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Intense competition has resulted in prompt service to the subscribers.
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| Demand |
Given the low penetration levels in the country and continuously falling tariffs, demand will continue to remain higher in the foreseeable future across all the segments.
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| Barriers to entry |
High capital investments, well-established players who have a nationwide network, license fee, continuously evolving technology and falling tariffs.
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| Bargaining power of suppliers |
Improved competitive scenario and commoditisation of telecom services has led to reduced bargaining power for services providers.
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| Bargaining power of customers |
A wide variety of choices available to customers both in fixed as well as mobile telephony has resulted in increased bargaining power for the customers.
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| Competition |
Competition has intensified with the entry of new cellular players in select circles. Reducing tariffs will hurt the new entrants as they will be unable to recover their high capital investments. |
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FY09 saw the continuance of strong growth for the Indian telecom market, which witnessed a 49% YoY increase in its subscriber base during the 12-month period. At the end of March 2009, the country’s total telecom subscriber base (fixed plus mobile) stood at about 429 m. The tele-density level stood at about 36% by the end of the fiscal.
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Growth remained robust in the GSM mobile space, with the same growing its subscriber base by 96 m, thus contributing to about 70% of the total incremental subscriber addition for the entire Indian telecom market. After a strong 76% YoY increase in subscriptions during FY08, the GSM industry recorded another good performance during FY08, growing subscriber base by 50% YoY to about 289 m.
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During FY09, India's mobile subscriber base grew by 50% YoY, from 261 m to 391 m, while the fixed subscriber base declined by about 4%, from 39.4 m to about 37.9 m.
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As far as the fixed line business goes, the low penetration levels in the country and the increasing demand for data based services such as the Internet will act as major catalysts in the growth of this segment, which had a subscriber base of over 39 m at the end of FY09. The huge market share of public sector behemoths, MTNL and BSNL is likely to get reduced further as the penetration by private players spreads. In spite of this, the PSUs will continue to retain their dominant position. This is on account of high capital investments required in setting up a nationwide network. As a result, the private sector players will have to rely on key business centers and pockets of high urbanisation for their growth.
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Increasing choice and one of the lowest tariffs in the world have made the cellular services in India an attractive proposition for the average consumer. The segment’s subscriber base has grown by over 50% YoY in FY09. Policy measures like lowering of taxes on the cellular industry and benefits of enhanced FDI limits shall further the prospects of the cellular industry.
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The industry has set out a target to cross the total subscriber base of 500 m by 2010 and 600 m the year after. Going by the current pace of subscriber additions, the target does not seem too farfetched. Cellular subscribers will continue to propel the subscriber growth.
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During the current fiscal, a lot of focus will be given to new policy initiatives in the industry. The predominant one is the allocation of spectrum for the 3G and broadband wireless access (BWA) services. In addition, the telecom regulator TRAI recently unveiled a draft to allow mobile number portability (MNP) which allows subscribers to switch networks without changing the number.
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