INDIA Telecom Report vFINAL DR 17/6/08 09:07 Page 16
Semiconductor India
operator is likely to maintain its dominance six months of being awarded a licence. all parts of rural India, where over two
for the foreseeable future, and indeed build thirds of the population lives.
on its share of the market. It is likely to Meanwhile, in eager anticipation of a new
build on its success in India by attempting era of mobile telephony in India, Hewlett The result should be a period of sustained
to repeat it in Sri Lanka, where it launches Packard (HP) has launched its first growth, even if the company’s operators
commercial services in 2008, and elsewhere smartphone in India and plants to launch suffer a hit on profitability as they increase
in south Asia (Bangladesh, Nepal, Maldives, another half dozen models by the end of the their capital expenditure levels and prepare
but not Pakistan) where it hopes to win year. The smartphones, which browse the to welcome lower income customers, not
more licenses. internet and store data, among other interested in VAS (in the short term, at
features, will cost US$250-US$350 and will least). It is little wonder, therefore, that
3G telephony is not yet available in India, be targeted at professionals in India’s major there has been a spate of applications for
but the government announced in cities. HP is confident that the smartphone new mobile licences in the last quarter.
November 2007 that it was preparing to market could soon comprise 5% at the
auction spectrum for 3G services, including entire Indian mobile market. It makes sense that mobile growth is set to
mobile internet services. Having initially continue in India, driven by investment
recommended that only existing operators In competition to 3G mobile services, India programmes from mobile operators,
should be allowed to bid, the government is set to become a high growth WiMAX consumer demand, low tariffs and the low
has decided that companies without an market, as a fall in cost of equipment drives penetration rates across rural India.
existing license could enter the bidding, and growth, and delays to 3G licensing Competition between the likes of Reliance,
this could include foreign companies. continue. In a venture with infrastructure Vodafone Essar and BSNL will sustain
provider Microsense, Intel has already growth, as will the eagerness of Tata
In addition to the price of the spectrum, the rolled out the first phase of WiFi and Teleservices and Idea Cellular to increase
winners will also have to pay 0.5% of their WiMax network in Pune. The US company their network capacities.
gross revenue to or merge with another is likely to complete similar projects in
operator within five years of winning the Bangalore, Ahmedabad, Nagpore, Mysore, BMI’s latest Business Environment
concession. These rules should ensure a Jaipur, Dehradun and Uttarkhand. It is also Rankings place India at the top, quite a
large number of bidders for India’s 3G interesting to note that Cisco Systems change from it’s eighth Position in the last
licences, with the auction likely to happen acquired US based WiMAX solutions quarter. Quite clearly India’s telecoms
in 2008. The government has already provider Navini Networks in 2007 for market present huge opportunities for future
allotted some limited 3G spectrum on a trial US$330mn. It is doing specifically so that it Investors, a point illustrated by the number
basis to BSNL, MTNL, Bharti, Airtel and can build high speed internet networks in of operators looking either to extend their
Vodafone. Spectrum was provided, but on a emerging markets. interest in the country’s mobile market, or
non commercial basis only. Bharti has made in the case of companies such as AT&T, to
it clear that it would be confident of We have decided to maintain our forecast as re-enter a market that has taken off in the
launching a commercial 3G service within we expect a similar last quarter to 2007 to last five years. And, there is still huge
the previous three month period in terms of potential for further growth with penetration
net additions. And so, by the end of the at just 20%. That is the single largest reason
year, there should be a total of 232mn for India’s climb in our ranks.
mobile subscribers and a penetration rate of
just over 20%. Over the next five years, we India’s telecoms market is also intensely
forecast an average annual growth rate of competitive with the government actively
over 30% so that by the end of 2012, there encouraging inward investment, even if
should be 620mn mobile subscribers in unlike Pakistan, there are limitations on the
India, representing 51.5% penetration. amount of FDI allowed from foreign
companies.
However, this still represents penetration of
just 18.5%, largely because much of Furthermore, in the TRAI, BMI sees a
rural India remains untouched by mobile regulator that is looking to encourage
network. This is likely to change with all of growth, both through supporting unified
India’s MNO’s looking to invest in licensing so that GSM operators can offer
improving network capacities so as to reach CDMA services, and vice-versa, and
16 www.semiconductor-india.com | Summer 2008
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