blue diamond group 10

8/6/2019 Blue Diamond Group 10

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Blue Diamond Project Indian Telecom Industry

Group 10

Tribhuvan Kumar 10EX-056

Udai Singh 10EX-057

Vishveshwar Pise 10EX-058

Vivek Bhola 10EX-059

Writankar Kundu 10EX-060


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Indian Telecommunication Industry A Snapshot

India has one of the biggest telecom markets in the world. It has more GSM subscribers than fixed-line subscribers.

Total telecom subscribers 752 million (Feb 2011)

Teledensity 52.27 per cent

Annual growth rate of telecom subscribers (June 2008June 2009) 42.68 per cent

Average Revenue per User (ARPU) for GSM (as on 30 June 2009) US$ 3.801

Telecom equipment market (200809) US$ 24.99 billion

Handset market (2008-09) US$ 5.82 billion

Expected mobile subscriber base (2013) About 1152 million.

The Indian telecom industry generated revenues of approximately US$ 32 billion in 200708 with agrowth rate of 60 per cent over 200607.

It witnessed a compound annual growth rate (CAGR) of approximately 29 per cent from 200203to 200708.

The CAGR of approximately 20 per cent between 200708 and 200910 and expected to stabilizeat 16 percent in future.


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Telecom Regulatory Authority of India (TRAI)

Mission To ensure that the interests of consumers are protected and at the same time to nurture

conditions for growth of telecommunications, broadcasting and cable services in a manner andat a pace which willEnable India to play a leading role in the emerging global information society.

Role of TRAI

One of the main objectives of TRAI is to provide a fair and transparent policy environment whichpromotes a level playing field and facilitates fair competition. In pursuance of above objectiveTRAI has issued from time to time a large number of regulations, orders and directives to deal withissues coming before it and provided the required direction to the evolution of IndianTelecom market from a Government owned monopoly to a multi operator multi service opencompetitive market. The directions, orders and regulations issued cover a wide range of subjectsincluding tariff, interconnection and quality of service as well as governance of the Authority.The functions of TRAI can be divided as: Recommendatory function and Mandatory Function.

Recommendatory Functions Need and timing for introduction of new service provider Terms and conditions of license to a service provider

Revocation of license for non-compliance of terms and conditions of license

Measures to facilitate competition and promote efficiency in the operation to facilitategrowth in industry

Technological improvement in services by service providers

Inspection of type of equipment used by service provider

Measures for Technological development

Efficient Management of available spectrum


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Mandatory Functions Ensure compliance of terms and conditions of license

Fix the terms and conditions of their inter connectivity between service providers

Ensure Technical compatibility and effective inter-connection between differentservice providers

Regulate arrangements for sharing of revenues amongst service providers

Lay-down the standards of Quos to be provided by service provider, ensure this byperiodical survey

Lay-down and ensure time period for providing local and long-distancecircuits of telecommunication between different service providers

Maintain inter-connect agreement register

Ensure compliance of USO(universal service obligation)

Other functions Levy fees and other charges as determined by regulations

Perform administrative functions as entrusted to it by Central government or as per TRAI act

Notify in Official Gazette the service rates and message rates within and outside India

Snapshot of TRAIfunctions


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Mobile Services

Mobile services have led the spectacular growth of the Indian telecom industry. Currently, 12

players are active in this segment. The total number of wireless subscribers escalated to 752 million

by the end of Feb 2011, with the monthly addition of more than 6 million wireless subscribers.

GSM continues to dominate this segment by a large margin as compared to CDMA, which has a

share of only 23 per cent.

India is one of the few countries in the world to have more GSM subscribers than fixed line

subscribers.

All the operators predominantly provide voice services, value added and data services such as SMS,

mobile internet service, email, chatting, conferencing, GPRS service, etc.

Services such as video conferencing and Closed User Group (CUG) facility are also gainingmomentum.

