Overview of Telecom Industry

8/8/2019 Overview of Telecom Industry

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Overview Of Telecom Industry

Indian Telecom sector, like any other industrial sector inthe country, has gone through many phases of growthand diversification. Starting from telegraphic andtelephonic systems in the 19th century, the field oftelephonic communication has now expanded to make

use of advanced technologies like GSM, CDMA, andWLL to the great 3G Technology in mobile phones. Dayby day, both the Public Players and the Private Playersare putting in their resources and efforts to improve the

telecommunication technology so as to give themaximum to their customers.


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Classification

The Indian telecom sector can be broadlyclassified into Fixed Line Telephony and mobiletelephony. The major players of the telecomsector are experiencing a fierce competition in

both the segments. The major players likeBSNL, MTNL, VSNL in the fixed line and Airtel,Hutch, Idea, Tata, Reliance in the mobilesegment are coming up with new tariffs and

discount schemes to gain the competitiveadvantage. The Public Players and the PrivatePlayers share the fixed line and the mobilesegments. Currently the Public Players havemore than 60% of the market share.


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Market share


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Market shares of public and Private Players

Both fixed line and mobile segments serve the basic needs of local calls, long

distance calls and the international calls, with the provision of broadbandservices in the fixed line segment and GPRS in the mobile arena. Traditionaltelephones have been replaced by the codeless and the wirelessinstruments. Mobile phone providers have also come up with GPRS-enabledmultimedia messaging, Internet surfing, and mobile-commerce. The much-awaited 3G mobile technology is soon going to enter the Indian telecommarket. The GSM, CDMA, WLL service providers are all upgradingthemselves to provide 3G mobile services.

Along with improvement in telecom services, there is also an improvement inmanufacturing. In the beginning, there were only the Siemens handsets inIndia but now a whole series of new handsets, such as Nokia's latest N-series, Sony Ericsson's W-series, Motorola's PDA phones, etc. have comeup. Touch screen and advanced technological handsets are gainingpopularity. Radio services have also been incorporated in the mobilehandsets, along with other applications like high storage memory,multimedia applications, multimedia games, MP3 Players, video generators,Camera's, etc. The value added services provided by the mobile serviceoperators contribute more than 10% of the total revenue.


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The leading cellular service providers have the

following number of subscribers:

Service Provider No. of CDMA Subscribers No. of GSM Subscribers

Reliance 2.75 crores 38.76 lakhs

Tata 1.07 crores

Airtel 3.37 croresMTNL 24.98 lakhs

BSNL 2.44 crores

Hutch 2.44 croresIdea 1.3 crores

Spice 25.56 lakhs

BPL 10.62 lakhs

Aircel 48 lakhs


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Bharti Airtel has the largest customer base with

31% market share, followed by Hutch and BSNLwith each holding 22% market share.

The 2007 budget has brought further relief to thecustomers with the reduction in the tariffs, both local

and long distance, and with slashing down theroaming rentals. This is likely to lead to even morepeople going for cellular services and more andmore use of the value added services. However,landline telephony is likely to remain popular, too, in

the foreseeable future. MTNL, the largest landlineservice provider, has recently taken some boldinitiatives to retain its market share and, if possible,expand it.


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Fixed Line Telephony

Fixed Line Telephony can be further categorized as fixedwire line telephony and fixed wireless telephony (knownas WLL (F)). Fixed Line Telephony provides servicessuch as local calls and long distance calls- national and

international. The Government of India is now takingactions to convert all national long distance calls to localcalls. In this regard, Public Players have already startedtheir 1Rs. call service. In India at present, fixed linetelephone numbers are of 8 digits, (initially 5 and 7 digits).The sector is in the process of converting all fixed line

numbers to 10 digits. Both Public Players and PrivatePlayers are competing hard to capture more and moremarket share. MTNL and BSNL are the leading publicsector players, whereas Reliance Infocomm, TataTeleservices and Touchtel are the leading private sectorplayers.


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Market shares of public and

Private Players


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During financial year 2005-06, Fixed LineTelephony segment in Indian telecom sector

witnessed a growth of 8.64%. The totalsubscriber base of fixed lines including WLL (F)touched the figure of 50.2 million and wasshowing an upward trend.

