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While MoTown is on a tailspin, the telecom sector is staging a rally

A higher call tariff and lesser competition have virtually enabled two of the country’s largest telecom companies show better quarterly revenues. This demonstrates that there is recovery for the world’s second biggest mobile phone market, India.

Reliance Communications has surpassed expectations in the latest quarter by doubling its profits. Vodafone claims it will increase its investment in mobile data networks following an impressive 14 per cent increase in its revenue in the latest quarter of this fiscal.

While India is home to the world’s largest number of mobile phone subscribers after China,  the sector’s profitability was checkmated by a price war.  Bharti’s AirTel, the nation’s largest telecom operator, Vodafone India, Idea Cellular, and Reliance Communications (R-Com), were allowed early this year to raise tariffs for voice calls after a gap of two years. This was because the courts revoked the permits of smaller operators literally pushing them quit the market.

Voice calls account for almost 85 per cent of revenues for these telcos. The next platform where mobile companies are likely to reap rich dividends are the mobile data services. It is interesting to note that R-Com launched Apple’s latest iPhones on a two year contract, while other telcos effect a sharp cut in data packages to boost demand.

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