Download Presentation

Indian Telecom Sector Outlook
July 2010
Siddharth Vishwanath
Associate Director, PricewaterhouseCoopers
PwC
PricewaterhouseCoopers
Telecom Sector – Overview
PricewaterhouseCoopers
2
Indian market is full of opportunities….
Telecom Market KPIs
Indian Economy KPIs
•
Population : 1.2 billion
•
• Increasing urbanization – Indians living in cities and
• Wireless penetration : 44.72% - The untapped
towns generate over 2/3 of the country’s GDP and
account for 90% of government revenues. (source:
world bank)
mobile market in India is still more than 500mn
• Wire line penetration: 3.16% - one of the lowest in
the world
• Broadband penetration: 0.6% - far beyond the
Govt. target of 20 million in 2010
• Relatively large youth population – it is estimated by
2015 the population in the 20-29 age group would
have crossed 210 Mn.
• Growing middle class - the middle class presently is
estimated to be over 300 Mn and growing.
•
GDP growth (Real, 2009-10): 6.7%
• Second fastest growing economy
•
GDP size (PPP adjusted, FY’09) : USD 3 trillion
• Fourth largest in the world
Telecom subscribers (June’10) : 635.51 million
•
•
•
•
Telecom revenues of +US $ 25 billion in FY’09
Telecom sector continues to attract a significant
portion (~8%) of the FDI
Impending Growth Opportunities
• Low rural penetration
• Stagnant data usage over the years
• Limited broadband services
Key Concerns
• Hyper competition - HHI Index of 0.15
• Spectrum Management
• Declining ARPU
Source: DoT & TRAI
PricewaterhouseCoopers
3
Telecom leading infrastructure growth in India…..
•
The Indian telecom sector has charted an impressive growth trajectory. The telecom market has
been growing at a CAGR of approximately 30 percent since 1995
•
Mobile services have grown at a CAGR of more than 117 percent during the period 1995-2009.
More than 14 million subscribers added every month in the calendar year 2009
•
Extremely low tariffs, availability of ultra low cost handsets, encouraging regulatory environment,
increasing income levels and change in consumer behaviour, have combined to produce
remarkable growth in the last decade.
Mobile Subscriber Growth ( in millions)
Wireline
Mobile
Teledensity
600
60%
500
50%
400
40%
300
30%
200
20%
100
10%
0
0%
1995
2003
2004
2005
2006
2007
2008
2009
Source: TRAI
PricewaterhouseCoopers
4
Mobile services driving telecom growth……
•
The mobile services have been growing at CAGR of 65 percent over the last 5 years.
•
Mobile services revenue contribution to the total telecom services revenue has increased over the
years, contributing 90 percent in FY 2009.
•
Wireline service revenues have not only declined in terms of overall contribution to the total
telecom services revenue but also in absolute terms. Growth in overall teledensity is mainly
attributable to the exponential growth of mobile services in both urban and rural areas.
Telecom Services Revenue (Rs. Billion)*
Wireline Services
Mobile Services
Teledensity
Others
Rural Teledensity
Urban Teledensity
111%
Overall Teledensity
269
89%
182
117
650
66%
833
1,019
39%
21%
286
2006-07
275
2007-08
236
2008-09
7%
2%
2003
26%
9%
2%
2004
48%
46%
37%
26%
13%
2%
2005
18%
6%
2006
9%
2007
21%
15%
2008
2009
*Including inter-segment revenue
Source: TRAI
Source: TRAI
PricewaterhouseCoopers
5
Challenges for Indian Telecom Sector
PricewaterhouseCoopers
6
Bridging the Rural-Urban divide…
•
Mobile teledensity is lower in India in comparison to countries such as Indonesia, Philippines and
Nigeria which have a similar level of GDP per capita (purchasing power parity)
•
Only 21 percent of Indians living in rural areas have access to mobile phone connections.
•
More than 500 million un-served population located mainly in rural areas with moderate to low
capacity to pay for the telecom services
International Precedent- Mobile Teledensity and GDP per Capita
12,000
Brazil
GDP Per Capita (PPP)
10,000
South Africa
8,000
China
Egypt
6,000
Sri Lanka
Indonesia
4,000
India
Morocco
Pakistan
2,000
Nigeria
0
0%
20%
40%
60%
Teledensity
80%
100%
120%
Source: PwC Analysis
PricewaterhouseCoopers
7
Managing spectrum efficiently…
Large number of operators per circle
•
India has more operators per circle than other countries. While most countries have assigned
spectrum to three to five operators to compete in a given area, the Indian government has
assigned spectrum to as many as 11 or 12 operators which use a mix of GSM and CDMA
technologies
•
Mobile operators in India must use assignments which are around one quarter of the spectrum
available to mobile operators elsewhere in the world
•
Mobile operators in India are using their spectrum far more intensively than operators elsewhere.
