800m mobile subscribers in India but not much money

 From the latest Equitymaster newsletter

 

With over 800 m subscribers (includes GSM and CDMA), India represents a huge telecom market. With the cheapest tariffs, it has seen telecom penetration going up from about 4% in March 2001 to around 71% in March 2011. But the huge surge in the number of subscribers has not translated to huge returns for the network providers. In fact, telecom operators have seen their profitability dwindling down. Hyper competition that led to sharp rate cuts is one big reason for this. As shown in today’s chart of the day, profitability (Earnings Before Interest, Tax, Depreciation & Amortization or EBITDA) per minute has been on the fall for the telecom operators. 

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