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INDUSTRIAL RELATION PROJECT REPORT

On

Telecom Industry & Analysis of Top 5 Telecom Company

Submitted in Partial Fulfillment of

Master of Business Administration (MBA)

Programme : 2011 -13

Of

Gautam Buddh Technical University, Lucknow

Under the Supervision of : Submitted By:

Dr. Supriya Srivastava Group - 6Karishma Joshi

Pravin Kumar

Ekta Singh

Sameera Naaz

Keshav Gupta

Rohit KumarGaurav Shrivastava

Faculty of Management ScienceShri Ram Murti Smarak College of Engineering & Technology, Bareilly

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Executive Summary

The rapid growth in Indian telecom industry has been contributing to Indias GDP at large.

Telecom industry in India started to set up in a phased approach. Privatization was gradually

introduced, first in value-added services, followed by cellular and basic services. Telecom

Regulatory Authority of India (TRAI), was established to regulate and deal with competition

(the service providers). This gradual and thoughtful reform process in India has favored

industry growth. Upcoming services such as 3G and Wi Max will help to further augment the

growth rate.The Indian telecommunications industry is one of the fastest growing in the

world and India is projected to become the second largest telecom market globally by 2015.

This is evident from the facts of Telecom Industry for example, India added 113.26 million

new customers in 2008, the largest globally. The countrys cellular base witnessed close to

50 per cent growth in 2008, with an average 9.5 million customers added every month. This

would translate into 612 million mobile subscribers, accounting for a Tele-density of around

51 per cent by 2012. It is projected that the industry will generate revenues worth US$ 43

billion in 2012-13. In this report we have tried to capture most of the areas of Telecom

Industry. Major highlights of the report are History of Telecom Industry, Current Industry

Analysis, Role of TRAI, Spectrum allocation, FDI Regulation, Competitive advantages,

Outsourcing in Telecom, Emerging Technologies, Latest Innovation, and Growth Trends,

Mergers and Acquisitions.

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INDEX

PART - A

Introduction

About the Industry

Department of Communication

TRAI

PART - B

Historical Events, Development & Growth

Average annual growth rate for last 5 year

Forecasted annual growth rate

Statistical Data

Competitors (Top 5 Companies)

Recent Sales Revenue

Industry Leader (Handset & Service Provider)

Supply Chain (Hand Set)

Manufacture Produce Finish Product

Intermediary Involved in Distribution

Factors Influences the ability of Supplier

Customer

Identify Customer

How buyer used product

Conclusion

References

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Introduction

Indian telecom sector is more than 165 years old. Telecommunications was first introduced in

India in 1851 when the first operational land lines were laid by the government near Kolkata

(then Calcutta), although telephone services were formally introduced in India much later in

1881. Further, in 1883, telephone services were merged with the postal system. In 1947, after

India attained independence, all foreign telecommunication companies were nationalized to

form the Posts, Telephone and Telegraph (PTT), a body that was governed by the Ministry of

Communication. The Indian telecom sector was entirely under government ownership until

1984, when the private sector was allowed in telecommunication equipment manufacturing

only. The government concretised its earlier efforts towards developing R&D in the sector by

setting up an autonomous body Centre for Development of Telematics (C-DOT) in 1984 todevelop state-of-the-art telecommunication technology to meet the growing needs of the Indian

telecommunication network. The actual evolution of the industry started after the Government

separated the Department of Post and Telegraph in 1985 by setting up the Department of Posts

and the Department of Telecommunications (DoT).

The entire evolution of the telecom industry can be classified into three distinct phases.

Phase I- Pre-Libralisation Era (1980-89)

Phase II- Post Libralisation Era (1990-99) Phase III- Post 2000

Until the late 90s the Government of India held a monopoly on all types of communications

as a result of the Telegraph Act of 1885. As mentioned earlier in the chapter, until the industry

was liberalised in the early nineties, it was a heavily government-controlled and small-sized

market, Government policies have played a key role in shaping the structure and size of the

Telecom industry in India. As a result, the Indian telecom market is one of the most liberalised

market in the world with private participation in almost all of its segments. The New Telecom

Policy (NTP-99) provided the much needed impetus to the growth of this industry and set the

trend for libralisation in the industry.

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About the Industry

Background

The Indian Telecommunications network is the third largest in the world and the second largestamong the emerging economies of Asia. Today, it is the fastest growing market in the world. Thetelecommunication sector continued to register significant success during the year and hasemerged as one of the key sectors responsible for Indias resurgent Indias economic growth.

Growth

This rapid growth has been possible due to various proactive and positive decisions of theGovernment and contribution of both by the public and the private sector. The rapid strides in thetelecom sector have been facilitated by liberal policies of the Government that provide easymarket access for telecom equipment and a fair regulatory framework for offering telecom

services to the Indian consumers at affordable prices.

