By Arvind Padmanabhan, New Delhi, Dec 25: With seveneight million new
subscribers joining the network each month, 2007 saw India emerge as one of the
fastest growing telecom markets in the world, attracting not just global service
providers like Britainbased Vodafone but also forcing handset makers like Nokia
to hike production capacities within 18 months of setting up their operations in
And the statistics speak for themselves. Driven mainly by the mobile telephone
operators since the volume of fixedline users dropped by over one million in
2007 subscribers not only benefited from across the board cuts in tariffs but
also saw handset costs drop sharply.
A mobile phone handset is available for as low as $25 in the country today, with
manufacturers even talking about base phones for less than $18. Similarly, from
a basic tariff of Rs.16.80 (42 cents) per local call 15 years ago, the average
cost is now as low as Rs.1 (less than 2 cents).
As a result, the total subscriber base of phone users jumped to 264.77 million
towards the end of November, with indications that the year will end with total
phone connections of nearly 275 million from under 190 million in 2006.
The telephone density too more than doubled from 11.43 percent in December 2006
to 23.21 percent as at endNovember, exceeding the target of 21 percent much
ahead of schedule. As a result, accounting and consultancy major
PriceWaterhouseCoopers said India emerged as the third largest telecom market in
the world in 2007.
"With about 215 million mobile subscribers today, India is the fastestgrowing
market in the world," said the consultancy firm Boston Consulting Group in a
report released this month titled "Ringing in the Next Billion Mobile Consumers:
A Roadmap for Accelerating Telecom Growth in India".
"Indian mobile operators are already blazing a trail and have among the leanest
operating models. As they get ready to embrace the next billion, they will need
to innovate further," the consultancys director Arvind Subramanian added.
In this, the allocation of radio spectrum, which has divided the industry like
never before, is an issue that needs to be addressed amicably and fast, experts
Giving a global picture, Boston Consulting Group said even though only about 1
in 20 of the first 2 billion mobile subscribers in the world live in India, as
many as 1 in 4 of the next billion subscribers will be Indian.
The year also saw the telecom boom story throwing up its own set of surprises.
Going by recent data compiled by industry watchdog Telecom Regulatory Authority
of India (TRAI), the growth this time was powered with an equal fervour by rural
areas, once regarded as a lowend, lowvolume market with modest purchasing
"Of the next 250 million users who will go mobile, as many as 100 million will
be in rural India," said watchdog chairman Nripendra Misra. "The next big growth
opportunity will be in the hinterland," Misra told IANS. Twothirds of Indias
1.17 billion population lives in rural areas or in its 600,000 villages.
In fact, rural mobile subscribers now account for close to 25 percent, or around
onefourth, of the total mobile user base in India.
Little wonder then global consultancies, like Gartner, have made fairytalelike
projections for the Indian telecom market. The USheadquartered tech research
firm says revenues of the Indian mobile phone segment will exceed $25 billion in
four years, growing at 22 percent annually.
"With more marginal users forming the bulk of addressable market, low service
costs and inexpensive handsets will help to unlock the inertia and facilitate
adoption of mobile services," said the firms senior analyst Madhusudan Gupta.
"This trend, coupled with the emergingmarket handset initiative by vendors and
operators, will boost adoption of mobile services in Indias semiurban and
The year also saw a major consolidation in the business, led by Vodafone, which
created a major global buzz when it acquired a controlling stake in Indias 3rd
largest private phone company HutchEssar for $10.9 billion, sending valuations
soaring for rivals like Bharti Airtel and Reliance Communications.
Another global consultancy, Grant Thornton, said the Indian telecom sector,
along with the steel industry, accounted for over 50 percent of the total
mergers and acquisition deals in the country in 2007. And Ernst and Young
predicts $25 billion in investments for the sector over the next five years.
"India is a tremendously exciting and fast moving market and I am confident that
the HutchEssar business would make a major contribution to the Vodafone group
over the coming years," the groups Indiaborn chief Arun Sarin said.
He also announced that Vodafone would invest $2 billion within two years in the
HutchEssar telecom venture to particularly tap the rural market, multiply the
infrastructure and improve the teledensity in the country.
According to T.V. Ramachandran, secretary general of the Cellular Operators
Association of India (COAI), telecom companies propose to invest $14.75 billion
this fiscal (AprilMarch) for expansion, rural penetration and infrastructure.
"What operators did in the last 16 years in terms of investment and expansion,
they are now squeezing that in just one year," he says, adding monthly additions
were expected to cross 10 million phones over the next few months.
India is an exciting story for another global players as well, notably Nokia.
The companys chief executive OlliPekka Kallasvuo who visited Chennai and New
Delhi earlier this year said India had overtaken the US as the groups 2nd
largest market for handsets after China. For global manufacturers as a whole,
India emerged as the largest market for these phones.
Kallasvuo said that 60 million handsets were shipped from the factory near the
Tamil Nadu capital Chennai since it started production 18 months ago and that he
expected to maintain its growth in the country and expand its headcount.
"India is playing an increasingly important role in the global economy buoyed by
impressive growth, skilled manpower and tremendous business opportunity," said
Kallasvuo, whose group has invested $500 million in the factory near Chennai,
which alone employs around 4,700 people.
In fact, the fast growth and the future potential forced all the five top global
mobile handset manufacturers Nokia, Motorola, Samsung, Sony Ericsson and LG
Electronics to set up manufacturing bases in India.
Gartner says even though domestic mobile phone production currently caters to
mainly to local demand, over the next new years, as much as 30 percent of the
production may be exported to Africa, the Middle East and other parts of South
Asia, which have significant demand for lowcost handsets.
A recent report by financial consultancy and merchant banking firm Merrill Lynch
even placed the Indian telecom industrys profitability ahead of the US,
Britain, Japan, France, Australia, Switzerland, Germany, the Netherlands and
All these factors suggest that Indias telecom subscriber base and the revenues
will surpass projections. TRAI chief Mishra hazards a guess. "I think the target
of 500 million by 2010 is feasible as we are growing by seveneight million
phones a month."
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