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Cellular firms under strain

Mumbai, June 5: Competition in mobile telephony combined with frequent rate cuts will make the cash registers of all telecom companies jingle a little slower than before.

The Credit Rating Information Services of India Ltd (Crisil) today said that average monthly revenue per user (ARPU) of the industry is set to decline by 15 per cent and that a shakeout is imminent.

The rating agency also feels that the Telecom Regulatory Authority of Indiaís (Trai) recent directives will pull down GSM tariffs by around 40-50 per cent from the levels existing a few months back and that such a scenario would necessitate every company to invest Rs 4,000 crore in telecom infrastructure to stay afloat.

The rating agency noted that the recent launch of wireless in local loop (WiLL-CDMA) services by Reliance Infocomm, the success of Bharat Sanchar Nigamís (BSNL) low-priced GSM offering and the implementation of the calling party pays (CPP) regime has forced GSM operators to initiate sweeping changes in their tariff structure.

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