Chennai, July 7: Come September and the metro cellular operators would enter their fourth year of operation. But unlike Hotmail, nobody is celebrating the birthday. The city operators, from September, have to shell out an annual Rs 6,023 licence fee per subscriber to the Department of Telecommunications, while their fixed revenue from the subscriber would remain at Rs 156 paid as rental per month.And with the countdown to the fourth year beginning, the operators are awaiting DoT's response on the industry's plea to hike the monthly rental from Rs 156 to Rs 575.
With the government deciding to put the industry's demands for an extension in the licence period and a two-year moratorium for the payment on the backburner, the hike in the monthly rentals might give the industry the respite it is looking for. Given the current financials of the industry, already the metro operators have started cutting down on aggressive acquisition of subscribers and have started consolidating their consumer base. Industrystatistics actually indicate a negative subscriber growth in the industry in 1998, especially in the metros.
As the chief executive of one company said: ``We have taken a decision to go slow on subscriber acquisition and instead we would concentrate on retaining the quality subscribers in our network.''
According to industry sources, this phenomenon of consolidation is much higher in the Delhi and Mumbai markets which are the better developed cellular markets, than in either Chennai and Calcutta, where more numbers still matter to the operators. But even in these cities, the operators have slashed down marketing costs and are concentrating on targeting specific groups through more focussed marketing programmes.
And it makes sense to the industry. The cost of acquiring a subscriber amounts to roughly Rs 6000, which is a one-time expense. The cost of maintaining the subscriber, however, would total Rs 4800 annually, which means Rs 400 a month.
Apart from this the operator will now start paying Rs 6000per subscriber which translates into Rs 500 a month. Hence, the total fixed expense per month of the operator for one subscriber would go up to Rs 900 while the total fixed revenue from each subscriber will remain static at Rs 156.
The average airtime revenue per month is around Rs 900 per subscriber, which would just about cover the fixed costs (after the imposition of the licence fee per subscriber in September), leaving little margin for overheads.
It was with this in mind that the operators had asked for a higher rental per subscriber to compensate for the fixed expenses.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
