Mobile telecom services were introduced in India in late 1995 and were marked by low demand and high tariffs due to large license fee commitments and capital expenditure requirements of service providers.
In March 1998, there were merely 0.88 million mobile subscribers in the country, more than half of those being from Delhi and Mumbai. A series of positive interventions by the government, together with well-run operations by telcos, have led to the phenomenal success in the Indian mobile market. Tremendous growth in the subscriber base since then has contributed to the gradual increase in the average earnings before interest, taxes, depreciation, and amortization (EBITDA) margin for mobile operators, from approximately 14% in 2000 to around 37% in 2007.
India, along with other Asia-Pacific countries like China and Indonesia, has very low average revenue per user (ARPU) compared to the United States (US) and European countries. A major reason for the differentials in ARPU across regions is the differentials in GDP (gross domestic product) per capita, and, consequently, the per capita telecom spending, which usually is a factor of the per capita GDP. However, EBITDA margins enjoyed by these Asia-Pacific operators are similar to those of their US and European counterparts.
