Telecom Trends To Watch In India In 2012


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This report was published on Economics Times 2nd Jan 2012, theme of this report that the global telecom services market to grow at a more modest 4% in 2012 as a result of the rising volatility and uncertainty facing the global economy. We expect total service revenue to reach $1.7 trillion - 2.4% of global GDP - in 2012. India will also witness similar trends: Emergence of mobile broadband, smart devices, more revenue from VAS, manufacturing Industrial setup etc.

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Telecom Trends To Watch In India In 2012

  1. 1. Compiled by Ae g is Leadcap Research and Consulting
  2. 2. SIZE OF RURAL INDIA 70% OF INDIA URBAN Executive Summary <ul><li>After expanding at 7% in 2011, we expect the global telecom services market to grow at a more modest 4% in 2012 as a result of the rising volatility and uncertainty facing the global economy. </li></ul><ul><li>We expect total service revenue to reach $1.7 trillion - 2.4% of global GDP - in 2012. </li></ul><ul><li>India Telecom services, mobile market to touch USD 54.5 billion by 2012. </li></ul><ul><li>India telecom services and mobile handsets market to grow at 16.7% in 2012 (over 2011) to touch revenues of Rs 288,832 crore or USD 63 billion. </li></ul><ul><li>The telecom services (including mobile and fixed line services) will contribute Rs 2,05,454 Crore (USD 45 billion) in 2012. </li></ul><ul><li>Cost Optimisation, Customer Service, Smart Devices and Mobile app ecosystems will be the top trends to watch in 2012 globally. </li></ul><ul><li>This report makes an attempt to provide a bird eye view of what is going to happen in 2012 in Indian telecom space. </li></ul>
  3. 3. Key Telecom Trends to watch in 2012 <ul><li>Wave of Consolidation in Indian Telecom Market </li></ul><ul><li>One India Shine </li></ul><ul><li>Rise of Cloud Computing </li></ul><ul><li>Cable Television : Looking at the digitized future </li></ul><ul><li>National Broadband Network will Operationalize </li></ul><ul><li>Limited roll out of BWA based on LTE </li></ul><ul><li>Smart Devices and Digital Content </li></ul><ul><li>Regulatory Conundrum </li></ul><ul><li>Emphasis of Manufacturing base in India </li></ul><ul><li>Challenging Dynamic Telecom Ecosystem & Business Models </li></ul>
  4. 4. Wave Of Consolidation in Indian Telecom Market <ul><li>The merger and acquisition wave is likely to manifest through consolidation, as the telecom industry is highly fragmented relative to other industries. The current over crowded telecom market with over 13 players is not sustainable due to under price-cut, inefficiency, under-utilization of scarce resources like spectrum. There are player who got telecom license but not rolled out any services or having unsustainable subscriber base will be merged with the larger operator, this will open doors for capital influx and better utilisation of resources including spectrum. </li></ul><ul><ul><li>The telecom industry has topped the charts of merger and acquisition deals, valued at $22.73 billion, across all sectors in the April-June quarter of 2010-11. </li></ul></ul><ul><ul><li>Telecom Commission has not ruled out one-time spectrum fee levy proposal. </li></ul></ul><ul><ul><li>Commission favours auction-based spectrum pricing in future. </li></ul></ul><ul><ul><li>Commission broadly accepts regulator's M&A rule proposals. </li></ul></ul><ul><ul><li>Etisalat, Telenor and Sistema are among those expected to participate in the consolidation process . </li></ul></ul>
  5. 5. <ul><li>In the new Telecom Policy, the One Nation, One License Policy was brought up. By this, there will be no difference between Local and STD Calls. This also means that there will be no roaming charges while in India. New telecom policy is likely to be will be declared in June 2012 </li></ul><ul><li>One licence for telecom services instead of the 22 required (India is divided into 22 </li></ul><ul><li>telecom circles) now. </li></ul><ul><li>Voice, data, internet and multimedia services will be delivered via the same network. </li></ul><ul><li>Any company holding the relevant licence can offer any services. </li></ul><ul><li>No Roaming charges on Mobile phone service. </li></ul><ul><li>Full Mobile Number Portability and work towards One Nation – Free Roaming. </li></ul>One India Shine
