Indian telecom industry: the way foeward

Abstract

The Indian telecom industry witnessed a decade of tremendous growth in 2011 with a CAGR of 66.66% in terms of subscriber base. But at the same time, the effective charge per minute dropped drastically in the past ten years from Rs 4.3 per minute to Rs 0.52 per minute at a CAGR of -19%. Declining average revenue per user (ARPU) has been a major concern in the telecom sector over the past few years. Price competition due to the entry of large number of players in the sector has brought down industry profitability. Also, new threats to the industry are imposed by the cancellation of 122 telecom operator licenses by the Supreme Court of India and TRAI’s proposal of increasing the base price for next 2G auction which is likely to take place after Aug 2012. This report analyses the current industry structure and the likely impacts of the recent happenings in the telecom sector. It focuses more on the analysis of factors driving the profitability of the telecom tower companies, which are likely to undergo more financial stress in the near future.