Agenda

1. Industry Overview
2. Industry Value Chain & Structure
3. Market Size and Growth
4. Industry Segments
5. Competition
6. Growth Drivers
7. Issues & Concerns
 INDUSTRY OVERVIEW
 BOOMING INDIAN TELECOM INDUSTRY (2ND LARGEST IN
WIRELESS NETWORK)

 MOBILE SUBSCRIBER BASE WAS 277.92 MILLION, WIRE LINE

SUBSCRIBER BASE WAS 39.05 MILLION.(31st march 2008)

 INDIAN TELECOM SERVICES GREW BY 21% ,revenue Rs

130,561 CRORE IN FY 2008

 100 MILLION NEW SUBSCRIBERS; OVER 50 % FROM RURAL

TOWNS(31ST MARCH 2008)

 TELEDENSITY: 27.59%(31STMARCH 2008)

 PROJECTED TELEDENSITY: 500 MILLION, 40% OF

POPULATION BY 2010.

 FULLY ORGANIZED

 INDIA WILL BECOME HUB OF TELEPHONE MANUFACTURING

EQUIPMENT
 1.Industry Value Chain &
Structure
• Value chain
• Structure
 Telecom Value Chain
Infrastructure Tower Support

Service
Providers

Finance

Raising Funds
TELECOM Marketing Customers

Government Dealer/
Franchisees
License Advt.

TRAI
Telecom Other
ISI IT
Equipment Telecom Co.
ISRO
Cross connection
Agreement.
 • Structure
TELECOM

Telephon
Internet Broadcasti
e
(43) ng
(336.97)

Wireles
Wire
s
line Wire line Wireless Cable Radio
(277.92
(39.05)
)
DTH

CDMA Broadb Mobile

GSM Dial UP
(53.25). and Net
184.67
 2. Market Size and Growth
• Market Size
• Future Expected Growth
 CUSTOMER DEMAND FOR
WIRELINE TELEPHONE
•
DECLINES
Decline in wire line
phone
– Technology
advancement
– Increase in investment
– Privatization
– FDI

Source:
Market Size
• Increase due to
reduced cost of
government initiatives
• Strong Demand
– industry,
– Institution
– Low price

Source: www.trai.gov.in
 Market Size
Increased Revenue
of Telecom Industry
• Cellular has
phenomenal growth
due to
– Reduction in operating
cost
– Privatization
– Increase in subscriber
– Reduction in call rates
– Increase in number of
towers
 OUTLOOK
• Industry will
continue to boom
in future

source: www.ibef.org
 ROAD AHEAD
• The total subscriber base to500mn by 2010

• The Indian telecom industry's revenue expected

US$ 35 bn 3.6 % of
GDP
US$ 76.6 bn (07-
12).
• Total investment projected at
us$ 24bn by
2010
• In mobile services projected investment

• Total 107 million handsets by 2010

 3. Industry Segment
Industry Segment Classified in 3
category
• Telephone
• Internet
• Broadcast
 3. Industry Segment
Telephone
1.Wireless
a. CDMA
b. GSM
2.Wireline
GSM HOLDS LARGER SHARE
• BUT CDMA growth
more than GSM
due to
– CDMA chipset is far
smaller thanGSM

– High speed data

transfer and
extreme security

Source: www.trai.gov.in
 Reliance gets the bigger
pie!
Reliance has major
customer base
45.79 million and
Tata account for
24.33 million
Average Revenue Per
User per month is
159 RS

Source: www.trai.gov.in
 Bharti leading in GSM!
• Bharti leading with
highest customer
• wide network
coverage
• good customer
service

Source: www.trai.gov.in
 Internet the ‘in thing’
• Broadband
accounting more
growth over dial up
because of
– speeds up to forty
times faster than a
standard internet
connection
– Enabling to use the
phone and internet
simultaneously

Source: www.trai.gov.in
 4. Competition
• Herfindahl Index
• Michael porter Analysis
 Herfindahl Index
• Value of Herfindahl index for Telecom
industry is- 2258.68
• High competition
• Opportunity to enter new Player

• Major Players (In India) :-

– Bharti Airtel
– Vodafone Essar
– BSNL
– IDEA
 Michael Porter Analysis

Bargaining power of Buyers Threats of Substitute

• Low • Low
• Customers had to follow • Substitutes are Couriers,
stated prices. Speed post, Telegram Etc –
But they are not fast source
of communication.
 5. Growth Driver
• Industry Driver/ Consumer Trend/
Export.
• Regulations
 GROWTH DRIVERS
 New subscribers from towns and villages with
populations less than 20,000

 Network coverage( half of the 6,00,000 towns

and villages)

 Rise in consumer income and spending owing to

strong economic growth

 Lowering of tariffs

 Lowering entry price of owning a handset

 Investment in the 3G network and large number

of towers setup
 GROWTH
DRIVERS/COMPANIES
• Investment of $32.5 billion in next 2 years

• Bharti is planning to invest 8n billion by 2010

• Reliance telecommunication will invest $8 billion in

2008

• Idea will invest 200 crore in Gujarat for capacity

expansion

• BSNL’s $100million expansion plan for GSM network in

South India

• Aircel is planning to invest US$ 5 billion in next 4

years in India
 Regulations
• 74% Foreign Direct Investment (FDI) permitted in
telecom industry.
• Proposed changes:
– lowering of excise duty on data card from 16% to zero
– lowering of customs duty on convergence products from
10% to 5%
– full exemption for specified components of set-top boxes
– internet telecommunication service brought under the
service tax net
– Nil additional duty of customs, on parts, components and
accessories of mobile handsets including cell phones
 The New Business Strategy:
From Services to Business
Radi
o
Ecosystem
pagin Legac
g
e/m
y paym
wirel
reform Fixe -ent
d ess
wirele
line Diversifi
ss
ed Fixe
solu telecom d
ti- line
history ons
Applic New
transitio a-tion telecom
n
busines
s
Telecom Telecom
future ecosyst
focused service em
service with VAS
business and mobile
 WHAT THE NEW ECOSYSTEM
WILL DO?
 Increase tele-density
 Growth of GDP
 1% increase in tele-density results in 3% increase in
rate of GDP growth rate

 Increase employment
 Increase Government revenue
 6.Issues and Concerns
• Lack of infrastructure increases initial fixed cost. Achieving
break-even under these circumstances may prove to be
difficult.

• Lack of adequate spectrum

• Interconnection charges between the private and state

operators.

• Highly taxed sector:

 Paying duties and levies under various heads including annual
license fees, spectrum charges and access deficit charge
 levies imposed on account of sales tax, service tax and import
duties on handsets and other telecom hardware
CHALLENGES FACING
OPERATORS
 RECOMMENDATIONS

 There should be no service tax on the IUC

 Avoid double taxation with both sales tax as

well as service tax

 Make india regional manufacturing hub for

mobile handsets

 Identify all the unused spectrums and

allocate them to the cellular industry.
Thank You