India on target for 500 mil. connections by 2010

At current growth rates, India’s target of 500 million fixed and mobile phone connections by 2010 is well within reach, the government said Thursday.

India’s Economic Survey for the year 2008-09, which was released ahead of the budget on Monday, revealed strong growth in the telecom sector with the country counting a total of 414 million fixed and mobile connections as of February 2009.

India is the third largest telecoms market in the world and the second largest wireless market.

Teledensity increased from 12.7 per cent in March 2006 to 35.65 per cent in February 2009, after government steps to reduce the barriers to entry and create a level playing field between new entrants and incumbents. The country’s rural regions are also experiencing strong growth, with the number of rural lines increasing from 12.3 million in March 2004 to 112.71 million in January 2009. Rural teledensity reached 13.81 per cent over the same period.

The country is also taking steps to promote broadband, resulting in an increase in broadband subscribers from 180,000 in March 2005 to about 5.69 million by February 2009.

The survey also made a suggestion that 2G and 3G spectrum be made freely tradable, replacing current legislation which prevents the buying and selling of spectrum.

India is gearing up to auction 3G licences, but the process has been repeatedly delayed to ongoing disputes between the government and the regulator. Moreover, state owned operators BSNL and MTNL have already been allocated 3G spectrum, giving them a substantial head start over 3G rivals. Now the spectrum auctions are unlikely to take place until the end of 2009, making the 3G licenses look less attractive to investors weighing up India’s 3G opportunity, although moves to make the spectrum tradable may change that.

In March, Indian regulator the Telecommunications Regularity Authority of India (TRAI) allowed MVNOs to operate in the country, paving the way for carriers without a 3G licence to offer more advanced services.

Analysts at parent and research house Informa Telecoms & Media said that the MVNO model offers GSM operators without a 3G licence a welcome opportunity to offer WCDMA services. Informa forecasts that mobile broadband revenues will reach $3.9bn in India in 2013 and if GSM operators want to capture a share of this they have no option but to offer WCDMA services.

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