Telecommunication
India is the world's second-largest telecommunications market, with 898 million subscribers.

Indian Telecom Industry

Latest update: September, 2014

Wireless and wireline revenues in India

Wireless and wireline revenue increased at a CAGR of 10.4 per cent to US$ 39.1 billion over FY06-13.

Wireless and wireline revenues in India

Composition of telephone subscribers in India

The wireless segment (96.6 per cent of total telephone subscriptions) dominates the market, while the wireline segment accounts for the rest.

Composition of telephone subscribers in India

Telephone subscribers in India

In March 2013, the total telephone subscription stood at 898.02 million, while teledensity was at 73.3.

Telephone subscribers in India

Wireless market share in India

Bharti Airtel is the market leader, with a 21.7 per cent share of total subscription; Vodafone follows with a 17.6 per cent share market share.

Wireless market share in India

Updated: September, 2014

SECTORAL REPORT | April, 2014

Introduction

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.

Market size

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.

Investments

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:

  • Reliance Jio Infocomm has signed an agreement to share 500 towers of Videocon Telecom in UP(W), UP(E), Bihar and Jharkhand, as it aims to roll out its high speed data and voice services faster and at a lower cost across India.
  • Idea Cellular joined hands with Opera Software and Quikr to offer sponsored mobile data through 'Sponsored Web Passes' to Idea’s 137 million plus customers in India. Under the arrangement, Idea customers will get free 10 MB data usage for an entire day.
  • Larsen and Toubro (L&T) has won a contract worth Rs 2,442 crore (US$ 396.91 million) from Bharat Sanchar Nigam Ltd (BSNL) to supply, trench, lay, install, test and commission optical fibre cable network which will establish optical national long distance backbone and optical access routes for the defence network.
  • Aircel has launched 4G services across four circles - Andhra Pradesh, Assam, Bihar and Odisha - making it the second operator to launch the services in the country. With this launch, Aircel now offers services under all the three existing telecom technologies (2G, 3G and 4G LTE). Further, the company has tied up with Micromax to launch the latter's new 3G smartphone - Canvas Beat.
  • Bharti Airtel, the country’s largest mobile operators by revenue and subscribers, has launched a 3G Wi-Fi dongle that enables downloads of up to 21.6 mbps. This speed is more than double of the present 9.8 mbps.
  • Nokia Networks has won a dozen deals with major Indian operators during the first half of 2014, as compared to the 16 deals signed last year.

Government Initiatives

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.

Road Ahead

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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