The Telegraph
Since 1st March, 1999
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Growth buzz in telecom sector

New Delhi, Sept 27: The telecom sector in India is all set to grow by more than 5 per cent next year, with the pace likely to hot up by 2006.

A study by Gartner says the cellular market, which has been propelling growth in the industry, will continue to grow at a compounded annual growth rate of 46 per cent, making it the highest growth market in the Asia-Pacific region, beating even China in percentage terms.

The report has projected a huge growth in the number of subscribers from the existing 8 million to 44 million by 2006. This will facilitate the entry of new players, which will not only lower the price points but also help broaden the market with innovative product offerings and solutions.

Basic telecom services are slated to play a key role in increasing tele-density. Revenues from fixed telecommunication services will grow at a CAGR of 15 per cent in the next five years from the current $ 6.9 billion to $ 14 billion.

The process of liberalisation of long distance service (LDS) will increase the number of players, put competitive pressures on pricing thereby bringing down tariffs and hence revenue per user. The market buoyancy though, will be maintained by the increasing use of WLL for ease of deployment of new lines, states the report.

Kobita Desai, senior analyst with Gartner, said, “While the process of deregulation has set the pace for growth, a lot remains to be done to maintain the momentum. Lack of interconnectivity guidelines, cap on FDI at 49 per cent, high percentage of revenue sharing towards license fees/ spectrum charges, freedom of the regulator, long gestation periods for resolving conflicts and lack of control mechanisms to combat anti-competitive practices have been restraining the growth potential in this segment.”

“The key to success is the role of the regulator to ensure best business practices in an independent and competitive marketplace and the influence of non market forces on regulatory practices, pricing and service provisioning,” she added.

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