India Telecom

The Great Indian Telecom Bazaar

Rajendra Prabhu

The great Indian telecom bazaar is spread across the length and breadth of this country - from Kanya Kumari to the Himalayas and from Gujarat to Assam. With planned investments of over Rs. 35,000 crores per year for the next three years, practically double of what it was last year, and nearly Rs. 100,000 crores per year for the years 2005 to 2008. Normally, these statistics should make the Indian telecom equipment industry go into overdrive - especially when the same industry in the developed countries is in the throes of large-scale restructuring, downsizing and is even shutting shop.

The Indian counterparts should be ecstatic over these investment plans, as equipment makers abroad face financial crunches or are on the verge of bankruptcies.

Why is the expectation of huge orders for telecom equipment, not creating a surge of optimism through the equipment makers? The elephantine expansion of telecom services and networks has a different mirror image when it comes to placing orders for equipment. If newspaper reports are to be believed an Indian manufacturer is virtually quitting the telecom equipment arena. It is this apparent contradiction that is the subject matter of an otherwise story of great hope amidst a global meltdown.

In the first decade of this millennium, telecommunications is all set to become the largest industry in the country. From the tenth story of the swanky new Statesman House, the new headquarters of the government owned Bharat Sanchar Nigam Ltd, Director (Finance) S.D. Saxena beams over the fact that his company’s investment plans “will be larger than that of the Railways,” India’s largest single enterprise so far. BSNL’s projected investment this financial year will be Rs. 14,000 crores (nearly USD 3 billion). No private sector corporation in the country’s economy will match this level of investment.

Already the lord of a countrywide network of 40 plus million telecom lines with annual revenues of Rs. 22,000 crores, BSNL plans a furious pace of expansion and diversification, leading the all round telecom transformation in the country. BSNL will add a total of 6.4 million lines this year with four million cellular lines scheduled to be completed in two years, and half a million wireless local loop (WLL) lines to reach out to the interiors.

India will need to add 15 million lines every year to its basic infrastructure if the projected teledensity of seven percent is to be reached by 2005. Further onwards till 2010, the annual addition will be 35 million lines per annum in order to reach a 17.5 percent teledensity. Though 31 private sector licensees are in play, BSNL will continue to dominate the basic services sector over the next 10 years. Though a late starter, even in cellular, BSNL plans to become a major player as the so-called third licensee in all the circles.

Four million cellular lines in the next two years could be construed as something of a record considering that all the private players together have set up only a little more than seven million lines over the past seven years.