  6. 6. Rise in Cloud Computing <ul><li>As improved broadband capacity helps to overcome network bottlenecks ,that cloud-based offerings from telecom operators and ICT providers will continue to grow. Operators can leverage their network-based advantages and strengths in managed services to differentiate their cloud based service offerings. Three major roles for telecom operators are to: manage the cloud connectivity, deliver cloud-based capabilities and, importantly, leverage network assets to enhance cloud offerings. </li></ul><ul><li>Cloud Service Management becomes a requirement for adoption. </li></ul><ul><li>Cloud telephony will take off . </li></ul><ul><li>Cloud Security expands to encompass privacy, compliance, and governance. </li></ul><ul><li>The Service Level Agreement becomes a key buying criterion. </li></ul><ul><li>Corporate management turns attention to security of Big Data. </li></ul>
  7. 7. <ul><li>A boost for the government and the economy, digitisation of Cable TV will also help the government to pursue India's broadband goals and thereby help to boost economic growth. It will offer consumer with various choices of TV channels, a better viewing experience and improved quality of services. </li></ul><ul><li>The Indian TV distribution industry now comprises of 6000 Multi System Operators (MSOs), around 60,000 Local Cable Operators (LCOs), 7 DTH/ satellite TV operators and several IPTV service providers. </li></ul><ul><li>There are over 116 million cable television homes , of which 39.5 million are digital subscribers. </li></ul><ul><li>It is estimated that the total investment required for complete digitisation would be close to Rs 18,000 crore . Among the listed players, Den Networks, Hathway Cable and Datacom raised close to Rs 1,030 crore through initial public offering. </li></ul><ul><li>The Ministry has revised the timelines for implementation of digital cable systems in four phases in india and to be completed by 31 st March 2015. </li></ul><ul><li>Mandatory digitization will provide opportunities for consolidation in the cable </li></ul><ul><li>industry too. </li></ul>Cable Television : Looking at the Digitized Future
  8. 8. National Broadband Network will Operationalize <ul><li>The Telecom Regulatory Authority of India (TRAI) has proposed a INR600bn (US$13.2bn) national broadband network for India that aims to increase the number of broadband connections to 160mn by 2014, up from 10.3mn in September 2010. This is an attempt for rural areas to provide opportunity like e-governance, e-education etc. </li></ul><ul><ul><li>Trai had recommended setting up a national broadband network at a cost of about Rs 60,000 </li></ul></ul><ul><ul><li>crore in order to achieve 160 million broadband connections by 2014. </li></ul></ul><ul><ul><li>Government has approved National Optical Fiber Network  in October 2011 for providing </li></ul></ul><ul><ul><li>broadband connectivity to all Panchayats at a cost of approx Rs 20,000 crore </li></ul></ul><ul><ul><li>All 250,000 village panchayats in the country will be connected with broadband by mid-2012 </li></ul></ul><ul><ul><li>NOFN will enable effective and faster implementation of various mission mode e-governance </li></ul></ul><ul><ul><li>projects amounting to Rs.50,000 crore initiated by the Department of Information Technology </li></ul></ul>
  9. 9. Limited roll out of BWA based on LTE <ul><li>With improved range and connection speeds up to 100 times faster than today’s 2G and 3G data services, these LTE-connected systems will enable unprecedented applications. </li></ul><ul><li>The BWA spectrum is expected to drive rapid mobile broadband penetration in the country currently abysmally low at 12.12 million subscribers, according to the Telecom Regulatory Authority of India. </li></ul><ul><li>Reliance – Infotel was expected to launch BWA Data service on 28 th December 2011, but now it </li></ul><ul><li>is delayed and expected to be launched in 2012 with data speeds from 50 Mbps to 100 Mbps. </li></ul><ul><li>RIL has planned to cover 100 million subscriber in next four years, with $ 200 each subscriber, </li></ul><ul><li>leading to a woofing revenue of around $ 24 million. </li></ul><ul><li>Other operator are like Airtel, Tikona, Qualcomm will ride over the advantage of BWA . </li></ul><ul><li>Auto manufacturers recognize that LTE is the future of mobile connectivity, and many are already planning LTE-equipped vehicles for as soon as 2014. </li></ul>
