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The wireless infrastructure market in India is growing at a rapid pace. More than 35 mn wireless subscribers have been added during the first three months this year, which means the number of Indian wireless subscribers is likely to reach 500 mn before the end of 2009.

With the addition of six new players and service providers soon going for the 3G spectrum auction, the telecom sector is likely to receive a further fillip. Greenfield operators are set to add momentum to the telecom growth. According to Ernst & Young and CII, by 2012, the total telecom subscriber base is expected to reach 690–700 mn subscribers out of which 640-650 mn users will go for wireless connections. In order to achieve this target, the industry would need capex investment of $18-20 bn in this period. All this has translated into massive requirements for funds which also mean some more global telecom operators to join the India telecom bandwagon.

For past few years, the wireless infrastructure segment has been witnessing an explosive growth. The growth clocked in FY 2007-08 was about 43% and the total revenue was Rs 23,770 crore. In the last financial year, even though the industry felt some heat due to the global meltdown, the Indian telecom picture was not so dismal.

According to VOICE&DATA estimates, the wireless infrastructure industry stood at Rs 33,261 crore. The market saw an overall rise of 40% in FY 2008-09 with Ericsson having the biggest share in this growth. The company recorded a 24% growth in its wireless business followed by Nokia Siemens Networks and Alcatel Lucent, growing at 26% and 30%, respectively. Despite the slowdown, all vendors pocketed some exciting projects. Chinese vendors-Huawei and ZTE performed brilliantly. Huawei witnessed an impressive 249% growth, while ZTE doubled its revenues in FY 2007-08.

Deals Bagged
For ZTE, last year was significant, marked by some interesting projects in hand. The company bagged some big projects from the service providers expanding their network. In GSM space, the wireless infrastructure solution company received Aircel's project for two circles, Idea Cellular's project in two circles, and Tata Communications' project for five circles. ZTE is also working on Sistema-Shyam's CDMA project in fifteen circles. Loop Telecom has recenty chosen ZTE to provide end-to-end network equipment for its GSM network in the country. The network will be based on ZTE's V3 version with GSM technology. The deal will also provide a portfolio of telecommunication equipment and services

After the successful SDR BTS commercial launch in Hong Kong CSL, ZTE has also deployed SDR BTS successfully in Tata Teleservices' GSM network, which the company believes will help to consolidate its leadership in the SDR field.

ZTE claims to command 100% market share in the Indian NGN market. It got accounts from BSNL for its NGN project. It also acquired Tata Communications' nationwide NGN project.

Nokia Siemens Network entered into a partnership with Tata Teleservices to focus on the service provider's pan-India GSM network rollout. NSN will manage operations of the networks it deploys over a period of five years. Managed services form just one portion of the vast scope of the deal. The equipment vendor will be responsible for GSM services across a majority of TTSL's twenty-two telecom circles in India.

Among the new orders for Nokia Siemens Networks, include Idea Cellular's project in Bihar. The vendor also secured contracts from Aircel for expansion in Delhi and Mumbai.

Chinese vendor, Huawei got business from almost every operator in the country. It not only got clients in its kitty, but also received expansion orders from the existing customers. Earlier only BSNL and Tata Teleservices were Huawei's main customers, but in 2008, the vendor managed to bring Bharti Airtel, Reliance Communications and Loop Mobile on its customers' list. It is an achievement for the vendor to have all the top ten operators in the country as its customers.

Huawei pocketed orders worth more than $2 bn in total for the supply of CDMA and GSM equipments for mainstream telecom carriers in India like Reliance Communications and Tata Teleservices in 2008

In March 2008, Huawei won a $20 mn contract from BPL Mobile. The deal marks Huawei's entry into the dominant GSM space of mobile telephony in India. As per the one-year contract, Huawei Technologies would supply GSM based services that will assist BPL in expanding its network across Mumbai.

RCom had decided to award contracts to multiple vendors for its pan-India GSM service. The service provider finalized a deal worth over Rs 2,000 crore. Huawei has also inked agreements with new entrants, including Datacom and Unitech Wireless. The Chinese vendor will roll out Datacom's GSM network across nine circles.

Unitech Wireless had given the Indian arm of Chinese telecom network equipment major, Huawei a contract worth about $400 mn to deploy end-to-end telecom network in three circles in southern India -Karnataka, Tamil Nadu and Andhra Pradesh. Recently, Unitech Wireless reportedly awarded equipment contracts worth $200 mn each to Alcatel-Lucent and Huawei as it builds its mobile network.

