The unprecedented growth in the Indian telecom sector has been driven largely by the metro circles. However, a key contribution has also been made by the southern circles of Andhra Pradesh, Karnataka, Tamil Nadu and Kerala. While the country?s wireless subscriber base witnessed a compound annual growth rate (CAGR) of 45.94 per cent from 261.09 million as of March 2008 to 811.59 million at the end of March 2011, in southern India, it witnessed a higher CAGR of 46.17 per cent.
The region has been an important contributor from the operators? standpoint as well. The wireless base of the top seven operators in terms of subscriber market share shows that at least two of the four southern circles figure among the top six subscriber-contributing circles for all operators. Also, more than 20 per cent of the seven operators? subscriber base is contributed by the four circles under consideration.
The southern circles also fare well on the internet and broadband connectivity front and are among the top 10 states in terms of internet subscribers. As of December 2010, there were 64.84 million internet subscribers, of which Karnataka had the highest number of 15.94 million.
Region?s telecom growth
The overall subscriber base in these circles stood at 222.98 million as of March 2011, accounting for more than 25 per cent of the country?s total subscriber base. In line with the trend in the rest of the country, the wireless segment has been a key contributor to the subscriber growth in the south with a user base of 211.12 million and accounting for 95 per cent of the total subscriber base in these four states. The brisk wireless addition is evident from the fact that the customer base grew from 67.6 million as of March 2008 to 211.12 million as of March 2011, registering a growth of 212.29 per cent.
The region also has a relatively high teledensity. Against the all-India figure of 66.16 per cent, Tamil Nadu has a teledensity of 102.02 per cent, Kerala 96.67 per cent, Karnataka 82.25 per cent and Andhra Pradesh 70.27 per cent. The four states figure in the top 10 circles in terms of urban teledensity with Kerala recording the third highest teledensity of 228.94 per cent.
Telecom services have reached the rural areas as well. The Kerala and Tamil Nadu circles had a rural teledensity of 51.26 per cent and 46.41 per cent respectively as of December 2010, higher than the country?s average rural teledensity of 31.18 per cent. This can be attributed to the south?s high literacy rate compared to the rest of the country.
Next-generation services
The southern states have been on the forefront with respect to next-generation technologies. The four circles have attracted high bids from operators for 3G spectrum and licences.
While the metro circles witnessed the highest bids from operators in the 3G spectrum auctions of May 2010, the southern states emerged as the next favoured investment destination for operators. The Karnataka, Andhra Pradesh and Tamil Nadu circles saw the highest bidding values, next only to the coveted circles of Delhi and Mumbai. Operators bid as high as Rs 15.8 billion for the Karnataka circle, followed by Rs 14.65 billion and Rs 13.73 billion for the Andhra Pradesh and Tamil Nadu circles respectively. In all, the southern states contributed Rs 141.9 billion of the total Rs 677.1 billion for spectrum and licences to the government. Moreover, these states accounted for more than 30 per cent of the total spectrum fee for all the circles, excluding Delhi, Mumbai and Kolkata.
Aircel, which has the majority of its subscribers in the southern regions, won 3G licences in all the four circles; Bharti airtel received them for Andhra Pradesh, Karnataka and Tamil Nadu; Tata Teleservices Limited (TTSL) won spectrum in Karnataka and Kerala; and Idea Cellular received licences for Andhra Pradesh and Kerala.
The southern circles were again the favourites in the June 2010 broadband wireless access (BWA) auctions. The highest bid in the southern region was for the Tamil Nadu circle, which saw operators paying Rs 20.69 billion, next only to the bids for Mumbai (Rs 22.92 billion) and Delhi (Rs 22.41 billion). The Karnataka and Andhra Pradesh circles also attracted high bids of Rs 15.43 billion and Rs 10.59 billion respectively.
This popularity is in line with the operators? subscriber share in the southern region. For Aircel and airtel, for instance, the highest subscriber share comes from Karnataka and Andhra Pradesh respectively. Also, for airtel, Aircel and TTSL, more than 25 per cent of the subscriber share is contributed by the southern circles.
Though the operators are yet to launch BWA services, their 3G rollout is under way and operators have come up with various measures to attract customers.
