The
telecom services sector in India is on the ascendancy.
Subscriber numbers are expected to more than double
in the period 2001-2006, from 35 million in March
2001 to about 85 million in 2006. India will mirror
the global trend of high growth rates in mobile
vis-à-vis fixed-line users (40 per cent CAGR in
mobile services against 16 per cent in the fixed-line
segment). However, with fixed-line teledensity
in India being at a very low 4 per cent, absolute
growth in fixed-line services will lead additions
in mobile subscribers over the next 10 years.
Despite the high projected growth, teledensity
in 2010 is expected to be 11.5 per cent, falling
short of the NTP99 target of 15 per cent. Revenues
will also grow, albeit slowly, in the light of
significant reductions in tariffs. By 2006, telecom
is expected to be a Rs 66,000-crore sector, contributing
5.4 per cent to India’s GDP.
Several
parts of the sector are being liberalised. Unlimited
entry of new players has been allowed in basic,
NLD, ILD, ISP and infrastructure businesses. ILD
and Internet telephony are the latest issues on
the deregulation agenda, with the former being
opened up in April 2002, and the guidelines for
the latter expected to be announced soon. However,
uncertainties remain regarding regulatory issues.
Customer choice mechanisms and interconnect terms
for long-distance services are yet to be finalised.
And the dispute regarding limited mobility has
not yet been resolved. These issues will result
in changes in tariffs, market share and revenue
share of Internet access and NLD/ILD players,
thereby affecting their strategies and plans.
Three
to four leading private players are likely to
emerge as competition to the incumbents, BSNL
and MTNL, which have a significant presence across
the value chain. The Tata Group, Reliance Infocom
and Bharti Televentures have announced plans to
emerge as integrated telecom companies offering
end-to-end services to customers. Hutchison, on
the other hand, appears to be focused on cellular
services, with no stated intention of entering
other businesses.
These
are interesting times for the Tata Group, which
has emerged as the largest private sector telecom
player, with a significant presence across the
telecom value chain. The acquisition of VSNL is
the latest in a series of moves that the group
has taken - gradually and quietly - to expand
the range of its coverage and services.
The
Tata Group was one of the earliest private sector
entrants into telecom services. In 1995 Tata Cellular
(TCL) won the licence to offer mobile services
in Andhra Pradesh. It was followed by Tata Teleservices
(TTSL), which successfully bid for the basic licence
in Andhra Pradesh in 1997. Tata Power was the
first to set up a broadband network in India,
using DWDM technology in the Mumbai metro network.
TCL later merged with Birla AT&T Ltd to expand
market coverage to four circles. Birla Tata AT&T
(BTAL) proposes to further merge with BPL Mobile,
thus forming the largest cellular services company
in India, with nearly 1.4 million subscribers.
TTSL, which recently crossed the one-lakh subscriber
mark in Andhra Pradesh, has secured licences to
roll out basic services in four new, high-potential
circles (Delhi, Tamil Nadu, Karnataka, and Gujarat).
The
VSNL acquisition has catapulted the Tata Group
to the leading position among private Indian telecom
players. With a 100 per cent share in the lucrative
ILD business, a leading share in Internet services,
and a favourable NLD license, VSNL fits in perfectly
with the group’s plans of providing integrated
telecom solutions. The Tata-VSNL team will now
embark on its next challenge - ensuring a smooth
transition at VSNL and integrating business plans
for ILD, NLD and Internet/data services to enhance
value for its customers and shareholders.
