indian telecom sector insights

Upload: ankit-shrivastava

Post on 10-Apr-2018

219 views

Category:

Documents


0 download

TRANSCRIPT

  • 8/8/2019 Indian Telecom Sector Insights

    1/19

    Management

    of TelecomServices

    Assignment

    Amartya Kundu MS-02

    Ankit MS-10

    FMS Delhi

    MBA (Management of Services)

    Batch 2009-11

    Question 1. Page 02

    Question 2. Page 11

    Question 3. Page 16

    Question 4. Page 19

  • 8/8/2019 Indian Telecom Sector Insights

    2/19

    Batch 2009-11 Manage

    ent of Telecommunications Systems MBA (MS), FMS Delhi

    Ankit MS -10 Amartya Kundu MS-02 2

    I. What has been the year wise growth of telephones (Land Line and Mobileseperately) during the last ten years? What are the main reasons for this

    growth? Discuss in detail. Has this filled the digital gap? If not what are the

    reasons. Suggest suitable measures to bridge the gap.

    Year Wise growth of Landlines and Mobiles: The Indiantelecommunications industry is

    the world's fastest growing telecommunications industry, with 688.38 Million telephone

    (landlines and mobile) subscribers and 652.42 Million mobilephone connections as of July

    2010.

    Source: TRAI Annual report 2008-2009

    As the fastest growing telecommunications industry in the world, it is projected that India

    will have 1.159 billion mobile subscribers by 2013.Furthermore, projections by several

    leading global consultancies indicate that the total number of subscribers in India will exceed

    the total subscriber count in the China by 2013. The industry is expected to reach a size of

    344,921 crore (US$ 74.85 billion) by 2012 at a growth rate of over 26 per cent, and

    generate employment opportunities for about 10 million people during the same period.

    According to analysts, the sector would create direct employment for 2.8 million people and

    for 7 million indirectly. In 2008-09 the overall telecom equipments revenue in India stood at

    136,833 crore (US$ 29.69 billion) during the fiscal, as against 115,382 crore (US$ 25.04

    billion) a year before.

  • 8/8/2019 Indian Telecom Sector Insights

    3/19

  • 8/8/2019 Indian Telecom Sector Insights

    4/19

    Batch 2009-11 Management of Teecommunications Systems MBA (MS

    FMS Dehi

    Ankit MS-10 Amartya Kundu MS-02 4

    from different strata ofthe society. Now even entry-level handsets come with features like

    coloured display and FM radio. Thus, the falling handset prices and the add-on features have

    triggered growth ofthe Indian telecom industry.

    Prepaid Cards Bring in More Subscribers

    In the late nineties, telecom service providers introduced prepaid cards, which was yet

    another milestone for the wireless sector. Prepaid cards lured more subscribers into the

    industry besides lowering the credit risk of service providers due to its upfront payment

    concept. Prepaid cards were quite a phenomenon among first-time users who wanted to

    control their bills and students who had limited resources but greater need to be connected.

    Pre-paid cards greatly helped the cellular market to grow rapidly and caterto the untapped

    market. Further, the introduction of innovative schemes like recharge coupons of smaller

    denominations and life time incoming free cards has led to an exponential growth in the

    subscriber base.

    Introduction of Calling Party Pays (CPP)

    The CPP regime was introduced in India in 2003 and underthis regime, the calling party who

    initiated the call was to bearthe entire cost ofthe call. This regime came to be applicable for

    mobile to mobile calls as well as fixed line to mobile calls. So far India had followed the

    Receiving Party Pays (RPP) system where the subscriber used to pay forincoming calls from

    both mobile as well as fixedline networks. Shifting to the CPP system has greatly fuelled the

    subscriber growth in the sector.

    Changing Demographic Profile

    The changing demographic profile of India has also played an important role in subscriber

    growth. The changed profile is characterised by a large young population, a burgeoning

    middle class with growing disposable income, urbanisation, increasing literacy levels and

    higher adaptability to technology. These new features have multiplied the need to be

    connected always and to own a wireless phone and therefore, in present times mobiles are

    perceived as a utility ratherthan a luxury.

