India, which was once the target for most of the companies who wanted to invest in the telecom sector is now suffering from a slowdown in the telecom sector.Let us take a look at the current status of telecom sector in India.
- India’s teledensity has improved from under 4% in March 2001 to around 76% by the end of March 2012.
- Cellular telephony continues to be the fastest growing segment in the Indian telecom industry.
- The mobile subscriber base (GSM and CDMA combined) has grown from under 2 m at the end of FY00 to touch 919 m at the end of March 2012 (average annual growth of nearly 64% during this 12 year period).
- Tariff reduction and decline in handset costs has helped the segment to gain in scale. The cellular segment is playing an important role in the industry by making itself available in the rural and semi urban areas where teledensity is the lowest.
- The fixed line segment continues to decline in terms of the subscriber base. It has declined to 32.17 m subscribers in March 2012 from 34.73 m in March 2011. The decline was mainly due to substitution of landlines with mobile phones.
- As far as broadband connections (>=256 kbps) are concerned, India currently has a subscriber base of 13.8 m. Broadband penetration received a boost from the auction of broadband spectrum. The network providers have stated that they would be looking at boosting the contribution of data to their revenues.
Global rating firm Fitch has expressed its concerns on the outlook of the Indian telecommunication sector for the year 2013, which is largely weighed down by regulatory overhang on the sector.The top-four operators by revenue market share – Bharti Airtel Limited, Vodafone India Limited, Idea Cellular Limited and Reliance Communications Ltd – will have to pay significant amounts for a one-off charge for excess spectrum (above 4.4MHz), spectrum re-farming and future spectrum auctions.
The current condition is not positive for Indian telecom sector as many of the companies are in a catch 22 situation. No funds to invest more and no revenue model that can generate a good amout of profit. 3G failed, and as was the huge investments that were done to buy the spectrum. World is on verge of 4G and India is still struggling to implement 3G as a profitable technology.