Transmission : New Heights

India has an exponentially growing telecom market. The country has recently
achieved the 391.76 mn cellular subscribers mark and the growth rate is showing
no signs of slowing down (about 10-15mn subscribers being added every month). In
addition, the enterprise services market is growing as is the trend for the
broadband subscriber base.

India is following a trend of leapfrogging on technology and has become the
first mover when it comes to adopting new technologies. In terms of technology
and means of content provisioning, the Indian market is witnessing an increasing
penetration of IPTV, 3G and WiMax as the three dominant trends. This is lending
a definite ambiance for vendors providing cutting edge technologies in a very
price sensitive market.

Under the shadow of economic slowdown, Indian telecom service providers
continued their expansion plans. The Indian transmission segment saw robust
growth of over 60% and stood at a value of Rs 3,107 crore from Rs 1,931 crore.
ECI remained the #1 transmission equipment vendor in India with approximately
30% market share. Its main business came from telecom giants including Bharti
Airtel, Tata Group, Vodafone, and Idea Cellular.

ECI made inaugural strides in the IPTV and broadband markets with ECI being
awarded the first end-to-end IPTV infrastructure deployment in the private
telecom sector and the deployment of a national high-speed broadband network.

India represented approximately 25% of ECI's global revenues in 2008, versus
20% in 2007. In India, ECI increased revenues from transmission equipment, which
excluded microwave equipment, from Rs 580 crore in 2007 to Rs 930 crore in 2008.

This represents a 60% year-on-year growth of ECI telecom. ECI also realized
initial revenues from its carrier class router platforms of Rs 45 crore and
broadband access platforms of Rs 40 crore.

ECI was followed by Tejas Network, which gained market share of around 20%.
According to VOICE&DATA estimates, total revenue of Tejas Network from
transmission segment in FY 2008-09 was approximately Rs 625 crore.

Though in the coming financial year it would be tough for Huawei to gain
business in India due to secuirty issues brought up by the Indian intelligence
bureau, the last financial year witnessed tremendous growth in business of
Huawei. With close to 270% growth, Huwaei occupied third place in the Indian
transmission segment.

Trends in Market

Advent of IPTV in Indian market has opened a new growth opportunity for
vendors in unexplored segments. Industry is seeing a growth in demand for voice,
video and data which will influence the technology and equipment supply in
market.

There has been a lot of brouhaha over 3G and WiMax, but we may expect to see
it converting into reality by this yearend. Last month, DoT has claimed that 3G
and BWA spectrum auction is topmost in its priority list.

Technology wise, the key trend that we are witnessing in the market today is
the ongoing investment by operators in SDH based solutions, mainly to support
the significant increase in network traffic.

In parallel to investment in SDH based solutions, the industry observed some
migration to IP based technologies such as Carrier Ethernet. However, such
migration is quite subtle at this point and most operators are taking a cautious
view in the matter. In this respect, carriers are increasingly interested in how
to leverage their existing network infrastructure while also setting up the
stage for growth and new services.

Growth Drivers

The quest to reach subscribers in every nook and corner of the country is
driving the expansion of transmission.

The growth trend in transmission will be driven by ongoing expansion of
existing networks and roll out of 3G services. And,with broadband and triple
play services adopted sooner than later, it is creating strong opportunity for
infrastructure solutions. ZTE sees business opportunity coming from the
requirement of telecom equipment manufacturers and operators who are expecting
unified and automatic management system for the transmission segment.

In the broadband segment, UTStarcom is realizing that operators are focused
on optimization of transport networks for multi-service delivery. These
transport networks have historically consisted of Synchronous Digital
Hierarchical (SDH) Networks and Metro Area Networks (MAN). Now these are
migrating towards Packet Transport Network (PTN). Key market segments offering
the best opportunities for migration and adoption of PTN, according to UTStarcom,
are mobile backhaul, broadband aggregation including carrier Ethernet services,
IPTV traffic, Internet traffic, and MSTP evolution to PTN.

Industry Outlook

The financial year 2009-10 saw the floating of $6 bn tender from BSNL for
its 93 mn line cellular expansion project. Ericsson and Huawei were declared
winners of this tender. Ericsson was shortlisted for north and east zones and
Huawei qualified for west, east and south zones.

VOICE&DATA estimates that the Indian transmission segment will see a double
digit growth and will be to the tune of Rs 3,700 crore by the end of FY 2009-10.

In line with this, Huawei specifies the FY 2009-10 growth to be at least 18%,
mainly due to the preparedness of the operators for all-IP evolution, as well as
due to the modernization of transport system to migrate from the legacy to a
packet transport delivery platform.

Players in the industry believe that the coming financial year will see
growth trend in transmission segment despite the economic slowdown. DoT's
pressure on greenfield operators to start services soon will also force new
operators to spend on network expansion.

Prasoon Srivastava

prasoons@cybermedia.co.in