Publication Overview
This report provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in India. Subjects covered include:
- Key statistics;
- Market and industry overviews;
- Regulatory environment;
- Major players (fixed and mobile);
- Infrastructure development – national and international;
- Digital media;
- Mobile voice and data market;
- Internet, including VoIP and IPTV;
- Broadband services;
- Regulatory environment;
- Telecom market forecasts for selected segments/years to 2020.
Researcher:- Peter Evans
Current publication date:- July 2010 (16th Edition)
Next publication date:- June 2011
Executive Summary
India without a doubt continues to be one of the most dynamic and fastest growing major telecom markets in the world. Although there had not been any signs that the 2008/09 global financial crisis had dampened growth in any significant way, by early 2010 the government was having to closely manage the country’s national debt as well as the prospect of high rates of inflation. The mobile sector in particular was continuing its strong march forward. The country’s mobile subscriber base has already grown from around 10 million subscribers in 2002 to reach 350 million by the start of 2009. By March 2010 it had reached 584 million and based on its then growth rate it was likely to pass 750 million by year-end.
A number of factors have been responsible for this amazing growth, including low tariffs, low handset prices and most notably a highly competitive market created by the government and the regulator. The government has continued to open the market up to more and more competition. In late 2009 another two mobile operators – S Tel and Videocon – launched services in the country. While GSM technology has continued to be dominant, by early 2009 CDMA was still managing to hang on to a 20% market share. The total mobile market was expanding at an annual rate of around 40% coming into 2010. All things considered the mobile industry should continue to grow for the time being.
Growth into the future will be boosted in some ways, no doubt, by the roll out of 3G mobile services following the assignment of 3G licences in May 2010. After multiple delays the government finally held its 3G auction, an event that was to significantly boost the government coffers. The seven winners of the auction were required to pay a combined amount of around US11.0 billion to the government. When the amount payable by BSNL and MTNL was included, the 3G spectrum auction earned revenue of US$14.6 billion for the government, an amount that far exceeded expectations. In fact it was more than double the US$7.6 billion the government had initially projected. In the meantime the two state-owned operators BSNL and MTNL had already started rolling out their 3G networks. The private operators were to be granted their frequency spectrum and start their 3G rollouts later in 2010.
With fixed-line subscribers at around 37 million in early 2010, the market was witnessing a modest decline in that segment of the market. Growth having stalled in 2006, fixed-line numbers were not expected to pick up again for some time. (It should be noted that in 2005 India’s telecom regulator began counting fixed WLL services as ‘wireless’ services and not as ‘wireline’ meaning that they were absorbed into the mobile statistics and were not able to be separated out any longer as fixed services. This has caused some confusion in the reporting data.) India’s total telephone subscriber base (mobile and fixed) had passed the 620 million subscriber milestone by March 2010, with all the growth being provided by the mobile market.
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. In the meantime, the Telecom Regulatory Authority of India remains committed to further regulatory and structural reforms. The adoption of Unified Licensing, a change in the Access Deficit Charge regime, and the encouragement of increased infrastructure sharing, especially the towers for mobile networks, were all contributing to ongoing growth. Another important initiative has been the Indian government’s revised Foreign Direct Investment policy which increased the foreign ownership cap from 49% to 74%.
If anything it could be said that the regulation of the market has been overly enthusiastic; there were some signs that the market was starting to suffer from the complexity of the regulatory regime. In parallel with the regulatory change process, there has been a continuing evolution of the market through a series of mergers and takeovers among the mobile operators that has initially resulted in a welcome and productive consolidation. Although the policy had initially been considered complex and unwieldy, the so-called ‘licensing by circles’ policy was eventually credited with establishing a highly competitive and healthy telecoms market. With the assistance of a comparatively well regulated commercial environment, with plenty of growth potential and an increasingly open market, India has proven to be an attractive telecoms destination for foreign investment with a clear way forward to further growth. The complex regulatory environment was again causing concerns in early 2010. The government’s 3G auctions held at that time had been structured in what many regarded as an overly complex fashion. As a result, the auctions produced outcomes that may not necessarily favour the mobile industry in the longer term. One significant consequence was that the massive revenue earned by the government meant in turn that many of the operators now have huge debt burdens to manage. This was an issue for both the local telecom industry and the Indian economy in general.
A market segment that has continued to puzzle the observer – and the government – is broadband Internet. Despite the obvious enthusiasm for Internet access to be found across the country, India’s move into high-speed broadband Internet has so far been noticeably sluggish. The Telecom Regulatory Authority of India in describing the situation in mid-2010 noted that ‘... the performance so far has not been up to the expectations’. The regulator’s reference point was the targets set in the government’s National Broadband Policy issued in 2004, with growth falling well short of these targets. The number of dial-up Internet subscribers had been increasing in a healthy fashion over the years, with the total Internet subscriber base increased fourfold over a five-year period between 2003 and 2008. The question remained, however: what was happening with broadband? By early 2010 broadband Internet penetration in India was a low 0.7%, with these broadband services accounting for about a half of the total Internet subscriber base. In other words, coming into 2010 there were only around 8 million broadband subscribers in a country of 1.2 billion people. In the meantime, somewhat paradoxically, the overall level of Internet usage seems to be growing strongly, perhaps boosted by the widespread use of Internet cafes and other points of public online access. There were in excess of an estimated 60 million Internet users throughout the country by January 2010, this representing a penetration of almost 5%.
Market highlights:
- Growth in India’s mobile market was continuing in its boom mode;
- By March 2010 the country had 584 million mobile subscribers, up from 350 million just 15 months earlier;
- The mobile market was continuing to expand at an annual rate in excess of 40% coming into 2010;
- GSM was comfortably maintaining its position as the dominant mobile technology with 80% of the mobile subscriber market, but CDMA seemed to have stabilised its market share at 20% for the time being.
- The number of broadband Internet subscribers in India has started to become more significant, having more than doubled in the two-year period to end-2009;
- However, broadband subscriber numbers still only comprised 0.7% of the population at the start of 2009;
- DSL, whilst holding slightly more than 75% of the local broadband market, was steadily losing market share to other non-DSL broadband platforms, especially to wireless broadband platforms;
- After experiencing a series of frustrating administrative delays, India finally held its auction to assign 3G licences in the first half of 2010. The auction was certainly successful in terms of the unexpectedly high revenue earned by the government. There was some debate as to whether the outcome was good for the local telecom industry;
- The 3G auction was followed by an equally high profile auction of WiMAX spectrum that set the scene for a competitive and invigorated wireless broadband market.
India: - key telecom parameters – 2009 - 2010
|
Category
|
2009
|
2010 (e)
|
|
Fixed-line services:
|
|
|
- Total number of subscribers
|
37.1 million
|
36.5 million
|
|
|
-2%
|
-2%
|
- Fixed-line penetration (population)
|
3.0%
|
2.9%
|
- Fixed-line penetration (household)
|
18%
|
18%
|
|
Broadband Internet:
|
|
|
- Total number of subscribers
|
7.8 million
|
11.0 million
|
|
|
44%
|
41%
|
- Broadband penetration (population)
|
0.7%
|
1.0%
|
- Broadband penetration (household)
|
3.5%
|
4.7%
|
|
Mobile services:
|
|
|
- Total number of subscribers
|
525million
|
760 million
|
|
|
51%
|
44%
|
- Mobile penetration (population)
|
45%
|
64%
|
(Source: BuddeComm)
Data in this report is the latest available at the time of preparation and may not be for the current year.