    Increased Competition & Declining Tariffs

  • 8/8/2019 Indian Telecom Sector Insights

    5/19

    Batch 2009-11 Management of Teecommunications Systems MBA (MS

    FMS Dehi

    Ankit MS-10 Amartya Kundu MS-02 5

    Liberalisation of the telecom industry has fuelled intense competition, especially in the

    cellular segment. The ever-increasing competition has led to high growth of subscribers and

    has put pressure on tariffs, which have seen a sharp drop over the years. When the cellular

    phones were introduced, call rates were at a peak ofRs 16 per minute and there were charges

    forincoming calls. Today, however, incoming calls are no longer charged and outgoing calls

    are charged atless than a rupee per minute. Thus, the tariff war has come a long way indeed.

    Increased competition and the subsequent tariff war has acted as a major catalyst for

    attracting more subscri bers. Apart from these major growth drivers, an improved network

    coverage, entry ofCDMA players, growth of value-added services (VAS), advancement in

    technology, and growing data services have also driven the growth ofthe industry.

    Despite the rapid increase in the telecom sector, growth has been disproportionate. The

    teledensity in rural areas is lagging behind urban areas. India's slow telecommunications

    expansion especially in the rural areas can be attribited to a number of factors, including tight

    bureaucratic control, poor policies and inadequate investment by private companies and lack

    of funds ofthe government, which until recently held monopoly control.

    Tele-density is low throughout the countries of the South Asia. Pakistan has highest tele-

    density in Asia and Bangladesh has lowest. India is by farthe largest South Asian country, in

    terms of population, economy and telecommunication network. However, there are huge

    disparities extant within the country, and this is evidenced in the uneven distribution of

    telecommunication access. Many of the less developed states have state-wise average

    penetration rates of below 20 per cent, including Bihar (12.13), Assam (13.67), Andaman &

    Nicobar Islands (17.94), Uttar Pradesh (15.58), West Bengal (13.78) Orissa (14.28), Madhya

    Pradesh (19.54) Uttaranchal (10.37) and Bihar (12.13). Tele-density in some states like

    Jharkhand (3.49), Chhattisgarh (4.18) and North East-II (8.71) are less that 10 percent.

    Itis clearthatthere is huge gap of digital divide between rural and urban India. However, this

    gap varies from State-to-State. In some States like North East, Uttaranchal, Bihar, Jharkhand,

    Orissa and Andaman and Nicobar Island the gap of digital divide is really very significant, in

    some other states it is narrow like Punjab, Maharashtra and Kerala. Added to this, the gap

    also varies from technology-to technology. Some States are not able to adopt even one

    technology but others have adopted very efficiently. In some states overall adoption of

    technology is high, but, adoption rate is rural areas is very low. In some cities like Delhi,

  • 8/8/2019 Indian Telecom Sector Insights

    6/19

    Batch 2009-11 Management of Teecommunications Systems MBA (MS

    FMS Dehi

    Ankit MS-10 Amartya Kundu MS-02 6

    Mumbai, Kolkata, Bangalore, Hyderabad, Noida etc, ICTs adoption rate is very high,

    whereas in some other cities like, Patna, Lucknow, Ahmadabad (even these are the capital of

    States)etc, adoption rate is very low.

    Causes:

    The better educated are statistically more likely to have and use connected PCs. In particular

    those with college degrees or higher, are ten times more likely to have access. Literacy rate ishigh in the urban India (79.9 percent) whereas it is only 58.7 percent in the rural India.

    Overall literacy rate in India is 64.8 percent. There is also huge difference in male (75.3

    percent) and female literacy rate (53.7 percent).

    Anotherimportant reason of digital divide in India is knowledge divide. Knowledge divide is

    directly related with digital divide. More educated people with computer knowledge and

    English language are able to access new technologies. Rural India had 368 million literate

    people out of whom only 63 million were found to be English speaking as on March 2008.

