INTRODUCTION

Telecommunication has emerged as a key driver of economic and social development in an increasingly knowledge intensive global scenario, in which India needs to play a leadership role.

The history of telephone services in India found its beginning when a 50-line manual telephone exchange was commissioned in Kolkata in the year 1882. Today, India is one of the fastest growing telecom markets in the world. Indian telecom network is 2nd largest in the world with 960.90 million subscribers and an overall teledensity of 79.28 %. The unprecedented increase in teledensity and sharp decline in tariffs in the Indian telecom sector have contributed significantly to the countrys economic growth. The fact that India is one of the worlds fastest growing telecom markets in the world, has acted as the primary driver for foreign and domestic telecommunication companies investing into the sector. It is also recognized as one of the most lucrative markets globally, resulting in massive investments being made in the sector both by the private and government sector in the last decade.

The telecom industry in India is regulated by the Ministry of Telecommunications and Information Technology, with TRAI (Telecom Regulatory Authority of India) being the regulatory authority and DoT (Department of Telecommunications) being responsible for licensing.

With the liberalization of the Indian economy, the telecom sector has become very attractive for mergers and acquisitions. M&A in India is subject to various laws the principle of them being The Companies Act 1956, Income Tax Act 1961 and the Takeover Code (for public listed companies). Regulatory considerations are also equally important to take note of in telecom M&A. The rapid pace of growth in telecommunications makes it necessary to develop India as a global manufacturing hub. With its proven track record in the skill-intensive industries and the global trend to manufacture and source products in low cost countries, India is well placed to emerge as one of the leading hub for manufactured exports.

SEGMENT WISE STATUS (Source: Telecom Regulatory Authority of India (Press Release No.

143/2012):

PARTICULARS TOTAL SUBSCRIBERS (MILLIONS) OVERALL TELEDENSITY

WIRELESS 929.37

WIRELINE 31.53 960.90

TOTAL

76.68

2.60

79.28

Total Subscribers
RURAL 35% URBAN 65%

Wireline Subscribers
RURAL 23% URBAN 77% RURAL 36%

Wireless Subscribers
URBA N 64%

a.WIRELESS SEGMENT (GSM, CDMA, FWP): Private operators hold 88.89% of the wireless market share whereas BSNL and MTNL, two PSU operators hold only 11.11% market share. The

graphical presentation of market shares of all the service providers during the month of May, 2012 is given below (Source: Telecom Regulatory Authority of India (Press Release No.

143/2012):

b. . Broadband ( 256 Kbps download):

Yearly growth in broadband subscribers is 18.06% during the last one year (June 2011 to May 2012). As on 31st May 2012, there are 156 Internet Service Providers (ISPs) which are providing broadband services in the country. Top five ISPs in terms of market share (based on subscriber base) are: BSNL (9.12 million), Bharti Airtel (1.37 million), MTNL (1.06 million), You Broadband (0.60 million) and Hathway (0.36 million). The pie chart below shows the typical broadband market share:

Source: Telecom Regulatory Authority of India (Press Release No. 143/2012)

c. WIRELINE SEGMENT: BSNL and MTNL, two PSU operators hold 80.15% of the Wireline market share. The graphical presentation of market share of all service providers as on 31st May 2012 is given below:

Source: Telecom Regulatory Authority of India (Press Release No. 143/2012)

KEY TRENDS AND STATISTICS: Increased internet usage: Latest data from the International Telecommunication Union indicates that there were approximately 125.4mn individuals accessing internet in the country. Among the factors that are contributing to India's fast-growing internet sector are the increasing prevalence of internet cafs, the rapid emergence of India's middle class and the growing availability of mobile devices, which enable affordable internet access. Also, BMI has forecasted the number of individuals accessing the internet to increase to 150.5mn in 2012 Value-added services: India's mobile value-added services (VAS) market is expected to reach INR332.8bn (US$6bn) in 2013, according to the Internet & Mobile Association of India (IAMAI), which reaffirms the need for operators to expand their product portfolio and adapt to the growing trend of declining voice service usage. Rise in Cloud Computing: As improved broadband capacity helps to overcome network bottlenecks, cloud-based offerings from telecom operators and ICT providers will continue to grow. One Nation, One License Policy: With this, there will be no difference between Local and STD Calls. This also means that there will be no roaming charges while in India. New telecom policy is likely to be declared in June 2012. Digitization of Cable TV: This will help the government to pursue India's broadband goals and thereby help to boost economic growth. Smart devices and Digital content: As 3G will be stabilized by 2012 which will fuel 4G, smart devices like tablet, smart phone, smart TV will become a media for video and digital content consumption. Bharti recently set the trend by launching 4G services in India.

CHALLENGES: The Indian telecommunications market has experienced a considerable amount of challenges in the last few years due to constant regulatory disputes and a hostile business environment, which

includes an aggressive price war, which have eroded operators' profitability. Despite the country's significant growth potential, the industry is struggling to capitalize on the opportunities, which will remain the central theme in the near future as we do not expect the market to reach a swift resolution of the complicated issues. Market saturation and cancellation of licenses have resulted in a downgrade to India's mobile subscriber forecast. OPPORTUNITIES: As the fastest growing telecommunications market in the world, India is projected to have 1billion telephones by 2015 and is estimated to become world's largest mobile phone market by subscriptions by 2013. With a large population yet to have access to telecommunication and teledensity still being 76.86 % and rural tele-density at 37.48 %, there is significant growth opportunity for the sector. REFERENCES: 1. Telecom Regulatory Authority of India (Press Release No. 143/2012) 2. http://www.ficci.com/sector/39/Project_docs/FICCI_Website_content-Telecom.pdf 3. Business Monitor International (BMI) 4. businessreviewindia.in (for key trends)