Telecom is one of the fastest-growing industries in India. Today, India stands as the secondlargest telecommunications market in the world. The mobile phone industry in India, which is estimated to contribute $400 billion in terms of gross domestic product (GDP) of the country in 2014, is expected to generate about 4.1 million additional jobs by 2020. The sheer rate at which the telecom industry is growing, is due to the government's efforts to increase rural penetration along with the growth in the smart-phone numbers and internet usage.
Telecom has also been crucial in attracting large amount of FDI in India. The sector alone is responsible for more than 7% FDI flows in the country. As per the figures put out by DIPP, the cumulative FDI inflow during April 2000 to September 2014 has been $16, 628 million. Over the past decade the telecom sector has experienced rapid growth owing to regulatory liberalization, however the sector has been in turbulent phase for nearly two to three years, marked by legality of 3G roaming agreements, one-time spectrum cost, reframing of allotted spectrum in the 900 MHz band. Nevertheless, the tide has turned in the favour of the telecom industry as growth and profitability has accelerated in recent times.
However, new battles are being fought in the country's booming data segment along with existing voice segment, which continued to be dominated by three major private players-Bharti, Reliance and Vodafone - with a formidable 57% share of the market between them. State-owned enterprises -BSNL and MTNL -have also been making their presence felt with a combined market share of more than 10%.
Outlook: "Outlook for India's telecom industry is positive as the sector is in transformational phase, which would see it leap from a chronic spectrum crunch to an abundance of the airwaves, which though will add to the debt burden of these mobile phone companies, but will also offer them opportunities to follow global business models and offer data services across radio frequency bands." "However, the entry of Reliance Jio Infocomm in the telecom space, could pose a threat for the existing players as this would intensify competition and might bring data tariffs down by at least 20%, which in turn could weigh on profitability of the industry, which had just started improving on the back of recovering pricing power in the mature voice telephony segment combined with strong growth potential in the emerging data business, widely seen as harbinger of a good period ahead for the industry", says Indira Securities research report.
Source: Moneycontrol
Telecom has also been crucial in attracting large amount of FDI in India. The sector alone is responsible for more than 7% FDI flows in the country. As per the figures put out by DIPP, the cumulative FDI inflow during April 2000 to September 2014 has been $16, 628 million. Over the past decade the telecom sector has experienced rapid growth owing to regulatory liberalization, however the sector has been in turbulent phase for nearly two to three years, marked by legality of 3G roaming agreements, one-time spectrum cost, reframing of allotted spectrum in the 900 MHz band. Nevertheless, the tide has turned in the favour of the telecom industry as growth and profitability has accelerated in recent times.
However, new battles are being fought in the country's booming data segment along with existing voice segment, which continued to be dominated by three major private players-Bharti, Reliance and Vodafone - with a formidable 57% share of the market between them. State-owned enterprises -BSNL and MTNL -have also been making their presence felt with a combined market share of more than 10%.
Outlook: "Outlook for India's telecom industry is positive as the sector is in transformational phase, which would see it leap from a chronic spectrum crunch to an abundance of the airwaves, which though will add to the debt burden of these mobile phone companies, but will also offer them opportunities to follow global business models and offer data services across radio frequency bands." "However, the entry of Reliance Jio Infocomm in the telecom space, could pose a threat for the existing players as this would intensify competition and might bring data tariffs down by at least 20%, which in turn could weigh on profitability of the industry, which had just started improving on the back of recovering pricing power in the mature voice telephony segment combined with strong growth potential in the emerging data business, widely seen as harbinger of a good period ahead for the industry", says Indira Securities research report.
Source: Moneycontrol
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