Last couple of weeks has seen spirited discussions and threadbare analysis of what Infosys

management will guide for FY08, largely fuelled by the steep rise rupee and fears of economic
slowdown in the US. From stock market perspective, Infosys, being the only large player besides
Satyam that gives an annual guidance, sets the tone for what one should expects from the overall
IT services sector.
We believe much of the analysis and scenario projections around Infosys' guidance are a futile
exercise. Over the last 5 years since Infosys has started given guidance, it has outperformed
every time by a significant degree both on EPS and revenue, including a year—FY04—in which
rupee appreciated by as much as 3.6%. Thus, our focus should remain on business fundamentals
and an analysis of trends in key business drivers.
We believe the demand environment for offshoring remains strong. There has been much
speculation on fall-out of possible economic slowdown in the US. We believe this has been
largely a case of people jumping the gun. Without getting into the discussions on whether and
when will be the slow-down in the US economy, we think there aren’t any leading indicators of
slowdown in the IT spend. Our analysis of quarterly growth rates of the US’ GDP and dollar
revenues of the top four Indian IT services companies indicate a marginal co-relation only with a
2 quarter lag.
One should also note the constant evolution in the profile of offshoring per se over the last few
years where-in, it has moved from traditional service streams of application development and
maintenance (ADM) to newer service lines such as package implementation, infrastructure
management, IT consulting and business process outsourcing. The share of non-ADM services
for Infosys has grown to 48% in 3Q 2007 from 17.6% in FY2000. Despite this rapid growth,
Indian players only have 0.9% share of the global non-ADM services market (which account for
over 89% of the $445 billion worldwide IT services market). An expansion in the market share
to even 3.2% by 2010 should help in sustaining the current growth rate for the industry.
Indian companies, especially tier 1 players, are also seeing expansion in the deal wins for ADM
services, both from size and duration perspective. The top six companies have announced at least
16 $50 million plus multi-year deal wins so far in FY2007, compared with eight deal wins of
similar size in FY2006. The growing share...

of annuity-based business should increase the visibility. However, we believe the growth will
remain volume-led; despite the reported MSA (master service agreement) renewals at 3-5%
higher price points, we believe average blended realisation growth will be muted.
From supply perspective too, we believe quantity is not a concern. We believe macro
environment remains strong, especially for the larger players, in an industry where scale is
increasingly becoming a big, if not the biggest, differentiator.

The telecommunications industry remains attractive

Notwithstanding a challenging economic background and rising unemployment, the
fundamentals of the telecommunications industry continue to be attractive. The sector remains
relatively resilient, but not immune, as it provides essential services that serve a fundamental
human need to communicate for work and social purposes. In this environment, the sector
leaders, such as Vodafone, continue to be able to innovate and deliver new products and services
as well as generate strong cash flow.
Although revenue from traditional services of voice and messaging in mature markets is growing
more slowly due to competitive and regulatory pressures, there remains a significant growth
opportunity in mobile data. There are also growth opportunities in enterprise and broadband
markets due to increasing demand for integrated solutions, international services and converged
offerings.
Within the Vodafone footprint, emerging markets, such as India, continue to exhibit the potential
for strong growth due to low mobile penetration rates of around 38% on average, compared to
over 120% in Europe, which together with higher GDP growth prospects, provide a significant
customer growth opportunity.
Vodafone is well positioned in the telecommunications industry
The Group believes its leading market position is demonstrated by a strong level of free cash
flow, with some £18 billion generated over the last three years, a resilient structure based on a
diverse portfolio of assets in both mature and emerging markets and a number one or two
ranking in most countries in which it operates. The Group has also been a pioneer in data
products and services, developing high speed mobile broadband networks and providing simple
to use and attractive devices with features such as touch screen technology. The Group has a
recognised brand in consumer markets and a strong position in the enterprise segment. In
addition, Vodafone is already well placed to benefit from growth in emerging markets, with a
presence in a number of the countries where significant growth is expected. In a difficult market
environment, the ability to control and reduce costs is ever more important. Against this
background, the Group continues to drive network and IT savings through both consolidation
and centralisation of core activities, as well as local operating company initiatives. Vodafone
also benefits from a variable cost base as only around one third of cash operating costs are fixed.
May 2006 strategy
In May 2006, Vodafone formulated a five point strategy and strong progress has been made
against the key objectives. Mobile phone usage has grown significantly, partly offsetting price
declines, key operating costs and capital expenditure targets have been met and exposure to
emerging markets has increased. The share of revenue from non-core mobile or total
communication services has grown through both significant data revenue growth and an
increased fixed broadband presence. In addition, the Group has refined its portfolio of businesses
and disposed of several non-core assets. Lastly, Vodafone has maintained a disciplined approach
to its capital structure, which has proved right for the business, particularly in the current
environment, and also returned a significant level of cash to shareholders.
Evolving telecommunications environment
A number of challenges have evolved since 2006. In particular, the macro economic
environment has become more challenging. Competitive pressures continue to be strong,
contributing to price declines of around 15% per annum. Consumers have an ever growing
choice of converged communication offers from established mobile and fixed line operators and
newer entrants including handset manufacturers, internet based companies and software
providers. In addition, mobile virtual network operators, that lease network capacity from mobile
companies, are becoming increasingly prevalent. Finally, regulators continue to press for
substantially lower mobile termination rates and roaming prices, and these areas together account
for around 17% of Group revenue.
November 2008 revised strategy
In light of the changing environment the Group revised its May 2006 strategy. The new key
target is to focus on driving free cash flow generation. This target is supported by four main
objectives: drive operational performance, pursue growth opportunities in total communications,
execute in emerging markets and strengthen capital discipline.
Drive operational performance
Vodafone aims to improve execution in existing businesses through customer value enhancement
and cost reduction.
Value enhancement involves maximising the value of existing customer relationships, not just
the revenue. This approach shifts away from unit based tariffs to propositions that deliver much
more value to customers in return for greater commitment, incremental penetration of the
account or more balanced commercial costs. This requires a more disciplined approach to
commercial costs to ensure investment is focused on those customers with higher lifetime value.
Customer value enhancement replaces the previous focus on revenue stimulation.
The Group has established a significant number of initiatives which are expected to reduce
current operating costs by approximately £1 billion per annum by the 2011 financial year, to help
offset the pressures from cost inflation and the competitive environment and to enable
investment in growth opportunities. As a result, on a like for like basis, Vodafone is targeting
broadly stable operating costs in Europe and for operating costs to grow at a lower rate than
revenue in emerging markets between the 2008 and 2011 financial years. Capital intensity is
expected to be around 10% over this period in Europe and to trend to European levels in
emerging markets over the longer term.
Pursue growth opportunities in total communications
Regarding growth opportunities, the three target areas are mobile data, enterprise and broadband.
Vodafone has already made significant progress on mobile data, with annual revenue of £3
billion, 26% higher on an organic basis than that of a year ago, but the opportunity remains
significant as the proportion of the customer base that regularly uses data services is only around
10% in Europe. In the enterprise segment, Vodafone has a strong position in core mobile
services, mainly amongst larger corporations. The aim is to build upon this position and expand
into the broader communications market, serving small and medium sized businesses with
converged fixed and mobile products and services and to continue to increase the Group’s
penetration of multinational accounts. In fixed broadband, the Group has a presence in all of its
European markets and 4.6 million customers globally. Vodafone continues to adopt a market by
market approach focused on the service, rather than the technology, and targeted at enterprise
and high value consumers as a priority.
Execute in emerging markets
Vodafone is already represented in a number of attractive emerging markets. The Group’s
principal focus is now on execution in these markets, particularly in India, Turkey and the
existing African footprint, following the acquisition of a controlling interest in Vodacom based
in South Africa. Where possible, Vodafone will also seek to maximise the mobile data
opportunity. While new markets are of interest, Vodafone will be cautious and selective on
future expansion. The primary focus will remain on driving results from the existing footprint.
Strengthen capital discipline
The Group is focused on generating £5 billion to £6 billion of free cash flow per annum,
excluding licence and spectrum and any potential CFC tax settlement. In terms of cash
deployment, the priority is to invest in existing businesses, expand in the growth areas of mobile
data, enterprise and broadband and acquire, where appropriate, new spectrum to support voice
and data traffic growth.
Beyond this, the Group will aim to enhance returns to shareholders, primarily by increasing
dividends. In November 2008, the Board adopted a progressive dividend policy where dividend
growth reflects the underlying trading and cash performance of the Group. The Group remains
committed to the current low single A long term average credit rating.
After investing in existing business and returns to shareholders, the Group will consider
opportunities to reshape the portfolio. In emerging markets, the focus is on execution rather than
expansion. In addition, the Group’s current capital structure implies that any significant
acquisition would likely need to be funded through portfolio disposals. Vodafone supports in-
market consolidation, such as the recent agreement to merge the Australian assets of Vodafone
and Hutchison 3G Australia to form a 50:50 joint venture.

