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Telecom Story for Demand Analysis

Telecom Story for Demand Analysis

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Published by siddhant_masson6026
Demand in Telecom
Demand in Telecom

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Published by: siddhant_masson6026 on Oct 06, 2012
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05/13/2014

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GROWTH OF TELECOMMUNICATIONS IN INDIA
The last decade, especially since 2003, has seen tremendous growth and dynamism in
the Indian telecommunications sector. A phone has been transformed from a “luxury” good to a “necessity” connecting millions of people. Earlier India was primarily concerned
 with increasing teledensity, i.e. telephones. Now, the idea of phones has itself changedfrom fixed line/wireline phones to mobile/wirless phones connecting people everywhereand anywhere.
Overall Teledensity at the end of March’12 reaches 78%.
From 2001 to 2011, the total number of telephone subscribers has grown at aCompound Annual Growth Rate (CAGR) of 35 per cent. The comparable rates in the1980s and 1990s were 9 per cent and 22 per cent, respectively. The composition of thesubscribers shows that mobile subscribers have led the way.Growth of Telephones in India (Nos in Millions)Mar-2000 Mar-06 Mar-09March-12Wire lines 32.4 50.2 37.7 32Wireless 1.9 101.8 390 919Total 34.3 152 427.7 951The Indian telecom sector has undergone major transformations through significantpolicy reforms. The regulatory reforms in the telecom sector from 2000 to 2011 can bebroadly classified into the following three distinct phases.1.
 
Phase 1
2000
2003: Telecom sectors were opened up to competition.2.
 
Phase 2
2004
2007: Regulator encouraged competition and also set the stagefor future growth.3.
 
Phase 3
2008
2011: More choices were brought in for consumers in terms of technology and services.
What are the drivers for this huge demand?
The growth in demand from the consumer’s point of view is mainly driven by following
factors:
 
Aggressive price competition among the players leading to lower per call charges
 
Aggressive price competition among the players leading to lower subscription cost
 
Addition of various value added services.
 
Decline in long-distance tariffs leading to tie ups with international players
 
Availability of cheap handset
 
Increasing affordability
Rise in per capita income
 
Increasing affordability
Pre-paid top up charge at Rs.5/10
 
Aggressive advertising by the players
 
Increase in coverage area
 
Mobile Number PortabilityMobile cellular prepaid tariffs ranged between US$1.3 and 37 per month across countriesin 2008. Average mobile cellular prepaid tariff in the world is US$ 10.1 per month.Mobile tariffs in India are the second lowest (US$1.6 per month) in the world afterBangladesh.Low purchasing power of customers forced companies competing against each other toinnovate. Vodafone (2009) estimates that the own-price elasticity of mobile is minus2.12, i.e. a 10 per cent price fall would increase demand by approximately 21 per cent,keeping everything else constant. This implies that the fall in prices of mobile phones

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