BMI's Executive Summary

[TOP]

The Sector At A Glance

Key Insights On The Telecomunications sector of India

India’s telecommunications market is fascinating to analyse. Quite simply, it has replaced China as the country to admire in terms of market growth. It is perhaps not as innovative as the Chinese telecoms market, but was home to 17mn net additions in Q305 alone, beating China’s 16.8mn for the first time. With China’s market beginning to slow down in terms of growth, India’s mobile market is still accelerating. One only has to look at the capital expenditure plans of Bharti, Reliance, BSNL and Hutchison to recognise that this level of growth is here to stay.

Changes to the way in which the TRAI counts its fixed-line and wireless customers have obliged us to amend our five-year projections. We forecast an 18% reduction in the number of fixed-line users during 2006, with the number of lines in service remaining just above 40mn. There is little chance of any revival, with the government turning its attention towards ensuring the continued rapid growth of its wireless market. Indeed, it has re-directed its Universal Service Obligation Fund (USOF) away from the fixed-line sector and pointed these funds in the direction of India’s fast-growing wireless industry and embryonic broadband market. There is some activity in India’s DLD sector with investments from AT&T, Tata, Hutchison, Idea Cellular and Spice, but this will change matters little.

The potential for further growth in India’s wireless industry is huge. We project y-o-y growth of 95% by the end of 2006, as India’s mobile subscriber base grows at about 5.5-6mn customers per month. This means that by the end of the year, there should be about 150mn mobile users in India. From here, we estimate that there will be over 250mn subscribers by the end of 2007 and that India will welcome its 400 millionth customer towards the end of 2009. Rural India will provide much of this growth. It is this that will hinder the growth of 3G mobile telephony in the short-term with data usage and non-voice revenues remaining low throughout India, but especially in the countryside where the ultra low-cost handset remains popular.

India is eighth in BMI’s Telecommunications Business Environment Rankings. It scores very highly for its growth potential and its licensing/regulatory regime. We commend the regulator for its support for the launch of 3G telephony in 2007, and the government for its plan to draw up a shortlist of four frequency bands for the allocation of spectrum for WiMAX. The government also continues to encourage inward investment. However, there is some concern that the Indian government’s tolerance of a foreign telecoms provider owning a 74% stake in one of the country’s operators could impinge on Indian security. It would be a major reversal in the perception of India as an investment-friendly market if the government were to reduce its ownership cap to 49%. The Indian government has given a three-month extension to the 74% cap, but analysts and potential investors are watching very closely as to what the state decides on its longterm FDI policy.

Contents

[TOP]

Chapter 1 - Executive Summary

Chapter 2 - Business Environment Rankings

Asia

India

India Telecoms Business Environment SWOT Analysis

Chapter 3 - Industry Forecast Scenario

Fixed-Line

Table: India Telecoms Sector – Fixed Lines – Historical Data & Forecasts

Mobile

Table: India Telecoms Sector – Mobiles – Historical Data & Forecasts

Internet

Table: India Telecoms Sector – Internet – Historical Data & Forecasts

Multimedia

Table: India Telecoms Sector – Historical Data & Forecasts

Chapter 4 - Macroeconomic Forecast Scenario

Momentum Maintained

Table: GDP And Population

Chapter 5 - Country Snapshot: India Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 6 - Competitive Landscape

Competitor Analysis

Table: Key Players – Indian Telecoms Markets

Table: Selected Operators Financial Indicators

Key Players

Fixed Line

Table: Regional Fixed-Line Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Internet

Table: Regional Internet Penetration Overview

Market Data Analysis

Fixed Line

Table: Indian Fixed/WLL Market (2005)

Table: India’s Leading ISPs (2005)

Table Broadband Subscribers, September 2005 – September 2006

Mobile

Table: Indian Mobile (GSM/CDMA) Market, September 2006

Table: India Mobile (GSM/CDMA) Net Additions, 9M 2005

Table: Bharti Revenues (INRbn) Segmented – September 2006

Manufacturers

3G

Industry Developments

India Leads China In Subscriber Growth

Hutchison Prepares To Launch Converged Services In India

Other Developments

Chapter 7 - Company Profiles

Regional Case Study – Motorola

Table: Motorola Net Sales by Region (US$mn)

Table: Motorola Market Sales by Locality of End Customer

Table: Leading Mobile Phone Handset Sales (mn) – Q306

Bharat Sanchar Nigam Ltd (BSNL)

Mahanagar Telephone Nigam Ltd (MTNL)

Bharti Tele-Ventures (Bharti Airtel)

Hutchison Essar

Reliance Infocomm

Ericsson India Pte Ltd

Motorola

Nokia

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Chapter 9 - Appendix: Regional Demographic Data

Table- Manufacturing Wages (ave per annum), US$

Table - Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Asia Telecommunications Reports: Sample of Companies Ranked

[TOP]

Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of Asian Telecommunications Sources

[TOP]

BMI's Asian Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include: