OVERVIEW OF THE TELECOM INDUSTRY

HIGHLIGHTS

Indian Telecom services industry accounts for 1.5 per cent of GDP. Telecom services market is growing at 20 per cent per annum. Cellular segment growing at 70 per cent. Major Segments of Telecom Services Basic Fixed Line services, National Long Distance,

International Subscriber Dialing and Cellular Mobile services. Policy framework for this segment governed by the National Telecom Policy (NTP). NTP 1994 allowed private participation. NTP 1999 set target of tele-density of 15 telephone connections per 100 persons by 2010. Basic services still largely monopolized by state owned players - MTNL and BSNL, even though private participation allowed in 1994. Total fixed line connections are estimated at around at 28 million as on 31 October 2000. They are expected to go up to 75 million by end of March 2006. National Long Distance (NLD) service was opened up for private participation during FY2001. The revenue from this service is expected to be INR 151 billion in FY2002 and INR 239 billion by FY2005. Overseas service is monopolized by VSNL at present. However VSNL which is already an internet service provider will also participate in NLD and other broadband services. Cellular mobile services, started in 1995, are amongst the fastest growing segment. After a slow start, this sector grew at compound annual growth rate of more than 70 per cent. Future issues include implementation of Calling Party Pays principle, passage of the Convergence bill and greater consolidation through mergers and acquisitions.