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September, 2011

The Indian telecommunication network is the third largest in the world and the second largest among the emerging economies of Asia. The Indian telecommunication sector has continued to record noteworthy success throughout the year and has emerged as one of the key sectors that have been accountable for resurgent growth of the Indian economy. The rapid growth of the sector has been coupled with proactive polices and decisions taken by the Indian Government and dynamic involvement of the private sector. The liberal policies in the telecommunication sector have facilitated easy access to telecom companies and a fair regulatory framework offers services to the Indian consumers at affordable prices.

Market size

Over 20.2 million new subscribers were added in the month of February, thereby raising the total mobile phone subscription in the country to 791.38 million.

Moreover, the statistics for February state that the rate of growth (2.82 per cent) in the number of rural mobile phone subscribers surpassed than those of the urban areas (2.52 per cent) across the country. The broadband subscription in February, 2011 was 11.47 million as compared to 11.21 million in January, 2011.

The Indian telecom sector is largely dominated by private operators that control a share of 87.9 per cent share of the entire sector. Among the top players in the telecom sector, Bharti Airtel owns the largest share at 20.09 per cent, followed by Reliance (16.7 per cent), Vodafone (16.54 per cent), state-owned BSNL (11.41 per cent), Tata (11.08 per cent) and Idea (10.97 per cent). Vodafone has recorded the fastest growth rate in the month of February, at 17.61 per cent in its subscription base. Reliance (16.36 per cent), Bharti (15.85 per cent), Idea (12.43 per cent), Aircel (8.26 per cent) and Tata (7.93 per cent) have also recorded decent growth rate figures for the month of February, 2011, according to Telecom Regulatory Authority of India (TRAI) database.

As per statistics, the total number of mobile phone base in the country will rise to 900 million by the end of 2012 and it is further expected that this figure will steadily rise to 1.25 billion by 2015. It has also been projected that the users for the broadband base are going to reach 100 million mark by 2014, particularly after the telecom companies roll out their 3G services as per the research study conducted by Crisil.

Indian Telecommunication - Major Investments

Telecom managed services globally have been growing at a rate of 14 per cent on an yearly basis, with revenues aggregating up to US$ 190 billion, while in India, the growth rate of the telecom managed services is 19 per cent per year with revenues pegged at US$ 8-9 billion as stated by Arpita Pal Agrawal, Executive Director – Telecom KPMG at the 3rd International conference organised by Bharat Exhibitions on Managed Services.

Companies outside the telecom sector have shown interest in the sector investment and the Pharma company, Piramal Healthcare has decided to buy a 5.5 per cent stake in Vodafone's India unit for Rs 2,856 crore (US$ 640 million). With this deal, Vodafone has allotted over 26 per cent of the company shares to Indian investors in accordance to the foreign direct investment (FDI) guidelines for the telecom sector.

Nokia, a US$ 12.7 billion telecom company intends to set up the company’s largest manufacturing hub in Asia, overtaking the China facility centre. “As of now, the China centre has a larger infrastructure than the Chennai centre, but going by the plans here, Chennai could possibly be the biggest in a year or so”, said Herbert Merz, Global Head of operations and Executive Board Member, Nokia Siemens Networks, a US$ 12.7 billion telecom infrastructure manufacturer.