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INDIAN TELECOM INDUSTRY

OVERVIEW
 315 mn mobile subscribers by September 08

 39 mn fixed line subscribers by September 08

 Crossed 25% teledensity mark in March 08

 10.42 mn subscribers added in month of October 08

 There are 6-7 telcos operating in each of 23 license areas.


Airtel, Reliance, Vodafone & BSNL, who are “the Big 4” have
74% market share
 Growth is expected to continue and even accelerate,
reaching a projected 496 mn mobile subs by 2010
Fixed vs. Mobile
No of new subscribers
Threat from New
Entrants
Supply Side Economies Of Scale

• declining ARPU

• Infrastructure tenancy costs

• Other FC like BPO

Demand Side Benefits

• Brand pull exists to some extent for brands like airtel /idea/
vodafone
Threat from New Entrants
(Cont.)
Customer Switching Costs

• Cost of new connection low

• Proposed number portability

Capital Requirement
• Extremely high infrastructure setup costs
• Spectrum License cost
Threat from New Entrants
(Cont.)
Incumbent Advantages
 Established brand image

 Reliability of network

Uneven access to Distribution Channels


 Not a factor
Threat from New Entrants
(Cont.)
Restrictive Govt Policy
 Spectrum and license allocation

 3G and Number portability policy still unclear.

 74% FDI cap.

 Minimum requirement of number of towers.


Power of the buyer
Lack of differentiation among the service provider

Cut throat competition

Customer is price sensitive

Low switching costs

Number portability to have negative impact


Supplier Bargaining Power
 Large number of suppliers.
Physical Infra Supplier
Network -Ericsson
 Shared tower infrastructure.
Infrastructure -Siemens
Networks
 Limited pool of skilled managers and engineers -Cisco
especially those well versed in the latest -Huawei

technologies. Information -IBM


Technology -TCS
Passive -Bharti Infratel
 Medium cost of switching since changing their
Infrastructure -Indus Towers
hardware would lead to additional cost in
Call Center -IBM Daksh
modifying the architecture. Outsourcing -Mphasis
-Hinduja TMT
 Overall influence on the industry - medium -Aegis BPO
-Nortel
Rivalry among Existing
Competitors
High Exit Barriers

High Fixed Cost

6-7 players in each region

3 out of 4 BIG-Four present in each region

Very less time to gain advantage by an innovation

(Eg. Caller tunes, life time card)


Price wars
Market Share
Presence in States
Threat of Substitutes
 Some Substitutes:
 VOIP (Skype, Messenger etc.)

 Online Chat

 Email

 Satellite phones

 None of the above a major threat in current scenario.

 Price-Performance trade-off very high.

 Issues of mobility and penetration with the substitutes.