A Study Of Telecom Industry

A STUDY OF TELECOM INDUSTRY

Presented by:

akash AgrawalMonu

Sagar rawalaniVArsha mauryaAnmol rastogi

Telecommunication is the exchange of information over significant distances by electronic means.

Telecom stands as one of the most essential elements of the business world in terms of “Connecting the World”.

INTRODUCTION

Historically telecom network in India was owned and managed by Government as it is considered as a strategic service. At that time the Telecom industry was monopoly in nature.

PRE LIBERALIZATION

Reforms in telecom sector began in 1980 with telecom manufacturing being opened for private sector followed by NATIONAL TELECOM POLICY (NTP) in 1994 and 1999.

In 1990 telecom revolution in many countries which resulted in better quality of service with lower tariff rates force Indian policy makers to open up telecom sector for private players.

REFORMS IN TELECOM SECTOR

3 phases

Phase1

Phase 2

Phases 3

PHASES OF REFORM

The decade of 1980's saw private sector being allowed in telecommunications equipment manufacturing.

Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were formed.

A telecom commission was set up to

give focus to telecommunications policy formation

PHASE 1

In 1990s, telecommunication sector also benefited from the general opening up of the economy.

NTP 1994 was the first attempt to give a comprehensive roadmap for the Indian telecommunications sector.

Availability of telephones on demand (targeted by 1997) .

Universal service covering all villages and one pco per 500 persons in urban areas at the earliest (targeted to be achieved by 1997) .

Telecom services at affordable and reasonable prices .

PHASE 2

NTP 1999 brought in the third generations of reforms in the Indian Telecommunications sector.

FDI increase from 49% to 74%.

Internet telephony in 2002.

Launch of CDMA technology.

3-6 operator in each circle.

Intra circle merger guidelines.

Broadband policy 2004.

PHASE 3

Indian Governmen

t Bodies

Independent Bodies

INDIAN TELECOM INDUSTRY FRAMEWORK

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

INDIAN GOVERNMENT BODIES

Wireless Planning and Coordination (WPC)

Department of Telecommunications

Telecom Commission

Group on Telecom and IT (GoT-IT)

Handle spectrum allocation & management

DoT – Licensee and frequency management for telecom

Exclusive policy making body of DoT

Handles ad hoc issues of the telecom industry

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.

Independent regulatory body

Telecom disputes settlement body

INDEPENDENT BODIES

Telecom Regulatory Authority of India (TRAI)

Telecom Disputes Settlement and Appellate Tribunal (TDSAT)

Telecom Regulatory Authority of India

Abbreviation TRAI

Formation 1997

Legal statusCreated by Telecom Regulatory Authority of India Act, 1997

Purpose/focus Independent regulator

HeadquartersMahanagar Doorsanchar Bhawan, Jawaharlal Nehru Marg, New Delhi 110 002

Region served India

Chairman J. S. Sarma

Website trai.gov.in/Default.asp

TELECOM COMPANY

INFO

TYPE Public

INDUSTRY Telecommunications

FOUNDED 2004

FOUNDER(S) Dhirubha Ambani

HEADQUARTERS Navi Mumbai, Maharashtra, India

AREA SERVED India

KEY PEOPLE Hasit Shukla, (President)

PRODUCTSFixed-line and mobile telephony, broadband and fixed-line internet services, digital television, IT and network service.

EMPLOYEES 28,065 (2010)

PARENT Reliance Group

WEBSITE rcom.co.in

TYPEPublic company(BSE: 532454 NSE: BHARTIARTL)

INDUSTRYTelecommunications

FOUNDED7 July 1995 (1995-07-07)

FOUNDER(S)Sunil Bharti Mittal

HEADQUARTERSNew Delhi, India

KEY PEOPLE Sunil Bharti Mittal(Chairman) and (MD)

PRODUCTS Fixed-line and mobile telephony, broadband and fixed-line internet services, digital television, IPTV and network services

EMPLOYEES 22,858 (June 2011)

WEBSITE airtel.in

TYPE Public

TRADED ASBSE: 500483NSE: TATACOMMNYSE: TCL

INDUSTRY Telecommunications network

FOUNDED 1986

FOUNDER(S) JRD Tata

HEADQUARTERS Mumbai, Maharashtra, India

KEY PEOPLE Ratan Tata (Chairman)

EMPLOYEES 6,457 (2010)

PARENT Tata Group

WEBSITE tatacommunications.com

TYPEPUBLICBSE: 532822NSE: IDEA

INDUSTRY Telecommunications

FOUNDED 1995

HEADQUARTERS Santacruz East, Mumbai, India

KEY PEOPLEKumar Mangalam Birla(Chairman)

PRODUCTSMobile telephony, WirelessInternet service

EMPLOYEES 6,481 (2010)

PARENTAditya Birla Group (49.05%)Axiata Group Berhad (15%)Providence Equity (10.6%)

WEBSITE ideacellular.com

TYPE State-owned enterprise

INDUSTRY Telecommunications

FOUNDED 19th century, incorporated 2000

HEADQUARTERS New Delhi, India

KEY PEOPLERakesh Kumar Upadhyay(CMD)

PRODUCTSFixed line and mobile telephony, Internetservices, digital television

EMPLOYEES 281,635 (March 2011)

WEBSITE bsnl.co.in

MAHANAGAR TELEPHONE NIGAM LIMITED

TYPEA publicly-listed state-owned enterprise

TRADED ASNSE: MTNLBSE: 500108NYSE: MTE

INDUSTRY Telecommunications

FOUNDED 1986

HEADQUARTERS New Delhi, India

KEY PEOPLEKuldip Singh(Chairman & MD)

