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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 focus is on execution rather than expansion. Economic and Market Trends that Drive the Telecom Revolution Coupled with the technological trends. to do this we will examine the following issues: Monopoly In a monopoly scenario. expand in the growth areas of mobile data. where the telecom services and the collection of products were supplied by one telecommunication company. the telecom service providers. a single supplier supplies the whole market. enterprise and broadband and acquire. Driven by technological developments. Beyond this. primarily by increasing dividends. we shall look at the development of the telecom market. In Africa. the Board adopted a progressive dividend policy where dividend growth reflects the underlying trading and cash performance of the Group. With the reforms in the telecom industry. the priority is to invest in existing businesses.S. the company and the industry are identical. One major problem with telecom monopoly is that monopolist may exploit its market position by charging excessive prices and compromise quality of service. new spectrum to support voice and data traffic growth. most fixed line operators are still monopoly in nature. with fixed line subscribers migrating to cellular markets where there are competitive services. The liberalization of the sector. In a monopolistic market structure. or operators have been government-owned monopolies. excluding licence and spectrum and any potential CFC tax settlement. The development of wireless technology has brought in competition in the telephony market. The single company makes all the output and price decisions. the revolution in the telecom sector has been driven by the dynamism in the telecommunications market globally.The Group is focused on generating £5 billion to £6 billion of free cash flow per annum. To expatiate further on the market trends. In terms of cash deployment. Telecommunications industry was traditionally a natural monopoly. Vodafone supports inmarket consolidation. it has complete control over the market (Gerber & Braun 1998). The Group remains committed to the current low single A long term average credit rating. the Group’s current capital structure implies that any significant acquisition would likely need to be funded through portfolio disposals. where appropriate. Traditionally. In addition. however there is competition in the . 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. in 1976 in the U. For instance. the Group will consider opportunities to reshape the portfolio. Traditional view of the telecommunications sector is that the telecommunications market was monopolistic in nature. the traditional monopoly service provider was faced with competition in the long-distance market from use of microwave technology (Gerber & Braun 1998). competition has come to dominate a market that was once a monopoly. In emerging markets. In November 2008. such as the recent agreement to merge the Australian assets of Vodafone and Hutchison 3G Australia to form a 50:50 joint venture. Today most developed countries are or have introduced competition in the telecom market that was once monopolistic in nature. After investing in existing business and returns to shareholders. came a series of restructuring of the telecom industry. the Group will aim to enhance returns to shareholders.
Developing countries identify that massive investment is required to address the low teledensity and poor service typical of the telecom market. The privatization of national companies comes in either public stock floatation or private sales to strategic investors. which is presently known as Telkom Malaysia. Liberalization Liberalization Liberalization usually means the process of transferring monopolistic market to a free market environment. It can be defined as the process where by the government handover its management or assets of services to private interest. Another reason for privation is also to tap into the advantages that modern technology offers through foreign investment into the local telecom infrastructure. Subsequently “private sector investment – through privatization of national carrier or other forms of private sector involvement – is often the only recourse” (Pisciotta. In the telecom sector. their telecommunication infrastructures have improved drastically. • Privatization of a public telecommunication operator can generate a lot of financial benefit. Many countries have endorsed the WTO’s liberalization guideline and subsequently open their telecom market. the monopoly fixed line service provider. In . Since the processes of liberalization and privatization have been taken into consideration by countries such as India. 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. or actual ownership of publicly owned facilities. it has brought about an era of competition in the telecom sector. leading to open and competitive market. 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. has further spurred the need for privatization. Privatization and Liberalization Amongst the wave of reforms that characterized the global telecom markets in the 80’s and 90’s. It can also be defined as a transfer of government (public) agency to a non-government (private) body.cellular market. Malaysia and South Africa. This transfer can entail the operation. Privatization is the transfer of public functions and resources to the private sector. Privatization and liberalization are two telecom reforms that improve the public treasury. Privatization and liberalization cut the existence of monopoly and promote competition. it could also include the opening up of market to private investment in the thriving telecom market. are far beyond the reach of many governments that have other social development projects to fund. Privatization without liberalization is possible: a monopoly merely becomes a private one. in most cases. In most cases of telecommunications privatization. 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. management. however. In developing countries. The World Trade Organization has prescribed liberalization of the telecom market. and most of its shares are sold in the stock exchange. the realization that investment in the telecom infrastructure is a necessary foundation for economic growth. Malaysian government has developed its telecommunication infrastructure by privatizing the former RTT. Specifically. some element of liberalization is involved. The South African government is in the process of introducing a Second National Operator to compete with Telkom. was the privatization of national companies. 1997). as privatization can be considered as the component of the development of a market economy. which will expand trade relation and also promote competition. Such investments.
