Painting a rosy picture of the sector, the Department of Telecom on Wednesday said tele-density has increased to 7.02 per cent in March 2004 compared to 5.11 per cent last year.

In its annual report, DoT said there has been tremendous growth in the rural telephony with 86 per cent villages covered by village public telephones (VPT).

Out of 6,07,491 villages in the country, as many as 5,22,347 villages have been provided with VPTs as on March 31, 2004, DoT said.

With a record growth of 40 per cent in the total number of telephone connections in 2003-04 taking it to 7.65 crore (76.5 million), the surge was driven mainly by a 160 per cent growth in mobile phones vis-a-vis a meagre three per cent growth in fixed lines.

"The year 2003-04 showed a record growth of 40 per cent in the total number of telephone connections. During the year, 2.19 crore (21.9 million) new connections were provided and total telephone connections as on March 31, 2004 was 7.65 crore," the department said in the report.

Two key features of this were the increasing share of mobile phones and higher contribution of private sector in the incremental growth, it said. The tele-density has moved up to 7.02 per cent as on March 31, 2004, up from 5.11 per cent last fiscal.

The private sector's share in the growth of telecom has also risen to 39 per cent from 21 per cent a year ago.

"Mobile phones grew 160 per cent while fixed phones grew by 3 per cent in the year as the user preference in favour of mobile phones continued," it said.

During the year, 4.64 crore (46.4 million) fixed line and cellular connections were provided by BSNL and MTNL and 3 crore (30 million) was provided by the private sector.

A continuous shift has been seen in the use of mobile phones with a rise in its share, which has increased from 23.77 per cent in March 2003 to over 44 per cent.