Professional Documents
Culture Documents
Indian Telecom Sector 301008
Indian Telecom Sector 301008
Telecommunication
Sector
August 2007
www.ibef.org
Presentation Plan
6 Growth Avenues
2
www.ibef.org
Presentation Plan
6 Growth Avenues
3
www.ibef.org
Indian Telecom Industry A Lucrative Option
One of the fastest growing cellular markets Total telecom subscribers 225.21 million
in the world in terms of number of subscriber (June 2007)
additions 19.35 million in 3 months (April to
Tele density 19.86 percent (June 2007)
June 2007)
Number of new mobile subscribers added
Expected to reach total subscriber base of
every month 7.34 million (June 2007)
about 500 million by 2010 (i.e., more than
one phone for every household) ARPU for GSM USD 6.6 per month
Annual growth rate of the telecom Telecom equipment market USD 17,100
subscribers 47 percent (200607) million (200607)
More GSM subscribers than fixed-line Handset market USD 4,750 million (2006
subscribers 07)
4
www.ibef.org
Telephony services (mobile and basic) and Internet services
dominate the Indian telecom services
The Indian telecom market generated revenues of approximately USD 20 billion in 200607. It registered a CAGR of
approximately 22 percent from 200203 to 200607. The CAGR from 200607 to 200910 is expected to stabilise at 21
percent. Apart from mobile telephony services, other value-added services are also gaining importance.
Mobile Services
Basicces In
te
Registered an
Servi rn annual growth of 33
et percent in 200607
S
dio g
RT
PM
GMPC
S VSATs
The Indian telecom services can be divided predominantly into basic, mobile and Internet services. It also comprises smaller segments,
such as radio paging services, Very Small Aperture Terminals (VSATs), Public Mobile Radio Trunked Services (PMRTS) and Global Mobile
Personal Communications by Satellite (GMPCS).
The growth witnessed in the mobile services and Internet services segments was higher as compared to other services, such as basic
services and radio paging services.
5
www.ibef.org
Private players account for highest subscriber base growth in the
basic telephony services segment
Basic Services
Basic services include fixed wireline and
wireless in local loop (WLL-fixed). In 2006
07, basic services subscribers exceeded 50
million.
Fixed wireline services hold a major market
share of 83 percent in basic services.
BSNL and MTNL are market leaders in this Market Share* of Basic Service Operators in
segment. India (200506)
Although the government-owned BSNL
dominates the segment in terms of
subscriber base and market share, private
players have registered a notable growth.
6
www.ibef.org
Mobile telecom services provide an unprecedented growth
opportunity for companies
Mobile services have led to a spectacular growth in the Indian telecom industry. Currently, 12 players are active in this segment. The total
number of wireless subscribers escalated to 185.13 million at the end of June 2007, with a monthly addition of more than 6 million wireless
subscribers. Despite the decreasing ARPU*, the minutes of usage is on a rise, which provides impetus to the mobile services growth in India.
7
www.ibef.org
Number of mobile subscriber will propel the total subscriber base
to 500 million by 2010
The state-owned BSNL was the second largest service provider after Bharti
Airtel (23 percent) in the Indian wireless telecom market with a market share of
approximately 19 percent for the year ending March 2007.
8
www.ibef.org
GSM surpasses CDMA in number of additions to subscriber base
Market Share GSM* Service Providers (as of Market Share* CDMA Service Providers (as of
quarter ending March 2007) quarter ending March 2007)
9
www.ibef.org
Various other services emerged by leveraging the telecom
services industry
Radio Paging
In 1995, radio paging services emerged as a
promising segment in India. However, this
segment could not compete with cellular
services in general and SMS technology in
particular, and is currently shrinking. At
present, only four radio paging service
providers are present in the Indian market.
PMRTS have not grown to their expected potential GMPCS services were launched in India
in India. The high licence fee leaves a very thin in 1999. These services allow a
margin for services providers; thereby, inhibiting its subscriber to communicate from any
point on earth through a handheld
growth. About 31,000 subscribers are currently Other Telecom
terminal. Moreover, the telephone
availing this service in India from 12 different Services
operators. number remains unchanged,
irrespective of the subscribers location.
10
www.ibef.org
Broadband services to drive Internet penetration in India
The emergence of private players and new technologies have provided a strong
impetus to the growth of Internet and broadband services. The quality and
penetration of these services have undergone changes, with significant
improvement in the telecom infrastructure. The Internet subscriber base
registered a CAGR of 60 percent for the period 199798 to 200607.
Market Share of Top Five Internet Service BSNL and MTNL caters to more than two-thirds of Internet subscribers in India.
Providers (as of quarter ending March 2007)
India had 2.52 million broadband connections at the end of June 2007.
Private players are catching up fast due to increased penetration of Internet and
broadband services in India.
The telecom market will experience high penetration of Internet services with
the support from government policies and introduction of novel technologies in
India.
11
www.ibef.org
Presentation Plan
6 Growth Avenues
12
www.ibef.org
Indian telecom handset market booming along with mobile
services industry
The Indian handset market grew at a phenomenal rate in 2006 Mobile Handsets Market in India: 200407
with the sale of approximately 3035 million handsets. It is
estimated that by 2011, sales of mobile handsets will reach 150
million units.
Competitive pricing has triggered the growth of coloured
handsets, which accounted for 65 percent of the market in
2006; whereas, the share of monochrome handsets has
declined to 35 percent.
Mobile phones are available at prices as low as USD 2835.
