Price war boosts mobile phone growth
Tuesday, 27 April 2010
Fazlur Rahman
Mobile phone operators posted sizzling growth in the first quarter amid one of the fiercest price wars in the sector triggered by acquisition of Warid by Indian low-cost operator, Bharti Airtel.
The country's six mobile phone companies added 2.27 million users in the first quarter to March, clocking a 105 per cent growth over the same period last year and 110 per cent than the previous quarter.
Although the number looks impressive, operators are not excited, saying the growth is "seasonal" and owes largely to up to 50 per cent cut in average call tariff by leading players as they geared up for a turf war with Airtel.
"We see it as seasonal phenomenon-- one that is driven by attractive new packages and a 20-50 per cent tariff cuts," said a senior official of a leading mobile phone company.
He spoke on condition of anonymity as he is not authorised to speak to the media. "The new figure is deceptive because you are comparing it against some of the worst performances in recent years," the official said.
"It's good. But the kind of growth we want to see has not been happening since 2008. We have seen fabulous growth in 2004-2007 when market leader Grameenphone alone added one million susbscribers in some months," he said.
The latest acquisition by operators took the number of subscribers to 54.7 million -- still hovering around 35 per cent of the country's 150 million population.
The official added the number is heavily skewed towards urban users. "We have reached close to cent per cent penetration in urban centres. But penetration in rural and semi-urban areas remains far off our expectations."
"We have invested heavily in expanding the network to the remotest parts of the country. But the return is still poor."
Analysts said the new figure indicates a turnaround for the mobile phone sector after two years of stagnation.
They attributed it to the price war unleashed by Bharti Airtel's entry into Bangladesh. It was the first time in three years that all big players have significantly reduced their call tariffs.
Bharti Airtel, which is specialised in low-cost tariff and has built up a tough-dog reputation in Indian market, bought 70 per cent stake in Warid in January with undisclosed amount
Continued to page 16
Mobile phone operators posted sizzling growth in the first quarter amid one of the fiercest price wars in the sector triggered by acquisition of Warid by Indian low-cost operator, Bharti Airtel.
The country's six mobile phone companies added 2.27 million users in the first quarter to March, clocking a 105 per cent growth over the same period last year and 110 per cent than the previous quarter.
Although the number looks impressive, operators are not excited, saying the growth is "seasonal" and owes largely to up to 50 per cent cut in average call tariff by leading players as they geared up for a turf war with Airtel.
"We see it as seasonal phenomenon-- one that is driven by attractive new packages and a 20-50 per cent tariff cuts," said a senior official of a leading mobile phone company.
He spoke on condition of anonymity as he is not authorised to speak to the media. "The new figure is deceptive because you are comparing it against some of the worst performances in recent years," the official said.
"It's good. But the kind of growth we want to see has not been happening since 2008. We have seen fabulous growth in 2004-2007 when market leader Grameenphone alone added one million susbscribers in some months," he said.
The latest acquisition by operators took the number of subscribers to 54.7 million -- still hovering around 35 per cent of the country's 150 million population.
The official added the number is heavily skewed towards urban users. "We have reached close to cent per cent penetration in urban centres. But penetration in rural and semi-urban areas remains far off our expectations."
"We have invested heavily in expanding the network to the remotest parts of the country. But the return is still poor."
Analysts said the new figure indicates a turnaround for the mobile phone sector after two years of stagnation.
They attributed it to the price war unleashed by Bharti Airtel's entry into Bangladesh. It was the first time in three years that all big players have significantly reduced their call tariffs.
Bharti Airtel, which is specialised in low-cost tariff and has built up a tough-dog reputation in Indian market, bought 70 per cent stake in Warid in January with undisclosed amount
Continued to page 16