Business Today

2014 set the pace for growth in telecom sector in India

There was some bad news too. However, the high for the telecom industry was the growing demand for data services and smartphones.

Sunny Sen | December 24, 2014 | Updated 10:06 IST
2014 set the pace for growth in telecom sector
(Photo: Reuters)

It was an action-packed year for the telecom sector. It started with the telecom auctions of the cancelled licences of 2008, where the government received bids worth Rs. 61,126 crore. It also saw Bharti Airtel, country's largest operator, registering its first rise in profits after many months of decline. Mukesh Ambani's Reliance Jio, which is yet to commence operations, bid for 2G spectrum.

There was some bad news too. The 2G scam hearings are still on. Vodafone's tax case is still pending. Some companies like Uninor were reduced to just being regional players. Others like Aircel and Videocon are slowly becoming irrelevant operators. But the worst was when Mumbai's Loop Telecom shut shop, leaving about a million subscribers in the lurch.

However, the high for the industry was the growing demand for data services and smartphones. Even though the numbers are yet to be out, it seems by the end of winter, India will be the second largest country in terms of Internet users, overtaking the US, thanks to increased smartphone use. India has currently 243 million Internet users, of which about 200 million access the Internet through their mobile phones.

The growing smartphone user base had a positive impact on Indian mobile handset makers. According to one of the research firms, home-grown Micromax piped Samsung to become the country's largest smartphone seller. The phones became bigger and faster. There were many new launches, of which almost all of them were smartphones. While some companies like Nokia and Blackberry struggled, companies like Samsung and Motorola were clawing on to their position, after being hit hard by Indian brands like Micromax, Karbonn and Lava, and Chinese brands like Xiaomi and Gionee.

The smartphone user base had already crossed 120 million handsets by May end. Service providers like Bharti Airtel, Vodafone and Idea saw a significant rise in data users to 40 million, 33 million and 31 million, respectively. The companies also launched a series of services to further enhance data usage.

More importantly, the spike in data use was also fuelled by increase in rural usage. Himanshu Kapania, managing director of Idea Cellular, had told Business Today that the requirements of people in rural India are not very different from the urban user. Companies formed special teams to tap the rural market and offered packages for customers in villages. To build a brand, Vodafone and Idea introduced the concept of "son of soil", where the company engaged a resident of the village to sell services.

INTERESTING READ:How Himanshu Kapania made Idea one of the top 3 telecom operators

This entire buzz created a lot of headlines in the newspapers and grabbed TRP of news channels. But then, businesses without bad news become boring. Telecom tribunal, TDSAT, slapped Rs. 650 crore and Rs. 100 crore penalties on Airtel and Vodafone, respectively, in roaming case. The Department of Telecom had found that the top two telecom companies had been routing national and international calls as local calls, causing a loss to the exchequer.

The much-awaited launch of Reliance Jio's services was deferred to 2015. The spectrum auctions, which were to happen by the end of 2014, have also been postponed to the next year.

Somehow, after years of lull, 2014 has set the pace for growth in the telecom sector in India. The year has also widened the gap between the top three players and the rest of the industry. Things had started looking better by 2013 end, but still companies were sceptic, which is not the case anymore. In 2015, if Mukesh Ambani launches Reliance Jio, then that might bring about an inflection point in the industry. But then this is only the beginning of a new era in telecommunication.

FULL COVERAGE:2014 Year In Review

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