New Delhi: Predicting a fresh wave of mergers and acquisitions (M&A) in the Indian telecom industry, an E&Y report on the Indian telecom sector has said the current number of telecom players in each circle would go up to 10 or 12 with the allotment of new licenses. But by 2012 this is expected to come down to 4 or 5 in each circle and that the circle B and the circle C would contribute to around 60% of the subscribers by 2012.
The report titled ‘India Telecom 2012 Study” further states that with Telecom Regulatory Authority of India (Trai) recommending Mobile Virtual Network Operator or MVNO, the competition in the Indian telecom market is expected to further hot-up. The report further says that by 2012 India will have about 25 million to 30 million 3G subscribers and 3G revenues would reach around $4 to $5 billion by 2012.
WiMax on the other hand, could attract about 8 million to 10 million subscribers and could account for about $1 to $1.5 billion by 2012, the report says. The report has pointed out that in order to make Mobile Number Portability (MNP) a success in the country, the MNP will have to be spread across the country and porting of numbers has to to be made affordable.
Another interesting point in the report is the Average Revenue Per User (Arpu) is expected to stablise over the next couple of years. Blended Arpus is likely to stabilise at Rs 150 to Rs 155 by 2010, while Minutes of Usage (MOU) per subscriber per month would stabilise at approximately 520 minutes to 530 minutes per subscriber in 2011. The data, would be driven by 3G and WiMax services which would exert a positive impact on Arpus.
The report emphasises that the launch of 3G and WiMax services will drive the data revolution. In 2012, 3G and WiMax services are expected to gain popularity initially in the top 20 cities and gradually penetrate to the rest of the country.
Findings from the report also indicate that the total telecom subscriber base is expected to reach approximately 690 million to 700 million by 2012 including about 640 million to 650 million wireless users and approximately 45 million to 50 million fixed line users. This is going to be primarily driven by a rise in communications demand from semi-urban and rural India. Circle B and Circle C would experience the highest growth and would contribute to about 60% of the total mobile subscribers.
In order to manage capex the report further recommends a strong focus on active and passive infrastructure sharing. It underlines the need to revisit duties and levies in the sector as this would help reduce operational costs incurred by the operators and the benefits can eventually be passed on to customers. Further, specialist and skilled resources will be imperative to support and sustain growth over the next four to five years. The private sector would also need to reorient its focus on talent development through training schools and facilitation programmes that cater to the needs of the telecom industry.