It is logical that when companies lock horns over gaining market share, it is the customer who wins. This is what is happening in the Indian telecom industry. While companies have been busy in cutting tariffs to increase their market share, it is advantage customers in the industry. The benefits for consumers have been numerous. The call charges have come down drastically over the past year, both in the mobile and fixed-line segments. In the mobile segment, the call charges are the lowest in the world and even the monthly charges (as low as Rs. 99) are starting to disappear as the cellular operators are introducing `lifetime offers' one after the other. In the fixed-line segment too, BSNL, the state-owned market leader, has slashed the monthly charges from Rs. 250 to Rs. 180. It has even reduced long-distance call charges significantly over the last year.
Overall, the year 2005 has been a good one for the Indian telecom industry. During the year, the teledensity reached 11.4% compared to 8.2% in the previous year. Subscriber base touched 125 million, showing a growth rate of 34.4%. Number of mobile phone users grew to 75 million, registering a growth of 58% over the previous year. The sale of handsets saw significant growth due to fall in prices. According to Gartner, India is expected to cross one billion handset sales a year and overtake China by 2009. The most striking event for the industry was the raising of FDI cap in the telecom sector from 49 to 74% in October 2005. This move by the government will go a long way in achieving the goal of reaching 250 million subscribers by 2007 and a teledensity of 22%.
Another significant development in the year was Vodafone picking up a 10% stake in Bharti Tele-Ventures for $1.5 bn. This is the largest FDI investment in the industry's history. On similar lines, Aircel was acquired by Maxis Communications, Malaysia's largest telecom firm, for $1.2 bn, the second largest FDI injection into Indian telecom. In a major consolidation move, Essar group bought BPL Communications in a deal worth Rs. 5,200 cr. The Tatas and Birlas jointly bought the 32.91% of Idea Cellular from the foreign stakeholder, Cingular Wireless. During the year, Motorola, Ericsson, LG, Samsung, and Nokia, set up GSM handset manufacturing bases in India. French telecom equipment manufacturer, Alcatel, announced its plans to invest $500 mn over the next four years.
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