Wire line Vs Wireless

It has also undergone a substantial change in terms of mobile versus fixed phones and publicversus private participation. The preference for use of wireless phones has also been predominantin the sector. Participation of the private entities in the telecom sector is rapidly increasing ratethere by presenting the enormous growth opportunities. There is a clear distinction between theGlobal Satellite Mobile Communication (GSM) and Code Division Multiple Access (CDMA)technologies used and the graph below shows the divide between the two.

Segment wise Status

Wire line Services

With increasing penetration of the wireless services, the wire line services in the country isbecoming stagnant. On the other hand, Broadband demand has picked up and promises tostabilise fixed line growth.

GSM Sector

In terms of the Global System for Mobile Communication (GSM) subscriber base this now

places India third after China and Russia.China had 401.7 million GSM subscribers

CDMA Services

CDMA technology was introduced in India as a limited mobility solution. The introduction ofCDMA services has created competition, lowered tariffs and offered many citizens access tocommunication services for the first time

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Internet Services

Internet services were launched in India on August 15, 1995. In November 1998 the governmentopened up the sector to private operators. A liberal licensing regime was put in place to increaseInternet penetration across the country. The growth of IP telephony or grey market is also a

serious concern.

Government loses revenue, while unlicensed operation by certain operators violates the law anddepletes licensed operators market share. New services like IP-TV and IP-Telephony arebecoming popular with the demand likely to increase in coming years. The scope of servicesunder existing ISP license conditions are unclear.

Telecom services

Telecommunication sector in India is primarily subdivided into two segments, which are FixedService Provider (FSPs) and Cellular Services. Telecom industry in India constitutes some

essential telecom services like telephone, radio, television and Internet. Telecom industry inIndia is specifically emphasizing on latest technologies like GSM (Global System for MobileCommunications), CDMA (Code Division Multiple Access), PMRTS (Public Mobile RadioTrunking Services), Fixed Line and WLL(Wireless Local Loop ). India has a prospering marketspecifically in GSM mobile service and the number of subscribers is growing very fast.

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Department of Communication

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Telecom Regulatory Authority of India (TRAI)

Mission

To ensure that the interests of consumers are protected and at the same time to nurture conditions

for growth of telecommunications, broadcasting and cable services in a manner and at a pace

which will enable India to play a leading role in the emerging global information society.

Role of TRAI

One of the main objectives of TRAI is to provide a fair and transparent policy environment

which promotes a level playing field and facilitates fair competition. In pursuance of above

objective TRAI has issued from time to time a large number of regulations, orders and directives

to deal with issues coming before it and provided the required direction to the evolution of Indian

telecom market from a Government owned monopoly to a multi operator multi service open

competitive market. The directions, orders and regulations issued cover a wide range of subjects

including tariff, interconnection and quality of service as well as governance of the Authority.

The functions of TRAI can be divided as : Recommendatory function and Mandatory Function.

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History Of Telecommunication Industry

Telecommunication is a term coming from Greek and meaning communication at distance

through signals of varied nature coming from a transmitter to a receiver. In order to achieveeffective communication, the choice of a proper mean of transport for the signal has played (and

still plays) a fundamental role.

The history of telecommunication industry started with the first public demonstration of Morses

electric telegraph, Baltimore to Washington in 1844. In 1876 Alexander Graham Bell filed his

patent application and the first telephone patent was issued to him on 7th ofMarch.

In 1913 Kingsbury commitment telegraph was popular way of communication. AT&T commits

to dispose its telegraph stocks and agreed to provide long distance connection to independence

telephone system as approved by the Interstate Commerce Commission.

In 1956 Final Judgment, the final judgment limited the Bell System to Common Carrier

Communications and Government projects but preserving the long-standing relationships

between the manufacturing, researches and operating arms of the Bell System. In this judgment

AT&T retained bell laboratories and Western Electric Company. This final judgment brought to

a close the justice departments sevenyear-old antitrust suit against AT&T and Western Electric

which sought separation of the Bell Systems Manufacturing from its operating and research

functions. AT&T was still controlling the telecommunication industry.

In 1982 Modified final judgment (MFJ) , AT&T was requested to divestiture its stock ownershipin Western Electric; termination of exclusive relationship between AT&T and Western Electric;

divestiture by Western Electric of its fifty percent interest in Bell Telephone Laboratories, AT&T

s telecommunication research and development facility, is a jointly owned subsidiary in which

AT&T and Western Electric each own 50% of the stock; separation of telephone manufacturing

from provision of telephone service and the compulsory licensing of patents owned by AT&T

on a non-discriminatory basis.

