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The Indian telecom market is one of the fastest growing markets in the world today, with a #2 market position in terms of subscribers, next only to China. The year 2009 was filled with panic that the recession would affect the Indian telecom industry too, though we had predicted otherwise. In FY 2008-09, equipment vendors' revenue grew by 20% (Rs 1,14,526.9 crore) defying the recession. Service providers' revenue also grew by 20.7% (Rs 157,542 crore) almost equal to the growth of FY 2007-08.

In 2009, the industry missed out on VoIP, that could have brought down long distance tariffs, 3G and WiMax services by private operators, MNP, and MVNOs. The other issues include unsettled spectrum, a voice on standardization issues in international forums, a long term telecom roadmap, LTE plans, etc. Though we have scored well on the subscriber base, India is yet to become a key market for many global operators.

The year was certainly an eventful one in many ways, changing the market dynamics for operators and equipment vendors altogether. Rajat Mukarji, chief corporate affairs officer, Idea Cellular observes, "The year gone by was highlighted by important events such as new operators entering the market, price wars due to overcapacity, further decline of ARPUs due to dual SIM usage, delay in spectrum allocation and 3G auction, etc, changing the market dynamics. Due to the intense tariff war, price is reaching an unsustainable level for network operators. The year also saw urban areas achieving 100% teledensity."

Recession Defied
It is true that almost all the verticals felt the heat of the sweeping global recession, but the telecom industry showed resilience. As Jayant K Rastogi, country head & area sales director, Indin subcontinent, Enterprise Mobility, Motorola says, actually there was no impact of recession on the Indian telecom industry; it was only a sentiment that hit the industry and companies adapted various reactionary and precautionary measures, cost-cutting being the overused measure. In fact, many milestones were witnessed by the industry in 2009.

A Nokia spokesperson says, "Telecom is perhaps one of the sectors that defied the magnified impact of the global slowdown in India. In fact, we have surpassed the 500 mn subscriber mark, and seen increased consumer propensity to experience services. The mobile Internet growth has nearly doubled. We have also witnessed foreign investments to the tune of Rs 9,815 crore during April-October 2009 in the sector and robust local manufacturing growth. For a lot of companies including Nokia, local manufacturing facilities are emerging as global hubs." While the slowdown might have dampened immediate infrastructure expansion plans for some, at an overall level, the industry has enjoyed significant growth in India.

Sunil Kumar Goyal, CEO, Bharti Teletech attributes this cushion effect to the inherent strength and faster anticipated growth in this sector. Despite the overall economic slowdown, telecom operators have been buying equipments to expand their networks, resulting in subscription growth. Falling prices of handsets and proliferation of Chinese low cost phones, pushed the growth in semi-urban and rural areas, where more entry level phones sell. Vijay Yadav, managing director, UTStarcom says, "The enormous potential lying with us in rural areas leaves no space for recession to create a negative impact. In 2009-10, the telecom sector is estimated to contribute around Rs 45,000 crore to the government's kitty."

Dileep Kumar, director, product management, carrier and enterprise solutions, ADC Krone says, "While the recession has had some impact, the overall performance has been extremely positive in terms of growth and revenues. A positive impact of the recession has been an uptake in high-speed connectivity requirements in the SMB sector due to the caps imposed on outstation travel." Shailendra Badoni, COO, Datacraft India says, "The impact of recession has been comparatively less on the telecom sector though it is witnessing a slow growth rate. Liberalization policy and some socio-economic factors are mainly responsible for the growth in the sales volumes. With cheap cell phones available in the Indian market and cheaper call rates, the sector has become the necessity and primary need of everyday life."

On the broadband front, according to a report by Trai, India had 7.40 mn broadband subscribers and an overall teledensity of 44.87, as on October 31, 2009. This represents an increase of 2.35 mn broadband subscribers and 13.37% increase in teledensity from the same period in 2008.

Naresh Wadhwa, president and country manager, Cisco, India and SAARC says, "Enterprises invested in technologies like videoconferencing, wireless LANs, network security, network storage, and voice solutions like IP telephony to bring down costs and increase business productivity. As a result technologies like visualization, UC, software-as-a-service, managed services, etc, became popular."

Double 500 mn Mark: With the addition of 15.23 mn new wireless and wireline subscribers in September 2009, India crossed the 500 mn mark in telephone subscription, touching 509 mn (mobile subscription 471.7 mn, wireline 37.3 mn). Much ahead of the goal set by the government for the end of 2010. By December the industry achieved another 500 mn in mobile phone service subscription, as predicted by VOICE&DATA. The primary reason for this was drastic tariff reduction by service providers.

On this achievement, A Raja, Minister of Communication and Information Technology says, "About three years back we envisioned to achieve 500 mn connections by the end of 2010. The conducive government policies and the zeal of the industry have helped to place the Indian telecom sector on the world map as we crossed the milestone of 500 mn connections in the month of September 2009, and achieved an overall teledensity of 44%."

100% Urban Tele-density: Teledensity has crossed 100% in urban areas, wherein the number of cellphone connections have exceeded the urban population, thanks to the intense price war over the past three months. The over 100% urban teledensity reflects multiple SIM ownership. Urban India accounts for close to 70% of India's 500 mn cellular users and over 75% of the telecom operators' revenues. Sunil Kumar Goyal, CEO, Bharti Teletech says, "Tariff reduction and decline in handset costs has helped the urban teledensity cross 100%. The same factor is helping for expansion in rural areas also where teledensity is the lowest at present."

Price War: Intense tariff wars shook the industry due to overcapacity, causing myriad problems for operators. For operators, ARPU started declining further, and network congestion increased.

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