Motorola won a $90 mn contract from state-run telecom firm BSNL to supply GSM network equipment. The deal will help BSNL add 2.3 mn subscribers in southern India.

In 2008, Ericsson earned a large part of its revenue from projects alloted by Idea Cellular and Vodafone. The vendor bagged an expansion project from Idea Cellular for Mumbai. This contact was in addition to the already existing deals for expansion work in six circles. A new project for the equipment provider was from Aircel that launched its services in April, early this year.

A major project came from Vodafone to remove 12,000 base stations offered by Motorola. Apart from new contracts, Ericsson received expansion orders from all customers including Bharti, BSNL, Idea, MTNL, Aircel and Vodafone. One of the most noteworthy achievement for Ericsson was helping BSNL achieve the largest multi-city launch of 3G services in India.

Alcatel-Lucent has been working on a contract to supply and install 2 mn lines for MTNL based on advanced wireless communications technology in Mumbai. The mobile NGN solution deployment is a part of a multi-year agreement. Services offered under this agreement include project management, consulting and design, installation and deployment, network operations, maintenance and integration and testing.

Other big deals that the company inked, include a contract from Tata Teleservices for expansion of their CDMA/GSM network in twenty-two states with SDH technology. BSNL's 2G/3G Phase 5 contract in the west zone was a big win for Alcatel-Lucent.

Growth Drivers
There are various aspects that drive the rapid growth of India's wireless market. The first comes from sustained growth in penetration rate of mobile subscribers, while the second is derived from technology. Future oriented technology and long-term low TCO requirements will drive vendors towards R&D of new technology that will enable higher utilization rate for spectrum and multi-mode TCA platform with SDR technology, to help operators save on capex and opex.

India has a huge rural area that still needs to be covered. The operators are now heading towards rural destinations, however, even in circle A, a lot of infrastructure needs to be deployed to support the huge subscriber base. The year 2009 is set to witness some key developments, including 3G and BWA spectrum auction. Some of the greenfield operators tightening their belts will take a final plunge in the market.

Considering the fertile grounds in India, vendors are looking forward to be a part of the mobile revolution in the country. To support India's rapid growth in mobile subscribers, NSN has opened a new facility for the manufacture and distribution of mobile communications infrastructure in Chennai. Over the next three years the company plans to invest $70 mn in the facility and to generate 400 new jobs. The equipment vendor is also determined to strengthen its software innovation network in India. With an aim of strengthening its global research and development, NSN has expanded its development center at Bengaluru, which currently employs 1,600 engineers.

Concerns
From a vendor's perspective, delay in 3G spectrum auction and uncertainty on policy framework for the spectrum allocation has led to disappointment of vendors. Vendors had been pinning great hopes and eyeing big business opportunity offered by the evolution of technology in the country. Continuous delay and lack of clarity on future plans have proved to be a big turn-off.

A highly competitive and price-sensitive Indian market throws up a challenge for vendors to reduce the total cost of ownership, to make mobile networks more pervasive, and mobile services more affordable. At the urban level, this means helping reduce overall TCO.

NSN's Environmentally Sustainable Business (ESB) program allows the vendor to work closely with operators to evaluate the performance of their installed equipment, and help optimize it. The vendor has recently collaborated with ACME Tele Power, leveraging their range of innovative passive infrastructure solutions to create customized solutions, and to establish a joint development lab in India to examine future opportunities, specifically around remote energy monitoring solution.

Motorola has many innovative solutions for rural market like Motorola Strongbox portfolio along with solar/wind power energy solutions.

A major thrust area for the vendors is transitioning operations to next generation network architecture, helping deliver the power of fixed mobile convergence and drive greater revenues from fixed line investments by enabling services such as IPTV, high speed Internet access and videoconferencing among others.

Outlook
In the times ahead, various technologies will co-exist in the Indian wireless market and the operators will focus on the convergence of deployed network with the aim of realizing a single RAN. Voice services are still a major area of focus in the Indian market, given the continued requirement for voice services. But in the coming era high-speed data services in hot spots will become the killer application for operators focusing on and developing high-end users of telecom services.

Going forward, the Indian market will evolve into leader in unified platform and SDR technology, which works toward building a flat network. All IP structures with high-speed data service will bring together various applications and services, thus providing customized service to the end-users. This will lead to a booming telecom market in the country.

Heena Jhingan
heenaj@cybermedia.co.in