Telecommunication
India is the world's second-largest telecommunications market, with 933 million subscribers.

Indian Telecom Industry

Latest update: March, 2015

Teledensity in India

In March 2014, total telephone subscription stood at 933 million, while teledensity was at 75.2.

Teledensity in India

Composition of telephone subscribers in India

The wireless segment (96.9 per cent of total telephone subscriptions) dominates the market, while the wireline segment accounts for the rest.

Composition of telephone subscribers in India

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

Wireless market share in terms of total subscribers in India

Bharti Airtel is the market leader, with a 22.7 per cent share of total subscription, followed by Vodafone (18.4 per cent share).

Wireless market share in terms of total subscribers in India

Updated: March, 2015

SECTORAL REPORT | October, 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.

The Indian mobile economy is growing rapidly and will contribute approximately US$ 400 billion to India’s gross domestic product (GDP), according to report prepared by GSMA in collaboration with BCG.

The rapid strides in the telecom sector have been facilitated by liberal policies of the Government of India that provide 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 has made the sector one of the fastest growing and a top five employment opportunity generator in the country.

Market Size

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 in 2014 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.

According to a study by GSMA, it has been expected that smartphones will account for two out of every three mobile connections globally by 2020 and India is all set to become the fourth largest smartphone market.

India is projected to have 213 million mobile internet users by June 2015, a 23 per cent rise over a six month period, according to Mobile Internet in India 2014 report.

The broadband services user-base in India is expected to grow to 250 million connections by 2017, according to the UK-based GSM Association (GSMA).

India saw the fastest growth in new mobile-phone connections with 18 million net additions in the third quarter of 2014, followed by China with 12 million new additions, according to a report by Swedish mobile network equipment maker Ericsson.

The Indian telecom sector is expected to create four million direct and indirect jobs over the next 5 years on the back of the government’s efforts to increase penetration in rural areas along with the growth in the smartphone numbers and internet usage, according to estimates by Randstad India. “The telecom sector has been growing aggressive at an average for 35 per cent a year for close to two decades,” said Mr K Uppaluri, CEO, Randstad India.

Investment

With daily increasing subscriber base, there have been a lot of investments and developments in the sector. The industry has attracted FDI worth US$ 16,994.68 million during the period April 2000 to January 2015, according to the data released by Department of Industrial Policy and Promotion (DIPP).

Some of the major developments in the recent past are:

  • Sterlite Technologies Ltd has announced an annual seed fund of US$ 100,000 to strengthen India’s investments in broadband technology research, by investing in Indian start-ups, working on innovative broadband deployment technologies.
  • Maxx Mobilink plans to start production of mobile handsets at its Haridwar plant, beginning with assembling devices from April 2015. Maxx will invest over Rs 6 crore (US$ 965,615.81) initially in setting up the R&D laboratory.
  • Huawei Technologies has won two contracts worth a combined US$ 120 million from Bharti Airtel and Idea Cellular to upgrade their wireline networks.
  • Tata Communications has invested in acquiring capacity in Seabras-1, a submarine cable being developed between the US and Brazil, seeking to increase services in the Latin American region.
  • Bharti Airtel and IHS Holding have signed an agreement under which latter will acquire about 1,100 telecom towers across Zambia and Rwanda.
  • Ericsson has won a seven-year deal worth more than US$ 1 billion to manage the network of Reliance Communications across 11 service areas, making the Swedish telecom gear maker the only service provider to manage the pan-India network of a mobile phone operator.

Government Initiatives

The government has fast-tracked reforms in the telecom sector and plans to clear the proposal allowing spectrum trading and sharing ahead of the year-end deadline as it wants to lift the business sentiment for the forthcoming airwave auction. Some of the other major initiatives taken by the government are as follows:

  • The Government of Uttar Pradesh (UP) has secured investment deals valued at Rs 5,000 crore (US$ 804.64 million) for setting up mobile manufacturing units in the state.
  • The Government of India plans to roll out free high-speed wi-fi in 2,500 cities and towns across the country over the next three years and the programme, involving an investment of up to Rs 7,000 crore (US$ 1.12 billion), will be implemented by state-owned Bharat Sanchar Nigam Ltd (BSNL).
  • Citizens of India are expected to get a minimum of 2 megabits per second (MBPS) Wi-Fi speed at every government owned service point such as railways stations, airports, bus stops, hospitals and all government departments that deal with the public on a daily basis.
  • The Union Cabinet of India has approved the largest ever telecom spectrum auction that is targeted to fetch at least Rs 64,840 crore (US$ 10.43 billion). The government will sell 380.75 megahertz (MHz) of second generation (2G) spectrum in three bands—the premium 900 MHz, 1800 MHz and 800 MHz.
  • To speed up the national optical fibre network (NOFN) project, the Department of Telecommunications (DoT) has advised officials to use public buildings such as post offices, railway stations and schools.
  • The Government of Kerala has decided to allow mobile telecom service providers to set up towers on government land and buildings. This is the first time that a State Government has opened its own land, buildings and offices to mobile companies.

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.

With the government’s favourable regulation policies and 4G services hitting the market, rapid growth is expected in the Indian telecommunication sector in the next few years. Also, with developments in this sector, services such as security and surveillance, remote monitoring of ATM machines, home automation, traffic management, retail, logistics and grid energy could eventually facilitate optimisation of resources.

Exchange Rate Used: INR 1 = US$ 0.016 as on March 24, 2015

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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