The commoditization of voice services has been a major magnet for service providers, compelling

them to intensify their focus on data services. Revenues from value added services are growing at

30-40 per cent annually. These trends have paved the way for 3G services in India. Indian players

have constantly reduced tariffs, which in turn has led to a constant reduction in the Average Revenue

per User (ARPU). However, though the ARPU is declining gradually, it remains well supported by

the increase in subscriber base. The ARPU for GSM service in India is much higher than that for

CDMA service.

Notwithstanding a low ARPU, mobile usage is on the increase. India currently stands at number two

in the world in terms of the Minutes of Usage (Moue). The declining ARPU implies that India Inc. is

tapping the huge market at the bottom of the pyramid by reducing tariffs, thereby enhancing

affordability.


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Hardware:

7. With the objective of meeting the telecom needs of the country the sector of manufacture of

telecom equipment has been progressively re-licensed. Substantial capacity has already been

created for the manufacture of the necessary hardware within the country. The capacity for

manufacture of switching equipment, for example, exceeded 1.7 million lines/year in 1993and is projected to exceed 3 million line/year by 1997. The capacity for manufacture of

telephone instruments at 8.4 million units per year is far in excess of the existing or the

projected demand. Manufacturing capacities for wireless terminal equipment, Multi Access

Radio Relay (MARR) for rural communication, optical fibre cables, underground cables etc.

have also been established to take care of the requirements of the VIII Plan. With the

revision of the targets demand would firm up and there would be an incentive to expand the

capacities to meet the extra requirement.

Value Added Services:

8. In order to achieve standards comparable to the international facilities, the sub-sector of

value-added services was opened up to private investment in July 1992 for the following

services :

a. Electronic Mail

b. Voice Mail

c. Data Servicesd. Audio Text Services

e. Video Text Services

f. Video Conferencing

g. Radio Paging

h. Cellular Mobile Telephone

9. In respect of the first six of these services companies registered in India are permitted to

operate under license on non-exclusive basis. This policy would be continued. In view of the

constraints on the number of companies that can be allowed to operate in the area of Radio

Paging and Cellular Mobile Telephone Service, however, a policy of selection is being

followed in grant of licenses through a system of tendering. This policy will also be

continued and the following criteria will be applied for selection :

a. Track record of the company;


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b. Compatibility of the technology;

c. Usefulness of the technology being offered for future development;

d. Protection of national security interests;

e. Ability to give the best quality of service to the consumer at the most competitive

cost; and

f. Attractiveness of the commercial terms to the Department of Telecommunications.

Basic Services:

10. With a view to supplement the effort of the Department of Telecommunications in providing

telecommunication services to the people, companies registered in India will be allowed to

participate in the expansion of the telecommunication network in the area of basic telephone

services also. These companies will be required to maintain a balance in their coverage

between urban and rural areas. Their conditions of operation will include agreed tariff andrevenue sharing arrangements. Other terms applicable to such companies will be similar to

those indicated above for value-added services.

Pilot Projects:

11. Pilot projects will be encouraged directly by the Government in order to access new

technologies, new systems in both basic as well as value-added services.

Technology and Strategic Aspects:

12. Telecommunication is a vital infrastructure. It is also technology intensive. It is, therefore,

necessary that the administration of the policy in the telecom sector is such that the inflow of

technology is made easy and India does not lag behind in getting the full advantage of the

emerging new technologies. An equally important aspect is the strategic aspect of telecom,

which affects the national and public interests. It is, therefore, necessary to encourage

indigenous technology, set up a suitable funding mechanism for indigenous R&D so that the

Indian Technology can meet the national demand and also compete globally.


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Implementation:

13. In order to implement the above policy, suitable arrangements will have to be made (a)

protect and promote the interests of the consumers and (b) ensure fair competition.

The government plans to formulate a comprehensive National Telecom Policy 2011

including the recognition of Telecom as infrastructure and as an essential service, encouraging

Green Telecom, steps to accelerate migration from IPv4 to IPv6 at the earliest, release of IPv6

standards by Telecom Engineering Centre for implementation in the country, etc., as per a press

release by the Ministry of Communications & Information Technology.

