NLD telephony forays grow, biz shrinks

Sector set to see 31 players in the next 12 months.

If all goes to plan and intent, the number of domestic long-distance telephony operators will have increased from four to 31 in a year.

This, even though the business generated by this sector has shrunk from Rs 8,000 crore to Rs 5,000 crore in three years due to an 80 per cent drop in tariffs from Rs 6-8 a minute to Re 1.

Five new licences have been issued in recent weeks to Idea, Hutch, Sify, British Telecom and AT&T and 22 other applications are being processed.

Although forecasts are not available, the prospect of rapid growth, a sharp increase in average talk-time to 380 minutes from 220, the advent of gaming and advanced web applications and growing IT-enabled services revenues are expected to drive growth.

India has 150 million mobile service subscribers and adds 5.5-6 million every month, the fastest growth in the world. Moreover, the country's over 1 billion population is a growth driver with the government aiming to provide telecom services to 250 million people in 36 months.

Easier entry terms have also encouraged investors. From January last year, the department of telecommunications reduced the entry fee for domestic long distance to Rs 2.5 crore from Rs 100 crore.

The annual share of the revenue that must be given to the government was reduced to 6 per cent from 15 per cent. The department also scrapped the Rs 400 crore guarantee that the operators were required to furnish.

The cap on foreign direct investment in a telecom service provider was raised to 74 per cent from 49. Concurrently, 100 per cent foreign direct investment was permitted in manufacture of telecom equipment.

"These measures will help global majors increase their investments in the country," said Cable & Wireless Country Manager Sunanda Das.

IN THE QUEUE
(Some major applicants)

British Telecom

Cable & Wireless

Verizon

AT&T

Mahanagar Telephone Nigam Ltd

Essar group-owned Shippingstop.com

Railtel

Powergrid Corporation

Tulip IT Sevices

HCL Infinet

Hughes Communications

i2i Enterprises

Tata Teleservices

Dishnet Wireless

Sify

Idea Cellular

Spice Communications

Akash Broadband