Worldwide mobile subscriber-base is around 2.8 bn and India contributes around 166 mn lines. And this figure is expected to cross 4 bn of which majority will come from emerging economies and high growth markets. Also, large players are focused on subscriber growth in emerging markets such as India which is well positioned to reach the magical figure of 500 mn by 2010.

A Steep Rise
The wireless infrastructure market has shown a steep rise and come out from a flat growth recorded in FY '05-06. Despite BSNL not giving large orders to vendors, the market grew by 46.1% which shows that private operators are now investing in network for increasing capacity in existing locations and also increasing coverage in newer cities. This will continue further till we plan to cover around 80-90% of India from present coverage of around 55-60%.

It was a year for private operators, and Bharti Airtel led the way in terms of capacity expansion followed by Hutchison Essar, BSNL, Idea, and Aircel. On the CDMA front, Reliance Communications and Tata Teleservices was also not far behind as there was huge demand for network expansion. All this resulted in India overtaking China in terms of monthly net adds, which is presently at around 6-7 mn subscribers per month.

In FY '06-07, the Indian wireless infrastructure equipment is estimated to be around Rs 16,677 crore ie $3.79 bn registering a growth of 46.1%. In FY 2005-06, the market was at around Rs 11,411 crore ($2.3 bn) having registered a growth of 1.2%. This high growth can be attributed to large expansion initiatives undertaken by Bharti Airtel, Hutchison Essar, BSNL, Reliance Communications, and Tata Teleservices in FY '06-07. This number could have been on a higher side if the BSNL tender of 45.5 mn lines had sailed through and not undergone litigation.

Company Positioning
Ericsson has finally regained its #1 position in the Indian market by doubling its revenue to Rs 4,664 crore. Nokia on a standalone basis (now known as Nokia Siemens Networks) was at #2 with revenues of Rs 4,405 crore whereas Siemens was at #6 with revenues of Rs 585 crore. As a combined entity, Nokia Siemens Networks was at Rs 4,990 crore and was ahead by Rs 326 crore. Alcatel Lucent, a new entity formed with the merger of Alcatel and Lucent made it to the #3 position with revenues of Rs 2,995 crore. Motorola also grew by around 80% to touch Rs 1,543 crore. ZTE, a non entity last year, has shown a supersonic growth of 1,019% and so did Huawei with a growth of around 197%. Nortel was the only player that had negative growth whereas UTstarcom also made its presence felt with a growth of 400%.

Cumulatively, operators are investing around Rs 55,000 crore ($12.5 bn) in terms of Capex spending in FY 2007-08, and this number is increasing with each passing year. Presently, all these numbers do not incorporate 3G Capex, but if incorporated it would be further on the higher side.

Operator Speak
On the operator front, for Bharti, it was managed services contracts to Nokia and Ericsson. BSNL gave expansion orders to Ericsson, Nokia, and Alcatel. In case of Hutchison Essar (now named as Vodafone Essar), it was managed services contract to Nokia. For Idea, it was Ericsson, Nokia, and Siemens' contracts. Recently, the company has announced expansion deals with Nokia Siemens worth $500 mn. Tata Teleservices majority contract went to Motorola whereas rural order went to ZTE. Recently, Huawei has also bagged orders for five circles which is presently under execution. From Reliance Communications, Alcatel-Lucent was the main beneficiary with small orders to Huawei and ZTE in the CDMA space whereas in GSM space it was a mix of Huawei and ZTE. The company has floated an RFP of 30 mn lines, and Alcatel-Lucent and Huawei are presently way ahead with respect to other vendors. Aircel's expansion was completely managed by Ericsson, and ZTE is executing network expansion for spice.

The long awaited BSNL tender for 45.5 mn 2G/3G lines is in its final stages after Motorola withdrew the case filed in the Delhi High Court. Of this, 60% will go to Ericsson whereas Nokia Siemens will get the remaining 40%. In terms of deal value, it is close to Rs 21,208 crore ie $4.82 bn, largest in the history of Indian communications. And this deal will change the face of Indian communications. We expect more such high value deals of a lower magnitude coming from private operators.