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Indian telecom industry sees a saturation point ahead?
By Binu Paul, SiliconIndia
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Thursday, 28 October 2010, 13:54 IST
Bangalore: India's inspiration machine and former President Dr. APJ Abdul Kalam had shared his vision of Indian tele-density reaching over 75 percent well before the year 2020. Keeping alive his expectations, the urban tele-density has reached the 100 percent landmark and the rural tele-density is slowly shooting up. The overall tele-density has increased to 58.17 percent in July 2010.
Indian telecom industry is in a rapid expansion phase with more operators and subscribers adding up in a fast and steady rhythm. Given the fact that most of the providers offer free connections, the subscriber base is shooting up each day. The competition between the operators has intensified to a state that they are actually competing to slash prices.
The penetration of mobile connections in India has been skyrocketing in the last couple of years. A Gartner study predicts that mobile connections in India will cross 660 million, growing at 27.3 percent in the current year. The revenue from mobile services is expected to reach $19.8 billion by the end of the year, up by 19.7 percent from last year. The customer base has increased tenfold from 46 million in 2001 to 470 million in 2010. The Indian mobile industry is expected to score a double-digit growth rate till the end of 2012 and the penetration of mobile connections is projected to reach 72.5 percent by 2012 and 82 percent by 2014.
Rural market is the center of focus for the operators now. By introducing more low-priced handsets, every provider is trying to made inroads to the villages and expand their reach to the remote areas.
Bharti Airtel tops the list of telecom service providers in terms of revenues with 
38,800 crore. Although saw a dip in its revenue for the second consecutive year, BSNL still holds the second spot with revenue of 30,240 crore. Vodafone becomes the third largest player with revenue of 23,200 crore. Reliance Communications recorded a revenue of Rs 22,130 crore coming at the fourth place. The fifth place is held by Aditya Birla Groups Idea Cellular with a revenue of 11,390 crore.
The government has received a whooping revenue of 67,719 from the 3G allocation earlier this year. The private operators who have spent large amounts on 3G bidding are worried over its success in the near future as generally only an 80-90 percent penetration determines success of a particular technology. Many analysts believe that 2G will still rule the roost for at least the next two to three years and feel that only 10 percent of the population will migrate to 3G any time sooner. Although delayed for a few months, most of them are planning to roll out their 3G services by the year end.
Looking at the rapid growth of Indian telecom sector, some foresee a point of saturation at some time in the distant future. Is there going to be an opposite turn at which point the industry will stabilize itself in terms of pricing and offers? Should we fear of a market collapse in telecom industry as a result of intensified competition? If it happens ever, it will only be the strongest players who would survive.
38,800 crore. Although saw a dip in its revenue for the second consecutive year, BSNL still holds the second spot with revenue of 30,240 crore. Vodafone becomes the third largest player with revenue of 23,200 crore. Reliance Communications recorded a revenue of Rs 22,130 crore coming at the fourth place. The fifth place is held by Aditya Birla Groups Idea Cellular with a revenue of 11,390 crore.
The government has received a whooping revenue of 67,719 from the 3G allocation earlier this year. The private operators who have spent large amounts on 3G bidding are worried over its success in the near future as generally only an 80-90 percent penetration determines success of a particular technology. Many analysts believe that 2G will still rule the roost for at least the next two to three years and feel that only 10 percent of the population will migrate to 3G any time sooner. Although delayed for a few months, most of them are planning to roll out their 3G services by the year end.
Looking at the rapid growth of Indian telecom sector, some foresee a point of saturation at some time in the distant future. Is there going to be an opposite turn at which point the industry will stabilize itself in terms of pricing and offers? Should we fear of a market collapse in telecom industry as a result of intensified competition? If it happens ever, it will only be the strongest players who would survive.