The thus far recession-resilient telecom sector has recently started showing notable signs of deceleration, despite the otherwise robust figures that they have been posting! The high network costs and a fall in per-user-per-minute revenues are forcing the telecom operators to expand their services' arena in the near future.

With the sector as a whole depicting an over 35 percent year-on-year growth, the recession notwithstanding, the weaknesses beneath the momentous numbers have finally begun to surface. Though the three top-listed telecom companies - Bharti Airtel, Reliance Communications, and Idea Cellular - posted double-digit revenue growth in FY 09, the rate of revenue growth has come down.

The underlying reason for slower revenue growth apparently is that a majority of the new subscribers have been added from tier-3 cities and rural areas, and these users generally have a considerably lower per minute usage vis-à-vis the users in bigger cities.

The March-quarter figures related to increase in subscribers and minutes used indicate that while the subscriber base for Bharti, Reliance and Idea Cellular increased by
10 percent, 19 percent and 14 percent respectively; their minutes used grew by 6 percent, 3.6 percent and 10 percent respectively. As such, the average revenue per minute (ARPM) for Bharti fell by 12.7 percent; for Reliance by nearly 15 percent; and for Idea Cellular by 10 percent!