Economic and Market Trends that Drive the

Telecom Revolution
Coupled with the technological trends, the revolution in the telecom sector has been driven
by the dynamism in the telecommunications market globally. The liberalization of the
sector, the extension of services by multinational conglomerates across nations and the
active competition currently in place in the sector have all contributed to the telecom
revolution. To expatiate further on the market trends, we shall look at the development of
the telecom market; to do this we will examine the following issues:
Monopoly
In a monopoly scenario, a single supplier supplies the whole market. Traditional view of the
telecommunications sector is that the telecommunications market was monopolistic in
nature. Telecommunications industry was traditionally a natural monopoly, where the
telecom services and the collection of products were supplied by one telecommunication
company. In a monopolistic market structure, the company and the industry are identical.
The single company makes all the output and price decisions, it has complete control over
the market (Gerber & Braun 1998). Traditionally, the telecom service providers, or
operators have been government-owned monopolies.
One major problem with telecom monopoly is that monopolist may exploit its market
position by charging excessive prices and compromise quality of service. With the reforms in
the telecom industry, came a series of restructuring of the telecom industry. Today most
developed countries are or have introduced competition in the telecom market that was
once monopolistic in nature. Driven by technological developments, competition has come
to dominate a market that was once a monopoly. For instance, in 1976 in the U.S, the
traditional monopoly service provider was faced with competition in the long-distance
market from use of microwave technology (Gerber & Braun 1998). The development of
wireless technology has brought in competition in the telephony market, with fixed line
subscribers migrating to cellular markets where there are competitive services. In Africa,
most fixed line operators are still monopoly in nature, however there is competition in the
cellular market. The South African government is in the process of introducing a Second
National Operator to compete with Telkom, the monopoly fixed line service provider.
Privatization and Liberalization
Amongst the wave of reforms that characterized the global telecom markets in the 80’s and
90’s, was the privatization of national companies. Privatization and liberalization are two
telecom reforms that improve the public treasury. Since the processes of liberalization and
privatization have been taken into consideration by countries such as India, Malaysia and
South Africa, their telecommunication infrastructures have improved drastically. Malaysian
government has developed its telecommunication infrastructure by privatizing the former
RTT, which is presently known as Telkom Malaysia, and most of its shares are sold in the
stock exchange.
Privatization and liberalization cut the existence of monopoly and promote competition. The
privatization of national companies comes in either public stock floatation or private sales to
strategic investors. In the telecom sector, it could also include the opening up of market to
private investment in the thriving telecom market. In developing countries, the realization
that investment in the telecom infrastructure is a necessary foundation for economic
growth, has further spurred the need for privatization. Developing countries identify that
massive investment is required to address the low teledensity and poor service typical of
the telecom market. Such investments, in most cases, are far beyond the reach of many
governments that have other social development projects to fund. Subsequently “private
sector investment – through privatization of national carrier or other forms of private sector
involvement – is often the only recourse” (Pisciotta, 1997). Another reason for privation is
also to tap into the advantages that modern technology offers through foreign investment
into the local telecom infrastructure.
Definition of the Two Concepts
Privatization
Privatization can be defined as the selling and transferring of at least part of the state
ownership of a corporation to private owners. It can be defined as the process where by the
government handover its management or assets of services to private interest.
It can also be defined as a transfer of government (public) agency to a non-government
(private) body. Privatization is the transfer of public functions and resources to the private
sector. This transfer can entail the operation, management, or actual ownership of publicly
owned facilities.
Liberalization
Liberalization
Liberalization usually means the process of transferring monopolistic market to a free
market environment, which will expand trade relation and also promote competition.
Liberalization encourages the lifting of barrier to entry to accommodate many players in the
market and hence transform a market into a free and open market. The World Trade
Organization has prescribed liberalization of the telecom market. Many countries have
endorsed the WTO’s liberalization guideline and subsequently open their telecom market,
leading to open and competitive market. Specifically, it has brought about an era of
competition in the telecom sector. Privatization without liberalization is possible: a
monopoly merely becomes a private one. In most cases of telecommunications
privatization, however, some element of liberalization is involved.
• Privatization of a public telecommunication operator can generate a lot of financial
benefit, as privatization can be considered as the component of the development of a
market economy. Privatization can benefit the majority of the people. Analysts
mostly welcome the government’s stance on the sale of public telecommunication
operator because they do not expect this to have a major impact on the currency. In
 2001, the South African government aimed to earn R18 billion from privatization in
the fiscal year 2001-02, mainly from its telecom assets (Reuters 2001).
• In a privatized entity, private operators bring new skills, which are efficient with high
standard and quality. Privatization limits monopoly and instead promotes
liberalization because it allows competition among various companies. Private
companies introduce new technological innovations and services to challenge other
companies. Private companies provide good quality service to attract the customers
and also to facilitate the development of the small businesses.
• Private companies improve the telecommunication infrastructure because they are
always equipped with advanced technologies in order to attract both local and
foreign investors. It shows how effective a public telecommunication operator will
succeed if it becomes privatized. It is best for the country to Privatize a public
telecommunication operation, because privatization increase the performance of the
economy by improving utilization of resources and it also allows competition which
enhances efficiency and capacity of the private sector to adapt itself more rapidly to
changing circumstances. In South Africa the government and labour union were at
loggerhead over privatization. The labour union argued that privatization leads to
loss of jobs and the government believes that privatization generates income and
again it can overcome the problem of government failure because the state-owned
monopoly companies have failed to deliver for the past years.
The other reason why private companies are more efficient is that, shareholders in large
private firms give managers real incentives to produce results, which are good for customer
and generally good for the public. As a result of incentives the companies satisfy their
customers and this leads to a more internationally competitive economy. Privatization also
gives companies the opportunity to contribute towards development of the economy by
paying regular taxes, which will benefit the country. The main advantage of privatization is
the extension of capacity and world-class technology and it is also has a potential for global
alliances because it develops the local expertise. It is also raises the funds for improvement
of telecommunication infrastructure.
Countries that privatize do so realize a range of benefits. Some of these benefits include:
• Raising cash to lower national debt
• Raising foreign exchange, which can be used to extinguish foreign debt or purchase
needed imports
• Raising domestic currency in order to expand services or facilities
• Curbing losses incurred by state-owned enterprises and controlling subsidy flows to
those enterprises by moving into new business venture and opportunities
• Increasing operating efficiencies through more liberal personnel policies and more
market-oriented procedure
• Spreading corporate ownership more widely through the sale of stock
• Gaining control of, or improvement in, public policy objectives through the creation
of regulatory bodies (Cheong and Mullins 1991: 112)
Some Criticisms of Privatization
• Some observers believe that privatization will eventually impact negatively on the
goal of universal service. Privately run corporations operate on a stringent need for
profit basis. This implies that services will be increasingly provided to the rich who
 can afford to pay for the services. For the rest of the population, who belong to the
low-income group or the unemployed, access to services could be a mirage.
• Privatization has a potential loss of management control and lesser opportunity for
local participation, because in most cases when a company is privatized it then
brings its own expertise from the outside country and as a result it also lead to
retrenchment and this will aggravate the country’s poverty and unemployment
problem, so privatization in some cases appears to be complex and uncertain.
Domberger (1995: 43) states that, public enterprises are inherently as efficient as
private ones and a change of ownership is not a necessary condition for
performance. The point is, privatization is not a solution for performance; even a
public sector can do better especially if they can be well managed. Privatization also
weakens the state control over the national telecommunication operator because the
state no longer owns 100 per cent of the company.
• Privatization lead to loss of jobs
The prospect of transferring a state-owned company to private owners has
systematically created the fear that the change will immediately bring
unemployment. (Petrazzini 1995:19). Private sectors usually prefer employees who
are specially trained for a particular field or who have experience in that field.
• Privatizing leads to a rise in prices for domestic consumers
It could be argued that privatization leads to a rise in prices for domestic consumers.
For instance, in Mexico, after the telemex’s privatization in 1991, prices were
increased and residential users were more affected by the price increase than
business and long distance caller.
Model of Privatization
1. Privatization with full competition
In this model, a policy of full and open competition is implemented at the same time
as privatization. All restrictions on entry into all sections of the telecom market are
removed. This model was utilized by New Zealand in 1990, Chile the first Latin
American country to open its telecom markets to private sector is another example
of a privatized and fully liberalized market.
2. Privatization with phased-in competition
In model two, privatization of national carriers is accompanied by a period of
exclusivity rights, or limited competition, in basic telephone services. In some
instances only fringe services are liberalized at the outset. In this model, national
carriers are privatized with a gradual and measured implementation of competition
with exclusivity in the provision of basic services guaranteed for a certain period of
years. Several countries in Europe have followed the process of partial privatization.
South Africa followed this model with the privatization of the national carrier with
exclusivity for fixed operation that was meant to lapse in May 2002.
3. Liberalization without privatization
Government may introduce liberalization into the telecom market without actually
privatizing the national carrier. “One reason for pursuing this approach is to gain the
advantages of foreign investment, technology and management expertise without
suffering the political disadvantages and disruptions of a privatization transaction”
(Pissciotta, 1997: 339). Some of these disruptions include opposition from workers’
union based on fear of job loss, military and defence interest based on fear of loss of
control and security over critical communication facilities and in some instances,
constitutional prohibition against foreign ownership.
 4. Private Sector Participation without Privatization and Liberalization
This is an innovative way of attracting private sector investment and expertise
without actually privatizing and introducing competition. Ways of doing this include
the granting of concessions by national operators to private industry to build and/or
operate certain facilities or services. The national operator then enters into a
management contract to improve operations and enhance profitability. In this model,
foreign investments are invited in the form of build, transfer and operate (BTO)
arrangements. In these arrangements, private companies invest capital to develop a
project and operate the system for a period of time, ownership rights are eventually
transferred to the government company. Examples of these arrangements are in
Saudi Arabia and China- where “private sector participation in telecom is not
permitted. Private company involvement is limited to consultant services and supply
contracts” (Pissciotta, 1997: 339).
Competition
The increasing competition in the global telecom market has greatly impacted on the
telecom revolution. The liberalization of the telecom industry opened the doors to
competition and brought an end to a period when telecom was considered a natural
monopoly. Coupled with technological development in the telecom sector, competition has
revolutionized the sector remarkably. It has increasingly led to the expansion of telecom
market and this expansion of market has increased access rate to telecommunication
services.
The evolving nature of competition in telecommunications and information activities in
general is interwoven with different issue: the technological trajectories; changes in the
institutional arrangements; investment in information-handling capabilities and general
infrastructure; shift in demand for information goods and services and policy fashions
(Lamberton, 1995: 6). Two major issues are essential to the advent of competition in the
telecom sector:
• Liberalization and
• Technology
Liberalization of the telecom market which leads to removal of barrier to entry, coupled with
privatization of telecom corporation which encouraged private investment are precursors to
the advent of full competition in the telecom sector. The introduction of competition means
that a well-established telecom monopoly operator has to compete with new entrants in the
different segments of the market. Competitors are diverse in their operations; they are not
only limited to telecommunications operators. Telecommunications operators have to
compete with providers in parallel markets and vice-versa. An example is a telecom
company providing internet service and competing in the internet service provision market.
With adoption of the liberalization programme, many countries opened up their telecom
market by issuing licenses to operators. In South Africa, the first phase of liberalization of
this sector took place in 1997, when two cellular providers, Vodacom and Mobile Telephone
Networks (MTN), were licensed to offer cellular services. Liberalization of the ICT sector
encourages the entry of new telecommunications companies and fosters greater competition
in the sector. Today there are three cellular providers competing in the South African
market. The liberalization of the telecom sector in Nigeria and the concomitant issuance of
operating licenses have brought immense competition into the market. Today Nigeria has
four cellular providers.
The growing development in communication technology has increasingly made it impossible
for a monopoly telecommunication corporation to provide the varieties of services available
in the telecom sector. Traditionally telecommunications services were limited to basic voice
transmission; today we witness the availability of a gamut of telecommunication services
brought about by innovations in communication technology. For instance the introduction of
commercial Internet into the telecom market brought in an era of competing internet
service providers and development in wireless technology-specifically cellular technology-
has resulted in the era of cellular service providers.
Competition in the telecom industry has stimulated growth in the sector. Amongst
numerous benefits, competition encourages:
• Choice: Customers are provided with varieties of products and services to choose
from.
• Good quality: competing suppliers strive to out-do each other and invariably strive
for good quality product and service in order to beat the competitor. This also
ensures that the customers get quality products.
• Accessibility: products and services are provided in close proximity of the customers.
Customers do not to have to ‘go extra miles’ to have access to products and
services.
• Prices: competing suppliers attract customers by attaching affordable and low prices
to their products. Price is a strong tool used by competing firms to attract
considerable customer base
• Improves and maintain standard: Competition encourages the improvement and
maintenance of standards of products and services. This will help in attracting new
customers and also gives satisfaction to current customers
• Stimulate growth: Competition stimulate the growth of the market and the economy
in general

