1.1) Introduction:

The telecom network in India is the fifth largest network in the world meeting up with global

standards. Presently, the Indian telecom industry is currently slated to an estimated contribution

of nearly 1% to India’s GDP.

The Indian Telecommunications network with 110.01 million connections is the fifth largest in

the world and the second largest among the emerging economies of Asia. Today, it is the fastest

growing market in the world and represents unique opportunities for U.S. companies in the

stagnant global scenario. The total subscriber base, which has grown by 40% in 2005, is

expected to reach 250 million in 2007.

According to Broadband Policy 2004, Government of India aims at 9 million broadband connections and

18 million internet connections by 2007. The wireless subscriber base has jumped from 33.69 million in

2004 to 62.57 million in FY2004- 2005. In the last 3 years, two out of every three new telephone

subscribers were wireless subscribers. Consequently, wireless now accounts for 54.6% of the total

telephone subscriber base, as compared to only 40% in 2003. Wireless subscriber growth is expected to

bypass 2.5 million new subscribers per month by 2007. The wireless technologies currently in use are

Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). There are

primarily 9 GSM and 5 CDMA operators providing mobile services in 19 telecom circles and 4 metro

cities, covering 2000 towns across the country.

1.2) Evolution of the Industry - Important Milestones:

Year Description

1851 First operational land lines were laid by the govt. 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 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 Communication

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

(Source: The Indian Telecom Industry by consulting club, IIM Calcutta)

1.3) Major Players:

There are three types of players in telecom services:

State owned companies (BSNL and MTNL)

Private Indian owned companies (Reliance Infocomm, Tata Teleservices)

Foreign invested companies (Vodafone-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL

Mobile, Spice Communications)

India's mobile telecom sector is one of the fastest growing sectors. Unlike in the 1990s when the mobile

phone was an elitist product, mobile operators now tap a mass market with mass marketing techniques.

"Unified licensing" rules allow basic and mobile operators into each other’s territory, and have ushered

in perhaps the final phase of industry consolidation.

It seems that only companies with deep pockets can effectively compete as primary operators mobile

markets. Economies of scale, scope, and end-to-end presence in long-distance as well as local telecom,

are desirable.

There are, besides, new challenges. Operators have to find new growth drivers for the wire line

business. There are problems of getting broadband to take off, of technology choice, of when to

introduce new technologies, and of developing a viable business model in an era of convergence.

1.4) Growth of mobile technology:

India has the fastest growing mobile markets in the world. The mobile services were commercially

launched in August 1995 in India. In the initial 5-6 years the average monthly subscribers additions were

around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002 stood at 10.5

millions. However, after the number of proactive initiatives taken by regulator and licensor, the monthly

subscriber additions increased to around 2 million per month in the year 2003-04 and 2004-05.

Although mobile telephones followed the New Telecom Policy 1994, growth was tardy in the early years

because of the high price of hand sets as well as the high tariff structure of mobile telephones. The New

Telecom Policy in 1999, the industry heralded several pro consumer initiatives. Mobile subscriber

additions started picking up. The number of mobile phones added throughout the country in 2003 was

16 million, followed by 22 millions in 2004, 32 million in 2005 and 65 million in 2006. The only countries

with more mobile phones than India with 156.31 million mobile phones are China – 408 million and USA

– 170 million.

India has opted for the use of both the GSM (global system for mobile communications) and CDMA

(code-division multiple access) technologies in the mobile sector.

The mobile tariffs in India have also become lowest in the world. A new mobile connection can be

activated with a monthly commitment of US$ 5 only. In 2005 alone 32 million handsets were sold in

India. The data reveals the real potential for growth of the Indian mobile market.

1.5) Cellular Service Providers:

As on Apr 2007 India has 167 million mobile phone subscribers. Out of this 125 million are GSM users

and 41 million CDMA users. BSNL, Bharti Airtel, Hutch, Idea, Aircel, Spice and MTNL are the main GSM

providers in India. Reliance Communications and Tata Indicom are the main CDMA providers in India.

Bharti Airtel

Airtel is providing cellular services in Delhi, Mumbai, Kolkata, Chennai, Andhra Pradesh, Gujarat,

Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra,

Goa, Orissa, Punjab, Rajasthan, Tamil Nadu, UP and West Bengal. Airtel is the No.1 cellular service

provider in India using GSM technology. Airtel has 23% market share in India with a total subscriber base

of 38 million.

Reliance Communications

Reliance has both CDMA and GSM networks and total subscriber base of 29 million or 17% market

share. It has GSM network in Assam, Bihar, Himachal Pradesh, Kolkata, North East, Madhya Pradesh,

Orissa and West Bengal. Reliance has CDMA networks in other states and cities.

