Telecommunication Industry

The telecommunication industry is growing fast in India and is envisioned to reach the second position in the global telecom industry by 2010. India added 113 million new customers in 2008. Also, the cellular technology grossed a 50% growth by adding 9.5 million consumers.

 

As per Business Monitor International, India is estimated to add 8–10 million subscribers monthly. This means that by 2012 up to half of India's population will have mobiles. That translates to a tele-density of 51% by 2012. The projected revenues for the industry are US$ 43 billion during the 2009–2010 timeframe. A study by Nokia estimates the communication sector to emerge as the second largest contributor to India's GDP by 2014.

 

The equipment industry is projected at around US$ 24 billion. Nokia leads this market followed by Ericsson.

 

Growth Potential:

 

As per the industrial analyst Frost and Sullivan, the mobile revenues are expected to be about US$ 39.8 billion while the fixed-line revenues will be somewhere around US$ 12.2 billion.

 

India has more than a 100 million CDMA-based subscribers, which makes it second after the US. The GSM-based platform is expected to add 9.3 million more customers in August 2009. India is thus the world's fastest expanding market with GSM users at 335 million.

 

Value-added Services:

 

The mobile value-added services account for about 10% in India as of now and are expected to grow to 18% by 2010. According to a study by Stanford University, this market is projected to reach US$ 2.74 billion by 2010.

 

Equipment Manufacturing:

 

The manufacturing sector for telecom equipment is set to grow enormously. A total of 107 million handsets are going to be produced by 2010.

 

Major Investments:

 

The boom in the telecom market is attracting investments with the entry of new services and players. All major players, such as Vodafone Essar, Aircel, and BSNL, are investing huge sums to increase their customer base.

 

To facilitate growth in this sector, the government has created a number of policies:

 

  1. 100% FDI investment is permitted in equipment manufacturing via the automatic route.
  2. In the services sector, FDI involvement has been elevated to 74%.
  3. It has introduced a unified license system for telecom services.
  4. It has also introduced portability of mobile numbers though in a phased manner.
  5. DOT (Department of Telecommunication) has also allowed foreign companies to bid for 3G spectrum. Foreign companies can bid without having to partner up with any Indian companies. However, after these foreign companies win the bid, they would have to apply for UASL and team up with a Indian counterpart as per FDI.

 

With the government implementing the Bharat Nirman project, the potential customers are going to rise further. This is because the rural consumers will also get added to the existing ones. Not only is there a huge market for basic telephone services, but there is a huge market for value-added services too. And according to the industry report, the revenue is going to reach US$ 54 billion by 2012.

 

Thus, India is a huge market for telecommunications and offers good investment opportunities.

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