The Hindu Business Line : Telecom juggernaut on a roll

The emergence of India with the highest number of new cellular users in the world with an addition of more than six million subscribers a month, shattering of long distance telephone tariff barrier to Re One per minute and a spate of multi-million dollar investment in equipment manufacturing were the key highlights of the telecom sector in 2006.

The sector recorded a growth of 50 per cent compared to a 35-per cent growth last year.

The total number of telephones increased from 125.79 million in December 2005 to 183.46 million as on November 30, 2006. The share of wireless phones has increased from 68 per cent in December 2005 to 78 per cent in November 2006. The number of Internet subscribers grew at 25 per cent while broadband subscribers grew from 0.18 million to 1.32 million during 2005-06. The total number of fixed line users also increased after a long time from 39.89 million lines to 40.35 million. This year also saw the private operators overtaking the State-owned BSNL and MTNL in terms of market share. The share of private sector has risen from 54.54 per cent in December 2005 to 64.14 per cent in November 2006.

100-m club

During the year, India became the fifth country to join the club of countries with more than 100 million mobile subscribers. Operators added close to seven million subscribers every month, making it the highest growth rate in the world, for the first time surpassing China.

For the consumers the party continued with all the operators launching the One India plan, which allows STD calls at Re One a minute. While there was no major decline in local call charges, users gained from falling price of mobile handsets, which is now available for as low Rs 1,000.

It was a good year for equipment manufacturers too. Production of telecom equipment has been increased from Rs 16,090 crore in 2004-05 to Rs 17,833 crore in 2005-06. There has been a commitment of more than $1.5 billion from various companies including Nokia, Ericsson and Alcatel.

Acquisitions

On the mergers and acquisition front, the big story was Birlas acquiring Tatas' 33 per cent stake in Idea Cellular for little over Rs 4,000 crore. The other major development that is waiting to be completed is the deal involving Hutchison Essar, which has the likes of Vodafone, Reliance Communication, Maxis, Orascom vying with each other. The year also saw the re-entry of global firms like AT&T and BT into the Indian telecom services market.

While the telecom juggernaut was largely on an upswing, rural telephony continues to be a cause of concern. Lack of growth in Internet and broadband is also another dampener. The Government announced the year 2007 as the Year of Broadband and therefore some push is expected next year. Other areas of concern include lack of adequate spectrum for mobile services and the delay in spectrum policy.