Documente Academic
Documente Profesional
Documente Cultură
www.ibef.org
PricewaterhouseCoopers is one of the largest and most
reputed professional services network in the country.
The Telecom Group of PricewaterhouseCoopers in India
works with telecom service operators, lenders, policy making
authorities, infrastructure vendors, manufacturers and
associated services companies to provide industry focused
solutions. PricewaterhouseCoopers specialists from the tax
and advisory teams connect their thinking, experience and
solutions to build public trust and enhance value for clients
and their stakeholders.
For information, please contact:
Deepak Kapoor, Executive Director
PricewaterhouseCoopers Pvt. Ltd.
PwC Centre, Saidulajab, Opposite D-Block, Saket
Mehrauli Badarpur Road, New Delhi – 110 030
Tel: +91 11 5125 0000
E-mail: deepak.kapoor@in.pwc.com
TELECOMMUNICATIONS
TELECOM IN INDIA
High on Opportunity 2
POLICY INITIATIVES 4
MARKET
Size, Players and Trends 8
OPPORTUNITIES 13
High on Opportunity The Indian telecom market has been displaying sustained high
growth rates. Riding on expectations of overall high economic
growth and consequent rising income levels, it offers
an unprecedented opportunity for foreign investment.
A combination of factors is driving growth in the telecom
market, promising rich returns on investments.
Macro-economic impetus
India is currently Over the past 10 years, India has registered the fastest growth
the fourth largest economy among major democracies, having grown at over 7 per cent
in terms of Purchasing in four years during the 1990s. It represents the fourth largest
Power Parity economy in terms of “Purchasing Power Parity”.
India to emerge as According to a recent Goldman Sachs report, over the next
the third largest economy fifty years, Brazil, Russia, India and China - the BRIC economies
in the world by 2050 - could become a much larger force in the world economy.
“India could emerge as the world’s third largest economy
and of these four countries; India has the potential to show
the fastest growth over the next 30 to 50 years”. The report
also states that, “Rising incomes may also see these economies
move through the ‘sweet spot’ of growth for different kinds
of products, as local spending patterns change. This could be
an important determinant of demand and pricing patterns
for a range of commodities”.
Shift of focus to services The share of the services sector as a percentage of total GDP
sector with its share is also predicted to rise from the current 46 per cent to
to increase to 60 per cent about 60 per cent by 2020. The boom in the services sector
of GDP by 2020; fuelled is slated to come from India, emerging as a chosen destination
by India becoming for software and other IT enabled services, tourism etc.
the chosen destination According to a Nasscom- McKinsey & Co. Study, by 2008,
the Indian IT software and services sector will account for
for BPO-ITES services
US$ 70-80 billion in revenues; employ 4 million people, and
account for 7 per cent of India’s GDP and 30 per cent
of India’s foreign exchange inflows.
T E L E C O M M U N I C A T I O N S PAGE 3
Demographic impetus
Population projections from the Planning Commission Working age population
of India suggest that the share of the working age population of India set to increase
(15-64 years) in total population will grow from the current to 882 million by 2020
59 per cent to about 65 per cent, translating into 882 million
by year 2020.
According to the Vision 2020 document of the Planning India’s urban population
Commission of India, the country will witness continued expected to rise
urbanisation. The urban population is expected to rise to 40 per cent from
from 28 per cent to 40 per cent of total population by 2020. the current 28 per cent
Future growth is likely to be concentrated in and around 60 by 2020
to 70 large cities having a population of one million or more.
This profile of concentrated urban population will facilitate
customised telecom offerings from operators.
Over the years, spending power has steadily increased in India. 30-40 million people joining
Between 1995 and 2002, nearly 100 million people became the middle class every year
part of the consuming and rich classes. Over the next five with consumption spendings
years, 180 million people are expected to move into the associated with rising
consuming and very rich classes. On an average, 30-40 million incomes
people are joining the middle class every year, representing
huge consumption spending in terms of the demand for
mobile phones, televisions, scooters, cars, credit goods and
a consumption pattern associated with rising incomes.
