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Issue of September 2006 

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Indian SMBs to invest $8.73 billion in telecom

Buoyed by the country’s booming economy, Indian small and medium businesses (SMBs) are on track to spend over $8.73 billion on telecom equipment and services this year. Expenditure on telecom services accounted for the bulk of all telecom investment, comprising 95 percent of total spend according to the latest study by AMI-Partners.

Local telephony remained the primary driver of telecom spending among India’s small businesses, accounting for 55 percent of all telecom spending. The majority of India’s small businesses are consumer-centric, though sales to other small businesses also account for a significant portion of their revenues. These businesses prefer to partner with other local small businesses, and telephone conversations remain their primary means of communication with business partners.

Despite the widespread use of cellular phones, landlines are essential to SMBs in India; they average 2.21 telephone lines per small business, and close to 20 lines per medium business. “The state-run communications service provider BSNL is the undisputed market leader among Indian SMBs, two-thirds of whom have BSNL connections,” noted Neha Jalan, Kolkata-based Analyst at AMI-Partners. “Cell-phone usage has surged in the past year as a result of falling tariffs.” Nine-in-ten SMBs already deploy mobile telephony, and use of cellular phones is expected to approach saturation in the next 12 months. Mobile telephony is an important method of communication for Indian SMBs, ranking third in their communication preferences—just after fixed telephony and personal visits.

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Indian Express - Business Publications Division

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