India is the fifth largest telecom services market in the world; $17.8
billion revenues in FY 2005
Industry grew by about 36% in FY 2005 over FY 2004
119 million subscribers - 48 million fixed lines and 71 million
wireless - November 2005
Telecom market has grown at about 25% p.a. over the last 5 years
Wireless segment subscriber base grew at 85% p.a.; fixed line segment
at about 10% p.a.
Over 150% growth in telecom services is projected in 5 years
India will require large investments in network infrastructure
STRUCTURE
The Indian telecom market has both public and private sector companies
participating:
Public sector has over 60% market share, down from over 90% in 2000
Private companies have added subscribers at a CAGR of 192% since 2000
Mobile operators have deployed both CDMA (16 million users) and GSM
(55 million users) wireless networks
Value added service features constitute 10% of revenue today (2% in 2001)
POLICY
74% to 100% FDI permitted for various telecom services
(for details, please refer to table on page 104)
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
Planned opening up of National Long Distance (NLD), International Long
Distance (ILD) and other value added services.
Major players and presence in value chain
Company
Services
Investor
Cellular
Basic
NLD1
ILD2
1. Bharti Televentures
Vodafone, SingaporeTelecom, Warburg
Pincus
2. Reliance Infocomm
Reliance Group
3. Tata Indicom
Tata Group
4. BSNL
Government of India
5. Hutchison Essar
Hutchison Whampoa,Essar Group
6. IDEA Cellular
AT&T, Tata Group,Birla Group
Note: 1 National Long Distance
2 International
Long Distance
Source:
TRAI, DoT, TSMG Analysis
OPPORTUNITY
OUTLOOK
India expected to be among the fastest growing telecom markets in the world
Projected growth of 30-40% p.a. to reach 250 million subscribers by 2009-2010
Over 3 million new users are added every month - mostly in wireless
POTENTIAL
Favourable demographics and socio economic factors leading to high growth:
Growth of disposable income combined with changes in lifestyle
Increased coverage and availability of mobile services
Investment opportunity of $22 billion across many areas:
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
Nokia, Elcoteq, Alcatel, LG, Ericsson are all investing in India
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)
