Thirty percent rise is unnatural in the telecom market, and the industry
captains around the world tend to watch the whopping escalation. The growth in
telecom turnkey business may have a cascading impact on the performance of other
telecom verticals too. The efforts to reach 210 mn subscribers including pure
wireless (GSM + CDMA) and fixed wireless (FWP+FWT), and landlines by March 2007
have fuelled the augmentation.
As per V&D estimates, the telecom turnkey industry grew by 30% to Rs 3,688
crore during 2006-07 from Rs 2,837 crore during 2005-06. Players like ITI, GTL,
HFCL, and UTL fared in the race, while TCIL, which has stronger focus on the
overseas markets, is losing market share in local markets. Other players
contributing to the surge in business were CH2M Hill, ORG Telecom, Sasken, Mak
Telecom, etc.
ITI, which retained its dominant position, clocked Rs 1,401 crore revenues in
the telecom turnkey business as compared with Rs 1,390 crore, a marginal growth
of 0.79%. Telecom turnkey revenue of GTL, which became the #2 vendor, stood at
Rs 750 crore as compared to Rs 353 crore, registering a rise of 112%. HFCL,
which has bagged some major orders, grew its revenue by 541% to Rs 577 crore
from Rs 90 crore. UTL's turnkey revenue was up by 40% to Rs 195 crore from Rs
140 crore. TCIL, which has bagged major orders abroad, registered 11.52%
increase to Rs 300 crore from Rs 269 crore during 2005-06.
In ITI, equipment manufacturing, turnkey projects, maintenance and services
from defense, BSNL/MTNL, railways, and the public sector contributed for a large
share of the income. The main sectors that contributed to UTL's revenue are both
the telecom and e-Governance sectors.
Market Trends
The telecom industry has seen several trends in the last decade. But,
the year 2006 has set fire for implementing several key technologies.
Acceleration toward IP convergence, increased penetration to garner untapped
markets, push to release appropriate spectrum to create new markets, setting up
of international data centers for hosting and managed services, unification of
disparate NOCs, last mile access moving toward wireless, NGN soft-switches, and
multi-service backbones were the key trends observed in the market.
Some telecom service providers insisted on installation, commissioning of GSM
and CDMA equipment, and operation and maintenance of the same, as Indian
wireless subscribers grew faster. For some players, providing total telecom
solutions involving products and services, and integrating datacom and telecom
applications were the focus.
A major trend in the global market is a shift toward managed services
outsourcing to reduce Opex. There is also a push toward accessing independent
CPEs in various form factors.
Growth Drivers
Growth drivers that are propelling the domestic wireless market
include lower penetration on mobility and broadband, untapped markets, trends
toward IPTV with requirement of triple play networks, and mobile commerce. Apart
from these drivers, e-Governance infrastructure projects and common service
center projects initiated by the department of information technology, under the
national e-Governance program, and expansion of financial networks are also
contributing heavily to the growth.
As cellular operators continue to add subscribers and seek to limit the churn
rate, they will focus on network quality as a competitive necessity, and invest
in upgrading their networks. To increase penetration and drive revenue growth,
wireless carriers have a steady capital expenditure on wireless networks to
improve service quality and expand coverage. The Indian wireless capex is
expected to be consistent at $10 bn a year, over the next two years.
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