As a result of incentives the companies satisfy their customers and this leads to a more internationally competitive economy. 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. It is best for the country to Privatize a public telecommunication operation.2001. 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. public policy objectives through the creation of regulatory bodies (Cheong and Mullins 1991: 112) Some observers believe that privatization will eventually impact negatively on the goal of universal service. or improvement in. Privatization also gives companies the opportunity to contribute towards development of the economy by paying regular taxes. Private companies provide good quality service to attract the customers and also to facilitate the development of the small businesses. Privately run corporations operate on a stringent need for profit basis. It shows how effective a public telecommunication operator will succeed if it becomes privatized. 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. This implies that services will be increasingly provided to the rich who Some Criticisms of Privatization • . which are good for customer and generally good for the public. In South Africa the government and labour union were at loggerhead over privatization. Private companies introduce new technological innovations and services to challenge other companies. shareholders in large private firms give managers real incentives to produce results. 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. the South African government aimed to earn R18 billion from privatization in the fiscal year 2001-02. • The other reason why private companies are more efficient is that. private operators bring new skills. Privatization limits monopoly and instead promotes liberalization because it allows competition among various companies. which are efficient with high standard and quality. which will benefit the country. Countries that privatize do so realize a range of benefits. Private companies improve the telecommunication infrastructure because they are always equipped with advanced technologies in order to attract both local and foreign investors. • In a privatized entity. Some of these benefits include: • • • • • • • Raising cash to lower national debt Raising foreign exchange. mainly from its telecom assets (Reuters 2001).
privatization is not a solution for performance. constitutional prohibition against foreign ownership. technology and management expertise without suffering the political disadvantages and disruptions of a privatization transaction” (Pissciotta. Private sectors usually prefer employees who are specially trained for a particular field or who have experience in that field. even a public sector can do better especially if they can be well managed. In model two. 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. in Mexico. 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. 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. Privatization with full competition In this model. .can afford to pay for the services. Privatization also weakens the state control over the national telecommunication operator because the state no longer owns 100 per cent of the company. a policy of full and open competition is implemented at the same time as privatization. Domberger (1995: 43) states that. military and defence interest based on fear of loss of control and security over critical communication facilities and in some instances. 2. access to services could be a mirage. “One reason for pursuing this approach is to gain the advantages of foreign investment. The point is. All restrictions on entry into all sections of the telecom market are removed. after the telemex’s privatization in 1991. 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. Chile the first Latin American country to open its telecom markets to private sector is another example of a privatized and fully liberalized market. privatization of national carriers is accompanied by a period of exclusivity rights. • • Model of Privatization 1. Liberalization without privatization Government may introduce liberalization into the telecom market without actually privatizing the national carrier. In some instances only fringe services are liberalized at the outset. Some of these disruptions include opposition from workers’ union based on fear of job loss. Privatization with phased-in competition 3. in basic telephone services. For instance. who belong to the low-income group or the unemployed. In this model. prices were increased and residential users were more affected by the price increase than business and long distance caller. or limited competition. This model was utilized by New Zealand in 1990. 1997: 339). 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. For the rest of the population. (Petrazzini 1995:19). Several countries in Europe have followed the process of partial privatization. public enterprises are inherently as efficient as private ones and a change of ownership is not a necessary condition for performance. • Privatization has a potential loss of management control and lesser opportunity for local participation. so privatization in some cases appears to be complex and uncertain.
In South Africa. Competitors are diverse in their operations. ownership rights are eventually transferred to the government company. Traditionally telecommunications services were limited to basic voice transmission. Examples of these arrangements are in Saudi Arabia and China. 1997: 339). when two cellular providers. shift in demand for information goods and services and policy fashions (Lamberton. today we witness the availability of a gamut of telecommunication services . foreign investments are invited in the form of build. In this model. 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. Today there are three cellular providers competing in the South African market. they are not only limited to telecommunications operators. 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. In these arrangements. Private company involvement is limited to consultant services and supply contracts” (Pissciotta. competition has revolutionized the sector remarkably. With adoption of the liberalization programme. Telecommunications operators have to compete with providers in parallel markets and vice-versa. 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. Vodacom and Mobile Telephone Networks (MTN). Today Nigeria has four cellular providers. coupled with privatization of telecom corporation which encouraged private investment are precursors to the advent of full competition in the telecom sector. Coupled with technological development in the telecom sector. investment in information-handling capabilities and general infrastructure. 1995: 6). Competition The increasing competition in the global telecom market has greatly impacted on the telecom revolution. Liberalization of the ICT sector encourages the entry of new telecommunications companies and fosters greater competition in the sector. the first phase of liberalization of this sector took place in 1997. Ways of doing this include the granting of concessions by national operators to private industry to build and/or operate certain facilities or services.4. The evolving nature of competition in telecommunications and information activities in general is interwoven with different issue: the technological trajectories. An example is a telecom company providing internet service and competing in the internet service provision market. many countries opened up their telecom market by issuing licenses to operators. The liberalization of the telecom sector in Nigeria and the concomitant issuance of operating licenses have brought immense competition into the market. The national operator then enters into a management contract to improve operations and enhance profitability. 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. It has increasingly led to the expansion of telecom market and this expansion of market has increased access rate to telecommunication services. were licensed to offer cellular services. transfer and operate (BTO) arrangements.where “private sector participation in telecom is not permitted. changes in the institutional arrangements. private companies invest capital to develop a project and operate the system for a period of time. 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.
Competition in the telecom industry has stimulated growth in the sector. Customers do not to have to ‘go extra miles’ to have access to products and services.brought about by innovations in communication technology. India currently has only 13. competition encourages: • • • • • • Choice: Customers are provided with varieties of products and services to choose from. The Indian government has heady plans when it comes to Broadband and Internet services growth. 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. Prices: competing suppliers attract customers by attaching affordable and low prices to their products. 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 1.3% – We seriously have problems when it comes to Internet penetration ! . but it is growing steadily nevertheless. This is a ridiculously low number ! Even the growth rate is lowly 5. Amongst numerous benefits. Accessibility: products and services are provided in close proximity of the customers. which includes broadband. 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. 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 technologyhas resulted in the era of cellular service providers. This is the 1st part in the India Telecom report series. This also ensures that the customers get quality products. Internet & Broadband services have been unable to emulate the growth that is seen by Indian Mobile sector. 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.54 million Internet subscribers.