1.
This is the 1st part in the India Telecom report series. Internet & Broadband services have
been unable to emulate the growth that is seen by Indian Mobile sector, but it is growing steadily
nevertheless. The Indian government has heady plans when it comes to Broadband and Internet
services growth.
To achieve is 500 million subscriber base in next 3 years seems to be near impossible target !
Lets look at the where Indian Internet & Broadband services stand for the quarter ending March
2009:
Indian Internet & broadband services snapshot

According to TRAIs report, India currently has only 13.54 million Internet subscribers, which
includes broadband. This is a ridiculously low number !
Even the growth rate is lowly 5.3% – We seriously have problems when it comes to Internet
penetration !
While the wireless data Internet subscribers show close to 118 million subscribers, majority of
them are GPRS connection on mobiles, which according to me should not be counted as Internet
subscribers.
Indian Internet Subscriber Growth

• There were 13.54 million Internet subscribers at the end of March 2009 as compared to
12.85 million Internet subscribers at the end of December 2008 registering a growth of
5.30%.
• This growth rate is higher as compared to the growth rate of 5.01% at the end of
December 2008.
• Besides above, there were 117.82 million wireless data subscribers at the end of
March 2009 (capable of accessing data services including internet through mobile
handsets (GSM/ CDMA)).
• Broadband Subscriber Growth - The number of Broadband subscribers (with a
download speed of 256 Kbps or more) was 6.22 million at the end of March 2009 as
compared to 5.52 million at the end of December 2008. The growth rate of broadband
subscribers in this quarter is 12.68%.
Technology Used to Access Internet
 • Broadband Subscribers Share (Technology wise) – Out of total 6.22 million
broadband subscribers,
○ 5.364 million are DSL based;
○ 0.474 million Cable Modem;
○ 0.244 million Ethernet LAN;
○ 0.042 million Fiber;
○ 0.072 million Wireless,
○ 0.020 million Leased Line
○ 0.002 million use other technologies
Internet Subscriber Growth QoQ
Although, Indian broadband connections have doubled in last one year, the growth rate is still
not enough. With a country population of close to 1.2 billion, 6.22 million broadband
connections is just ridiculous !

