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Dynamics of the Indian Telecom Industry 2009

Dear Reader,

Thank you for coming back.

The telecom industry has shown tremendous growth in the past few years. Mobile services, the primary growth driver has propelled India into the third largest telecom network in the world. As with most things in India, there is great potential for the industry but the slow pace of reforms are, in some sense, hindering this growth. FDI (Foreign Direct Investment) is providing the much need liquidity to propel the telecom industry from the third largest to the soon-to-be second largest telecom network in the world.

And yes, there are more than one ways to get a piece of this growth. Most of the big players in this industry are publicly traded companies. Owning a piece of the business will expose you to the volatility in this industry.

What is also interesting is to see how consumers respond to new marketing strategies, price wars, and network affects. A classic network affect is the rise in the use of Value-added Services (VAS) and growth in revenues from VAS vs. voice services. This kind of a network affect is more prevalent in countries where VAS are still cheaper than voice services.

Its a wait and watch scenario now, with the bigger incumbent players fighting it out with each other for market dominance and the smaller players try their best to innovate for a piece of the action.

I did an analysis of the industry and presented to a group of managers in a leading semiconductor industry. See the full presentation below.

Comments/suggestions are welcome.

Regards,
Jyothin

Dynamics of Indian Telecom Industry 2009 v8 by jmadari