68%. which according to me should not be counted as Internet subscribers. Broadband Subscriber Growth . The growth rate of broadband subscribers in this quarter is 12.82 million wireless data subscribers at the end of March 2009 (capable of accessing data services including internet through mobile handsets (GSM/ CDMA)). Besides above. Indian Internet Subscriber Growth • • • There were 13. there were 117. majority of them are GPRS connection on mobiles.54 million Internet subscribers at the end of March 2009 as compared to 12. This growth rate is higher as compared to the growth rate of 5.85 million Internet subscribers at the end of December 2008 registering a growth of 5.01% at the end of December 2008.52 million at the end of December 2008. • Technology Used to Access Internet .30%.22 million at the end of March 2009 as compared to 5.The number of Broadband subscribers (with a download speed of 256 Kbps or more) was 6.While the wireless data Internet subscribers show close to 118 million subscribers.
○ 0. ○ 0. ○ 0. ○ 5.002 million use other technologies Internet Subscriber Growth QoQ . ○ 0.364 million are DSL based.072 million Wireless.• Broadband Subscribers Share (Technology wise) – Out of total 6. ○ 0.020 million Leased Line ○ 0.474 million Cable Modem.22 million broadband subscribers.244 million Ethernet LAN.042 million Fiber.
the price will be lower and quality will be higher. These days. 6. telecom industry is more concerned with texts and images (Internet technologies). Most of the research works are going on Internet accessibility. Indian broadband connections have doubled in last one year. Traditional telecom technologies are also being replaced by modern wireless technologies. mobile phones and internet services.Although. At the same time. specifically on data applications and broadband services. telecom industry are being controlled by private companies instead of government monopolies. With a country population of close to 1. Telecom industry trends Throughout the world. rather than voice(telephone service).2 billion. but these days mobile service is going to replace traditional telephone services. there will be a healthy competition among the providers of telecommunication services.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. The telecom industry comprises of complex network of services like telephones. One of the major objectives of telecom industry is to enhance the quality and speed of Internet technology. Previously the traditional telephone calls used to earn the maximum revenues. The other major division of telecom industry is mobile network sector. where lots of innovative research works are going on. Statistical report Phoenix Center research revealed that in the coming years. The new telecommunications technologies will replace the traditional telecom services. Telecom industry analysis from the experts point of view . Telecom industry analysis also reveals that this industry will provide an immense employment opportunity in the coming years. Statistical data also reveals that the telecommunications industry is going to be a dynamic and booming industry in the near future. specifically in case of mobile services. the growth rate is still not enough.
The competition between the companies led to the decline of revenues. where a number of multinational companies have shown their interest to invest in this industry and consequently the prices are reduced. which are being used as a medium of data transmission instead of using coaxial or twisted pair cables. maintenance. One of the products of modern technologies is optical fibers. the quality is also improved. During the period of 1990. Optical fibers can carry a high volume of data and are easier to maintain and install. Leading companies are showing their interest to invest in this telecommunications industry. Government of India is eager to reconstitute this telecom industry by enacting effective policies . 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. it can be said that they should be well aware of cash flow in this industry. Employment opportunities in telecommunications industry Telecommunication industry has created immense employment opportunities. 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. Fifty five percent of all workers are engaged in office and administrative support occupations. Use of communication satellites make this telecommunications industry a booming industry. and repair . From the investor's point of view. That is why the competitors of this industry should be such that they can meet that demand. The other occupations of this industry relate to installation. telephone.Telecom industry is a vast and diversified industry and needs a huge capital to invest. The use of mobile network has a crucial role behind the growth of an improved telecommunications industry. Telecommunications industry deals with the activities and services of electronic systems for transmitting messages through cables. 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. radio or television. Most of the employees in this industry are engaged in large establishments. The introduction of these advanced technologies makes the telecommunications industry a competitive one. the telecommunication industry showed a speedy growth in terms of investment and eventually increased the competition. Telecommunications industry is going to be a digitized one. where a large number of small contractors are involved. although there are some small establishments.
