Indian telecom industry challenges and prospects

Abstract

The Indian telecommunication sector entered into a phase of continuous evolution with the commercial entry of mobile phones in India on 23rd August 19951 . Today after almost 15 years, with revenues in excess of Rs 1.58 lakh Crores2 and a CAGR of close to 30% since year 2000, the Indian telecom industry is one of the biggest and most lucrative telecom markets in the world. As can be easily observed, the market for cellular services has increased and so has the number of telecom service providers. Back in 1994, the teledensity in India was 0.8, with 2.5 million people in waiting list for a telephone connection3 .Today the subscriber base is at 581.81 million with 49.50% of Indian population owning a telephone connection (wired and cellular)4 , being serviced by 12 telecom service providers as against only 0.03 million5 people serviced by 2 major service providers (BSNL and MTNL) in 1995. When telecom services were first rolled out they were targeted only at the rich and affluent Indians with entry level handsets costing around Rs.12,0006 and outgoing call charges at Rs 16/min and incoming cal charges at Rs 8/min7 . Today the handset prices have dropped to as low as Rs.1200 and outgoing calls are charged at 0.5paise/second8 enabling the mass scale adoption of mobile phones in India. Today the telecom industry directly contributes more than 1.5 % 9 of the GDP and is seen as one of the most vibrant industry in India.