The Indian telecom sector is set to provide employment to around one crore people by 2012. This figure would include 28 lakh direct jobs and around 72 lakh indirect jobs, according to a recent study commissioned by COAI and conducted by research firm, PwC.
Contributing nearly two percent to the GDP, the Indian telecom industry is set to exceed $30 billion by 2013, according to a report by Gartner, which states that the industry is growing at an annual CAGR of 12.5 percent.
The research firm also states that mobile market penetration is projected to increase from 38.7 per cent in 2009 to 63.5 per cent in 2013. The wireless telephony industry has grown by over 700 per cent in the last 13 years, from less than 10 lakh subscribers in 1998 to over 886 million subscribers, as of June 2011.
With 13 operators and the world’s lowest tariff rates for voice and data, VAS plays a major role in the fiercely competitive Indian telecom market, and is today pegged at US$ 2.45 billion-US$ 2.67 billion, according to a KPMG study – which makes up around 10 per cent of the total revenue of the wireless industry. The share of VAS in wireless revenue is also likely to increase to 12-13 percent in 2011, with the onset of 3G, the rise of smartphones and apps.
The pace of rural teledensity is also growing steadily, with innovative offerings by operators and the government for rural areas – like m-banking, telemedicine, m-health, tele-education, mandi bhav, weather reports, and daily news updates in vernacular languages, as well as IVRS solutions for the illiterate.
According to TRAI figures for the quarter ending March 2011, urban teledensity increased from 147.88 to 157.32 in the quarter, while rural teledensity increased from 31.18 to 33.79. The share of rural subscribers has increased to 33.35 percent in total subscription from 33 percent at the end of December 2010.
However, while wireless services have been witnessing steady growth, wireline has continued to fall behind, ending with a subscriber base of 34.73 million at the end of March 2011, as compared to 35.09 million in December 2010.
With BSNL being funded by the USO Fund to provide mass broadband to rural areas, and panchayats, as well as with 3G penetration aiding a data boom, broadband penetration is gradually growing in the country.
As per TRAI figures for March 2011, broadband subscribers increased from 10.99 million at the end of December 2010 to 12.32 million at the end of June 2011, registering a quarterly growth of 8.17 percent and Y-O-Y growth of 35.49 percent. Internet subscribers increased from 18.69 million at the end of December 2010 to 19.67 million at the end of March 2011, registering a quarterly growth rate of 5.29 percent.
3G and MNP have also provided a boost to the Indian telecom sector. While there were an estimated 9 million 3G subscribers in the country as of May 2011, with mass roll-outs in urban and rural areas, MNP has attracted a churn of almost 13 million subscribers, as of June 2011.
However, FDI investment in the telecom sector in India has witnessed a significant decline of almost 35 percent, with total FDI investment in FY2011 pegged at $1.7 billion, as compared with $2.6 billion in FY2010. Investments in this sector by leading operators were also down by 50 per cent. This can be attributed to slow recovery from the recession by US and Europe – which makes up a majority of India’s FDI investments.
According to a recent statement by DoT, the Indian telecom industry requires an estimated investment worth Rs 6.5 trillion for the 12th Five-Year Plan (2012-2017). Out of this, Rs 1 trillion of the total projected investment is likely to be generated from the auction of spectrum and renewal of licenses, while telecom equipment may generate Rs 2.85 trillion, upgradation of telecom networks will mop up Rs 1.4 trillion and broadband is expected to attract an investment of Rs 1.25 trillion during the period.
While ARPUs for GSM services declined by 4.52 percent from Rs 105 in QE Dec-10 to Rs 100 in QE Mar-11, with Y-O-Y decrease of 23.7 percent, CDMA services ARPU also declined by 3.79 percent, from Rs 68 in QE Dec-10 to Rs 66 in QE Mar-11, with a Y-O-Y decline of 13.81 percent. However, the recent decision by leading telcos, Bharti Airtel, Vodafone Essar, Idea Cellular and Reliance Communications to raise prepaid voice and data tari8ffs, may bring some relief to critically falling ARPUs.
According to DoT’s Five-Year-Plan, India is also projected to have 1,200 million telephone subscribers by 2017; 25 percent of which will include 3G and 4G subscribers, while broadband penetration is expected to throw up approximately 175 million subscribers by the end of 12th Five-Year Plan. DoT has also pressed for 100 percent preference to be given to Indian telecom manufacturers, creating around 100 million jobs in the Indian telecom manufacturing sector by 2025.
By Beryl M