3G finally starting to take off: Anil Ambani

Company predicts data services in general may grow to over Rs 35,000 crore in next four to five years

Anil Ambani, the promoter of Reliance Communications that the telecom industry has entered a second phase of growth, led by data.

The company predicts that data services in general may grow from less than Rs 5,000 crore currently, to over Rs 35,000 crore in the next four to five years.

“The first phase of exponential growth will be led by data and broadband services. The next big opportunity will be led by data and broadband services,” Ambani said, in the company's annual report.

The total internet subscriber base has increased to more than 26 million at the end of March, the company said.

“We have seen a tremendous growth in our wire line broadband subscriber base both in terms of quality and quantity. Our Internet subscriber base has crossed approximately seven million. We command 25% of market share at second position,” the report said.

As customers now prefer higher bandwidth plans, as per the operator's assessments, it is also looking to augment its capacity.

“Till, a few months back, there were few wireless networks capable of offering broadband broadband services, the smartphone prices were too steep and usage charges also acted as a deterrent for mass scale adoption. Now, the wireless broadband ecosystem is improving fast,” said Ambani.

The tide turned towards wider data adoption after most operators with 3G spectrum. Ambani says that smartphone suppliers have become competitive resulting in device pries coming down and applications and content are being generated to target specfic user segments, with significant increase in adoption.

“This positive change in the ecosystem is creating huge opportunity in data and wireless broadband services. 3G services are finally starting to take off, primarily for high speed mobile internet usage,” he said.

The case for huge growth comes from the fact that the country has a voice penetration of over 70%, whereas broadband penetration is less than 1%.

The company also believes that the telecom sector which has been under regulatory weather for the last few years is also seeing some 'positive' structural changes. The number of players have reduced, tariffs have rationalised. It also praised the progressive New Telecom Policy of the government.

RCom also said that product lifecyles have been reduced and new types of products are coming within a short span of time.

“As a result, hectic merger and acquisition activities to consolidate the market share would be the new buzz in the market place. We are open to new acquisitions and opportunities to consolidate,” the company said, without giving anymore details.

“The main thrust of the policy is on the multiplier effect and transformational impact of telecommunication services on the overall economy,” Reliance Communications said.

Apart from reporting annual profits for the year ended 2012-13 at Rs 672 crore, RCom also reported growth in its equity value. “Stakeholders equity was Rs 33,850 crore, while net debt (excluding cash and cash equivalents) was Rs 38,858 crore, giving a net debt to equity ratio of 1.15 times,” Ambani said.