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

Indian Telecom Industry

Latest update: June, 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: June, 2014

SECTORAL REPORT | April, 2014

Brief Introduction

Telecom services have been recognised the world over as an important tool for socio-economic development of a nation. It is one of the prime support services needed for rapid growth and modernisation of various sectors of the economy. India is currently the world’s second-largest telecommunications market and has registered exceptional growth in the past few years. The reasons for growth of the telecom sector in India are reform measures by the Government of India, active participation of the private sector, and wireless technology.

The National Telecom Policy 2012 (NTP-2012) was announced with the objective to maximise public good by facilitating reliable, secure and affordable telecommunication as well as broadband services in India. This along with the deregulation of foreign direct investment (FDI) norms have made the telecommunications sector one of the fastest growing and a top five employment opportunity generator in the country. The telecommunications sector attracted FDI to the tune of US$ 14,163.01 million in the period April 2000 – March 2014.

Market Size

India’s GSM operators added 2.58 million rural subscribers in April 2014, taking the total to 297.16 million. Also, Cellular Operators Authority of India’s (COAI) data suggests that the overall GSM subscriber base increased by 4.97 million in April 2014 taking the total GSM subscriber base to 726.90 million customers.

The COAI data also suggests that telecom provider Bharti Airtel provided the most number of customers in the month of April, about 990,000 new subscribers followed by Vodafone and Idea Cellular.

It has been predicted by Ericsson that India's mobile subscriber base will grow from 795 million in 2013 to 1145 million subscribers by 2020.

Data traffic powered by third-generation (3G) services grew at 146 per cent in India in 2013, higher than the global average, according to an MBit Index study by Nokia Siemens Networks (NSN).

With Bharti Airtel becoming the second largest telecommunications provider in Nigeria and Tata Communications entering into strategic partnerships with countries such as Australia, Germany, Austria and Malaysia, it can be observed that Indian telecommunication providers are doing quite well in the global market.

Investments

The telecommunications sector in India is rapidly growing and due to its potential, there has been a number of investments in the recent past. Some of the notable few are as follows:

  • Aircel, in a move to expand its retail footprint in India, plans to set up 200 more XPRESS stores in the country, thereby taking the total number of these franchisee-owned, franchisee-operated model XPRESS stores to 500 by the middle of 2015.
  • Reliance Jio Infocomm has signed deals with Ascend Telecom Infrastructure and Tower Vision to share their towers. Tower Vision has a portfolio of 8,400 towers while Ascend Telecom has 4,250. These deals will help the telecom unit of Reliance Industries to roll out its much awaited high speed data and voice services sooner and at a lower cost across India.
  • Vodafone India has extended its Project Samridhi to Karnal in rural Haryana, in a bid to boost sales and provide employment opportunity to women in the region. Under the project, Vodafone has appointed 100 women, to sell e-top-ups and prepaid recharges.
  • Reliance Communications (RCom) has entered into inter-circle roaming partnerships with Aircel and Tata Teleservices Ltd to offer 3G services on a pan-India basis. This agreement will enable RCom’s GSM customers to access 3G services while on roaming even outside its network.
  • Tata Communications has entered into strategic partnerships with NEXTDC in Australia, Interxion in Germany and Austria, and Pacific Link Telecom in Malaysia. These partnerships will help the company to scale up data centre footprints in newer geographies.
  • Vodafone Business Services (VBS) launched managed video conferencing service for enterprises to offer an experience of world class virtual face-to-face-like interaction with various participants anytime, anywhere. The service offers a seamless conferencing experience and is independent of device and network boundaries.

Government Initiatives

The Government of India has taken several initiatives to boost the telecommunications sector in India. Some of the recent notable initiatives are as follows:

  • The Government of India has planned to establish a nearly 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.
  • 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$ 843.5 million).
  • The Department of Telecom (DoT) has planned to set up an application development centre with an outlay of Rs 1,000 crore (US$ 168.54 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 Department of Space (DoS) plans to waive satellite bandwidth charges payable by Bharat Sanchar Nigam Ltd (BSNL) to sustain the state-run telecommunication operations in the Andaman and Nicobar, Lakshadweep archipelagos and strategic border regions across the northeastern states.
  • A top-level team from DoT has been sent to participate in a global convention in Israel to showcase India as a world-class networks gear manufacturing hub. The team has been sent to showcase India's telecom gear manufacturing abilities and policies, in a bid to boost bilateral trade.

Road Ahead

To propel the Indian economy forward, the government is using the telecom industry as an effective channel to reach and serve its citizens.  The NTP-2012 has targeted 100 per cent tele-density and 600 million broadband connections by 2020. It has visualised doubling the current telecom capacity and increasing its reach to 95 per cent of India while providing broadband level of internet capability.

DoT is promoting a vision of ‘green telecom’ by which it plans to convert 50 per cent of urban and 30 per cent of rural towers to renewable energy. 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. It has also been speculated that this sector will generate about 4.1 million additional jobs by 2020.

Exchange Rate Used: INR 1 = US$ 0.01687 as on June 5, 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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