This report provides a comprehensive overview of the developments and trends in telecommunications, Internet and digital media markets in India. Subjects covered include:
Major Players (fixed and mobile)
Mobile Voice and Data Markets
Internet, including VoIP
Convergence and Digital Media
India continues to be one of the most dynamic and fastest growing major telecom markets in the world. The mobile sector has grown from around 10 million subscribers in 2002 to reach 150 million by early 2007, the rate of market expansion being boosted by low tariffs and falling handset prices. While GSM technology has continued to be dominant in the country’s mobile market, CDMA has been increasing its market share and had grabbed a 30% share by early 2007. With this in mind the mobile industry should continue its present strong growth.
Regulatory reform has been central to the development of India’s telecoms market. Sweeping reforms by successive governments over the last decade have dramatically changed the nature of telecommunications in the country. The Telecom Regulatory Authority of India (TRAI) has predicted that the rate of market expansion would increase with further regulatory and structural reforms. The adoption of Unified Licensing, a change in the Access Deficit Charge (ADC) regime, increased sharing of infrastructure and coverage of new areas by operators were all expected to contribute to ongoing growth.
By early 2007, the total telephone subscriber base (mobile and fixed) had passed the 200 million subscriber milestone. The number of phone subscribers was rising by an average of 6 million each month coming into 2007. With fixed-line subscribers at just over 40 million, growth in that segment of the market had stalled in 2006 and was not likely to pick up again for some time.
For more statistical information, see chapter 1, page 1.
Regulatory change in the industry has not been easy. In the early stages of reform, the structure of the market was frequently criticised. However, there has been an evolution through a series of mergers and takeovers among the mobile operators that has seen a welcome and productive consolidation. The so-called ‘licensing by circles’ policy, in particular, has been credited with establishing a highly competitive and healthy telecoms market. It was not always so, with the circles policy being considered far too complex and unwieldy to administer. But, with what has now become a comparatively well regulated commercial environment and with plenty of growth potential, the Indian market is proving to be an attractive telecoms market for foreign investment with a clear way forward to further growth.
For more information, see chapter 3,page 11.
In early 2007, estimates put the total worth of India’s telecommunications sector at nearly US$100 billion. This was on the back of soaring valuations of the country’s telecommunications companies, both listed and unlisted. Listed companies like Bharti Airtel and Reliance Communications could claim valuations in the range of US$26-$27 billion and US$19-$20 billion, respectively. And big operators like Bharat Sanchar Nigam Ltd (BSNL) and Idea Cellular would be likely to range in value from US$8 billion to US$30 billion if they were listed. Over a 10 year period, the telecom industry saw numerous high profile exits by multinational companies such as AT&T, Telecom Italia, British Telecom, Telstra, Cingular and France Telecom. Others to exit included some local companies as well such as Aircel, BPL, Escorts, RPG, Usha Martin, JT Mobile and Hindujas. Vodafone, which had also exited the Indian market earlier on, had made a comeback with its successful bid for Hutch. Over the years, the exits and entry of new players have been part of market consolidation, ultimately resulting in strong value creation.
One segment of the market that has been puzzling is broadband Internet. Despite the manner in which the country’s Internet market has been booming, India’s move into high-speed broadband Internet access has been distinctly sluggish. And, while there appears to be considerable enthusiasm amongst the population for the Internet itself, this has not been reflected in broadband subscription numbers. The dial-up Internet subscriber base has been increasing steadily since 1999, accelerating rapidly in 2005 when the number of subscribers increased by over 200% during that year. By early 2007, Internet subscribers in India totalled more than 8.5 million. This equated to an estimated 60 million Internet users throughout the country or a penetration of almost 6%. It was during 2006 that finally we witnessed a substantial surge in broadband users with the total subscriber base in the country expanding by almost 200% to just over 2 million by year’s end. Despite this surge, broadband penetration in India still remains around only 0.2%; broadband services were still only accounting for 25% of the total Internet subscriber base, still in itself comparatively low.
For more information, see chapter 6,page 79.
The Ministry of Communications and Information Technology (MCIT) is targeting 250 million telephone subscribers by end-2007 and 500 million by 2010. Most of the expansion in subscribers was set to occur in rural India. The ministry noted in setting its targets that India’s rural teledensity had been languishing at around 1.9%; officials stressed that the country could not move forward unless it supported the 70% of the population who lived in rural India.
India continues to see its mobile market boom; by early 2007, the country had 150 million mobile subscribers, with growth continuing into 2007 at an annual rate approaching 90%.
For more information, see chapter 8.1, page 122.
While GSM has continued to be the dominant technology in the mobile market, CDMA has been increasing its market share in India; the technology platform had grabbed a handy 30% share by early 2007.
During 2006, there was a significant surge in broadband subscribers in India, the total subscriber base expanding by almost 200% to just over 2 million by year’s end; but this was still only a 0.2% penetration of the population.
For more information, see chapter6.1, page 79.
In the broadband segment, most significant growth was in DSL subscriptions, with the market jumping from 0.6 million subscribers to 1.8 million in a twelve month period. In other words, DSL has continued to be the clearly dominant broadband technology platform with about 85% of the local market.
The booming telecoms market in India saw total revenues of US$22.4 billion in 2006, and it is likely to hit US$25 billion in 2007. Of the 2006 total, mobile services contributed around 60%.
Quarterly net mobile subscriber additions in India exceeded those in China for the first time in the September quarter of 2006.
Ministry of Communications and Information Technology (MCIT) said they were targeting 250 million telephone subscribers by end-2007 and 500 million by 2010.
India’s mobile subscriber growth - GSM versus CDMA - 2000 - 2007
Year GSM Subscribers (millions) GSM Annual growth CDMA Subscribers (millions) CDMA Annual growth
2000 3.1 94% - -
2001 505 76% - -
2002 10.5 91% 0.8 -
2003 22.0 110% 6.4 700%
2004 37.4 70% 10.9 70%
2005 58.5 57% 19.1 75%
2006 105.4 80% 44.2 131%
2007 180.0 71% 85.0 92%
(Source: BuddeComm based on industry data) Notes: *forecast; CDMA figures exclude WLL(F) subscribers up to 2005