Telecom Sector

Facts about Telecom sector

• India’s telecom service market is fifth largest in the world. It fetched $17.8 billion revenues in the financial year 2005




• The telecom industry grew by 36% in FY 2005 over FY 2004.




• According to available data, there are 119 million subscribers in India. Out of this 119 million, 48 million have fixed lines and 71 million wireless .




• In the last five years, the telecom market has grown at about 25% p.a. Subscriber base in wireless segment grew at 85% p.a whereas fixed line segment grew at about 10% p.a.
  

Organization and Structure
In India public and private sector companies are participating in this sector . The market share of private sector is increasing every year. The share of public sector in the market is 60% which is down from over 90% in 2000 whereas; Private companies have added subscribers at a CAGR of 192% since 2000. Mobile operators in India have deployed both CDMA (16 million users) and GSM (55 million users) wireless networks. Of all the revenues, value added service constitute 10% as compared to 2% in 2001.

Major players and presence in value chain

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Government Policy
Government in order to boost investment in the telecom sector has carried out various reforms. Government policies regarding telecom sector are as follows:

• Government of India has allowed 74% to 100% FDI for various telecom services




• Foreign investors require receiving approval from FIPB route if investment exceeds 49% in all telecom services




• For manufacturing telecom equipment 100% FDI is permitted

Government has announced telecom policy whose aim is to encourage private and foreign investment. Some of the important highlights of the policy are:

• Government has appointed an independent regulatory authority for teleecom sector – the Telecom Regulatory Authority of India (TRAI)




• Government has also carved revenue-share model for licences issued for telecom services in India. For providing telecom services on a pan-India basis, unified access licences are available




• Government has also planned to open National Long Distance (NLD), International Long Distance (ILD) and other value added services.

Opportunities and Potential
Telecom sector presents huge opportunities both to the domestic and the foreign investors. In the next five years, it is estimated that telecom sector would grow by 150% . The investors can capitalize on this as India needs large investments in network infrastructure.

It is estimated that India would be fastest telecom markets in the world. By 2009-2010, there will be 250 million subscribers in India. Nearly 3 million new users are added every month – mostly in wireless.
There are many other reasons that make India as a beneficial destination for foreign investors and domestic investors.

• High growth due to favorable demographics and socio economic factor




• Change of life style




• Affordability is increasing, tariffs are low and there are easy payment plans and handset financing




• Coverage and availability of mobile services are increasing




• There is investment opportunities of $22 billion.
  

Areas of Investment
Investment opportunities are in various areas such as:

• Telecom Devices and Software for Internet, Broadband and Direct To Home Services. Set Top boxes, Gateway exchange, Modem, Mobile handsets and consumer premise equipments, Gaming devices, EPABX, Telecom Software




• Telecom Services for voice and data via a range of technologies




• Applications and Content development ranging from gaming to education