Telecommunications Reforms in India Telecommunications Reforms in India

Mushtaq Khan 03 Himanshu Ahire 13 Mushtaq Khan 03 Himanshu Ahire 13

Presentation Plan

1

5

Introduction

Growth of the Industry (Analysis)

3 Major Players in Telecom Sector

4

History2

Major reforms

6 SWOT analysis

7 Problems and prospects

Presentation Plan

1

5

Introduction

Growth of the Industry (Analysis)

3 Major Players in Telecom Sector

4

History2

Major reforms

6 SWOT analysis

7 Problems and prospects

The total wireless subscriber base {GSM, CDMA and WLL (F)} stood at 391.76 million at the end of financial year.

The number of wireline subscribers on 31st March 2009 was 37.96 million. On an average, more than 10 million subscribers were added every month

during the financial year. The overall teledensity at the end of March 2009 was 36.98% as compared

to 26.22% ending March 2008. The rural teledensity at the end of March 2009 was 15.20% as compared to

9.20% ending March 2008

There were 13.54 million internet subscribers on 31st March 2009 as compared to 11.09 million on 31st March 2008.

The number of broad-band connections on 31st March 2009 was 6.22 million compared to 3.87 million for the same period during previous year.

*Source : http://www.trai.gov.in/ Annual Report

Introduction to Indian Telecom Industry – Recent facts & figures

Presentation Plan

1

5

Introduction

Growth of the Industry (Analysis)

3 Major Players in Telecom Sector

4

History2

Major reforms

6 SWOT analysis

7 Problems and prospects

• 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 the government's Ministry of Communications

History of Indian Telecom Industry

• 1985 Department of Telecommunications (DOT) established, an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system)

• 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.

• 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

History of Indian Telecom Industry

Presentation Plan

1

5

Introduction

Growth of the Industry (Analysis)

3 Major Players in Telecom Sector

4

History2

Major reforms

6 SWOT analysis

7 Problems and prospects

Basic Services Operators

BSNL

MTNL

Major Players in different segments of Indian telecom industry

Reliance

TTSL

GSM Services Operators

Airtel

Vodafone

Idea

Reliance

TTSL

BSNL

CDMA Services Operators

Reliance

Internet Services Operators

BSNL

MTNL

Reliance

TTSL

BSNL

Airtel

TTSL – Tata Teleservices Ltd.

MOBILE SERVICES

BSNL – Bharat Sanchar Nigam Ltd.

MTNL – Mahanagar Telecom Nigam Ltd.

Subscribers (Rural & Urban) & Market share (GSM & CDMA) - 2009

Subscribers (Rural & Urban) & Market share (GSM & CDMA)

Presentation Plan

1

5

Introduction

Growth of the Industry (Analysis)

3 Major Players in Telecom Sector

4

History2

Major reforms

6 SWOT analysis

7 Problems and prospects

Growth of Subscriber base from 1999 to 2009

Growth of Indian Telecom Sector

Wirelline Subscriber in Million

Growth of Indian Telecom Sector

Wireless Subscriber in Million

Growth of Indian Telecom Sector

Internet Subscriber in Million

Growth of Indian Telecom Sector

Broadband Subscriber in Million

Growth of Indian Telecom Sector

Growth of Teledensity

Presentation Plan

1

5

Introduction

Growth of the Industry (Analysis)

3 Major Players in Telecom Sector

4

History2

Major reforms

6 SWOT analysis

7 Problems and prospects

Indian Telecom Industry FrameworkIndian Telecom Industry Framework

Indian Government Bodies Independent Bodies

Wireless Planning and Coordination (WPC)

Department of Telecommunications

Telecom Commission

Group on Telecom and IT (GoT-IT)

Telecom Regulatory Authority of India (TRAI)

Telecom Disputes Settlement and Appellate Tribunal (TDSAT)

Handles spectrum allocation and management

DoT – Licensee and frequency management for telecom

Exclusive policy making body of DoT

Handles ad hoc issues of the telecom industry

Independent regulatory body

Telecom disputes settlement body

Regulatory Framework provides level playing field for all operators

They formulate various policies and pass laws to regulate the telecom industry in India.

They undertake various research activities and monitor the quality of service provided in the Indian telecom industry. They also provide various recommendations to improve the status of telecom operations in India.

The Department of telecommunications (Government of India) is the main

governing body for the industry.

Telephone Regulatory Authority of India (TRAI) assists the Government of

India (GoI) to take timely decisions and introduce new technologies in the

country.

FDI in telecom recently revised to 74%.

Government gets 15% of revenues from Unified Licensing

Regulator

Licensor

Judiciary

Telecom Regulatory

Authority of India

Telecom Dispute Settlement

Appellate Tribunal

Dept of Telecom Unified License Operators

Fixed Line Operators

GSM

900 &

1800

Wireless Operators

National Long Distance Operators

International Long Distance Operators

CDMA

1800Mhz

Ministry of Communication & Information Technology

INDIA

Go-ahead to the CDMA technology

Private players were allowed in Value Added Services

National Telecom Policy (NTP) was formulated

1992

1994

1997

Independent regulator, TRAI, was established

NTP-99 led to migration from high-cost fixed license fee to low-cost revenue sharing regime

1999

2000

2002

BSNL was established by DoT

ILD services was opened to competition

Internet telephony initiated

Reduction of licence fees

2003

Calling Party Pays (CPP) was implemented

Unified Access Licensing (UASL) regime was introduced

Reference Interconnect order was issued

2004

Intra-circle merger guidelines were established

Broadband policy 2004 was formulated—targeting 20 million subscribers by 2010

2005

FDI limit was increased from 49 to 74 percent

Attempted to boost Rural telephony

2006

Number portability was proposed (pending)

Decision on 3G services (awaited)

2007

Department of Telecommunication (DoT) is the main body formulating laws and various regulations for the Indian telecom industry.

