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India Telecoms market - overview and future trends
Publication: 20.02.2008 by Raghunatha Chary
The telecoms industry in India is poising itself for prime positioning, to ensure that it is in the right place at the right time to embrace the many predicted opportunities that are set to hit the country.
GSM players and their market share
Currently the Telecoms market comprises 9 major operators – Bharti Televenture, Vodafone Essar, BSNL & MTNL, Idea Cellular, Aircel Cellular, Reliance, Spice Telecom, Dishnet Wireless and BPL Mobile. The first three operators listed form the leading pack with a combined market share of 76%.
The total telephone subscriber base in India has seen a steady increase of over 50% since December 2006, reaching 241 million in August 2007. Total GSM figures are also enjoying a continual rise of over 40% since December 2006.
There is a definite social lifestyle shift with people starting to embrace technology country-wide rather than just in larger industrial regions, as was previously the case. Increasing growth, positive spin and future investments are all set to play a large part in India’s productivity and profitability in the sector.
Mobile penetration
Although mobile penetration in India is currently 23-24%, this represents an immense opportunity for service providers as this is an area which is forecast to grow rapidly.
Mobile penetration is projected to increase from 12.7% in 2006 to 39.6% in 2011. According to Gartner’s India Telecom Report, July 2007; by 2011 it is expected that 58% of India’s rural population and 95% of the urban population will have mobile connections.
Revenue forecast
The report indicates that India, as an emerging mobile market is set to exceed US$25 billion by 2011, rising from US$8.95 billion in 2006. It is also widely anticipated that revenues from data services will outrun voice services and contribute to 22% of operators’ revenues.
To take voice to the next level in India in terms of data clearing, it could be argued that the operator community needs to be facilitated through the establishment of an integrated Data/IP clearance platform, to build in the revenue assurance factor. This would support and fuel the predicted growth throughout all areas.
EBITDA & Investment
Significantly, a report by Merrill Lynch states that the Indian Telecom industry’s EBITDA margin stands at 37.5%, ahead of the main industry influencers: the US (32%), UK (25.6%), Japan (26%), France (35.6%), Australia (30.5%), Switzerland (37.3%), Germany (34.9), the Netherlands (31.2) and Finland (25%). In terms of Foreign Direct Investment (FDI), the cap has been raised from 49% to 74% leading to a total of US$1 billion as of March 2007. The gates to India are well and truly open for further investment and expansion.
There are lots of activities going on the industry, with several predominant issues/trends:
Pre-paid vs. post-paid
In terms of market share, 80% of the subscriber base in India is on pre-paid connection, with the remaining 20% on post-paid subscriptions. This has given rise to opportunities for generating increased revenue, through exploring potential Value Added Services (VAS) and more exclusive roaming services tailored to pre-paid subscribers. (1)
VAS – the next generation – potential revenue streams
The mobile VAS sector is a potential long-term revenue stream and according to the Cellular Operators Association of India (COAI), is estimated to have grown 60% from 2006 to the end of 2007:
VAS market split
• Person to Person (P2P)* – 40%
• Ringtone downloads – 35%
• Person to Application (P2A)* & Application to Person (A2P)* – 15%
• Games and data – 7%
• Others 3%
*More applicable to SMS services.
Expected revenue sharing belt (VAS products)
• Operators – 60% share
• Developers/aggregators – 25%
• Copy right owner – 15%
Keys trends and analysis highlight India’s push for the next generation of telecoms technology and connectivity, driven by both the industry and consumers. There is a major growth opportunity to provide innovative products to tempt the subscribers and tap into the population’s lifestyle changes/needs.
Wireless trends in India
Recent statistics indicate that the Indian market is also ripe for wireless opportunities and growth. Quarter 3 of 2007 saw the wireless market (Mobile & Wireless Local Loop) reach 184.92 million subscribers; an increase of 10.7% since the previous quarter. Technology wise, GSM technology accounts for 73% of the market share (approximately 136 million subscribers) with CDMA technology accounting for 27% (around 49 million subscribers). (2)
Technology shift-over
It is feasible that CDMA technology may get phased out from India in the future. The two major CDMA players in India (Reliance and Tata Indicom) have gained approval from the Government to use both CDMA and GSM technology. With this, it’s likely that operators will move gradually from CDMA to GSM.
How can MACH facilitate India’s potential and growth?
By transferring MACH’s global know-how and core competencies to the region via their unique solutions portfolio, MACH’s experts can help operators to reach their potential in line with future opportunities in India.
MACH can share and apply its expertise of ‘best in class’ practices gained from experience within developed countries and networks worldwide. This will benefit Indian operators and allow them to tailor their plans to augment the same type of growth in India. MACH can support them as they move towards the next generation of products.
Through the introduction of Revenue Assurance tolls such as IOTs (Inter-Operator Tariffs), Re-pricing and NRTRDE solutions, etc., MACH can build even more value for client operators and help them focus on increased sales opportunities and profitability. Acting as the common platform for operators’ strategies, MACH can help plan and execute various mobile initiatives within the region as a trusted neutral party.
For further information, please visit www.mach.com
Source:
(1) Information extracted from the Cellular Operators Association of India (www.coai.in)
(2) Information extracted from the Telecom Regulatory Authority of India’s reports on Indian Telecom Performance (www.trai.gov.in)
