The number of wireless connections has increased astronomically, from 35.6 to 315.13 million in the space of four and a half years, from March 2004 to September 2008. According to an official statement, the number of landline telephone connections also increased from 76.5 million to 353.61 million in the same period, making the Indian telecom network the third largest in the world. Of this, rural landline telephone connections increased from 12.2 to 104.83 million; urban telephone connections increased from 64.3 to 248.83. Overall teledensity has increased from 7.02% to 30.64% in the four and a half year period.

Mobile phones

Mobile telephony was introduced in India in 1995 and continues to spearhead the growth of the Indian telecom sector. The total mobile services revenue in the country is expected to increase at a compound annual growth rate (CAGR) of 12.5% from 2009 to 2013 to surpass $30 billion, according to a Gartner report. The mobile subscriber base is set to grow from 452 million and surpass 771 million connections by 2013, and it is expected to increase at a CAGR of 14.3% during that period. India is expected to continue to be the second largest wireless market in the world following China.

Madhusudan Gupta, senior research analyst at Gartner said, “The Indian mobile industry has now moved out of its hyper growth mode, but it will continue to grow at double-digit rates for next three years as operators focus on rural parts of the country.” He added, “Growth will also be triggered by increased adoption of value-added services, which are relevant to both rural and urban markets.”

Prepaid subscribers dominate the Indian mobile market, accounting for more than 93% of the total number of mobile connections in 2008. It is expected to surpass 96% by 2013. The postpaid subscriber base will increase by 2.5% percent to surpass 29 million in the same period. Voice services will continue to contribute the major part of the revenue, but is projected to fall from 89% in 2008 to 86% in 2013 owing to the growth of data services.

According to the Telecom Regulatory Authority of India (TRAI) the use of SMS in India is increasing every year. On average a person sends nearly 29 SMS per month to connect with friends and family, for mobile banking and accessing information services (such as train/flight status). 



3G services should arrive in India by the end of 2009 bringing with it, value added services such as high resolution video and multimedia services, plus voice, fax and conventional data services with high data rate transmission capabilities.

Supplying handsets for the mobile market

The increasing demand for a wide range of telecom equipment, especially in mobile telecom, has opened the doors to domestic and foreign investors in this sector. India’s telecom equipment manufacturing sector is projected to become one of the largest globally by 2010. Foreign direct investment inflow has already increased from $478 million in 2006-‘07 to $1261 million in 2007-‘08. Mobile operators and handset manufacturers are now increasingly focusing on rural areas to increase their market share. In the last four years, many leading telecom companies set up their manufacturing base in India.



A report by Ernst & Young states that mobile users will account for 60% of the subscribers in rural India by 2012. The growth of the mobile handset sale in the rural market is predicted to increase at a CAGR of 17% during 2009-2012 to surpass 75 million units by 2012. However, the teledensity in rural areas is less than 10%, compared with an overall teledensity of 30% in India. 



Success in penetrating the rural mobile market may depend on two important factors—service charges by operators and the availability of low cost, battery-efficient handsets. Leading mobile handset players such as Nokia, Samsung, Motorola and LG are making efforts in this direction. There is yet another sector, Chinese mobile handset manufacturers, some of them shanzhai, vying for their share of the Indian handset market. Although surrounded by controversies, the Chinese phones could prove to be efficient competitors in this fast growing market. 

Watch this space

Despite the global economic slowdown, of recent times, the telecom sector in India is continuing its growth at a fast pace. Shanzhai manufacturers would do well to make sure they secure a spot in the next pie charts detailing the players in supplying handsets for this huge growth market.

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