Rohit Sharma

With the strong pace the Indian telecom industry is growing, it will be very soon that India becomes the biggest manufacturing hub of telecom equipment and bring in global and domestic investors for manufacturing opportunities. The global mobile phone industry that fell 1% last year is awaiting a huge leap as India surges ahead for a telecom renaissance buoyed by 3G revolution. Propelling the telecom industry are the new handset manufacturers, mushrooming in India almost everyday, making it possible for a Rs 500 billion-worth Indian handset market to thrive and how.

Indian mobile handset market has been growing at a striking rate with a registered sale of around 100.9 million handsets in 2009, recording a growth of 6.7% from 94.6 million units in the previous year ended June 2008. This makes India cover at least 10% of the world market, according to a report from research firm IDC India.

The growth trend in the mobile handset market can be determined from an escalating number of small handset players- 28 new handset vendors entered India in one quarter of 2009, according to The Economic Times. They together made 17.5% of the total sales for the first time during the October-December 2009 quarter.

With the launch of Spice mobiles, Olive Telecommunications, ZTE, Micromax and many others, the competition has become tough, especially for well entrenched mobile giants like Nokia, Samsung and Sony Ericsson. Consumers now have a variety of brands to choose from, which provide the same features, models and services either at the same or lesser price.

Companies with no telecom background want to test waters in India. The Videocon Group, one of India’s leading global business conglomerates, announced the launch of its GSM mobile services in Gujarat Telecom circle while planning an investment of Rs 10 billion for its GSM venture in the state. Luminous, a power and energy storage company, is foraying into the market under Wynn Telecom soon with an investment of Rs 1.1 billion. Television set maker Onida launched its mobile phones last year.

Other small companies are seemingly doing well. Airfone that started with 37 service centres and has grown these to 121 centres, whereas, Karbonn Mobiles has built an extensive network of more than 350 services centres spread across the country. Karbonn has made an investment of over Rs 200 million and is expecting a profit of Rs 1 billion this fiscal. Last year, Mindtree entered telecom market through its acquired company Kyocera Wireless. Coolpad Communications is targeting Rs 8 billion-revenue in next five years as it plans to invest Rs. 4 billion as capex and opex over the next three years.

Interestingly, Nokia, that’s stayed as a global leader in the sales of handsets, saw erosion in its market share that fell to 54% last year, whereas smaller Indian brands such as Spice and Micromax, increased their share from less than 1% during early 2008 to 17.5% towards the end of 2009, IDC said. Troubles with Nokia have also helped rival brands like Motorola and Samsung gain strongly- Samsung went from 7.7% market share during the year ended June to 9.7% for the year ended December.

With the much awaited advent of 3G and Android, Indian mobile companies are lined to penetrate deeper into the technologically advanced handset arena. Intex, Movil and Karbonn mobile have already announced their plans to come out with affordable 3G enabled phones, soon. Surfing, emailing and downloading are few of the most sought after features on mobile phones and with the 3G enabled low-budget phones, internet access will be much easiern and cheaper for everyone.

China, that has a staggering mobile subscriber base of 727 million (2009-end), will have 43 million 3G enabled handsets by the year end, according to iSuppli. India that is following China’s footsteps is still lagging behind on the penetration of handsets in the country, while 3G technology has just kicked off. Nevertheless, the crowding handset market will only make way for healthy competition in the market and as soon as the 3G gains momentum, not only will it profit the Indian telecom industry as a whole but also connect India at a faster speed.

Indiabiznews, May 4, 2010