It was telecommunication act of 1996 that true competition was allowed. The act of 1996 opened

the market to all competitors. AT&T being the first telecommunication company paved the road

for the telecommunication industry as well as set the policy and standards for others to follow.

AT&T would be the nation's largest provider of long-distance telephone service and cable TV.

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History Of Indian Telecommunications

YEAR

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

of British power)

1881 Telephone service introduced in India

1883 Merger with the postal system

1923 Formation of Indian Radio Telegraph Company (IRT)

1932 Merger of ETC and IRT into the Indian Radio and Cable Communication

Company (IRCC)

1947 Nationalization of all foreign telecommunication companies to form the

Posts, Telephone and Telegraph (PTT), a monopoly run by thegovernment's Ministry of Communications

1980 Private sector was allowed in telecommunication equipment manufacturing

1986 Conversion of DOT into two wholly government-owned companies: the

Videsh Sanchar Nigam Limited (VSNL) for international telecommunications

and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.

1990

Telecom revolution in many other countries which resulted in better quality of

services and lower tariffs and finally resulting in opening for the private sector

services and lower tariffs and finally resulting in opening for the private sector

1997 Telecom Regulatory Authority of India created.

1999 Cellular Services are launched in India. New National Telecom Policy isadopted.

2000 DoT becomes a corporation, BSNL

2004 Broad Band policy

2006&2007 Years of dynamic growth for telecom sector

The telecom industry is one of the fastest growing industries in India. With a growth rate of

45%, Indian telecom industry has the highest growth rate in the world.The improvement in thestandard of living and the development of infrastructure and connectivity are some of the mainsreasons for the significant growth of the telecom industry. The Indian Telecommunicationsnetwork with 200 million connections is the fifth largest in the world and the second largestamong the emerging economies of Asia. Today, it is the fastest growing market in the world andrepresents unique opportunities for U.S. companies in the stagnant global scenario. The totalsubscriber base is increasing day by day. The wireless technologies currently in use are GlobalSystem for Mobile Communications (GSM) and Code Division Multiple Access (CDMA).

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Average Annual Growth Rate of Last 5 years

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Forecasted Annual Growth Rate

The India telecom industry will grow at a compound annual growth rate (CAGR) of 15.8 per

cent between 2010 and 2014 and will touch revenues of Rs.3, 77, 683 Crore ($ 82 billion)

according to a research done by Cyber Media Research.

The India telecom services and mobile handsets market will grow at 16.7 per cent in 2012 (over

2011) and will touch revenues of Rs.2,88,832 Crore ($ 63 billion) out of which, the telecom

services, which includes mobile and fixed line services will contribute Rs.2,05,454 Crore ($ 45

billion) and the India mobile handsets market which includes feature phones and smart phones

will contribute Rs.83,377 Crore ($ 18 billion). The latter will grow at over 30 per cent during

2012 (over 2011).

Anirban Banerjee, Associate Vice President, Cyber Media Research, said The telecoms growth

story will be a function of the enhanced demand for high speed broadband and data services from

both enterprises and consumers, as 3G and BWA/WiMAX services are rolled out by various

operators to cover an increasing number of cities and towns

Here is a table of the India telecom services and products sector, 2010-2014.

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TOP FIVE COMPANIES:

The Top five companies, on the basis ofMarket Share as on 31st January, 2011 are:

Bharti Airtel Ltd. Reliance Communications Ltd. Vodafone Essar Ltd. BSNL Idea Cellular + Spice

24.4

18.3

17.5

13.1

11.1

0.11.2

0.6 0.1

9.14.6

Market Shares as on 31st january 2011

Airtel

RCL

Vodafone Essar

BSNL

Idea Cellular

Shyam Telecom

MTNL

BPL Mumbai

HFCL

Tata Tele Services

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Sales Revenues Of The Top Companies

Companies Sales Revenue(US $)

Airtel 7.53 (billion $)

RCom 2.01 (billion $)

Vodafone 5.76 (billion $)

BSNL 5.80 (billion $)

Idea Cellular 2.79 (billion $)

0

1

2

3

4

5

6

7

8

Airtel Rcom Vodafone BSNL Idea Cellular

Sales Revenue as on 2012

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Statistical Data

(i) Growth Graph

Globalization has made telecommunication an integral part of the infrastructure ofthe Indian economy. The telecom sector in India has developed as a result of progressiveregulatory regime.

According to the TRAI, the total gross revenue of the Indian telecom services industry was Rs1,524 bn in FY09 up from Rs 1,291 bn in FY08 registering a growth of 18.03% over FY08 andits subscriber base grew by 43% over FY08 to touch 429.70 mn subscribers in FY09.

