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3G may turn it around for telecom

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Rajesh S Kurup Mumbai
-14.32

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Himachal Futur42.98209.883.087.53 Avaya GlobalCon9.4828.6322.3313.1 Astra Micro14.49153.325.3628.04 FCI OEN Connect5.4910.2431.9710.14 Kavveri Telecom1.92204.766.19.18 Punjab Comm-1.59

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-6.11

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 According to an analyst, the majority of the capital would be used for the expansion of services in the country, resulting in faster rollout of services, especially in the rural and semi-urban areas, connecting the length and breadth of the country in the next 24 months. However, the results would emerge within the next two quarters, or latest by the end of this year.  Indian telecom companies are also looking at increasing the pace of erection of passive infrastructure or towers. Reliance is committed to setting up another 8,000 towers, in addition to its existing 12,000 BTSs, and Bharti Airtel has announced an addition of 30,000 BTSs to its existing 40,000 towers. GTL Infrastructure is looking at adding 400 towers a month to its existing 1,200 cell sites.  The emergence of tower sharing, after a recent Telecom Authority of India (Trai ) notification that a BTS can be shared among three players, would result in faster rollout of services. Analysts expect the Indian telecom sector to witness one of its fastest growths during this financial year, especially during the last two quarters of the year.  The industry is also expecting a fall in handset prices that would help in driving telecom penetration. The present telecom penetration stands at an abysmal 14.3 per cent, compared with other developing nations across the world. For example, the telecom penetration in Pakistan stands at around 27 per cent, more than double of India.  The prices of entry-level handsets have fallen to around Rs 1,000 from Rs 4,000 three years ago. Analysts and industry sources expect a further reduction in prices to around Rs 800-900 that would drive telephony growth in the country.  Macquarie Research has raised its wireless subscriber forecast to 425 million subscribers by March 2010, up from our earlier forecast of 400 million. This is based on higher wireless penetration expectations for each of the 23 wireless circles in India.  According to an analyst firm, this would drive revenues and EBITDA margins for the companies in the telecom space.  Another important factor is the country's strong economy that is expected to grow at around 9-10 per cent during the year. The rising income levels of Indian households would provide a "huge impetus" for the wireless sector growth in the country.  Industry expects a monthly net addition of around 7.5-7.7 million per month for the next two years, compared with the existing 6.6 million per month.  Moreover, the entry of Vodafone would also bring in more value-added services and features to the country, that would make other Indian companies launch newer customer-friendly services. If spectrum is released this quarter, as is expected by the industry, it would result in the rollout of 3G services in the country. For the sector, the current year and the next could well turn out to be the best years.

 

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First Published: May 03 2007 | 12:00 AM IST

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