Telecom Sector in India

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TELECOM SECTOR IN INDIA
August 2012

1. INDUSTRY OVERVIEW
1.1

Introduction
The Indian telecommunications industry is one of the fastest growing in the world. Government policies and regulatory framework implemented by Telecom Regulatory Authority of India (TRAI) have provided a conducive environment for service providers. This has made the sector more competitive, while enhancing the accessibility of telecommunication services at affordable tariffs to the consumers. In the last two decades, the Indian Telecom Sector and mobile telephony in particular has caught the imagination of India by revolutionizing the way we communicate, share information; and through its staggering growth helped millions stay connected. This growth, however, has and continues to be at the cost of the Climate, powered by an unsustainable and inefficient model of energy generation and usage. Simultaneously, this growth has also come at significant and growing loss to the state exchequer, raising fundamental questions on the future business and operation model of the Telecom sector. The telecom industry has witnessed significant growth in subscriber base over the last decade, with increasing network coverage and a competition-induced decline in tariffs acting as catalysts for the growth in subscriber base. The growth story and the potential have also served to attract newer players in the industry, with the result that the intensity of competition has kept increasing. The sector expected to witness up to US$ 56.3 billion investments and the market will cross the US$ 101 billion mark in five years.

1.2

Current Scenario
The Indian telecom sector has witnessed tremendous growth over the past decade. Today, the Indian telecom network is the second largest in the world after China. A liberal policy regime and involvement of the private sector have played an important role in transforming this sector. The total number of telephones has increased from 429.73 million on 31 March 2009 to 926.55 million on 31December 2011.

The telecom industry has witnessed significant growth in subscriber base over the last decade, with increasing network coverage and a competition-induced decline in tariffs acting as catalysts for the growth in subscriber base. The growth story and the potential have also served to attract newer players in the industry, with the result that the intensity of competition has kept increasing. Also, broadband segment has seen significant growth with total internet subscribers reaching 20.99 million in September 2011, which includes 13.30 broadband subscribers. Liberalization of the sector has not only led to rapid growth but also helped a great deal towards maximization of consumer benefits, evident from a huge fall in tariffs. Telecom sector has witnessed a continuous rising trend in the total number of telephone subscribers and hence the teledensity. In simple terms, ‘Teledensity’ is the number of landline telephones in use for

every 100 individuals living within an area. A teledensity greater than 100 means there are more telephones than people.
Third-world countries may have a
teledensity of less than 10. Teledensity is
also an important indicator of telecom
penetration in the country. Teledensity has
increased from 18.2 per cent in March 2007
to 76.86 per cent in December 2011.
Teledensity varies across circles and there is
significant urban-rural divide.
While urban teledensity reached 167.4 per
cent at the end of December 2011 and rural
teledensity was only 37.5 per cent. At circle
levels also, while some circles such as Delhi
(235.6 per cent), Mumbai (188.95 per cent),
Kolkata (168.45 per cent), Chennai (170.18
per cent), and Himachal Pradesh (118.63
per cent) have high teledensity, in some
circles such as Bihar (47.17 per cent) and
Assam (45.85 percent), it is very low. The
steps that been undertaken to improve
teledensity, particularly in rural areas.

Circle wise Overall Tele-density June
All...
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