Rural a major growth area for India’s telecoms sector

The development of India’s telecom sector has witnessed a major process of transformation in terms of growth, technological content, and market structure in the last decade through policy reforms introduced by the Indian Government, according to eprobe.

The impetus of these changes is expected to continue, and at a much faster pace. Wireless telephony and the internet are expected to be the preferred means of communication as convergence of telecommunications, broadcasting, and information technology progresses. The Government has undertaken the implementation of telecom policy to usher in competition in almost all the service sectors.

The migration package to revenue sharing in place of a fixed licence fee has led to a virtual ‘take off' in growth of the cellular and basic service sectors. National and international data connectivity has been opened. The rate of adoption of wireless internet has started to rise thanks to an overall increase in mobile penetration together with networks being progressively upgraded to next generation platforms.

While 3G licensing and the launch of 3G services by private telecom operators in India has certainly been promoting the growth of wireless data services, statistically only 10 million internet users have broadband connections in India. However this number is surging with the double digit growth rate. In case of wireless internet subscribers, 15 million mobile users use their mobile phone for internet surfing. The mobile internet subscribers are growing at the rate of 25% annually. Hence, the market gives the huge opportunity to the broadband and mobile operators to expand, as the market is at an early stage of development.

India has gone from having 5.07 million subscribers in 1991 to being the world’s second-largest market with a subscriber base 840.28 million by the end of May 2011. Interestingly, more than 40% of these new subscribers are from rural areas. The current teledensity of the Indian rural mobile sector is close to 33% and the government is seeking to achieve a rural teledensity of 50% by 2012. Moreover, private telecom operators are also targeting rural India to expand their business.

For instance, Samsung, which has a distribution tie-up with Indian Farmers Fertilizer Co-operative Ltd (IFFCO), is also looking at collaborations with microfinance companies and self-help groups to increase penetration. The company is growing upwards of 60% in the smaller markets.

Nokia meanwhile is running a pilot project to sell handsets through SKS Microfinance in the district of Andhra Pradesh. It is about to launch SMS-based mobile information-based services revolving around agriculture, education and entertainment in rural Maharasthra. Nokia is partnering Reuters Market Light to provide data on weather, prices of seeds, fertilisers and pesticides as well as prevailing market prices to farmers.

The initiatives by the private players will therefore increase the number of rural mobile subscribers rapidly - as will increased customer awareness, mobile affordability, low tariff plans, etc.

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