BANGALORE, India-Losing more than US$5 million per month, paging service providers in India face a grim situation. The paging industry has halved its service penetration targets from 6 million pagers by the turn of century to 3 million, despite an impressive 25-percent growth rate in budget year 1997-98.
Some 425,000 paging subscribers were added in the year ended 31 March, taking the total pager numbers to 945,000 and making India among the fastest-growing paging markets in the world.
“More than 50 percent of the losses are on account of the license fees that we have to pay to the government,” said Deepak Malhotra, Indian Paging Services Association (IPSA) vice president. “We have asked for (an) extension on the period to pay the fees. In case this and other relief measures are not forthcoming, some of the operators might even have to wash their hands [of] their business.”
Malhotra also called for raising the license period from 10 years to 20 years, as well as a revenue-sharing plan for local calls generated by pagers.
“If these steps come through, then the companies might be able to break even on cash on (a) month-to-month basis within the next 12 to 18 months,” Malhotra said.
In addition to mounting losses due to the license fees, operators also have reached a dead-end with vendors. Unable to recover their money from operators, pager manufacturers have stopped supplying units to them.
Three paging operators-Microwave Communications, Modi-Korea and Easy Call-have sought permission from the Department of Telecommunications (DoT) to exit seven paging service areas. The companies also have requested that DoT refund the bank guarantee and performance guarantee they submitted at the time they signed their license agreements.
The paging industry may get a new lease on life in this budget year 1998-99, with newly assigned “infrastructure status” from the government. With this status, the industry will have easy access to loans at a lower interest rate and will enjoy a tax holiday in the long-term as they presently are running losses or are at the point of break-even. Pagers also will be cheaper as import duties have been reduced from 18 percent to 13 percent.
“Injustice that was done to the paging industry last year has been rectified,” said Pravin Kumar, IPSA president.