Telecom industry analysis uncovers the fact that this industry has a huge business potentiality
and is going to be a booming industry. Telecom industry analysis also reveals that this industry
will provide an immense employment opportunity in the coming years.
Statistical report
Phoenix Center research revealed that in the coming years, there will be a healthy competition
among the providers of telecommunication services. At the same time, the price will be lower
and quality will be higher. The new telecommunications technologies will replace the traditional
telecom services. Statistical data also reveals that the telecommunications industry is going to be
a dynamic and booming industry in the near future. The telecom industry comprises of complex
network of services like telephones, mobile phones and internet services.
Telecom industry trends
Throughout the world, telecom industry are being controlled by private companies instead of
government monopolies. Traditional telecom technologies are also being replaced by modern
wireless technologies, specifically in case of mobile services. One of the major objectives of
telecom industry is to enhance the quality and speed of Internet technology.

These days, telecom industry is more concerned with texts and images (Internet technologies),
rather than voice(telephone service). Most of the research works are going on Internet
accessibility, specifically on data applications and broadband services. The other major division
of telecom industry is mobile network sector, where lots of innovative research works are going
on. Previously the traditional telephone calls used to earn the maximum revenues, but these days
mobile service is going to replace traditional telephone services.
Telecom industry analysis from the experts point of view
Telecom industry is a vast and diversified industry and needs a huge capital to invest. That is
why the competitors of this industry should be such that they can meet that demand. From the
investor's point of view, it can be said that they should be well aware of cash flow in this
industry.

Telecommunications industry deals with the activities and services of electronic systems for
transmitting messages through cables, telephone, radio or television.
Components and factors responsible behind the growth of telecommunications industry
Two major factors responsible for the growth of telecommunications industry are use of modern
technology and market competition. One of the products of modern technologies is optical fibers,
which are being used as a medium of data transmission instead of using coaxial or twisted pair
cables. Optical fibers can carry a high volume of data and are easier to maintain and install. Use
of communication satellites make this telecommunications industry a booming industry.

The use of mobile network has a crucial role behind the growth of an improved
telecommunications industry. Leading companies are showing their interest to invest in this
telecommunications industry.

Telecommunications industry is going to be a digitized one. Use of ISDN (Inter Services Digital
Network) makes this telecommunication industry a total digitalized system and eventually
enhanced the speed and quality of digital communication.

The introduction of these advanced technologies makes the telecommunications industry a

competitive one, where a number of multinational companies have shown their interest to invest
in this industry and consequently the prices are reduced, the quality is also improved. During the
period of 1990, the telecommunication industry showed a speedy growth in terms of investment
and eventually increased the competition. The competition between the companies led to the
decline of revenues.
Employment opportunities in telecommunications industry
Telecommunication industry has created immense employment opportunities. Most of the
employees in this industry are engaged in large establishments, although there are some small
establishments, where a large number of small contractors are involved. Fifty five percent of all
workers are engaged in office and administrative support occupations. The other occupations of
this industry relate to installation, maintenance, and repair .

To know more about telecommunications industry one can browse through the following links:

Telecom industry in India has a big market potentiality and is a fast growing sector.
Government of India is eager to reconstitute this telecom industry by enacting effective policies
for more investments from foreign companies, which results in a very competitive and
deregulated market in the world.
Policies of telecom industry in India
Government of India implemented the unified access licensing regime, which enables basic and
cellular mobile service to use any modern technology. In 1997, Telecom Regulatory Authority of
India (TRAI) was formed to facilitate the growth of the telecom sector in India.

Major services and market potentiality of Telecom industry in India

Telecommunication sector in India is primarily subdivided into two segments, which are Fixed
Service Provider (FSPs) and Cellular Services. Telecom industry in India constitutes some
essential telecom services like telephone, radio, television and Internet. Telecom industry in
India is specifically emphasizing on latest technologies like GSM( Global System for Mobile
Communications), CDMA(Code Division Multiple Access), PMRTS(Public Mobile Radio
Trunking Services), Fixed Line and WLL(Wireless Local Loop ). India has a prospering market
specifically in GSM mobile service and the number of subscribers is growing very fast.
Economic perspective of telecom industry in India
Telecom industry in India has a major role in Indian economy. The Indian government is also
enforcing some effective telecom policies and regulations for the infrastructural growth of this
industry. Indian telecom market provides a tele-density of 8.5 percent as registered in the year
2004. A number of leading multinational telecommunication companies are approaching and
showing their interest to invest for the telecom industry in India. Telecommunication industry of
India ranked sixth among all the telecommunication sectors in the world. In the year 2004, the
total number of telephone subscriptions were US$93.2.
Leading telecommunication service providers of telecom industry in India
Bharat Sanchar Nigam Limited, Mahanagar Telephone Nigam Limited (MTNL), Videsh Sanchar
Nigam Limited (VSNL), Bharti Airtel, Tata Teleservices, SIFY Ltd.

The Role of Mobile VoIP in the Future of Mobile Internet Mobile Internet will be dominated
by mobile VoIP and other chat applications to give users a fully integrated 'mobile freedom'
Thursday, July 02, 2009
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Mobile Internet take up is

dominated by mobile
VoIP, now an established reality globally, in both developed and importantly developing
countries as the benefits of cost and flexibility are well understood. What is not certain yet is
how the supply chain will eventually pan out and where the value will settle between
independent suppliers, operators, media owners and vendors such as Microsoft and Google
getting involved with their own mobile services. This article aims to examine the factors
influencing successful collaboration between these players.
Nimbuzz is the comprehensive mobile VoIP, Presence and IM provider that also brings voice to
social networks. Mobile VoIP is a highly competitive sector with many well known and not so
well known providers offering different MVoIP components. Nimbuzz' s USP is offering its
product across the widest range of handsets, across the most IM and Social Network
communities and in the most countries, a vision they call 'Mobile Freedom'.
To put it succinctly, content suppliers have two commercial aims, first to build user base to make
both a successful business and also as a commodity to offer potential partners. Second, to
investigate ways services can be leveraged financially, a process that has already started for
Nimbuzz with 10 major social network and 3 operator deals on the table. Making MVoIP and
associated services a commercial success is something the industry as a whole is starting to think
about and this article will investigate the success to date and the potential future impact of
mobile freedom.
In the immediate future, the current confusing market is allowing third party providers such as
Nimbuzz to offer mobile VoIP using Wi-Fi services or the user's data plan exploiting open
operating systems, flat-rate data plans and features like 'naked SIP' and built-in VoIP capability.
By working with providers, operators have the opportunity to gain experience of mobile VoIP
from independent specialists thereby reducing risk of their own large scale roll out.
Future market success factors
The success factors in this area include pricing structure as operator response to existing price
erosion already exists - cutting internet data costs and introducing fixed data packages. The other
factor is in developed countries vis a vis developing where a dollar is a weeks pay. In the end
user take up, current growth is also due to increased take up of smart phones moving away from
the early adopter and high end business user to mainstream audiences. Further, the propensity to
download software, initiate calls via PC, swap Sim cards etc vs unacceptable high roaming tariffs
leads to offering a fully integrated service.
Customers like choice and the products they will want and use vary according to country, calling
patterns, preferences, handset, "host" mobile operator, specific tariff, partnerships, interest in
"enhanced" VoIP vs. cheap calls etc. The other factor is integration of familiar technologies eg
Skype to break sown barriers to trial. Reports suggest that the number of VoIP subscribers will
more than double in the next four years and Disruptive Analysis forecasts 255m active VoIPo3G
users by the end of 2012, with the figure dominated by mobile operators' own 3.5G+ voice
services. Despite this growth, penetration will still be below 10 per cent of total global mobile
subscribers, and around 20 per cent of all 3G+ users, by 2012