Bharat Sanchar Nigam Limited (BSNL)

BSNL is a state owned telecom company which has GSM presence in almost every cities and towns.

BSNL has 27 million subscribers with a market share of 16%.

Vodafone

Vodafone is another emerging GSM provider in India with coverage in Kerala, Mumbai, Delhi, Kolkata,

Chennai, Gujarat, Andhra Pradesh, Karnataka and Punjab with a total subscriber base of 27 million.

Tata Indicom

Tata Indicom is a main CDMA provider in India with 16 million subscribers all over India. Tata Indicom

has presence in almost every state and cities in India.

2.1) Introduction:

Vodafone is a mobile network operator headquartered in Berkshire, England, UK. It is the

largest mobile telecommunications network company in the world by turnover and has a market

value of about £75 billion (August 2008). Vodafone currently has operations in 25 countries and

partner networks in a further 42 countries.

The name Vodafone comes from Vo ice da ta fone , chosen by the company to "reflect the

provision of voice and data services over mobile phones."

As of 2006 Vodafone had an estimated 260 million customers in 25 markets across 5 continents.

On this measure, it is the second largest mobile telecom group in the world behind China Mobile.

In the United States, Vodafone owns 45% of Verizon Wireless.

2.2) Mission:

Vodafone is primarily a user of technology rather than a developer of it, and this fact is reflected in the

emphasis of our work program on enabling new applications of mobile communications, using new

technology for new services, research for improving operational efficiency and quality of our networks,

and providing technology vision and leadership that can contribute directly to business decisions.

2.3) Vision:

Our Vision is to be the world’s mobile communication leader – enriching customers’ lives, helping

individuals, businesses and Communities be more connected in a mobile world.

2.4) History:

In 1982 Racal Electronics plc's subsidiary Racal Strategic Radio Ltd. won one of two UK

cellular telephone network licenses. The network, known as Racal Vodafone was 80% owned by

Racal, with Millicom and the Hambros Technology Trust owning 15% and 5% respectively.

Vodafone was launched on 1 January 1985. Racal Strategic Radio was renamed Racal

Telecommunications Group Limited in 1985. On 29 December 1986 Racal Electronics bought

out the minority shareholders of Vodafone for GB£110 million.

In September 1988 the company was again renamed Racal Telecom and on 26 October 1988

Racal Electronics floated 20% of the company. The flotation valued Racal Telecom at GB£1.7

billion On 16 September 1991 Racal Telecom was demerged from Racal Electronics as

Vodafone Group.

In July 1996 Vodafone acquired the two thirds of Talkland it did not already own for £30.6

million. On 19 November 1996, in a defensive move, Vodafone purchased Peoples Phone for

£77 million, a 181 store chain whose customers were overwhelmingly using Vodafone's

network. In a similar move the company acquired the 80% of Astec Communications that it did

not own, a service provider with 21 stores.

In 1997 Vodafone introduced its Speech mark logo, as it is a quotation mark in a circle; the O's

in the Vodafone logotype are opening and closing quotation marks, suggesting conversation.

On 29 June 1999 Vodafone completed its purchase of AirTouch Communications, Inc. and

changed its name to Vodafone Airtouch plc. Trading of the new company commenced on 30

June 1999. To approve the merger, Vodafone sold its 17.2% stake in E-Plus Mobilfunk. The

acquisition gave Vodafone a 35% share of Mannesmann, owner of the largest German mobile

network.

Vodafone’s original logo used until the introduction of the speech mark logo in 1998.

On 21 September 1999 Vodafone agreed to merge its U.S. wireless assets with those of Bell

Atlantic Corp to form Verizon Wireless. The merger was completed on 4 April 2000.

In November 1999 Vodafone made an unsolicited bid for Mannesmann, which was rejected.

Vodafone's interest in Mannesmann had been increased by the latter's purchase of Orange, the

UK mobile operator. Chris Gent would later say Mannesmann's move into the UK broke a

"gentleman's agreement" not to compete in each other's home territory. The hostile takeover

provoked strong protest in Germany and a "titanic struggle" which saw Mannesmann resists

Vodafone's efforts. However, on 3 February 2000 the Mannesmann board agreed to an increased

offer of £112bn, then the largest corporate merger ever. The EU approved the merger in April

2000. The conglomerate was subsequently broken up and all manufacturing related operations

sold off.

On 28 July 2000 the Company reverted to its former name, Vodafone Group Plc. In April 2001 the first

3G voice call was made on Vodafone United Kingdom's 3G network. In 2001 the Company took over

Eircell, then part of eircom in Ireland, and rebranded it as Vodafone Ireland. It then went on to acquire

Japan's third-largest mobile operator J-Phone, which had introduced camera phones first in Japan.

