hi haha

1. INDIAN TELECOM SECTOR
AN INDUSTRY ANALYSIS.
Tanmay Jauhary

2. TELECOM SECTOR-
INTRODUCTION
 Most vibrant sector with highest growth rate –
more than 60 lakh customers are added every
month
 Plethora of services
 Easier access/ availability
 Drastic reduction in tariff
 World class service

3. Major classes of
services
• Fixed Copper, Optical Fibre, Wireless
• Mobile GSM and CDMA based
• Narrow band Voice, Internet, Fax
• Broad band High speed Internet, Video

4. MOBILE TARIFFS IN INDIA ONE OF
THE LOWEST
0.23
0.22
0.19
0.17
0.16
0.11 0.11 0.11
0.09
0.05 0.05
0.04
0.03
0.02
0
0.05
0.1
0.15
0.2
0.25
Belgium
Italy
UK
France
Brazil
Philippines
Taiwan
Argentina
Malayasia
HongKong
Thailand
Pakistan
China
India
USD

5. KEY POLICY INITIATIVES/MILESTONES
 New Economic Policy (1991)
 Opening up of Telecom service sector (Mobile –
metros)
 National Telecom Policy 1994
 Telecom, key for development
 Inadequacy of public resource to meet demand
 Private sector to supplement Govt.
 Provide world class telecom service at affordable
cost

6. TECHNOLOGY TREND
 Optical fiber based wireline networks
 Wireless networks GSM,CDMA based mobile
 Next Generation Networks: Voice , Data, Video
convergence
 Telecom networks increasingly software intensive

7. issues to be addressed in the
indian scenario
 Unique Rural Scenario : low teledensity
 Need for Spectrum re-farming & re-allocation
 Lack of Content in Local Languages
 Network Security

8.  Mobile. 2699.270 M
 Fixed.1229.987 M
 Total. 3929.257 M
 Population 6563.69 M
 Teledensity. 60.02
220.743
837.195
1744.815
1090.504
35.997
Telephone connecTions inmillions-
2008
Africa
America
Asia
Europe
Oceania

9. MARKET STRUCTURE
 Divided into 23 circles
 4 metros
 19 circles
Further divided into A, B
and C category.
 Division based on
economic parameters
and revenue potential
Each circle has a
licenses, which are a
saleable.
North Eastern
States
METRO Circles
Gujarat
Rajasthan
Maharashtra
Orissa
Andhra
Pradesh
Karnataka
Tamil Nadu
Kerala
Madhya Pradesh
Uttar Pradesh E
Bihar
West
Bengal
Punjab
Himachal
Pradesh
Haryana
Jammu &
Kashmir
Uttar
Pradesh
W
CHENNAI
MUMBAI
DELHI
KOLKATA
C Circles
B Circles
A Circles
Source :COAI

10. CURRENT INDUSTRY STRUCTURE
FDI in telecom recently revised to 74%.
Government gets 15% of revenues from Unified Licensing
Ministry of Communication & Information Technology
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

11. TELECOM REGULATORY
AUTHORITY OF INDIA
•Setup in 1997
•Protection of Consumer Interest
•Nurture Conditions for Growth of Telecom in
India
•Major Activities
Reduced levies on Operators.
Reduced upper limit in tariff (Local, STD & ISD)
and other Inter-operators tariffs.
Directives on number of network access service
providers.
Policy guidelines on new services like 3G, Wi-
MAX, Internet Telephony, Radio Paging, VSAT,
etc.
Regular monitoring of Quality of Service

12. MAJOR PLAYERS OF INDIAN
TELECOM INDUSTRY
 The Top five companies, on the basis of ‘Market Share’ as on
31st January, 2009 are:
1. Bharti Airtel Ltd.
2. Reliance Communications Ltd.
3. Vodafone Essar Ltd.
4. BSNL
5. Idea Cellular + Spice
•Bottom five companies, on the basis of ‘Market Share’ as on
31st January, 2009 are:
1. Aircel Cellular Ltd. + Dishnet
2. Mahanagar Telephone Nigam Ltd. (MTNL)
3. BPL Mobile Communications Ltd.
4. HFCL Infotel Ltd.
5. Shyam Telecom Ltd.

