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SWOT ANALYSIS OF INDIAN

TELECOM INDUSTRY Presented by Rahul Kalra

Facts

• Indian Telecom market is one of the fastest growing

markets in the world.
• Indian telecom network has about 562.21 million connections
as on 31 December 2009.
• With 525.15 million wireless connections, Indian telecom
has become the second largest wireless network in the
world after China.
• About 15 million connections are being added every month.
• Wireless telephones are increasing at faster rate. The share
of wireless telephones as on December 31, 2009 is
above 93% of the total phones.
• The share of private sector in total telephone is about 82.33%.
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Strengths
• Huge Customer potential
▫ Teledensity still being 48% and rural tele-density 21%.
▫ The broadband subscribers grew from 0.18 million in 2005 to6.2
million as on 30 April 2009 and about 7.98 million, at the end of the
December 2009.
• High Growth Rate
▫ Wireless subscribers growing at a CAGR of 60 per cent per annum
since 2004.
• Allowed FDI limit ranging from 74% to 100%
▫ The total FDI equity inflows in telecom sector have been US$ 2223
million during April-November 2009-10
• High return on Investment
▫ Easier to create economies of scale thereby increasing return on
investment
• Liberalization efforts by Govt.
▫ The share of private sector in total telephone connections is now 82.33% as per
the latest statistics available for December 2009 as against a meager 5% in
1999.
• Lower capital expenditure
▫ The Indian telecom market is a high density area, which means more
population per tower. This means lower capital expenditure cost.
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Weakness
• Poor Telecommunication Infrastructure
▫ Result : Large number of call drops.
• Late adopters of New Technology
▫ India will be among the last countries in the world to get access to
3G technology. Some estimates suggest that nearly 132 countries
across the world already have 3G technology and mobile services
in one form or the other.
• Most competitive market
▫ 10 to 12 companies offer mobile services in most parts of India,
globally, the average is 4.
• A market strongly regulated by Government.
• Difficult to enter because of requirement of huge financial
resources.
• E.g Auction of 3G license has reached Rs 15814.15 crores.
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Opportunities
• 3G Telecom services and 4G services
• More Quality Service
▫ Mobile Number Portability will force the Service provider to improve their quality to
avoid losing subscribers
• Value added Services (VAS)
▫ The mobile value added services include, text or SMS, menu based services,
downloading of music or ringtones, mobile TV, videos, streaming, sophisticated m-
commerce applications etc.
▫ Mobile banking, Mobile Ticketing etc
• Boost to Telecom Manufacturing Companies
▫ Production of telecom equipments in value terms has increased from Rs. 412700
million (2007-08) to Rs.488000 million during 2008-09 and expected to increase to
Rs. 575840 million during 2009-10.
• Telecom Equipment Exports
▫ The Indian telecom industry is expected to reach a size of Rs 344,921 crore by 2012 at a
growth rate of over 26 per cent, and generate employment opportunities for about 10
million people during the same period.The sector would create direct employment for
2.8 million people and for 7 million indirectly, according to a Frost and Sullivan report.
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• Horizontal Integration
▫ Entry Into other consumer segments leveraging the present channels
▫ E.g. DTH service like Reliance BIG TV, Tata SKY, Airtel digital TV by
telecom majors like Reliance, Tata and Airtel Respectively.
▫ Other examples : Airtel website builder
• Providing fibre Connectivity to 2,50,000 village panchayat by 2012.
• More scope in content related services, since, the consumer is
influenced by local culture.
▫ Local festivals like Baisakhi, Chhath Puja, religious festivals like
Diwali, Chrismas etc., National festivals like Independence Day etc.
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Threats
• Telecommunication Policies
▫ e.g. Trai's 2G direction affecting new players most notably Tata
Teleservices, Norway’s Telenor and Essar-owned Loop Telecom
▫ Renewal of 2G license on the basis of market rates of 3G auctions
▫ TRAI intentions of rolling out 4G or the fourth-generation
technology, known as the ultra-broadband in 2-3 years raising
fears rendering 3G services somewhat obsolete.
• Declining ARPU (average Revenue per user)
▫ E.g. price wars like per-second billing which is deflating revenues
and making sure the ‘survival of the fittest’
• Partiality on the part of the Govt.
▫ E.g.Allowing 3G service in a PSU (MTNL,BSNL) before
auctioning to Private Sector .
• Content Piracy

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