    Given the high levels of literacy in rural India and very low levels of English speaking

    population and computer savvy population, IMAI , 2008 made a clear case of content and

    applications in local languages in order to ensure higher and faster adoption of internet in

    rural. Internet use is primarily associated with a large section of the English-knowing urban

    population-though they account for only 31 percent of the total urban population of 250

  • 8/8/2019 Indian Telecom Sector Insights

    7/19

    Batch 2009-11 Management of Teecommunications Systems MBA (MS

    FMS Dehi

    Ankit MS-10 Amartya Kundu MS-02 7

    million-as many, as 84 per cent ofthem are PCliterate. Internet penetration extended to only

    0.6 per cent of the population in rural areas, with the number of active Internet users

    estimated at 3.3 million.

    Electricity is the most basic condition for using ICTs and many studies established that

    relationshi p between the level of electrification and digital divide. Rural India has low

    electricity coverage (Table 6). Almost 10 per cent villages of India have no electricity. Some

    areas may get agricultural power- two hours in the morning and evening-but even this is the

    exceptional. Added to this the cost of electricity is very high. In this situation, one can not

    even think about using computers and Internet.

    The digital divide is not simply an issue of access, but also of obstacles to use ICTs. Various

    studies (Tracy et al, 2003; Winter and Huff; 1996; Spender, 1997; MacKenzie and Wajcman,

    1985) revealed that even when women and men have equal access to the internet either

    through home, work or school, they may not have the opportunity to access the Internet or

    engage in a wide variety of uses. Women have been online less than men (Kennedy et al,

    2003). They have been online for fewer months and when they do go online, they spend less

    time. The genderissue is highly relevantin the developing countries like India. Women have

    less access than men in India due to various social and

    personal factors.

    Added to these, the growing population, insufficient funds, affordability, and delays in

    implementation of government policies and programmes have been some of the challenges

    that have lead to unequal developmentin the society, which is responsible for digital divide.

    Suitable Measures:

    LastMile Connectivity: Ashok Jhunjhunwala a professor atthe prestigious IIT who has been

    working attechnological solutions that could make telephone connections cheaper and more

    reliable, said much of the problem had to do with "last-mile connectivity". This means that

    the existing telephone infrastructure cheaply and efficiently carries telephone signals over

    long distances, but becomes costly and falters when it branches outinto homes.

  • 8/8/2019 Indian Telecom Sector Insights

    8/19

    Batch 2009-11 Management of Teecommunications Systems MBA (MS

    ! FMS Dehi

    Ankit MS-10 Amartya Kundu MS-02 8

    His solution, increasingly popular in the southern state of Tamil Nadu, uses radio waves to

    beam telephone signals from local exchanges into homes within a 10 kilometer radius, using

    Wireless in LocalLoop (WiLL) technology. Feeling threatened, private cellular-telephone

    companies petitioned the Supreme Court for a stay, but the court has refused to oblige and

    said thattechnology could not be held down.

    Apart from reliable voice communication, this revolutionary technology also provides

    reliable fast and affordable Internet at 70 kbps (kilobits per second), says Jhunjhunwala, who

    thinks it could become a model for other developing countries.

    Already it has been licensed to a few companies in Singapore, Tunisia, Brazil, Kenya, Fiji,

    Argentina and Nigeria. Supported by solar-powered relay stations, the system can workin an

    extended radius of up to 25 kilometers, making it usefulin rural areas that have no electricity

    supply and where expensive cabling is not practical. In Tamil Nadu's Nellikuppam district,

    sugarcane farmers are already using a WiLL system to checktheir accounts with a local sugar

    mill and also market prices of

    fertilizer and pesticides.