Subscriber trend ofFixed Line Telephony inIndian market


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Public Players

The Government of India has played a major role in thedevelopment of telecommunication sector. Established in 1985,Department of Telecommunications (DOT) was the first governmentdivision to provide domestic and long-distance telephone service inIndia. In 1986, DOT created Mahanagar Telephone Nigam Limited(MTNL) for telephone services in metropolitan cities and VideshSanchar Nigam Limited (VSNL) for international telecommunicationsas its wholly owned subsidiaries. Later on, in 1997 TelecomRegulatory Authority of India was formed. DOT has now become acorporation named BSNL.

Along with Fixed Line Telephony, Public Players also provide

Internet Services like broadband, Tri Band service, dial up, pre paidand post paid Internet, Wi-Fi, etc.


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Growth of Public Players in


In India, Public Players in Fixed Line

Telephony are dominating the telecom

market with 82% market share. MTNL

(providing services in Delhi and Mumbai)

and BSNL (providing services in the rest of

India) are the two Public Players in the

country.


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Public Players are in the process of expanding their networks. They are

focusing on providing services to the interiors of the country.

Financial Year Subscriber Base

(in millions)

Growth

(over preceding FY)

2001-02 37.83 1.66%

2002-03 40.53 7.13%

2003-04 40.47 -0.14%

2004-05 41.10 1.55%

2005-06 41.38 0.68%

Growth trend of Public Players of Indianfixed line telephones


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Private Players

Many Private Players have entered Fixed Line Telephony. PrivatePlayers have brought WLL (F) Fixed Line Telephony to Indiantelecom sector. They are also providing Internet Services likebroadband, dial-up, pre paid and post paid Internet, Wi-Fi, etc.

Touchtel, Reliance Infocomm, Tata Teleservices, Shyam TelelinkLtd (Rajasthan), HFCL Infotel Ltd. (Punjab), etc. are leading PrivatePlayers in Indian Fixed Line Telephony.

Growth of Private Players

Private Players have shown a high growth rate, adding more andmore customers every year, taking the total subscriber base to 8.79million.


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Growth trend of Private Players of Indian

fixed line telephones


(in millions)

Growth

(over preceding

FY)

2001-02 0.58 1.32%2002-03 0.95 63%

2003-04 2.36 148.4%

2004-05 5.09 115.6%2005-06 8.79 72.6%

Private Players are expanding their networks providing more coverage areas.

They are offering special rentals and tariff plans to capture a larger customer

base


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Private Players Subscribers

Private Players are providing services to the whole ofIndia. The companies are serving both urban and ruralareas. Tata Teleservices, HFCL, Shyam, Reliance,

Touchtel are the leading Private Players in fixed linesegment.

With more than 80% share with Public Players, PrivatePlayers are now striving hard to capture more and

more customers. Since 1997, the year they enteredFixed Line Telephony, they have been increasing theirmarket share every year.


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Public Players Subscribers

The two Public Players, Mahanagar TelephoneNigam Limited (MTNL) and Bharat SancharNigam Limited (BSNL), are providing services to

the whole of India. The companies are servingboth urban and rural areas. MTNL is providingservices to two metropolitan cities, Delhi andMumbai, whereas BSNL provides services to therest of India. MTNL's Garuda, Trump and

Dolphin and BSNL's Cellone and Excel arerunning successfully on CDMA, WLL and GSMtechnologies.


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Market shares of Public Players in

Indian Fixed Line Telephony


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Since, Private Players entered Indian

Fixed Line Telephony, market shares of

Public Players started declining. This can

be easily seen by the trend of number of

subscribers (increasing or decreasing) of

Public Players. MTNL has showed a

declining trend in the last three years.BSNL is adding new customers but with a

declining growth rate.


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Subscriber trend of MTNL in Fixed

Line Telephony


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Subscriber trend of BSNL in Fixed

Line Telephony


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Market shares of Private Players (18%) in



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Subscriber base of Private

Players in Fixed Line Telephony


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Mobile Telephony Mobile telephony was introduced in Indian markets in mid- 1990s. In the last fewyears, the sector has witnessed tremendous growth. The subscriber base is adding

more and more customers every year. Mobile telephony recorded more than 52.2million users in FY 2004-05, exceeding fixed line telephone subscriber base. Also,mobile segment has welcomed more and more players every year. Liberalizedpolicies have ensured lower tariffs and reduced roaming rentals. This will lead toincreased usage of mobile phones. Mobile telephony can be further categorized intoWLL, CDMA and GSM. The much-awaited 3G mobile technology is going to enter

soon in Indian telecom sector. Mobile telephony provides services such asmessaging- text and multimedia- mobile commerce through GPRS enabled mobileInternet, with local calls and long distance calls- national and international.