Integration into the mobile value chain

Most 3GPP/UMTS operators will need to wait until 2012 before starting broad migration of
circuit telephony to standardised VoIP. In the meantime, they will have to compete or partner
with pre-standard VoIP players with multiple options for both operators and independent
specialists becoming a virtual mobile operator vs partnerships. Integrating mobile data services
onto handsets, VoIP will eventually become invisible to users as one of many Internet services
on the handset. It will be more important to embed mobile VoIP into new devices, services or
web applications (Voice 2.0) than adding video or other media streams. Standalone Mobile VoIP
players offer blends of WiFi, VoIPo3G, call-through and special SIMs, backed by a variety of
social networking / Web 2.0 capabilities.
Further, VoIP allows carriers to handle more calls on their spectrum and reduce expenses by
handling all traffic as data. It will also let them offer new services and become service enablers,
already a clear trend towards this with open mobile internet access and all you can use tariffs. In
this context, mobile operators in developed nations must look to new 3G applications and
bundled services for increased average revenue per customer.
While operators have the assets (billing and access to customers), content providers provide
revenue streams, traffic and advertising revenue. However, working together operators will drop
VoIP-hostile 3G terms-of-service, on the grounds of competition, regulation and difficulty of
enforcement. In the case of scope for partnerships between VoIPo3G innovators and incumbent
operators (and other parties), especially on HSPA networks, initial reticence will be countered by
awareness of the threats of outright competition.
Connectivity
In the area of connectivity, the key areas include WiFi, 3G – True VoIP vs Hybrid VoIP. By
2012 broad migration of circuit telephony to standardised VoIP will have started and VoIP will
be accessed by mobile operators' own standards-based VoIP capabilities, over the new, advanced
3G+ networks vs still be on independent providers' offerings. Operators will deploy VoIP to
improve voice capacity, gain synergies from Fixed Mobile convergence networks and counter
competition from WiMAX or other VoIP providers. While mobile VoIP is set to grow, it will run
over the 3G data provided by handsets, rather than over Wi-Fi, according to a research report
from Disruptive Analysis, which predicts 250 million users of 3G VoIP by 2012, compared with
less than 100 million for voice on Wi-Fi.
In this context, new sectors and revenue streams include social networking capabilities and
exploiting web 2.0. While new advertising models are not cracked yet eMarketer reports that ad
spend on social networks is not as high as anticipated, £65m in 2007, and £115m by the end of
2008. This when big brands are yet to transfer more than a couple of percent of their advertising
budget onto mobile, giving this market potential to explode from $1.72bn in 2008 to $12.09bn by
2013 according to Informa Telecoms & Media forecasts.
Further, revenue from consumer telecoms network services will hit $2 bn globally by 2012 as the
digital divide between developed and developing nations deepens, market watchers predict. In-
Stat expects the sector to grow at a steady annual pace of about 5.7%, on average, over the next
five years.
To give you an idea of how the revenue sharing model actually works in case of Mobile VAS
and correlation between content and distribution, here is an insight into the Indian Idol revenue
model. During the voting period from November 2004 to March 2005, Indian Idol got more than
55 million votes via SMS. At Rs 3 per SMS, that is Rs 16.5 crore. The telecom companies made
Rs 11.5 crore, and Sony about Rs 5 crore.
So as one can see, the creators of the content as of now do not demand as much of the revenue
margin as the distributors (i.e. the mobile phone operators). In short, the supply of mobile phone
operators is relatively inelastic i.e. they are fewer in number and not growing that fast. The
supply of content makers however is relatively elastic - there are loads of people trying to
produce exclusive content and there is a certain level of quality that is being made due to the
proliferation of so called 'exclusive' content creation tools. So obviously the distribution takes a
higher premium because there are scores of people lining up with content for distribution while
everything cannot really be distributed.
Another development in the near future is that TV over mobile is going to be easily accepted. We
definitely will see exclusive content but due to limitations in bandwidth primarily and due to the
nature of the screen and short attention time spans, we will see mostly TV 'munching' or short
TV shows (like our very own WATShow).
In the past, the impression was that content over the mobile will be paid for, and the revenues
will be much bigger on the Mobile phones than on the Internet. This was primarily because of
the mindset that exists in the consumer's mind who thinks that everything on the Internet is (or
should be) free, while everything on mobile phones is/or can be paid for.
Key Takeaways
To sum up, mobile Internet will be dominated by mobile VoIP and other chat applications to
give users a fully integrated 'mobile freedom' especially when consumers are demanding lower
costs of communications and are becoming familiar with finding and using new technologies to
achieve this. The supplier market is currently fragmented allowing room for independent
innovators to make their mark with key developmental challenges being faced by content
providers, network operators and others in the mobile internet value chain.
Further, operators concentrating on their current mobile internet capabilities will use the
technology innovations of independent suppliers to make their own entry into the market via
partnerships. Finally, mobile internet is a strong future revenue stream but advertising models
need to be honed to provide proven value for brands before budgets will be allocated.
(Contributed by Evert Jaap Lugt, the Founder and CEO of Nimbuzz)

Mobile VAS Consumption And Insights on Service

providers in Urban India
Mobile subscriber review on Service providers (cellular operators)
in India, likelihood of VAS options by subscribers

FOR IMMEDIATE RELEASE

PRLog (Press Release) – Jul 15, 2009 – BANGALORE, India - Evolution of cellular
technologies and increasing number of mobile subscribers in India has driven
telecommunication industry to become one of the fastest growing industry in India
today. Mobile users are in constant look out for new cellular services. To meet this
demand, service providers are persistently working on providing innovative and
attractive mobile value added services. There has been significant increase in
revenues for service providers ever since the existence of cellular technologies.
Mobile phones today have moved beyond their fundamental role of voice
communications. Subscribers are using their cellular phones to send SMS, play
games, read news, surf the Internet, keep a tab on astrology, download images,
listen to music, set ring back tone for callers or even check their bank accounts and
hence making the best use of Mobile VAS offered by service providers.

Vital Analytics a pioneer in analyzing urban Indian mobile phone usage trends has
released its VAS service provider report on Urban Indian Mobile space. State run
mobile service providers are perceived to be offering most reasonably priced
services! 22% of BSNL and 16% of MTNL subscribers feel they (service provider)
offer a more reasonably priced services compared to overall subscribers. On the
product diversity side, Aircel and Vodafone do a great job as 11% of both service
providers’ subscribers appear to agree than overall subscribers. On customer
service front, MTNL, Loop mobile and Vodafone Essar are ahead of the curve with
subscribers to each provider agreeing 16% more than overall that they offer reliable
customer service. In terms of VAS Options likelihood of usage, unlimited data usage
at lower cost and better SMS bundle offers are two most popular VAS options Urban
Indian would subscribe to if offered by service providers! When asked what options
if offered would Urban Indians subscribe to with their service provider,
bundle/unlimited usage type options came out on top with “unlimited data usage at
low fixed price”being the most popular with over 40% suggesting they would likely
subscribe to, followed by “better bundle offers in SMS value added services” (39%
would likely subscribe).
VeriSign Supports Visa Mobile Platform to Advance Fast-
Growing Mobile Commerce Market
29 March, 2007 - VeriSign, Inc., (NASDAQ: VRSN), the leading provider of digital
infrastructure for the networked world, announced today that it has entered into an agreement
with Visa to support the Visa mobile platform to advance the already fast-growing mobile
commerce market, through mobile marketing campaigns and point-of-sale redemption of mobile
offers.
"The Visa mobile platform provides mobile operators and financial institutions the opportunity
to rapidly develop new mobile services utilising the unique interactive features of handsets." said
Patrick Gauthier, senior vice president, innovation, Visa International. "We are excited to be
working with VeriSign to combine secure payments with value-added promotional services. Our
collaboration is designed to enable consumers to receive promotions and information relevant to
their purchase experience anywhere via their mobile phones."
As a result of the agreement, Visa will provide mobile offer management capabilities including
the delivery of mobile coupons by leveraging VeriSign's content delivery services. VeriSign will
enable Visa, its members and merchants to create customised campaigns, mobile offers and
promotion programs. Additionally, the service will help marketers understand the performance
of their mobile campaigns potentially resulting in better returns on marketing dollars spent.
"Consumers are driving demand for new mobile commerce services and applications. They need
to be able to access information and make purchases in a secure environment anywhere and on
any device," said Brian Matthews, vice president of industry marketing -- financial services,
VeriSign. "We are excited to help Visa deliver the most compelling mobile payment
experience."
According to forecasts from a recent Juniper report, 2009 and 2010 will represent the start of the
wider adoption of mobile payment applications and services and will result in close to $1 billion
worth of worldwide payments being made via mobile by 2010.

