India is the world’s second-largest telecommunications market. The telecom infrastructure in India is expected to increase at a compound annual growth rate (CAGR) of 20 per cent during the period 2008–2015 to reach 571,000 towers in 2015.
The mobile phone industry in India is likely to contribute US$ 400 billion to the country’s gross domestic product (GDP) and has the potential to generate about 4.1 million additional jobs by 2020, as per Ms Anne Bouverot, Director General, Groupe Speciale Mobile Association (GSMA). The mobile ecosystem generated approximately 5.3 per cent of the GDP for India, and directly supported 730,000 jobs in 2012, according to the report titled ‘Mobile Economy India 2013’ released by GSMA in association with the Boston Consulting Group (BCG).
“India is a place for investment and innovation for Vodafone. India is one of the two biggest markets for us along with Germany. The company is investing nearly US$ 3 billion over the next two years in India in expanding its network infrastructure and distribution channel in the country,” according to Mr Vittorio Colao, CEO, Vodafone Plc.
The telecommunications industry attracted foreign direct investments (FDI) worth US$ 12,889 million in the period April 2000–September 2013, according to data published by Department of Industrial Policy and Promotion (DIPP).
The country’s GSM operators added 1.66 million rural subscribers in October, taking their overall user base to 274.32 million, according to data released by the Cellular Operators’ Association of India (COAI). The telecom companies are looking at rural India to add users and revenues.
India could emerge as a low-cost hub for testing security-sensitive IT products used in telephone and other critical infrastructure networks, with the country being recently given the 'authorising member nation' status in the Common Criteria Recognition Arrangement (CCRA). Laboratories in India could offer testing services at much lower costs compared to other CCRA labs in Western markets, highlighted Mr Rajan Mathews, Director General, COAI – the industry body representing GSM operators.
India has over 50 per cent mobile-only internet users, possibly the world’s highest compared to 20–25 per cent across developed countries, according to Avendus Capital. More so, gaining impetus from the increasing penetration of smartphones and a whole host of mobile-only content, the Indian mobile advertising market is estimated to reach Rs 2,800 crore (US$ 457.52 million) by 2016 from the current Rs 180 crore (US$ 29.41 million).
Increasing demand for smart phones and availability of high speed networks, such as 3G and 4G services, has resulted in the rapid growth of the Indian market, besides offering immense opportunities to players involved in the business. The RNCOS’ research study, ‘Indian Mobile Gaming Market Forecast to 2017’ estimated the market to reach Rs 18.5 billion (US$ 302.28 million) in 2017 and grow at a CAGR of nearly 24 per cent during the period 2013–2017.
An empowered group of ministers (EGoM) has cleared the mergers and acquisitions (M&A) guidelines for the telecommunication sector, in order to encourage consolidation in the sector.
The Telecom Commission has ratified the Rs 5,000 crore (US$ 817 million) government proposal to give away 2.5 crore mobile handsets at subsidised prices.
The telecom tower provider industry has been granted the 'infrastructure' status, a move that will make tower providers eligible for viability gap funding, higher limit on external commercial borrowings (ECBs), lower import duties and exemptions on excise duty on telecom infrastructure equipment.
The Government of India's decision to allow 100 per cent foreign direct investment (FDI) in telecommunication sector will enable foreign telecommunication companies to buy out their Indian partners. At present, India permits up to 74 per cent FDI in the sector – 49 per cent through the automatic route and the rest after Foreign Investment Promotion Board (FIPB) approval.
The Government intends to make India a teleport hub, enabling it to become an up-linking/down-linking centre. The initiative is expected to facilitate foreign investments, better technology and sustainable employment opportunities in the country. The Government has recently given its nod to 74 per cent of FDI in DTH, IPTV, and mobile TV.
According to the new guidelines issued by the DoT, foreign entities can participate in the 2G auctions directly and obtain a licence. The initiative is expected to make the upcoming auctions more attractive to certain foreign players such as Telenor, which wanted to bid directly without an Indian partner in the auctions. There will be a lock-in period of three years.
The DoT will encourage telecom service providers to share their infrastructure, according to Mr M F Farooqui, Telcom Secretary, Government of India. The telecom industry and the Government need to work together to attract investments and exploit advances in technology. With the success in voice-connectivity being carried forward to data and emerging technologies including cloud computing, the government is targeting broadband connectivity from 15 million currently to over 600 million in 2020.
On the back of the ongoing investments into infrastructure, the country is projected to witness high penetration of internet, broadband, and mobile subscribers in the near future. Various policy initiatives by the Indian government have led to a complete transformation of the industry in the last decade. It has achieved a phenomenal growth during the last few years and is poised to grow further.
Exchange Rate Used: INR 1 = US$ 0.01634 as on December 6, 2013
References: Media Reports, Department of Telecommunication, Department of Industrial Policy and Promotion (DIPP), RNCOS