The Indian telecommunications industry is one of the fastest growing in the world.

The
industry has witnessed consistent growth during the last year on the back of rollout of
newer circles by operators, successful auction of third-generation (3G) and broadband
wireless access (BWA) spectrum, network rollout in semi-rural areas and increased focus
on the value added services (VAS) market.

According to the Telecom Regulatory Authority of India (TRAI), the number of

telephone subscriber base in the country reached 742.12 million as on October 31, 2010,
an increase of 2.61 per cent from 723.28 million in September 2010. With this the overall
tele-density (telephones per 100 people) has touched 62.51. The wireless subscriber base
has increased to 706.69 million at the end of October 2010 from 687.71 million in
September 2010, registering a growth of 2.76 per cent.

Meanwhile, Indian Global System of Mobile Communication (GSM) telecom operators

added 17.45 million new subscribers in November 2010, taking the all-India GSM
cellular subscriber base to 526.18 million, according to the Cellular Operators
Association of India (COAI). The GSM subscriber base stood at 508.72 million at the end
of October 2010.

Value-Added Services (VAS) Market

Mobile value added services (VAS) include text or SMS, menu-based services,
downloading of music or ring tones, mobile TV, videos and sophisticated m-commerce
applications. As per a report, ‘India Telecom 2010’ released by KPMG in December
2010, currently, the VAS market is worth US$ 2.45 billion-US$ 2.67 billion, which is
around 10 per cent of the total revenue of the wireless industry. The share of VAS in
wireless revenue is likely to increase to 12-13 per cent by 2011, on the back of increased
operator focus on VAS due to continuous fall in voice tariffs, increasing penetration of
feature rich handsets, availability of vernacular content and increased user adoption of
VAS applications.

Major Investments

The booming domestic telecom market has been attracting huge amounts of investment
which is likely to accelerate with the entry of new players and launch of new services.
According to the Department of Industrial Policy and Promotion (DIPP), the
telecommunications sector which includes radio paging, mobile services and basic
telephone services attracted foreign direct investment (FDI) worth US$ 1,062 million
during April-October 2010-11. The cumulative flow of FDI in the sector during April
2000 and October 2010 is US$ 9,993 million.
As per an industry report the telecom industry witnessed merger and acquisition (M&A)
deals worth US$ 16.60 billion during April-December 2010, which represented 28.26 per
cent of the total valuation of the deals across all the sectors during the period analysed.
There were 10 inbound, outbound and domestic M&A deals in the telecom sector during
the first nine months of the current fiscal. The biggest M&A deal in the sector was made
by telecommunications service provider Bharti Airtel through the acquisition of Zain’s
African mobile services operations in 15 countries. The deal involved a transaction of
US$ 10.7 billion. In another deal, Bharti Airtel acquired 100 per cent stake of Telecom
Seychelles Ltd for US$ 62 million.

Other major M&A deals included the acquisition of 95 per cent stake in Infotel
Broadband for US$ 1,032.26 million by Reliance Industries and 26 per cent stake of US-
based mobile chipmaker Qualcomm’s Indian arm for US$ 57.72 million by India's Tulip
Telecom and Global Holding. Further, India-based GTL Infrastructure Ltd has bought
17,500 telecom towers of Aircel Ltd. for US$ 1,702.95 million.

Going Global

In March 2010, Bharti Airtel bought the African operations of Kuwait-based Zain
Telecom for US$ 10.7 billion, driving the Indian player into the league of top ten telecom
players globally.

The Reserve Bank of India (RBI) has liberalised the investment norms for Indian telecom
companies by allowing them to invest in international submarine cable consortia through
the automatic route. In April 2010, RBI issued a notification stating "As a measure of
further liberalisation, it has now been decided... to allow Indian companies to participate
in a consortium with other international operators to construct and maintain submarine
cable systems on co-ownership basis under the automatic route." The notification further
added, "Accordingly, banks may allow remittances by Indian companies for overseas
direct investment."

Tele-medicine

With increase in cell phone users to around 700 million and introduction of 3G services
soon in the country, remote treatment and diagnosis of patients through mobile phones
would become a reality in the near future. In fact, a few telecom operators and value-
added service developers are planning to use mobile phones for diagnostic and treatment
support, remote disease monitoring, health awareness and communication.

The Gujarat health department plans to connect all villages through its telemedicine
network. The state government has so far expanded the reach of telemedicine services
from 53 villages in 2008 to 453, and hopes to cross 500 villages soon. Jay Narayan Vyas,
state health minister, said "First thing we plan to do is to start the 104 service over the
phone. People can call up and talk to paramedics in call centers who can suggest the
primary action to be taken in case of any health emergency. Also, they would be able to
suggest generic and over the counter drugs."