Virgin Mobile India Strategy

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- Presentation Transcript
1. Virgin Mobile Retail strategy for entering the Indian Handset market
2. An Update
○ On 1st March 2008, Virgin Mobile has entered the Indian Market, tying
up with Tata Tele-services.
○ Virgin is primarily an MVNO company, and retail distribution is only a
part of the overall strategy.
3.
○ However, it is a very important piece.
○ Even for an MVNO like Virgin, having a finely crafted retail strategy can
mean the difference between a strong subscriber uptake rate or a
mediocre showing among the target audience.
4. Agenda
 ○ Virgin Mobile - Company Brief
○ The Indian Opportunity
○ Competition and Positioning
○ The Indian Consumer
○ VM’s Entry Strategy Review
○ Analysis and Recommendations
5. Virgin Mobile The Company
6. Global Reach
7. Virgin Mobile Charter As a customer, there’s nothing more frustrating than
dealing with a faceless bureaucracy or a member of staff who tows the party
line. A little something extra can really go a long way to improve a their
experience and their opinion of Virgin. E.g. A Virgin Trains manager took all
the placemats from First class and folded them into fans for the passengers
caught in an unpleasantly hot carriage when the air-conditioning failed. To
add a personal touch to our customer experience: the little extras….
8. Virgin Mobile Charter Speak from the heart, not a script. Talk to people the
way they prefer to be talked to – with warmth and humanity. When Virgin
Money sends people letters about their financial services they recognise it’s
the customer’s money, not theirs. They don’t write in jargon but as one
human being to another To offer an experience that’s 100% human, treating
customers with respect.
9. Organizational Mission
○ Keep it simple
○ Do what you say
○ Take the leap of faith
○ Keep on checking
○ Stay true to your values
○ Love the locals
10.Virgin’s New Venture Strategy
○ When we start a new venture, we base it on hard research and
analysis. Typically, we review the industry and put ourselves in the
customer's shoes to see what could make it better. We ask
fundamental questions: Is this an opportunity for restructuring a
market and creating competitive advantage? What are the competitors
doing? Is the customer confused or badly served ? Is this an
opportunity for building the Virgin brand ? Can we add value ? Will it
interact with our other businesses? Is there an appropriate trade-off
between risk and reward?
11.Size, Structure and Segments for Handset Retail
12.Mobile Retail - The Numbers
○ New Connections per month = 60,00,000
 ○ Handset Retail = 3,50,00,00,00,000
○ Airtime + Accessories + Handset = 7,50,00,00,00,000
13.The Demographics
○ 50%
14.What Virgin Needs To Know
○ No Bundling - Handsets sold directly so far, not by operators. This
works in the favor of retailers, though it has begun to change.
○ 7-9 Models added every month.
○ Replacement sales account for as much as 60%.
○ People are replacing handsets every 18-24 months
15.Organized Retail
○ There are 95000 retail outlets in all
○ Only 1% of these are organized retailers
○ By Sales, organized retail has a share of 7%
16.The Future - Growth Rates
○ Handset retail market has been growing at a CAGR of 60%
○ Overall, the Mobile retail market is growing at 20%
○ According to Gartner figures for Sep 07, India recorded the fastest
growth in mobile handset sales
17.The Future - Volumes
18.The Potential - Handset Retail
19.The Future - Trends
○ Saturation in the urban market
○ Rural India will drive growth, accounting for 35-38% of total handset
market.
○ Aggressive promotions to get more common
○ Low priced handsets and handset bundle offers.
20.PEST – Politico-Legal Environment
○ Politically stable country. However, there are certain parties with
vested interests that act as bottlenecks.
○ FDI allowed upto 24% for foreign players w.e.f. April, 2008
○ Availability of cheap as well as professional labour
○ Weak consumer protection laws
○ Increasing recognition of the potential in the retail space by the
government.
21.PEST - Economic Environment
○ 7-9% growth rate; mobile retail growing at 20%.
 ○ Credit Sales have started, and Cell Phones are being sold on EMI.
○ The Monetary policy aims to contain inflation close to 5.0% in 2007-08
while conditioning expectations in the range of 4.0-4.5%.
○ Indirect taxes like service tax on immovable property adds to the
costs. The retailers want to move the service tax on rent, telephone,
etc to sales tax.
○ Consumer confidence in the organized retail format is high and
encouraging.
22.PEST - Social Environment
○ 21.5 crore people between the ages of 14 – 25 years
○ Demographics - A lot of demand is coming from Rural India, as as
much as half of the newly added subscriber are from rural areas.
○ Growing middle class and youth with an increasing propensity to save.
○ Changing attitude- live for today
23.PEST - Technological Environment
○ The mobile sector has grown more than tenfold from 2001 to around 6
crore subscribers by mid-2005.
○ 10% of the ISPs have 90% of the subscribers
○ The country’s mobile market stands at Rs. 35,000 crores and is
growing at an annual rate of 60%.
24.Porter’s Five Forces
25.Porter’s Five Forces
○ Threat from New Entrants: High
○ Rising cost of retail real estate makes nationwide competition difficult,
but numerous national and foreign players are interested to enter
26.Porter’s Five Forces
○ Competitive Rivalry: Moderate
○ Margins are thin at mere 4%. Pressure from Second hand sales makes
it worse.
○ Buyer Power: High
○ Buyers Demanding greater variety at lower prices
27.Porter’s Five Forces
○ Supplier Power: Moderate
○ Suppliers have strong brands and often have a presence in retail
themselves
○ Network Operators are able to push cheaper brands (e.g. Reliance
Classic)
28.Porter’s Five Forces
 ○ Threat of Substitution: High
○ Second hand phone market and unorganized retail is strong.
○ Most demand is from rural areas – where organized retailers don’t have
a presence.
29.Competitive Landscape Players, Positioning and Strength
30.Existing Players
○ Nokia
○ Samsung
○ Sony World
○ ConvergeM (Future Group)
○ Mobile Store (JV between Essar and Virgin)
○ MobileNxt
○ Univercell
○ Hotspot (Spice Telecom)
○ RPG Cellucom
○ Subhiksha
○ M Bazaar
31.Nokia
○ Around 50% market share in Indian mobile market
○ Focus on “Mother Brand” than on “Another Brand”
○ Addressed all five needs “REAPS” of Indian Consumer
○ Strong focus on distribution network
○ Reduced their prices to counter the grey market
32.Mobile Store
○ Essar Group venture - entered Jan 2007
○ Target Segment - 18 to 45 years
○ Eyeing 10% market share, 2500 stores, 600 cities, and breakeven by
2010
○ Plans to invest 1250 cr by 2010
○ 3 Formats - large medium and compact, in 20:60:20 ratio
○ Against Franchising - dilutes brand value
33.Positioning Map
34.Consumer Need Analysis Segments, Buyer Behavior and Gaps
35.Consumer Segments I want everything from my mobile and I want it now My
phone means I belong amongst my peers My life is a juggling act – my mobile
keeps me connected I want a phone that makes me look good - even when I
can’t afford it To stay ahead of the game you need the best tools New