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(ii) Contribution to GDP

According to the UNCTAD, there is a direct correlation between the growth in mobileteledensity and the growth in GDP per capita in developing countries, which tend to have a high

percentage of rural population. The share of the telecom services industry in the total GDP hasbeen rising over the past few years (the telecom sector contribution in GDP went up from 5%in FY 09 to 8% in FY 13).

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Bharti Airtel

Bharti Enterprises is one of Indias leading business groups with interests in telecom, financialservices, retail and manufacturing. Bharti Airtel is a flagship company of Bharti Enterprises.

The businesses at Bharti Airtel have been structured into three individual strategic business units(SBUs) - Mobile Services, Airtel Telemedia Services & Enterprise Services.

It is the largest cellular service provider in India in terms of number of subscribers. Services areoffered include Mobile Services (GSM Technology), Broadband & Telephone Services, Long

Distance Services and Enterprise Services (Telecommunications Consulting for corporate).

It provides end-to-end telecom solutions to corporate customers and national & internationallong distance services to carriers.

The company served an aggregate of 88,270,194 customers as of December 31, 2008; of whom85,650,733 subscribed to GSM services and 2,619,461 use the Telemedia Services either forvoice and/or broadband access delivered through DSL.

. They have recently forayed into media by launching their DTH and IPTV Services. Company shares are listed on The Stock Exchange, Mumbai (BSE) and The National Stock

Exchange of India Limited (NSE).

Bharat Sanchar Nigam Ltd.

Bharat Sanchar Nigam Ltd. formed in October, 2000, is World's 7th largest TelecommunicationsCompany providing comprehensive range of telecom services in India: Wireline, CDMA mobile,

GSM Mobile, Internet, Broadband etc.

Presently it is one of the largest & leading public sector units in India. Today, it has about 46 million line basic telephone capacity and 0.6 million Data One broadband

customers

BSNL is the only service provider, making focused efforts and planned initiatives to bridge theRural-Urban Digital Divide.

BSNL has installed Quality Telecom Network in the country and now focusing on improving it,expanding the network, introducing new telecom services with ICT applications in villages and

winning customer's confidence.

In fact there is no telecom operator in the country to beat its reach with its wide network givingservices in every nook & corner of country and operates across India except Delhi & Mumbai.

http://en.wikipedia.org/wiki/GSMhttp://en.wikipedia.org/wiki/Broadbandhttp://en.wikipedia.org/wiki/Broadbandhttp://en.wikipedia.org/wiki/GSM

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Reliance communication

RelianceADA Groups flagship company, Reliance Communications, is India's largest privatesector information and communications company, with over 100 million subscribers.

It has established a pan-India, high-capacity, integrated (wireless and wireline), convergent(voice, data and video) digital network, to offer services spanning the entire info communication

value chain.

Their business encompasses a complete range of telecom services covering mobile and fixed linetelephony.

It includes broadband, national and international long distance services and data services alongwith an exhaustive range of value-added services and applications.

Today the company can proudly claim that they were instrumental in harnessing the true powerof information and communication, by bestowing it in the hands of the common man at

affordable rates.

Vodafone Essar

Vodafone Group Plc is the world's leading mobile telecommunications company, with asignificant presence in Europe, the Middle East, Africa, Asia Pacific and the United Statesthrough the Company's subsidiary undertakings, joint ventures, associated undertakings and

investments.

The Group's mobile subsidiaries operate under the brand name 'Vodafone'. In the United Statesthe Group's associated undertaking operates as Verizon Wireless.

During the last few years, Vodafone Group has entered into arrangements with networkoperators in countries where the Group does not hold an equity stake. Under the terms of these

Partner Market Agreements, the Group and its partner operators co-operate in the development

and marketing of global products and services, with varying levels of brand association.

On 31 December 2009, based on the registered customers of mobile telecommunications

ventures in which it had ownership interests at that date, the Group had 333 million customers,

excluding paging customers, calculated on a proportionate basis in accordance with the

Company's percentage interest in these ventures.

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Idea cellular

IDEA Cellular is a publicly listed company, having listed on the Bombay Stock Exchange (BSE)and the National Stock Exchange (NSE) in March 2007.

IDEA Cellular is part of the Aditya Birla Group, India's first truly multinational corporation. Thegroup operates in 25 countries, and is anchored by over 1,25,000 employees belonging to 25

nationalities.

IDEA Cellular is a leading GSM mobile services operator in India with over 53 millionsubscribers, under brand IDEA. It is a pan India integrated GSM operator covering the entire

telephony landscape of the country, and has NLD and ILD operations.

