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The Indian NLD market has churned out one more growth story during FY 2008-09, clocking a whopping 48.3% growth to touch Rs 14,432 crore as compared with Rs 9,732 crore in FY 2007-08. Despite the economic gloom, the NLD market in India managed to grow at a healthy pace, thanks to the ever increasing mobile subscribers base, efforts of service providers and careful reviewing and initiatives of Trai and DoT.

Regulatory Moves
This year witnessed a lot of ups and downs in the NLD space and regulatory movements have excited the market. Trai and DoT have taken many initiatives to boost the Indian NLD market. One of the major happenings is DoT's decision to audit the major telcos. Recently, DoT has ordered an audit of the country's major operators over charges that they were reporting revenues in a manner that attracts a lower license fee. These operators include Bharti Airtel, Vodafone, Idea Cellular and Tata Teleservices.

The DoT action came after Trai found a significant jump in revenues from long distance services in India. Trai had carried out an analysis for five quarters. The authority has raised doubts that the licensee company is shifting the revenues of mobile segment to long distance segment. To clear this doubt, DoT has decided to conduct special audit of the companies.

Another major step in the NLD space is the entry of carrier selection code in the Indian market. In 2008 Trai issued a consultation paper on carrier selection code, which includes possibilities of allowing long distance service provider to issue calling cards. But in a major move in the FY 2008-09, DoT has finally given its nod for the carrier selection code paving the way for reduced long distance tariffs for consumers.

With the reduction in the applicable license fees and entry of large number of new long distance operators, tariff has already come down over a period of time. The entry of carrier selection code will have a major impact on the long distance segment and the industry is expecting some revolutionary changes in NLD and ILD space.

Trai has also come out with the recommendation on the various issues related to Internet telephony. As per the recommendations, NLD operators shall be permitted to connect the ISPs through public Internet to facilitate termination of Internet Telephony calls on PSTN/PLMN and vice versa both within telecom circles as well as outside telecom circles. The AGR of a NLD for the purpose of calculation of license fee shall include revenue from carriage of Internet Telephony also apart from their normal revenue.

It is expected that this move will reduce STD rates and reshape the management and execution of NLD. It will also generate competition in the NLD space and enable the reduction in tariff for the benefit of subscribers.

The NLD arena has become bigger and many new players are vying for a pie of this potentially huge NLD market. Some of the new players have bagged the NLD/ILD license to roll out their service. Swan Telecom, SingTel and Orange Business Services have joined the fray and obtained the license to operate both NLD/ILD services by DoT.

Players' Scoresheet
FY 2008-09 seems to be the year of achievements and success for Bharti Airtel. Last year Bharti Airtel was in the second spot with a revenues of Rs 2,410 crore and registered a growth of 132.9% and BSNL was topping the chart with a revenue of Rs 2,870 crore. But this fiscal, challenging and replacing the position of BSNL, Bharti Airtel jumped to the numero uno position with the magical revenue of Rs 4,905 crore and registered the phenomenal growth of 103.5% and 33.9% market share.

BSNL slipped to the second spot with a revenue of Rs 3,159 crore in FY 2008-09 as compared to Rs 2,870 crore in FY 2007-08, registering a growth rate of 10.1%.

Reliance Communications retained its third position with the revenue of Rs 2,729 crore and witnessed growth rate of 44.2%. RCOM NLD network has crossed 1,90,000 kms of ducted fiber optic cable on March 31, 2009. RCom also has the largest number of nodes with over, 400 points of interconnection, over 300 points of presence and over 175 MPLS nodes. RCom closed a large 1,000 plus kms infrastructure deal in Q4, and it has additional deals in the pipeline to close in next few months.

There is a shuffle in the fourth position also. In FY 2007-08, Tata Communications captured the fourth position with a revenue of Rs 692 crore. But in FY 2008-09, Tata Communications is replaced by Vodafone. Vodafone grabbed the fourth position registering revenue of Rs 1,403 crore, a 234% growth over last fiscal revenue of Rs 420 crore.

Tata Communications slipped to the fifth position and reported a revenue of Rs 1,050 crore and registered the growth of 51.7% as compared to Rs 692 crore during FY 2007-08.

For FY 2008-09, Idea Cellular registered the revenue of Rs 713 crore as against Rs 354 crore in FY 2007-08 and recorded a growth of 101.4%. During FY 2008-09, Idea launched its services in Orissa, Karnataka, Tamil Nadu and Sirmour district of Himachal Pradesh. The company has also launched its top-of-the-line mobile service in the service area of Mumbai.

It has also launched breakthrough tariff services in Madhya Pradesh and Chattisgarh to promote usage amongst existing subscribers and to attract new subscribers and started unlimited plans for subscribers in Andhra Pradesh.

The FY 2008-09 was a year of good business for players like Sify, Tulip, Railtel, Aircel and others. Sify registered a revenue of Rs 147 crore, Tulip recorded revenue of Rs 126 core and Railtel's revenue for the FY 2008-09 is Rs 119 crore.

For FY 2008-09, Aircel registered a revenue of Rs 53 crore. For Aircel this year is the of expansion and achievements. The company has currently gained momentum in this space, post the allocation of additional spectrum by DoT for thirteen new circles across India. This include Delhi, Mumbai, Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerela, Madhya Pradesh, Maharashtra, Goa, Rajasthan, Punjab, and eastern and western Uttar Pradesh. Recently, the company has also started its operation in Delhi and Mumbai.

Others like BT, AT&T and HCL Infinet, etc, contributed Rs 28 crore to the total NLD market.

Outlook
India has an exponentially growing telecom market. The country has recently achieved the 391.76 mn cellular subscribers base and the growth rate is showing no signs of slowing down. With the scope of NLD business growing and the market getting bigger and bigger, the business proposition is becoming more lucrative, and new players are jumping into this space. All this movement are making the Indian NLD market more and more competitive. Indian operators have to reshape their strategies, quality of services and future plans to face this tough competition, and to exploit the incredible growth potential available in this arena. It is expected that with the help of continuous effort of the operators, entry of new players and encouraging initiatives of the regulatory bodies the Indian NLD market is likely to witness the surge and will touch new heights.

Arpita Prem
arpitap@cybermedia.co.in