Telecommunication industry creating waves in India despite strict policy and regulatory issues

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 is comprised of several segments, namely wireless services, wire line services, internet and broadband services, satellite and cable television services, mobile value added services and telecom equipment manufacturing.

Other than the wireline segment, all other segments have witnessed growth in the past few years. Currently, India is the world’s second largest telecommunication market in terms of mobile cellular subscribers. The Indian telecommunication industry had a good year in terms of subscriber growth but was marred by policy and regulatory issues. In February 2012, Honorable Supreme Court of India cancelled 122 telecom licenses of 11 companies owing to their alleged involvement in 2G spectrum allocation scam. In view of the directions given by the Supreme Court, the government held auction for the 2G spectrum at the end of 2012. However, the 2G auction concluded in just two days with a tepid response. Only five players participated in the auction, of which only two were among those whose licenses had been cancelled. On 16 July 2012, the government in a move to push reforms allowed the much anticipated 100% FDI in the telecom sector.

The outlook for Indian telecommunication is positive as far as rural wireless, internet and broadband segment is concerned. The low penetration rates existing in these segments will enable high growth rates both in subscriber additions and revenue in the next few years.

Key Findings

• Over the last      few quarters, the growth in mobile subscription has softened a bit. In      Q2FY13, the wireless subscriptions declined by 2.9% for the first time in      five years.
• In 9MFY13,      the wireline subscriptions saw a y/y contraction of 5.8%. The contraction      was acute in urban markets while rural markets unexpectedly recorded a      growth during this period.
• In the past      five years, the total number of internet subscriptions grew at a CAGR of      26% while broadband subscriptions grew at a CAGR of 36%. In 9MFY13, total      broadband subscriptions grew by 13.1% y/y.
• The contribution of telecom sector to India’s GDP was around INR 2tn in FY12. The sector recorded a y/y growth of 8% in 9MFY13 in terms of gross revenues.

Chart: Gross revenues from Indian telecom sector (INR Billion)

Source: TRAI

Much more in the EMD report: India Telecommunication Industry>>

 

 

 

Romanians are getting increasingly techno savvy

Statistical indicators on Romania’s telecom sector in 2012 show that the market stabilised in comparison to the first years of crisis and that there is enough room for growth particularly on the internet segment, despite the challenging market environment.

Mobile and fixed telephony recorded annual decline in the number of users in 2012, while voice and message traffic continued to increase last year. The fixed telephony segment maintained a downward path both in terms of traffic and number of users.

The internet services segment kept accelerated expansion pace in 2012. The number of mobile broadband connections surged by 67.8% y/y to 7.1mn in 2012, while the fixed broadband internet connections advanced by 7.9% y/y. The segment has good prospects for further growth, as despite the accelerated dynamics in the recent years, internet usage in Romania remains below the EU average. Approximately 48% of the population has never used internet services, compared to 22% EU average.

Figure 1 Fixed and mobile telephony penetration degree in 2009-2012

Figure 2 Internet: Broadband connections by connection type in 2010-2012 (mn)

This is just a quick glimpse into the Intellinews Report: Romania Telecom Sector. Learn more and purchase now>>

 

Mobile internet service creating waves in Poland

The Polish telecom market inched up by 1.1% y/y to nearly PLN 43bn (EUR 10.4bn) in 2011; the moderate expansion of the internet and mobile segments managed to offset the poor performance of voice call services at fixed locations.  The demand for data transfer market strengthened in 2011. Mobile internet services in particular are gaining ground and compete with fixed-line internet access. In 2011, 2G/3G became the most popular form of internet access.

Number of internet users by technology used in 2010-2011 (mn)

In terms of providers, the largest customer base in 2011 was held by TPSA, followed by mobile network operators with a heaped share of 40.5% users.

Major internet providers – Market shares by number of users in 2010-2011- (% of total)

Much more in the Intellinews report: Polish Telecom Sector

 

Online media tops as prefered advertising choice in Poland

Poland’s advertising market growth slowed down visibly in 2011 and projections for 2012 are rather pessimistic. After a poor performance Q1, the Euro 2012 soccer championship did not show the expected positive impact upon the advertising market in Q2, as many companies adopted a cautious behaviour on such expenditures. Accordingly, market players expect the advertising market to drop by 0.4-5% y/y in full year 2012.

The online segment, on the other hand, seems resilient not only to overall economic factors, but also to the cautious behaviour showed by advertisers for the other channels. The Polish e-book market and mobile press are developing at an accelerated pace, while DTH TV providers invest in web VoD and DVB-H mobile TV services. Companies will likely continue to be interested in building new channels of distribution and the online media is expected to become soon the second news source in the country, after television.

Advertising market segmentation in 2011-2012 (% in total)

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Indian consumers more fascinated by imported electronic equipment

India recorded its worst GDP in the last nine years with a 5.3% growth during the fourth quarter. Mirroring this, the Indian electronics industry also suffered a minor slowdown but managed to record a y/y growth of 10%. The production turnover of the industry grew at a CAGR of more than 15% in the last six years and is expected to cross INR 1.5 tn by the end of fiscal year 2013.