    Role of community information centres

    The central and state governments of India, especially the Ministry of InformationTechnology, have taken several initiatives for rural development through community

    information centres. These may be considered as rural electronic libraries. The project has

    been started in Sikkim and North Eastern states of India to provide IT facility in each and

    every block. Each CIC will have one server computer system and five client configuration

    computer systems linked in a local area network and connected to a VSAT for Internet

    access. The facility will hel p government functionaries to use email and the Internet for

    communicating with district and state officers. Efforts are being made to use the IT

    Infrastructure atthe CICs to capture localinformation ofthe block and make them available

    worldwide through the Internet.

    Besides the efforts made by institutes and private sectors in the country in the context of

    information dissemination, the community information services listed as follows is quite

    impressive:

  • 8/8/2019 Indian Telecom Sector Insights

    9/19

    Batch 2009-11 Management of Te"ecommunications Systems MBA (MS

    #

    $ FMS De"hi

    Ankit MS-10 Amartya Kundu MS-02 9

    Agri watch (www.agriwatch.org)

    Greenstar (www.greenstar.org)

    ikissan.com (www.ikissan.com)

    Soyachaupal (www.soyachaupal.com)

    Web site for aqua farmers (www.cddc.vt.edu/aquachaupal.com)

    EChaupals Project

    The Projectlaunched in the year 2000 has been quite popular in rural areas of India. The e

    chaupals enables rural people to access information in their local languages on crops and

    market prices. Around 2,700 echaupals provides services to more than half a million farmers

    in five states of the country, viz. Maharashtra, MP, Karnataka, Uttar Pradesh, and Andhra

    Pradesh.

    Digital Mobile Library

    In orderto bridge the digital divide in a larger way the government of India, in collaboration

    with the Centre for Advanced Computing (CDAC) based in Pune, aims to bring about one

    million digital books to the doorsteps of common citizens. The Internetenabled digital

    li brary will promote literacy. It will make use of a mobile van with satellite Internet

    connections. The van will be fitted with printers, scanners, cutters and binding machines for

    providing books in bound form to end users.

    These projects are encouraging steps taken by the governmentto bridge the gap between the

    information haves and havenots in the country. The poorest and underprivileged students

    will no longer be deprived of the latest reading material by virtue of their remoteness or

    affordability.

    Li brary networks are playing an important role in bridging the information needs of the

    people. Realising this need, the planning commission in 1984 recommended that the

    government modernise li brary services and information in the seventh fiveyear plan by

    means of li brary networks. Consequently the biggest li brary network, the INFLIBNET

    (Information and Li brary Network), was initiated in 1991 by the university grants

    commission with headquarters located in Ahmedabad. The programme is directed towards

  • 8/8/2019 Indian Telecom Sector Insights

    10/19

    Batch 2009-11 Management of Te%ecommunications Systems MBA (MS

    &

    ' FMS De%hi

    Ankit MS-10 Amartya Kundu MS-02 10

    modernisation of libraries and information centres and the establishment of a mechanism for

    information transfer and access to academicians and researchers in India.

    Several city networks, such as CALIBNET, the Kolkatta Li brary Network; DELNET, the

    developing li brary network, Delhi; BombayL

    i brary Network (BONET); MadrasL

    ibraryNetworkMALIBNET; Pune Library Network (PUNET); and, Ahemedabad Library Network

    (all sponsored by NISSAT Department of Scientific and IndustrialResearch) are promoting

    resource sharing and disseminating information by creating centralised union catalogues of

    their holdings. Public libraries in India need to be geared up with the latesttechnologies and

    IT infrastructure. At presentthe public libraries are technologically behind in both resources

    and technology. Very few libraries provide access to the Internet. The Bill and Melinda Gates

    Foundation has generously supported the process of modernisation of public libraries in

    United States and beyond. It has provided technology grants so that people can access the

    Internet. In India there is no major initiative for any local philanthropic hel p for

    modernisation of public libraries. However, some scanty efforts are being made by Indian

    Institutes of Technologies by launching the small project of Infothela (Information Box)

    equipped with Internet facility forthe people.