  10. 10. Smart devices and Digital content <ul><ul><li>As 3G will be stabilized by 2012 which will fuel 4G, smart devices like tablet, smart phone, smart TV will become a media for video and digital content consumption. </li></ul></ul><ul><ul><li>Last time it was Vodafone , now Airtel and Aircel have tied up with Iphone 4S launched in India. </li></ul></ul><ul><ul><li>India's $35 tablet computer &quot;Aakash&quot; unveiled even such launches flood market. </li></ul></ul><ul><ul><li>Reliance Infotel, with pan India BWA spectrum, will offer LTE tablets for as low as $70. </li></ul></ul><ul><ul><li>India has 75 million possible smart-device users, followed by 65 million in Japan, and 34 million in Brazil and in Germany. </li></ul></ul><ul><li>The India mobile handsets market, that includes featurephones and smartphones, will grow at a CAGR of over 30 percent during 2012 to touch revenues of Rs 83,377 crore (USD 18 billion). </li></ul><ul><li>India domestic mobile handsets market will be fuelled by a more than 150% increment in the value of featurephones and smartphones shipped, from Rs 50,714 Crore in 2010 to Rs 1,28,729 Crore in 2014. </li></ul><ul><li>First time in history NTT DOCOMO, Japan has surpassed the voice revenue over data revenue. </li></ul>
  11. 11. Emphasis of Manufacturing base in India <ul><li>The growth of Indian telecom market has also enabled various telecom equipment companies to flourish in India. While on the mobile devices side, there are a number of Indian companies such as Micromax, Karbonn Mobiles, Lava, etc that came up in recent years, a few Indian companies such as HFCL, Coral Telecom, Tejas Networks, VMC, etc., had ventured into core telecom space much before the handset companies . </li></ul><ul><li>India being an import-centric industry, is slowly but steadily moving towards becoming a global telecom equipment manufacturing hub. </li></ul><ul><li>According to the Ovum Research, the 2012-2013 forecast for the Telecom Equipment demand in India constitutes 6.2% ( Rs.76,940 cr) of the total global Demand ( Rs. 1,638,255 cr). </li></ul><ul><li>If domestic manufacturing is not initiated, India will be compelled to import U.S. $ 150 billion worth of semiconductors in next 10 years. </li></ul><ul><li>Requirement of 3G equipment is expected to be of the order of Rs 10,127 crore and </li></ul><ul><li>LTE and WiMax about Rs 12,659 crore in 2015-16. </li></ul>
  12. 12. Regulatory Conundrum <ul><li>Indian telecom regulations is undergoing a lots of uncertain situation which has affected the Telecom growth during the year 2011. Telecom Players has almost backslidden from doing any investment in new ventures. Every path is leading to another unknown path due to unclear regulatory framework. Indian regulatory body need to overcome the nitty-gritty issue of political scams and really work toward strong and stabilized regulatory Policies . </li></ul><ul><li>Regulatory initiatives like the mobile number portability and dealing with issues such as pesky calls also put additional cost burden on the operators </li></ul><ul><li>There must be more clarity on certain issues like re-licensing norms, pricing of spectrum, availability of additional spectrum </li></ul><ul><li>Government needs to stabilize the regulations to increase investors confidence. </li></ul><ul><li>Much awaited telecom policy to be released in Jan 2012 is expecting policies that will facilitate nation-wide free roaming, frame an exit policy for operators to surrender licences, give a push to indigenous manufacturing and promote an eco-system for development of a self-dependent telecom industry. </li></ul>