 experiences, new possessions, new technologies – that’s what I want I’ll
adopt new technologies if you show me a good reason I’ll carry a mobile if I
need to… Pioneer Youth Mainstream Youth In-touch Organizers Mainstream
Materialists Careerist Experiencers Family Phoners Basic Phoners
36.The Indian CellPhone Buyer
○ Replace handsets every 18-24 months
○ High demand from upgraders
○ Price Sensitive - bulk of demand from sub 5000 price range
○ VAS such as Texting very popular among Urban, Young customers
37.The Opportunity
○ Urban youth: Distinct mobile needs
○ More and longer out-bound voice calls
○ Large calling circles for both making and receiving calls
○ Large users of SMS
○ Both the earliest adopters and highest users of value-added services
○ Higher usage for both voice and SMS at weekends
38.Urban Youth: More Than Just A Segment
○ India has 21.5 crore people between the ages of 14 – 25 years old.
○ Incremental urban youth subscribers between 2008 and 2010 will be
more than 5 crores.
○ Urban youth mobile service revenues > Rs. 35,000 crores by 2010
○ Mobile as a badge of self-expression: brand and style very important
39.Indian Market Entry Strategy Target Segment, Positioning and Objectives
40.Virgin India Strategy
○ Target Segment - Urban Youth
○ Sales Objectives
 Revenues of Rs. 35000 Crores by 2011 (including connections,
handsets and accessories)
○ Image Objectives
 Establish the brand name
○ Market Share Objectives
 10% of the market in 3 years
41.Positioning - Seeking Youngistan
○ Mainstream Youth and Materialists
○ 14-25 years
○ Young executives / students / Youthful Adults
42.Virgin India Strategy - Differentiation
 ○ Win a 10% share of the urban youth market by…
○ Delivering imaginative solutions that offer
○ Value for money & flexible tariffs that reflect their unique needs
○ Innovative, game-changing value-added services
○ Great handsets at great prices
○ Personalized customer care
43.Virgin India Strategy - Cost
○ Whilst achieving a low operating cost per customer through
○ Sharp focus on India’s top youth markets
○ Fewer, stable propositions with low support and service costs
○ Imaginative, eye-catching advertising & PR that gets youth talking
○ A lean, enthusiastic team supported by simple processes
44.Differentiation Strategy - Customer Care
○ Taking the hassle out of buying a cell phone
○ Try before you buy
○ Real conversations: no scripts
○ End-to-end ownership of problems: same Champ call-back
○ Champ empowerment: authorized to resolve issues on the spot
○ Welcome calls: all customers are personally welcomed to Virgin Mobile
○ A real returns policy
45.Returns Policy
○ q. Lost my charger, battery fell off and someone threw my phone…
gasp!
○ a. Tension nahin leneka. Whatever your problem you can walk into any
service center and get replacements for faulty* items in your pack.
Here’s a list of our service center .
○ *conditions apply. But don’t get scared about it.
46.Differentiation Strategy
○ Value for Money and Flexible Service Offerings
47.Differentiation Strategy - First Time In India
○ Get paid to receive calls
○ 50 paise to any local network
○ TGI the weekend Bolt-on
○ One Touch access to V-Bytes
○ Unlimited access to V-Bytes for a simple daily charge
○ ‘ 100% colour, 100% FM’ handsets
 ○ Easy Handset upgrades
○ Personalised Care
○ Safe Secrets
48.Virgin India Strategy - Promotions
○ Think Hatke Campaign
○ 10 paise every minutes on incoming
49.Virgin India Strategy - Location And Ownership
○ “ You have to be in front of the right people.”
 Howard Handler
 CMO, Virgin Mobile
50.Virgin India Strategy - Location
○ Shop in Shop and Kiosks
○ Non exclusive, extensive coverage, lower costs
○ The one commonality all of the retailers share is they are places where
teens shop, because that's Virgin's core market.
51.A Virgin Kiosk
52.Virgin India Strategy - Expansion Plans
○ To begin with, Virgin Mobile services were launched in 50 cities with
15,000 handsets & 40,000 top-up outlets. Also, with 55 Virgin Mobile
kiosks & Shop-in-Shops.
○ Plan to expand to 1000 cities by 2008-end
○ Aims to acquire 50 lakh subscribers over the next 3 years, by when it
would be profitable.
○ By the end of 2008, when the new GSM players start rolling out their
services, Virgin Mobile aims to offer similar services on GSM as well.
53.Virgin Mobile Analysis and Recommendations
54.South African Experience
○ Virgin entered as a 50-50 partnership with Cell C, H1, 2006
○ Classified itself as an ESP, since MVNO’s are illegal in SA
○ Premium Pricing, supported by a strong brand, superior customer
service and pricing plan simplicity
55.Singapore Experience
○ Entered through a tie-up with SingTel
○ Exited the market - citing premium pricing and crowded market
○ Customers placed more premium on Price
○ SingTel tariffs too high - texting too expensive
56.Strategic Choices for Mobile Retailers Price Volume Low High High Low Cost
Strategy-Viable Low Cost Strategy- Unviable Not sustainable Premium
Positioning-Viable
57.Positioning Virgin BRAND ENGAGEMENT CAN BE THE ONLY DIFFERENTIATOR
OFFER SIMILAR ACROSS RETAILERS ASSORTMENT EXPECTED CONSUMER
MORE EVOLVED PRICE COMPETIVENESS SHORT LIVED
58.200 companies worldwide, employing 48 500 people, an annual Virgin Group
turnover of £10.8bn/US$20.4bn … .one of the most exciting brands in the
world
59.SWOT
○ Threats
○ Rising Retail Costs
○ Lack of number portability - switching barriers
○ Unclear Government Policy on MVNO
○ Falling Handset prices - lower margins
○ Saturation - Mobile penetration in excess of 40%.
○ Opportunities
○ India a growth story - 20-30% CAGR, highest handset sales volumes.
○ Organized Retail mere 7% by revenue, 1% by outlets.
○ Most entrants are new, few established competitors
60.SWOT
○ Weaknesses
○ Dependent on Partners for pricing, capacity
○ Non serious image may not go well with conservative Indian consumer.
○ Limited understanding of India Market
○ Strengths
○ Strong Global Brand
○ Limited overlap with Tata’s existing customers
○ Very low fixed costs as it leases Network Time
○ Not tied to a particular Technology
61.Capitalizing On Strengths
○ Into retailing + service provider
○ If the GoI allows MVNOs then after tying up with GSM players, can beat
Reliance
○ Good brand recall
○ Structured pricing of airtime serves as a loyalty incentive, encouraging
active use
62.Making Weaknesses Irrelevant
 ○ People not familiar with the MVNO concept
○ Tata Teleservices does not have a good brand image
○ Confusion in the minds of consumer about the Virgin-Tata deal- a re-
branding exercise by Tata Teleservices?
63.Recommendations
○ Key advantage over other (non-operator) retailers - presence in both
retailing and airtime
○ Key advantage over operators - not tied to technology (as an MVNO)
64.Recommendations
○ Forge deal with a GSM player
○ Offer bundled plans - subsidize handset costs with Airtime
○ Offer for both CDMA and GSM - greater assortment
○ Offer plans for 2 years, with upgrade options
65.Recommendations
○ VM is moving in the right direction but time is still not ripe for a big
bang entry into handset retailing
○ Need to see the response to Airtime and expand in other cities
○ Continue tie-ups with existing Mobile retailers like Univercell, Hotspot,
M Bazaar, M Port, Vishal, etc.
66.Thank You !!