On 17 December 2001 Vodafone introduced the concept of "Partner Networks" by signing TDC

Mobil of Denmark. The new concept involved the introduction of Vodafone international

services to the local market, without the need of investment by Vodafone. The concept would be

used to extend the Vodafone brand and services into markets where it does not have stakes in

local operators. Vodafone services would be marketed under the dual-brand scheme, where the

Vodafone brand is added at the end of the local brand. (i.e., TDC Mobil-Vodafone etc.)

In February 2002 Finland was added into the mobile community, as Radiolinja is signed as a

Partner Network. Radiolinja later changed its named to Elisa. Later that year the Company

rebranded Japan's J-sky mobile internet service as Vodafone live! and on 3 December 2002 the

Vodafone brand was introduced in the Estonian market with signing of a Partner Network

Agreement with Radiolinja (Eesti). Radiolinja (Eesti) later changed its name to Elisa.

On 7 January 2003 the Company signed a group-wide Partner agreement with mobilkom Austria.

As a result, Austria, Croatia, and Slovenia were added to the community. In April 2003 Og

Vodafone was introduced in the Icelandic market and in May 2003 Vodafone Italy (Omnitel

Pronto-Italia) was rebranded Vodafone Italy. On 21 July 2003 Lithuania was added to the

community, with the signing of a Partner Network agreement with Bitė.

In February 2004 Vodafone signed a Partner Network Agreement with Luxembourg's LuxGSM

and a Partner Network Agreement with Cyta of Cyprus. Cyta agreed to rename its mobile phone

operations to Cytamobile-Vodafone. In April 2004 the Company purchased Singlepoint airtime

provider from John Caudwell (Caudwell Group) and approx 1.5million customers onto its base

for £405million, adding sites in Stoke on Trent (England) to existing sites in Newbury (HQ),

Birmingham, Warrington and Banbury. In November 2004 Vodafone introduced 3G services

into Europe.

In June 2005 the Company increased its participation in Romania's Connex to 99% and also

bought the Czech mobile operator Oskar. On 1 July 2005 Oskar of the Czech Republic was

rebranded as Oskar-Vodafone. Later that year on 17 October 2005 Vodafone Portugal launched a

revised logo, using new text designed by Dalton Maag, and a 3D version of the Speech mark

logo, but still retaining a red background and white writing (or vice versa). Also, various

operating companies started to drop the use of the SIM card pattern in the company logo. (The

rebranding of Oskar-Vodafone and Connex-Vodafone also does not use the SIM card pattern.) A

custom typeface by Dalton Maag (based on their font family InterFace) formed part of the new

identity.

On 28 October 2005 Connex in Romania was rebranded as Connex-Vodafone and on 31 October

2005 the Company reached an agreement to sell Vodafone Sweden to Telenor for approximately

€1 billion. After the sale, Vodafone Sweden became a Partner Network. In December 2005

Vodafone won an auction to buy Turkey's second-largest mobile phone company, Telsim, for

$4.5 billion. In December 2005 Vodafone Spain became the second member of the group to

adopt the revised logo: it was phased in over the following six months in other countries.

In 2006 the Company rebranded its Stoke-on-Trent site as Stoke Premier Centre, a centre of

expertise for the company dealing with Customer Care for its higher value customers, technical

support, sales and credit control. All cancellations and upgrades started to be dealt with by this

call centre. On 5 January 2006 Vodafone announced the completion of the sale of Vodafone

Sweden to Telenor. On February 2006 the Company closed its Birmingham Call Centre. In 1

February 2006 Oskar Vodafone became

Vodafone Czech Republic, adopting the revised logo and on 22 February 2006 the Company

announced that it was extending its footprint to Bulgaria with the signing of Partner Network

Agreement with Mobiltel, which is part of mobilkom Austria group.

On 12 March 2006 former chief, Sir Christopher Gent, who was appointed the honorary post

Chairman for Life in 2003, quits following rumours of boardroom rifts. In April 2006 the

Company announced that it has signed an extension to its Partner Network Agreement with

BITE Group, enabling its Latvian subsidiary "BITE Latvija" to become the latest member of

Vodafone's global partner community. Also in April 2006 Vodafone Sweden changed its name

to Telenor Sverige AB and Connex-Vodafone became Vodafone Romania, also adopting the

new logo. On 30 May 2006 Vodafone announced the biggest loss in British corporate history

(£14.9 billion) and plans to cut 400 jobs; it reported one-off costs of £23.5 billion due to the

revaluation of its Mannesmann subsidiary. On 24 July 2006 the respected head of Vodafone