POLICY INITIATIVES
in million
“In our view, The migration from a fixed to a revenue share licence regime
the Government of India has provided the desired relief to the private operators - earlier
virtually deregulated every burdened by huge debts that they had to service owing
segment of the Indian to their licence fee commitments. This was the starting point
Telecom industry over of the cellular revolution being witnessed in the country today,
the past two years” wherein almost 2 million lines are getting added to the
- Morgan Stanley, network every month.
December 2003
T E L E C O M M U N I C A T I O N S PAGE 5
Regulatory structure
*E: Estimates for year ending March; Source: Cellular Operators Association of India
(COAI)
T E L E C O M M U N I C A T I O N S PAGE 9
Most of the telecom infrastructure till now has been deployed With urban tele-density
in the urban areas, raising urban tele-density to about 18.2 at 18.2 and rural tele-density
per cent compared to a rural tele-density of about 1.5 at less than 2, there is
per cent. According to the latest Telecommunication Industry enormous scope for addition
Performance Indicators issued by the Telecom Regulatory to telecom infrastructure
Authority of India (TRAI), the equipped switching capacity
of the fixed network is about 60 million with the ownership
distribution as provided in the diagram above. There also
exists about 0.5 million route kms of optical fibre-based
and 0.15 million of microwave-based transmission network
infrastructure. The ownership pattern of the transmission
network infrastructure is as provided in the diagram, on
the following page.
OFC (in RKms)
1 Bharti 7,343,763 26.10 Integrated telco, with presence in all sectors - Cellular, Basic, National Long Distance (NLD) & International
Long Distance (ILD). Currently offering only GSM based cellular services. No CDMA based cellular services
being offered.
2 BSNL 5,549,285 19.70 Incumbent operator, virtual monopoly in the basic services. Very strong NLD operator; and, has been able
to quickly ramp up GSM subscribers due to nationwide network reach. Pan country presence in both basic
(except Mumbai and Delhi) and cellular services.
3 HUTCH 5,591,892 19.80 Pure play GSM mobility player offering cellular services in 11 circles. Has been working on a model of being
associated with the high ARPU subscribers.
4 IDEA 3,961,442 14.10 A 3 way GSM mobility joint venture between Tatas, Birlas and AT&T Wireless offering cellular services
in 8 circles. IDEA has recently taken over Escotel that was operating in 3 circles.
5 BPL 2,087,740 7.4 Pure play cellular operator along with Spice, Escotel and Aircel.
6 SPICE 1,270,904 4.5 Pure play GSM based mobility player offering services in 2 circles – Punjab and Karnataka.
7 AIRCEL 1,123,314 4.0 Recently acquired the contiguous metro circle of Chennai, while already operating
in the state circle of Tamil Nadu.
8 RELIANCE 850,831 3.0 Operating GSM wireless services in 6 circles and subsequently acquired Madhya Pradesh circle from RPG.
Reliance is currently focusing on rollout of CDMA based wireless services.
9 MTNL 396,281 1.4 Integrated incumbent operator also offering GSM based mobility in Delhi and Mumbai.
Tatas 652,735
Reliance 7,010,258
HFCL 34,114
Shyam 27,141
Total 7,724,248
Source: isourceupdates.com (as per media & other sources), May 2004
Trends
The Indian telecom market was liberalised in the 1990s
With multiplying
and the service licences were given on the basis
opportunities, the number
of services to be offered in specified areas of operation.
of regional players
The country was demarcated into “circles” - categories
is growing
based on their economic potential, and these
demarcations were mostly contiguous with the states
of India. As a result, the Indian telecom market today
is characterised by the existence of various regional
players in the fixed and cellular segments.
