Everyone's got one: That seems to bge the problem

There are a million reasons for India's mobile telephony companies to be worried-1.04 million, actually-but no one is pressing the red button just yet. Since June 2003, these companies have added at least five million new subscribers every three months (quarter in D-street's language). Indeed, between October and December they added close to 6 million ones, almost as much as they did in all of 2002-03. However, between April and June 2004, they added 3.96 million subscribers.

This, as even a cursory perusal of the graphic on the next page will show is the lowest growth in over a year, both in terms of absolute numbers and percentages. Yet, most experts are strangely sanguine. "The first quarter is used by most operators to churn out their most unprofitable customers," says Kobita Desai, Principal Analyst (Telecom), Gartner India, a technology research firm. "In fact, if you look at the numbers, some companies have seen a decline in their subscriber base as they have tried to stabilise user revenues."

Between May 2004 and June 2004, Idea Cellular saw its subscriber base in Delhi shrink from 5,14,271 to 5,00,863; Bharti Mobinet in Chennai, from 4,02,474 to 4,02,064; and Escotel in Haryana, from 1,40,016 to 1,36,850. There are more examples and those tending to doubt Ms Desai's word would do well to understand the concept of net new additions: these numbers indicate that companies have studiously pruned their subscriber base-after all, the lower numbers have been achieved despite adding new customers.

An executive at one of India's largest mobile telcos argues that the boom of the past 18 months was engineered by the companies themselves: in response to Reliance Infocomm's entry into the market, he explains, they launched a gamut of promotional schemes aimed at the trade which, inadvertently, motivated dealers to "book these temporarily activated phones into their numbers". Some of the numbers being pruned, he adds, may well belong to customers who never really existed.

The general response among companies, however, is to pooh-pooh suggestions that the market is slowing down. "Mobile phones are not a luxury but an essential service," says Atul Bindal, Director (Mobility), Bharti Tele-Ventures. "People need to stay in touch and growth will continue."

The stockmarket isn't quite as cheerful as experts and execs at telcos: on July 23, Bharti Tele-Ventures declared its results for the three months ended June 30. Its revenues have increased 67 per cent (over the same period last year) to Rs 1727.58 crore, and net profits 11 times to Rs 239.04 crore. Yet, on D-street, the Bharti stock took a beating and fell by 7.5 per cent the day the results were announced. The market, apparently, had been expecting better results.

The real number to worry about, according to Gartner's Desai, is average revenue per user (ARPU), which, despite declining steadily over the years, is, at Rs 400 a month, around 5-15 per cent of the monthly income of the typical mobile customer. "That's an absurdly high number," she says, adding that the corresponding figure for developed markets is 2-3 per cent.

With ARPUs set to fall further, telcos have to look at value-added services, reasons Amit Bose, President (Telecom), Tata Teleservices. "Voice tariffs have reached rock-bottom; now, mobile operators have to look for revenues from non-voice based applications." And pray that the April-June quarter is just an aberration.

-By Kushan Mitra

SECOND
Exit MNCs, Enter Candico
Well, it's not exactly that, but the Delhi-based confectionery company does have a contrarian approach to globalisation.

Candico's Gupta: Going where MNCs don't dare to

Ghana is a West African country not particularly known for democracy or political stability. Coups are a way of life, and after a series of dictators (mostly from the armed forces), the country has settled into an uneasy democracy over the past three years under its first elected President John A. Kufuor of the New Patriotic Party. Kufuor's time has been spent more on preventing another coup-the main opposition leader, Jerry Rawlings, is a former military dictator and a known instigator of coups-than anything else. The result is an environment that isn't exactly a magnet for foreign investors. Yet, the Delhi-based Candico, a confectionery company, is trying to forge a joint venture with a company in Ghana that will manufacture and distribute confectionery in the country.

No, Candico doesn't know anything about Ghana, or Kufuor, or Rawlings that the rest of the world doesn't. It is just that countries like Ghana, explains Karan Gupta, Director, Candico India, who is spearheading the company's global foray, fit very well into its strategy. The articulated part of that is to use low-cost world class manufacturing expertise and local distribution networks to make the company a global (read: Third World) brand. The unsaid part is to eye countries that multinational confectionery companies have exited, or which they will not consider entering, largely because of the unstable political, or economic environment (or both).

That could explain why Nigeria and Cameroon are the other countries on Candico's radar. The first is a country that has flirted with democracy in between longer stints of dictatorships; its generals, and their corrupt ways, are legendary. The second was ranked eighth in a listing of the world's most corrupt countries (Bangladesh was first, and India was ranked 51) put out by Transparency International, a German non-governmental organisation (NGO).

Candico's intent to conquer markets in Africa and West Asia is evident in the décor of its office in South Delhi's Mohan Cooperative Estate: a glass-and-wood armoire in one corner displays confectionery from countries like South Africa, Tanzania, and Dubai. Some of these (especially the big sellers) have been dispatched to Candico's r&d lab in Nagpur where they are being reverse engineered to identify tastes and flavours that the local market enjoys; the company will then develop products for these markets. It has already done this for the South African market, where its plant, set up as a joint venture with a local company, will start churning out confectionery sometime in 2005. South Africa is an exception to the company's ''out-multinationals'' route; every MNC of note, including Wrigley's, Cadbury, and Nestlé has a presence in the $5.6-billion market.

Tapping markets in West Asia and Africa is an imperative for the Rs 150-crore Candico, which has a manufacturing capacity of 45,000 tonnes a year in India (in Nagpur). It is one of the few surviving local players in India's Rs 2,000-crore organised confectionery business (the unorganised sector contributes another Rs 2,000 crore) and a global presence can only help reduce its dependence on a domestic market that is increasingly being dominated by MNCs such as Wrigley's and Perfetti. Circa 2004, international operations account for an insignificant proportion of the company's overall revenues; by 2006, reckons Gupta, this will increase to 25-30 per cent. As long as there is political unstability in Africa.

-By Sahad P.V.

CURIOSITY
Biometric Passport

What is this?

A biometric passport.

What?

It's a passport that has a 2-dimensional barcode (1-2 KB capacity) on the page where the passport holder's photograph and details are. The barcode will contain all details of the person, a photograph, even a biometric image of his finger.

Why?

A biometric passport will make the visa process that much smoother, especially for entry to the US.

Who is interested?

The Indian passport office is, as is the American embassy in New Delhi. The Indian government, some reports say, could soon make biometric passports mandatory.

Is there a market?

Sudhir Rao, the managing director of the Hyderabad-based Bartronics India, that has developed this technology, estimates the size of the market at Rs 50-60 crore. He adds that he will be happy with a 10 per cent share.

-E. Kumar Sharma