The Indian Telecom Sector - The Indian Telecom Sector India...

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The Indian Telecom Sector India is the fourth largest telecom market in Asia after China, Japan and South Korea. The Indian telecom network is the eighth largest in the world and the second largest among emerging economies. At current levels, telecom intensiveness of Indian economy measured as the ratio of telecom revenues to GDP is 2.1 percent as compared with over 2.8 percent in developed economies (CRISIL, www.ibef.com). Indian telecom sector has undergone a major process of transformation through significant policy reforms. The reforms began in 1980s with telecom equipment manufacturing being opened for private sector and were later followed by National Telecom Policy (NTP) in 1994 and NTP'1999 . Historically, the telecom network in India was owned and managed by the Government considering it to be a natural monopoly and strategic service, best under state's control. However, in 1990's, examples of telecom revolution in many other countries, which resulted in better quality of service and lower tariffs, led Indian policy makers to initiate a change process finally resulting in opening up of telecom services sector for the private sector. Policy reforms can be broadly classified in three distinct phases " The Decade of 1980's saw private sector being allowed in telecommunications equipment manufacturing. Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were formed and a Telecom Commission was set up to give focus to telecommunications policy formation. " In 1990s, telecommunications sector also benefited from the general opening up of the economy. NTP 1994 was the first attempt to give a comprehensive roadmap for the Indian telecommunications sector. o Availability of telephones on demand (targeted by 1997) o Universal service covering all villages and one PCO per 500 persons in urban areas at the earliest (targeted to be achieved by 1997) o Telecom services at affordable and reasonable prices o World standard quality of services " NTP 1999 brought in the third generations of reforms in the Indian telecommunications sector. Telecommunication Services Telecommunication services include Basic service, Cellular service, Internet Service Provider (ISP) and Very Small Aperture Terminal (VSAT) services. Government of India (GoI) plans to introduce a unified license for all telecommunication services in India, and has already allowed full mobility to wireless in local loop (WLL) operators as a first step. Telecom services are growing at an approximate rate of around 5 percent per year in terms of revenue and mere 10 % in terms of subscriber base in last five years. Partly the result is due to negative growth in NLD market (-14% Rs 51,410 million from Rs 59,880 million) and ILD market (-13% Rs 43,460 million from Rs 50,010 million) in 2003-04. Amongst telecom services, cellular services are the fastest growing, with CAGR of 40 percent over the past four years. Telecommunications Regulatory Authority of India (TRAI) expects that the total number of cellular connections would
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This note was uploaded on 03/21/2010 for the course KNOWLEDGE 5654 taught by Professor Mr.david during the Spring '10 term at IESE Business School.

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The Indian Telecom Sector - The Indian Telecom Sector India...

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