BANGALORE, India-Paging operators in India are optimistic. Optimistic they have always been. However, having burnt their fingers once, this time around they are not expected to make wrong predictions, especially in terms of subscriber growth.
The Indian paging industry plunged into a deep crisis last year, posting negative growth in its subscriber base. In the 27 cities licensed initially, the subscriber base dropped from 830,000 subscribers in March 1998 to 670,000 subscribers as of 31 March 1999. However, the beginning of services in state circles-the non-metropolitan service areas-compensated for the drop. The total base in the country managed to reach 800,000 at the end of March 1999.
“Though the pager industry has been stagnant, there has been no major decline in the subscriber base,” said Sridhar Rao, vice president of Hutchison Max Telecom Ltd. “With the cost of hardware (pagers) coming down, we are adding new customers.”
The poor penetration rate due to reduced subsidies and bundled services resulted in end users paying full prices for pagers. Operators have been prompt to disconnect subscribers who have not been paying on time.
While the industry added 25,000 subscribers a month during 1998-1999, it also deactivated more than 33,000 subscribers per month in the same period. But cutting down on subsidies has led to improved bottom lines for most operators, said industry sources.
There were challenges from cellular companies, too. The question is whether paging operators can continue to retain and attract new customers when cellular providers offer free incoming calls.
“Last year, the paging industry witnessed a downtrend. But that was mainly due to the recession in the economy, which affected other industries also. As the cellular industry grew at a faster pace, a very small chunk of our customers moved over (to) it,” said PG Ponnappa, general manager of marketing for Page Point India Ltd.
The economic slowdown and confusion among users about the utility of pagers affected the future of the paging industry. The industry did not succeed in clearly segmenting the market and positioning its offerings against other popular services. Most paging companies did not take seriously the idea of offering value-added services.
Market segmentation is expected to happen in the future, say industry analysts. While high-income individuals will increasingly go for cellular, the middle and lower-middle segments will continue with pagers, they predict.
Paging companies are now exploring virgin markets such as offering services to rural and semiurban areas, and they are trying to pitch paging as an essential ingredient for total communications solutions. Market sources point out that paging is re-emerging in a new robe.
With the government according “infrastructure status” to the paging sector, it expects more funds to flow from outside.
“The grant of infrastructure status to this industry would result in a string of tax benefits and incentives and would draw the investor community to this sector,” said Deepak Malhotra, chairman and managing director of Pagelink.
An interim revenue share of 15 percent will be extended to paging companies wishing to migrate to the revenue-sharing regime under the New Telecom Policy (NTP) ’99. Details of the migration package are currently being finalized at the Department of Telecommunications (DoT). The major circle paging companies are expected to accept the package.
Market observers feel that this year will see companies selling licenses to their strong competitors.
Still, operators are optimistic. The market potential of the paging industry is 5 to 10 times that of the cellular industry, Malhotra said, adding that language paging would give a big boost to pager penetration in India. The new formula for survival is adding value and concept selling.