    Several community information centres have been opened with efforts of the Ministry of

    Information Technology to help people use email and Internet for access to information. A

    few states like West Bengal have encouraged the establishment of community li brary andinformation centres (CLICs) in rural areas. Around 1,500 CLICs will be set up in places

    where there are no public libraries. These centres would provide information relating to

    career, vocational opportunities and developmental activities carried out by village

    Panchayats in the state.

  • 8/8/2019 Indian Telecom Sector Insights

    11/19

    Batch 2009-11 Management of Te(ecommunications Systems MBA (MS

    )

    0 FMS De(hi

    Ankit MS-10 Amartya Kundu MS-02 11

    II. The auction of 3G spectrum had been in news during last few months. Whatwas the method/uniqueness of its auction? Name the operators who got the

    spectrum and the total revenue earned by the Government. Do you agree with

    this method of auctioning?

    Each of the auctions for 3G spectrum in Indias 22 telecom zones was a separate but

    simultaneous process conducted overthe Internet.

    Bidders had authentication tokens and passwords to access the electronic auction from their

    own computers. The names of bidders for each service area were not disclosed during theauction, only the total number of applicants would be known.

    The auctions consisted ofmultiple rounds and atthe end of each round, provisional winnerswere declared. The auctioneer, Rothschild and DotEcon, announced higher price for everyround and would look for demand at that price . It was be a multiple-round auction with

    time limits.

    The bid value in each round is to be determined by the auctioneer based on demand. If for acircle where there are three slots available and at least six bidders, then the price

    increment was 10%. If there are five bidders for three slots, the bid increment is 5%and for four bidders, the bid increment is 1%.Measures are to eliminate irrational bidsand cartelization.

    The bidders earnest money deposit will determine eligibility to bid in the first round. Eachround will earn eligibility points, which in turn will determine eligibility to participate insuccessive rounds. Only valid bids based on eligibility was accepted. At the end of eachround, bidders were shown the number of bidders forthe round. Each round was for a fixed

    time period. Maximum extra time permitted is four hours, broken up into 10-minute chunksfor extensions. Atthe end ofthe auction, bidders were notified ofthe provisional outcome ona confidential basis. The government has to approve the results before itis made public. Theauctions end when demand is equalto the number of slots available in each service area. Theauctions were held from 9am to 7:30pm on all days except Sundays and national holidaysin India, beginning 9 April.

    The essence of Auction is to get the maximum benefit due to the perceived or true rarity ofthe desired object. Thus the auctioning of 3g spectrum was a logical step. The hugeexpenditure caused by the buying of spectrum will lead to high tariff pricing of 3g

    plans. The early adopters of 3g were well heeled customers who may be able to bear thecosts. Unlike 2g which needed to be priced low to increase the telecom penetration. Themoney raised will help in decreasing the fiscal deficit.

    The Indian government hasmanaged to raise Rs. 67,718.95 crores from the auction, withRs. 50,968.37 crores from private telecom operators, and Rs. 16,750.58 crores from the stateowned telecom operators BSNL and MTNL. The two circles of Delhi and Mumbaitogether account for 39.19% of the total money raised, while the top five circles Delhi,Mumbai, Karnataka, Tamil Nadu and Andhra Pradesh account for 65.56% ofthe bids.

  • 8/8/2019 Indian Telecom Sector Insights

    12/19

  • 8/8/2019 Indian Telecom Sector Insights

    13/19

    Batch 2009-11 Management of Te4ecommunications Systems MBA (MS

    5

    6 FMS De4hi

    Ankit MS-10 Amartya Kundu MS-02 13

    Spectrum in 5 circles Andhra Pradesh, Tamil Nadu, Uttar Pradesh (West), West Bengaland Himachal Pradesh is in the 1959-1964 Mhz band.

    Spectrum in 5 other circles Delhi, Rajasthan, Assam, North East & Jammu & Kashmirwas in the 1969-1974 Mhz band

    Spectrum won in Mumbai and Karnataka was in the 1974-1979 Mhz Band, and in Biharwas in the 1964-1969 Mhz band

    In a statement, Airtel has said that they wanted to achieve a pan-India 3G footprint, butcould not, due to the auction format and severe spectrum shortage along with ensuing policyuncertainty, which drove the prices beyond reasonable levels.

