Current trends in Indian Telecom 

Telecom sector, unlike other sectors has shown the highest growth in terms of competition, benefit
for end users, and pricing, social policies, etc. In the post, I want to share current happenings in this
industry.

1. New players entering rural markets:

Although biggies like Airtel, BSNL and Reliance leading in the race to access rural markets, smaller
players are not behind. In past few months, DoCoMo witnessing the biggest jump in proportion of
subscribers coming from the rural areas (increased from 10% to 18% in one quarter).
Even Uninor, albeit on a smaller subscriber base, has a relatively high proportion of subscribers
coming from the rural areas at 34%. Aircel is the only operator whose proportion from rural areas has
actually gone down.
2. Prepaid tariff’s 40% lower than Postpaid
The competition in terms of pricing has become intense. More number of players, per second plans
has reduced the pre-paid rev/min saw a sharp fall from 76p/min in Mar-09 to 55p in Mar-10; a fall of
30%. Post revenues are relatively stable as of now. The reason is that incumbents (majority of
postpaid subscribers) right now have no incentive to cut tariffs as MNP and 3G will take some time.
However this segment is too going to witness pressure in terms of tariffs
3. C Circle usage higher than A/B circles
The Circle C MoU have held on and even widened the gap versus the A/B circles in the last 12 months.
Investors’ concern on C circle subscribers diluting the ARPU have also not materialized given ARPU is
in-line with the B circles and only 10% below national average. This usage elasticity for C circle is
especially strong as it comes despite a relatively higher y-o-y increase in penetration in these circles.

The two key reasons for this trend are: Low fixed-line usage resulting in fixed-line like usage in
wireless and High market concentration results in lower incidence of multi-SIM and prevents leakage
of minutes
4. Multi-Sim usage is hitting the industry
If you look at the table below, many of the circles have more than 100% teledensity. Even C
category circles like Bihar and Orissa’s urban penetration is also at 130% (national average at 120%).
This is mainly due to multi Sim usage which is facilitated by handsets and sometimes due to attractive
tariffs. The switching cost in this case is negligible.

State Wise Tele-Density

What can you expect from Telecom in the future?

 Fixed line network is likely to be sustained, albeit with a very small footprint. India has already
crossed the stage where Mobile lines are in multiples of fixed lines
 The next phase will be crossover between data and voice There will be a process oftechnical
consolidation and system integration of different competing standards in a single platform
 Future vision of telecom is a vision of IT. Telecom will be the springboard of future expansion
of IT heralding in an information society. ICT will spread among the masses and will spur
innovation, entrepreneurship and growth 
(Source:Planning commission’s vision 2020)
Indian Telecom Sector To Cross INR 4.5 Trillion in 5 Years

The current size of the Indian telecom market is estimated at Rs 3,00,000 crore, with factors such as competition,
MNP and the decline in ARPUs (average revenue per user) playing killjoy. 
However, the Boston Consulting Group (BCG) is still very positive on the sector,estimating that the sector will get up
to Rs 2,50,000 crore investments in 5 years, with the revenues expected to cross the Rs 4,50,000 crore or $100
billion-mark during the same period. This forecast takes into account a wider gamut of markets like digital advertising,
handsets, TV distribution, TV sets, mobile data services, wireless, laptops and PCs and wired voice services.
Key factors, which will fuel the growth, will be increased access to services thanks to the launch of newer telecom
technologies like 3G and BWA, better devices, changing consumer behaviour and the emergence of cloud
technologies.
This would be a pretty tough task if you were to go by the recent Indian Telecom Services Performance Indicator
Report from TRAI, according to which, Gross Revenue (GR) and Adjusted Gross Revenue (AGR) of Telecom Sector
for the QE Sep-10 has been INR 41,895.95 Crore and INR 29,736.20 Crore respectively. There has been an increase
of 1.22% in GR while AGR declined by 2.45% as compared to previous quarter.
TRAI’s covers the period from July to September 2010, based on the key parameters and growth trends for the
Telecom Services as well as Cable TV, DTH & Radio Broadcasting services. Some points from the report:

 The number of telephone subscribers in India increased from 671.69 million in Jun-10 to 723.28 million at
the end of Sep-10, registering a sequential growth of 7.68% over the previous quarter as against 8.11%
during the QE Jun-10. This reflects year-on-year (Y-O-Y) growth of 42.09% over the same quarter of last
year.
 Subscription in Urban Areas grew from 452.59 million in Jun-10 to 487.07 million at the end of Sep-10,
taking the Urban Teledensity from 128.20 to 137.25. Rural subscription increased from 219.09 million to
236.21 million, and the Rural Teledensity increased from 26.43 to 28.42.
 Incidentally, While the potential in the rural areas is hyped quite a bit, rural subscription recorded a decline in
rate of growth during the quarter, from 9.18% in Jun-10 to 7.81% in Sep-10
 Internet subscribers increased from 16.72 million at the end of Jun-10 to 17.90 million at the end of Sep-10,
registering a quarterly growth rate of 7.02%. Top 10 ISPs together hold 95% of the total Internet subscriber
base.
 Number of Broadband subscribers increased from 9.47 million at the end of Jun-10 to 10.30 million at the
end of Sep-10, registering a quarterly growth of 8.79% and Y-O-Y growth of 42.93%.
 Average Revenue Per User (ARPU) for GSM-Full Mobility service declined by 10.16%, from INR 122 in QE
Jun-10 to INR 110 in QE Sep-10, with Y-O-Y decrease of 33.1%.
 ARPU for CDMA – full mobility service declined by 1.34%, from INR 74 in QE Jun-10 to INR 73 in QE Sep-
10.  ARPU for CDMA has declined by 17.5% on Y-O-Y basis.
Vodafone Leads on Number Portability
Written by admin on 25 March 2011