Tata Teleservices. Bharti Airtel. radio. Telecom Regulatory Authority of India (TRAI) was formed to facilitate the growth of the telecom sector in India. Economic perspective of telecom industry in India Telecom industry in India has a major role in Indian economy. Telecom industry in India is specifically emphasizing on latest technologies like GSM( Global System for Mobile Communications). PMRTS(Public Mobile Radio Trunking Services). Major services and market potentiality of Telecom industry in India Telecommunication sector in India is primarily subdivided into two segments. Mahanagar Telephone Nigam Limited (MTNL). India has a prospering market specifically in GSM mobile service and the number of subscribers is growing very fast. What is not certain yet is how the supply chain will eventually pan out and where the value will settle between independent suppliers. Telecommunication industry of India ranked sixth among all the telecommunication sectors in the world. which are Fixed Service Provider (FSPs) and Cellular Services. media owners and vendors such as Microsoft and Google getting involved with their own mobile services. . operators. In the year 2004.2. 2009 Print Comment Email Digg Del.icio. The Indian government is also enforcing some effective telecom policies and regulations for the infrastructural growth of this industry.us Reddit Mobile Internet take up is dominated by mobile VoIP. which results in a very competitive and deregulated market in the world. Leading telecommunication service providers of telecom industry in India Bharat Sanchar Nigam Limited. A number of leading multinational telecommunication companies are approaching and showing their interest to invest for the telecom industry in India. CDMA(Code Division Multiple Access). television and Internet. in both developed and importantly developing countries as the benefits of cost and flexibility are well understood. now an established reality globally. July 02. 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. Policies of telecom industry in India Government of India implemented the unified access licensing regime. This article aims to examine the factors influencing successful collaboration between these players. Telecom industry in India constitutes some essential telecom services like telephone. Videsh Sanchar Nigam Limited (VSNL).5 percent as registered in the year 2004. the total number of telephone subscriptions were US$93.for more investments from foreign companies. Fixed Line and WLL(Wireless Local Loop ). In 1997. which enables basic and cellular mobile service to use any modern technology. Indian telecom market provides a tele-density of 8.
initiate calls via PC. It will be more important to embed mobile VoIP into new devices. 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.0) than adding video or other media streams. 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. Further. Standalone Mobile VoIP . across the most IM and Social Network communities and in the most countries. partnerships. 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. To put it succinctly. handset. calling patterns. to investigate ways services can be leveraged financially. Mobile VoIP is a highly competitive sector with many well known and not so well known providers offering different MVoIP components. flat-rate data plans and features like 'naked SIP' and built-in VoIP capability.cutting internet data costs and introducing fixed data packages.Nimbuzz is the comprehensive mobile VoIP. preferences. 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. the propensity to download software. swap Sim cards etc vs unacceptable high roaming tariffs leads to offering a fully integrated service. In the end user take up. operators have the opportunity to gain experience of mobile VoIP from independent specialists thereby reducing risk of their own large scale roll out. In the meantime. "host" mobile operator.5G+ voice services. Presence and IM provider that also brings voice to social networks. a vision they call 'Mobile Freedom'. a process that has already started for Nimbuzz with 10 major social network and 3 operator deals on the table. Despite this growth. VoIP will eventually become invisible to users as one of many Internet services on the handset. content suppliers have two commercial aims. In the immediate future. specific tariff. with the figure dominated by mobile operators' own 3. services or web applications (Voice 2. and around 20 per cent of all 3G+ users. Nimbuzz' s USP is offering its product across the widest range of handsets. Integrating mobile data services onto handsets. cheap calls etc. Second. Customers like choice and the products they will want and use vary according to country. first to build user base to make both a successful business and also as a commodity to offer potential partners. By working with providers. 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. 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. The other factor is in developed countries vis a vis developing where a dollar is a weeks pay. Future market success factors The success factors in this area include pricing structure as operator response to existing price erosion already exists . penetration will still be below 10 per cent of total global mobile subscribers. interest in "enhanced" VoIP vs. The other factor is integration of familiar technologies eg Skype to break sown barriers to trial.
5 crore. initial reticence will be countered by awareness of the threats of outright competition. VoIPo3G. regulation and difficulty of enforcement. on the grounds of competition. the mobile phone operators).7%. Connectivity In the area of connectivity. However.72bn in 2008 to $12. So as one can see. call-through and special SIMs. InStat expects the sector to grow at a steady annual pace of about 5. In this context. the creators of the content as of now do not demand as much of the revenue margin as the distributors (i. according to a research report from Disruptive Analysis. rather than over Wi-Fi. over the new. it will run over the 3G data provided by handsets. revenue from consumer telecoms network services will hit $2 bn globally by 2012 as the digital divide between developed and developing nations deepens. already a clear trend towards this with open mobile internet access and all you can use tariffs. At Rs 3 per SMS. While operators have the assets (billing and access to customers). and £115m by the end of 2008. 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. Indian Idol got more than 55 million votes via SMS. While new advertising models are not cracked yet eMarketer reports that ad spend on social networks is not as high as anticipated.0. 3G – True VoIP vs Hybrid VoIP. This when big brands are yet to transfer more than a couple of percent of their advertising budget onto mobile. which predicts 250 million users of 3G VoIP by 2012. The telecom companies made Rs 11.players offer blends of WiFi. working together operators will drop VoIP-hostile 3G terms-of-service. gain synergies from Fixed Mobile convergence networks and counter competition from WiMAX or other VoIP providers. that is Rs 16. mobile operators in developed nations must look to new 3G applications and bundled services for increased average revenue per customer.0 capabilities. giving this market potential to explode from $1. So obviously the distribution takes a . compared with less than 100 million for voice on Wi-Fi. To give you an idea of how the revenue sharing model actually works in case of Mobile VAS and correlation between content and distribution. Operators will deploy VoIP to improve voice capacity. over the next five years.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.09bn by 2013 according to Informa Telecoms & Media forecasts. on average. Further. and Sony about Rs 5 crore. especially on HSPA networks. advanced 3G+ networks vs still be on independent providers' offerings. new sectors and revenue streams include social networking capabilities and exploiting web 2. traffic and advertising revenue. In the case of scope for partnerships between VoIPo3G innovators and incumbent operators (and other parties).5 crore. In this context. they are fewer in number and not growing that fast.e. backed by a variety of social networking / Web 2. Further. VoIP allows carriers to handle more calls on their spectrum and reduce expenses by handling all traffic as data. content providers provide revenue streams. In short. £65m in 2007.e. It will also let them offer new services and become service enablers. During the voting period from November 2004 to March 2005. the supply of mobile phone operators is relatively inelastic i. While mobile VoIP is set to grow. The supply of content makers however is relatively elastic . here is an insight into the Indian Idol revenue model. the key areas include WiFi. market watchers predict.