A frontrunner in introducing revolutionary tariff plans, IDEA Cellular has the distinction ofoffering the most customer friendly and competitive Pre Paid offerings, for the first time in India,

in an increasingly segmented market. From basic voice & Short Message Service (SMS) services

to high-end value added & GPRS services such as Blackberry, Datacard, Mobile TV, Games etc

- IDEA is seen as an innovative, customer focused brand.

IDEA has seen phenomenal growth since its inception, the company's footprint idea is to firstachieve critical mass, then drill deep instead of spreading thin.

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Trend for Wireline subscribers (In Crores)

Figure 6.3 Trend for wireline subscriber base

The above figure shows the decreasing trend in the number of wireline subscribers in India. This

suggests that people are shifting from fixed wired lines to other alternatives for voice

communications.

31

32

33

34

35

36

37

38

39

2010 2011 2012 2013 2014 2015

Trend for Wireline Subscribers (InCrores)

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6.4.2 Trend for Wireless subscribers (In Crores)

Figure 6.4 Trend for wireless subscriber base

Unlike the decrease in the number of the WireLine Subscribers, the wireless subscriber base hasbeen on a huge growth spree.

This suggests that India is a volumes market, wherein the number of subscribers are switchingfrom the traditional wired telephones to the mobile phones, and mobile phone service providers.

0

100

200

300

400

500

600

700

800

900

2010 2011 2012 2013 2014 2015

Trend for Wireless subscribers (inCrores)

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6.4.3 Trend for Internet Subscribers

Figure 6.5 Internet Subscriber base trend

The internet subscriber base in India has also been on the gradual rise.

In India, a country with a large number of its population living in the rural regions, most of the

population does not have access to computers. This shows that the usage of computers is

gradually on the rise, and with it, so is the internet usage.

0

5

10

15

20

25

30

2010 2011 2012 2013 2014 2015

Trend for Internet subscribers (inCrores)

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6.4.4 Trend for Broadband Subscribers

Figure 6.6 Broadband subscriber base

This trend shows that the number of broadband subscribers is increasing with time. People are

more aware about broadband services and the advantage of using a broadband connection

over a regular dial-up service.

It suggests that most of the rise in subscribers are coming from the more aware customers in

the urban and sub-urban regions.

0

2

4

6

8

10

12

14

16

18

2010 2011 2012 2013 2014 2015

Trend for Broadband subscribers (inCrores)

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6.4.5 Trend for Teledensity

Figure 6.7 Changing trend in Tele-Density

The teledensity has been rising constantly. Showing that the penetration of mobile services has

been on the rise.

The teledensity will keep growing because the penetration in the rural areas is still not complete.Thus, this suggests that even though India has high tele-density in the urban areas, the sub-urbanand rural areas can still improve much further.

0

10

20

30

40

50

60

70

80

2010 2011 2012 2013 2014 2015

Trend for the Teledensity

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6.4.6 Net Sales Trend

Figure 6.8 Change in Net Sales

From the above graph we can see that the net sales will show a positive growth with anapproximate increase of 10000 crores a year which is a good sign for the future of the telecom

industry.

020000

40000

60000

80000

100000

120000

140000

160000

180000

200000

2010 2011 2012 2013 2014 2015

Net Sales in crores

Net Sales in crores

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6.4.7 Trend for Net Profit

Figure 6.9 Reported Net Profit Trend

The above graph shows an increasing trend in the net profits, but the margin of increase is smallcompared to the net sales this may be attributed to the stiff competition among service providersand low pricing.

0

5000

10000

15000

20000

25000

2010 2011 2012 2013 2014 2015

Reported Net Profit in crores

Reported Net Profit in

crores

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Industry Leader (Handset & Service Provider)

(Service Provider- AIRTEL)

For any telecom operator, the main point in the initial stage is planning for network requirements

and arranging budget for such a capital expenditure, so Airtel did it very well so for the last

couple of years AIRTEL has been the MARKET LEADER in telecom sector. Here are some

reasons behind AIRTELs success.

According to a blog post by Govindarajan and Atanu Ghosh, the success of Bharati Airtelstarted when Sunil Mittal, Chairman, and his team decided to hand over the responsibility for

building up and managing the company's telecom and IT network to vendors. With 110

million subscribers, Airtel is the world's third largest telecom operator.

Bharti chose to engage some of the well-known global equipment vendors and serviceproviders to ensure quality services. It chose Ericsson, Nokia, and Siemens, which were key

telecom network-equipment vendors, to build up and manage its telecom network. It chose

IBM to build and manage the IT network. These proceedings mitigated Bharti's risk.

The vendors for telecom network management were paid only for the capacity utilized byBharti, not for the equipment. Through the outsourcing arrangements, Bharti considerably

lowered its costs while ensuring quality for customers, since vendors had outstanding

competencies in their domains.

