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June, 2011

One of the world’s most progressive telecom markets - the Indian telecom industry has seen massive investments by both private and government sectors in the previous decade. The success story and the potential have attracted newer players on the canvas due to which the intensity of competition has paced up between domestic and foreign players, which as a result, has benefitted the end user. Increasing network coverage and competitive tariffs – these are the two most prominent catalysts that are contributing to the growth of the Indian Telecommunication sector.

Mobile telephony continues to fuel growth in the Indian telecom sector with mobile subscriber base projected to grow at a CAGR of around 6.6 per cent during 2011-12 to 2014-15, according to RNCOS’ new research report ‘Indian Telecom Analysis (2008-2012)’.

Indian Telecommunication - Market Size

The number of telephone subscribers in India increased to 861.48 million at the end of April 2011 from 846.32 million at the end of March 2011, thereby registering a growth rate of 1.79 per cent, according to the data released by Telecom Regulatory Authority of India (TRAI). With this, the overall tele-density (telephones per 100 people) in India reached 72.08 at the end of April 2011 from 70.43 in the previous month.

The growth in the wireless category was led by Reliance Communications, which added 2.93 million subscribers, taking the subscriber base to 138.65 million at the end of April 2011. Idea Cellular added 2.45 million new users, taking the user base to 91.95 million. Bharti Airtel added 2.41 million subscribers (increasing its user base to 164.61 million), while Vodafone added 2.40 million users (taking its user base to 136.97 million). Aircel added 1.10 million users, while Tata Teleservices added 1.24 million users in April.

Broadband subscription reached 12.01 million in the reported month from 11.87 million in March, growing 1.17 per cent.

Meanwhile, Indian Global System of Mobile Communication (GSM) telecom operators added 9.53 million subscribers in May 2011, taking the all-India GSM cellular subscriber base to 590.19 million, according to Cellular Operators' Association of India (COAI). The GSM subscriber base stood at 580.66 million at the end of April 2011.

Indian Telecommunication - Key Players

The Indian telecommunication sector has become highly competitive over the last four years. The industry is highly fragmented. There are as many as 15 players who strive to gain competitive edge in the market. As of September April 2011, Bharti telecom led the market with 19.19 per cent share, Reliance (16.77 per cent), Vodafone (16.56 per cent), BSNL (11.13 per cent), Idea (11.12 per cent), Tata (10.93 per cent), Aircel (6.77 per cent), with the remaining share being held by other smaller operators, according to Telecom Regulatory Authority of India (TRAI) database.

Hi5 For WiFi

WiFi networks, offering secured connections, are getting popular over broadband services due to cheaper data plans and faster speeds. Mobile operators, trying to tap market potential, are pledging high investments to upgrade their 3G networks into 4G ones, though capacities remain a constraint. To remove such constraints, WiFi has become a significant tool for offloading traffic. Discarding the conventional dependency on third-party WiFi providers, mobile operators are pulling their socks to build their own WiFi networks.

Tata Indicom, Aircel and Vodafone have publicised their WiFi services the most.

Indian Telecommunication - Value-Added Services (VAS) Market

Value added services (VAS) market has been expanding at about 60 per cent year-on-year, according to a study by the firm ‘Research and Markets’. The study underlines mobile advertising, m-commerce, multi-media games, 3G, mobile internet for faster data upload, as major factors for growth. Also the rural VAS market possesses a huge potential in India.

Features like SMS, Ringtones, Caller Ring Back Tone (CRBT) and Games form part of VAS and their delivery is mainly based upon IVR, GPRS and WAP platforms. In India, VAS accounts for 9-10 per cent of the operator's revenue, which contributes 20 per cent to global telecom revenues.

Mobile VAS are expected to garner US$ 12.25 billion in sales by 2015 (more than double the current figure of US$ 4 billion), reports consulting firm PricewaterhouseCoopers (PwC). The students section looks the most lucrative market for VAS in next four years. The study also assessed that the new generation of content users will desire for more entertainment and utility-based services.

Techzone is planning a product expansion, including its entry into mobile gaming service business in 2011-12. The Chennai-based mobile VAS provider has pledged US$ 6.67 million of investment for the same. The company is holding discussions with two international gaming service providers for strategic alliance, said Naveen Bhandari, director, Techzone.

With an aim to acquire 15-20 per cent market share in mobile gaming sector in first year of operation itself, the company is targeting the launch of its mobile gaming service by mid-July 2011.