Telecom sector – India 1



India is currently the world’s second-largest telecommunications market and has registered strong growth in the past decade and half. The Indian mobile economy is growing rapidly and will contribute substantially to India’s gross domestic product (GDP), according to report prepared by GSM Association (GSMA) in collaboration with the Boston Consulting Group (BCG).

The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth in the Indian telecom sector. The government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework that has ensured availability of telecom services to consumer at affordable prices. The deregulation of foreign direct investment (FDI) norms has made the sector one of the fastest growing and a top five employment opportunity generator in the country.

Market Size

Driven by strong adoption of data consumption on handheld devices, the total mobile services market revenue in India is expected to touch US$ 37 billion in 2017, registering a Compound Annual Growth Rate (CAGR) of 5.2 per cent between 2014 and 2017, according to research firm IDC.

India’s mobile subscriber base is expected to cross 500 million! subscribers by the end of FY2015 from 453 million subscribers at the end of FY2014.

According to a study by GSMA, smartphones are expected to account for two out of every three mobile connections globally by 2020 making India the fourth largest smartphone market.

The broadband services user-base in India is expected to grow to 250 million connections by 2017, according to GSMA.

India added the highest number of net mobile phone subscriptions of 13 million during the third quarter of 2015@.

International Data Corporation (IDC) predicts India to overtake US as the second-largest smartphone market globally by 2017 and to maintain high growth rate over the next few years as people switch to smartphones and gradually upgrade to 4G.

In spite of only 5 per cent increase in mobile connections in 2015, overall expenditure on mobile services in India is expected to increase to US$ 21.4 billion in 2015, led by 15 per cent growth in data services expenditure, as per research firm Gartner.

The Indian telecom sector is expected to generate four million direct and indirect jobs over the next five years according to estimates by Randstad India. The employment opportunities are expected to be created due to combination of government’s efforts to increase penetration in rural areas and the rapid increase in smartphone sales and rising internet usage.


With daily increasing subscriber base, there have been a lot of investments and developments in the sector. The industry has attracted FDI worth US$ 17.7 billion during the period April 2000 to September 2015, according to the data released by Department of Industrial Policy and Promotion (DIPP).

Some of the major developments in the recent past are:

  • Walmart India Private Limited’s president has shown interest in opening its chain of stores in Haryana, while Micromax has also offered to set up a mobile handset manufacturing unit in the National Capital Region (NCR).
  • Vodacom SA, a subsidiary of Vodafone Plc, has entered into an agreement with Tata Communications Ltd to buy the fixed-line assets of TataComm’s South African telecom subsidiary Neotel Pty Ltd.
  • Bharti Airtel has planned to invest Rs 60,000 crore (US$ 9.02 billion) over a period of three years with a view to boost its telecom network capacity thereby improving the quality of voice and data services to its customers.
  • Reliance Communications Ltd, India’s fourth largest mobile services provider, has agreed to acquire Sistema Shyam TeleServices Ltd (SSTL), the local unit of Russian company Sistema JSFC, in a deal valued at Rs 4,500 crore (US$ 687 million), which includes payments to the government for spectrum allotted to Sistema.
  • Videocon Industries Ltd plans to set up a mobile handset assembly plant along with manufacturing set top boxes in Punjab for an investment of Rs 500 crore (US$ 76.7 million) over three years.
  • American Tower Corporation, a New York Stock Exchange-listed mobile infrastructure firm, has acquired 51 per cent stake in telecom tower company Viom Networks in a deal worth Rs 7,635 crore (US$ 1.17 billion).
  • Chinese smartphone maker OnePlus has announced its partnership with Foxconn, a Taiwanese company, for assembling its phones in Foxconn’s factory in Andhra Pradesh.
  • Swedish telecom equipment maker Ericsson has announced the introduction of a new radio system in the Indian market, which will provide the necessary infrastructure required by mobile companies in order to provide fifth-generation (5G) services in future.
  • Out of the total number of smartphones shipped in India during the June 2015 quarter, 24.8 per cent were made locally – a significant rise as compared to 19.9 per cent in the previous quarter – as per CyberMedia Research firm.
  • Global telecom equipment makers like Ericsson, Nokia Networks and Huawei are looking forward to over US$ 1 billion revenue opportunity as mobile phone operators in India roll out high-speed broadband services on the 4G LTE technology across the country.
  • Lenovo Group of China has commenced manufacturing its smartphones in India, through its contract manufacturer Flex’s facility near Chennai, thus becoming the largest Chinese company to follow ‘Make in India’ strategy.
  • Foxconn, the world’s largest contract-manufacturing firm for consumer electronics and manufacturer for Apple products, has signed a Memorandum of Understanding (MoU) with Maharashtra state government to invest US$ 5 billion over the next three years for setting up a manufacturing unit between Mumbai and Pune.

Government Initiatives

The government has fast-tracked reforms in the telecom sector and continues to be proactive in providing room for growth for telecom companies. Some of the other major initiatives taken by the government are as follows:

  • The Telecom Regulatory Authority of India (TRAI) has directed the telecom companies or mobile operators to compensate the consumers in the event of dropped calls with a view to reduce the increasing number of dropped calls.
  • With a view to encourage consolidation in the telecom sector, the Government of India has approved the rules for spectrum trading that will allow telecom companies to buy and sell rights to unused spectrum among themselves. The Union Cabinet chaired by the Prime Minister, Mr Narendra Modi, gave its approval to the guidelines on spectrum sharing, aimed to improve spectral efficiency and quality of service, based on the recommendations of the Telecom Regulatory Authority of India (TRAI).
  • The Central Government’s several initiatives to promote manufacturing in the country, such as ‘Make in India’ campaign appears to have had a positive impact on mobile handsets manufacturing in the country. Companies like Samsung, Micromax and Spice had been assembling handsets in the country already. Xiaomi and Motorola, along with Lenovo have also started assembly of smartphones in India. Firms like HTC, Asus and Gionee too have shown interest in setting up a manufacturing base in the country.
  • The Government of India plans to roll out free high-speed wi-fi in 2,500 cities and towns across the country over the next three years. The program entails an investment of up to Rs 7,000 crore (US$ 1.06 billion) and will be implemented by state-owned Bharat Sanchar Nigam Ltd (BSNL).

Road Ahead

India will emerge as a leading player in the virtual world by having 700 million internet users of the 4.7 billion global users by 2025, as per a Microsoft report. With the government’s favourable regulation policies and 4G services hitting the market, the Indian telecommunication sector is expected to witness fast growth in the next few years.

References: Media Reports and Press Releases, Cellular Operators Authority of India (COAI), Telecom Regulatory Authority of India (TRAI), Department of Telecommunication (DoT), Department of Industrial Policy and Promotion (DIPP)

We are not the biggest or most advertised firm in the market but our calling card is quality and our credo is ‘that failure is not an option’. So if you are looking for that niche talent, that X factor that makes the difference, then do talk to us for executive search & leadership hiring


Leave a comment

Your email address will not be published. Required fields are marked *

One thought on “Telecom sector – India