final report ppt

Telecom Sector

Presenting by Group 10: Finance ‘C’Sneha GargAnandavalli.HMayuri SoodRohit SinghGagandeep Kaur

Introduction

Service Industry

Lifeline of social economic growth

Fastest growing sector employing more people

Contributing more to global output

Overall average growth in GDP in the last eight years is59.6%

History of Indian Telecom Industry

1851 - First operational land lines were laid by the government near Calcutta

1881 - Telephone service introduced in India

1923 - Formation of Indian Radio Telegraph Company (IRT)

1947 - Nationalization of all foreign telecommunication companies to form the Posts, Telephone and Telegraph (PTT)

1985 -Department of Telecommunications (DOT) established

1986 - Conversion of DOT into two wholly government-owned companies: VSNL and MTNL

1997 - Telecom Regulatory Authority of India created

1999 - Cellular Services are launched in India. New National Telecom Policy is adopted.

2000 - DOT becomes a corporation, BSNL

Role of Telecommunication in the Indian Economy

The Indian telecom Industry is the second largest in the world

According to TRAI, the number of telecom subscribers in the country increased to 562.21 million in December 2009

The telecom industry notched up US$ 8.56 billion in revenues during the quarter ended December 31, 2009

According to the CII Ernst & Young report titled 'India 2012: Telecom growth continues', revenue from India's telecom services industry is projected to reach US$ 54 billion in 2012

Telecom industry is directly contributing more than 1.5 % of country’s GDP It is targeted to reach 771 million subscribers by 2013

India has nearly 37.66 million landline subscribers

India has one of the cheapest cell phone rates in the world

Source:www.trai.gov.in

INDIAN TELECOMMUNICATIONS AT A GLANCE

RANK IN WORLD IN NETWORK SIZE

3rd

TELE-DENSITY(PER 100 POPULATION)

36.98

TELEPHONE CONNECTION (IN MILLION)

Fixed 37.96

Mobile 391.76

Total 429.72

VILLAGE PUBLIC TELEPHONES COVERED(Out of 66,822 uncovered villages)

57,167

FDI(in million) from Jan 2000 till Jan 2009

2,75,441

To know the Future outlook of the Indian Telecom Industry.

How the Indian Telecom Industry has evolved in the past decade.

Improvement in the quality of living of the people

Impact on the Indian economy.

To understand how industry structure drives competition and that

determines the level of industry profitability.

OBJECTIVE OF THE STUDY

Industry Analysis

SWOT ANALYSIS

STRENGTHS

With many players in the market, the competition is immense, and each one is trying to beat the other by proving better schemes and services so as to increase the subscriber base.The telecommunication sector is one of the fastest growing sectors in the country.

The consumers are ready to pay extra for cutting edge services

The FDI limit has increased from 49% to 74%.

The unified license regime.

WEAKNESSES

The lowest call tariffs of Indian telecom service providers.

Every other operator in the industry is dependent upon BSNL.

Congestion level.

Dependence of global telecom sector on India.

OPPORTUNITIES

With respect to the telecommunication industry, there are many growth opportunities available.

Broadband Push

The rural market in India .

Tele density

Internet access.

THREATS

Telecom Infrastructure

Huge initial fixed cost

Governmental and Regulatory interference

The low cost service providers.

PORTER’S FIVE FORCES MODEL OF INDIAN TELECOM SECTOR

THREAT FROM NEW ENTRANTS

Supply Side of Economies of Scale Demand Side Benefits Capital Requirement Incumbent Advantages Restrictive Government Policy

BARGAINING POWER OF THE BUYER

Lack of differentiation among the service provider Cut throat competition because of the existence of numerous supplier Customer is price sensitive

RIVALRY AMONG EXISTING COMPETITORS

High Exit Barriers High Fixed Cost 6-7 players in each region 3 out of 4 BIG-Four present in each region Price wars BARGAINING POWER OF THE SELLERS

Large number of suppliers. Shared tower infrastructure. Limited pool of skilled managers and engineers especially those well versed in the latest technologies.

THREAT OF SUBSTITUTES

Some Substitutes for telecommunication:VOIP (Skype, Messenger etc.)Online ChatEmailSatellite phones

Price-Performance trade-off very high.