Trends and developments in the telecommunication environment

The global market for telecommunications is expanding rapidly. It is not a question of “demand
pull” or “supply push”. Both are happening. The interaction of these two forces has made
telecommunications one of the leading growth sectors in the world economy. It has also made
telecommunications one of the most important components of social, cultural and political
activity.
On the demand side, growth is pulled by an increasing reliance on
telecommunications and information technology in every area of human
life – in all sectors of economic and social activity; in government, in the
provision of public services, and in the management of public
infrastructures; in the pursuit of knowledge and the expression of culture;
in the control of the environment; and in response to emergencies,
whether natural or man-made.
On the supply side, growth is pushed by rapid technological
developments which continuously improve the efficiency of existing
products, systems and services, and provide the foundation for a
continuing stream of innovations in each of these areas. Particularly
noteworthy is the convergence of telecommunication, information,
 broadcasting and publishing technologies, which has greatly enriched the
communication choices available to consumers.
The effect of the fundamental forces driving demand and supply has been amplified by the
worldwide trend to liberalize markets for telecommunication and information technology goods
and services. As a result of this trend, the majority of telecommunication networks are now
privately owned and operated. Significant developments have also taken place to introduce
competition at the national, regional and international levels. Of particular importance is the
World Trade Organization (WTO) agreement to liberalize trade in basic telecommunication
services which was concluded in February 1997 by 69 countries which together account for more
than 90% of global telecommunication revenues. The agreement entered into force on
5 February 1998.
The new framework developed by WTO to govern trade and regulation of telecommunication
services will facilitate further globalization of the telecommunication equipment and services
industries, as well as the closely-related information technology industry.
In the 1995-1999 planning period, "globalization" was more a slogan
than a reality, since it referred mainly to alliances between major
operators to provide end-to-end services to multinational enterprises.
Public networks and residential customers were relatively unaffected by
this kind of globalization, although various forms of "alternative calling
procedures" provided consumers in countries which allowed such
practices a "poor-man's version" of the benefits enjoyed by big business
users.
In the 1999-2003 planning period, globalization is likely to become much
more of a reality. The WTO agreement will make it possible for foreign
operators to have direct access through interconnection and
interoperability to public networks in most of the world's major
telecommunication markets, as well as to make direct investments in the
development of those networks.
Five years ago, few would have predicted that the Internet would emerge so rapidly as a serious
competitive force in telecommunications. However, today's Internet is only a precursor to the
new competitive forces that are likely to emerge in the next five to ten years in the new
"communications and information sector" which will result from technological convergence.
The essential lesson to be learned from the Internet phenomenon is that competition is no longer
a public policy tool which can be introduced in a completely controlled fashion and regulated
within the confines of the traditional telecommunication sector. Competition in
telecommunications is rapidly becoming a true market force whose evolution cannot be planned
by policy-makers, a force which increasingly is seen as best regulated on the basis of principles
that are not specific to telecommunications, but derived from a broader economic, social and
cultural perspective.
Although far from universally accepted, the sweeping changes in telecommunications described
above have broad support among many countries, including a number of developing countries
who see it as the best way forward in developing their telecommunication networks and services
to the benefit of their overall economic and social development.
The liberalization of telecommunications does not mean an end to regulation – but it has changed
both the role of government and the nature of telecommunication regulation:
 In the past, most administrations of ITU Member States tended to be
"all-purpose" creatures — policy-makers and operators which both
provided and regulated telecommunications on the basis of a "public
utility" model.
The liberalization of telecommunications has been accompanied by a
separation of these functions. The trend now is for administrations of
ITU Member States to be policy-makers, nested within a general
department of government (e.g. industry and trade); for
telecommunications to be operated by corporations — whether public,
private or mixed; and for "the public interest" in telecommunications to
be protected by an independent regulatory authority.
In countries that have introduced partial or full competition, the model
for regulating telecommunications is changing. Principles derived from
competition law are taking their place alongside the classical precepts of
public utility regulation. In some jurisdictions, sector-specific
telecommunication regulation has been abandoned.
Again, the WTO agreement will amplify these regulatory trends. More
than 60 signatories accounting for more than 90% of global
telecommunication revenues have made commitments to apply in whole
or in part a set of regulatory principles including interconnection,
transparency and anti-competitive safeguards. These regulatory
commitments, and indeed all other commitments, are subject to the WTO
dispute resolution mechanism. They are therefore more than a voluntary
code of conduct. They are binding commitments which are enforceable
under the WTO dispute resolution mechanism.
In the 1999-2003 planning period, it is likely that the trends noted above with respect to
liberalization, competition and globalization will begin to combine in new ways that may
ultimately change the way the telecommunication industry sees itself and is seen by its
regulator(s) and customers.
Countries that began permitting competition in telecommunications 10
or 20 years ago generally introduced it in a planned and orderly manner:
first in terminal equipment; then in value-added services; then in the
long-distance service; and finally in local and international services. In
addition, competition was generally permitted among different service
providers using the same infrastructure before being allowed between
different infrastructure providers. Even today, most countries that permit
competition do so on a highly regulated basis
In this environment, the regulator must implement competitive
safeguards, nurture competition, ensure interconnection/interoperability
and ensure broad and affordable access to necessary services
As a result of technological progress, convergence and market
liberalization, countries only now beginning to introduce competition are
less likely to be in a position to plan an evolution of this kind
Even in those countries that have experience with competition, service
providers and regulators that have based their respective plans on an
 orderly evolution of this kind are finding that the "rules of the game" are
suddenly changing, that competition is coming from unforeseen
directions, and that it cannot be regulated as it was in the past
More than any other phenomenon, the Internet symbolizes the changing
nature of telecommunications. It is based on different technologies,
network architectures, standardization and addressing schemes. Its
economic foundations and charging principles are diametrically opposed
to those of public telecommunication operators. It has experienced
phenomenal growth and it has largely been outside government
regulation. Yet it is emerging as a serious alternative to the traditional
services provided by the telecommunication industry in every market
segment, from intra-corporate communications to public voice
From one point of view, encouraging progress has been made in the 1995-1999 period in certain
countries and some regions in forging the "missing link" identified by the Maitland Commission.
Overall, the gap between developed and developing countries in access to basic
telecommunication services is closing. However, from other points of view, new gaps are
beginning to appear:
In general, the majority of the least developed countries (LDCs) have
made little progress in the past five years in closing the gap in access to
basic telecommunication services. In some cases, teledensity (the
number of telephone lines per 100 people) has fallen, as population
growth has outstripped telecommunication growth. New technologies
such as global mobile personal communications by satellite (GMPCS)
may help close the "telecommunication gap". This will only be possible,
however, if their services are affordable to inhabitants of the LDCs.
There is currently an enormous gap between developed and developing
countries in access to the Internet. Even as the telecommunication gap
which has preoccupied the Union for so many years is beginning to
close, an "information gap" of even greater proportions is opening up.
A difference in regulatory practices is emerging between countries which
have decided to liberalize their telecommunication markets under the
WTO agreements, and those that have not. If competition brings the first
group of countries the anticipated benefits in terms of investment,
technology transfer, innovative services and lower prices, these
regulatory differences may become a new development gap. In this
regard, it is important to recall that although the 119 ITU Member States
that are not yet part of the WTO basic telecommunications agreement
generate less than 10% of global telecommunication revenues, they
include more than 45% of the world's people.
On the eve of the 21st century, the Union thus finds itself in a dynamic situation. On the one
hand, the goal established by the Maitland Commission of achieving universal access to basic
telecommunications will be technically achieved, and the overall gap between developed and
developing countries is steadily narrowing. However, at the same time, new differences are
developing, for example within the developing world, between the LDCs and other developing
countries, between liberalized and non-liberalized countries which may be either developed or
developing, and between countries that are moving rapidly towards competition and those
moving at a slower pace.
This raises important questions in relation to the vision of the global information society (GIS).
This vision was the subject of considerable discussion during the 1995 — 1999 period, initially
in the G-7 group of advanced industrial economies, then in the broader international community.
Today, the basic ideas behind the concept of the GIS have been broadly accepted and indeed
endorsed. In this vision, all forms of economic, social, cultural and political activity will
increasingly depend on access to the telecommunication and information services provided by
the global information infrastructure (GII). The rapid development of electronic commerce on
the Internet is one tangible example of how the GIS is becoming a reality. The challenge facing
the international community is to find ways to ensure that the GIS is truly global, and that people
everywhere are able to share in its benefits.
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Investment in the Major Telecom Service Sector by Private Operators

(upto 31.3.2000)

Items Amount (Rs. Crore)

Basic Services 3605.48

Cellular Mobile Telecom Services 11860.91

V-SAT 184.52

Mobile Radio Trunk Service 250.00

Paging Service 663.47

Source : Rajya Sabha, Unstarred Question No. 213, dated on 24.07.2001.

Year: Period of fiscal year in India is April to March, e.g. year shown as 1990-91 relates to April 1990 to March 1991.
Units: (a) 1 Lakh (or Lac) = 100000.
(b) 1 Crore (or Cr.) = 10000000.
Some part of the footnotes/units may not be applicable for this table.

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