Mobile users are in constant look out for new cellular services.higher premium because there are scores of people lining up with content for distribution while everything cannot really be distributed. 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. Further. likelihood of VAS options by subscribers FOR IMMEDIATE RELEASE PRLog (Press Release) – Jul 15. Finally. network operators and others in the mobile internet value chain. service providers are persistently working on providing innovative and attractive mobile value added services. 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. (Contributed by Evert Jaap Lugt. In the past. 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. 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. 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. Another development in the near future is that TV over mobile is going to be easily accepted. To meet this demand. . India . while everything on mobile phones is/or can be paid for.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. Key Takeaways To sum up. 2009 – BANGALORE. and the revenues will be much bigger on the Mobile phones than on the Internet. we will see mostly TV 'munching' or short TV shows (like our very own WATShow). 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. the impression was that content over the mobile will be paid for. There has been significant increase in revenues for service providers ever since the existence of cellular technologies. The supplier market is currently fragmented allowing room for independent innovators to make their mark with key developmental challenges being faced by content 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. MTNL. On customer service front. 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. surf the Internet. . In terms of VAS Options likelihood of usage. Subscribers are using their cellular phones to send SMS. keep a tab on astrology. Aircel and Vodafone do a great job as 11% of both service providers’ subscribers appear to agree than overall subscribers. 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. 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.Mobile phones today have moved beyond their fundamental role of voice communications. 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. followed by “better bundle offers in SMS value added services” (39% would likely subscribe). 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. read news. play games. On the product diversity side. download images.
Additionally.." said Brian Matthews. senior vice president. Virgin Mobile India Strategy • • • • Share Favorite Favorited X ." According to forecasts from a recent Juniper report.VeriSign." said Patrick Gauthier. Inc. 2007 . the leading provider of digital infrastructure for the networked world. "We are excited to be working with VeriSign to combine secure payments with value-added promotional services. innovation. They need to be able to access information and make purchases in a secure environment anywhere and on any device. "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. VeriSign will enable Visa. 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. Visa International. mobile offers and promotion programs. "Consumers are driving demand for new mobile commerce services and applications. vice president of industry marketing -." As a result of the agreement. 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.financial services.VeriSign Supports Visa Mobile Platform to Advance FastGrowing Mobile Commerce Market 29 March. its members and merchants to create customised campaigns. the service will help marketers understand the performance of their mobile campaigns potentially resulting in better returns on marketing dollars spent. VeriSign. through mobile marketing campaigns and point-of-sale redemption of mobile offers. (NASDAQ: VRSN). Visa will provide mobile offer management capabilities including the delivery of mobile coupons by leveraging VeriSign's content delivery services. "We are excited to help Visa deliver the most compelling mobile payment experience. Our collaboration is designed to enable consumers to receive promotions and information relevant to their purchase experience anywhere via their mobile phones.
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Virgin is primarily an MVNO company. 4. Even for an MVNO like Virgin. Virgin Mobile Retail strategy for entering the Indian Handset market 2. Virgin Mobile has entered the Indian Market.Presentation Transcript 1. On 1st March 2008. An Update ○ ○ 3. Agenda . and retail distribution is only a part of the overall strategy.6 Favorites • satyle favorited this 2 months ago • prernamahendru favorited this 3 months ago • edwinp favorited this 3 months ago • Llewella74 favorited this 4 months ago Tags virgin mobile strategy to enter india • manishsehgal007 favorited this 4 months ago • more --> DN2009 favorited this 5 months ago Tags virgin mobile india strategy mimp plan . tying up with Tata Tele-services. ○ ○ However. it is a very important piece. having a finely crafted retail strategy can mean the difference between a strong subscriber uptake rate or a mediocre showing among the target audience.
Company Brief The Indian Opportunity Competition and Positioning The Indian Consumer VM’s Entry Strategy Review Analysis and Recommendations 5. They don’t write in jargon but as one human being to another To offer an experience that’s 100% human. Typically. not theirs.g. 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? 10.The Numbers ○ New Connections per month = 60. E. Virgin Mobile The Company 6. Talk to people the way they prefer to be talked to – with warmth and humanity.○ ○ ○ ○ ○ ○ Virgin Mobile . To add a personal touch to our customer experience: the little extras…. we review the industry and put ourselves in the customer's shoes to see what could make it better. A little something extra can really go a long way to improve a their experience and their opinion of Virgin. not a script. Global Reach 7.Size. there’s nothing more frustrating than dealing with a faceless bureaucracy or a member of staff who tows the party line. Virgin Mobile Charter As a customer. When Virgin Money sends people letters about their financial services they recognise it’s the customer’s money. 8. 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. treating customers with respect. Structure and Segments for Handset Retail 12. 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 When we start a new venture. we base it on hard research and analysis.00. 9.000 . Virgin Mobile Charter Speak from the heart.Mobile Retail .Virgin’s New Venture Strategy 11.
