Has mobile penetration reached saturation point?

Updated: May 01, 2012, 20:54 PM IST

Siddharth Tak / ZRG

The famed Indian mobile phone growth story is increasingly struggling to sustain its tempo.

India, which witnessed a high of about 23 million net wireless subscriber additions in November 2010, recorded a low of about 7.5 million subscriber additions in February 2012. India had in all about 911 million wireless subscribers at the end of February this year while China is said to have already crossed the one billion mobile phone subscriber mark end of March this year.

India added only about 84 million wireless subscribers in 11 months from April 2011 to February 2012 as against 210 million in 2010-11, representing a near 60 per cent decline. The net mobile subscriber additions in 2009-10 was about 181 million.

There is more concrete evidence of the mobile market slowdown in India. It took 10 months to reach 900 million mark in January 2012 from 800 million mark achieved in March 2011. Contrast this with the solid performance earlier when in five months India grew to 800 million from 700 million wireless subscribers in October 2010.

India took 10 or more months to add 100 million subscribers earlier twice. It took 14 months to grow to 200 million subscribers from 100 million in June 2006 and again it took 12 months to reach 300 million total subscribers in August 2008. The mobile growth story here achieved its first significant landmark in 1998 when the number of subscribers crossed the one million mark.

“This should not surprise at all. Penetration of mobile connections in India has indeed reached the saturation point,” said Romal Shetty, telecom practice head at KPMG India.

Shobhit Agarwal, managing director at Protiviti Consulting, a global consulting firm, said, “The decrease in number of mobile subscriber additions in India is on expected lines and points to saturation in the market.”

Explaining the declining trend, Shetty at KPMG said, “In the last one year big operators in the country have reduced their offer packs and increased their tariff levels. This has led to subscriber additions being adversely impacted.”

The decline trend’s impact on the Indian telecom story evokes a mixed response. One major argument is that India has already attained the critical mass and need not “lose sleep”.

KPMG’s Shetty averred, “The net additions in mobile subscribers would not be that significant for the operators. Launch of more value added services are much important for the operators which help them in their revenue earnings.”

Goel at Knowledgefaber, however, opined that higher the mobile phone penetration better it was for the telecom industry growth. His prediction: “Once penetration level reaches the maximum then as a result there are several other growth trends in an emerging economy.”