Various important regulations and laws have been passed in the Indian telecom industry post-liberalisation era

ILD – International Long Distance

3G Spectrum Was Auctioned. In April Airtel launched 3G Service and MTNL in December 11

2008

Presentation Plan

1

5

Introduction

Growth of the Industry (Analysis)

3 Major Players in Telecom Sector

4

History2

Major reforms

6 SWOT analysis

7 Problems and prospects

Strengths• Huge wireless subscriber potential

• Fastest growing mobile market in the world

• Consumers are ready to pay for cutting edge services

• Government proposes to hike FDI limit in Telecom to 74%

• Unified license regime

Market SWOT AnalysisWeaknesses

• Lowest call tariffs in the world• Market strongly regulated by Govrenment body –

Governing both ISP and Telecom sectors• Too many authorities ruling the sector• Huge potential for low end and cheap handsets• Wide scale Consumer churn in Telecom and ISP• Wide spread VAS deployment is restricted due to

language and literacy problems• Primarily a voice based market

Threats• Low cost service providers – no possibility of

breaking even in short term• Weak IPR protection• Software and digital content Piracy• Political instability• Regulatory interference

Opportunities• To offer value added services on GSM, CDMA and IP• Language independent services• Mobile Marketing concepts• Content influenced by local culture and Global

success stories• M-Commerce• Unified messaging platforms• Foreign investment in form of equity or technology

Presentation Plan

1

5

Introduction

Growth of the Industry (Analysis)

3 Major Players in Telecom Sector

4

History2

Major reforms

6 SWOT analysis

7 Problems and prospects

Fifth largest telecom network in the world; second largest among the

emerging economies after ChinaOn an average, about 6–7 million new users added per month,

making India the world’s fastest growing wireless services marketLiberal Foreign Investment Regime–FDI limit increased from 49

percent to 74 percent; the rural telecom equipment market is also

open to large investmentsAmong the countries offering the highest rates of return on investmentThe large untapped potential in India’s rural markets–1.9 percent

teledensity in rural markets as compared to the national level of 18

percentThe government promoting telecom manufacturing by providing tax

sops and establishing telecom specific Special Economic Zones

Prospects of Indian Telecom sector

Vodafone purchased stake in Hutch from Hong Kong's Hutchison Telecom International for USD 11.08 billion.

Telekom Malaysia acquired a 49 percent stake in Spice Communications for USD 179 million.

Maxis Communications acquired a 74 percent stake in Aircel for USD 1.08 billion.

Ericsson to design, plan, deploy and manage Bharti Airtel network and facilitate their expansion in the rural areas, under a USD 2 billion contract.

Recent Deals in Telecom Sector

FDI and other M&A activities increasing in number

Reliance Communications Limited has sold a five percent equity share capital of its subsidiary Reliance Telecom Infrastructure Limited to international investors across the US, Europe and Asia. The deal was worth USD 337.5 million.

Major trends in the telecom sector is increasing M&A activity, de-regulation of telecom policies and growing interest of international investors.

Fight for the Sweet pieFight for the Sweet pie

Vodafone purchased stake in Hutch from Hong Kong's Hutchison Telecom International for USD 11.08 billion.

Telekom Malaysia acquired a 49 percent stake in Spice Communications for USD 179 million.

Maxis Communications acquired a 74 percent stake in Aircel for USD 1.08 billion.

Ericsson to design, plan, deploy and manage Bharti Airtel network and facilitate their expansion in the rural areas, under a USD 2 billion contract.

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Recent Deals in Telecom Sector

FDI in Telecom Sector

The Indian telecom industry has always attracted foreign

investors. In fact, the cumulative FDI inflow, during the August

1991 to March 2007 period, in the telecommunication sector

amounted to USD 3,892 million. It is the third largest sector to

attract FDI in India in the post-liberalisation era.

FDI calculation takes into account radio paging, cellular mobile

and basic telephone services in the telecommunication sector.

FDI and other M&A activities increasing in number

Reliance Communications Limited has sold a five percent equity share capital of its subsidiary Reliance Telecom Infrastructure Limited to international investors across the US, Europe and Asia. The deal was worth USD 337.5 million.

The Indian telecom industry has a 74 percent FDI limit in the

telecom services segment.

The GoI has permitted 100 percent FDI in manufacturing of

telecom equipment in India.

Major trends in the telecom sector is increasing M&A activity, de-regulation of telecom policies and growing interest of international investors.

Problems of Indian Telecom sector

• Lowest call tariffs in the world• Market strongly regulated by Govrenment body – Governing both ISP and Telecom

sectors• Low cost service providers – no possibility of breaking even in short term• Political instability

• Wide scale Consumer churn in Telecom and ISP

• Wide spread VAS deployment is restricted due to language and literacy problems

• Primarily a voice based market

“Nigahen nigahon se milake to dekho. Naye logo se rishta bana kar to dekho

Khamoshi se kab hoti hai khwahishein poori dil ki baat bata kar to dekho

Jo hai dil mei use kar do bayaan khud ko ek baar jata kar to dekho

Dil ki baat bata kar to dekho”

Thank You for your patience&

Till Then…Happy Talking !