PEST ANALYSIS

POLITICAL• Presence of huge number of players in the market.

• DOT, TRAI, DTS who takes care of the rules and regulation. •Apart from them it keeps issuing policy and act which checks the events happening in the industry.

ECONOMIC

• The areas served by the telecom service providers.

• Increased economic activity due to liberalization.

• Opening of value added services.

SOCIO- CULTURAL

•The main aim is to sustain the customer base. • Provide the customers with the highest level of satisfaction and delight.

• Diversification in other areas.

TECHNOLOGICAL

•IT support is essential.

• A business has to co- ordinate on entire supply chain process and corresponding information flow. • Convergence of technologies evolved by IT.

Criteria for the Selection of Companies

Market Share

$10.7 bln, March 2010

No M&A, Jan. 2010

Nov, 2008

2007 M&As

To acquire 70% stake in WAIRD Telecom

Is In Talk

With African mobile phone operator MTN

Emerging Technologies

IP Multimedia Subsystem (IMS)High Speed Download Packet Access

(HSDPA)Mobile TVMobile Virtual Network TV (MVNO)Fourth Generation (4G)

Value Added Services (VAS)

Growing 40% annually As market saturate, focus will be on

increased VAS and average revenue per user (ARPU)Entertainment VAS

Information VAS

mCommerce

VAS

•Short Message Service (SMS) Platform

•Voice Platform

Access mod

e

•GPRS•Multi

media Message Service (MMS) Platform

Marketing Strategies

Understanding, communicating, delivering and developing existing customer relationships in

addition to creating and keeping new customers.

Marketing Strategies

BSNL became most trusted company in 2003&04

and awarded with Golden peacock award for CSR. Reliance Infocomm: Post card or phone call;

making call rates @40 paisa/min Tata Indicom: Non stop mobile Virgin mobile: Get paid for incoming Reliance Communication: Daily Telephone

Allowance Tata Docomo: Marketing call rates @1paisa/sec

Company Profile

Founded by Late DHIRUBAI AMBANI (1932-2002) is the flagship company of the reliance Anil Dhirubhai Ambani Group.

It ranks among the Top 5 Telecom companies in the world.

Differentiation Strategy- RURAL INTIATIVE by introducing Grameen VAS

and M2M applications.

NET WORTH 64,000 CRORES (US$ 13.6 billion)

NET PROFIT 8,400 CRORES (US$ 1.8 billion)

CUSTOMER BASE OVER 85 MILLION

Reliance Communication

BSNL

Bharat Sanchar Nigam Ltd (BSNL) incorporated in October, 2000.

World's 7th largest Telecommunications Company. Presently it is one of the largest & leading public sector unit in India.

Differentiation Strategy Beat its reach with its wide network giving services in

every nook & corner of country Wide bouquet of telecom services and provides most

transparent tariff schemes designed to suite every customer.

NET WORTH 68,000 CRORES

NET PROFITS 99, 390 million (US $ 2.26 billion)

CUSTOMER BASE 55.23 MILLION (2G+3G)

Tata Teleservices

Incorporated in 1996. Teleservices Limited is the pioneer of the CDMA 1x

technology platform in India. The company's network has been rated as the

'Least Congested' in India .

Differentiation strategy- First to pioneer the per-second tariff option-part

of its 'Pay for What You Use' pricing paradigm.

Net Worth 4,496.36 crores

Net Profit Negative

Customer Base 58 Million

Bharti Airtel

Airtel brand is headed by Sunil Bharti Mittal Bharti Airtel is now INDIA’s largest and world's

third-largest cellular service provider

Differentiation Strategy- Performance , dynamism and leadership Advertisement strategy-emotional and

humorous

NET WORTH USD 7.8 billion

NET PROFITS 18,502.83 crores

CUSTOMER BASE 121 million

Vodafone Essar Ltd.

In 1992 Hutchison Whampoa and its Indian business partner established a company launched commercial service as Hutchison Max in November 1995.

In February 2007, Hutchison Telecom announced that it had entered into a binding agreement with a subsidiary of Vodafone Group

Differentiation Strategy- Hutch was often praised for its award winning

advertisements which all follow a clean, minimalist look.