Consolidation is underway Over the past few years, consolidation has been happening
in the industry in the industry, which has created about four large integrated
players who have a presence in all the segments like wireline,
wireless, national and international long distance and data
services. These four players are BSNL (incumbent), Bharti
Televentures, Reliance Infocomm and Tatas. Hutchison, another
significant player with more than five million subscribers, has
restricted itself to the mobile services space. The industry is
expecting to see more consolidation following issuance
of the Unified Access Licence by the Government
in December 2003 and clarity in intra-circle merger
and acquisition norms relating to both spectrum
and dominance issues.
T E L E C O M M U N I C A T I O N S P A G E 13
OPPORTUNITIES
India offers an unprecedented opportunity for telecom service Dynamism in the services
operators, infrastructure vendors, manufacturers and associated sector and changing
services companies. A host of factors are contributing to consumer profile
enlarged opportunities for growth and investment in telecom: is enhancing growth
• an expanding Indian economy with increased focus in telecom
on the services sector
• population mix moving favourably towards a younger
age profile
• urbanisation with increasing incomes
Further, at a time when global telecom majors are struggling India represents vast
to cope with their losses and the rollout of 3G networks, untapped potential
which has been a non-starter for close to a year now; India, for global telecom majors
with its telecom success story, represents an attractive and
lucrative destination for investment.
Source: investindiatelecom.com
Government initiatives Concrete steps taken by the Government of India are key
facilitating… drivers facilitating investment in the sector. It is reported that
Department of Telecommunications is considering proposals
for reduction in Licence Fee (currently between 6 per cent
T E L E C O M M U N I C A T I O N S P A G E 15
and 10 per cent) and Spectrum Charges (currently between …expanding bouquet
2 per cent and 4 per cent) for Basic and Cellular Operators of services to extended
to make the services more affordable. to consumers…
With the introduction of the Unified Access Licensing Regime,
operators can offer telecom access services to consumers
in a technology neutral manner, subject to fulfilling certain
conditions. Introduction of this regime has also broken
the legal/regulatory impasse between the cellular and basic
service providers.
“The Elephant
is on the dance floor…
…and the Band
is playing a Mobile Tune…
…Get on that dance floor
with the Indian Elephant”!!!
NEIL GALLOWAY
Head of Asian Telecom
ABN AMRO BANK, December 2003
Department of Telecommunications
Ministry of Communications
Sanchar Bhawan
20 Ashoka Road
New Delhi 110 001
India
Tel: + 91 11 2371 6666
Fax: + 91 11 2337 2323
Website: www.dotindia.com
T E L E C O M M U N I C A T I O N S
DISCLAIMER
This publication has been prepared for the India Brand Equity Foundation
(“IBEF”).
All rights reserved. All copyright in this publication and related works is owned by
IBEF. The same may not be reproduced, wholly or in part in any material form
(including photocopying or storing it in any medium by electronic means and
whether or not transiently or incidentally to some other use of this publication),
modified or in any manner communicated to any third party except with the
written approval of IBEF.
This publication is for information purposes only. While due care has been taken
during the compilation of this publication to ensure that the information is
accurate to the best of IBEF’s knowledge and belief, the content is not to be
construed in any manner whatsoever as a substitute for professional advice.
IBEF neither recommends nor endorses any specific products or services that may
have been mentioned in this publication and nor does it assume any liability
or responsibility for the outcome of decisions taken as a result of any reliance
placed on this publication.
IBEF shall, in no way, be liable for any direct or indirect damages that may arise due
to any act or omission on the part of the user due to any reliance placed
or guidance taken from any portion of this publication.
The India Brand Equity Foundation is a public-private partnership
between the Ministry of Commerce, Government of India and
the Confederation of Indian Industry. The Foundation's primary objective
is to build positive economic perceptions of India globally.
Tel +91 124 501 4087 Fax +91 124 501 3873
E-mail ajay.khanna@ciionline.org
Web www.ciionline.org
Knowledge Partner