India Telecom Market

The India telecom market ranks among the fastest growing industries in the country. The improvement in the standard of living and the development of infrastructure and connectivity are some of the mains reasons for the significant growth of the telecom industry. The growth is expected to be more over the years.

Presently, there are around 200 million telephone lines in India which make it the third largest phone network in the world after China and the US. Today, the telecom market in India enjoys a growth rate of around 45 % which is the highest in the whole world.

History of India telecom market

It was in the year 1851 that the British first introduced telecommunication services in India through operational land lines near Calcutta. Gradually, the telephone service was made operational in the year 1881. After independence, the foreign telecommunication companies were nationalized and the Posts, Telephone and Telegraph (PTT) Company was set up by the Ministry of Communications.

In the year 1985, the Department of Telecommunications (DOT) was set up to provide domestic and long distance telephone services. In the year 1986, the government established two companies namely Mahanagar Telephone Nigam Limited (MTNL) for metropolitan telephone services and Videsh Sanchar Nigam Limited (VSNL) for international telephone services.

With the economic liberalization in the 1990s, the telecom market in India was also benefited to a great extent. The service was improved and the tariffs were also significantly lowered. In the year 1997, the government set up the Telecom Regulatory Authority of India (TRAI) to provide a comprehensive telecom service in the country. In 1999, modification was brought to the policy and the cellular services were introduced.

Telecom segments in India

India telecom market is mainly divided into two major segments namely, the Fixed Service Provider (FSPs) and the cellular services. Fixed Service Provider network comprises land lines, basic services, domestic and long distance call service. The two major basic operators BSNL and MTNL comprise almost 90 % of the FSPs in the country. Around 5 % are operated by private firms and are mostly scattered in the urban areas. In most cases, the private basic service telephone operators cater to offices, business firms, schools and the corporate sector.

In case of the cellular services, there are mainly two sub divisions: Code Division Multiple Access (CDMA) and Global System for Mobile Communications (GSM). In the GSM sector, the major players are Vodafone, Airtel, Idea Cellular, and Aircel and so on. The national company BSNL also has its GSM service named "Cellone" which has a major share in the semi urban and rural areas. The major companies which dominate the CDMA scenario are Reliance Communications and Tata Indicom. In both the sectors of cellular services, perfect competition exists according to the demand supply chains.

Recent trends in the India telecom market

The Indian economy is greatly benefited by the growth of the telecom industry in the country. With the growth in the demand and customer base, more and more multinational companies are entering the telecom market. The India telecom market is expected to grow by Rs 344,921 crore by the year 2012. The rate of growth will be around 26 % and the sector will also generate employment to around 10 million people.

The number of telephone subscribers is expected to grow by around 650 million by 2012 from the current number of 250 million.

>> More about India Market