By transforming the telecom infrastructure, Bharti was able to offer additional value addedservices like "Music Bharti". Though the company does not produce music, it has created

another source for revenue by distributing music via caller ring-back tones, mobile radio and

music on demand.

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Supply Chain (Hand Set)

When we talk about mobile handsets the name which comes in the mind is NOKIA. In fact

Nokia is also the world leader in handset manufacturing. So if we are talking about supply chain

of handset sector which is also a part of telecom sector, we can discuss about the complete

supply chain of Nokia handsets in entire world because Nokia is an ideal company for other

handset manufacturers and they also would like to follow the same supply chain process as

Nokia does.

Introduction

Finland-based Nokia Corporation (Nokia) is the world's leading manufacturer of mobile devices.

Analysts attributed Nokia's success to its supply chain management practices. The company hadan integrated supply chain which inter-linked suppliers, manufacturing plants, contract

manufacturers, sales, logistics service providers, and the consumers. It entered into a long-term

relationship with its suppliers and also supported them in improving their processes, which in

turn helped the company. Nokia was able to keep its costs low because of its efficient

manufacturing systems and processes. The company adopted a hybrid manufacturing system

which was a combination of in-house manufacturing and outsourcing. It also adopted the Smart

manufacturing technique so as to enhance the competitiveness of its manufacturing facilities.

The company had a wide distribution network which helped it to effectively reach the end

customers. The project highlights the unique supply chain management practices of Nokia. The

case examines how the company is making its supply chain efficient to counter the impact of

reduced demand of mobile handsets.

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Nokia Supply Chain Management

Nokia manufactures its mobile in 15 manufacturing plants located across 9 countries globally-

Brazil, China, Finland, Great Britain, Hungary, India, Mexico, Romania and South Korea .

Then it transfers to Nokias mother depot which is located in Gurgaon. They also provide

assistance in selection of channel partners like redistributors, Dealers, Franchisees, etc. Besides

this they provide monetary assistance in Store development for Nokia Priority dealers, help in

promotion of products on mass scale as well as in store and training of the sales force of partners

at every level. With an extremely complex supply chain that handles 100 billion components, 60

strategic suppliers, and 10 factories worldwide, Nokia had to be extremely focused in their

transformation efforts. New product introductions and variations are also intense 1 phone can

represent 170 handset variations and 250 sales package variants. To support this complexity, the

operations philosophy has been: think globally, act locally, i.e. balancing localized decision-

making with global planning. Nokia started their SCM transformation in 1995 with the strategy

of replacing inventory with information and creating a pull-driven supply chain with end-to end

integration linking suppliers, factories, telecom operators, channel partners, contract

manufacturers, banks, sales, iHubs, and logistics service provider tothe consumer. Their

approach was to create the most efficient supplier network to offer the best solutions to meet

customer expectations. Fundamentals for success included creating a value-based partnership

with suppliers, based upon factual information, leadership, flexibility and trust - Making the

impossible possible through collaboration. Based on this approach, the supplier network is now

considered the central point for reaching their corporate objectives: Great products, Operational

excellence, and Customer satisfaction.

The results of their transformation have been impressive with increased sales and reduced

component inventories not only within Nokia, but also reduced inventories throughout the

pipeline, including supplier and customer inventories. Sourcing excellence is a key ingredient for

Nokias business model transformation. Benefits include time-to-market, risk management,

agility and financial model flexibility. Nokia believes two critical factors were instrumental to

their transformation success: leadership and the communication of the vision. The leadership

philosophy relies on four equally important elements: head, heart, hands, and guts. These

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leadership attributes are exemplified through energy and passion, trust as the base for business,

focus and drive, active communication and finally, flawless execution.

Nokia distribution structure - GSM

Nokia rarely does divulge any kind of internal data in public domain. It makes it hard to get

much detail about the exact details of the distribution structure of Nokia mobile phones. Nokia

has been market leader in mobile phones market not just in terms of sales by volume and value,

but also in terms of setting best practices and examples in supplier selection. Nokia manages one

of the largest distribution networks among mobile companies globally. It ranges from small

village on island of some remote south-east Asia like Tahiti to advanced market like US and

western European countries. Its mobiles are available at stores measuring barely 15sq. ft. in

remote villages to super-sized Nokia Concept stores on high streets.

When it comes to distribution, Nokia's lead is clear. Today, India has some 1,10,000 outlets that

sell mobile phones. Out of these, according to companies own conservative estimates, 50,000

stores have only one brand availableNokia.

In India, Nokia started distributing its phones through a partnership with HCLI (formerly

Hindustan Computers Ltd.), which had already built an extensive network for its own products.

