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Call revenue dips below 50% for Indian telecom operators on data take-up

Call it the 3G effect, or the result of a relentless and ruthless assault on call rates by leading operators in India: today, the contribution of call revenues to overall sales has fallen below the 50% mark for most Indian telecom operators.

An analysis of numbers crunched by the Telecom Regulatory Authority of Inda (TRAI) has shown that the Indian mobile industry makes more money from various other services than plain vanilla calls today.

The trend is more pronounced in CDMA services — which has Reliance Communications, MTS and Tata DoCoMo, than in the GSM segment, which has operators like Bharti Airtel, Vodafone, Uninor and Idea Cellular.

According to the data, the contribution of normal voice calls (excluding roaming) in CDMA segment fell from about 68% in late 2007 to just 42% for the last quarter of 2011 — the latest for which data is available.

Similarly, the contribution of voice charges sank from about 61% in mid 2009 to just above 50% in the December quarter, for GSM players.

In other words, operators make more money, at least sales, in non-voice categories such as data, messaging and downloads, than in the traditional voice-call category.

A noticeable aspect of the decline is its secular nature. Without exception, voice contribution has been on the decline — for a longer period for CDMA than GSM, but on the decline nevertheless.

Another interesting aspect is that the trend reflects the ability of the GSM operators to have kept call rates up for longer than CDMA operators.

The GSM operators, for example, saw peak contribution from voice in about mid-2009, while the CDMA operator saw peak contribution from voice nearly a year and a half earlier. (see chart above.)

Another interesting tidbit that points to where companies are getting the extra income from is this: the share of “other services” — which includes data and VAS — went up from about 9% in mid 2007 to about 30% in late 2011 for CDMA operators.

CDMA operators, of course, have been the pioneers in the mobile broadband business in India, with their low-priced EVDO Usb-Dongles.

SMS revenue has remained at the same depressing level of about 1.5%-2% throughout, for CDMA operators.

In contrast, “other revenues” have not taken off that spectacularly for GSM players. For them, it went from about 8%-9% in 2007 to 13% in late 2011.

SMS revenues, however, increased from an already-high 5.5% in 2007 to about 9% in the last quarter of 2011. Some of the difference in SMS numbers is explained by the fact that CDMA phones are mostly with the cost-conscious and mostly rural customers, while the text-loving youth prefer GSM phones.

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