Telecom Lead India: Mobile users and enterprises in India will
spend an additional around Rs 2,500 crore for connecting each other as service
tax on telecom tariffs will go up by 2 percent.

Increased rate of service tax will impose burden on the
telecom consumers, which is likely to be around Rs 2,500 crore,” said Hemant
Joshi, partner of Deloitte Haskin & Sells.

According to India Government’s Economic Survey, profit
after tax of Indian telecom services segment is expected to decline 85 percent
in 2011-12.

The Economic Survey said growth in income from the telecom
services segment is expected to be 8.7 percent in 2011-12 and 10.6 percent in
2012-13. During 2010-11, telecom services revenue grew 10.5 percent. Hyper
competition is the main reason for marginal decline in growth between 2010-11
and 2011-12.

Telecom
operator revenue in India grew 19 percent to Rs 49,877 crore in Q2 2011-12

Revenue of telecom operators in India grew at 19 percent in
Q2 2011-12 to Rs 49,877 crore from Rs 41,840 crore in Q2 2010-11, according to
TRAI.

Indian
telecom service providers’ revenue is likely to grow at 9.5 percent to $38.59
billion in 2011

According to Ovum, Indian telecom service providers’ revenue
is likely to grow at 9.5 percent to $38.59 billion in 2011 from $35.24 billion in
2010. Out of this, mobile service revenue is likely to grow at 13.7 percent to
$29.75 billion in 2011 from $26.16 billion in 2010.

Mobile phone parts have been exempted from custom duty which
is likely to decrease the prices of handsets manufactured in India. This will
be creating positive impact on the industry.

Since several operators exited from India following the
Supreme Court order, there will be significant change in subscriber base from
February 2012. The increase in service tax will pose more challenges to the
growth in mobile users.

According to TRAI, telecom operators have added 9.88
million mobile subscribers in January, taking the total number of wireless
users in India to 903.73 million.

The total telecom subscriber base (wireless+wireline) of the
country stood at 936.12 million at the end of January, taking the overall
tele-density to 77.5 percent.

The wireline segment of the industry has seen a decline of
0.90 percent in January, with wireline subscribers stood at 32.39 million.