Recently, Nokia has decided to supplement that with its own distribution efforts. Nokia believed

that there was a tremendous growth opportunity and it was best exploited when the resources

utilization of both companies was optimized.

In recent years, Nokia has started an initiative to allow customers to drop their used old mobiles

in Nokia drop boxes for safe disposal. This has necessitated a reverse flow of handsets also.

Distributor

HCLI Info has been handling distribution of Nokia phones in India for 10 years. Nokia follows

similar pattern in different global markets of having tie-ups with companies with established

network for the distribution of their mobile phones. In September this year Brightstar Europe

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today announced a distribution agreement with Nokia. The agreement will focus mainly on the

IT reseller market, Value-Added Resellers (VARs) and the B2B sector in France.

These distributors perform multiple roles within the supply chain. They act as resellers for the

GSM phones.

Distribution

Channel

Sales Force Penetrate market

deeper

Explore new

markets

Assist in new

product

Receivable

collection

Share & gain

market insight

Nokia Care Centres

Retailers/ Dealers

Nokia Priority dealers, Multi brand and individual dealers in any specified region are all served

by designated RDSS. Dealers are explained the features of every new launch mobiles, different

schemes and offers by Nokias representatives. Re-supplies are always just a phone call away

and the delivery is made within a few hours. Besides, Nokia assists most dealers in the region in

the store set-up and design. The price points sometimes dictate the type of outlet.

Nokia Suppliers Requirements

Nokia has developed environmental requirements for the products, components and parts that it

source. New suppliers (like our existing suppliers) must commit to meeting their requirements

(e.g. NSR and environmental product requirements) as part of the contractual agreement.

Suppliers Performance

Supplier assessments are used to understand a suppliers performance level and compliance to

Nokias requirements. Trained Nokia assessors conduct the majority of its supplier assessmentsso that Nokia is involved first hand. Nokia believe it is important for Nokia assessors to see the

factories for them, to understand the problems and to work directly with suppliers to drive

improvements. This hands-on approach means that both Nokia and its suppliers take their

performance very seriously. Occasionally, Nokia work with third parties for specific expertise or

investigations, or as part of joint industry assessments. Nokia do, however, invite its suppliers to

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use NGOs or similar parties to assure the effectiveness of its own labor standards and

environmental practices. To drive sustainable change Nokia often need to combine assessments

with other tools and approaches including face-to-face meetings, performance metrics and

targets, development programs, trainings and supplier-focused events.

Training and Building Capability

Nokia help suppliers improve their management of corporate responsibility (CR) issues by

meeting with them and providing training, sharing examples of best practice from Nokias own

operations or from other case studies. Nokia help suppliers develop their own internal CR

organization and embed CR within their business starting with a commitment from the top.

Nokia also work with Tier One suppliers to help them manage their own supply chains. It is

becoming increasingly apparent that training and capacity building amongst companies in the

supply chain are important for driving sustainable improvements to support monitoring

programs. Therefore, as part of the Global e-Sustainability Initiative (GeSI) Supply Chain

Working Group (SCWG), Nokia actively participate in the Learning & Capability Building sub

work group.

Internal training

Before Nokias suppliers can be expected to meet our requirements, it is first important that own

sourcing personnel are familiar with the requirements and commitments so that they can support

implementation and ensure consistent messaging.

Internal training is provided to new sourcing personnel and existing personnel receive training

and information sessions on new requirements.

Supplier training- Supplier training helps:

New suppliers to understand our expectations (e.g. NSR, Environmental Requirements for Nokiaproducts)

Existing suppliers to understand and implement new requirements (e.g. new material restrictions,updates to NSR), and

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Existing suppliers to build competences to meet existing requirements (e.g. address non-conformances from on-site assessments).

Nokias trainings focus on the Nokia Supplier Requirements, labor conditions, health and safety

in the work place, design for the environment, and substance management.

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Manufacture Produce Finish Product

Rising demand for a wide range of telecom equipment, particularly in the area of mobile

telecommunication, has provided excellent opportunities to domestic and foreign investors

in the manufacturing sector. The last two years saw many renowned telecom companies

setting up their manufacturing base in India. Ericsson has set up GSM Radio Base Station

Manufacturing facility in Jaipur. Elcoteq has set up handset manufacturing facilities in

Bangalore. Nokia set up its manufacturing plant in Chennai. LG Electronics set up plant of

manufacturing GSM mobile phones near Pune.

The Government has already set up Telecom Equipment and Services Export Promotion

Forum and Telecom Testing and Security Certification Centre (TETC). A large number of

companies like Alcatel, Cisco have also shown interest in setting up their R&D centers in

India. With above initiatives India is expected to be a manufacturing hub for the telecom

equipment.

