This report profiles India’s telecommunication industry, discussing market trends through 2014 and outlook for 2015 and beyond. The report also highlights leading players in the sector including Bharti Airtel Ltd, Idea Cellular Ltd and Reliance Communications Ltd.

The telecommunication industry has played an important role in the development of the country’s economy over the last few years. Not only has it increased connectivity across the country, it has also helped in stimulating other sectors of the economy. The telecommunication sector in India comprises several segments, namely wireless services, wire line services, internet and broadband services and mobile valued added services.

India’s telecom sector continued on the path of revival in FY15, buoyed by a good year in FY14. Major wireless providers saw an improvement in their market share both in terms of subscriber base and revenue, while fringe players continued to bleed. Mobile cellular market consolidated further during FY15. Big three players accounted for around 60% of the subscriber base at the end of FY15.

The reduction of 2G base spectrum prices in February 2014 auction brought some relief to the government, which earned INR 612bn (~USD10bn) from this auction that ended after 68 rounds of bidding over 10 days. The latest round of spectrum auction in March 2015 saw aggressive bidding across all bands (2,100MHz; 1,800MHz; 900MHz; and 800MHz). As of March 2015, over 86% of the spectrum was provisionally allocated to bidders with the government fetching INR 1.02tn in revenue.

Wireless penetration rate saw strong growth in FY15. It is the rural parts which are driving new subscriptions in India. Wireline segment contracted while data and internet usage continued to grow during the year. Low penetration rates in rural India coupled with high growth in the internet and broadband segment will drive the sector over the next few years.

Key Points:

• According to the Telecom Regulatory Authority of India, the sector contribution to India’s GDP was around INR 2.5tn in FY15. The sector recorded a growth of 21% y/y in FY15 in terms of gross revenues.

• Wireline subscriptions saw a contraction of 6.7 y/y % in Q4FY15. The contraction was acute in rural markets while urban markets recorded a gradual decline.

• India’s current regulations and policies encourage foreign companies to own and start operations in the telecom sector. Actual inflow of FDI in the sector was USD 17.1bn from April 2000 to March 2015.

• During 2006-11, wireless subscriptions grew at a CAGR of 38%. The growth plateaued post 2011 and even went into the negative territory in FY13-14. In FYE15, the total subscriber base grew by 7% y/y.