Why phone connections may exceed India's population in 2016

India has become the only second nation in the world after China to have over a billion active mobile phone numbers. At the end of October 2015, India had about 1.003 billion active mobile phone numbers and about 25.85 million fixed line phone connections.

Together that's about 1.029 billion telephones, equivalent to 81.4 per cent of India's population. As we ring in the New Year, the number of mobile phones in the country most likely has already risen by another 12-14 million while that of the fixed line shrunk by 0.1 million.

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Another milestone may be set in 2016. The number of telephones in the country is inching close to the total population of the country, and the launch of fourth-generation (4G) mobile telecom services may give a big boost to subscription numbers.

Big disparity in phone ownership

But as with ownership of assets and access to utilities, there is a wide divergence in the ownership of telephone connection. At one extreme is Delhi, where the number of phone connections, is twice more than the city state's population and at the other extreme is Bihar, where the number of phone connections is just a little more than half of its population.

The number of phones per 100 people is referred to as teledensity, and teledensity is a popular measure of the penetration of telecom services among a specific set of population. According to data published by the Telecom Regulatory Authority of India (TRAI), the teledensity for Delhi was 239 compared to just a little over 54 for Bihar. Delhi data includes mobile subscribers in the national capital region area such as Gurgaon, Faridabad, Noida and Ghaziabad.

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The Delhi region is a clear outlier. No other state or city matches its teledensity, even Mumbai have far fewer phone connections than Delhi for a population that is almost as large. Himachal Pradesh has the second highest teledensity, with about 123 phone connections per 100 people. Number of telephone connections exceeded population in states such as Tamil Nadu, Punjab and Karnataka at the end of October. Kerala too may have joined that club by the end of December. Gujarat and Maharashtra are set to be part of that group in 2016.

There is also the big urban-rural disparity, but that is only to be expected. There are about 153 connections per 100 people in urban areas compared to just 49 connections per 100 people in rural areas. But, telephone penetration is improving in rural areas.

Bharti's gain is BSNL's loss

The mobile telecom revolution led to the rise of Bharti Airtel as one of the best known companies in the country and one of the most sought in the stock market. In comparison, Bharat Sanchar Nigam Ltd (BSNL), which had a monopoly in the telecom services, not only lost subscribers but also ran into losses due to its inability to keep pace with its customers' needs. Currently, for every fixed line and mobile subscriber BSNL has, Bharti has 2.5 subscribers. BSNL, despite losing about over 1,00,000 fixed line subscribers regularly every month, remains the largest player in that segment of the market. Bharti has been consistently gaining fixed line subscribers but it still has just a fraction of the fixed line subscriber base of BSNL.

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The launch of 4G connections across the country in 2016 will surely lead to some churn in the telecom services market. The high speed data connections offered by the 4G telecom operators may lead to more subscribers deserting BSNL. As operators compete to gain subscribers for the 4G services, subscribers may see some interesting times, and another round of tariff wars.