Sunday, December 17, 2006

Mobile business: comparing China and India

India and China contribute to about 25% of the mobile telecom subscribers in the world. China as 425 mln subscribers, while India has 125 mln.

Tele-density in China is 45% while the same is about 12% in India.

China’s total revenues are $35 bn; India’s $8 bn.

Herfindahl Hirschman Index ( a measure of competition) is 0.14 for India. This is below the threshold level of 0.18 required for a good competition in market place.

Competition has brought dramatic reduction in mobile tariffs in India to about Re. 1 per minute, which is one of the lowest in the world.

Indian operators are faced with regulatory levies of up to 25%; while Chinese operators pay less than 5%.

Research has shown that it is not the income level but the level of competition that has significantly contributed to bridging the digital telecom divide in India.

Reasons that contribute to curbing the investment and growth of mobile services in India:

  • Policy flip-flop on telecom FDI
  • Higher regulatory levies
  • Inadequate allocation of spectrum