The Potential .Trends ○ ○ ○ ○ ○ ○ ○ ○ ○ Saturation in the urban market Rural India will drive growth.Organized Retail 16.Economic Environment ○ .○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ Handset Retail = 3.The Future .50. mobile retail growing at 20%.Handsets sold directly so far.Handset Retail 19. accounting for 35-38% of total handset market.00. 7-9 Models added every month. though it has begun to change. Replacement sales account for as much as 60%.e. 20. organized retail has a share of 7% Handset retail market has been growing at a CAGR of 60% Overall. there are certain parties with vested interests that act as bottlenecks. Politically stable country.The Future . India recorded the fastest growth in mobile handset sales 13.00.000 Airtime + Accessories + Handset = 7. the Mobile retail market is growing at 20% According to Gartner figures for Sep 07.00. FDI allowed upto 24% for foreign players w. This works in the favor of retailers.Volumes 18. People are replacing handsets every 18-24 months There are 95000 retail outlets in all Only 1% of these are organized retailers By Sales. April.50. 7-9% growth rate. 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. not by operators.The Future .00.Growth Rates 17.f.The Demographics 14.00.00. However.PEST . Aggressive promotions to get more common Low priced handsets and handset bundle offers.PEST – Politico-Legal Environment 21.What Virgin Needs To Know 15.000 50% No Bundling .
Consumer confidence in the organized retail format is high and encouraging.A lot of demand is coming from Rural India. 21.PEST . Indirect taxes like service tax on immovable property adds to the costs.g.Porter’s Five Forces 28. 10% of the ISPs have 90% of the subscribers The country’s mobile market stands at Rs.Porter’s Five Forces ○ ○ ○ ○ ○ ○ ○ 27.Technological Environment 24.0% in 2007-08 while conditioning expectations in the range of 4. Reliance Classic) 26. Changing attitude.live for today The mobile sector has grown more than tenfold from 2001 to around 6 crore subscribers by mid-2005.5 crore people between the ages of 14 – 25 years Demographics .Porter’s Five Forces .Porter’s Five Forces 25. Growing middle class and youth with an increasing propensity to save.PEST . etc to sales tax. telephone. Buyer Power: High Buyers Demanding greater variety at lower prices Supplier Power: Moderate Suppliers have strong brands and often have a presence in retail themselves Network Operators are able to push cheaper brands (e.Social Environment ○ ○ ○ ○ ○ ○ ○ 23.0-4.○ ○ ○ Credit Sales have started.5%. ○ 22. as as much as half of the newly added subscriber are from rural areas. The retailers want to move the service tax on rent. 35. Pressure from Second hand sales makes it worse.Porter’s Five Forces ○ ○ Threat from New Entrants: High Rising cost of retail real estate makes nationwide competition difficult. and Cell Phones are being sold on EMI.000 crores and is growing at an annual rate of 60%. but numerous national and foreign players are interested to enter Competitive Rivalry: Moderate Margins are thin at mere 4%. The Monetary policy aims to contain inflation close to 5.
Consumer Need Analysis Segments.large medium and compact. in 20:60:20 ratio Against Franchising . Positioning and Strength 30. Buyer Behavior and Gaps 35.Positioning Map 34.Existing Players ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ 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 Essar Group venture .dilutes brand value Nokia Samsung Sony World ConvergeM (Future Group) Mobile Store (JV between Essar and Virgin) MobileNxt Univercell Hotspot (Spice Telecom) RPG Cellucom Subhiksha M Bazaar 32. 2500 stores.○ ○ ○ Threat of Substitution: High Second hand phone market and unorganized retail is strong. and breakeven by 2010 Plans to invest 1250 cr by 2010 3 Formats .Competitive Landscape Players.entered Jan 2007 Target Segment . Most demand is from rural areas – where organized retailers don’t have a presence. 29.Mobile Store 33.even when I can’t afford it To stay ahead of the game you need the best tools New .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 . 600 cities.18 to 45 years Eyeing 10% market share.
Virgin India Strategy ○ ○ Target Segment .5 crore people between the ages of 14 – 25 years old.The Opportunity 38. new possessions.000 crores by 2010 Mobile as a badge of self-expression: brand and style very important 37.Virgin India Strategy . 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.Urban Youth Sales Objectives ○ ○ Revenues of Rs.Differentiation .Indian Market Entry Strategy Target Segment.Urban Youth: More Than Just A Segment 39.Positioning . 35. Young customers 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 India has 21.bulk of demand from sub 5000 price range VAS such as Texting very popular among Urban.experiences.The Indian CellPhone Buyer ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ Replace handsets every 18-24 months High demand from upgraders Price Sensitive . Positioning and Objectives 40. 35000 Crores by 2011 (including connections.Seeking Youngistan ○ ○ ○ Mainstream Youth and Materialists 14-25 years Young executives / students / Youthful Adults 42. Urban youth mobile service revenues > Rs. handsets and accessories) Establish the brand name 10% of the market in 3 years Image Objectives Market Share Objectives 41. Incremental urban youth subscribers between 2008 and 2010 will be more than 5 crores.
