Present Tense, Future Perfect

India's subscriber numbers have grown significantly in the last one year, thanks to mobile additions. Though India has added around 225 mn lines, that does not get reflected in the carrier equipment market which has shown negative growth in FY 2010-11.

This negative growth can be attributed to the security policy of the Government of India which did not allow service providers to purchase equipment for almost 5-6 months. This led to revenue loss for vendors. Things cleared up only when vendors signed the TSP agreement and service providers started giving orders for network rollout, but that was not enough to give it a big boost. 3G operations provided some ray of hope though it was unable to neutralize the security damage as rollouts were limited to a few towns and cities except for one or two operators. All this resulted in negative growth for the carrier equipment market.

With carrier vendors not doing well, the V&D Top 10 Club also saw a major change. The V&D Top 10 Club saw presence of 4 carrier vendors, 2 handset players, 3 telecom software companies, and 1 enterprise equipment company. So we are seeing emergence of telecom software companies and handset players in the V&D Top 10 Club which make up around 50% of the companies; and this is bound to increase with 3G and 4G rollout in the country.

The market also saw lot of innovations last year, be it dual SIM, managed services on energy, intra-circle roaming and mobile money. Dual SIM is an Indian phenomenon and due to multiple operators, it was a success story since it contributed around 26% of the mobile handset market. This phenomenon also restricted Nokia's growth and market share.

On mobile money, we have seen lot of service provider tie-ups with bankers, but one now needs to see how the consumer behaves with respect to mobile transactions.

Managed services on energy is a new phenomenon and it will provide some cost advantage to operators who are always on the lookout for reducing capex as well as opex. Presently, different models are being tested and I believe we will see some developments in this fiscal. Deployment of clean energy will also gain momentum.

Intra-circle roaming is a good way to expand one's services in circles where they do not have a license; thereby one can leverage on other operators' licenses. This phenomenon will have bandwidth problems and it is for the operators to decide how they want to optimize their bandwidth for voice and data for their own operations and also for others.

We believe that in the present fiscal, the market is bound to grow at around 10%. The reasons are many. First, the security policy has been taken care of. Second, there would be expansion projects for both 2G and 3G by mobile operators and one can see some stability in the market. Third, it is expected that there will be some orders released by 4G operators. So, all this will help in fueling the telecom software and mobile handset market, which in turn will help in growing the communications equipment market.

Pravin Prashant

pravinp@cybermedia.co.in