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The rapid growth in Indian telecom industry has been contributing to India

The rapid growth in Indian telecom industry has been contributing to India

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Published by: Nithun Eapen on Mar 20, 2011
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The rapid growth in Indian telecom industry has been contributing to India¶s GDP at large.

Telecom industry in India started to set up in a phased approach. Privatisation was gradually introduced, first in value-added services, followed by cellular and basic services. Telecom Regulatory Authority of India (TRAI), was established to regulate and deal with competition (the service providers). This gradual and thoughtful reform process in India has favoured industry growth. Upcoming services such as 3G and WiMax will help to further augment the growth rate. The Indian telecommunications industry is one of the fastest growing in the world and India is projected to become the second largest telecom market globally by 2010. This is evident from the facts of Telecom Industry for example, India added 113.26 million new customers in 2008, the largest globally. The country¶s cellular base witnessed close to 50 per cent growth in 2008, with an average 9.5 million customers added every month. This would translate into 612 million mobile subscribers, accounting for a tele-density of around 51 per cent by 2012. It is projected that the industry will generate revenues worth US$ 43 billion in 2009-10. In this report we have tried to capture most of the areas of Telecom Industry. Major highlights of the report are History of Telecom Industry, Current Industry Analysis, Role of TRAI, Spectrum allocation, FDI Regulation, Competitive advantages, Outsourcing in Telecom, Emerging Technologies, Latest Innovation, and Growth Trends, Mergers and Acquisitions

1 Indian Telecom Industry History History
1851 Introduction of Telegraph services 1947 Foreign Telecom Companies nationalized to form PTT
1980¶s: The Beginning

Tele-density in 1980-81: 0.3% Introduction of public pay phones Private Sector allowed DoT, MTNL and VSNL formed Early to Mid 90¶s: A Messy Affair Telecom policy 1994 - Basic telephony service to private operators - 49% FDI - 8 licensees began operations in Aug 1995
Late 90¶s

Birth of a regulator: TRAI NTP 1999 (New Telecom Policy) 2000+ CAGR of around 85% since 1999 FDI: 74% (2005) 2007-2009 having the world's lowest call rates the fastest growth in the number of subscribers (45 million in 4 months),

Bharti-Airtel expects a bloodbath in the Indian telecom market in the near future. Prachi. India has become the second country in the world to have more than 100 million CDMAbased (code division multiple access) mobile phone subscribers after the US. television and Internet.98 per cent India¶s service providers revenue in Q1 (2009): $8. The company recently achieved the magic figure of 100 million subscribers. Be it an Aircel or Etisalat. Sandeep 10 1. by 2012.72 million (March 2009) Wireless subscribers : 391. There have been talks about 3G and IPTV pushing growth. the world's cheapest mobile handset the world's most affordable colour phone 1. Also.76 million Wire line subscribers : 37. Telecom industry in India constitutes some essential telecom services like telephone. PMRTS (Public Mobile Radio Trunking Services). CDMA (Code Division Multiple Access). radio. the new operators would not remain fringe players in the Indian market. but would try and rock the applecart of existing operators. a growth of 3. however. The growth in Indian market could start tapering off very soon.6 Industry Revenue (2002-2010) According to a Frost & Sullivan industry analyst. According to an industry expert the subscriber base will not expand beyond 800 million in coming years from current number 400 million.94 million Tele density : 36.2 billion India¶s Rural Mobile Phone Users: 100 Million 1.2 billion while mobile revenues will reach US$ 39. The Indian telecommunications industry is on a growth trajectory with the GSM operators adding nearly 9 million new subscribers in April 2009. ARPUs in India have steadily falling($5-$6). However. and is looking to spread its risks by entering new geographies (Bharti-MTN deal is discussed in Industry Update Section).11 per cent over the additions made the previous month. but it all seems .8 billion in India. Puneet.the fastest sale of million mobile phones (in a week). taking the total user base to 297 million. fixed line revenues are expected to touch US$ 12. which has 157 million CDMA users. 8 Major Players Bharti-Airtel leads the wirless market with 24% market share. Telecom industry in India is specifically emphasizing on latest technologies like GSM (Global System for Mobile Communications). Fixed Line and WLL(Wireless Telecom Industry Anjana.3 Telecom services Telecommunication sector in India is primarily subdivided into two segments. With 12-13 players present in the market there would be a severe pressure on margins. do not include the GSM subscriber additions made by Reliance Telecom. which are Fixed Service Provider (FSPs) and Cellular Services.2 Quick Facts Total telecom subscribers : 429. The figures.

Besides.2 Handset Manufacturers (Market share) India's telecom equipment manufacturing sector is set to become one of the largest globally by 2010. a couple of years ago. most companies are now sweating it out by hard selling their products and services in the rural areas of the region. Puneet.20 per cent). Puneet. As a result. The third generation of mobile services (3G) will be used by telcos to gain more spectrum. 100% foreign direct investment (FDI) is permitted through the automatic route in telecom equipment manufacturing FDI ceiling in telecom services has been raised to 74% Introduction of a unified access licensing regime for telecom services on a pan-India basis Plan to introduce mobile number portability in a phased manner The government is implementing a program of connecting 66.com 1. Though the rural mobile penetration is highest in Punjab (20. Sandeep 12 1.1 Wireless Service Providers (Market share) Source: www.coai. Prachi.69 per cent). 2 Telecom Regulatory Authority of India (TRAI) 2. the geographical coverage of mobile telephony in India has gone up from 13 percent. Telecom Industry Anjana. Nokia Leads the market with whopping 60% share.09 per cent).8. Sandeep 12 Telecom Industry Anjana. the services will be used only in urban areas.far-fetched. Korean giant Samsung currently at number there is looking forward increase its market share to 20% through aggressive marketing. The Department of Telecommunications (DoT) has stated that foreign telecom companies can bid for 3G spectrum without partnering with Indian companies. at least 100 million will come from rural areas. Mobile phone production is estimated to grow at a CAGR of 28. totaling 107 million handsets by 2010. followed by Himachal Pradesh (17.822 uncovered villages under the Bharat Nirman programme. Prachi.1 Mission .8.3%. Kerala (10. Only after winning a bid. would they need to apply for unified access service licence (UASL) and partner with an Indian company in accordance with the FDI regulations. Policy Initiatives The government has taken many proactive initiatives to facilitate the rapid growth of the Indian telecom industry.000 community service centres in rural India to provide broadband connectivity in 2008-09. to 39 percent now.63 per cent) and Haryana (10. The government will invest US$ 2 billion to set up 112. 11 Exploring the rural telecom opportunity It is believed that of the next 250 million people expected to go mobile.

To ensure that the interests of consumers are protected and at the same time to nurture conditions for growth of telecommunications. broadcasting and cable services in a manner and at a pace which will enable India to play a leading role in the emerging global information society .

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