Following GSM (global system for mobile) launches by Aircel, Vodafone, RCOM and Idea in the first quarter of calendar 2009, net adds have stabilized at 11.5-12mn in the last two months, down from 15-16mn in the previous quarter.

Initial launches, especially by RCOM, offered ARPM as low as Rs0.1/min for a three month period. RCOM has discontinued this practice and has gradually inched up tariffs to Rs0.4 0.5 / min.

In response to introductory offers by new operators in the Mumbai circle, recently both Bharti and Vodafone have introduced tariffs that offer the user a cheaper tariff for higher usage. We believe such tariffs will reduce ARPMs by Rs0.05-0.06. However, since they provide an incentive for consumers to talk more, overall ARPU should remain stable.

The Indian government may complete the 3G auction process in F2010. We believe each operator will invest US$1 bn for a pan-India footprint, producing US$5 billion income for the government. However we estimate the payback will range from 10-15 years, assuming the 3G auction does not exceed US$1bn.