2009 India - Telecoms, Mobile, Broadband and Forecasts

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Last updated: 30 Jun 2009 Update History

Report Status: Archived

Report Pages: 291

Analyst: Peter Evans

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;

·         Convergence and Digital Media;

·         Mobile Voice and Data Market;

·         Internet, including VoIP and IPTV;

·         Broadband services;

·         Telecom market forecasts.

 

Researcher: Peter Evans

Current publication date:- June 2009 (15th Edition)

Next publication date:- July 2010

Executive Summary

BuddeComm’s Annual Publication, India - Telecoms, Mobile, Broadband and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and converging media markets in India.

 

India without a doubt continues to be one of the most dynamic and fastest growing major telecom markets in the world. There was little evidence by mid-2009 that the global financial crisis was dampening growth in any significant way.

 

The mobile sector in particular continues its strong march forward. The country’s mobile subscriber base has already grown from around 10 million in 2002 to 350 million by the start of 2009. 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. While GSM technology remains dominant, by early 2009 CDMA was still managing to hang on to a 25% market share

 

The total mobile market was expanding at an annual rate of close to 50% coming into 2009. All things considered the mobile industry should continue its present strong growth for the time being. On the somewhat contentious subject of 3G licences, the delays continued up to mid-2009, by which time the most recent roadblock, a dispute between the Department of Telecommunications and the Ministry of Finance over licence fees, appeared to be close to resolution. In the meantime the two state-owned operators BSNL and MTNL had made a start on rolling out their pilot 3G networks.

 

With fixed-line subscribers at slightly less than 38 million in early 2009, the market has witnessed a modest decline in that particular segment. Growth initially stalled in 2006 and fixed-line numbers are 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.) The total telephone subscriber base (mobile and fixed) had passed 400 million by February 2009, as the number of subscribers was rose by an average of 12 million per month in the first half of the year.

 

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, are all contributing to ongoing growth. Another important initiative has been the 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 are some signs that the market was starting to suffer from the complexity of the regulatory regime. Changing the regulation of the industry was certainly not easy with many observers initially being sceptical of the strategies adopted by the government. 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 resulted in welcome and productive consolidation. In the final analysis the so-called ‘licensing by circles’ policy has been credited with establishing a highly competitive and healthy telecoms market. Initially the circles policy had been considered complex and unwieldy. But, with the assistance of a comparatively well regulated commercial environment, with plenty of growth potential and an increasingly open market, India is proving to be an attractive telecoms destination for foreign investment with a clear way forward to further growth.

One market segment that has continued to puzzle the observer is broadband Internet. Despite the obvious enthusiasm for Internet access to be found across the country, India’s move into high-speed broadband has been noticeably sluggish. The number of dial-up Internet subscribers has been increasing in a healthy fashion over the years. Between 2003 and 2008, the total Internet subscriber base increased fourfold over that five year period. The question remained, however, where was the broadband? It is true that there have been a number of surges in growth over the years, but this has always been off a relatively low base. Despite a major jump in subscribers in 2008, by early 2009 broadband Internet penetration remained only 0.5%; and broadband services still only accounted for one third of the total Internet subscriber base, still in itself comparatively low. In other words, by early 2009 there were only around 6 million broadband subscribers in India out of a total of around 18 million Internet subscribers. 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 an estimated 90 million Internet users throughout the country by January 2009, representing a penetration rate of almost 9%.

 

Key highlights:

·         The mobile market continues to move along its boom path; by early 2009, India had 350 million mobile subscribers.

·         The mobile market continued to expand at an annual rate around 50% into 2008.

·         GSM remains the dominant technology in the mobile market, but CDMA maintains a solid 25% market share.

·         The number of broadband Internet subscribers in India is starting to become more significant, having increased by more than 70% in 2008, yet broadband subscribers still only comprised 0.5% of the population at the start of 2009.

·         DSL, representing about 81% of the local broadband market, is steadily losing market share to other non-DSL broadband platforms.

·         After experiencing a series of frustrating bureaucratic delays, India looks set to issue 3G licences in the second half of 2009.

·         The MCIT’s target of 500 million telephone subscribers (fixed and mobile) by 2010 looks likely to be exceeded by around 100 million.

 

India – key telecom parameters – 2008 - 2009

Category

2008

2009 (e)

Fixed-line services:

·         Total subscribers

37.9 million

37.0 million

·         Annual growth (e)

-4%

-2%

·         Fixed-line penetration (population)

3.2%

3.1%

·         Fixed-line penetration (household)

19%

18%

Broadband Internet:

·         Total subscribers

5.4 million

7.5 million

·         Annual growth

74%

40%

·         Broadband penetration (population)

0.5%

0.6%

·         Broadband penetration (household)

3%

4%

Mobile services:

·         Total subscribers

347 million

510 million

·         Annual growth

49%

46%

·         Mobile penetration (population)

30%

43%

(Source: BuddeComm)

 

The following notes provide some background to our scenario forecasting methodology:

·         This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.

·         The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.

·         All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

 

Data in this report is the latest available at the time of preparation and may not be for the current year.

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BuddeComm's strategic business reports contain a combination of both primary and secondary research statistics, analyses written by our senior analysts supported by a network of experts, industry contacts and researchers from around the world as well as our own scenario forecasts.

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