8/7/2019 The Indian telecommunications industry is one of the fastest growing in the world

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The Indian telecommunications industry is one of the fastest growing in the world. The

industry has witnessed consistent growth during the last year on the back of rollout ofnewer circles by operators, successful auction of third-generation (3G) and broadbandwireless access (BWA) spectrum, network rollout in semi-rural areas and increased focuson the value added services (VAS) market.

According to the Telecom Regulatory Authority of India (TRAI), the number oftelephone subscriber base in the country reached 742.12 million as on October 31, 2010,an increase of 2.61 per cent from 723.28 million in September 2010. With this the overalltele-density (telephones per 100 people) has touched 62.51. The wireless subscriber basehas increased to 706.69 million at the end of October 2010 from 687.71 million inSeptember 2010, registering a growth of 2.76 per cent.

Meanwhile, Indian Global System of Mobile Communication (GSM) telecom operatorsadded 17.45 million new subscribers in November 2010, taking the all-India GSMcellular subscriber base to 526.18 million, according to the Cellular OperatorsAssociation of India (COAI). The GSM subscriber base stood at 508.72 million at the endof October 2010.

Value-Added Services (VAS) Market

Mobile value added services (VAS) include text or SMS, menu-based services,downloading of music or ring tones, mobile TV, videos and sophisticated m-commerce

applications. As per a report, India Telecom 2010 released by KPMG in December2010, currently, the VAS market is worth US$ 2.45 billion-US$ 2.67 billion, which isaround 10 per cent of the total revenue of the wireless industry. The share of VAS inwireless revenue is likely to increase to 12-13 per cent by 2011, on the back of increasedoperator focus on VAS due to continuous fall in voice tariffs, increasing penetration offeature rich handsets, availability of vernacular content and increased user adoption ofVAS applications.

Major Investments

The booming domestic telecom market has been attracting huge amounts of investment

which is likely to accelerate with the entry of new players and launch of new services.According to the Department of Industrial Policy and Promotion (DIPP), thetelecommunications sector which includes radio paging, mobile services and basictelephone services attracted foreign direct investment (FDI) worth US$ 1,062 millionduring April-October 2010-11. The cumulative flow of FDI in the sector during April2000 and October 2010 is US$ 9,993 million.

8/7/2019 The Indian telecommunications industry is one of the fastest growing in the world

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As per an industry report the telecom industry witnessed merger and acquisition (M&A)deals worth US$ 16.60 billion during April-December 2010, which represented 28.26 percent of the total valuation of the deals across all the sectors during the period analysed.There were 10 inbound, outbound and domestic M&A deals in the telecom sector duringthe first nine months of the current fiscal. The biggest M&A deal in the sector was made

by telecommunications service provider Bharti Airtel through the acquisition of ZainsAfrican mobile services operations in 15 countries. The deal involved a transaction ofUS$ 10.7 billion. In another deal, Bharti Airtel acquired 100 per cent stake of TelecomSeychelles Ltd for US$ 62 million.

Other major M&A deals included the acquisition of 95 per cent stake in InfotelBroadband for US$ 1,032.26 million by Reliance Industries and 26 per cent stake of US-based mobile chipmaker Qualcomms Indian arm for US$ 57.72 million by India's TulipTelecom and Global Holding. Further, India-based GTL Infrastructure Ltd has bought17,500 telecom towers of Aircel Ltd. for US$ 1,702.95 million.

Going Global

In March 2010, Bharti Airtel bought the African operations of Kuwait-based ZainTelecom for US$ 10.7 billion, driving the Indian player into the league of top ten telecomplayers globally.

The Reserve Bank of India (RBI) has liberalised the investment norms for Indian telecomcompanies by allowing them to invest in international submarine cable consortia throughthe automatic route. In April 2010, RBI issued a notification stating "As a measure offurther liberalisation, it has now been decided... to allow Indian companies to participatein a consortium with other international operators to construct and maintain submarine

cable systems on co-ownership basis under the automatic route." The notification furtheradded, "Accordingly, banks may allow remittances by Indian companies for overseasdirect investment."

Tele-medicine

With increase in cell phone users to around 700 million and introduction of 3G servicessoon in the country, remote treatment and diagnosis of patients through mobile phoneswould become a reality in the near future. In fact, a few telecom operators and value-added service developers are planning to use mobile phones for diagnostic and treatmentsupport, remote disease monitoring, health awareness and communication.

The Gujarat health department plans to connect all villages through its telemedicinenetwork. The state government has so far expanded the reach of telemedicine servicesfrom 53 villages in 2008 to 453, and hopes to cross 500 villages soon. Jay Narayan Vyas,state health minister, said "First thing we plan to do is to start the 104 service over thephone. People can call up and talk to paramedics in call centers who can suggest theprimary action to be taken in case of any health emergency. Also, they would be able tosuggest generic and over the counter drugs."

8/7/2019 The Indian telecommunications industry is one of the fastest growing in the world

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