added 15.4 million new wireless subscirbers the biggest monthly growth ever.
To see this magnitude of unprecedented expansion in the telecom sector in the midst of deep slowdown in consumer demand and cut-back in domestic spending is proof enough that there is tremendous potential for staying invested for the long term.
The Indian mobile market boasts the most fierce and cut-throat competition and at the same time offers the worlds lowest call rates . But this is no bad news. Afforadibility is seen as the single-most important catalyst which is fueling this rapid growth.
Customers pay less that 50 paise for a call and new handset can be bought for as little as Rs.750. It is no surprise that India has now surpassed China to be the worlds fastest growing cellular market.
>> The beginning of the mobile revolution
It is not just affluent indians who are buying mobile phones, but the real growth is driven by the poor; Labourers, maids, drivers and other lowly paid people in cities are now buying mobile phones too.
The mobile service providers are aggresively rolling out new networks, sharing infrastructure costs and aiming to drive the mobile revolution deeper in to India's poorer markets. In rural areas the farmers are using mobile phones to call other farmers to find out market price for crops and also to stay in touch with distant relatives more often than before. The rural market of India presents a new opportunity to expand growth further.
The key to this surge in rural mobile subscriptions is due to the fact that these people are not affected by the global crunch. They do not own shares, or real estate hence are not being hit by the US credit or mortgage crises. There is enough employment for all and the crops being produced are to a great extent being consumed by the domestic markets.
>>Opportunity for further Growth for Cellular Companies
Rural India accounts for 70% of the 1.1 billion total population. Till the end of January of the total population who own a telephone only 9% were situated in rural areas, hence it is obvious that the next acclerator for mobile growth will come from rural india.
Expected growth : The forecast for 2010 is for total mobile subscirbers to rise to 525 million , and rise further to 740 million in 2012. The telecom providers know this fact and are moving fast. Bharti Airtel, Reliance Communication and Idea Cellular are 3 top Private service providers, followed by BSNL and MTNL which are backed by the government.
BSNL also announced rollout for 3G services in 700 cities in India by July 2009. This is another encouraging piece of information which will allow added revenue from data services, email and more profitable Business and Enterprise customers.
Stocks to Watch out for:
Bharti is a very experienced player in the market and has the reach and financial backing to aggresively invest in newer markets, rural as well as Urban.
Idea already has good reach and is expanding on its customer base in rural India and is beginning to establish itself in urban towns and cities with pervasive advertising campaingns and publicity.
MTNL is backed by the state and is expanding is data networks bringing Internet to the rural areas which has good potential in the coming years.
I am not too optimistic about Reliance Communications due to continued hinderance caused by Mukesh Ambani Group. In my opinion the telecom sector will see M&A activity and ADAG-Mukesh Group standoff creates uncertainity which is not good for the stock price.
The source for numbers and facts & figures provided in this article are coutesy: The Associated Press. The original article can be found at STOCKEZY.COM - India's Social Investing Community. You can connect with me at email@example.com
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