Indian mobile services industry: Braving the storm

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Cellular Operators Association of India (COAI) commissioned a study from PwC (PricewaterhouseCoopers) titled ‘‘Indian Mobile Services Sector: Struggling to Maintain Sustainable Growth’. The report highlights emerging trends in the mobile services industry and their impact on the National Telecom Policy objectives of spreading affordable telecom services in the country.

The mobile telephony industry in India witnessed unprecedented growth of more than 700%, from having less than a million subscribers in 1998 to over 752 million subscribers in 2010. The growth of the sector has favorably impacted the lives of the ordinary citizens by providing access to cheap communication services which were so far restricted on account of poor coverage. The industry has also played a vital role in India’s growth story and the industry today contributes nearly 2% of the GDP. More significant is its contribution in generating direct (2.8 million people) and indirect (nearly 7 million people) employment in the country.

The report indicates that although the industry has taken significant strides in the past decade, the task of providing access to mobile services at affordable rates across the hinterlands remains incomplete. The urban tele-density in the country at 154% is far ahead of the rural tele-density of 34%. While this spells opportunity for the industry, significant investments will be required in order to increase reach in the rural areas.  Similarly, India’s internet and broadband penetration are only around 1.6% and 0.9% respectively. This can be explained by inadequate wireline infrastructure in the country. Hence, mobile broadband, which is an opportunity for providers, will require increasing investments.

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