Indian Telecom sector outlook for the year 2011-12 By Sohag SarkarThe growth seen by the Indian Telephony sector has been nothing short ofextraordinary and remains as one of the fastest growing telecom sectors acrossthe globe. On an average 19.68 million subscribers (Wired & Wireless) areadded per month (Source: TRAI, Telecom Subscription Data, Jan-Mar 2011).The growth is primarily contributed by the wireless segment while the wirelinesegment continues to register negative growth trends. At the end of thefinancial year, the total Telecom subscriber base stands at 846.32 million; thusleading to a national tele-density of 70.89. From here-on, the future outlook ofIndian Telecom for the year 2011-12 looks promising thanks to its enhancedservice introductions, equipment manufacture blooming, launch of variousutility MVAS offerings and upbeat consumer responsiveness.Maturing of 3G Services: During the 3G auction in 2010 the private operatorshave paid INR 67,719 Crores. Another INR 20,000 Crores will be spent on therollout of 3G services across major cities of economic prominence. However, 6-9 months would still be required to achieve a robust & a mature 3G network.Operators’ first prerogative would be to draw the high usage subscribers whoalready own a 3G enabled handset (i.e. approximately 8-10% of their 2Gsubscriber base). Introduction of low price 3G Handset models will sideline theinitial apprehensions of 3G uptake in India. To offer pan-India 3G services totheir subscribers, the operators would focus on collaborative models like 3G-ICR. The entire 3G ecosystem would, therefore, take 12-18 months to takeshape as a fully developed model.Stabilizing of Mobile Number Portability (MNP): Since the national launch,MNP has hit the 10 million mark (i.e. in a span of four and a half months); thusaround 2.22 million subscribers are porting on a monthly basis. It has affectedthe churn rate of operators; however the figures are not too significant as itinitially sounded to be. Interestingly porting trends have shown that lowertariffs might not be the only factor affecting subscriber decision to churn orswitch operators. In 2011-12, operators would witness stabilization of churnowing to MNP as they would try to counter it by means of improved services totheir subscribers.Going Rural with National Broadband Plan: In India less than 30% of thepopulation lives in the urban areas; however the urban tele-density is awhooping 157.32 while it is just 33.79 for rural India. The burgeoning sale of
dual SIM handsets says it all. Operators have already started focusing on therural hinterlands. National Broadband Plan would see light in 2011-12; and OFCnetwork till the 250,000 Gram Panchayats would be targeted over the nextcouple of years (if not to all the inhabited villages).Rise of the Utility MVAS: Telecom industry is witnessing collaborative models(ICR, Infrastructure sharing, etc) not just within the industry but beyond. Theoperators are reaching out to other industries to offer services to the masses.Utility VAS models are becoming reality with m-Health, m-Education and m-Commerce seeing the light of the day. India has an average 0.6 doctors per1000 population against the global average of 1.23; which suggest an evidentgap in primary healthcare services. Tele-medicine and consultation over mobilephones is trying to help gap this disparity to some extend. With the currentliteracy rate of 74.04 percent (as per 2011 Census) m-Learning will provide themuch need fillip to initiatives like “education for all”. m-Payment will providea new & effective means of facilitating national remittances given the changesin RBI Policy and launch of Interbank Mobile Payment Service (IMPS).Local Telecom Manufacturing: The annual handset demand in India stands at140 million units as on date. Given the hitherto growth of subscribers thetelecom equipment market (which includes network equipment as well as end-user devices) is likely to remain strong. Going forward we may see higher localmanufacturing along with research and development, especially withgovernments recent emphasis on establishing strong hardware andmanufacturing component base.Setting the landscape for Consolidation & Policy Reforms: The telecomindustry eagerly awaits the release of National Telecom Policy - 2011. Thepolicy would specify the regulation with respect to spectrum sharing & trading,also the treatment of spectrum in case of mergers and acquisitions (M&As). Itwould be difficult to offer more than 16 companies a profitable sustenance inIndia; the drafting of the NTP-2011 would determine the manner in whichconsolidation would take place over 2011-12.With the initiation of enhanced technology (3G, BWA) & consumer services(MNP); introduction of utility MVAS to the end-consumers, and variousregulatory and policy reforms (National Broadband Plan, Telecom EquipmentManufacturing Policy and NTP-2011) India seems to be well poised to witnessthe one-billion subscriber mark and beyond in 2011-12.