Further, the government plans to take concrete steps towards finalization of National Broadband

Plan including strategy for implementation and initiation of steps for roll out of optical fiber.

The government has taken many proactive initiatives to facilitate the rapid growth of the Indian

telecom industry.

In the area of telecom equipment manufacturing and provision of IT-enabled services, 100

per cent FDI is permitted No cap on the number of access providers in any service area. In 2008, 122 new Unified

Access Service (UAS) licenses were granted to 17 companies in 22 services areas of the

country Revised subscriber based criteria for allocation of Global System of Mobile Communication

(GSM) and Code Division Multiple Access (CDMA) spectra were issued in January 2008 To provide infrastructure support for mobile services a scheme has been launched to provide

support for setting up and managing 7,436 infrastructure sites spread over 500 districts in 27

states. As on December 31, 2009, about 6,956 towers had been set up under the scheme

According to the Consolidated Foreign Direct Investment (FDI) Policy document, the FDI limit in

telecom services is 74 per cent subject to the following conditions:

This is applicable in case of Basic, Cellular, Unified Access Services, National/ International

Long Distance, V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile

Personal Communications Services (GMPCS) and other value added Services


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Both direct and indirect foreign investment in the licensee company shall be counted for the

purpose of FDI ceiling. Foreign Investment shall include investment by Foreign Institutional

Investors (FIIs), Non-resident Indians (NRIs), Foreign Currency Convertible Bonds

(FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) andconvertible preference shares held by foreign entity. In any case, the 'Indian' shareholding

will not be less than 26 per cent FDI up to 49 per cent is on the automatic route and beyond that on the government route.

FDI in the licensee company/Indian promoters/investment companies including their holding

companies shall require approval of the Foreign Investment Promotion Board (FIPB) if it has

a bearing on the overall ceiling of 74 per cent. While approving the investment proposals,

FIPB shall take note that investment is not coming from countries of concern and/or

unfriendly entities The investment approval by FIPB shall envisage the conditionality that the Company would

adhere to license Agreement FDI shall be subject to laws of India and not the laws of the foreign country/countries


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Porters Diamond Analysis

An analysis of the Indian telecom industry under the Porters Diamond Model reveals that India offers a

competitive advantage for firms operating in the country.


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Major Mobile Services Providers in IndiaBharti Airtel

Bharti Airtel, a part of Bharti Enterprise, is Indias first and largest private service provider with a

nation-wide

operational presence. While it was founded in 1995 as Bharti Televenture Ltd. (BTVL), in April

2006, the company changed its name to Bharti Airtel.

Today, it is one of the fastest growing telecom companies in the world with more than 40 million

subscribers. The company has structured its business in three segments mobile services, broadband

and telephone services, and enterprise services.

Business Strategies

Business Alliances In order to improve cost and quality, the company outsources non-core activities

through business alliances.

These alliances provide access to new technologies and allow the company to adopt the bestpractices of enhancing customer experience. In fact, Airtel has established alliances with Sing Tel,

Ericsson, Nokia, Siemens, Nortel, Corning, IBM, Hinduja TMT, TeleTech and MphasiS.

Unified Brand Strategy

Bharti has decided to use Airtel as the single brand name across all its categories such as cellular,

fixed and internet services. The company believes that an integrated approach such as One Airtel

will help it in better addressing customer needs through bundled service offerings. This initiative is

slated to increase Airtels ROI.

Bharat Sanchar Nigam Ltd .

BSNL, a state-owned service provider in India, is the seventh-largest telecommunication company

in the world. It offers a wide range of services in India, such as wireline, CDMA mobile, GSM

mobile, internet, broadband, carrier, MPLS-VPN, VSAT, VoIP, IN, etc.

BSNL is the largest operator in basic services in India with its cellular services helping it to establish

its presence as the largest operator in rural areas.

Business Strategies

Rural Penetration

BSNL is playing a leadership role in developing the telecom infrastructure in rural areas. It has been

successful in increasing its cellular subscriber base by pioneering its services in the rural terrain. Its

services cover the whole of India, except Delhi and Mumbai, which are covered by MTNL, the other

state-owned player.


