Three leading Indian private mobile operators have announced the launch of a new company to share communications infrastructure to cut costs and help speed the rollout of a nationwide telephone network.
India's cellular market is growing by 8 million subscribers a month and totals over 217 million customers, making it the world's fastest expanding.
Now three major private mobile firms -- Bharti Airtel, Vodafone and Idea Cellular -- say they will merge their wireless infrastructure operations in what they say is a move to make growth even faster.
They announced on Saturday they would set up an independent communications tower operator company, Indus Towers, to lower costs and push the mobile phone network deeper into rural areas.
"This is the first such venture to be launched in India and we're inviting other players -- government and private -- to join us in helping roll out mobile phone services to every nook and corner of this country," Akhil Gupta, managing director of Bharti Enterprises, said in an interview.
Bharti Airtel -- led by billionaire Sunil Bharti Mittal -- is the country's largest private mobile phone operator.
"This way there will be no duplication of infrastructure building efforts," Gupta said.
The companies will pool existing communications towers so Indus Towers will start out with 70,000 tower sites and will be an independently managed company, sharing profits from rents charged to firms which use it.
"This company is a major leap forward in reducing costs," Gupta said. "No longer will each company have to build a tower where it wants to go -- it can concentrate on growing its business."
India's teledensity -- the number of people owning a phone out of every 100 people -- stands at just 21 percent compared to the West where the market is saturated.
So far India's "mobile revolution" has been mainly confined to the cities but analysts say the real prize lies in the vast rural hinterland where 70 percent of the 1.1 billion population lives.
Phone penetration in urban India is around 25 percent but just under 2 percent in rural areas.
Bharti and Vodafone, owned by the British mobile operator giant with the same name, will hold 42 percent stakes each in the company.
Idea Cellular, controlled by the Aditya Birla conglomerate, will hold the rest.
The new company will also share infrastructure with other wireless service providers like broadcasters and broadband service providers, a statement said.
India's mobile phone costs are already among the world's cheapest at less than US$0.02 a minute that has helped operators win customers among poor income groups who have been driving subscriber growth.
But the companies believe they can push down costs even further, reaching a new layer of clientele.
"If we can make as operators phones affordable to the lowest common denominator on the economic ladder, the industry will flourish," Gupta said.
The government is targeting 500 million mobile phone users by 2010. The easiest way to increase teledensity is through mobile phones as landline networks are more complicated and take longer to set up, analysts say.
Sharing mobile phone infrastructure had been done on a smaller scale by such US companies as American Tower Corp and Crown Castle "with huge success" but in India "it will be on a huge scale," Gupta said.
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