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India signed up its billionth customer to the mobile phone industry making it the second country after China to cross the benchmark. Despite the huge user base, it is not enough for the phone industry to survive without struggling. The third largest economy in Asia is already cluttered with dozens of wireless carriers, spectrums are becoming a challenge and the regulatory risks are very high. When you add all the costs of running a phone company in India, it becomes clear why the companies are delivering low profitability than operators in other parts of the continent, as reported by Gulf News.

"There are too many of them all fighting for limited spectrum," said Chris Lane, a telecommunications analyst at Sanford C. Bernstein in Hong Kong. "In China by comparison, 1.3 billion subscribers are serviced by just three operators. The government in China allocates spectrum on the basis of need, and at no cost to the operators. As a result, the Chinese operators get scale benefits that Indian operators are unable to achieve." The Indian phone carriers are getting prepared for even tougher times as the richest man of India, Mukesh Ambani, is planning to enter the competition by 2016 and launch Reliance Jio Infocomm Ltd., a $15 billion 4G service. Sunil Mittal, head of the market leader Bharti Airtel Ltd., has already warned the smaller players that the entry of Ambani will change the face of telecom industry compelling them to either exit or merge with larger companies, says Bloomberg.

The competition in India is so intense that the call rates are at an all time low, in fact the lowest in the world and the average profit margins fall between 35% and -50% in the last five years, said Bernstein. On the other hand, telecom companies in other emerging markets of Asia report a profit of 42%, says Ejinsight