PRODUCTSFixed-line and mobile telephony, broadband and fixed-line internet services, digital television

EMPLOYEES 45,000 (2010)

WEBSITE mtnl.net.in

WORLD TELECOM EVOLUTION

Cheap Calling ServicesNetwork CoverageCustomer CareDTH Programme PackagesInternet Speeds offeredNumber Series offeredPush mail services

VALUE PARAMETERS

Audio ConferencingVideo conferencingPrepaid MobilePostpaid MobileHandsetsInternetHome PhoneGlobal Calling

VALUE OFFERINGS

TELECOM NETWORK STATISTICS

WORLDWIDE

Rank Country No. of Phones % of Population

1 95,23,10,000 712 86,57,08,379 71.593 32,75,77,529 103.94 22,74,00,000 118.25 22,42,60,000 154.56 16,82,64,000 73.17 12,12,46,700 95.18 10,88,94,518 65.49

10,70,00,000 130.110 Nigeria 9,05,83,306 64.7

TOP 10 COUNTRIES IN TERMS OF MOBILE PHONE USAGE

LIST OF CELLULAR MOBILE (GSM & CDMA) SERVICE PROVIDERS

CURRENTLY PROVIDING SERVICE [AS ON 30TH JUNE 2011]

NUMBER OF PCOs

Trends in Telephone subscribers and Teledensity in India

MARKET SHARE - RURAL & URBAN

TRENDS IN INTERNET/BROADBAND SUBSCRIPTION

WIRELESS SUBSCRIPTION: GSM VS CDMA

COMPOSITION OF TELEPHONE SUBSCRIBERS

MARKET SHARE OF TOP 10 INTERNET SERVICE PROVIDER

(ISP)

SERVICE AREA WISE ACCESS (WIRELESS +WIRELINE)

SUBSCRIBERS

SWOT ANALYSIS OF

INDIAN TELECOM INDUSTRY

STRENGTHS

Huge Customer potential : *) Wireless Teledensity increased from 67.98 to

71.11. *) Number of Broadband subscribers increased

from 11.89 million at the end of Mar-11 to 12.35 million at the end of Jun-11, registering a quarterly growth of 3.89% and Y-O-Y growth of 30.37%.

High Growth Rate: *) The Rural Wireless subscribers increased

from 273.54 million at the end of Mar-11 to 289.57 million at the end of Jun-11..

*)Allowed FDI limit ranging from 74% to 100%.High return on Investment:

*)Easier to create economies of scale thereby increasing return on investment.

Liberalization efforts by Govt.:*)The share of private sector in total

telephone connections is now 84.33% as per the latest statistics available for June 2010 as against 5% in 1999.

Lower capital expenditure:*)The Indian telecom market is a high density

area, which means more population per tower. This means lower capital expenditure cost.

WEAKNESS

• Poor Telecommunication Infrastructure Result : Large number of call drops.• Late adopters of New Technology

India will be among the last countries in the world to get access to 3G technology. Some estimates suggest that nearly 132 countries across the world already have 3G technology and mobile services in one form or the other.

• Most competitive market▫10 to 12 companies offer mobile services in

most parts of India, globally, the average is 4.

•A market strongly regulated by Government.

•Difficult to enter because of requirement of huge financial resources.

•Wireless business segment is growing faster than wire line and more demand is coming for pre-paid services.

OPPORTUNITIES

4G Telecom services and 5G services. Value added Services (VAS)

Value added services like M-Commerce (Mobile banking, Mobile Ticketing , M-Marketing, Special Information, Ring tones, etc. offer venues of additional revenue.

Boost to Telecom Manufacturing Companies: Production of telecom equipments in value terms has increased

from Rs. 412700 million (2007-09) to Rs.488000 million during 2008-09 and expected to increase to Rs. 575840 million during 2011-12.

Telecom Equipment Exports: Projected teledensity is 1 billion, 84% of population by 2012. the

current teledensity is 73.97%.

Providing fibre Connectivity to 2,50,000 village panchayat by 2012.

More scope in content related services, since the consumer is influenced by local culture like Baisakhi, Chhath Puja, religious festivals like Diwali, Chrismas etc., National festivals like Independence Day etc.

THREATS

MORE QUALITY SERVICE:Mobile Number Portability forced the Service

provider to improve their quality to avoid losing subscribers.

TRAI intentions of rolling out 4G or the fourth-generation technology, known as the ultra-broadband in 2-3 years raising fears rendering 3G services somewhat obsolete.

• DECLINING ARPU (AVERAGE REVENUE PER USER):▫ Telecom companies price wars like per-second

billing which is deflating revenues and making sure the ‘survival of the fittest’.

▫FEAR OF LOOSING LANDLINE CUSTOMERS:

Wireline subscriber base declined from 34.73 million at the end of Mar-11 to 34.29 million at the end of Jun-11 with

Indian Telecom market is one of the fastest growing markets in the world.

With 900 million wireless & landline connections (July 2011), Indian telecom has become the second largest network in the world after China.

Bharti airtel is the leading operator with 169.19 million wireless subscribers at the end of Jun-11, followed by Reliance (143.27 million) and Vodafone (141.52 million).

The share of private sector in total telephone is about 85.62% as on June 2011.

CURRENT SCENARIO IN TELECOM INDUSTRY

Contribution of telecom sector in terms of revenue is 2.1 % of GDP as compared to 2.8% in developed economies.

About 18 million connections are being added every month.

Wireless telephones are increasing at faster rate.

The share of wireless telephones as on June, 2011 is above 96% of the total phones.