Indian Telecom Equipment Beats Downturn; Grows 20% to Nearly $25 Billion

Published on: 8th June 2009

The Indian telecom equipment industry reported a 20% growth in revenues to comfortably cross the US$24 billion mark during FY 2008-09 compared to a 24% growth recorded in the previous financial year (2007-08). Indian trade magazine, Voice&Data said that the result was not surprising because despite overall economic slowdown, India has been witnessing over 10 million month-on-month new mobile subscriber additions, and telecom operators have been buying equipment to expand their networks.

Of the three components of the telecom equipment industry, Carrier Equipment business grew the fastest at 27% to report revenues of Rs 72,616 crore (US$15.5 billion), followed by the next fastest growing, Enterprise Equipment category with revenues of Rs 15,242 crore (US$3.3 billion), a growth of 15.4%.

Telecom again bucked the trend in the slowdown-hit enterprise technology market, as large business organizations bought equipment for video conferencing, wireless LANs, network security, network storage and voice solutions. Cost-saving- and productivity-enhancement technologies were a strong growth area.

"We've seen this before: in a downturn, telecom gains, as businesses deploy cost-saving tech", said Prasanto K Roy, chief editor of Voice&Data. "In the last downturn, IP telephony got a boost. This time, it's video-conferencing, including high-spend areas such as telepresence."

Interestingly, the Phones category, which primarily includes CDMA, GSM and fixed phone handsets, placed at number two in terms of revenues at Rs 26,669 crore, grew a modest 6%, thanks to crashing handset prices, major growth happening in semi-urban and rural areas where more entry level phones sell, and large scale proliferation of low cost Chinese phones.

Top companies by revenue: Nokia, Ericsson and Nokia Siemens

According to the survey estimates, Finnish mobile and equipment maker Nokia posted revenues of Rs 16,567 crore to retain its 'numero uno' rank among telecom equipment players. Nokia was followed by Ericsson at No 2 (Rs 10,310 crore), Nokia Siemens Networks at No 3 (Rs. 9,848 crore) and Alcatel-Lucent at No 4 (Rs 8,050 crore), all telecom infrastructure solution providers. Chinese vendor Huawei made a grand entry at No 5 by more than doubling its revenue to Rs 6,240 crore. Another Chinese player ZTE improved grew its revenues by 60% to claim No 7 position with revenues of Rs 4,800 crore.

Despite all the noise being raised about the national security angle of Chinese vendors who are doing extremely well in most other global markets, they have been able to establish themselves as big and acceptable players in India. Among the Top players, Cisco was the only player to have dropped revenue to Rs 4,693 crore at No 8. The three software companies Wipro, TCS and Infosys sold telecom software valued at Rs 5,692 crore, Rs 4,233 crore and Rs 3,926 to claim No 6, 9 and 10 position respectively.

Mobile phone sales up 7.9%, Fixed phone sales drop one-third

The Voice&Data100 annual survey reveals that the fixed phone market has been losing to mobile market in recent years. During FY 2008-09, the fixed phones market declined by over a third to post revenues of Rs 760 crore compared to Rs.1,200 crore in the previous fiscal. Governments' as well as telecom operators' focus on broadband penetration which is still very low in India is being seen as the likely driver of fixed phone going ahead. Availability of affordable feature-rich mid-range handsets in the market is the secret behind the explosive number growth in the mobile industry. And with more mobile operators launching their services, and established players turning their attention to low tele-density markets, mobile is only likely to continue its growth run.

LG, Mototola and Sony Ericsson mobile sales drop by one-fifth to one-half

Nokia with revenue of Rs 16,567 crore was the top mobile handset player commanding almost a two-third market share, followed by Samsung with revenue of Rs 2590 crore and market share of 10% at No 2 and Sony Ericsson with revenue of Rs 1555 crore and market share of 6% at No 3.

Stiff competition from Chinese players ZTE (Rs 1440 crore at No 4), Haier (Rs 388 crore at No 8) and Huawei (Rs 360 crore at No 9) saw Sony Ericsson drop sales by half, Motorola drop sales by 25% to Rs 906 crore at No 6, LG drop sales by 22% to Rs 1165 crore at No 5.

Sectoral cuts in Carrier Equipment segment

Within the Carrier Equipment segment Wireless infrastructure players like Ericsson, Nokia-Siemens, Alcatel Lucent, Huawei and ZTE contributed Rs 33261 crores. The telecom software market was the next big contributor notching up Rs 25,152 crore contributed by players like Tech Mahindra, TCS, Wipro, Infosys, Sasken and Subex. With competition to offer more and better telecom services likely to increase, technologies like 3G and NGN networks will see faster adoption, where telecom software will play a more high value game.

WiMax and Telecom Turnkey companies such as GTL, ITI, TCIL were big growth drivers clearly indicating to the high action in network expansion and deployment, infrastructure sharing, and outsourcing, trends that are likely to gain momentum in days ahead.

While the story has been good so far, the last few months of 2008-09 had its share of challenges too, for which the industry blamed the minister and pressure from vested interest groups. Spectrum allocation and 3G licenses issues continue to be dogged by controversies and litigation. With the PM closely reviewing the performance of key ministries, the Industry expects the new Government to perform, remove all bottlenecks, and help it grow.

Top 10 Mobile Handset Players in India in 2008-09

	FY 07-08	FY 08-09	Growth (%)	Marketshare
Nokia	15000	16567	10%	64
Samsung	1500	2590	73%	10
Sony Ericsson	3,083	1555	-50%	6
ZTE	850	1440	69%	5.6
LG	1500	1165	-22%	4.5
Motorola	1200	906	-25%	3.5
Huawei	320	360	13%	1.3
Haier	300	388	29%	1.5
Others	250	939	275%	3.6
Total	24003	25909	8%	100

Top 10 Indian Telecom Players

Company	Revenue (In Rs Crore)		Growth (%)	07-08 Rank
	FY 07-08	FY 08-09
Nokia	15000	16567	10	1
Ericsson	8000	10310	29	2
Nokia Siemens Networks	7779	9840	26	3
Alcatel Lucent	7000	8050	15	4
Huawei	2700	6240	131	New
Wipro	5585	5692	2	5
ZTE	3000	4800	60	10
Cisco	5046	4693	-7	6
TCS	3978	4233	6	7
Infosys	3605	3926	9	8

Source: Cybermedia's Voice&Data Annual June 2009 

 

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