Telecom Industry in India

Telecom Industry in India, History, Market Size, Investments and Major Developments in Telecom Sector, Telecom market segments, Top Telecom companies in India, Market competition in Indian Telecom Industry, Introduction of Jio, Employment in Indian Telecom Sector, Revenue from Telecom Sector, Future Directions of Telecom Companies in India, Effects of LPG on Telecom Sector, Government Initiatives.

1. Presented by - Krishna Patel

2. INTRODUCTION India is currently the world’s second-largest telecommunications market with a subscriber base of 1.17 billion and has registered strong growth in the past decade and half. The Indian mobile economy is growing rapidly and will contribute substantially to India’s Gross Domestic Product (GDP) The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth in the Indian telecom sector. The government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework that has ensured availability of telecom services to consumer at affordable prices. The deregulation of Foreign Direct Investment (FDI) norms has made the sector one of the fastest growing and a top five employment opportunity generator in the country.

3. HISTORY OF TELECOMMUNICATIONS Postal means of communication was the only mean communication until the year 1850. In 1850 experimental electric telegraph started for first time in India betweenCalcutta (Kolkata) and Diamond Harbor . In 1851, it was opened for the use of the British East India Company. Subsequently, construction of telegraph started throughout India In early 1881, Oriental Telephone Company Limited of England opened telephone exchanges at Calcutta (Kolkata), Bombay (Mumbai), Madras (Chennai) and Ahmedabad. On the 28th January 1882, the first formal telephone service was established with a total of 93 subscribers. From the year 1902, India drastically changes from cable telegraph to wireless telegraph, radio telegraph, radio telephone, trunk dialling. Trunk dialling used in India for more than a decade were system allowed subscribers to dial calls with operator assistance. Later moved to digital microwave, optical fiber, satellite earth station. During British period all major cities and towns in India were linked with telephones.

4. EFFECTS OF LPG ON TELECOM SECTOR Liberalization of Indian telecommunication in industry started in 1981 when Prime Minister Indira Gandhi signed contracts with Alcatel CIT of France to merge with the state owned Telecom Company (ITI), in an effort to set up 5,000,000 lines per year. In 1985, the Department of Telecom(DoT) was separated from Indian Post & Telecommunication Department. DoT was responsible for telecom services in entire country until 1986 when Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were carved out of DoT to run the telecom services of metro cities (Delhi and Mumbai) and international long distance operations respectively.

5. EFFECTS OF LPG ON TELECOM SECTOR The demand for telephones was ever increasing and in the 1990s Indian government was under increasing pressure to open up the telecom sector for private investment as a part of Liberalisation-Privatisation-Globalisation policies that the government had to accept to overcome the severe fiscal crisis and resultant balance of payments issue in 1991. Consequently, private investment in the sector of Value Added Services (VAS) was allowed and cellular telecom sector were opened up for competition from private investments. It was during this period that the Narsimha Rao-led government introduced the National Telecommunications policy (NTP) in 1994

6. MARKET SIZE With 493.96 million internet subscribers, as of March 2018, India stands second in terms of total internet users. As of June 2018, overall tele-density stood at 89.72 per cent. Urban tele-density stood at 158.16 per cent and rural tele-density at 57.99 per cent. Rise in mobile-phone penetration and decline in data costs will add 500 million new internet users in India over the next five years, creating opportunities for new businesses. The monthly data usage per smartphone in India is expected to increase from 3.9 GB in 2017 to 18 GB by 2023. India’s smartphone market grew 14 per cent year-on-year to a total of 124 million shipments in 2017, as per IDC. Availability of affordable smartphones and lower rates are expected to drive growth in the Indian telecom industry.

7. INVESTMENT AND MAJOR DEVELOPMENT With daily increasing subscriber base, there have been a lot of investments and developments in the sector. The industry has attracted FDI worth US$ 31.75 billion during the period April 2000 to June 2018, according to the data released by Department of Industrial Policy and Promotion (DIPP). Some of the developments in the recent past are: During the first quarter of 2018, India became the world’s fastest-growing market for mobile applications. In November 2017, Airtel’s acquisition of Tata Teleservices’ mobile business was given approval by Competition Commission of India (CCI). Bharti Airtel is planning to launch 6,000 new sites and 2,000 km of optical fiber in Gujarat in 2018-19. As of June 2018, BSNL is expected to launch its 5G services by 2020. Vodafone India and Idea Cellular have merged into ‘Vodafone Idea’ to become India’s largest telecom company, as of September 2018.