Europe, Bill Morrow, quit unexpectedly and on 25 August 2006 the Company announced the

sale of its 25% stake in Belgium's Proximus for €2 billion. After the deal, Proximus was still part

of the community as a Partner Network. On 5 October 2006 Vodafone announced the first single

brand partnership with Og Vodafone which would operate under the name Vodafone Iceland and

on 19 December 2006 the Company announced the sale of its 25% stake in Switzerland's

Swisscom for CHF4.25 billion (£1.8 billion). After the deal, Swisscom would still be part of the

community as a Partner Network. Finally in December 2006 the Company completed the

acquisition of Aspective, an enterprise applications systems integrator in the UK, signaling

Vodafone's intent to grow a significant presence and revenues in the ICT marketplace.

Early in January 2007 Telsim in Turkey adopted Vodafone dual branding as Telsim Vodafone

and on 1 April 2007 Telsim Vodafone Turkey dropped its original brand and became Vodafone

Turkey. On 1 May 2007 Vodafone added Jersey and Guernsey to the community, as Airtel was

signed as Partner Network in both crown dependencies. In June 2007 the Vodafone live! Mobile

Internet portal in the UK was relaunched. Front page was now charged for and previously

"bundled" data allowance was removed from existing contract terms. All users were given access

to the "full" web rather than a Walled Garden and Vodafone became the first mobile network to

focus an entire media campaign on its newly launched mobile Internet portal in the UK. On 1

August 2007 Vodafone Portugal launched Vodafone Messenger, a service with Windows Live

Messenger and Yahoo! Messenger.

On 17 April 2008 Vodafone extended its footprint to Serbia as VIP mobile was added to the

community as a Partner Network and on 20 May 2008 the Company added VIP Operator as a

Partner Network thereby extending the global footprint to Macedonia. In May 2008 Kall of the

Faroe Islands rebranded as Vodafone Faroe Islands.

On 30 October 2008, the company announced a strategic, non-equity partnership with MTS

group of Russia. The agreement adds Russia, Armenia, Turkmenistan, Ukraine, and Uzbekistan

to the group footprint.

2.5) VODAFONE ESSAR

2.5.1) Introduction:

Vodafone Essar, previously Hutchison Essar is a cellular operator in India that covers 21 telecom

circles in India. Despite the official name being Vodafone Essar, its products are simply branded

Vodafone. It offers both prepaid and postpaid GSM cellular phone coverage throughout India

and is especially strong in the major metros.

Vodafone Essar provides 2G services based on 900 MHz and 1800 MHz digital GSM

technology, offering voice and data services in 22 of the country's 23 licence areas.

2.5.2) Ownership:

Vodafone Essar is owned by Vodafone 52%, Essar Group 33%, and other Indian nationals, 15%.

On February 11, 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li Ka Shing

Holdings in Hutch-Essar for US$11.1 billion, pipping Reliance Communications, Hinduja Group, and Essar

Group, which is the owner of the remaining 33%. The whole company was valued at USD 18.8 billion.

The transaction closed on May 8, 2007.

2.6) Previous brands:

In December 2006, Hutch Essar re-launched the "Hutch" brand nationwide, consolidating its

services under a single identity. The Company entered into agreement with NTT DoCoMo to

launch i-mode mobile Internet service in India during 2007.

The company used to be named Hutchison Essar, reflecting the name of its previous owner,

Hutchison. However, the brand was marketed as Hutch. After getting the necessary government

approvals with regards to the acquisition of a majority by the Vodafone Group, the company was

rebranded as Vodafone Essar. The marketing brand was officially changed to Vodafone on 20

September 2007.

On September 20, 2007 Hutch becomes Vodafone in one of the biggest brand transition

exercises in recent times.

Vodafone Essar is spending somewhere in the region of Rs 250 crores on this high-profile

transition being unveiled today. Along with the transition, cheap cell phones have been launched

in the Indian market under the Vodafone brand. There are plans to launch co-branded handsets

sourced from global vendors as well.

A popular daily quoted a Vodafone Essar director as saying that "the objective is to leverage

Vodafone Group's global scale in bringing millions of low-cost handsets from across-the-world

into India."

While there is no revealing the prices of the low-cost Vodafone handsets, the industry is abuzz

that prices might start at Rs 666, undercutting Reliance Communications' much-hyped 'Rang

Barse' with cheap handsets beginning at Rs 777.

Meanwhile, Vodafone Essar sources said there would be no discounts or subsidized handset

offers -- rather handset-bundled schemes for customers.

Incidentally, China's ZTE, which is looking to set-up a manufacturing unit in the country, is

expected to provide several Vodafone handsets in India. Earlier this year, Vodafone penned a

global low-cost handset procurement deal with ZTE