Telecom market in India v/s America: Why equipment vendors prefer U.S. and not us

By Telecom Lead Team: India
has more than 800 mobile customers, but America is the still number one market
for telecom equipment vendors. China, the number one telecom market based on
wireless users, is also yet to overtake America as the preferred market for
making investment returns.

In India, Idea rolled out 2,270 2G cell sites in Q3 (till
December 31, 2011), taking 2G cell sites count to 80,637, while the count of 3G
cell sites increased to  10,902 compared to 9,744 in Q2 FY12.

The total capex of Idea Cellular, which has more than 100
million customers, was Rs 12.6 billion for Q3, including Rs 3.6 billion on
account of capitalized foreign exchange loss. The total capex guidance for Idea
Standalone stands at Rs 40 billion.

Take an example of Verizon that serves around 100 million customers
in entire America. The mobile major spent $729 million for wireless network
investment in 2011 in the state of California to provide new wireless
services, network coverage and additional capacity for its customers across the

Verizon Wireless’ network investment in California totals
more than $7.2 billion since 2000.  Nationally, Verizon Wireless
has invested more than $70 billion to increase the coverage and
capacity of its premier nationwide networks and to add new services.

In 2011, Verizon Wireless launched/expanded its 4G LTE
network in California. Customers throughout the greater Los Angeles and San
Diego regions have access to the most advanced 4G LTE network in the

The Verizon Wireless 4G LTE network is available in 195 US markets
and covers more than 200 million people, providing the fastest 4G network in
the United States. Full nationwide deployment of the company’s 4G LTE network
is scheduled to be complete by the end of 2013.

Ericsson says
India sales decreased 46 percent in Q4 2011 year-over-year to SEK 1.5 billion.
Regulatory uncertainty, particularly around mergers and acquisitions as well as
spectrum trading policy, contributed to a slowdown in infrastructure
investments in the second half of the year.

For Ericsson, Networks sales were positively impacted
by the initial 3G rollouts in the first half of the year.

Ericsson India contributes 4 percent of revenue to total income of Ericsson. China chips in 8
percent of sales. America contributes 21 percent of sales from the earlier 23

China and North East Asia sales increased 15 percent
year-over-year. The increase is related to broad introduction of smartphones by
all operators leading to continuous growth in mobile broadband in the region
together with steady growth of mobile subscriptions.

In Q4 2011, the business mix started to change with
relatively higher share of LTE sales in Korea and in Japan where there was a
substantial amount of project completions. Will Indian growth story resume
in 2013-14?

If the government does not take action, telecom sector will
draw pink slips. We need positive support from the government at a time when
the entire industry is going through a bad phase.

By Baburajan K