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If FY 2001–02 saw huge deployment of optic fiber by the carriers, it was FY 2002–03 that saw much of that fiber being lit up for carrying the ever growing voice and data traffic.

FY 2002–03 saw deployments by both incumbent as well as private operators for basic as well as cellular services, and in both CDMA and GSM spaces. This also helped in moving the teledensity to a more respectable level of around 5.

The carrier equipment industry in India grew by around 1.4 percent, thanks to large-scale deployment of CDMA/GSM network by Reliance, BSNL, Bharti, and Hutch. According to Voice&Data estimates, India’s carrier equipment industry for FY 2002–03 was estimated at Rs 15,012.82 crore, whereas in FY 2001–02 it was pegged at Rs 14,805.76 crore. In the carrier equipment space, products contributed around 84 percent i.e. around Rs 12,662.05 crore whereas the services’ share was around 16 percent i.e. around Rs 2,350.77 crore. Carrier equipment is still more of a product-driven market as can be gauged from the revenue share.

Wireless infrastructure was the key driver as it helped in maintaining a positive growth for the carrier equipment industry. In the fiscal 2002–03, the focus was on deploying wireless networks at a faster pace. BSNL had a pan-India deployment of GSM network whereas Bharti and Hutch increased their coverage areas by rolling out services in new geographies. On the CDMA front, Reliance is moving ahead with a countrywide rollout of network in 673 cities and has already activated customers in 97 cities.

Even on the ILD side, there was new network deployment by both Data Access and Bharti Telesonic. Bharti Telesonic went for a TDMA backbone whereas Data Access went for a mix of both TDMA as well as IP. It is believed that Bharti is also deploying IP backbone and has recently finalized a deal with Cisco for supply of equipment.

V&D estimates CyberMedia Research

The leading service providers in terms of capex-related deployments were Reliance on the private front and BSNL on the incumbent front. Both the operators invested a lot in FY 2002–03 on carrier equipment to deploy their extensive wireless networks (CDMA as well as GSM) across the country.

The telecom cables segment was badly affected as there was a significant fall in revenues from Rs 4,133 crore to Rs 1,400 crore, which meant a negative growth of around 66 percent. This has restricted the growth of carrier equipment to only 1.4 percent. Transmission did well as a sizable amount of fiber that was deployed in the previous fiscal was lit in fiscal 2002–03 by both Reliance and Bharti. Even VSNL is moving aggressively to deploy its domestic long distance network. The OSS/BSS segment also performed well, as a natural fallout of robust growth in the cellular services space. Cellular services saw a net addition of around 6 million subscribers in FY 2002–03, which helped the mobile subscriber base double by the end of the fiscal. Consequently, the license revenues of billing vendors got significantly ramped up.

In the turnkey space, companies did well on the India front but in FY 2003–04 the focus would be more on projects outside India as a lot of countries are opening up their markets. Companies also have to move from installations and commissioning to system integration and managed outsourced service as this will help in reducing costs.

However, the way telecom tariffs have been falling, it is expected that the cellular services market (CDMA plus GSM) will witness the next round of consolidations and only four to five players will remain in the field. This may not augur well for the carrier equipment industry. Voice&Data estimates that in FY 2002–03 the market for carrier equipment will see a flat growth and one can see a drop in revenue to the extent of 10 percent. The reason for this is there are no green field projects and carrier vendors will be dependent only on expansion orders whereas service providers will work more on sharing of infrastructure and reducing the capex to increase profitability.

Pravin Prashant