Net Worth 0.00

Net Profit 356.19 crores

Customer Base 18.7 million

Ratio Analysis

Source: www.capitaline.com

Vodaf

one

Airtel

BSNL

Tata

tele

serv

ices

Relia

nce

Indu

stry

0

0.5

1

1.5

2

2.5

20082009

Current Ratio

YEAR /COMPANIES 2008 2009

VODAFONE 1.4 1.69

AIRTEL 0.49 0.61

BSNL 1.92 2.04

TATA TELESERVICES 0.28 0.31

RELIANCE 1.25 0.34

INDUSTRY 1.33 1.22

Current Ratio


Fixed Assets Turnover Ratio

Year/Company 2008 2009

Tata Teleservices 0.4 0.43

Airtel 0.94 1.04

Vodafone 1.52 1.11

Reliance 0.7 0.86

BSNL 0.27 0.24

Industry 0.4 0.43

Tata

Tel

eser

vice

s

Airtel

Vodaf

one

Relia

nce

BSNL

Indu

stry

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

20082009


Debtor Turnover Ratio



Airtel 11.06 12.77

Vodafone 15.2 22.41

Reliance 15.61 30.67

BSNL 5.86 5.94

Industry 5.98 6.44

Tata

Tel

eser

vice

s

Airtel

Vodaf

one

Relia

nce

BSNL

Indu

stry

0

5

10

15

20

25

30

35

20082009


Debt-Equity Ratio


Tata Teleservices 0 -0.3

Airtel 0.38 0.3

Vodafone 0.27 0.13

Reliance 0.77 2.23

BSNL 0.05 0.04

Industry 0.21 0.35

Tata

Teles

ervi

ces

Airtel

Vodaf

one

Relianc

eBSN

L

Indu

stry

-0.5

0

0.5

1

1.5

2

2.5

20082009

Interest Coverage Ratio

Tata Teleser-

vices

Airtel Vodafone Reliance BSNL Industry0

5

10

15

20

25

30

35

40

45

20082009




Airtel 12.47 4.8

Vodafone 2.44 42.29

Reliance 3.99 2.86

BSNL 6.1 3.82

Industry 7.04 4.52

APATM

Tata Teleser-

vices

Airtel Vodafone Reliance BSNL Industry

-10

-5

0

5

10

15

20

25

30

20082009



Tata Teleservices -7.37 -8.22

Airtel 24.29 22.77

Vodafone 13.36 26.13

Reliance 17.49 5.47

BSNL 9.3 1.9

Industry 18.55 15.41

Return on Capital Employed (ROCE)

Tata Teleser-

vices

Airtel Vodafone Reliance BSNL Industry0

5

10

15

20

25

30

35

40

20082009



Tata Teleservices 0 0

Airtel 34.38 33.17

Vodafone 4.23 27.15

Reliance 8.66 22.72

BSNL 5.84 1.89

Industry 10.28 9.72

Return on Net Worth (RONW)

Tata

Teles

ervice

sAirt

el

Vodafone

Relian

ceBSN

L

Industry

0

10

20

30

40

50

60

70

80

90

100

20082009



Tata Teleservices 0 0

Airtel 39.46 32.35

Vodafone 3.25 30.25

Reliance 11.4 87.56

BSNL 2.92 0.71

Industry 10.62 10.11

www.capitaline.com and nseindia.com

ParametersTata Teleservices Bharti

AirtelVodafone

EssarReliance

communicationBSNL

Market Capitalization

4,429.96 156785.52 0.00 32,497.99 0

Enterprise Value/

subscribers

4567 7679 0.00 4346 0

Sales 1,941.68 34,014 2,733.76 15,086.66 32359.5

Other Income 112.31 367.14 115.68 520.58 5878.1

EPS 0.00 32.9 7.06 12.4 4.16

Credit Rating A AAA AA LAAA+

Inter-Company Analysis

Telecom Regulatory Act of India (TRAI)

Laws Governing the Indian Telecom Sector

TRAI ACT ( 1997 ) Lay-down the standards of quality

of service to be provided by the service providers. Ensure the quality of service and

conduct the periodical survey of each service provided by the service providers. Suggest measures for the development

of telecommunication technology. Establishment of ‘Telecom Disputes

Settlement & Appellate Tribunal (TDSAT)’ .