Not only service providers but also equipment manufacturers are contributingtowards the growth of the sector. Mobile telephony started up with bulky handsetsand has now reached to smart phones with cameras, radio facility and lots of othermultimedia applications. Also, PDAs have entered Indian markets with operatingsystems that make it a pocket PC.

Both Public Players and Private Players are competing hard to capture more andmore market share. Leaders in Fixed Line Telephony have now started providingmobile services, such as MTNL's Garuda and Dolphin. Private Players capture mostof the market share in Indian mobile segment.


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Market shares of Private Players and

Public Players in mobile telephony

During financial year 2005-06, mobile telephony segment in Indian

telecom sector witnessed a growth of 72%. The total subscriber base

of mobile phones touched a figure of 90.14 million in 2006.


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Subscriber trend of mobile

telephony in Indian market


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Market shares of Public Players

in Indian mobile telephony

Since, Private Players entered Indian Fixed Line Telephony, market

shares of Public Players started declining. This can be easily seen by

the trend of number of subscribers (increasing or decreasing) of Public

Players. MTNL has showed a declining trend in the last three years.

BSNL is adding new customers but with a declining growth rate.


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Subscriber trend ofMTNL in

mobile telephony


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Subscriber trend of BSNL in

mobile telephony


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Private Players

Private Players are dominating the mobile segment with78% market share. With technological advancements,Private Players have brought in WLL, CDMA, and GSMmobile telephony in Indian telecom sector. They are now

in the process of launching 3G technology in India.

Bharti Airtel, Reliance Infocomm, Tata Teleservices, IdeaCellular, Hutchison Essar, etc, are the leading PrivatePlayers in Indian mobile telephony. They are capturing

more and more customers with their special discountschemes and lower tariffs. They are also offering manyvalue added services in special rental schemes.


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Growth of Private Players Private Players have shown a high growth

rate, adding more and more customers

every year, taking the total subscriber

base to 70.44 million.


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Growth trend of Private Players

of Indian fixed line telephones


(in millions)

Growth (over

preceding FY)

2001-02 6.158 120.71%

2002-03 8.948 45.30%

2003-04 27.36 205.76%

2004-05 41.24 50.73%

2005-06 70.44 70.80%Private Players are expanding their networks providing more coverage

areas. They are offering special rentals and tariff plans for value added

services and outgoing calls to widen their customer base.


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Private Players' Subscriber Base

Private Players are providing services to the whole ofIndia. Tata Teleservices, Reliance Communications,Bharti Airtel, Idea cellular, Hutch, etc are the leadingPrivate Players in cellular services. They are providing

cellular services through CDMA, GSM and WLLnetworks.

With more than 70% share in market, Private Players areintroducing more and more discount schemes and tariff

plans and call rentals to capture more and morecustomer base. Even the handset manufacturers arecoming up with advanced multimedia applications toattract customers.


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Market shares of Private Players

(78%) in mobile telephony


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Subscriber base of Private

Players in mobile telephony


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Internet Services

There are Public Players and Private

Players providing the Internet Services

such as broadband, dial-up, pre paid and

post paid Internet, Wi-Fi, etc. Subscriber

base of Internet Services provided by

Public Players is showing an upward

trend.


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Internet subscriber base of

Public Players

Private Players are also adding more and more customers every

year showing an upward trend.


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Internet subscriber base of

Private Players


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Investment in Telecom Sector

Both Public Players and Private Players areinvesting huge sums to expand their networkand provide more coverage in Fixed Line

Telephony as well as mobile telephony.

Facing stiff competition from private sector,Public Players are taking up measures toincrease their customer base of fixed lines and

Internet Services. MTNL and BSNL are investingin Internet infrastructure to provide much reliablenetwork.


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Capital investment of Public

Players in Fixed Line Telephony


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Private Players are striving hard to capture

more and more customers. They are

introducing low-cost tariff plans and

discount schemes in Fixed Line Telephony

and Internet Services to increase their

customer base. They are also in the

process of enlarging their network areaproviding more coverage in urban as well

as rural areas.


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Annual investment of major Private

Players in Indian telecom sector


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Overview of Telecom Industry

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