According to the latest numbers collected by the Telecom Regulatory Authority of India (TRAI) , the country's subscriber growth is accelerating fast -- the number of phone connections grew by a record 3.79 million during November, compared with 3.24 million subscribers added in October and 2.87 million in September.
Emerging markets with little installed telecom infrastructure are finding it easier to install wireless networks, and India's no exception: 3.51 million of the subscribers added in November were mobile customers, and most of the 280,000 fixed-line subscribers were connected using wireless local loop.
India now has 48.47 million fixed subscribers and 71.46 million mobile users for a total of 120 million.
That may seem like a large figure, but with a population of 1.08 billion, it translates to just 11 phones for every 100 people. And that number is skewed by the relative wealth of the cities -- while urban teledensity is around 31 percent, just 2 percent of the rural population has a phone line. With India's expanding middle class, demand for telephone services is growing so rapidly that carriers are unable to keep up.
State-run operator Bharat Sanchar Nigam Ltd. (BSNL) has a 1.6 million-strong waiting list for fixed lines and another 1.35 million customers waiting for mobiles. Although private operators haven't been keeping figures, they report having to turn potential mobile customers away for lack of spectrum.
The Department of Telecommunications has set a target of doubling telephone penetration to 250 million lines and reaching a teledensity of 22 percent by 2007. "I think it is a realistic target," says Sanjay Nayak, CEO of Indian optical equipment vendor Tejas Networks India Ltd. , "but to reach it the carriers have got to at least double the infrastructure that's been built to date."
Carriers will also need ambitious rollout plans to reach the government's target of 20 million broadband users by 2010. According to the TRAI figures, India had 750,000 broadband connections (defined as above 256 kbit/s) in November, up from 690,000 in October and 610,000 in September, but far short of the three million target set for the end of this year.
Market research firm Gartner Inc. forecasts India will spend 739 billion rupees ($16.34 billion) on telecom services and equipment in 2006, up 27.3 percent from this year. As the table shows, it expects to see a compound annual growth rate (CAGR) of 23.1 percent from 2004 to 2009, when spending will reach 1.42 trillion rupees ($31.37 billion).
Table 1: Forecasted Growth of Indian Telecom Spending Through 2009
|India rupees (millions)||2004||2005||2006||2009||CAGR 2004-2009||AGR 04-05||AGR 05-06|
|Source: Gartner Inc.|
All of this translates into a wealth of contracts up for grabs from India's service providers as they build out their networks. (See Reliance, China Telecom Partner, UTStarcom, BSNL Team, Bharti Picks SupportSoft, InfoVista Wins Indian Deal, and NEC Brings Cable to India .)
In recent weeks Intel Corp. (Nasdaq: INTC), Juniper Networks Inc. (NYSE: JNPR), Cisco Systems Inc. (Nasdaq: CSCO), and Ericsson AB (Nasdaq: ERIC) have been among the vendors announcing plans to increase their presence in the country and tap that business. They join the growing ranks of domestic vendors cropping up to address the market. (See India's Telecom Startups Reel in Cash.)
With a market that is in effect a clean slate, India's carriers are in some cases moving straight into next-generation services. A look at the "tender watch" on BSNL's Website shows it was due to open a tender today for 300,000 ADSL2+ modems, has issued another for a turnkey VOIP equipment contract, and is inviting "expressions of interest" for EPON fiber-to-the-home systems. And in the mobile space, all eyes are on its upcoming $4 billion contract for 60 million GSM lines, which is set to include up to 12 million 3G lines. It was expected to be issued in December, but now looks likely to come early next year.
— Nicole Willing, Reporter, Light Reading