Indian telecom sector will provide employment to around one crore people by 2012, a study by PwC has said.

The telecom industry will provide about 28 lakh direct jobs and around 70 indirect jobs by 2012, the study commissioned by the Cellular Operators Association of India (COAI) and done by PwC said.

The mobile telephony industry in India witnessed unprecedented growth of more than 700 per cent, from having less than 10 lakh subscribers in 1998 to over 75.2 crore subscribers in 2010, the study titled 'Indian Mobile Services Sector: Struggling to Maintain Sustainable Growth' said.

The industry has also played a vital role in India's growth story and the industry today contributes nearly 2 per cent to the GDP, the study said.

The study, however, indicated that though the industry has taken significant strides in the past decade, the task of providing access to mobile services at affordable rates across the hinterlands remains incomplete.

The urban tele-density at 154 per cent is far ahead of the rural tele-density of 34 per cent. While this spells opportunity for the industry, significant investments will be required in order to increase reach in the rural areas.

Similarly, India's internet and broadband penetration are only around 1.6 per cent and 0.9 per cent, respectively. This can be explained by inadequate wireline infrastructure.

Hence, mobile broadband, which is an opportunity for providers, will require increasing investments.

"The challenges that the Indian telecom sector faces today are unique and multi-faceted and will require innovative solutions coming from operators and regulator working together," PwC India Telecom Executive Direction and Leader Mohammad Chowdhury said.

In such a scenario, Foreign Direct Investment participation and increased capital expenditures by industry participants are the need of the hour. Current trends indicate significant reversal in FDI inflows and capex outlays implying strong headwinds for the industry.

FDI in telecom sector in India was USD 1.7 billion in FY2011, down by almost 35 per cent compared with USD 2.6 billion in FY2010. Investments in sector by leading operators are down 50 per cent.

Mobile operators are experiencing declining financial performance. Increasing competition (significantly high number of operators compared to global benchmarks) has resulted in reduction in average revenues per minute to Rs 0.5 per call in FY2010 from a high of Rs 7.3 per call in FY2000.