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Low Cost Strategy

BSNL is a low-cost service provider of many services. This strategy has helped BSNL in penetrating

the market.

Reliance Communications

Reliance Communications, previously known as Reliance Infocom, brought about a digital

revolution in the Indian telecom industry by providing Indias vast population with affordable means

of information and communication.

Reliance Infocom, with the aim of making mobile calls cheaper than postcards, built a 60,000-

kilometre-long fiber optic backbone, crisscrossing the entire country.

Reliance currently offers its services in 340 towns with its eight circle footprints; it also initiated

mobile data services through its R-world mobile portal. This portal leverages the data capability of

the CDMA 1X network.

Regulatory Framework


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Key Trends in Indian Telecom sectorMergers and Acquisitions


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FDI in Indian Telecom Sector

Porter's 5 Forces Analysis

1. Threat of New Entrants. It comes as no surprise that in the capital-intensive telecom

industry the biggest barrier to entry is access to finance. To cover high fixed costs, serious

contenders typically require a lot of cash. When capital markets are generous, the threat of

competitive entrants escalates. When financing opportunities are less readily available, the

pace of entry slows. Meanwhile, ownership of a telecom license can represent a huge barrier

to entry. In addition, it is important to remember that solid operating skills and management

experience is fairly scarce, making entry even more difficult.

2. Power of Suppliers. At first glance, it might look like telecom equipment suppliers have

considerable bargaining power over telecom operators. Indeed, without high-tech broadband

switching equipment, fiber-optic cables, mobile handsets and billing software, telecom

operators would not be able to do the job of transmitting voice and data from place to place.

But there are actually a number of large equipment makers around. There are enough


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vendors, arguably, to dilute bargaining power. The limited pool of talented managers and

engineers, especially those well versed in the latest technologies, places companies in a weak

position in terms of hiring and salaries.

3. Power of Buyers. With increased choice of telecom products and services, the bargaining

power of buyers is rising. Let's face it; telephone and data services do not vary much,regardless of which companies are selling them. For the most part, basic services are treated

as a commodity. This translates into customers seeking low prices from companies that offer

reliable service. At the same time, buyer power can vary somewhat between market

segments. While switching costs are relatively low for residential telecom customers, they

can get higher for larger business customers, especially those that rely more on customized

products and services.

4. Availability of Substitutes. Products and services from non-traditional telecom industriespose serious substitution threats. Cable TV and satellite operators now compete for buyers.

The cable guys, with their own direct lines into homes, offer broadband internet services, and

satellite links can substitute for high-speed business networking needs. Railways and energy

utility companies are laying miles of high-capacity telecom network alongside their own

track and pipeline assets. Just as worrying for telecom operators is the internet: it is

becoming a viable vehicle for cut-rate voice calls. Delivered by ISPs - not telecom operators

- "internet telephony" could take a big bite out of telecom companies' core voice revenues.

5. Competitive Rivalry. Competition is "cut throat". The wave of industry deregulation

together with the receptive capital markets of the late 1990s paved the way for a rush of new

entrants. New technology is prompting a raft of substitute services. Nearly everybody

already pays for phone services, so all competitors now must lure customers with lower

prices and more exciting services. This tends to drive industry profitability down. In addition

to low profits, the telecom industry suffers from high exit barriers, mainly due to its

specialized equipment. Networks and billing systems cannot really be used for much else,

and their swift obsolescence makes liquidation pretty difficult.


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Stable Economic Outlook

A decade of reforms has opened the country to greater competition and spurred industries tobecome more efficient. India is currently the fourth-largest economy on PPP basis and is well

positioned on a continuously increasing growth curve. Indias emergence as a leading destination

for foreign investment is a result of positive indicators such as a stable 6 per cent annual growth,

rising foreign exchange reserves of over US$ 266.18 billion(July 24 th 2009) and Foreign Direct

Investment (FDI) of US$ 15 billion. Goldman Sachs had earlier predicted that India will become

the third-largest economy in the world. However, it has now revised its previous estimates and

claims that by 2050, India will even surpass the US and become the second-largest economy

after China. The countrys economic growth has become more attractive due to the rising share of

the services sector in the GDP.