The India unit of the U.K.’s Vodafone Group PLC has so far gained the
maximum number of subscribers on a net basis, since the launch of mobile number portability on Jan. 20, the
telecom operator’s association said Friday.
Vodafone Essar Ltd. gained 192,761 users, while Idea Cellular Ltd. and sector leader Bharti Airtel Ltd. added 150,789
and 148,215 subscribers, respectively, Cellular Operators Association of India said in a statement

Telecom second largest corrupt sector: KPMG

Written by admin on 25 March 2011

In the wake of the second generation (2G) spectrum scam, a survey on bribery and corruption in India by global
consultancy firm KPMG has found the telecommunications sector to be the second most corruption-prone area
followed by real estate and construction.
The survey, which was based on ratings of industries by different respondents, reflected that some industries tend to
have relatively higher instances of bribery and corruption than others, primarily due to the link they have with multiple
parties, both in the government as well as the private realm. Source

Wireless broadband is the next big thing

Written by admin on 13 March 2011

Bharti Enterprises chairman Sunil Mittal said that “mobile

broadband” based on 3G technology was the next big thing for his company. This technology provides high-speed
wireless Internet and data network access over a wide area.
Bharti’s competitors like BSNL and Reliance had already launched this and the company too has recently unleashed
3G services in the country. Source

Mobile Number Portability: A Telecom Revolution

Written by admin on 13 March 2011

After years of debate and delay, the Mobile Number Portability (MNP) was launched in India in January 2011. It
allows the user to retain the existing number while giving him an option to change the subscriber.
Singapore was pioneer in introducing MNP in 1997; thereafter the service was introduced in different countries like
Hong Kong, Australia, Europe, Japan, New Zealand and UK. Number portability is of three types; operator, location
and service portability. However, most of the countries have adopted the operator portability due to its ability to
promote fair competition amongst the operators. Source

Can India lead the mobile-internet revolution?

Written by admin on 13 March 2011

Almost 1,500 years ago, Indian mathematicians, including Aryabhata, Brahmagupta and Pingala, transformed
mathematics by conceiving the rules of the binary numeral system. While those rules today lie at the heart of the
code powering the internet, India has relatively few internet users: just seven per cent of its population is connected
to the web, compared with 32 per cent in China and 77 per cent in the United States.
Yet India has an opportunity to lead the world once again by becoming the first truly mobile digital society. All the
elements are in place: the cost of network access and handsets is going down, wireless networks are going up and
Indian consumers already display an insatiable appetite for digital services. Source

Development in Indian telecom not to impact plans: Telenor

Written by admin on 22 February 2011

Norwegian telecom firm Telenor, whose Indian partner Unitech

Wireless is facing charges of being a beneficiary in the 2G spectrum scam, today said the allegations will not impact
its India plans.
Unitech Wireless had inducted Telenor as majority partner after the Norweign firm picked over 67 per cent stake
through equity and formed ‘Uninor’ as a joint venture for Indian operations.
New telecom policy will help in consolidation: Sibal
Written by admin on 05 February 2011

Attempting to move beyond the country’s tainted 2G history, telecom

minister Kapil Sibal’s new telecom policy would promote consolidation in the telecom sector and bring about effective
utilisation of spectrum in a clear, transparent and a balanced manner so that government earns revenue, users get
best services at reasonable rates and the industry posts healthy growth.
Speaking at the Idea Exchange programme of the Express Group, Sibal said he would also come out with norms on
mergers and acquisitions. “The Department of Telecommunications (DoT) is assessing whether the country needs
13-14 operators per circle. Source

BSNL to enter into roaming arrangements with private operators

Written by admin on 03 January 2011

State-owned BSNL is set to invite bids from private operators to share its
third generation airwaves.The telco is of the view that it can raise between Rs 2,500 crore to Rs 5,000 core over five
years if it were to enter into roaming arrangements with two players for its third generation airwaves.
“Having tracked MTNL’s success in attracting bids (for sharing its 3G airwaves by entering into roaming agreements,
we are working to put in place a similar model,” BSNL’s acting chairman and managing director Gopal Das told
ET. Source