TWENTY-TWO companies, operating in 27 cities and 19 circles, with 5,29,111 subscribers. Three years later, the paging industry seems to be on the last page. And some players haven't even started on the prologue.
The beep is slowly fading for the pager industry
TWENTY-TWO companies, operating in 27 cities and 19 circles, with 5,29,111 subscribers. Three years later, the paging industry seems to be on the last page. And some players haven't even started on the prologue.
The Damocles' sword hangs over the service providers in the cities, whose three-year licence agreements with the Department of Telecommunications (DOT) are all set to expire shortly. The upshot: licences might not be renewed, or may come at a higher price.
As the government prepares to invite fresh bids for the cities, the sluggish growth in the number of subscribers has burnt a large hole in the pockets of service providers. At last count—end of April 1997—they were totalling up monthly losses of almost Rs 20 crore. Barring the metros, where the pager density is growing, most of the circles are yet to get off the blocks. In fact, with a total of 2.58 lakh subscribers, Mumbai, Delhi and Chennai account for over half the total pager population in the country.
The picture looks more dismal for the 19 circles: services have started in only two circles—Punjab and Haryana. In Haryana, one of the two slots is vacant. There are not many takers either. In the Bihar circle—each telephone circle approximately caters to one state—both the slots are lying empty.
The most pathetic case is that of Patna, where of the three service providers—Easycall, Beltron and Tele Info—only Easycall has subscribers. All 909 of them. And while Beltron commenced operations in March 1996, not one subscriber has gone in for its service. Tele Info is yet to take off. It's a similar tale in Bhopal where again with three service providers there are a mere 1,253 subscribers to just one operator.
The numbers are truly depressing. This despite the extravagant marketing ploys offered by a large number of companies—chiefly in the metros—who were giving a pager free with almost anything. What exactly is wrong with the industry? Perhaps everything:
Low telephone density: Since pager services are dependent upon telphones for their operation, there is a direct relationship between the two. Thus, if the number of telephones per person (telephone density) is low, the effects trickle down to the paging service providers as well.
Long gestation: Typically, the returns from providing paging services take a long time to hatch. For instance, even in Mumbai, which has the largest number of subscribers, the service providers have only now managed a moderate subscription. Factor in the discounts and free gifts, and you're looking at high costs and low revenues.
Frequency allocation: The biggest hurdle for these companies has been the delay in allocation of frequency by the Standing Advisory Committee on Frequency Allocation (SACFA), which comprises 19 government departments including defence, airlines, and intelligence services. In one or two cases, complains an official with a Delhi operator, "they even took a year before the frequency was allotted." As if acknowledging that such was the state of affairs, DOT chairman A.V. Gokak had announced earlier that if SACFA took more than four months to allot the frequency, DOT would take that into consideration while granting extension if the services did not commence on time.
Equity lock: In the tender that was floated seeking paging operators, DOT had locked in the foreign equity participation at 25 per cent. This means, even if the foreign company wants to get out of the business at a later date, it cannot do so completely. In retrospect, DOT officials say this decision was possibly a major mistake. In sharp contrast, the cellular licences have a lock-in period of three years during which the original foreign partner has to hold a 10 per cent equity. This 10 per cent can be sold after the expiry of the three-year period.
Downmarket status: In India, pagers are perceived as poorer country cousins of the more glamourous cellphones. The middle class, therefore, did not bite into this service as voraciously as the operators expected it to. Says a DOT official: "If I were to buy a pager, I would rather give it to my driver or servant." Just before the Congress government was voted out of power, former communications minister Sukh Ram had raised the monthly rental for paging services from Rs 150 to Rs 250. Last month, the government announced that paging would be given infrastructure status which would allow operators access to cheaper funds from the overseas market. It would also entitle them to a tax holiday for the first five years of operation.
Will the industry turn a new page? Wait and watch.