PCOs come calling again, grow 52% a yr

MUMBAI: ���I���m calling from a PCO.��� This line from another age that had lost resonance ever since the cellphone got wired to public consciousness, is now regaining some lost ground. The number of PCOs has increased over 52% in the past one year backed by rising demand in rural and semi-urban areas. And not just growth, there���s a lot of stuffing in that little yellow-and-black box: apart from offering lower tariffs for international calls, wireless terminals require a minimal investment of Rs 4,000 to Rs 8,000.

With urban teledensity crossing 40% and rural penetration being a meagre 2%, there���s enough room for further growth of this segment - now also a point-of-sale for telecom products. PCOs are essentially two types: fixed-line booths and coin-collection booths (CCBs), also called fixed-coin terminals (FCTs).

Public sector Bharat Sanchar Nigam (BSNL), the leader in this market, saw PCO numbers going up from nearly 19 lakh in Q1 of FY06 to over 21 lakh in the first quarter of FY07. However, the bigger expansion was witnessed in the private sector, with Reliance Communications (RCOM) ramping up its PCO base from just about 4 lakh to over 11 lakh.

Tata Teleservices (TTSL) saw three-fold growth as its PCO outlets shot up from 1.76 lakh to around 7 lakh during the period. Hutchison-Essar entered the PCO business last year while Idea Cellular too has set up its FCTs along the major national highways. For TTSL, PCOs are a high-growth area. ���The PCO business is especially thriving in C&D towns where tele-density is very low,��� TTSL CEO Darryl Green told ET. Revenues from the PCO business have increased from Rs 35 crore per month to over Rs 100 crore per month, he said.

According to Sanjay Behl, head, branding and marketing, RCOM, one of the major drivers of growth is consumer demand. ���Growth is really coming from smaller towns as well as localities in metros where mobility is out of reach,��� he said. The low investment in setting up a wireless PCO is luring entrepreneurs too. ���Our PCOs are based on the fixed-wireless route. They can be installed in a 2X2 sq ft shop. Investments are very low and returns are high,��� Mr Behl said. While he refused to disclose ROM���s revenues from PCOs, industry analysts peg it at over Rs 2,000 crore annually. The figure for Idea Cellular is in the region of Rs 1,200-Rs 1,300 per terminal per month, say analysts.

BSNL finance director SD Saxena points out that with the number of people leaving towns and villages, for work, going up, the PCO business is picking up. Also, PCO booths are now turning into outlets for selling pre-paid vouchers and new connections. This has renewed interest in the segment.

Green added that a lot of people who have mobiles use PCOs for STD and ISD calls as some PCOs are now specialising in long-distance calls, offering lower rates compared to mobiles. ���Users prefer them for making long-distance calls,��� he said.