Large Market Potential Around 30-40 million people in India join the middle class every year. The countrys uppermiddle class spends 6 percent of its earnings on telecom services. India is one of the largestconsumer markets in the world. Due to rapid economic growth and rise in disposable income,the spending power of consumers is increasing rapidly. It has been forecasted that 15 years down

the line, Indians will be approximately four times richer than they are today. As per this forecast,Indians will purchase five times more cars and consume three times more crude oil than they dotoday.


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According to the 2001 census, about 54 per cent of the countrys total population was below 25years of age. By 2013, another 200 million people will be joining the league, representing anexponential growth in the consuming class. India will become a large consumer of worldresources - be it natural or man- made, thereby offering numerous opportunities to marketersaround the globe. Approximately 33 per cent of Indias population will be residing in urban areasby 2026, as against 28 per cent in 2001.

Large Talent Pool The working age population is expected to rise by 83 per cent by 2026. India has over 380universities and about 1,500 research institutes, which churn out approximately 200,000engineers, 300,000 post graduates, 2,100,000 other graduates and around 9,000 PhDs. Thislarge base of skilled manpower offers unparalleled advantages to the companies operating inIndia. As a result, many multinational companies have either established operation hubs in India

to leverage this sizeable talent pool, or they have outsourced their work to a third party in India.The numerous BPOs and KPOs flourishing in India are a direct consequence of companieschoosing the latter option.

Low Labour Cost CII estimates that manufactured product outsourcing accounted for US$ 10 billion in 2007.The value will escalate to US$ 50 billion by 2015. India has one of the lowest labour costsamong the developing countries, which is the foremost factor for attracting multinational giants inevery sector. The Ministry of Commerce, Government of India, has estimated that off shoringoperations to India can provide a cost benefit of up to 40 to 60 per cent, as compared todeveloped countries. The country has also emerged as a major R&D hub with more than hundredFortune 500 companies based in India. An apt example is Nokia, which has set up itsmanufacturing operations in India considering the long term sustainable demand for mobiletelephony. The company believes that this initiative will help the company in reducingtime to market and respond better to customer requirements. It has pumped in US$ 150million into its Chennai facility.


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India an ideal destination for investments

Worlds largest democracy

Independent judiciary

Third-largest telecom network in the world, second-largest among the emerging economies afterChina

On an average, approximately 8 million users are added per month, making India the worldsfastest growing telecom market.

Liberal Foreign Investment Regime: FDI limit increased from 49 per cent to 74 per cent; the ruraltelecom equipment market also opens to large investments

Among countries offering the highest rates of return on investment

The large untapped potential in Indias rural markets revealed by 9.21 per cent teledensity in ruralmarkets as compared to the national level of 28 per cent in 2008.

The government is promoting telecom manufacturing by providing tax sops and establishingtelecom-specific Special Economic Zones

Fully repatriable dividend income and capital invested in telecom equipment manufacturing


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Opportunities for AVG group in India

The explosive growth of the telecom industry in India is being followed by the urge to move towards

better technology and the next level of service delivery. While the last 5 years have been transformational for

Indian telecom industry, the next few years look even more exciting. BWA will overcome the key hindrance

of ROW in India, while 3G has the potential to make the mobile phone, a ubiquitous device for accessing the

internet. The new opportunities opened through new services such as 3G mobile, VAS, Wi-MAX, M-

Commerce, Mobile banking and Broadband wireless services will put emphasis on deeper penetration into

urban and rural areas.

Shifting Focus on Rural Telephones

With introduction of mobile services in rural areas, the rural subscribers are also increasing. The measures

undertaken by USOF to increase rural connectivity are given in Box 2.

Rural Telephone connections have gone up from 12.3 million in March 2004 to 200.77 million in March,

2010 and further to 259.83 million in December, 2010.

