Navi Mumbai, Maharashtra -- (SBWIRE) -- 03/18/2012 -- Emerging from doldrums but future is full of surprises…

Growth of telecommunication was one of the essential developments in the history of mankind. Wireless telecommunication was a dream that was nurtured for ages but came true only in twenty-first century. In India, telecom witnessed pinnacle of growth providing connectivity to every 7 out of 10 Indians. India hosts second largest wireless subscriber base after China, within less than two decades of inception. The Indian telecommunication industry has undergone substantial structural revolution from its liberalisation till now. http://www.bharatbook.com/market-research-reports/mobile-and-telecoms-market-research-report/telecom-wireless-industry.html

Globally, GSM is the most popular technology whereas CDMA is mostly used in U.S. Both GSM and CDMA technologies entered into Indian telecom markets within a decade of inception. CDMA was a late entrant in the Indian market (introduced in 2002). After a glorious performance in the initial years, its growth started tapering after 2008, taking CDMA subscribers as a % of total from 30% in December 2006 to 12% in December 2011. It can be attributed partly to relatively expensive CDMA handsets with limited variety, cheaper tariff plans on GSM services due to increased competition etc.

India has seen a massive subscriber growth of more than 50% year after year as the tariffs and handset prices kept plummeting. Over the last five years, the teledensity in India zoomed from 18% in FY 2007 to 68% in FY 2011. In spite of the grand success, Indian telecom story has its own anomalies. Though more than 2/3rd of Indian population resides in rural areas, in terms of subscribers it contributes just 1/3rd of the total subscriber base, leading to a teledensity of 34% in rural areas. Urban areas are highly saturated with a teledensity of 157% on account of multiple connections and rising number of inactive players. In last few years, subscribers in rural areas have grown faster (CAGR of 70% over last 5 years) as compared to the urban areas (CAGR of 42%). CARE Research believes that in the next 2-3 years, rural areas will contribute ~60% of the net subscriber addition.

Government continued with opening of the sector for more and more players contrary to a global practice of not more than 5 players. As India is predominantly a voice-driven telecom market, there aren’t many differentiating factors apart from lower tariffs to acquire new customers. This led to price war among the telecom players resulting in average realization per minute declined from Rs. 1 per min by the end of 2007 to Rs. 0.5 per min in 2011, hitting the profitability of the telecom players. The remarkable growth in subscribers failed to fetch incremental revenue to the players due to persistent drop in tariffs.

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