Indian operators are extracting much more capacity than operators in the developed nations
through the deployment of a higher density of base stations per square kilometre and through the
use of advanced technologies to maximise the traffic carrying capacity of the available spectrum.
•
In the deployment of advanced technologies to maximise spectrum capacity the Indian operators
are one of the leaders in using technologies such as AMR and synthesised frequency hopping.
Despite these efforts , it has been claimed that there is scope for GSM operators to substantially
increase the capacity of their networks through the further deployment of advanced technologies.
PricewaterhouseCoopers
8
Stagnant data usage over the years…
•
With rapid decline in ARPU due to the continuously falling tariffs and addition of marginal
subscribers the telecom operators are focusing on value added services (VAS)/data services for
bridging the ARPU gap
•
However, the data revenues have remained stagnant at 11-12 percent of mobile services revenue
in last 2-3 years.
International Benchmarking - Data Revenue Share
52%
32%
27%
26%
19%
12%
Malyasia Philippines
China
Singapore Australia
India
Source: PwC Analysis
PricewaterhouseCoopers
9
Limited uptake of broadband services..
•
Broadband subscriber base in India is currently at a very low level.
•
Total broadband subscriber number stood at 8 million as of December 2009, this is far less than
the target set by the Government of India (20 million) for broadband by 2010.
•
India continues to be one of the least broadband penetrated markets. High cost involved for both
the operators and subscribers act as an impediment for growth of wireline based broadband
services.
Broadband Subscriber Growth (Million)
7.8
5.5
3.1
2.1
0.9
Dec'05
Dec'06
Dec'07
Dec'08
Dec'09
Source: TRAI
PricewaterhouseCoopers
10
Mobile Services – Outlook
PricewaterhouseCoopers
11
The growth story of the mobile services is expected to continue for 3-5 years……
•
The growth of the mobile services is expected to continue for 3-5 years driven by high subscriber
additions in mostly non-urban areas and multiple SIMs purchased by the existing subscribers in
urban India. The majority of the next 500 million subscribers are expected to be added in the
semi-urban and rural areas.
•
The mobile subscriber base will cross 1 billion in 2014, growing at a CAGR of more than 9
percent (2010 to 2015).
•
The mobile penetration in India is projected to cross 80 percent in next 4 years. The market will
begin to saturate in terms of subscriber numbers starting 2013.
Rural – Urban Teledensity - 2015
Mobile Subscriber Projections - 2015
Total Mobile Subscribers
76%
Mobile Teledensity
84%
82%
80%
Rural Teledensity
Urban Teledensity
69%
59%
712
2010F
117%
844
2011F
Source: PwC Analysis
940
999
1,048
2013F
2014F
122%
124%
125%
125%
54%
58%
61%
63%
46%
2011F
2012F
2013F
2014F
2015F
1,078
33%
2012F
120%
2015F
2010F
Source: PwC Analysis
PricewaterhouseCoopers
12
Over hundred million 3G broadband subscribers by 2015 and growing…..
•
Broadband volumes are likely to be driven on the mobile platform leveraging 3G
•
Key Drivers - Introduction of new innovative applications, enhanced user experience and
decreasing prices of 3G enabled handsets.
•
Initially, the uptake of mobile broadband services will almost exclusively be in urban India; in 2015
rural subscribers are likely to comprise 24 percent of overall 3G subscriber base.
•
3G subscriber numbers are projected to cross 107 Mn by 2015 growing at a CAGR of 190%
between 2011 and 2015
3G Subscriber Forecast*
Urban 3G Subscribers
Rural 3G Subscribers
107mn
24%
26mn
18%
0.1mn
100%
2010F
1mn
95%
10mn
86%
82%
2011F
2012F
2013F
60mn
23%
77%
76%
2014F
2015F
*Unique subscriber numbers. Figures are as of year end.
Source: PwC Analysis
PricewaterhouseCoopers
13
VAS revenue shares realign….
•
Open internet access allowing direct access to subscribers and increasing value proposition of
content to customers, will reflect in the bargaining power of content developers and aggregators.
•
Content will be the key differentiator which will see new alliances being forged between handsets
vendors/ operators and application developers to attract new customers.
•
Mobile operators will leverage proprietary content create customer stickiness.
Projected Revenue Shares in 2015
Tech.
Enabler
2% - 6%
Content
Developer
12 - 16%
Content
Aggregator
15 -19%
Mobile
Operator
63% - 67%
Source: PwC Analysis
PricewaterhouseCoopers
14
Imperatives for Telecom Sector
PricewaterhouseCoopers
15
Imperatives
•
Margins
•
Rural Focus
•
Applications and Data driven Services
•
Blurring of the lines between Value Chain players
•
Carbon Footprint
•
Spectrum Management
PricewaterhouseCoopers
16
www.pwc.com/telecom
© 2010 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers”, a registered trademark, refers to PricewaterhouseCoopers Private Limited (a
limited company in India) or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of whichPricewaterhouseCoopers
is a separate and
independent legal entity.
17