We would like to highlight the Myths and Realities in the Indian Wireless Industry.

New entrants too focused on rural areas – DoCoMo witnessed the highest jump in proportion of subs coming from rural areas (11% in last two quarters) though still remains low overall (20% v/s 33% avg). Even Uninor, albeit on a small base, has a relatively high rural proportion at 34%. Both Bharti and Idea are at ~37% with even Vodafone at 36% despite its perception of being “urban centric.”

Post-paid tariffs are currently 40% higher than pre-paid tariffs – Post-paid rev/min, which was similar to pre-paid in Mar-09, is currently 40% higher (gap has widened over time) given sharp decline in pre-paid after industry migration to per-sec billing. Given 3G and MNP looks set to be simultaneously launched, it raises risk of a round of tariff cuts in the yet untouched segment.

C Circle usage higher than A/B circles – Outgoing mins in C circle are higher than A/B with the gap widening in the last six quarters despite a higher acceleration in penetration in last 12-18 months. This could be on account of low fixed-line penetration resulting in technology leapfrogging to wireless and lower incidence of multi-SIM (lower penetration/higher market concentration).

The percentage of on-net calls varies from 41% in metros to 56% in C circle. The reason for this trend could be attributed to market share concentration. Circles where one operator has a dominant market share have a higher percentage of on-net calls versus circles where market shares are less concentrated.

Finally, The urban penetration across all circles is currently more than 100% with only Gujarat (six v/s eight operators on a national average) and MP in 90s highlighting the spread of multi-SIMs. Even C category circles like Bihar and Orissa’s urban penetration is also at 130% (national average at 120%).