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IT spending of the Indian Telecom vertical is expected to reach $7.1 billion in 2020: Zinnov
Zinnov has come out with a report titled, “Indian Telecom Market Overview 2012.”
The study covers the overall industry growth, key technology trends and government regulations that have shaped the growth of the Indian telecom sector.
According to the study, the Indian telecom industry, characterised by a large subscriber base, substantial tele-density but low revenues per user (ARPU), has witnessed a three-fold increase in subscriber base since 2008. Currently, the wireless subscriber base stands at 933.7 million and is dominated by Bharti Airtel. The wireline segment base stands at 31.4 million and is led by Bharat Sanchar Nigam Limited.
The study also highlights new avenues for revenue generation for the telecom companies, like mobile-based value added services (MVAS), cloud and data center services which in turn are providing a lot of business opportunities to IT companies. Currently data center market in India is valued at over $4.0 billion and is expected to increase to $6.0 billion by 2014. Nearly one-fifth of this segment is governed by third party while the rest is captive. Lack of in-house skills, high investments, and long gestation periods pose challenges for captive data centers in India.
Additionally, operators are increasingly focusing on MVAS opportunities. As per Zinnov, this trend has been necessitated by declining share of voice in telecom ARPUs. Indian MVAS market is expected to move from the traditional SMS based services to internet based and application based services. Currently, valued at over $5 billion Indian MVAS industry is expected to increase to $6 billion by 2013.
The emerging MVAS categories are:
m-Health- Leading operators like Vodafone India, Bharti Airtel and Aircel are partnering with healthcare companies to deliver m-Health services. Typical services include provision of locating hospitals, fixing appointments, registration, medical advice, facilitating treatment and blood donation process.
m-Governance- Amidst visible traction for m-Governance in India, government has pushed m-Governance framework to aid adoption of these services. Many Indian states such as Kerala, Gujarat, Bihar, Goa and Andhra Pradesh have initiated m-governance practices primarily through SMS-based platform.
m-Education- Major telecom players are enabling mobile platform as a medium to impart education. For instance, Aircel and MTS are partnering with non-governmental organisations for educational initiatives for underprivileged children; Reliance Communication (RCOM) is delivering interactive, real time courses across 105 cities; Bharti Airtel is involved in imparting education through interactive voice response which includes English speaking courses at basic level.
m-Commerce- Telecom carriers are increasingly taking interest in m-Commerce services as the government is pushing through reforms such as m-Microfinance, m-Retailing and Mobile wallet services. Some of the recent government initiatives include increase in the mobile payment limit to Rs 50,000 by Reserve Bank of India (RBI), creation of Interbank Mobile Payment Service by National Payments Corporation of India and six nationalised banks and RBI granting semi-closed wallet licenses to operators.
m-Agriculture- These services bridge the information gap between the farmers and market conditions. Key services include commodity prices, local info, weather updates, multiple language support etc. RCOM provides a service called Grameen VAS, while Bharti Airtel offers Bahtar Zindagi.
m-Infotainment- Almost all leading telecom companies provide information and entertainment related services. Infotainment is the largest contributor to overall MVAS revenue. Categories such as sports, travel, news content, ringtones, music and videos are largely covered in this segment.
Commenting on findings of the study, Praveen Bhadada, director-market expansion, Zinnov Management Consulting, says, “This study examines various trends that have shaped the adoption of IT across the entire value chain of the telecom vertical. IT spending in the telecom vertical is mature and has grown at a rate of 14.3 per cent in the financial year 2012 and has reached $2.4 billion out of which the maximum spending takes place in hardware followed by services and business process outsourcing. Focus on 3G and long term evolution (LTE) technology has forced many operators to re-look at modernising their IT systems. Additionally, new avenues for revenue generation for telecom companies like mVAS, cloud and datacenter services are providing ample opportunities to IT companies, with whom service providers are looking at establishing strategic partnerships. Further to this, it is interesting to know that the IT spend in this sector will cross over $7.0 billion by 2020.”
As per the study the telecom companies are facing some challenges in IT adoption. These challenges include: lack of clarity on consumer preferences, uncertain government regulations, difficulty in predicting future IT requirements, falling ARPUs affecting profit margins, management issues in public sector units and high operation costs in remote areas.
The study highlights that a host of regulatory changes are being sought through the National Telecom Policy – 2012 such as- promoting R&D and manufacturing in domestic telecom equipment industry, moving towards a unified license regime through which revenue could take a hit of as much as five per cent due to roaming abolition, permitting spectrum pooling, sharing and trading, making additional spectrum available every five years and framing policies to ensure rapid expansion of cloud services and technologies.
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