Two of India's top three mobile telecoms network operators reported a rise in quarterly profits on Tuesday, helped by strong subscriber growth for mobile data services while strong competition continued to pressure prices for voice calls.
Idea Cellular Ltd, India's third-biggest mobile opebehinrator d Vodafone India, and market leader Bharti Airtel Ltd together spent about USD 9.5 billion in the recently concluded government auction for airwaves, betting on the country's significant mobile data potential.
With a majority of the country still using more basic "feature phones", India's smartphone market is expected to grow at around 36 percent a year over the next five years, according to consulting firm Zinnov, making the higher margin mobile data business a potentially lucrative bet for network operators.
Idea, which posted a 60 percent rise in quarterly profit on Tuesday, recorded a monthly average revenue per user (ARPU) among its 33.4 million data customers of 150 rupees (USD 2.38), up from 104 rupees a year ago.
Separately, Bharti, which posted a 30.5 percent rise in profit for the quarter ended March 31, saw its mobile data ARPU rise by 43 rupees to 173 rupees.
However, the companies reported sharp declines in the average price achieved for voice calls - the realisation rate per minute.
Despite the jump in mobile data over the past year, voice revenues still make up close to 80 percent of operator revenues.
Idea posted a 7.1 percent decline in its voice realisation rate to 0.339 rupees per minute for the fourth quarter, while market leader Bharti Airtel recorded a 2.5 percent fall.
Idea Cellular's chief executive, Himanshu Kapania said that cost pressures remained in the sector but his company would try to absorb them by expanding.
Otherwise prices would have to rise. "Whatever scale can't absorb, it would be inevitable that price increases would happen," Kapania told reporters in Mumbai.
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