Bharti airtel was the first operator to launch 3G services in Andhra Pradesh. It rolled out services in the districts of Vizag, Vijayawada, Hyderabad, Warangal and Karimnagar. Aircel, which has 1.69 million subscribers in Andhra Pradesh, was the next to launch 3G services in the circle in March 2011 with Idea Cellular following shortly theerafter in April 2011. Idea?s 3G services are currently available in Hyderabad, Vijayawada and Vizag, and cover 42 towns across eight districts in Andhra Pradesh including Anakapalli, Bhongir, Gadwal, Mylavaram and Tadepalligudem.
Bharti airtel marked its foray into the 3G space with the launch of services in the Karnataka circle in January 2011. The operator hopes to build a substantial customer base from the circle, which has generated the highest revenues for the company. TATA DOCOMO, the GSM arm of TTSL, launched 3G services in Hubli, Dharward and Belgaum districts of Karnataka in January 2011. Aircel?s services followed in February 2011. As an introductory offer, the operator provided free 3G services to all its Karnataka subscribers for a five-day period.
All the three service providers ? Bharti airtel, Aircel and TTSL ? have launched their services in the Kerala circle. Aircel, for which Kerala is the sixth largest circle in terms of subscribers, launched services in March 2011. The operator, which is aiming to acquire 10 per cent of the Kerala customer base to shift to 3G, provided 250 MB of free data download to its customers in the circle as a promotional offer.
Bharti airtel launched its 3G services in the Tamil Nadu circle beginning with Chennai and Coimbatore. It has a wireless customer base of 120 million in Tamil Nadu and delivers services through a network of 11,000 cell sites. 3G equipment has been co-located on most of these sites.
Recent operator initiatives
Given the importance of these circles in terms of subscriber and revenue contribution, operators have taken many initiatives to attract customers to their network. In early 2011, Reliance Communications (RCOM) initiated a new programme, Reliance First, for its users in Karnataka. The interactive programme was aimed at helping users pay their bills, recharge their prepaid accounts, submit customer application forms and discuss other customer service issues. In February 2011, Uninor, which is rapidly making its presence felt in Karnataka, launched an innovative prepaid balance transfer facility in the circle. Through this service, users can borrow or transfer talktime from family and friends. In September 2010, Bharti airtel tied up with India Post to offer basic services like prepaid and post-paid subscription forms; assistance in filling out the forms; and collection, authentication, validation and dispatch of documents to the service provider.
A number of initiatives were launched in the Andhra Pradesh circle as well. For Idea Cellular, Andhra Pradesh is an important circle as it contributes the third highest number of subscribers to its total base. The operator introduced a novel initiative in the prepaid category, which enables over 8 million Idea subscribers to retain a reserve balance in their prepaid accounts for later use. In March 2011, Vodafone partnered with the Department of Telecommunications and launched Sanchar Shakti, the gender budget scheme for mobile connectivity and information and communications technology-related livelihood skills for self-help groups. This pilot project will span a 12-month period and engage 2,500 women across 80 villages in the Warangal and Rangareddy districts of Andhra Pradesh. On the occasion of World Telecom Day on May 17, 2011, airtel, in association with local NGOs, allocated 100 public call offices to disabled people across the state to provide them a means of income. Vodafone launched its Happy to Help customer service initiative in Kerala to provide relief to commuters during heavy rains. As a part of the initiative, aimed at increasing the brand?s visibility and goodwill, Vodafone ushers were stationed with huge umbrellas at major railway junctions across the state to assist people.
Keeping in mind Tamil Nadu?s tourism potential, Idea Cellular, introduced a utility service for subscribers to get instant information on places of tourist attraction, restaurants, hotels, hospitals, events and transport facilities in and around Coimbatore. Aircel, which currently has 35 per cent of its total subscriber base and the highest market share in the Tamil Nadu circle, launched its Aircel Apollo Mobile HealthCare service in the state. The service enables subscribers to seek medical help from Apollo physicians and paramedics round the clock.
Clearly, these four circles are high on the priority list for most operators. Going forward, the region is likely to contribute significantly to the 3G and BWA subscriber base as well.