India's telecom equipment manufacturing sector is set to become one of the largest globally by

2012. Mobile phone production is estimated to grow at a CAGR of 28.3%, totaling 107 million

handsets by 2012. Nokia Leads the market with whopping 60% share. Korean giant Samsung

currently at number there is looking forward increase its market share to 20% through aggressive

marketing.

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Customer

Identify Customer

Telecom industry is one of the fastest growing industries in the world. The never-endingtechnological developments combined with cut-throat competition have made the Industry morecompetitive than ever. Telecom industry is customer driven and hence being customer-responsive is an important trait for success in this industry. To be customer focused and to beupfront in the interactions with the customer, the primary need is a tool that empowers thecustomer facing staff with accurate information at the click of a button..

Support Center Plus has been helping a number of companies across the globe to cater tocustomer needs and to help them provide superior experience to their customers. What we said

may sound cliched, but the diversified portfolio of our Telecom Clients bear the testimonial forthe fullest utilization of Support Center Plus in the Telecom domain.

Email and Phone are the two main ways the customer support is approached in TelecomIndustry. Customers expect faster response times, one call resolution and better user experience.Support Center Plus with its strong email response management system, intuitive KnowledgeBase, unique Self-Service Portal and computer telephony integration can help a telecomcompany to provide top-notch customer support to its customers.

How Business Units can be used by a Telecom company?

Any telecom service provider will have two different streams of customers. B2B customers arethose who avail the enterprise services and the normal B2C customers, who avail differentservices like broadband, mobile services etc. The business units in a Telecom company aredivided according to different products.

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For example our Acme Telecom, has three major product divisions' broadband, mobile andlandline. Each product business unit will have different clients (of both B2B and B2C). The B2Bclients can be classified as accounts and if they have different branches, it can be classified in to

sub-accounts. The contacts (requesters) can be from any of the accounts or sub accounts. TheB2C contacts can be directly without any association with Accounts or Sub-Accounts.SupportCenter Plus is extremely flexible and can be customized seamlessly to manage yourbusiness units, accounts , sub-accounts and contacts.

How buyer used product

With this tool, search for specialized providers of desired goods or individual products by partnumber. And by clicking the on the words Desktop Search located at the top of the guides

main search page, you can easily download the Desktop Search Toolbar directly to yourcomputer. Then gain instant, one-click access to the buyers Guide and the TIA Web site at any

timeeven if you are not logged on to your browser.The TIA Telecom/ICT Buyers Guidealsoincludes Request for Information (RFI) functionality. This feature allows users to contactparticipating suppliers with the click of a mouse. With a downloadable desktop searchapplication available, association members also have the ability to search for items directly froma small search window on their desktops making the search process as convenient and time-efficient as possible.

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A new Firefox search application is now an integral part of theTIA Telecom/ICT Buyers Guide.Industry professionals using a Firefox Web browser to search the online buyers guide for theproducts needed for customers and incorporate the guides search engine into their browserstool bar. This makes the guide accessible anytime the Firefox browser is open, regardless of whatWebsite the user may be visiting.

Online Supplier Directories (OSDs) are emerging as the preferred method of searching within abusiness sector. Unlike traditional search engines, OSDs focus on a small niche of products andservices, producing extremely relevant search results for the end user. By nature, OSDs service aspecific industry and are usually maintained by seasoned veterans in the industry, such asassociations like TIA.

General search engines are leaving business professionals with much to be desired, said Dan

Maitland, president of Irving, Texas-based MultiView Inc., a technology company that partneredwith TIA to develop theTIA Telecom/ICT Buyers Guide. The obstacles created by these searchengines result in failure to find critical content and information needs. These obstacles are

overcome by the associations vendor search, ultimately increasing productivity in businessesthat rely on this type of search.

If you are an industry supplier not currently listed in theTIA Telecom/ICT Buyers Guide, ourmembers will miss your company as they research the suppliers prominently displayed in thisone-o- a-kind, industry-specific search environment. A completed listing will make yourcompany stand out from the competition. Packages start at just $395 for an entire year. Ifyoudlike more information on advertising options, contact (800) 816-6710 for a media kit.

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Conclusion

The Indian Telecom Service provider industry is gearing for a revolution. The customer

is driving this revolution and will see more unique and sophisticated offerings coming his

way. The 3G which will pave the way for 3.5G, 3.75G and the next big thing-4G and the

VAS services will keep the customer asking for more. The rural areas which have

remained untapped will see an insurgence of services. Also the easing of the regulations

by TRAI ,the ease of spectrum licensing, the FDI influx will make the telecom space in

India a must watch in the coming years.

References

www.dot.gov TRAI reports from website Cellular Operators Association of India (COAI) ISI Emerging MarketsAsia Datamonitor Numerous reports available online