Indian Telecom Sector

December 6, 2019 India INC

Indian Telecom Sector

It’s profit and adventure, which drives private enterprises towards excellence. And Indian telecom industry is one such example of success through privatisation. The second largest among emerging economies after China, Indian telecom industry has 175 million connections to its credit till 2010. And the investment required amounts to $ 37 billion by 2005 end and $69 billion by 2010. And it’s no wonder that the sector ranks second in terms of FDI inflow during the period from 1991 to 2003. The amount of FDI in this sector during the period hovered around Rs 9, 576.40 crore. In absolute terms, this is the highest inflow of FDI into the telecom sector in the world. The share of the private players in the sector has also increased to 45% in 2004. In view of the massive growth potential in the sector, the government recently hiked the FDI cap in the telecom sector to 74% from the earlier 49%. And with the Govt decision to allow FDI up to 100% for the manufacturing of telecom equipment, foreign players such as Kyocera and Nokia (Japan), Alcatel (France), LG (S Korea), etc are planning to set up manufacturing units in the country to cater to the telecom needs. According to an Ernst & Young study, the telecom revenues are expected to touch $23-25 billion by 2007. The mobile phone sector in 2003-04 registered three times higher growth compared to that in 2002-03. However, the growth in fixed lines has been negligible, merely 3%, from 41.48 million connections in 2003 to 42.58 connections in 2004. So the basic telephony still has potential for the participation of private players. According to an estimate, the telecom industry at present requires Rs 1.6 trillion ($37 billion) to provide telecommunications at affordable prices to the masses. And the answer to such huge amount lies in private investment especially FDI. In fact, an FDI flow of approximately $10 billion a year is required to achieve the desired 8 per cent annual gross domestic product growth. But all said and done, the telecom sector still remains bullish and with more and more private players chipping in to take their pound of flesh, India for sure is the right ring-tone.