13
www.ibef.org
Presentation Plan
6 Growth Avenues
14
www.ibef.org
India: An Ideal Destination for Investments in Telecom Sector
15
www.ibef.org
Increasing mobile subscriber numbers and low level of teledensity
offers large opportunities to Indian companies
16
www.ibef.org
Presentation Plan
6 Growth Avenues
17
www.ibef.org
Regulatory Framework provides level playing field for all operators
IndianTelecom
Indian TelecomIndustry
IndustryFramework
Framework
Independent Bodies
Indian Government Bodies
They formulate various policies and pass laws to They undertake various research activities and monitor
regulate the telecom industry in India. the quality of service provided in the Indian telecom
industry. They also provide various recommendations to
improve the status of telecom operations in India.
18
www.ibef.org
Various important regulations and laws have been passed in the
Indian telecom industry post-liberalisation era
Lowering of ADC
UASL, Access Deficit Charges (ADC)
Telecom Tariff CPP
Order
ADC makes it mandatory for a service provider at the callers
NTP 99 WLL end to share a percent of the revenue earned with the service
provider at the receivers end in long-distance telephony. This
subsidises the infrastructure costs of the service provider
enabling access at receivers end, especially because rental
for fixed-line services is low. Revision in the ADC regime is
expected to be followed by further tariff reduction in telecom
services.
20
www.ibef.org
Presentation Plan
6 Growth Avenues
21
www.ibef.org
FDI and other M&A activities increasing in number
Major trends in the telecom sector is increasing M&A activity, de-regulation of telecom policies and growing
interest of international investors.
Recent Deals in Telecom Sector The Indian telecom industry has a 74 percent FDI limit in the
telecom services segment.
22
www.ibef.org
Presentation Plan
6 Growth Avenues
23
www.ibef.org
Major Players in different segments of Indian telecom industry
Vodafone
Reliance
Idea
TTSL
Reliance
BSNL
Internet Services Operators
BSNL
CDMA Services Operators
MTNL Reliance
Reliance
TTSL
TTSL
BSNL
Airtel
6 Growth Avenues
25
www.ibef.org
India presents a host of opportunities for telecom companies
Infrastructure
Rural Sharing Managed
Telephony Services
Value-Added
Growth
Growth Virtual Private
Services
Avenues
Avenues Network
WiMax
Enterprise
Telecom
3G Services
To reduce their network deployment costs, many service providers are considering
infrastructure sharing offers the following advantages:
Virtual Private Network is a private data network Improved service quality
that provides connectivity within closed user groups via Increased affordability for customers
public telecommunication infrastructure. Competition is Faster roll out of services in rural and remote areas
likely to heat up in the VPN segment as DoT has Significant reduction in initial set up costs
relaxed the norms for private players. Increased environmental aesthetics
Lower operating costs for service providers
26
www.ibef.org
Emerging technologies 3G and WiMax to assist in penetration of
telecom services in India
The Indian government plans to auction the spectrum for 3G services by inviting bids from
domestic as well as foreign players, and creating a competitive environment that offers better
services to consumers. Therefore, the 3G spectrum is among the major investment
opportunities and growth drivers of the telecom industry.
The immense potential for 3G is reflected by the 3040 percent annual growth in Value-Added
Services.
Cell phone manufacturers are striving to develop USD 100 priced 3G handsets for the Indian
market.
India expects to replicate its 2G growth in 3G services.
WiMAX has been one of the most significant developments in wireless communication in the recent
past. Since this mode of communication provides network access in inaccessible locations at a speed
of more than 4 Mbps, it is expected to be a major factor in driving telecom services in India, especially
wireless services. Thus, it will lead to the increased use of telecom services, Internet, value-added
services and enterprise services. WiMAX is expected to accelerate economic growth and assist in
providing better education, healthcare and entertainment services.
It is estimated that India will have 13 million WiMAX subscribers by 2012.
Aircel is the pioneer in WiMAX technology in India.
The state-owned player, BSNL, aims to connect 74,000 villages through WiMAX.
Bharti, Reliance and VSNL have acquired licenses in the 3.3GHz range to utilise the opportunities
offered by this domain.
27
www.ibef.org
Value-Added Services and Rural Telephony holds large market
potential in India
Value-Added Services in India (200607)
The VAS industry was worth USD 632 million in
200607. The industry is estimated to grow by 60
percent in 200708 and become an USD 1,011 million
opportunity.
The VAS industry is currently focussing on the entertainment sector, such as the Indian film
industry and cricket; however, there is scope for growth in other avenues as utility-based
services, such as location information and mobile transactions.
28
www.ibef.org
DISCLAIMER
This presentation has been prepared jointly by the India Brand Equity Foundation (IBEF) and
Evalueserve.com Pvt. Ltd., EVALUESERVE (authors).
All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. The
same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any
medium by electronic means and whether or not transiently or incidentally to some other use of this
presentation), modified or in any manner communicated to any third party except with the written approval of
IBEF.
This presentation is for information purposes only. While due care has been taken during the compilation of
this presentation to ensure that the information is accurate to the best of the Authors and IBEFs knowledge
and belief, the content is not to be construed in any manner whatsoever as a substitute for professional
advice.
The Author and IBEF neither recommend or endorse any specific products or services that may have been
mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of
decisions taken as a result of any reliance placed in this presentation.
Neither the Author nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or
omission on the part of the user due to any reliance placed or guidance taken from any portion of this
presentation.
29
www.ibef.org