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Indian Telecommunications Industry Analysis

October, 2014

India is the world's second-largest telecommunications market, with 933 million subscribers by the end of FY14. It stood third-highest in terms of total internet users in 2013, with 164.81 million internet subscriptions.

The Indian telecom sector's revenue grew by 13.4 per cent to touch US$ 64.1 billion in FY12. Wireless and wireline revenue increased at a compound annual growth rate (CAGR) of 10.4 per cent to reach US$ 39.1 billion over FY06-13. Revenues from the telecom equipment segment stood at US$ 23.5 billion in FY12 compared to US$ 23.4 billion in FY11.

Increasing income has been a key determinant of demand growth in the telecommunication sector in India. The IMF forecasts income to expand at a CAGR of 5.7 per cent to US$ 1,869.3 during 2013-18.

The Government of India plans to cut license fees by up to 33 per cent for operators that cover services for more than 95 per cent of the residential areas in a calling circle. The Department of Information Technology intends to set up over one million internet-enabled common service centres across India as per the National e-Governance Plan. The government has also revised the M&A guidelines for the telecom sector; it raised the limit on the market share of a merged entity in a circle to 50 per cent from 35 per cent earlier.

The mobile application (app) market is expected to expand at a CAGR of 70.4 per cent to US$ 100 billion during 2012-15. The segment's growth is expected to be driven by increasing mobile connections and availability of low-range smartphones.

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