Subscribers for 3G set to double

An analysis predicts that Bharti Airtel will emerge as leader with more than 14 million 3G subscribers by March 2014

This financial year, India’s 3G subscriber base is expected to double to about 56 million, according to a recent analysis by PhilipCapital. The survey added by March 2015, the subscriber base was estimated to exceed 96 million.

While Reliance Communications (RCom) had the most 3G subscribers in FY13, the analysis predicted by March 2014, Bharti Airtel would emerge as the leader, with about 14 million subscribers. It added the number was expected to double the following year.

The sharp rise in 3G subscriber base will be driven by affordable 3G handsets The sharp rise in the 3G subscriber base would be driven by affordable 3G handsets and smartphones, a decline in 3G rates and aggressive marketing by telecom companies, according to an analyst with a management consulting firm.

As of March-end, Anil Ambani-led RCom (which has 3G spectrum in 13 circles) had 7.2 million 3G customers, while Bharti Airtel (3G spectrum in 13 circles) had just 6.3 million subscribers, according to the company’s fourth quarter result statement. The country’s second-largest telecom operator by subscriber base, Vodafone (3G spectrum in nine circles), had 3.3 million subscribers, while Idea Cellular (3G spectrum in 11 circles) had 4.1 million subscribers. During the April-June quarter, Vodafone’s 3G subscriber rose to 3.7 million.

A separate analysis by Morgan Stanley said Bharti Airtel and Idea Cellular were expected to reach break-even points in their 3G businesses in 2016-16, while RCom would do so in 2014-15. “The fall in data rates and cheaper handsets led to a rise in 2G data rates, while 3G data rates have remained largely stable over the past six months, though these have declined about seven times since the beginning of 2012,” stated the Morgan Stanley analysis.

In May 2012, Bharti Airtel, Vodafone India and Idea Cellular slashed their 3G prices about 80 per cent, shedding the premium tag of the high-speed data service. Early this month, RCom had reduced 3G data rates by half, making it lower than its 2G prices —  while 1GB of data download through 3G now costs Rs 123, it costs Rs 125 through 2G.

According to the Morgan Stanley analysis, purely 3G revenues have negative incremental returns. However, the silver lining is data volumes have picked up sequentially (20-25 per cent) in the past three quarters.

Operator	3G Subscribers (in million)
	FY13	FY14 (estimated)	FY15 (estimated)
Bharti Airtel	6.4	14.3	30.0
Idea Cellular	5.1	11.1	15.2
Vodafone India	3.3	6.9	22.0
Reliance Communications	7.2	13.0	22.0
Aircel	1.0	1.8	2.9
Tata Teleservices	2.0	3.6	5.4
BSNL/MTNL	3.0	5.4	7.6
Total 3G subscribers	28.0	56.1	96.3