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Telecommunications

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Indian Telecom Industry

September, 2013

Introduction

India is the world’s second-largest telecommunications market, with 898 million subscribers as on March 2013. The sector's revenue grew by 13.4 per cent to reach US$ 64.1 billion in FY12.

Telecom infrastructure in India is expected to increase at a compound annual growth rate (CAGR) of 20 per cent during 2008-15 to reach 571,000 towers in 2015.

Internet traffic in India is expected to reach to 2.5 exabytes per month in 2017 from 393 petabytes per month in 2012, as per a Cisco study. In addition, the wireless connectivity in India is expected to grow at about 40 per cent traffic by 2017, up from 38 per cent in 2012.

India has immense opportunities for telecom operators and is one of the best markets for telecom business. “Right now, we feel the Indian market is ripe for M&A stories,” highlighted Mr Dmitry Shukov, CEO, Sistema Shyam Teleservices (SSTL).

Key Statistics

India has recorded 55.48 crore mobile users as per Juxt’s study titled, India Mobile Landscape (IML) 2013. “More than 29.8 crore, about 54 per cent, of these device owners are in rural areas as compared to 25.6 crore in cities and towns," added Mr Mrutyunjay, Co-founder, Juxt.

The telecommunications industry attracted foreign direct investments (FDI) worth US$ 12,866 million during April 2000 to June 2013, an increase of 7 per cent to the total FDI inflows, according to data published by Department of Industrial Policy and Promotion (DIPP).

Moreover, the cumulative revenue of telecom service providers was recorded at Rs 54,284 crore (US$ 8.32 billion) in the January-March 2013 quarter, as per Telecom Regulatory Authority of India (TRAI) data.

Market Dynamics

The Indian mobile phone market is highly competitive with more than 150 device manufacturers trying to attract the consumers with their schemes and offers. Most of these producers focus their efforts on the low-cost feature phone market, which constitutes over 91 per cent of overall mobile phone sales, offering a huge scope for growth.

India added 1.49 million GSM subscribers in July 2013, taking the total GSM user base in India to 672.63 million. Moreover, in June 2013 the GSM telecom operators added 2.33 million new subscribers, to take the user base to 271.6 million at the end of the month, according to the data released by Cellular Operators Association of India (COAI)

The GSM incumbents—Bharti Airtel, Vodafone and Idea Cellular—have jointly crossed 70 per cent in revenue market share and had a 99.6 per cent share of the incremental revenues during the June 2013 quarter, as per the latest figures released by TRAI.

The mobile value-added services (MVAS) market is expected to reach US$ 9.5 billion in 2015, from US$ 4.9 billion in 2012, as per a joint research report by Wipro Technologies and the Internet and Mobile Association of India (IAMAI).

A total of 9.4 million smartphones were shipped into the country, registering a growth of 167.3 per cent on an annual basis. India also witnessed 73.5 million mobile handset shipments for the January-April 2013 period.