TELECOM SECTOR REPORT (Updated on31st May 2007)

TELECOM INDUSTRY ORIGIN

The first experimental electric telegraph line was started between Calcutta (now Kolkata) and Diamond Harbour in November 1850.

In 1895, phonograms were introduced for the first time in Bombay and Calcutta. And in 1902, the first wireless telegraph station was established. Between 1930 and 1960 telephone communication between India & various other countries were functional.

In the 1980s, the first satellite earth station for domestic communications was set up at Secundrabad, and the first SPC analogue electronic trunk automatic exchange were commissioned in Bombay, the Centre for Development of Telematics (C-DOT) was established, the first mobile telephone service and the first radio paging service were introduced in Delhi, Mahanagar Telephone Nigam Ltd. (MTNL) and Videsh Sanchar Nigam Ltd. (VSNL) were set up, and the international gateway packet switch system was commissioned in Bombay.

The 1990s witnessed the commissioning of the I-Net Exchange, introduction of the voice mail service in Delhi, the announcement of a National Telecom Policy, the setting up of the Telecom Regulatory Authority of India, the introduction of the WLL telephone system in Delhi, the commissioning of the Indo-Nepal Optical Fibre link, the opening up of basic telephone services to the private sector investment as a part of Liberalisation-Privatization-Globalization policy.

Therefore, it became necessary to separate the Government's policy wing from its operations wing. The Government of India corporatised the operations wing of DoT on October 01, 2000 and named it as Bharat Sanchar Nigam Limited (BSNL).

Many private operators, such as Reliance India Mobile, Tata Telecom, Hutch, BPL, Bharti, Idea etc., successfully entered the high potential Indian telecom market.

Thus the journey towards telecom revolution, which started in the middle of the 19th century, continues in the 21st century.

Types of Telecom Services:

Various Telecom Services

1. Wireline

2. Wireless

3. Internet & broadband

Terms & Acronyms:

ARPU Average revenue per user

MoU Minutes of usage

GSM Global system for mobile

CDMA Code devision multiple access

TELECOM SERVICES

Growth pattern based on subscription

Wireline Services At the end of quarter ending December’ 06 Wireline subscribers base is 40.3 Million.

Wireless Services As on 31.12.2006, the Wireless Market has reached 149.62 million subscribers as against 129.54 million subscribers in the previous quarter. During this quarter 20.08 million subscribers were added, thus recording a growth of 15.50%. The total wireless subscriber base has grown from 75.94 million in December 2005 to 149.62 million in December 2006.

a. GSM

GSM industry recorded 15.84% growth during the quarter and reached subscriber base of 105.43 million at the end of December 2006.

b. CDMA

CDMA subscriber base recorded a growth of 14.69% during the quarter and reached subscriber base of 44.19 million at the end of December 2006.

Internet Services Internet subscribers stood at 85.82 lakhs for the quarter ending 31st Dec 2006 as compared to 80.96 lakhs during the preceding quarter registering an increase of 6.00%. The growth trend during the quarter is positive as compared with last quarter where it was 5.02%. The total Internet subscribers increased from 67.03 lakhs at the end of Dec 2005 to 85.82 lakhs at the end of Dec 2006 registering a growth of 28.03%.

a. Internet Subscribers Growth - There are 85.82 lakhs Internet Subscribers during quarter ending Dec 06.

b. Broadband Subscriber Growth - The number of Broadband subscribers as reported by ISPs was 20.54 Lakhs at the end of Dec 2006 as compared to 18.17 Lakhs at the end of Sept 2006, thus registering a growth of 13.04% over the previous quarter.

Wireline service providers

The Wireline services were provided by 5 licensed private operators in addition to BSNL and MTNL as on 31st December 2006. List of Wireline Service providers along with their areas of operation is given in Table below

Wireless service providers

Details of service providers: - The list of all the Wireless service providers along with their licensed service area is as under: -

Factors impacting competitiveness of Telecom industry

In the last two years, there has been an exponential growth in cellular mobile services. However, the provision of interconnection has not kept pace with this growth leading to increase in inter-network congestion and poor quality of service to the customers

Key Highlights of the Telecom sector

Ø The total revenue in telecom service sector was Rs.86720 crore for the FY year 2005- 06, in comparison to Rs.71674 crore for the FY 2004-05, thus registering an annual growth of 21%.

Ø The total investment in the telecom services sector reached Rs. 200660 crore at the end of the FY 2006 in comparison to Rs. 178831 crore at the end of FY 2004-05, showing an increase of around 21835 crore during the year.

Ø Tele density in the country has steadily increased from 4.29% as on 31.3.02 to 16.83% as on 31.12.2006.

Ø The Indian Telecommunications network connections is the third largest in the world and the second largest among the emerging economies of Asia. Today, it is the fastest growing market in the world. The telecommunication sector has emerged as one of the key sectors responsible for India’s resurgent India’s economic growth. The sector has moved to a higher growth path of an average rate of 40-45 per cent during the last two years.

Ø The Indian Telecom Sector has witnessed major changes in the tariff structure, resulting in a dramatic fall in the tariffs.

Ø A target has been set for providing 250 million telephone connections by December 2007 and 500 million mobile by December 2010. Efforts are being made for mobile coverage of geographical area of 85% by 2007 and 90% by 2010.

Ø The project for sharing of passive and active infrastructure and network operating expenses by mobile operators has been launched , It aims at reducing the number of towers in the skyline of the city, optimal utilization of resources and reduction in clearances from local agencies. The sharing of infrastructure will be increased in urban areas from present 25% to 40% by 2007 and 70% by 2010.

Ø 90% of the villages have already been provided with Village Public Telephones (VPT). Under Bharat Nirman, out of 66,822 uncovered villages, 38,795 villages have been provided VPTs till December 2006. Remaining villages will be provided with VPTs by November 2007.

Ø Emphasis is being given to the technologies having potential to improve rural connectivity. A target has been set for 50 million rural connections by 2007 and 80 million by 2010.

Growth of subscribers

The telecom sector has shown robust growth during the past few years. It has also undergone a substantial change in terms of mobile versus fixed phones and public versus private participation. The following table shows the growth of telecom sector since 2002: