OVERVIEW | OPPORTUNITIES

Telecommunications

 

OVERVIEW

SIZE

• India is the fifth largest Telecom services market in the world; US$23 billion revenues in FY 2007
  • Industry grew by about 22% in FY 2007 over FY 2006
  • 290 million subscribers - 39 million fixed lines and 251 million wireless - (February 2008)
• The telecom subscriber base has grown at about 40% p.a. over the last 4 years
  • Wireless segment subscriber base grew at 62% p.a.

TOP

STRUCTURE

• The Indian telecom market has both public and private sector companies participating
  • Public sector has over 27% subscriber market share, down from over 90% in 2000
  • Private companies have added subscribers at a CAGR of 80% since 2000
• Mobile operators have deployed both CDMA (62 million users) and GSM (189 million users) wireless networks (February 2008)
• Value added service features constitute about 10% of revenue (2% in 2001)

TOP

POLICY

• 74% to 100% FDI permitted for various telecom services
  • FIPB approval required for foreign investment exceeding 49% in all telecom services
  • 100% FDI permitted in telecom equipment manufacturing
• India has a telecom policy that aims to encourage private and foreign investment.
  Highlights are
  • An independent regulator – the Telecom Regulatory Authority of India (TRAI)
  • Revenue-share model for licences issued by the Government for telecom services in India. Unified access licences are available for providing telecom services on a pan-India basis in both, GSM & CDMA technologies
  • Government has simplified NLD and ILD license norms and lowered entry barriers
    • New entrants given 3 years to set up infrastructure
    • Entry fee and networth requirements have been reduced
  • Policy on Mobile Number Portability (MNP) & 3G to be announced shortly
  • Policy on Active Infrastructure Sharing to be announced shortly
  • Universal Access Service License (UASL) recently issued to 5 new players

TOP

Major players and presence in value chain

Company	Services				Promoter
	Cellular	Basic	NLD1	ILD2
Bharti Airtel					Bharti Group
Reliance Infocomm					Reliance ADA Group
Tata Teleservices					Tata Group
BSNL					Government of India
Vodafone Essar			*		Essar Group
IDEA Cellular			*		Aditya Birla Group

* Launch planned Note: 1 National Long Distance           2 International Long Distance

Source: TRAI, DoT, TSMG Analysis

TOP

OPPORTUNITY

Over 150% growth in telecom subscribers is projected in 5 years	India will require large investments in network infrastructure

TOP

OUTLOOK

• India is expected to be among the fastest growing telecom markets in the world
  • Projected growth of 27% p.a. to reach 500 million subscribers by March 2010
• Over 8 million new users are added every month – mostly in wireless

TOP

POTENTIAL

• Favourable demographics and socio-economic factors leading to high growth:
  • Growth of disposable income combined with changes in lifestyle
  • Increasing affordability - low tariffs, easy payment plans and low-cost handset
  • Increased coverage and availability of mobile services
• Investment opportunity of over US$76 billion across many areas:
  • Network infrastructure to increase service coverage
  • Roll-out of additional network for 2G, 3G, WIMAX etc.
  • Applications/software for voice, data and broadcasting services
  • Devices like the mobile handset, set top box, modem, gaming console, consumer premise equipments etc.
  • Nokia, Siemens, Alcatel, Lucent, Elcoteq, LG, Ericsson are all investing in India

TOP

For additional information: Department of Telecommunications, Ministry of Information Technology & Communications (http://www.dotindia.com), Telecom Regulatory Authority of India (http://www.trai.gov.in)