    3. Reliance CommunicationsWill pay Rs. 8585.04 Crores for spectrum in 13 circles

    Has won spectrum in Delhi, Mumbai, Kolkata, Punjab, Rajasthan, Madhya Pradesh, WestBengal, Himachal Pradesh, Bihar, Orissa, Assam, North East, Jammu & Kashmir

    Is one ofthe three operators to get both Delhi and Mumbai, both its most expensiveacquisitions.

    Has won 3G in all circles where it has 900 MHz spectrum

    Is the only operator to win spectrum in 6 circles in the 1969-1974 Mhz band: in Delhi,Kolkata, Himachal, Orissa, North East and Jammu & Kashmir

    Has won allCategory C circles forless than Rs 500 crores

    Claims to be the only operatorthat has pan India 3G capability in CDMA and among thetop 3 with highest coverage in WCDMA

    Says it will have minimum 3G networkCAPEX investment, and is 3G ReadyRCOM plans to strongly leverage its media, gaming, cinema and broadcasting businesses

    for 3G

    4. Aircel Has won spectrum in 13 circles forRs. 6499.46 crores, the least cost per circle

    Does not have spectrum in the expensive but high ARPU Delhi and Mumbai circles

    Its most expensive circles are: Karnataka (Rs. 1579.91 crores) and Rs. 1464.94 crores,followed by Andhra Pradesh atRs. 1373.14 crores

    It has spectrum in Andhra Pradesh, Karnataka, Tamil Nadu, Kolkata, Kerala, Punjab, UttarPradesh (East), West Bengal, Bihar, Orissa, Assam, North East and Jammu & Kashmir

  • 8/8/2019 Indian Telecom Sector Insights

    14/19

    Batch 2009-11 Management of Te7ecommunications Systems MBA (MS

    8

    9 FMS De7hi

    Ankit MS-10 Amartya Kundu MS-02 14

    Has spectrum in 7 circles in the 1974-1979 Mhz band: Andhra Pradesh, Tamil Nadu,Kerala, Punjab, West Bengal, Bihar, and Assam. This is the most circles any telecomoperator has in a single band.

    Has spectrum in the 1964-1969 Mhz band in Jammu & Kashmir

    5. Idea Cellular Has won spectrum in 11 circles forRs. 5768.59 crores, though it did not win in Delhi andMumbai

    Won spectrum in 11 circles: in Maharashtra, Gujarat, Andhra Pradesh, Kerala, Punjab,Haryana, Uttar Pradesh (E), Uttar Pradesh (W), Madhya Pradesh, Himachal Pradesh, andJammu & Kashmir

    Has won 5 circles in the 1969-1964Mhz band: Kerala, Punjab, Haryana, Madhya Pradeshand Jammu & Kashmir

    Has won 5 circles in the 1969-1974 Mhz band: Maharashtra, Andhra Pradesh, Uttar

    Pradesh (East), Uttar Pradesh (West) and Himachal Pradesh.

    Gujaratis the lone circle where Idea Cellular has spectrum in the 1974-1979 MHz band

    6. Vodafone Has spectrum in 9 circles for Rs. 11617.86 million, and has spent the second highestamountin these auctions

    Opted out of most Category C circles, and got Delhi and Mumbai Has spectrum in Delhi, Mumbai, Maharashtra, Gujarat, Tamil Nadu, Kolkata, Haryana,

    West Bengal and Uttar Pradesh (East)

    Doesnt have either Karnataka or Andhra Pradesh, so Vodafone Bangalore and Hyderabadcustomers will have to lookto othertelecom operators.

