INDIAN TELECOMMUNICATION INDUSTRY

Introduction

• India is the world’s second-largest telecommunications market after China, with 898 million subscribers as on March 2013.

• Government policies and regulatory framework implemented by TRAI have provided a conducive environment for service providers.

• The telecom industry has witnessed significant growth in subscriber base over the last decade.

• The sector expected to witness up to US$ 56.3 billion investments and the market will cross the US$ 101 billion mark in five years.

•  At present 74% to 100% FDI is permitted for various telecom services.

•  This has made telecom one of major sectors attracting FDI inflows in India.

Key Statistics(as on 24th Sept 2013)As per India Mobile Landscape (IML) 2013.1) India has 554.8 million mobile users and 143.2

million unique Internet users.2) Mobile Penetration in Urban India is 70% & rural

India is 36%. 3) 23.8 million users use Internet on their mobile

devices 4) 7.1 million (or 77%) of these users who access

Internet exclusively through mobile data connections are in rural areas.

5) 143.2 Million Internet users in India6)There are 773.9 million live SIMs in India.

Juxt defines a live SIM as any SIM which has validity irrespective of whether it is being used actively or not.

7) Students(33%) & housewives (22%) account for bulk of (55%) total mobile users.

8) 64% of mobile users are male.9) 95% of all active connections are prepaid.

Moreover, the cumulative revenue of telecom service providers was recorded at Rs 54,284 crore (US$ 8.32 billion) in the January-March 2013 quarter, as per TRAI.

54,284 crore

Trends & Developments • Big Capex Plans: Operators announce

major investments to drive data growth• Slow Growth: TRAI releases PIR for January-

March 2013• All in One: DoT finalises new unified licence

regime• FDI Push: Cabinet approves 100 per cent

foreign investment• Lowering the Ceiling: TRAI reduces the cap

on national roaming charges

Market Dynamics• The Indian mobile phone market is highly

competitive .

• India added 1.49 million GSM subscribers in July 2013, taking the total GSM user base in India to 672.63 million according to COAI.

• The GSM incumbents—Bharti Airtel, Vodafone and Idea Cellular—have jointly crossed 70 per cent in revenue market as per TRAI.

Market Size• India is the world’s second-largest telecommunications

market, with 898 million subscribers as on March 2013. The sector's revenue grew by 13.4 per cent to reach US$ 64.1 billion in FY12.

• Telecom infrastructure in India is expected to increase at a compound annual growth rate (CAGR) of 20 per cent during 2008-15 to reach 571,000 towers in 2015.

• The wireless connectivity in India is expected to grow at about 40 per cent traffic by 2017, up from 38 per cent in 2012.

Market Players

Source:Telecomlead.com

Company Services Investor Cellular Basic NLD ILD

1. Bharti Televentures

Vodafone, Singapore Telecom, Warburg Pincus

2. Reliance Infocomm Reliance Group

3. Tata Indicom Tata Group

4. BSNL Government of India

5. IDEA Cellular AT&T, Tata Group,Birla Group

Source: infrastructure.gov.in

Investments• India has a telecom policy that aims to encourage private and foreign

investment.

• 74% to 100% FDI permitted for various telecom services.

– FIPB approval required for foreign investment exceeding 49% in all telecom services.

• 100% FDI permitted in telecom equipment manufacturing. Foreign Direct Investment (FDI) in telecom sector during April-March 2011-12 stood at US$ 1,997 million.

• The idea behind increasing the FDI limit in the telecom sector is to help the industry get fresh funds to lower financial burden.

• 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 .

Applications and Content development ranging from gaming to education.

• Vodafone, Nokia, Elcoteq, Alcatel, LG, Ericsson are all investing in India

FDI InflowYear In Rs Crore 2000-01 784.16 2001-02 3938.46 2002-03 907.73 2003-04 408.78 2004-05 569.54 2005-06 2774.18 2006-07 2155.08 2007-08 5102.61 2008-09 11726.87 2009-10 12338.32 Source :Investindiatele.com

PARTICIPANTS IN VALUE CHAINTelecom equipment suppliers in India -– Ericsson– NSN–Motorola– Alcatel Lucent

Tower infrastructure companies in India -– Bharti Infratel– Indus Towers– Essar Telecom

Spectrum AllocationSpectrum allocation is important and necessary to ensure interference free operation for each radio service.

The International Telecommunication Union (ITU) at the World Radio Communication Conferences allocates spectrum frequencies for the use of various countries.

The WPC Wing of the Ministry of Communications, created in 1952, is the National Radio Regulatory Authority responsible for Frequency Spectrum Management. WPC is divided into major sections like LR ,NTG and SACFA.

India’s National Frequency Allocation plan

i) 0-87.5 MHz is used for marine and aeronautical navigation, short and medium wave radio, amateur (ham) radio and cordless phones.

ii) 87.5-108 MHz is used for FM radio broadcasts

iii) 109- 173 Used for Satellite communication, aeronautical navigation and outdoor broadcast vans

iv) 174-230 MHz not allocated.

v) 230—450 Used for Satellite communication, aeronautical navigation and outdoor broadcast vans

vi) 450- 585. Not allocated.

vii) 585-698 Used for TV broadcast

viii) 698-806 not allocated.

ix) 806-960 Used by GSM and CDMA mobile services

x) 960-1710 Aeronautical and space communication

xi) 1710- 1930 Used for GSM mobile services

xii) 1930-2010 – Used by defence forces

xiii) 2010-2025 – Not allocated

xiv) 2025-2110 – Satellite and space communications

xv) 2110-2170 – Not allocated

xvi) 2170-2300 – Satellite and space communications

xvii) 2300-2400 not allocated.

xviii) 2400- 2483.5 Used for Wi-Fi and Bluetooth short range services

xix) 2483.5-3300 Space communications

xx) 3300-3600 not allocated.

xxi) 3600-10000 Space research, radio navigation

xxii) 10000 – used for satellite downlink for broadcast and DTH services.

Telecom spectrum policy in IndiaIn India GSM technology works in the frequency bands of 900 and 1800 MHz and CDMA technology works in the 800 MHz band.

In 2002, the government introduced a subscriber linked spectrum allocation process, which provided for a maximum allotment of 12.5 MHz of spectrum per operator in each service area.

Due to the deluge of over 570 UAS licence applications, in Dec 2007, DoT delinked spectrum from the telecom licence and implemented a policy of first come first served basis for spectrum allocation.

According to this, the subscriber base required for additional spectrum allocation was hiked two to six times for different circles.

Road Ahead

• The telecom sector has been growing continuously with the help more inflow of FDI.

• The governments policies have also encourage to investment the foreign investors in this sector.

• Now this sector to be found in the growing path and it will continue in future also.

• The country is projected to witness high penetration of internet, broadband, and mobile subscribers in the near future. It has achieved a phenomenal growth during the last few years and is poised to grow further.

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