13. MARKET SHARE OF TELECOM
COMPANIES AS ON JANUARY, 2009

14. PORTER FIVE FORCES MODEL

15. THREAT OF SUBSTITUTES- LOW
 Some Substitutes:
VOIP (Skype, Messenger etc.)
Online Chat
Email
Satellite phones
 None of the above a major threat in current scenario,
but a potential threat for near future.

16. THREAT OF NEW ENTRANTS-
LOW
 Declining Average Revenue Per User.
 Infrastructure tenancy costs.
 Brand pull exists to some extent for brands like
Airtel / Idea/ Vodafone.
 Extremely high infrastructure setup costs
 Spectrum License cost- Lotteries, auctions.
 Incumbent Advantages: Established brand image,
Reliability of network

17. POWER OF SUPPLIER- LOW
 Large number of suppliers.
 Shared tower infrastructure.
 Limited pool of skilled managers and engineers especially
those well versed in the latest technologies.
 Medium cost of switching since changing their hardware
would lead to additional cost in modifying the
architecture.
 Overall influence on the industry - medium

18. BARGAINING POWER OF CUSTOMER-
HIGH
 Lack of differentiation among the service provider
 Cut throat competition
 Customer is price sensitive
 Low switching costs
 Number portability to have negative impact

19. RIVALRY AMONG COMPETITORS-
HIGH
 High Exit Barriers
 High Fixed Cost
 6-7 players in each region
 3 out of 4 BIG, present in each region
 Very less time to gain advantage by an
innovation (Eg. Caller tunes, life time card)
 Price wars

20. BHARTI AIRTEL- THE MARKET
LEADER

21.  Largest Telecom
Player in India -
~80Mn, 22.6%
 Strategic Alliance with
other stakeholders in
Bharti Airtel include
Sony-Ericsson, Nokia -
and Sing Tel
 Pan India Presence
 Strong Financials
 Outsourcing of Core
Systems
 Lack of emerging market
investment opportunity
STRENGTHS WEAKNESS
SWOT

22. SWOT
• Bharti Infratel – Cutting
Down cost in Rural area
• Match Box Strategy –
Scale of Penetration
• Current Tele-Density –
30.6 is still low among
developing countries
• Low Broadband
Penetration, Rural
Telephony
 India centric – Major
revenues from India
 Falling ARPU
 Intense Competition &
Shortage of Bandwidth
OPPORTUNITIES THREATS

23. AIRTEL – STRATEGY
MANTRA : Focus on Core Competencies and
Outsource the rest!

24. STRATEGY
• Airtel partnered with leading players in
telecommunication players across the globe.
• It has managed to work with the best of domain
specialists globally and emerge as a world class
entity.
• Partnerships include operational contracts with
vendors and strategic investors ranging from
private equity investors to global telecom giants.

25. STRATEGIC PARTNERSHIPS/
SHAREHOLDERS – TECHNOLOGY
AND CAPITAL
 Warburg Pincus – a celebrated PE investor held a
stake for a substantial period of time and was
instrumental in providing Airtel support in its early
stages.
 Vodafone was a strategic investor in Airtel.
 Temasek – the Singapore based investor holds a
considerable stake in it.
 Was also affiliated with Singapore Telecom.

26. OUTSOURCING DEALS IN 2004
 Ericsson was given the mandate to provide,
manage and maintain the equipment as well as
provide quality assurance in Airtel
 IBM was given the mandate to handle the back
office requirements of Airtel’s presence in India

27. OPERATIONAL STRATEGIES.
• Higher emphasis on ARPU/min – stark contrast with
other operators who concentrate on ARPU only.
• Aim to become a one stop shop for all
telecommunication services under the Bharti
umbrella.
• Exploring opportunities in international markets.
• Hived off tower infrastructure into a separate
entity.