    7. Tata TeleservicesWill pay 5864.29 crores for spectrum in 9 circles

    Doesnt have spectrum in Delhi or Mumbai, so Tata Docomo customers will lose out

    Has spectrum in Maharashtra, Gujarat, Karnataka, Kerala, Punjab, Haryana, Uttar Pradesh(West), Rajasthan and Madhya Pradesh

    Spectrum is equitably distributed within bands three circles each for 1959-1964 Mhz,1969-1974 Mhz and 1974-1979 Mhz band

    8. S-Tel S-Tel won spectrum in 3 Circles forRs. 337.67 crores

    It has spectrum in Himachal Pradesh, Bihar and Orissa

  • 8/8/2019 Indian Telecom Sector Insights

    15/19

    Batch 2009-11 Management of Te@ecommunications Systems MBA (MS

    A

    B FMS De@hi

    Ankit MS-10 Amartya Kundu MS-02 15

    Surprisingly, S Tel did not try to get 3G spectrum in circles where it doesnt have licensefor 2G services. It has license to offer 2G services in Assam, Bihar, Himachal Pradesh,Jammu & Kashmir, North East, Orissa.

    9. MTNLThough it did not participate in the 3G Auction, MTNL will have to pay Rs. 6564 crores forspectrum in the two cities of Delhi and Mumbai. It is currently grappling with losses (Rs.1573.76 crores in Q4-2010), and a fairly low subscriber base of 3G customers only 348,000as of 31stMarch 2010, despite having launched services a year ago.

  • 8/8/2019 Indian Telecom Sector Insights

    16/19

    Batch 2009-11 Management of Telecommunications Systems MBA (MS), FMS Delhi

    Ankit MS -10 Amartya Kundu MS-02 16

    III. Who are the lead telecom operators in the country? What is their market share?What are their strengths to meet the competition? How do you see the

    competition/consolidation of the industry? Are there any barriers in e it?

    India is one of the biggest telecom markets in the world with 581.81 million users, whichaccording to the Industry is e pected to reach 1000 million by end of 2012. The total tele-density was recorded at 49.5 per cent. Thetelecom sector is one of the highest F I attractingsectors in India, and has recorded FDI inflows worth over US$ 8.8 bn between 2000 and2010. Major factors for the growth in the industry are low tariffs, low cost of handsets, liberalgovernment regulations, and increase in disposable income and change in consumer

    behaviour.

    In the future, penetration of telecom service will be done in rural area which in the currentsituation is a highly untapped market. In the future i.e. by 2012, rural telecom service

    penetration is e pected to increase to 40 per cent compared to 16.61 per cent as of now.

    Current revenue of Indian Telecom Industry is $ 30 bn and is projected to reach US$ 45bn by the end of 2012.

    In the present situation the key players in the Indian Telecom market are:

    y Bharat Sanchar Nigam Limited (BSNL)y Bharti Airtel Limitedy Reliance Communicationsy Vodafone Essary Idea Cellulary Aircel, andy Tata Teleservices.

    Share of wireless service providers as on January 31, 2010 (in per cent)

    The strengths of leading operators to meet the competition and consolidation of the

    industry:

    Below are the strengths of leading operators to meet the competition

    11.29

    C .23

    14.3113.36

    11.421 D .1

    14.97

    6.68

    14. C 8

    1.83D .26 1. D 7

    02468

    10121416

    MARKET SHARE

  • 8/8/2019 Indian Telecom Sector Insights

    17/19

    Batch 2009-11 Management of TeEecommunications Systems MBA (MS

    F

    G FMS DeEhi

    Ankit MS-10 Amartya Kundu MS-02 17

    Airtely VERY FOCUSED O N TELECOM Bharti Airtel is largely focused on the

    telecom, around 93 per cent ofthe total revenue comes from telecom

    y LEADERSHIP IN FAST GROWING CELLULAR SEGMENT: Airtel isholding leadershi p position in cellular market. Airtel is present in all fivesegments oftelecom industry.

    y PAN INDIA FOOTPRINT: Airtel offerthe most expansive roaming network.Letting you roam anywhere in India with its Pan-India presence, and trotacross the globe with InternationalRoaming spread in over 240 networks.