Their share in the total telephones has constantly increased from 16.03% in 2004 to 33% as on 31 s

December 2010.


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Broadband coverage will get fillip with the setting up of 100,000 Common Service Centers (CSCs)

covering all the villages in the country. As on November 2010, 86521 CSCs have been covered. They will

provide internet access and benefit of e-governance to the common citizen.

India faces technological as well as commercial challenges in penetration of broadband.

The low PC penetration and affordability issue due to high cost are the main causes. In order to overcome

affordability issue, the Government of India has unveiled a prototype tablet computer that would sell for an

affordable INR 1500/-. The tablet would also come with a solar power option that could make it more feasible

for rural areas.

The wireless broadband is likely to be the preferred route that many operators adopt in delivering broadband

services to the masses of the country. Wireless technologies have capabilities to provide widespread

broadband access and could drive inclusive growth by way of mobile banking, tele-education, E-governance,

tele medicine etc.


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USOF for boosting rural Broadband

Scheme to provide 888832 wireline broadband connections to individual and Government institutions by

2014.

As on 30th November 2010, 232852 broadband connections and 670 kiosks provided.

Institutional users such as Gram Panchayats Higher Secondary School and Public Health Centers will be

provided Broadband.

Subsidy proposed for the wireless broadband active infrastructure such as BTS which would provide

broadband coverage to about 5 lakh villages.

Initiative taken to strengthen OFC network in rural areas to provide sufficient back-haul capacity to

integrate voice and data traffic.

Forecast of Indian Telecommunication Industry


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RecommendationLife cycle position

The Telecom Industry in India is in its growth stage . Telecom is one area in India where significant

improvements have happened. Now the private operators also are providing services which are giving rise tomore choice.

The Telecom sector in India is experiencing a stage of Mature Growth . The growth in sales is still above

normal. Due to rapid growth of sales and profit margins, new players are getting attracted to the Industry

giving rise to more and more competitors. This is leading to an increase in the level of supply and lower

prices. Profit Margins will start declining over time.

Business cycleTelecom is one area in India where significant improvements have happened. Even in the current scenario,

where most of the industries are suffering due to global economic recession, telecom is one sector which is

still going strong.

The total subscriber base in the country now stands at 752 million, nearly 50% more than that a year ago.


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Demand Analysis

- Real and Nominal Growth & Supply/Demand Analysis Indian telecom continues to register a significant growth in the current fiscal year. This has been due to the

impact of economic reforms and pro-active policies of the government. Today, Indian telecom network with

about 364 million connections in October 2008 is the third largest in the world .Indian telecom has achieved

another milestone as it has become the s econd largest wireless network in the world by surpassing USA.

With the current pace, where about nine million telephones are being added every mont h, the target of 500

million connections by 2010 is well within our reach.

The total number of telephones has increased from 76.53 million on March 31, 2004 to 363.95 million on

October 31 2008. While 94.63 million telephones were added during the twelve months of 2007-08, about

more than nine million subscribers are being added every month during the current fiscal year. Tele- density

has also increased from 12.7 per cent in March 2006 to 31.50 per cent in October 2008. Rural teledensity

increased to 13.4 per cent in October 2008 with 109.05 million rural telephone connections. Urban teledensity

on the other hand has been 74.61 per cent in October 2008.

The growth of wireless services has been phenomenal, with wireless subscribers growing at a compound

annual growth rate ( CAGR) of 87.7 per cent per annum since 2003 . The share of private sector in total

telephone connections is now 77.44 per cent as per the latest statistics available for October 2008 as against a

meager 5% in 1999.

Rural telephones have gone up from 12.3 million in March 2004 to 109.05 million in October 2008 with ateledensity of 13.04%. The target of 100 million rural telephones by 2010 has been achieved well in advance.

It is also envisaged that internet and broad-band subscribers will increase to 40 million and 20 million,

respectively, by 2010. As per the latest available statistics for September 2008, about 5.7% villages have

broadband coverage and the number of rural broadband connections is 1.55 lakh.