Lost my charger.First Time In India . Here’s a list of our service center . 100% FM’ handsets 43. stable propositions with low support and service costs Imaginative. But don’t get scared about it.Differentiation Strategy .Returns Policy ○ ○ ○ ○ ○ ○ ○ ○ 46. enthusiastic team supported by simple processes 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 q.Differentiation Strategy . Whatever your problem you can walk into any service center and get replacements for faulty* items in your pack.Virgin India Strategy . Tension nahin leneka. *conditions apply. battery fell off and someone threw my phone… gasp! a.Customer Care 45. game-changing value-added services Great handsets at great prices Personalized customer care Whilst achieving a low operating cost per customer through Sharp focus on India’s top youth markets Fewer.Differentiation Strategy 47. eye-catching advertising & PR that gets youth talking A lean.○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ 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. Value for Money and Flexible Service Offerings 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.Cost 44.
supported by a strong brand. because that's Virgin's core market. superior customer service and pricing plan simplicity Entered through a tie-up with SingTel Exited the market .Virgin India Strategy . Virgin Mobile 48. 2006 Classified itself as an ESP.South African Experience ○ ○ ○ Virgin entered as a 50-50 partnership with Cell C.citing premium pricing and crowded market Customers placed more premium on Price SingTel tariffs too high . Virgin Mobile aims to offer similar services on GSM as well.Promotions 49.texting too expensive 55.000 handsets & 40. ○ ○ ○ 53. By the end of 2008. extensive coverage.A Virgin Kiosk 52.Location And Ownership 50. since MVNO’s are illegal in SA Premium Pricing. H1.Virgin Mobile Analysis and Recommendations 54.Virgin India Strategy .Location ○ ○ ○ Shop in Shop and Kiosks Non exclusive. lower costs The one commonality all of the retailers share is they are places where teens shop. when the new GSM players start rolling out their services. Virgin Mobile services were launched in 50 cities with 15.Virgin India Strategy .Virgin India Strategy .Singapore Experience ○ ○ ○ ○ . Plan to expand to 1000 cities by 2008-end Aims to acquire 50 lakh subscribers over the next 3 years. Also.Expansion Plans ○ To begin with. by when it would be profitable.000 top-up outlets. with 55 Virgin Mobile kiosks & Shop-in-Shops.○ ○ ○ ○ ○ ○ Easy Handset upgrades Personalised Care Safe Secrets Think Hatke Campaign 10 paise every minutes on incoming “ You have to be in front of the right people.” Howard Handler CMO. 51.
highest handset sales volumes.lower margins Saturation .8bn/US$20.Unviable Not sustainable Premium Positioning-Viable 57. Organized Retail mere 7% by revenue.Positioning Virgin BRAND ENGAGEMENT CAN BE THE ONLY DIFFERENTIATOR OFFER SIMILAR ACROSS RETAILERS ASSORTMENT EXPECTED CONSUMER MORE EVOLVED PRICE COMPETIVENESS SHORT LIVED 58.SWOT ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ Weaknesses Dependent on Partners for pricing.Mobile penetration in excess of 40%. employing 48 500 people.4bn … .Strategic Choices for Mobile Retailers Price Volume Low High High Low Cost Strategy-Viable Low Cost Strategy.56.switching barriers Unclear Government Policy on MVNO Falling Handset prices . few established competitors 61. 1% by outlets. Most entrants are new.20-30% CAGR.Making Weaknesses Irrelevant . encouraging active use Threats Rising Retail Costs Lack of number portability .Capitalizing On Strengths 62. can beat Reliance Good brand recall Structured pricing of airtime serves as a loyalty incentive. 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 Into retailing + service provider If the GoI allows MVNOs then after tying up with GSM players. Opportunities India a growth story . an annual Virgin Group turnover of £10.200 companies worldwide.SWOT ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ 60. capacity Non serious image may not go well with conservative Indian consumer.one of the most exciting brands in the world 59.
a rebranding exercise by Tata Teleservices? Key advantage over other (non-operator) retailers . Particularly noteworthy is the convergence of telecommunication. .Recommendations ○ ○ ○ ○ ○ ○ ○ ○ ○ 64. Both are happening. in the control of the environment.greater assortment Offer plans for 2 years. M Bazaar. 63. On the demand side. growth is pushed by rapid technological developments which continuously improve the efficiency of existing products. whether natural or man-made. cultural and political activity.Thank You !! Trends and developments in the telecommunication environment The global market for telecommunications is expanding rapidly. M Port. Vishal. The interaction of these two forces has made telecommunications one of the leading growth sectors in the world economy.Recommendations 66.subsidize handset costs with Airtime Offer for both CDMA and GSM . It has also made telecommunications one of the most important components of social. in the provision of public services. information. systems and services.○ ○ ○ 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. with upgrade options 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. 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. On the supply side. and provide the foundation for a continuing stream of innovations in each of these areas.Recommendations 65. and in response to emergencies. It is not a question of “demand pull” or “supply push”. Hotspot. in the pursuit of knowledge and the expression of culture.not tied to technology (as an MVNO) Forge deal with a GSM player Offer bundled plans . in government.presence in both retailing and airtime Key advantage over operators . and in the management of public infrastructures. etc.