  13. 13. Today telecom any indian telecom operator’s situation is not quite diffenet than a marathon runner who is running on a ever changing track. Operators are doing business under highly dynamic and volatile economic and regulatory environment. Above all they are under constant threat and pressure from ever changing business models; every day the whole telecom ecosystems is changing its dynamics, adding new players . In last 20 years telecom business has drastically changed. No more it is offering only voice services nor it is controlled by traditional telecom operator and telecom vendors. In 2012 will see large piece of telecom cake will be grapped by consumer electronics companies. Mobile device provider’s, smart device provider’s, social networking companies, content providers etc. To survive in 2012 the companies and executives need to evolve themselves to better understand where the world is going and come up with a flexible dynamic business model, which can handle growing challenges from destructive business model and technologies, but at the same time grab the opportunity this digital world has to offer. Emerging Telecomm Ecosystem and Business Model
  14. 14. <ul><li>Contact: </li></ul><ul><li>Ashutosh Pandey, Consultant, Aegis, Email: [email_address] Cell : +91 9769831145 </li></ul><ul><li>Arvindkumar S, Consultant, Aegis, Email: [email_address] Cell : +91 9867893957 </li></ul><ul><li>Mridula Sharma , Consultant, Aegis, Email: [email_address] Cell : +91 9619596514 </li></ul><ul><li>Aegis-Leadcap Research and Consulting, Aegis School of Business and Telecommunication | Mahesh, Plot No.37, Sector 15, | Central Business District (CBD), Belapur | New Mumbai | MH | 400614 | India </li></ul><ul><li>Bhupesh Daheria, CEO, Aegis, Email: [email_address] Cell: +91 9820870483 </li></ul><ul><li> </li></ul><ul><li>Web:|| </li></ul><ul><li>Disclaimer </li></ul><ul><li>This publication has been prepared for general guidance on matter of interest only, and does not constitute professional advice. Thy should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty is given as to the accuracy or completeness of the information contained in publication and to the extent permitted by law, Aegis Consulting and Research wing of Aegis School of Business, its member, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequence of you or anyone else acting , or refraining to act on the information contained in this publication or for any decision based on it. </li></ul><ul><li>© May 2011 by Aegis School of Business and Telecommunication. All rights reserved. Unauthorized use of the material without written permission is strictly prohibited and leads to legal action. </li></ul>
  15. 15. The market is currently dominated by multinational companies like Huawei, NSN, Alcatel-Lucent and ZTE and Domestic companies like Micromax, Lemon,MAXX, Videocon and LAVA are competing with international handset vendors. A list of top ten manufacturers by value of the handsets sold in India during the year 2009-10 is given in Table. Out of the total market size of Rs 27,000 crore the top ten companies had about 92% share . Annexure
  16. 16. 2012: India Will Go Smarter With Smart Phones That shows who has already bought a device, but what about the next wave of smart-device consumers?
  17. 17. In 2012 India Will Transform Smartphones India is close in size to China, it has a much smaller middle- and upper-class population, and adoption among people who can afford a smart-device has been slower than in other countries
  18. 19. Indian Telecom Equipment Demand
  19. 20. India Manufacturing Potential
  20. 21. Aegis School of Business <ul><li>Aegis School of Business is among the top schools in India for telecom management, started with support from Bharti Airtel for developing the next generation cross functional leaders for telecom industry. Aegis is the first school to start Executive Telecom Management in India for working executives in Telecom and IT and Business consulting programs. Aegis is having academic alliance with Telecom Ecole de Management a leading Business School in France. </li></ul><ul><li>Aegis-Leadcap Research and Consulting is a joint initiative of Aegis and Leadcap Ventures. We help in finding solutions to the problems currently Confronting your organization. Get a fresh, multi-disciplinary and multi-Cultural perspective on any challenge or opportunity your business is facing from our high caliber faculty and student consulting teams. </li></ul>Aegis- Leadcap Research & Consulting