Call it the year of major policy decisions — from the hike in FDI limit to the reduction in the licence fees, telecom saw come big action in 2005. However, 2006 is expected to witness even more significant decisions — the introduction of 3G, spectrum allocation and infrastructure sharing and the much-awaited IndiaOne plan.

The ratio of mobile to fixed lines underwent a significant change. As on November 30, the number of mobile phones, including WLL touched 72.6 million, surpassing the fixed line phones at 4.79 million. The number of telephones increased from 77.94 million in May 2004 to over 120.67 million in November 2005, registering a growth of 54.8%. Teledensity grew to 10.87% from 7.15% in May 2004.

The market share of private players grew from 40.2% in May 2004 to 53.5% as on November 30, 2005.

The industry also witnessed the largest ever telecom deals in 2005. On December 30, Malaysia’s biggest mobile-phone company Maxis Communications bought 100% in C Sivasankaran’s Aircel for $1.08 billion. In other major deals, Vodafone acquired 10% in Bharti for $1.5 billion while Orascom bought 19% in Hutch Tele for $1.3 billion.

The government also decided to enhance the FDI ceiling from 49% to 74% in some services, such as basic, cellular, unified access services, national/international long distance, V-Sat, public mobile radio trunk services, global mobile personal communication services and other value-added services. The total 74% FDI ceiling will include direct and indirect foreign holding in the licensee company. The government also decided to shift ADC to revenue sharing basis.

Leading global companies like Ericsson, Alcatel, Elcoteq, LG set up their manufacturing base in India. Nokia also announced setting up an integrated manufacturing facility near Chennai with an investment of $150 million. Flextronic Siemens, Motorola, Foxcon, Aspcomomp, are also firming up their investment plan. With these initiatives, telecom equipment manufacturing sector is expected to attract about $855 million in the next 1-2 years.

Dialing growth: upwardly mobile

• Teledensity grew to 10.87% from 7.15% in May 2004
• Mobile phones and WLL touched 72.6 million mark, surpassing the fixed line phones at 4.79 million as on Nov 30
• Market share of private players grew from 40.2% in May 2004 to 53.5% as on Nov 30, 2005
• Telecom equipment manufacturing sector may see about $855 m in 1-2 years passage to india
• Maxis Comm bought 100% in Aircel for $1.08 bn.
• Vodafone acquired 10% in Bharti for $1.5 bn. Orascom bought 19% in Hutch Tele for $1.3 bn
• The government decided to enhance the FDI ceiling from 49% to 74% in some services
• Ericsson, Alcatel, Elcoteq, LG set up their manufacturing bases in India. Nokia also announced setting up a $150 million facility near Chennai

Moreover, Alcatel in association with C-DoT would be developing WiMAX products in India. Ericsson also announced their plans to set up R&D base in Chennai. Cisco announced setting up NGN lab for IT and Telecom with an investment of $ 10 million along with an additional investment of $1.1 billion in IT and Telecom Sectors.

The government also took major policy decisions in 2006. The annual licence fee for national long distance (NLD) as well as international long distance (ILD) licences was reduced to 6% of adjusted gross revenue w.e.f. 1-1-2006.

(www.financialexpress.com)