Retail News Update

NEW DELHI (AFP) — Amidst all the economic gloom, one business is still booming — India’s mobile phones — thanks to the world’s lowest call rates driven by fierce competition among cellular operators, experts say.

And while economists forecast a sharp slowdown in India’s economic growth, no downturn is seen in the mobile market, which added a record 15.4 million wireless users in January — the biggest monthly growth ever, according to the latest official data.

“India represents a unique mobile market where competition is the highest and the tariffs are the lowest,” T.V. Ramachandran, head of the Cellular Operators Association of India, told AFP.

And it’s not just affluent Indians who are buying phones in the world’s fastest growing cellular market — India outstripped China last April.

Most of the growth has been driven by laborers, maids, drivers and other lowly paid people in cities and increasingly in rural areas as innovative marketing has made phoning cheap enough for some of the poorest pockets.

“One of the biggest factors in this growth has been affordability both in terms of handset and tariff plans,” said Girish Trivedi, a senior analyst at consultancy Frost & Sullivan.

Customers can pay less than two cents for a call and 13 U.S. dollars for a new mobile handset. Second-hand ones can cost far less.

For many, mobile phones mean their livelihood. Sixty-two-year-old house painter Akshaye Jha runs his two-man business in New Delhi from his mobile phone. “It means people can get in touch with me. I get more jobs,” said Jha.

“The mobile has become a device for the masses … an agent of change,” transforming ways of communicating and doing business, Ramachandran said.

People are also buying phones even when they don’t need them for work.

Munshi, a security guard, never learnt how to read numbers and gets other people to dial. He keeps his handset in his breast pocket and starts with surprise when it rings with a bouncy Hindi pop tune.

“It keeps me in touch with my family in the village,” he smiles after getting a call from a nephew.

In rural areas, meanwhile, people are snapping up phones at an ever quicker pace as mobile firms aggressively roll out networks, sharing costs of infrastructure to reach far-flung areas quickly and cheaply, experts say. Farmers are using mobile phones to call other farmers to find out the market price for crops like rice, fruit and coconuts.

Market players say tumbling stock markets and property prices are not stopping many poor Indians signing up for phones as they don’t own shares or real estate and are not being hit.

“The people in rural India are not being affected by the global crunch,” Sanjay Gupta, chief marketing officer of Bharti Airtel, India’s leading cellular provider, said in an interview.

India’s “mobile revolution” is still mainly seen in the cities, but the real prize for phone companies is the vast rural market, where nearly 70 percent of the 1.1-billion-strong population live, analysts say.

By the end of January, 34.5 percent of the population owned a telephone, Telecom Regulatory Authority of India said.

But those figures distort the picture, with 66 percent of people in cities owning a phone compared to around nine percent in rural areas, says Frost & Sullivan.

“The next addition of subscribers will come from rural regions,” said consultant Trivedi. The government calls the rural market the “next accelerator” for mobile growth.

Total wireless connections stand at 362.30 million, up from 233.63 million a year earlier. Combined with fixed line users, the country now has over 400 million telephone connections.

“With aggressive rollout targets by operators … the trend of new subscribers will continue,” said Trivedi.

The Cellular Operators’ Association expects 525 million mobile subscribers by 2010, rising to 740 million by 2012.