Pick a newspaper and you are sure to read about the telecom industry and what is happening in it. It’s and industry you just cannot ignore right now, its an industry which cannot be forgotten for its role in transformation of Indian Economy. Understanding the dynamics of the industry and how it has and will shape our lives is quite important.

Telecom continues to be one of the fastest growing sectors of the Indian economy, becoming a strong contributor to India’s overall GDP. With a growth rate of 47% over the last 4 years and current subscriber base of 811 Million users the industry is attracting new players. Currently the telecom industry is dominated by big players like Bharti Airtel, Reliance, Vodafone & BSNL. However new entrants like Idea, Tata, Aircel are also making their mark with further competition increased by smaller players like Uninor, S Tel, HFCL, Loop. The industry has witnessed developments such as rollout of newer circles by operators, successful auction of 3G and BWA spectrum, growing push by telecom operators to rollout network in semi-rural areas and increased focus on the value added services market. Recent rollout of 3G services and MNP implementation are considered to change the industry significantly.

Despite all these milestones the way ahead for operators is challenging to continue the same growth story due to intense pricing competition among the 15 players. Usage of multiple SIMs, multiple tariff corrections and swelling competition continues to exert immense pressure on the operator margins. The 2G profitability is expected to dip by 3-4% over the next 2 years due to deterioration of operating Metrics and for the incumbents, EBITDA breakeven is unlikely before 4-6 years given the poor ARPU figures.

Given the intense competition, declining margins and lack of infrastructure, there is great need being seen for consolidation in the Telecom Industry. Consolidation is expected to improve operating metrics and stabilize the revenue growth to a healthy 15%.

The industry is an exciting study, the intricacies of its business model in the Indian Scenario, the operating metrics and the future outlook. I have avoided discussing here the political issues and scams that are currently surrounding the industry (there is enough of this on the news and it can form another blog post in itself) as the intent is to educate about the industry.

I have prepared a brief writeup on the Telecom Industry which I would definitely recommend you to download and read to get more insights to the current telecom scenario. The report can be downloaded from the Downloads Section. You will also find other useful material to download there.

Please do revert back on how you liked the report and your views on the Industry and its role in shaping our lives and the nation.