    y HIGH CSR (Corporate Social Responsibility): Airtel is one of the highestspenders in CSR. Airtel regularly does something or the other for benefit ofcommon people. For Ex :Marathon, Airtelicreate and many more.

    y THE ONLY OPERATOR IN INDIA OTHER THAN VSNL HAVINGINTERNATIONAL SUBMARINE CABLES: Airtel, the monopoly breakershattered the telecom monopoly in internationalLong Distance Space with thelaunch of International Submarine cable Network i2ijointly with SingaporeTelecommunications Ltd. In the year 2002. This has brought a Hugh value to

    the IPLC customers, giving them an option besides an incumbent carrier, toconnectto the outside world.

    y HIGH WORD TO MOUTH MARKETING: Today, Airtel has the biggest base of subscri bers and Airtel provides a quality service with highconnectivity and low cost. So, when a new person wants to take theconnection the first choice comes in his/her mind is Airtel because of thevisible users.

    RELIANCE COMMUNICATIONy As Reliance entered the market when things were not so stringent so the

    cost of entry was low as compared to other players.

    y Fast Activation Processy Excellent networky High presence in rural area.y Excellent connectivityy First operatorto provide CDMA technology to Indian consumers.y As Reliance is present in other sectors and is doing well, so it becomes

    easy forit create the brand value.

    BSNLy As it is government owned operator, it gets first priority in allocation of

    any new technology and doesnt have to go through rigid processes ofthegovernment.

    y High penetration in rural areas.y Competitive pricing policyy Provides continuous training, career advancement opportunities and a self-motivated work environmentto its employees.y Has a corporate culture of mutual respect and is an excellent service

    provider.

    y Because of its long term presence has a highest share in Wireline marketand is able to leverage on it for wireless service.

    VODAFONEy As Vodafone is MNC, so has the better work culture as compared to

    Indian companies because itis able to pull besttalent present.

  • 8/8/2019 Indian Telecom Sector Insights

    18/19

    Batch 2009-11 Management of TeHecommunications Systems MBA (MS

    I

    P FMS DeHhi

    Ankit MS-10 Amartya Kundu MS-02 18

    y Spends huge amount on advertising.y Low on costy Provides best value added servicesy Diversified geographical portfolio with strong mobile telecommunications

    operations in Europe, the Middle East, Africa, Asia Pacific and to someextentthe US.

    y Strong presence in cities.y Excellent network Infrastructure.y Worlds biggest mobile phone operator by revenue.

    IDEA CELLULARy Presence in telecom infrastructure so the cost of spreading the network is

    low compared to other players.

    y Attractive existing footprinty Originallicence in seven ofthe Established circles, providing incumbency

    advantages.

    y Market leader in two of the circles i.e. Maharashtra and Uttar Pradeshestablished positions in remainder ofthe Established circles.

    y Strong distribution channely A national brandy High quality network structure.

    Competition/Consolidation of the Telecom Industry

    y The government extends full supportto industry through reform processes.y Policies are in place to safeguard the interest of service providers as well as those of

    consumers.

    y Intensive competition in the country has made it possible for service providers to offerservices with lowest fare in the world, profitably.

    y Many new handsets have been launched.y Presence of skilled labour pool.y Rapidly developing robusttelecom infrastructure.y Increasing disposable income of consumers.y Increasing demand due to changing lifestyles and growing attraction for mobiles with

    new features.

    y Various value added service providers and content developers are presentin India.y Low tele-density offers huge future potential.y Growing affordability and lifetime schemes have created a market atthe bottom ofthe

    pyramid.

    y Spectrum Sharing by service providers as nobody has a pan Indian presence.y Acquisitions are low probability as spectrum allocated to company acquired, willrevert backto governmentLooking at the above mentioned points it is clearly visible that India is best to investmarket and in the future it is possible that some more mobile phone operators will enterthe market and the competition will go to its extreme level, but still the market will be

    profitable.

  • 8/8/2019 Indian Telecom Sector Insights

    19/19