TRAI AIMS & OBJECTIVES

TRANSPARENCY

ACCESS TO WORLD CLASS QUALITY

TELECOM SERVICES

EFFECTIVE INTERCONNEC-TION

ACCESS TO WORLD CLASS QUALITY BROADCASTING

PROMOTING FAIR COMPETITION

ADEQUATE CHOICE & AFFORDABLE

TARIFFS

Achievements of TRAI

Exponential growth of Telecom Sector.

Tele-density increased by 18% in just 10 years of TRAI’s existence.

Subscriber Base is growing by over 8 million every month.

India has 3rd largest telecom network after China & USA with lowest tariff.

New Telecom Policy 1999

Strengthening of Regulator. National long distance services opened to private

operators. International Long Distance Services opened to

private sectors. Direct interconnectivity and sharing of network

with other telecom operators within the service area was permitted.

Department of Telecommunication Services (DTS) corporatized in 2000.

Spectrum Management made transparent and more efficient.

Updates

Telecom Sector Defies Recession

Fastest growing telecom sector 2nd largest wireless network after China Basic need for citizens Connecting Rural India (Rural-Urban Imbalance) Allotment of Licenses to more operators

Provisions in Budget 2010-11

Central Excise duties increased from 8% to 10%

Rate of Minimum Alternate Tax MAT increased from the current rate of 15% to 18% of book profits.

Exemptions from basic, CVD and special additional duties are now being extended to parts of battery chargers and hands-free headphones (earlier only applicable for parts of mobile phones).

Future Outlook

The Telecom sector revenues would touch $30 billion by 2013 registering a compound annual growth rate (CAGR) of 12.5 percent between 2009-2013.

The Telecom subscriber base is also expected to grow at a CAGR of 12.5 percent and would cross 770 million by 2013.

Mobile market penetration is projected to increase to 63.5 percent in 2013

The churn rate – the rate at which a subscriber switches their operator – would cross 59 percent in 2013 from 53 percent currently.

The number of people with prepaid connections, accounting for 93 percent of the subscriber base in 2008, will continue to swell to exceed 96 percent by 2013, surpassing 740 million

Recommendations & Suggestions

Process of getting a prepaid connection to become stringent

Keep track of the prepaid mobile users

There is a need to market the available services better and work towards decreasing the rate of these services.

Telecom companies should try to build effective network reach and come up with some value added services which could benefit the rural people

High effective promotional strategies to be adopted to position the brand in market

The new technologies should be brought in soon so that India keeps pace with the other developed countries

There is a need to market the available services better and work towards decreasing the rate of these services.

Conclusion

With the government increasing the FDI gap to 74%, more foreign companies would be entering the Indian Market and there will be stiff competition among the Indian players and the international players and hence the Indian players have to sustain growth and make profits.

As the growth of telecom industry is being enormous, we can expect more and more of new technologies that we keep this industry growing and this industry can become the largest service sector in the world.

References

www.capitaline.com www.nseindia.com www.bsnl.co.in www.telecomspace.com www.slideshare.net/.../marketing-strategy-comparison-of-airtel

-and-hutch http://www.naukrihub.com/india/telecom/top-companies/ www.marketics.com http://www.financialexpress.com/news/valueadded-services-seen-driv

ing-telecom-revenue/280674/ http://us.asiancorrespondent.com/Indianomics/2009/03/28/10-

risks-for-indian-telecom-sector-in-2009-ey-report http://www.alacrastore.com/research/fitch-ratings-

India_Telecom_Sector_Outlook_2009-424738_report_frame http://www.researchandmarkets.com/reportinfo.asp?

report_id=1191830 http://www.theindusview.com/vol4Issue1/specialreport.html

http://www.capitaline.com/

http://www.nseindia.com/

http://www.bsnl.co.in/

http://www.telecomspace.com/

http://www.slideshare.net/.../marketing-strategy-comparison-of-airtel-and-hutch



http://www.naukrihub.com/india/telecom/top-companies/

http://www.marketics.com/



http://www.financialexpress.com/news/valueadded-services-seen-driving-telecom-revenue/280674/

http://www.financialexpress.com/news/valueadded-services-seen-driving-telecom-revenue/280674/

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