Telecom

Size

• 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
  • 142 million subscribers - 49 million fixed lines and 93 million wireless - March 2006
     
• 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.

Structure

• The Indian telecom market has both public and private sector companies participating:
  • Public sector has over 43% market share, down from over 90% in 2000
  • Private companies have added subscribers at a CAGR of 172% since 2000
     
• Mobile operators have deployed both CDMA (24 million users) and GSM (69 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

Source: TRAI, DoT, TSMG Analysis

Opportunity

Over 150% growth in telecom services is projected in 5 years

India will require large investments in network infrastructure

Outlook

• India expected to be among the fastest growing telecom markets in the world
  • Projected growth of 40% p.a. to reach 250 million subscribers by December 2007
     
• Over 4 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
  • Increasing affordability - low tariffs, easy payment plans and handset financing
  • 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
     
• Vodafone, 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)

Content Source: www.infrastructure.gov.in