Last Updated: November 25, 2014
President and CEO, Nokia
Updated: September, 2014
SECTORAL REPORT | October, 2014
Telecom services have been acknowledged globally as an essential tool for the socio-economic development of a nation. India is currently the world’s second-largest telecommunications market and has registered exceptional growth in the past few years.
Telecommunications is one of the prime support services needed for rapid growth and modernisation of various sectors of the economy. Driven by strong adoption of data consumption on handheld devices, the total mobile services market revenue in India will reach US$29.8 billion in2014 and is expected to touch US$37 billion in 2017, registering a compound annual growth rate (CAGR) of 5.2 per cent, according to research firm IDC.
The rapid strides in the telecom sector have been facilitated by liberal policies of the Government of India that provides easy market access for telecom equipment and a fair regulatory framework for offering telecom services at affordable prices. The deregulation of foreign direct investment (FDI) norms have made the sector one of the fastest growing and a top five employment opportunity generator in the country.
The number of telephone subscribers in India increased from 933 million in March 2014 to 935.81 million (Wireless- 907.44 million, Wireline- 28.36 million) in April 2014, as per data released by the Telecom Regulatory Authority of India (TRAI).
The country’s GSM operators added 2.10 million rural users in June 2014 taking their total to 302.73 million, according to data released by Cellular Operators' Association of India (COAI).
Bharti Airtel has the maximum rural users at 96.63 million as of June 2014, whereas Vodafone added the maximum during the month of June to take its rural user base to 90.91 million. Idea Cellular's rural subscriber base stood at 76.85 million at the end of the month, whereas that of Aircel and Uninor stood at 25.96 million and 12.38 million, respectively.
As of May 2014, the top three telcos - Bharti Airtel, Vodafone and Idea Cellular - have garnered market shares of 28.41 per cent, 22.95 per cent and 18.79 per cent, taking their subscribers to over 208 million, 168 million and 137 million, respectively.
FDI in the telecom sector, which includes radio paging, cellular mobile, and basic telephone services, grew manifold to Rs 13,889 crore (US$ 2.25 billion) during April-July 2014. FDI inflows in the sector during the period April 2000-July 2014 stood at Rs 80,608.47 crore (US$ 13.1 billion), as per data released by Department of Industrial Policy and Promotion (DIPP). The following are some of the major investments and developments in the Indian telecom sector:
The Government of India plans to invest Rs 39,458 crore (US$ 6.41 billion) in BSNL and Mahanagar Telephone Nigam Ltd (MTNL) over the next five years.
The Department of Telecom (DoT) plans to set up an application development centre with an outlay of Rs 1,000 crore (US$ 162.92 million) over a three-year period. The move aims to generate income for the Universal Services Obligation (USO) fund in addition to the revenue share received from telecom operators.
The Ministry of Communication and Information Technology is planning to extend basic mobile coverage, including voice calling, in far-flung areas of eight northeastern states, at an estimated cost of over Rs 5,000 crore (US$ 812.63 million). While approximately Rs 2,400 crore (US$ 390.06 million) will be spent as capital expenditure (tower installation and laying cables), the remaining Rs 2,670 crore (US$ 433.94 million) would be for maintenance and operation expenditure (op-ex) over a five-year-period.
The government has planned to establish a close to 1,200 km direct subsea optic fibre cable link between the Indian mainland and Andaman and Nicobar Islands to improve telecom connectivity in this strategically located archipelago.
India will emerge as a leading player in the virtual world by having 700 million internet users of the 4.7 billion global users by 2025, as per a Microsoft report.
The National Telecom Policy, 2012, has visualised doubling the current telecom capacity and increasing its reach to over 95 per cent of India while providing broadband level of internet capability. Revenue from the fixed broadband services in India is expected to grow at 7.8 per cent annually to reach US$ 2.12 billion by 2017, on back of demand for bandwidth driven by cloud and video, according to IDC.
It has also been predicted by Ericsson that India's mobile subscriber base will grow from 6.8 billion in Quarter 1 (Q1) of 2014 to 9.2 billion by the end of 2019.
Exchange Rate Used: INR 1 = US$ 0.0162 as on September 26, 2014
References: Media Reports and Press Releases, Cellular Operators Authority of India (COAI), Telecom Regulatory Authority of India (TRAI), Department of Telecommunication (DoT), Department of Industrial Policy and Promotion (DIPP)
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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