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India Telecommunications Report Q1 2011
Business Monitor International, Jan 2011, Pages: 108
India Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India's telecommunications industry.
We have incorporated the latest figures released by India’s telecoms operators and the Telecom Regulatory Authority of India in our latest telecommunications report for the country. The countrycontinued its growth momentum by adding 52.205mn mobile subscribers in the quarter ended September2010. We expect a strong finish to 2010 based on historical data that indicate strong performance byoperators in the second half of the year due to seasonal demand, and we retained our previous forecast of743mn subscribers by end-2010. Meanwhile, the ongoing price war continues to exert downward pressureon operators’ ARPU and companies are showing little signs of preventing further declines as they looktowards the lower value rural population to maintain subscriber growth.
That said, the competitive landscape could change once all the 3G licence holders launch their commercial 3G services in the first half of 2011. State-owned Bharat Sanchar Nigam (BSNL) andMahanagar Telephone Nigam (MTNL) were the only operators that offered 3G services but growthwere largely suppressed due to a lack of capital and competition, which hindered overall service roll-out.
With the entry of private operators, which invested heavily to secure spectrum licence and roll out infrastructure, we expect true growth in India’s 3G industry. That said, 3G tariff rates offered by the onlyprivate 3G operator, Tata DoCoMo, are significantly higher than BSNL, which could deter massadoption.
Shortly after the Commonwealth Games debacle and financing irregularities in Mumbai housing projects, the ongoing 2G spectrum licence scandal has throw the issue of weak regulatory framework andcorruption in India back into the investment spotlight. The country’s Comptroller and Auditor-Generalhas condemned the management of the 2G spectrum sale to operators in 2008 and estimated thegovernment lose about INR1.76trn in revenue. Besides threatening to revoke the licences of the guiltyparties, the Department of Telecommunications is likely to impose fines on all telecoms operators thathave failed to meet their service roll-out deadline as part of an industry-wide crackdown. Although thescandal will continue to shadow the industry in the long run, BMI believes that it could also pave the wayfor a long-term industry development, assuming that the government manages the dispute properly.
Lastly, India remained in eighth position in BMI’s latest Business Environment Ratings for Asia-Pacific after no changes were made to the country’s individual scores. India continued to head the emergingcountries in the region, staying ahead of peers such as China and Indonesia. While India’s hugepopulation and growth potential gives the country one of the highest Industry Rewards score, long-termweaknesses – high proportion of rural regions and low GDP per capita – means the country is unlikely toovertake seventh place Taiwan in the short term.
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