ndia's teledensity has improved from under 4% in March 2001 to around 53% by the end of March 2010.

Cellular telephony has emerged as the fastest growing segment in the Indian telecom industry. The
mobile subscriber base (GSM and CDMA combined) has grown from under 2 m at the end of FY00 to
touch 584 m at the end of March 2010 (average annual growth of nearly 76% during this ten year period).
Tariff reduction and decline in handset costs has helped the segment to gain in scale. The cellular
segment is playing an important role in the industry by making itself available in the rural and semi urban
areas where teledensity is the lowest. 


The fixed line segment has actually seen a decline in the subscriber base. It has declined to 36.96 m
subscribers in March 2010 from 37.96 m in March 2009. The decline was mainly due to substitution of
landlines with mobile phones. 


As far as broadband connections (>=256 kbps) are concerned, India currently has a subscriber base of
8.8 m. It has grown at an average annual growth rate of 40% since 2008. The auction for broadband
wireless license and spectrum has concluded recently. The government is expected to allocate spectrum
before the end of this year. This will further boost the broadband penetration in the country.
Key Points

Supply
Intense competition has resulted in prompt service to the subscribers.

Demand
Given the low tariff environment and relatively low rural and semi urban penetration levels, demand will
continue to remain higher in the foreseeable future across all the segments.

Barriers to entry
High capital investments, well-established players who have a nationwide network, license fee,
continuously evolving technology and lowest tariffs in the world.

Bargaining power of suppliers

Improved competitive scenario and commoditisation of telecom services has led to reduced bargaining
power for services providers.

Bargaining power of customers

A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in
increased bargaining power for the customers.
Competition
Competition has intensified with the entry of new cellular players in circles. Reduced tariffs have hurt all
operators.
 Financial Year '10
FY10 saw the continuance of strong growth for the Indian telecom market, which witnessed a 45%
YoY increase in its subscriber base during the 12-month period. At the end of March 2010, the
country's total telecom subscriber base (fixed plus mobile) stood at about 621 m. The tele-density level
stood at about 53% by the end of the fiscal. 

Growth remained robust in the GSM mobile space. GSM added 87 m subscribers during the year.
After a strong 50% YoY increase in subscriptions during FY09, the GSM industry recorded another
good performance during FY10, growing subscriber base by 22% YoY to about 479 m. 

During FY10, India's mobile subscriber base grew by 49% YoY, from 392 m to 584 m, while the fixed
subscriber base declined by about 3%, from 37.9 m to about 36.9 m.

TOP

 Prospects
As far as the fixed line business goes, the low penetration levels in the country and the increasing
demand for data based services such as the Internet will act as major catalysts in the growth of this
segment. The PSUs will however continue to retain their dominant position. This is on account of high
capital investments required in setting up a nationwide network. As a result, the private sector players
will have to rely on key business centers and pockets of high urbanisation for their growth. 

Increasing choice and one of the lowest tariffs in the world have made the cellular services in India an
attractive proposition for the average consumer. The segment's subscriber base has grown by over
49% YoY in FY10. As per Pricewaterhouse Coopers, India's mobile subscriber base is expected to
exceed 1 bn by 2014 and will be driven by additions in the rural areas. India's rural tele-density for
mobile subscribers currently stands at 32.7%. 

During FY10, the Government completed the auction of 3G as well as the Broadband Wireless Access
(BWA) spectrum auctions. The final price for a pan India 3G spectrum stood at a whopping '16,751
crores. As a result, there was no single operator with a pan India license. The maximum circles that an
operator got 3G spectrum was for 13 circles. For BWA, the final auction price for a pan India license
was '12,848 crores. There emerged a new competitor in this field with Reliance backed Infotel being
the only operator to win a pan India BWA license. 

During the year the Telecom Regulatory Authority of India (TRAI) also proposed new guidelines for
charging spectrum fee and for mergers and acquisitions in the sector. On the face of it these
guidelines appear to be more detrimental for the sector rather than helpful. If applied, these guidelines
would increase the financial burden for the GSM operators by making them pay higher spectrum
charges as well as humongous fee for holding higher quantities of spectrum. The guidelines also pose
hurdles for mergers and acquisition activities, which are essential for reducing the overheated
competition in the sector which currently has about 15 operators. 
 During the current fiscal, a lot of focus will be given to new policy initiatives in the industry. The
telecom regulator TRAI has set October 31st as the date for implementing mobile number portability
(MNP) which allows subscribers to switch networks without changing the number. This would definitely
lead to an increase in churn in the sector with each operator vying for subscriber attention to their own
networks. In addition to this, the government is supposed to allocate 3G spectrum later during the
year. Therefore, by the end of this fiscal, the operators would start rolling out 3G services in some
circles at least.

Budget 2010-11: Telecom

The Indian telecom industry has continued with its strong subscriber additions during the current year. At
the end of January 2010, the total subscriber base stood at nearly 582 m, of which wireless subscribers
contributed to nearly 94%. During March 2009, this figure had stood at about 429 m. The key reason for
such a growth in subscriber base has been the affordability factor. With many new entrants launching
services in India, competition has reached unprecedented levels. The new entrants have resorted to offer
very attractive schemes in attempt to grab their share of the overall market. While companies all across
have been able to add subscribers to their base, the benefits of the same have not really been reflected in
their financial performances. This is on the back of a sharp decline in tariffs.
 Budget Measures
The allocation for National Rural Employment Guarantee Scheme (NREGS) has been marginally increased to Rs 401 bn for
FY11 as compared to Rs 391 bn last year.
Full exemption of the countervailing duty (CVD) of 4% on accessories, parts and components imported for the manufacture of
mobile phones has been extended for the full year. Plus, this exemption has been extended towards battery chargers and
hands-free headphones as well.
Excise duty exemption on parts, components and accessories of mobile handsets including cellular phones has been extended
to battery chargers and hands-free headphones as well.
Mobile phones imported in pre-packaged form and intended for retail sale are being provided an outright exemption from
additional duty of customs of 4%.
Increase in the rate of Minimum Alternate Tax (MAT) from 15% to 18% of book profits.

Surcharge on domestic companies reduced to 7.5% from 10%.

 Budget Impact
Increase in allocation for the NREGS will help in targeting more customers in the rural areas.

Lower CVD on accessories, parts and components will help in keeping the cost of handsets low.

Imported mobile phones would become cheaper leading to increased affordability in urban and semi-urban regions as well.
The increased MAT rate would impact the bottomline of telecom operators.

 Company Impact
Considering many new players have launched mobile services in India, the incumbents are looking at targeting smaller town
and villages for maintain their leadership position in terms of revenues and subscriber growth. Companies such as Bharti Airtel,
Reliance Communication and Idea Cellular, which are present across India with a good distribution network, would be the key
beneficiaries.
With the government aiming at improving the amount of disposable income in the hands of the people, it would help the telcos.

Telecom companies would be able to enjoy the benefits of low cost handsets as it would help in keeping the strong pace of
subscriber additions buoyant. This would hold strong for rural markets.
Increase in MAT to impact profits of Bharti Airtel and Reliance Communications.

To find :

Market share of major player

www.indiatelecom.org

www.trai.gov.in

www.telecommindia.com

www.telecomindiaonline.com

www.dot.gov.in

Overview Of Telecom Industry

Indian Telecom sector, like any other industrial sector in the country, has gone through many phases of growth and
diversification. Starting from telegraphic and telephonic systems in the 19th century, the field of telephonic
communication has now expanded to make use of advanced technologies like GSM, CDMA, and WLL to the great 3G
Technology in mobile phones. Day by day, both the Public Players and the Private Players are putting in their resources
and efforts to improve the telecommunication technology so as to give the maximum to their customers.

Fixed-line Telephony

Public Players
o Subscribers
Private Players
o Subscribers

Mobile Telephony

Public Players
o Subscribers
Private Players
o Subscribers

Internet

Investment 

The Indian telecom sector can be broadly classified into Fixed Line Telephonyand mobile telephony. The major players of
the telecom sector are experiencing a fierce competition in both the segments. The major players like BSNL, MTNL, VSNL
in the fixed line and Airtel, Hutch, Idea, Tata, Reliance in the mobile segment are coming up with new tariffs and discount
schemes to gain the competitive advantage. The Public Players and the Private Players share the fixed line and the mobile
segments. Currently the Public Players have more than 60% of the market share. 

Market shares of public and Private Players 

Both fixed line and mobile segments serve the basic needs of local calls, long distance calls and the international calls,
with the provision of broadband services in the fixed line segment and GPRS in the mobile arena. Traditional telephones
have been replaced by the codeless and the wireless instruments. Mobile phone providers have also come up with GPRS-
enabled multimedia messaging, Internet surfing, and mobile-commerce. The much-awaited 3G mobile technology is soon
going to enter the Indian telecom market. The GSM, CDMA, WLL service providers are all upgrading themselves to provide
3G mobile services. 

Along with improvement in telecom services, there is also an improvement in manufacturing. In the beginning, there were
only the Siemens handsets in India but now a whole series of new handsets, such as Nokia's latest N-series, Sony
Ericsson's W-series, Motorola's PDA phones, etc. have come up. Touch screen and advanced technological handsets are
gaining popularity. Radio services have also been incorporated in the mobile handsets, along with other applications like
high storage memory, multimedia applications, multimedia games, MP3 Players, video generators, Camera's, etc. The
value added services provided by the mobile service operators contribute more than 10% of the total revenue. 

The leading cellular service providers have the following number of subscribers: 
 Service Provider No. of CDMA Subscribers No. of GSM Subscribers
Reliance 2.75 crores 38.76 lakhs
Tata 1.07 crores
Airtel 3.37 crores
MTNL 24.98 lakhs
BSNL 2.44 crores
Hutch 2.44 crores
Idea 1.3 crores
Spice 25.56 lakhs
BPL 10.62 lakhs
Aircel 48 lakhs

Bharti Airtel has the largest customer base with 31% market share, followed by Hutch and BSNL with each holding 22%
market share. 

The 2007 budget has brought further relief to the customers with the reduction in the tariffs, both local and long distance,
and with slashing down the roaming rentals. This is likely to lead to even more people going for cellular services and more
and more use of the value added services. However, landline telephony is likely to remain popular, too, in the foreseeable
future. MTNL, the largest landline service provider, has recently taken some bold initiatives to retain its market share and,
if possible, expand it.