Yesterday, I explained why India needs to focus on its own telecom technology companies. It’s also true that the competition is going to be intensified in upcoming months in this sector. Despite of the GDP decline of India–reached to 5.3% at the end of the fiscal year 2011-2012–, the telecom industry witnessed a 12% year-over-year growth in gross revenue for FY12. However, India’s GDP reached to its minimal level in the last nine months.
After hearing the petition filed for 2G scam, Honorable Supreme Court of India cancelled all 122 telecom licences in February of this year. However, the licenses are to be renewed till the end of this year, but the new proposed price for 2G spectrum auction is a big hurdle to telecom vendors. I have already discussed how new proposed auction price could affect the profit margin of telecom vendors. Anyway, the telecom industry recorded an incredible growth in mobile subscribers base.
Just a few days before, I discussed that India’s wireless subscribers baseline reached to 934 million till the end of June this year, added 4.72 million new subscribers during a month period. An increasing number of telecom subscribers (wireless and wireline combined) has strengthen the country’s position as the second largest telecom market in the world. Beside, the teledensity of the country also reached to 79.58% till the end of June, as reported by TRAI. However, the number of wireline subscribers in the country is steadily declining month-over-month.
95% of Indian mobile subscribers are using pre-paid services. Just two days before, I explained the reasons why subscribers in India prefer to use pre-paid rather than Post-paid. In addition to these, internet and broadband segment has also shown more than 16% of Y/Y growth in FY 12.
How FY12 Was For Telecom Vendors?
It’s well-known that Bharti Airtel was big gainer in Indian telecommunication industry in the fiscal year 2012, recorded total revenue of INR 715 billion. However, its net profit decline by 41% compare to the previous fiscal due to increased interest expenses. Moreover, Idea Cellular recorded total revenue of INR 197 billion, net profit for the year was INR 6 billion. On the contrary, the fiscal year 2012 was quite tough for Reliance Communication–its revenue declined by 12% and net profit plunged by 31%.
Overall, the growth of Indian telecommunication Industry was quite impressive in FY 12 due to positive responses of rural wireless, internet and broadband segment. It’s also clear that Indian telecom industry will show off high growth rate both in subscriber baseline and revenue over next years.