The article analyzes the Telecom Sector and defines the contemporary focus areas (3G, MNP, National Broadband Plan, MVAS, Telecom Manufacturing, and Policy Reforms) for year 2012.

2. Indian Telecom sector outlook for the year 2011-12
By Sohag Sarkar
The growth seen by the Indian Telephony sector has been nothing short of
extraordinary and remains as one of the fastest growing telecom sectors across
the globe. On an average 19.68 million subscribers (Wired & Wireless) are
added per month (Source: TRAI, Telecom Subscription Data, Jan-Mar 2011).
The growth is primarily contributed by the wireless segment while the wireline
segment continues to register negative growth trends. At the end of the
financial year, the total Telecom subscriber base stands at 846.32 million; thus
leading to a national tele-density of 70.89. From here-on, the future outlook of
Indian Telecom for the year 2011-12 looks promising thanks to its enhanced
service introductions, equipment manufacture blooming, launch of various
utility MVAS offerings and upbeat consumer responsiveness.
Maturing of 3G Services: During the 3G auction in 2010 the private operators
have paid INR 67,719 Crores. Another INR 20,000 Crores will be spent on the
rollout of 3G services across major cities of economic prominence. However, 6-
9 months would still be required to achieve a robust & a mature 3G network.
Operators’ first prerogative would be to draw the high usage subscribers who
already own a 3G enabled handset (i.e. approximately 8-10% of their 2G
subscriber base). Introduction of low price 3G Handset models will sideline the
initial apprehensions of 3G uptake in India. To offer pan-India 3G services to
their subscribers, the operators would focus on collaborative models like 3G-
ICR. The entire 3G ecosystem would, therefore, take 12-18 months to take
shape as a fully developed model.
Stabilizing of Mobile Number Portability (MNP): Since the national launch,
MNP has hit the 10 million mark (i.e. in a span of four and a half months); thus
around 2.22 million subscribers are porting on a monthly basis. It has affected
the churn rate of operators; however the figures are not too significant as it
initially sounded to be. Interestingly porting trends have shown that lower
tariffs might not be the only factor affecting subscriber decision to churn or
switch operators. In 2011-12, operators would witness stabilization of churn
owing to MNP as they would try to counter it by means of improved services to
their subscribers.
Going Rural with National Broadband Plan: In India less than 30% of the
population lives in the urban areas; however the urban tele-density is a
whooping 157.32 while it is just 33.79 for rural India. The burgeoning sale of

3. dual SIM handsets says it all. Operators have already started focusing on the
rural hinterlands. National Broadband Plan would see light in 2011-12; and OFC
network till the 250,000 Gram Panchayats would be targeted over the next
couple of years (if not to all the inhabited villages).
Rise of the Utility MVAS: Telecom industry is witnessing collaborative models
(ICR, Infrastructure sharing, etc) not just within the industry but beyond. The
operators are reaching out to other industries to offer services to the masses.
Utility VAS models are becoming reality with m-Health, m-Education and m-
Commerce seeing the light of the day. India has an average 0.6 doctors per
1000 population against the global average of 1.23; which suggest an evident
gap in primary healthcare services. Tele-medicine and consultation over mobile
phones is trying to help gap this disparity to some extend. With the current
literacy rate of 74.04 percent (as per 2011 Census) m-Learning will provide the
much need fillip to initiatives like “education for all”. m-Payment will provide
a new & effective means of facilitating national remittances given the changes
in RBI Policy and launch of Interbank Mobile Payment Service (IMPS).
Local Telecom Manufacturing: The annual handset demand in India stands at
140 million units as on date. Given the hitherto growth of subscribers the
telecom equipment market (which includes network equipment as well as end-
user devices) is likely to remain strong. Going forward we may see higher local
manufacturing along with research and development, especially with
government's recent emphasis on establishing strong hardware and
manufacturing component base.
Setting the landscape for Consolidation & Policy Reforms: The telecom
industry eagerly awaits the release of National Telecom Policy - 2011. The
policy would specify the regulation with respect to spectrum sharing & trading,
also the treatment of spectrum in case of mergers and acquisitions (M&As). It
would be difficult to offer more than 16 companies a profitable sustenance in
India; the drafting of the NTP-2011 would determine the manner in which
consolidation would take place over 2011-12.
With the initiation of enhanced technology (3G, BWA) & consumer services
(MNP); introduction of utility MVAS to the end-consumers, and various
regulatory and policy reforms (National Broadband Plan, Telecom Equipment
Manufacturing Policy and NTP-2011) India seems to be well poised to witness
the one-billion subscriber mark and beyond in 2011-12.