The country ranks very low regarding electronic equipment manufacturing, at 1.5% of the total world production. According to Department of Electronics and Information Technology (DeitY), more than 50% demand for electronics in the country was met through imports and the figure is expected to rise to 75% by 2020.  Government of India is undertaking several initiatives to promote domestic manufacturing of electronic equipment. Under the Draft National Policy on Electronics (NPE), the Government has targeted for creation an eco-system for a globally competitive electronic system design and manufacturing sector in the country, in order to achieve a production turnover of about USD 400 Bn by 2020. The policy also targets investment of about USD 100 Bn and employment to around 28 mn people at various levels of the industry.

All six major sub-sectors of Indian electronics industry saw growth in production turnover during the fiscal year 2012. Highest growth was recorded by the electronic components and communication equipment sub-sector, while consumer electronics was slightly subdued compared to past few years. However, rising costs of raw materials and persistent inflation was negatively affecting the profitability of the sector. Major domestic players in the industry recorded a significant decline in their profit margins during the year.

The outlook for Indian electronics is positive owing to the huge domestic demand and supply gap and double digit production growth rate in almost all of its sub-sectors. The increasing population and growing per capita income will increase the size of this industry in the years to come.

Salient Points

• In fiscal      year 2012, Indian electronic industry recorded a production turnover of      around USD 30 bn. The total electronic hardware production turnover of the      country grew at a CAGR of 16.8% during the last six years
• The largest      contribution in FY12 came from communication and broadcast equipment,      which accounted for 28.3% of the total production turnover, followed by      consumer electronics with 23.9%. Together these accounted for more than      half of the entire production turnover of the industry
• Electronic      hardware exports grew at a CAGR of 28.9% during the period 2007-12 and      crossed USD 9 bn by the end of fiscal year 2012.
• During the      period January 2000 to June 2012, electronics sector received foreign      direct investment (FDI) of USD 1.17 bn, equal to 0.7% of the total FDI inflows      in the country during that period. This was low compared with the inflows to      other industrial sectors of the country. However, it grew by 19% y/y over      the June 2011 figure, suggesting rising growth in inflows in this sector.

Chart: Cumulative FDI in Electronics Sector (Since January 2000 in USD Mn)

Source: Department of Industrial Policy and Promotion (DIPP)

This is only a small extract of the insights in the India Electronics Industry report; read more and purchase>>

 

Telecommunications growth is inevitable despite being trampled by Indian regulatory issues

India’s GDP grew by 5.3% in the fourth quarter of fiscal year 2012, recording its worst performance in last nine years. Indian telecommunication industry had a good year in terms of subscriber growth but was marred by policy and regulatory issues. In February 2012, Honorable Supreme Court of India cancelled 122 telecom licenses involving 11 companies owing to their alleged involvement in 2G spectrum allocation scam. In view of guidance from the Supreme Court, the Government will hold auction for the 2G spectrum by the end of year 2012. Despite of the adverse regulatory environment, the sector witnessed a 12% y/y growth in gross revenues.

The number of wireless subscribers grew by 13.3% y/y to 919 million in FY12 strengthening India’s position as the second largest telecom market in the world. The mobile cellular penetration rate of the country reached 76% at the end of FY12. The market was highly tilted in favor of pre-paid subscriptions which accounted for more than 95% of the total cellular subscriptions in the country. Wireline segment continued its decline in FY12 as well with total subscriber base shrinking by 7.7%. Internet and broadband segment showed positive signs recording y/y growth of more than 16% each. In the fiscal year 2012, Bharti Airtel led the telecommunication industry by recording total revenue of INR 715 billion. However it recorded a net profit decline of 41% owing to increased interest expenses. Idea Cellular Ltd recorded total revenue of INR 197 billion. Its net profit for the year stood at INR 6 billion. Reliance Communications had a tough year in terms of financial performance. It registered a revenue decline of 12% and a net profit decline of 31%. Its net debt to EBIDTA ratio soared to 5.52 by the end of fiscal year which was very high considering the industry standards.

The outlook for Indian telecommunication is positive as far as rural wireless, internet and broadband segment is concerned. The low penetration rates existing in these segments will enable high growth rates both in subscriber additions and revenue in next few years.

Key Findings

• In the      first three months of calendar year 2012, mobile wireless subscriber base      grew by 2.8% q/q to reach 919.2 million. Urban wireless subscriber base      grew by 1.1% while rural subscriber base grew by 4.6% during the same      period.
• In the      first three months of calendar year 2012, wireline subscriber base shrank      4.6% q/q to reach 31.17 million. Urban wireline subscriber base contracted      by 1.8% while rural subscriber base contracted by 3.3% during the same      period.
• The broadband      subscriber base grew by 3.4% q/q in the first quarter of the calendar year      2012, while total internet subscription grew by 2.1% in the same period.

The gross revenues earned by the telecom sector declined by 0.4% q/q in first quarter of the calendar year 2012 (ending March 2012) to INR 492 billion against INR 494 billion earned in quarter ending December 2011. However, on a y/y basis, the gross revenues grew by 8.1% against the March 2011 figure.

Chart: Gross Revenues from Indian Telecom Sector (INR Billion)

Source: Telecom Regulatory Authority of India (TRAI)

This is only a small extract of the insights in the India Telecommunications Industry report; read more and purchase>>