Foreign direct investment (FDI) is one of the important sources to meet the huge funds that are required for

rapid network expansion. The FDI policy provides an investor-friendly environment for the growth of the

telecom sector. The policy of the Government of India is to strive to maximize the developmental impact and

spin-offs of FDI. At present, 74% to 100% FDI is permitted for various telecom services. The total FDI

equity inflows in telecom sector have been 1261 million USD during 2007-08.

The government is now looking forward to achieve the target of 600 million telephone subscribers by the end

of Eleventh Plan and to achieve rural teledensity of 25% by means of 200 million rural connections at the end

of 11th Plan. It is also envisaged that internet and broad-band subscribers will increase to 40 million and 20

million, respectively, by 2010.


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Supply AnalysisDegree of Concentration

Today, the telecommunications industry is a vast one with a large number of private players who are

constantly bringing down the cost to consumers thereby making services more affordable and helping

improve life in general and business in particular. On the Indian business scene are successful government

owned institutions like MTNL and BSNL on the one hand, and even more successful and aggressive players

like the Tatas and Reliance on the other. Competition has just begun and is heating up every day with either

lowering of tariffs or introduction of newer and improved services to keep a larger share of the market.

Reliance, for instance, has been one of the recent, more aggressive players in the telecom business when it

introduced a wireless phone in the market for as low as Rs. 500.

Ease of entryFriction does exist between existing players and the newer entrants, as also between the providers of

services based on different technologies (CDMA Vs Cellular). The same needs to be resolved with

government intervention through the regulator in order to further improve the services. The telecom sector

today is not a small one and covers various services and many players within each service. One of the most

vibrant developments in telecommunications has been Cellular telephony a technology that gives us

the power to communicate anytime and anywhere. This segment, a part of the broader telecommunications

industry, has today spawned an entire industry in mobile telecommunication. Mobile phones today are anintegral part of growth, success and economic efficiency of businesses. The government in India has today

recognized, providing world-class telecommunications infrastructure as the key to rapid economic and social

development of the country.

Industry capacityConservative estimates put a tag of a 3% increase in the growth of GDP for every 1% rise in the tele-density

in the nation. Accordingly, this sector has received a great thrust from the government for investments and

development.


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ProfitabilityIncreased FDI Flows

The Telecom sector is one of the largest attractor of Foreign Direct Investment in the country, accounting for

almost a fifth of FDI approvals since 1991.

Heavy investment in Infrastructure

The cellular industry is responsible for the single largest chunk of investment by any individual industry.

The industry has already invested over Rs. 20,000 crores and is expected to invest even more in the years to

come.

Revenue Generation for the Government of India

The cellular telephony sector is poised for big growth going forward provided the government controls the

sector and its players in a healthy manner. Basic and Cellular telephony form the back bone of

communications in the country though the internet too has played a pivotal role.

Employment Generation

As the number of licensees goes up and they start their operations with 77 networks on air, the employment

opportunities in this sector will be huge.

The Road Ahead

According to a report published by Gartner Inc in June 2009, the total mobile services revenue in India is

projected to grow at a compound annual growth rate (CAGR) of 12.5 per cent from 2009-2013 to exceed US$

30 billion. The India mobile subscriber base is set to exceed 771 million connections by 2013, growing at a

CAGR of 14.3 per cent in the same period from 452 million in 2009. This growth is poised to continue

through the forecast period, and India is expected to remain the world's second largest wireless market after

China in terms of mobile connections.

The Indian mobile industry has now moved out of its hyper growth mode, but it will continue to grow at

double-digit rates for next three years as operators focus on rural parts of the country. Growth will also be

triggered by increased adoption of value-added services, which are relevant to both rural and urban markets."

Mobile market penetration is projected to increase from 38.7 per cent in 2009 to 63.5 per cent in 2013,

according to Gartner.

The much-awaited mobile number portability was launched on November 25, 2010 in Haryana and will be

available to more than 700 million subscribers from January 20, 2011 across the country.


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blue diamond group 10

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