The Indian telecommunications industry is one of the fastest growing in the world and India is projected to become the second largest telecom market globally.

According to the Telecom Regulatory Authority of India (TRAI), the number of telecom subscribers in the country increased to 562.21 million in December 2009, an increase of 3.5 per cent from 543.20 million in November 2009. With this the overall teledensity (telephones per 100 people) has touched 47.89.

The telecom industry notched up US$ 8.56 billion in revenues during the quarter ended December 31, 2009 helped by a recovery in earnings from both mobile and landline services.

According to Business Monitor International, India is currently adding 8-10 million mobile subscribers every month. It is estimated that by mid 2012, around half the country's population will own a mobile phone. This would translate into 612 million mobile subscribers, accounting for a tele-density of around 51 per cent by 2012.

Moreover, according to a study conducted by Nokia, the communications sector is expected to emerge as the single largest component of the country's GDP with 15.4 per cent by 2014.

The Indian equipment market was estimated at US$ 24 billion in FY09. Finnish giant Nokia is the market leader, with over US$ 3.4 billion revenues in 2008-09, followed by Ericsson at US$ 2.11 billion.

With the availability of the 3G spectrum, about 275 million Indian subscribers will use 3G-enabled services, and the number of 3G-enabled handsets will reach close to 395 million by 2013-end, estimates the latest report by Evalueserve.

According to a Frost & Sullivan industry analyst, by 2012, fixed line revenues are expected to touch US$ 12.2 billion while mobile revenues will reach US$ 39.8 billion in India.

Moreover, in an attempt to boost auction of 3G spectrum, the government has allowed prospective bidders to raise short-term funds from domestic market, which could be refinanced through external commercial borrowings (ECBs) within 12 months. The government is expected to mop up US$ 7.53 billion through the auction of 3G spectrum, which is likely to be completed by March 2010. It has fixed the reserve price at US$ 753.74 million.

State-run telecom operator BSNL has rolled out 3G services in 318 cities with 856,000 subscribers. BSNL has plans to cross 400 cities by March 31, 2010 and this will be increased to 760 cities by September 2010. And even as debate on 3G continues, TRAI has started consultation on the next level of telecom services. Fourth generation or 4G offers download at faster speeds.

Value-Added Services Market

Currently, mobile value-added services (MVAS) in India accounts for 10 per cent of the operator's revenue, which is expected to reach 18 per cent by 2010. According to a study by Stanford University and consulting firm BDA, the Indian MVAS is poised to touch US$ 2.74 billion by 2010.

In a bid to increase revenue from add-on services, India's top two mobile firms, Bharti Airtel Limited and Reliance Communications both plan to launch online mobile applications stores.

Bharti Airtel will provide more than 1,250 applications across 25 categories including games, books and social networking on its applications store.

Reliance Communications’ first version of its applications store would go live for GSM customers by the end of February 2010, and by the end of March 2010 an expanded version would be available to its code division multiple access (CDMA) customers as well.