In the 1999-2003 planning period. 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. 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: . "globalization" was more a slogan than a reality. In the 1995-1999 planning period. which has greatly enriched the communication choices available to consumers. As a result of this trend. few would have predicted that the Internet would emerge so rapidly as a serious competitive force in telecommunications. the majority of telecommunication networks are now privately owned and operated. globalization is likely to become much more of a reality. social and cultural perspective. 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. as well as the closely-related information technology industry. Public networks and residential customers were relatively unaffected by this kind of globalization. as well as to make direct investments in the development of those networks. The agreement entered into force on 5 February 1998. Competition in telecommunications is rapidly becoming a true market force whose evolution cannot be planned by policy-makers. Although far from universally accepted. However. 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. 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. 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 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. the sweeping changes in telecommunications described above have broad support among many countries.broadcasting and publishing technologies. since it referred mainly to alliances between major operators to provide end-to-end services to multinational enterprises. a force which increasingly is seen as best regulated on the basis of principles that are not specific to telecommunications. 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. Significant developments have also taken place to introduce competition at the national. regional and international levels. Five years ago. but derived from a broader economic.
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. In some jurisdictions. the regulator must implement competitive safeguards. Principles derived from competition law are taking their place alongside the classical precepts of public utility regulation. 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. In the 1999-2003 planning period. They are binding commitments which are enforceable under the WTO dispute resolution mechanism.g. In addition. then in value-added services. most countries that permit competition do so on a highly regulated basis In this environment. service providers and regulators that have based their respective plans on an . nested within a general department of government (e. 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. They are therefore more than a voluntary code of conduct. industry and trade). ensure interconnection/interoperability and ensure broad and affordable access to necessary services As a result of technological progress. 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. competition was generally permitted among different service providers using the same infrastructure before being allowed between different infrastructure providers. The trend now is for administrations of ITU Member States to be policy-makers. transparency and anti-competitive safeguards. are subject to the WTO dispute resolution mechanism. and finally in local and international services. sector-specific telecommunication regulation has been abandoned. Even today. and indeed all other commitments. convergence and market liberalization. The liberalization of telecommunications has been accompanied by a separation of these functions. the WTO agreement will amplify these regulatory trends. the model for regulating telecommunications is changing. These regulatory commitments. then in the long-distance service. In countries that have introduced partial or full competition. private or mixed. 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. Again. and for "the public interest" in telecommunications to be protected by an independent regulatory authority. nurture competition. for telecommunications to be operated by corporations — whether public.In the past.
New technologies such as global mobile personal communications by satellite (GMPCS) may help close the "telecommunication gap". the Internet symbolizes the changing nature of telecommunications. and that it cannot be regulated as it was in the past More than any other phenomenon. from intra-corporate communications to public voice From one point of view. the gap between developed and developing countries in access to basic telecommunication services is closing. new differences are developing. 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.orderly evolution of this kind are finding that the "rules of the game" are suddenly changing. at the same time. these regulatory differences may become a new development gap. On the one hand. In some cases. that competition is coming from unforeseen directions. However. There is currently an enormous gap between developed and developing countries in access to the Internet. and the overall gap between developed and developing countries is steadily narrowing. Even as the telecommunication gap which has preoccupied the Union for so many years is beginning to close. the goal established by the Maitland Commission of achieving universal access to basic telecommunications will be technically achieved. as population growth has outstripped telecommunication growth. and those that have not. between liberalized and non-liberalized countries which may be either developed or . In this regard. 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. A difference in regulatory practices is emerging between countries which have decided to liberalize their telecommunication markets under the WTO agreements. On the eve of the 21st century. network architectures. Its economic foundations and charging principles are diametrically opposed to those of public telecommunication operators. technology transfer. teledensity (the number of telephone lines per 100 people) has fallen. an "information gap" of even greater proportions is opening up. However. standardization and addressing schemes. If competition brings the first group of countries the anticipated benefits in terms of investment. the Union thus finds itself in a dynamic situation. they include more than 45% of the world's people. from other points of view. It is based on different technologies. Overall. Yet it is emerging as a serious alternative to the traditional services provided by the telecommunication industry in every market segment. for example within the developing world. new gaps are beginning to appear: In general. between the LDCs and other developing countries. This will only be possible. however. It has experienced phenomenal growth and it has largely been outside government regulation. 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. innovative services and lower prices. if their services are affordable to inhabitants of the LDCs.
cultural and political activity will increasingly depend on access to the telecommunication and information services provided by the global information infrastructure (GII).00 663.2000) Items Basic Services Cellular Mobile Telecom Services V-SAT Mobile Radio Trunk Service Paging Service Source : Rajya Sabha.52 250. initially in the G-7 group of advanced industrial economies. Crore) 3605. This vision was the subject of considerable discussion during the 1995 — 1999 period. and between countries that are moving rapidly towards competition and those moving at a slower pace. Unstarred Question No.07. This raises important questions in relation to the vision of the global information society (GIS).MS Excel MS Word HTML Print Comm Close Investment in the Major Telecom Service Sector by Private Operators (upto 31. and that people everywhere are able to share in its benefits. Top of Form /w EPDw UKMTkzM /w EWBgKBkebgC Statistical Information Download :.47 . the basic ideas behind the concept of the GIS have been broadly accepted and indeed endorsed. all forms of economic. Amount (Rs. The challenge facing the international community is to find ways to ensure that the GIS is truly global.91 184. The rapid development of electronic commerce on the Internet is one tangible example of how the GIS is becoming a reality. dated on 24. social. In this vision.developing.3. Today. 213. then in the broader international community.48 11860.2001.
e. Bottom of Form . year shown as 1990-91 relates to April 1990 to March 1991.g.) = 10000000.Year: Period of fiscal year in India is April to March. Some part of the footnotes/units may not be applicable for this table. (b) 1 Crore (or Cr. Units: (a) 1 Lakh (or Lac) = 100000.
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