Pricing 'sanity' returning to India telecom market

NEW DELHI: Savage competition in India's fast-growing telecom industry that hit sector profits is easing and "sanity" is returning, the head of the country's top mobile phone operator Bharti Airtel, says.

"Hyper competition in the market with 12 to 13 players, many of whom happened to be new entrants, is clearly abating," Sunil Bharti Mittal said in Bharti's annual report posted on the company's website on Monday.

"Some semblance of sanity is being restored and consolidation is imminent," Mittal said in the report.

During the last two years, profits and revenues of Indian telecom companies have suffered from a bruising price war that has cut call tariffs to less than one US cent a minute.

Bharti, the country's largest mobile phone operator by subscribers, expects stable tariffs to help facilitate "the return of reasonable growth," Mittal said.

In May, the company reported a 31-percent dive in quarterly net profit to 14.01 billion rupees ($314.3 million) from a year earlier.

Bharti, the fifth-largest mobile operator globally by users, is present in nearly 20 countries in South Asia and Africa.

As a first sign of an end to the price wars in India, Bharti last month raised call charges for some mobile schemes, a move which was followed by rivals Idea Cellular and Vodafone.

India is the world's fastest-growing cellular market and second largest after China with operators competing for millions of new customers each month.

Mittal said there was still large growth to be tapped in India's rural heartland where some 700 million people out of the country's population of 1.2 billion live.

While the mobile market is saturated in India's urban centres, the number of telephones per 100 people in rural areas stands at 34, according to official figures.

Indian telecom companies added nearly 60 million mobile users in three months to March, taking the country's number of wireless subscribers to nearly 812 million.

The government says boosting telecommunications use is key to India's socio-economic development, especially in poverty-hit rural areas where penetration is still low.

Copyright AFP (Agence France-Presse), 2011