Indian telecom services cross Rs 100,000 crore

New Delhi

July 9th, 2007

India's telecom services industry grew 22 per cent to Rs. 107,681 crore
during 2006-`07, according to an annual survey by Voice&Data, CyberMedia's
flagship magazine for the telecom sector. The revenue grew on the back of a 46
per cent increase in telecom subscriber base.

The total subscribers, including cellular and fixed line, grew to 206 million
during the period, reveals the 12th Indian Telecom Services Business
Voice&Data Report (Volume 2).

With this increase in connectivity, one in five Indians has access to a
phone. Despite this impressive growth, the rural teledensity is only 4-6 per
cent vis-à-vis urban teledensity of 50 per cent. Most service providers will
focus on this gap to grow in the coming years, says the survey

The good news is that the cellular subscribers grew almost 73 per cent in
2006-`07 to touch 157 million mark. The bad news is that the fixed line phone
subscribers declined 3.3 per cent, taking the total below 50 million. (48.9
million in FY07 vs. 50.6 million in FY 06).

Commenting on the survey, Prasanto K. Roy, the chief editor of
Voice&Data, said, "This is a nation gone mobile. The money's all in
mobility. So is the growth, and it's not just the 73 per cent jump in
subscribers to 157 million that's important. It's the whopping 56 per cent
revenue growth to $12.5 billion in revenues that spells a healthy, and
competitive, mobile landscape."

Cellular revenue is now double the $6.7 billion revenue from fixed phones,
three times the $4.2 billion from long distance--both were yesterday's bread and
butter for telecom. And cellular is what pushed up the telecom services industry
beyond Rs. 100,000 crore, to a whopping $24 billion level, says the
Voice&Data survey.

Revenue Growth of 22 p.c.

Revenue from seven telecom services - cellular, fixed line, international
long distance (ILD), national long distance (NLD), internet and broadband, VSAT
and radio trunking - increased to Rs. 107,681 crore during 2006-07 from Rs.
88,522 crore in 2005-06.

Cellular services made up more than half of the total revenue at Rs. 56,183
crore. Earnings from mobile services grew 56 per cent as compared to 2005-06.

Fixed line services chipped in slightly less than a third to the overall
services revenue at Rs. 30,190 crore, with the remaining coming from NLD (Rs.
7,186 crore), ILD (11,506 crore), Internet and broadband (Rs. 2,040 crore), VSAT
(Rs. 540 crore) and radio trunking (Rs. 36 crore).

However, fixed line services, NLD and radio trunking recorded a decline of
11.6 per cent, 20.3 per cent and 5.3 per cent respectively.

Top 10 Service Providers

BSNL, Bharti, Reliance, Hutch, VSNL lead the pack; TTSL, MTNL, Idea, Aircel,
TTML take the next 5 spots

According to the Survey the top revenue earners across all services during
2006-07 were BSNL and Bharti Airtel.

Despite a fall in the fixed line subscribers and a marginal decrease in
revenue, BSNL maintained its lead this year as well. BSNL recorded revenue of Rs.
40,135 crore during the year compared to Rs. 40,177 crore in the previous year,
way ahead of Bharti Airtel's Rs. 17,888 crore.

Reliance Communications and Hutchison Essar were at third and fourth slot
with revenues of Rs. 14,684 crore and Rs. 10,565 crore respectively,

The other state-run telecom service provider MTNL was at number 7, down from
fifth position last year, with a decline of 11.5% to Rs. 4,923 crore in 2006-07.
Tata Tele Services Ltd (TTSL) climbed up to sixth position from eighth last
year.

Cellular services

The year 2006-07 was marked by drastic reduction in the cost of owning a
cellular handset and a connection. Introduction of lifetime validity schemes,
low cost of services, low roaming charges, low STD cost, and a slew of value
added services led to a 72.7 per cent jump in subscribers, according to the
Voice&Data survey.

In the last financial year India added more mobile lines per month than
China. On an average, 5.5 million cellular lines were added every month, taking
the mobile subscriber base to 157 million from 91 million in 2005-06.

More than three-fourth of the total mobile subscribers were on GSM-based
technology whereas the six CDMA operators contributed around 23 per cent.

Bharti Airtel, with maximum subscribers, garnered 23.7 per cent of the
cellular market share followed by BSNL and Reliance Communications with 17.8 per
cent and 17.7 per cent share. Idea Cellular at number four with 16.8 per cent
share followed Hutchison Essar with 8.9 per cent.

Each of the top five companies achieved more than 50 per cent growth in
subscriber base during the year. The survey found that all cellular companies
plan to roll-out more services this year. Idea Cellular went public to raise
capital for the expansion. Spice Telecom too raised funds from the market last
month.

In terms of revenue from cellular services Bharti was the leader once again
followed by Reliance Communications, Hutchison Essar, BSNL and Idea Cellular.

Bharti is present in all the 23 telecom circles with a turnover of Rs. 13,431
crore generated from 37.14 million subscribers.

During 2006-07, the revenue from the fixed line services, including fixed
wireless phones, declined by 11.6% to touch Rs. 30,190 crore from Rs. 34,161
crore in the previous year. The fixed line subscriber base fell 3.3% to 48.91
million from 50.58 million.

BSNL led the market in terms of revenue with MTNL at number two followed by
Bharti Airtel, TTSL and Tata Tele Services Maharashtra Ltd.

However, the fixed line revenues of BSNL, MTNL and Reliance Communications
fell 16.6 per cent, 17.5 per cent, and 10.3 per cent, respectively during the
period.

Bharti Airtel and TTSL beat the trend and posted a revenue growth of 28 per
cent and 46.5 per cent respectively.

On the basis of subscribers the market leader was BSNL followed by TTSL at
number two and MTNL, Reliance Communication and Bharti Airtel at third, fourth
and fifth spots.

Reliance lost considerable market share as its fixed line subscriber base
fell by nearly 50 per cent to 1.56 million. Bharti's subscriber base also fell
by 5.2 per cent to 1.27 million.

Though there is a decline in the number of subscribers and revenue, fixed
telecom players are upping their ante, says the Voice&Data survey. This year
fixed line service providers are expected to launch new services like IPTV and
Metro Ethernet that will utilize the existing fixed line infrastructure in the
country.

To expand their subscriber base fixed line service providers will look at
promoting services like Wi-Fi and WiMax, besides fixed-mobile convergence.

Voice&Data's V&D100 (Volume I) for 2006-07 focused on the
telecommunications equipment market, which grossed Rs. 77,170 crore. Of the
total, carrier equipment contributed Rs. 42,763 crore, phones brought in Rs.
23,452 crore and the enterprise equipment brought in Rs. 10,955 crore.

Voice&Data 100 is the most comprehensive annual survey of the Indian
telecom services and equipment industries. It is the most trusted and widely
used survey for those seeking statistics on Indian communications. It is also
the most comprehensive, as it covers a wide range of segments. It is perhaps the
only 'single source' of such diverse information.

The Top 10 equipment vendors in the country were Nokia (Rs. 15891 crore),
Ericcson (Rs. 5004 crore), Motorola (Rs. 4090 crore), Cisco (Rs. 4037 crore),
Alcatel-Lucent (Rs. 3500 crore), Wipro (Rs. 3471 crore), LG Electronics (Rs.
3140 crore), TCS (Rs. 3006 crore), Infosys (Rs. 2681 crore), ZTE (Rs. 2596 crore).