As India’s Telecom Market Recoversit Looks towards a Fresh Period of Growth, Reveals New Report

Growth in India's huge mobile market had effectively stalled in 2012 and the market was looking very subdued coming into 2013. However, by early 2014 there were positive signs of a recovering market, following some major adjustments. There was also evidence that some serious restructuring was taking place.

Back in 2010/2011, mobile operators in India added around 370 million new subscribers to their networks, an average of 15 million per month over the two years, to bring the total number of subscribers to around 900 million by the start of 2012. However, in the twelve months that followed we saw some erratic behaviour of the subscriber base and by the year end there were just 865 million subscribers. The drop in subscriber numbers was a combination of falling customer demand and the effect of operators 'cleaning out' their data bases. The drop was predominantly in the urban markets with the rural subscriber base actually continuing to grow during this period.

Despite the big drop in mobile subscribers the key drivers were considered to still in place; the mobile market was continuing to be driven by cheap call rates, low handset prices and rising incomes among the hundreds of millions of the population that are described as the country's middle class. While offering some of the lowest mobile tariffs in the world, India's market had also been running for many years with one of the highest usage rates in the world with the average customer using around 500 minutes per month. (This had dropped to around 350 by 2013.) Additionally, the operators were continuing their push into the rural and remote parts of the country.

By the end of January 2014 India's mobile subscriber base was increasing again and had reached 893 million. Most importantly, there was a renewed interest in data services. For example, 4G / LTE networks were being rolled out and this was shaping as a key battleground in the market once newcomer Reliance Jio launches its 4G services in the December 2014 quarter and goes head-to-head with Bharti Airtel.

In the meantime, the fixed-line market, which had grown strongly over a number of years, began experiencing zero and then negative growth.

Fixed-line subscriber numbers stood at 28 million by early 2014. With less than 3% fixed-line penetration, India has nevertheless achieved a

remarkable national coverage, with 99% of the population having some form of access to a telephone.

In terms of online access, there have been a number of efforts by the government to promote broadband internet throughout the country; broadband development had long been languishing, but there was new hope for a serious expansion phase in this segment of the market. By early 2014 there were around 15 million fixed broadband subscribers - a lowly penetration (by population) of slightly more than 1%. Meanwhile, the

impact of mobile broadband was finally starting to hit the market and in the medium term this was expected to lift broadband penetration significantly.

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