It is an intriguing phenomenon. Indians talk less on their mobile phones
in the second quarter of the fiscal year. Both Bharti Airtel and Idea Cellular, India's leading telecom operators, reported a decline in the usage per minute in the July to September period. The operators said it was a seasonal phenomenon and has been happening for the past couple of years, mainly because mobile usage in rural India drops in this period.
Bharti Airtel reported a four per cent sequential drop in average usage per customer to 437 minutes while Idea Cellular saw a 7.6 per cent fall to 368 minutes. Uninor's average minutes of usage per subscriber was marginally up, but muted compared to the previous quarter. It grew 1.8 per cent to 434 minutes, compared with a growth of 6.2 per cent in the quarter ending June.
Consequently, both Bharti Airtel and Idea reported a drop in average revenue per user (ARPU). Airtel's ARPU dropped four per cent to Rs 192 while Idea reported a six per cent fall to 164. Uninor's was constant at Rs 103.
"This quarter always sees a reduction," said Gopal Vittal, CEO of Bharti Airtel's India operations, after declaring the second quarter results. Rural customers spend a lot on mobiles but between July and September, they spend more time in the fields and hence the drop, he explained. The quarter is the sowing season for kharif crops because of the southwest monsoon.
About 45 per cent of Airtel's 193 million subscribers come from rural India while the figure is 54 per cent for Idea Cellular. Rural customers are growing the fastest for Idea among all operators. In September alone it grew by 1.26 per cent, followed by Uninor at 1.08 per cent.
"We are servicing such a large base of rural subscribers and their usage or non-usage affects minutes consumed," said Rajat Mukarji, Chief Corporate Affairs Officer at Idea Cellular. With the urban India market almost saturated - with close to 100 per cent penetration in metros - operators see a lot of headroom for growth in rural India which has a penetration of about 40 per cent. "Rural is where the next phase of data growth is coming from," said Mukarji.
Agriculture accounts for almost 14 per cent of India's GDP. It is bound to have an affect on the mobile economy, which according to Boston Consultancy Group contributes 5.3 per cent to the GDP. Phones are used less when people are spending time in the fields, point out analysts.
India's urban teledensity was three and a half times higher than that of rural, according to the Telecom Regulatory Authority of India's latest teledensity report. But since August last year, urban subscriber numbers have fallen 8.6 per cent to 525 million while rural subscriber base moved up by 4.7 per cent to 349 million. As operators focus on rural India for growth, the September quarter will see muted growth in talk time.
Most companies are now releasing products that are specific to the rural user to boost usage. Even for data, which operators believe will drive growth in the future. Airtel, for example, has the sachet pack video clips on offer for Rs 1. Idea plans targeted agriculture-based trading solutions for rural areas with strong farming communities to beef up usage and revenue.
The inclement weather because of the monsoon also contributes to the lower mobile usage in the July to September period. "Network continuity is a factor of climatic conditions, which sometimes gets affected due to heavy rain and storm," says an executive with one of India's largest independent telecom tower company.
Finally, analysts say that the second quarter does not have a festival like the others, where people travel and talk a lot more, lifting both roaming and intra circle revenue. Not only for telecom operators, Mukarji says the second quarter is a dull period for other sectors as well such as fast moving consumer goods and auto. "The third and fourth quarter is always a stronger half year," he says.
Sarovar Agarwal, Principal at consultancy firm A.T. Kearney, expects that the next quarter with Dussera, Diwali and Christmas will show a rise in mobile talk time. "Quarter three will be a spike as there are a whole lot of festivals."