Almost all major mobile operators in India appear to be making huge sums of money, with country’s mobile market expanding at a high rate year after year.

Economic Times, India’s leading financial daily, has commented that “cash registers of mobile telephony providers are ringing.”

The news report came following the revelation of financial report of major cell phone operators for the fourth fiscal quarter of 2006-2007.

Mobile companies in India are adding about seven million users every month — the fastest anywhere in the world — on the back of lower tariffs.

Those who have posted huge profits and are seeing rapid growth are Bharti Airtel, Reliance Communications (RCOM) and Idea Cellular.

The increasing expansion of market share for these companies is selling their shares like hot cakes on stock markets across the country. No one is surprised to know that stocks of all the three are trading strong, at levels higher than those a month ago.

The Indian mobile market has been on a growth curve for several years now. But, nowadays, cell companies are not getting as much revenue from each of their subscribers as they did in the past. The reason is the outbreak of cutthroat competition among operators and the schemes that companies are using to entice more number of customers.

Performance of these companies not only mirrors the growth of the mobile market, but also shrugs off all the worries that companies are facing.

Idea reported two-fold increase in its profit in comparison with its profit for the same period last year. Delhi-based Bharti Airtel also posted strong growth in sales and profits on Friday. Its net profit surged by 89%. Moreover, the company reported improved operating efficiencies, compared with the previous year, as operating margins expanded by over 300 basis points (bps). Meanwhile, Reliance has also reported impressive growth. Its operating margin shot up from 24% last year to 40% this year.

On the outset, it appears that each and every cell operator is making most of the rapid growth that the telecom industry has been recording in India over the years. As these companies have been partners in the growth of the industry, they are taking their cuts in revenue generated by the industry.

Yet there are some surprises in the store. Bharati Airtel, India’s largest mobile operator has seen 10 per cent growth in minutes of usage (MOU) per subscriber. Yet, average revenue per user has slumped by 8 percent.

Expansion into rural areas - and competition – are factors eating into the profits of these companies.

On the top of it all, cell phone companies are required to identify, verify and authenticate subscribers before they can gain access to their networks. Annalists say these of kind of mandatory requirements are bearing an impact on the growth of cell companies.

The telecommunication companies are also keen on expanding into other forms of services, including direct-to-home (DTH), long distance telephony and broadband offerings. All the three companies have announced capex plans to fund their expansions.

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Narayan Bhat is a contributing editor for TMCnet.

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