The telecom sector is booming, not just in India but globally. During 2006, the sector witnessed substantial growth in both the wireless and the internet segment. This was reflected in the revenues of global telecom companies such as Verizon, Vodafone and AT&T. This, in turn, gave a fillip to the global telecom equipment segment, especially handset sales.

The following is an analysis of the global trends in the telecom sector. In each case, we have attempted to provide the most comprehensive, up-to-date data available.

Wireless
The total number of wireless connections in the world is estimated to have surpassed 2.5 billion during September 2006, with an addition of 500 million subscribers over the previous 12 months.

GSM
With over 2.14 billion GSM subscribers as of December 31, 2006, GSM/ WCDMA accounts for 83.8 per cent of the world mobile market, up from 80.3 per cent in December 2005. During 2006, GSM grew by approximately 25 per cent, having added approximately 400 million subscribers.

Notably, the Asia-Pacific region accounted for a large chunk of the GSM subscriber base with about 37.5 per cent share as of September 2006. This is followed by Western Europe with 19.1 per cent and Eastern Europe with 15.5 per cent.

CDMA
The CDMA user base also grew substantially over the year. During the period September 2005 to September 2006, the CDMA subscriber base grew by 25 per cent, from 285.7 million to 353.7 million. In the Asia-Pacific, the number of CDMA subscribers increased by 25 per cent from 124.9 million to 155.6 million. Europe, the Middle East and Africa, despite starting off with relatively fewer CDMA users, also expanded by a healthy 57 per cent having added 2.7 million subscribers.

As of September 2006, the AsiaPacific region accounted for 44 per cent of the CDMA subscriber base followed by North America with 33.7 per cent and the Caribbean and Latin America with 20.2 per cent.

3G
Over the past year, 3G has gained increasing importance. As of end September 2006, there were 302 million 3G CDMA subscribers and over 80 million WCDMA subscribers globally.

While the voice market is approaching saturation, revenues from data have slowly been expanding.

NTT DoCoMo has the largest wireless data revenue followed by China Mobile, KDDI, Verizon Wireless, Cingular Wireless, Sprint Nextel and O2 UK respectively.

Fixed line
With rapid growth and development of wireless means of communications, fixed line phones are no longer an essential in every home. Consumers worldwide are not only taking advantage of cheap or free calls offered on mobile networks but are also using e-mail for both personal and business contacts. This is not to mention the increasing use of internet-based telephone calls as an alternative to international long distance calls.

Consequently, in order to offset their dwindling fixed line revenues, companies have started undertaking a spate of mergers and acquisitions to become large global companies with massive potential for economies of scale. The recent acquisition of Bell South by US based AT&T is a case in point.

Companies are now diversifying into other segments and attempting to retain market share through the widespread practice of bundling internet, telephone and television services under one monthly price.

Internet
The internet segment, despite witnessing substantial growth over the previous year, still has ample unutilised potential. As of January 2007, only 16.6 per cent of the world population has access to internet services. Much of this untapped reserve lies in the Asian region, which has 389 million subscribers but an internet density rate of only 10.5 per cent.

This is in stark contrast to Australia, which has 19 million users and 53.5 per cent penetration. North America, with 232 million internet subscribers, has the highest internet density at 69.4 per cent.

Market value
With volumes forecasted to rise even further, the already lucrative telecommunications industry is slated to become even more profitable. According to the Telecommunications Industry Association (TIA)’s 2007 Telecommunications Market Review and Forecast Report, the global telecom market grew by 11.2 per cent to total $3 trillion in 2006.

Europe has the largest telecom market worth $1 trillion, followed by the US with $923 billion and the Asia-Pacific region with $715 billion. The Middle East/Africa is the fastest growing region, having expanded its market value by 21.6 per cent. By 2010, the global market is expected to reach $4.3 trillion in revenue.

According to the TIA, “The demand for broadband and high speed services is seen to be fuelling the growth in telecommunication revenues, as carriers invest in new fibre and wireless infrastructure to provide voice, video and data services.”

Considering combined fixed and mobile revenues for 2006, the world’s top telecom operators worldwide are Deutsche Telekom with $93 billion worth of revenues followed closely by Verizon with $90 billion, AT&T with $80 billion, NTT with $70 billion, Vodafone with $68 billion and France Telecom with $64 billion. Notably, the merger between AT&T and BellSouth will catapult AT&T to the number one spot with respect to revenues.

Telecom equipment
According to a study undertaken by Data Monitor, the global telecom equipment market generated total revenues of $294 billion in 2005. Of this, the Americas accounted for 35.8 per cent of the global communications equipment market followed by Europe and the Asia-Pacific region.

While the telephony and terminals segments were the most lucrative, generating total revenues of $221.2 billion, equivalent to 75.3 per cent of the market’s overall value, the networking segment contributed revenues of $72.8 billion or 24.7 per cent of the market’s aggregate revenues.

During the July-September 2006 quarter, worldwide mobile phone sales totalled 251 million units, a 21.5 per cent increment over the same period last year, according to Gartner estimates. In fact, third quarter sales in the Asia-Pacific region, which was the fastest growing region during the quarter, rose dramatically and drove overall growth.

Nokia is the market leader in the handset segment with 35 per cent market share as of September 2006. It is followed by Motorola with approximately 21 per cent market share and Samsung with approximately 12 per cent market share.

The road ahead
According to an Ernst & Young report, the total number of telecom subscribers in the world is expected to grow from 4.7 billion in 2006 to 6.4 billion by 2010. This will translate into global telecom service revenues of $1.7 trillion by 2010, growing at a CAGR of close to 4 per cent.

Wireless will be the growth driver for the future. In 2002, the total number of mobile subscribers overtook the fixed line user base. It is forecasted that revenues from mobile services will also surpass those from fixed line by the end of 2008.

Asia has emerged as the largest telecom market (in terms of subscribers) and is expected to generate the largest share of revenues from telecom services by 2010, with the fastest growth rates coming from India, Pakistan and Bangladesh.

All in all, telecom companies can look forward to brisk growth ahead.