Light Reading
A guide to India's fixed and mobile carriers and the 'circles' in which they operate

A Guide to India's Telecom Market

Catherine Haslam
4/19/2009
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In March 2008, Light Reading published A Guide to India's Telecom Operators. It proved to be one of the most popular articles on the site that year.

Now, little more than 12 months later, the Indian market has moved on considerably. Last year's report noted that, at the end of 2007, the country's mobile operators had a total of 233.6 million connections mong them. A year later, as 2008 ended, India's mobile service providers boasted nearly 347 million connections, a year-on-year increase of nearly 50 percent. (See IndiaWatch: Mobile Nears 347M Subs.)

And there's plenty of wireless growth still to come: In the first two months of 2009 alone, the mobile operators activated more than 28 million additional connections. (See India Adds 13M Subs in February and India Adds 15M Mobile Subs in January.)

According to the Telecom Regulatory Authority of India (TRAI) , the total number of telecommunications services connections reached nearly 414 million at the end February 2009, of which more than 90 percent were wireless.

In stark contrast to the mind-boggling growth experienced in the mobile sector, fixed voice connections have suffered a gentle decline in recent years: At the end of February 2009, India, a country of nearly 1.2 billion inhabitants, had just 37.73 million fixed-line connections.

India's fixed-line sector is not dead, though: There's potential growth in that market, too, as well as in the wireless world, though the big numbers and the immediate impact will continue to come in the mobile sector.

There are two obvious ways for the service providers to expand. The first is, quite simply, to connect more people. Teledensity is rising steadily but had only reached 35.65 percent at the end of February 2009, leaving significant potential for additional market expansion.

The majority of growth will now come from outside the metro circles and in the smaller cities, towns, and rural villages as teledensity in the major urban centers has reached 82 percent. It's worth noting that 70 percent of the Indian population lives in rural areas, and, equally importantly, 64 percent of the nation's expenditure and 56 percent of its income comes from these villages – yet India's rural teledensity currently stands at less than 13 percent.

It's the potential for rural area growth that drew five new players into the market in 2008, and it's that same potential that prompted a number of international players, including Telenor ASA (Nasdaq: TELN) and Etisalat , to take major stakes in each of the five (see the Wireless Service Providers section for further details). This trend towards international ownership is now well embedded and is likely to become more prominent when India's 3G spectrum auctions finally take place, which should be later this year.

The second growth driver is new services, such as broadband, IPTV, 3G mobile, and broadband wireless access (BWA), particularly using WiMax technology.

Broadband connectivity is still very low, but state-owned operators Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) , along with private carriers such as Bharti Airtel Ltd. (Mumbai: BHARTIARTL), are slowly increasing their DSL customer bases in urban centers (See the Fixed-Line Service Providers section for more details). Cable companies, such as Hathway Cable & Datacom Pvt. Ltd. and Sify Technologies Ltd. (Nasdaq: SIFY), are also developing broadband businesses, while Reliance Communications Ltd. has concentrated on building out WiMax capabilities to complement its high-speed Ethernet access rollout.

IPTV has struggled to gain traction as a popular service since its initial hype, but is now building, albeit slowly, with a number of service providers still planning to launch their services. With the incredible amount of content created by the Bollywood movie industry, and other local content developers, the potential flexibility offered by IPTV services could work well in the Indian environment, according to Jai Maroo, an industry executive interviewed by Light Reading TV (see below).



It's not all growth and success in the Indian telecom market, though. Plans to promote rural connectivity have fallen short after getting bogged down in bureaucracy, while the Department of Telecommunications 's inability to agree on terms for the 3G and BWA spectrum auctions with other government departments has delayed deployment of mobile broadband solutions, leaving operators frustrated. They are also limited by a lack of spectrum, which, despite the size of the market, is in short supply: Indian operators have received far less than the world average of around 25 MHz apiece.

With so many developments going on, and with so many other markets around the world relatively stagnant in terms of subscriber growth, there's never been a more important time to understand the Indian telecom sector, its service provider players, and its structure. And that's what this report provides.

As well as a visual guide to the country's service areas, known as "circles," this report provides a roll call of the fixed-line and mobile operators, an explanation of the licensing environment, an overview of the many companies involved in the provision of mobile tower sites as India embraces passive infrastructure sharing on a massive scale, and an overview of the country's approach to increasing rural teledensity.

Feedback and comments concerning the report, as well as any updates or additions, are most welcome, and can be added to the message boards at the foot of this page (preferable) or sent to haslam@lightreading.com.

Contents:



— Catherine Haslam, Asia Editor, Light Reading

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User Rank: Light Beer
12/5/2012 | 4:06:42 PM
re: A Guide to India's Telecom Market


The 3G auction will show us which other overseas firms believe they can boost their top and bottom lines by investing in the Indian mobile sector, but is taking a stake in an existing operator a better way forward? The Indian operators appear to be able to make money from very low ARPUs -- I wonder if non-Indian operators could match that capability.


Ray

girish_ketkar
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girish_ketkar,
User Rank: Light Beer
12/5/2012 | 4:06:33 PM
re: A Guide to India's Telecom Market


The map of India shown in this report is incorrect. You have cut off a portion of Jammu & Kashmir which is an integral part of India.


 

girish_ketkar
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girish_ketkar,
User Rank: Light Beer
12/5/2012 | 4:06:30 PM
re: A Guide to India's Telecom Market


Hi Ray,


Thank you for your response. I appreciate the fact that you acknowledged my feedback.


I know that Light Reading wouldn't have any intentions to redraw the political or geographical boundaries of India.


But it was important for me to point out the error.


Once again, thank you for acknowledging my feedback.


Girish


 

digits
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digits,
User Rank: Light Beer
12/5/2012 | 4:06:30 PM
re: A Guide to India's Telecom Market


Hi Girish


Thanks for the note.


I think you need to remember that this is NOT a political map of India -- it is a guide to the telecom circles. The map was built using information provided by the Indian telecom authorities. We certainly don't have any agenda in terms of redrawing the Indian geographic boundaries.


Ray

digits
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digits,
User Rank: Light Beer
12/5/2012 | 4:06:29 PM
re: A Guide to India's Telecom Market
Thanks for the feedback - always welcome!
Ray
taj
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taj,
User Rank: Light Beer
12/5/2012 | 4:04:22 PM
re: A Guide to India's Telecom Market


A pretty detailed introduction to the Indian Telecom market although it is missing national and international marketscape. For instance the market is dominated by 4 players in NLD space and 3 in ILD (Airtel, Reliance, VSNL/TCL, & BSNL and Airtel, Reliance, & VSNL respectively); and many new players have popped up recently e.g. Spice.

menexis
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menexis,
User Rank: Light Beer
12/5/2012 | 4:03:53 PM
re: A Guide to India's Telecom Market
One needs a strong presence to be able to even thing about redrawing the political or geographical boundaries of India.
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