IT spending in telecom to almost triple by 2020: Study

BANGALORE, INDIA: The Indian telecom industry, characterized by a large subscriber base and substantial tele-density, but low revenues per user (ARPU), has witnessed a three-fold increase in subscribers since 2008.

While the wireless subscriber market stands at 933.7 mn subscribers and is dominated by Bharti (Airtel), the wireline segment stands at 31.4 mn connections dominated by BSNL, states Zinnov's study report on the Indian Telecom market, titled, 'Indian Telecom Market Overview 2012'.

The study covers in detail the overall industry growth, key technology trends and government regulations that have shaped the growth of the Indian telecom sector. It also highlights new avenues for revenue generation for the telecom companies, like mVAS, cloud and datacenter services, which, in turn, are providing ample opportunities to IT companies.

Currently, data center market and capacity in India is valued at over $4 billion and is expected to reach at approx. $6 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.

Speaking about the study, Praveen Bhadada, director, Market Expansion, Zinnov Management Consulting, said, "IT spending in the telecom vertical is mature and has grown at a rate of 14.3 per cent in FY12 and has reached $2.4 billion, out of which the maximum spending takes place in hardware followed by services and BPOs. Focus on 3G and LTE has forced many telcos to re-look at modernizing 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 billion by 2020."

Additionally, another trend has been noticed by rising focus on mVAS opportunities necessitated by declining share of voice in telecom Average revenue per user (ARPU). Indian mVAS market is expected to move from the traditional SMS-based services to Internet-based and app-based services. Currently valued at over $5 billion, Indian mVAS industry is expected to reach well over $6 billion by 2013.

Recently emerging MVAS categories are highlighted below:

M-Health - Leading telecos such as Vodafone, 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, 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 NGOs for underprivileged children educational initiatives; Reliance communication delivering interactive, real-time courses across 105 cities; Airtel imparts education through IVR, which includes English-speaking courses at basic level.

M-Commerce - Telecom carriers increasingly taking interest in m-commerce service,s as the government aids through reforms such as M-Microfinance, M-Retailing and Mobile wallet services. Some of the recent government initiatives include increase mobile payment limit to Rs. 50,000 by RBI, Creation of Interbank Mobile Payment Service (IMPS), by NPCI along with six nationalized banks and RBI granting Semi-Closed Wallet licenses to telcos.

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. Reliance communication provides its service called Grameen VAS, while Airtel has 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 & Videos are largely covered in the segment.