8. GOVERNMENT INITIATIVES The government has fast-tracked reforms in the telecom sector and continues to be proactive in providing room for growth for telecom companies. Some of the other major initiatives taken by the government are as follows: The Government of India is soon going to come out with a new National Telecom Policy 2018 in lieu of rapid technological advancement in the sector over the past few years. The policy has envisaged attracting investments worth US$ 100 billion in the sector by 2022. The Department of Information Technology intends to set up over 1 million internet-enabled common service centres across India as per the National e-Governance Plan. FDI cap in the telecom sector has been increased to 100 per cent from 74 per cent; out of 100 per cent, 49 per cent will be done through automatic route and the rest will be done through the FIPB approval route. The Government of India has introduced Digital India programme under which all the sectors such as healthcare, retail, etc. will be connected through internet

9. THE TELECOM MARKET SEGMENTS

10. CONTRIBUTION TO GDP The joint report, released by the Department of Industrial Policy and Promotion and the Department of Telecom, said the industry contributes 6.5 per cent to the GDP currently. The contribution of mobile industry to the country’s GDP will increase to 8.2 per cent by 2020.

11. TOP TELECOM COMPANIES IN INDIA COMPANY NAME MARKET SHARE AIRTEL 31.7% JIO 22.4% VODAFONE 19.3% IDEA 15.4% OTHERS 11.2%

12. FUTUTRE DIRECTION OF TELECOM COMPANIES IN INDIA The telecom companies in India offer one of the lowest call rates in the world owing to high competition in terms of pricing and quality of network services. The telecom sector companies in India are estimated to be contributing almost 7% to the GDP of the country which amounts to almost $180 billion and the telecommunication industry in India is believed to directly employ more than 2 million professionals across the country. The growing population in the country, rising disposable income, and lower voice call tariffs are likely to augment the revenue of the telecom companies in India for the next five years. Furthermore, the telecom brands in India are forecasted to contribute around $240 billion to the economy of India by the end of 2022.

13. MARKET COMPETITION IN INDIAN TELECOM INDUSTRY The Indian telecom sector is becoming more competitive each year. With the launch of new Reliance Jio, Vodafone-Idea partnership, Bharti Airtel buying Telenor India, and Aircel filing for bankruptcy, the game is now only for big players in the market. The merger between Vodafone India and Idea cellular is most awaited deal in the Indian telecom sector, which may come into place before 2019. The changing consumer base and increase the use of the internet will also play an important role in the Indian market

14. INTRODUCTION OF JIO Reliance Jio has caused the revenue shares of the competition to drop by 7% Airtel, Vodafone and Idea are constantly coming with offers to counter Jio’s Offer. Jio has completely turned the industry on it’s head. it has been one of the changing forces that has put a halt to rising data costs and increased mobile penetration in second tier towns and rural areas. Jio is one one the best things to have happened in 2016.

15. EMPLOYMENT There are 4 million people employed in the telecom and by the end of 5 years , 14.3 million people will be employed in telecom as well as telecom manufacturing. Last year, the telecom sector has already lost around 40000 jobs and the trend is likely to continue for the next six to nine months with the total figure expected to reach 80000 to 90000.

16. REVENUE FROM TELECOM SECTOR Revenues from the telecom equipment sector are expected to grow to US$ 26.38 billion by 2020. The number of internet subscribers in the country is expected to double by 2021 to 829 million and overall IP traffic is expected to grow 4-fold at a CAGR of 30 per cent by 2021. The Indian Government is planning to develop 100 smart city projects. The Indian Mobile Value-Added Services (MVAS) industry is expected to grow at a CAGR of 18.3 per cent during the forecast period 2015–2020 and reach US$ 23.8 billion by 2020.

17. CONCLUSION India is the world’s second largest telecom industry market and is expected to grow by 10% annually to reach USD 103.9 billion by 2020. 2017 saw a trend of consolidation in India’s loss-making telecom industry. We witnessed several mergers among private telecom firms including tier ones, and a merger of two state-owned firms, MTNL and BSNL, is predicted. Telecommunications is considered to be a universal growth platform in India and has tremendous potential to lift the economy and put the country among the world’s super-powers in the future.