Indian

Telecommunication

Sector

Submitted by: Jaideep Singh Pankhuri Wadehra

Agenda
‡ ‡ ‡ ‡ ‡ ‡ Introduction Overview of telecom industry Players of telecom industry Scope of telecom industry Future trends in telecom industry Growth Avenues in telecom industry

Indian Telecom Sector

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MOBILE A BASIC NEED FOR ALL!

Indian Telecom Sector

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In the field of International communications.17 Lakh lines and 226.000 route kilometers of Optical Fiber Cables. tremendous progress was made by the use of Satellite Communication and submarine links. with a total equipped capacity of 272. India's telecom network comprises of 27. It is therefore not surprising that India has one of the fastest growing telecommunication systems in the world with system size (total connections) growing at an average of more than 20 percent over the last 4 years. The total number of stations connected to National Subscriber Dialing (NSD) is over 18.70. Yet the present tele-density is very low at about 2. The Long Distance Transmission Network has nearly 1. offering a vast scope for growth.000 and this is increasing fast.59 million-line telephone network is the largest in Asia.000 route kilometers of terrestrial Microwave Radio Relay & Co-axial cables and about 171.3 Lakh working telephones.INTRODUCTION India's 21. 3rd largest among emerging economies (after China and Republic of Korea) and the 12th largest in the world.2 per hundred persons. Fully automatic International Subscriber Dialing (ISD) service is available to almost all the countries. Indian Telecom Sector 4 .753 telephone exchanges.

Services Offered ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Telephone Services NSD/ISD Services Computerized Trunk Services Pay Phones National & International Leased Lines Circuits Telex Telegraph Services (Manual & Automatic) X-25 based Packet Switched Data Network (INET) Gateway Packet Switched Data Services (GPSS) Gateway Electronic Data Interchange Service (GEDIS) Gateway E-Mail and Store & Forward FAX Service (GEMS-400) Concert Packet Service (CPS) Satellite-based Remote Area Business Message Network Electronic Mail Indian Telecom Sector 5 .

‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Voice Mail Audio-Text Radio Paging Cellular Mobile Telephone Public Mobile Radio Trunked Service Video-Tex Video Conferencing V-SAT Internet ISDN INMARSAT Mobile Service INMARSAT Data Service Home Country Direct Service Intelligent Network (IN) Services Indian Telecom Sector 6 .

MAJOR PLAYERS IN DIFFERENT SEGMENTS OF INDIAN TELECOM INDUSTRY BASIC SERVICES OPERATORS BSNL Airtel MTNL Reliance Vodafone Idea TTSL Reliance BSNL MOBILE SERVICES GSM SERVICES OPERATORS INTERNET SERVICES OPERATORS BSNL MTNL Reliance CDMA Services Operators Reliance TTSL TTSL BSNL Airtel Indian Telecom Sector 7 .

801 Telecom equipment market (2008±09) ±US$ 24.Indian telecom industry ±a snapshot ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ India has one of the biggest telecom markets in the world.68 per cent Average Revenue Per User (ARPU) for GSM (as on 30 June 2009) ±US$ 3.08 million Annual growth rate of telecom subscribers (June 2008±June 2009) ±42.27 per cent (August 2009) Addition of mobile subscribers (July±August 2009) ±15. Total telecom subscribers ±494.07 million (August 2009) Teledensity ±42.99 billion Handset market (2008-09) ±US$ 5. It has more GSM subscribers than fixed-line subscribers.82 billion Expected mobile subscriber base (2013) ±About 771 million Indian Telecom Sector 8 .

Sources: 1) Average exchange rate for the year 2007±08. ‡ The Indian telecom industry generated revenues of approximately US$ 32 billion in 2007±081 with a growth rate of 60 per cent over 2006±07. ‡ The CAGR is expected to stabilise at 16 per cent between 2007±08 and 2009±10. 2)TRAI Report Indian Telecom Sector 9 .Telephony services (mobile and basic) and internet services dominate the Indian telecom services market. ‡ It witnessed a compound annual growth rate (CAGR) of approximately 29 per cent from 2002±03 to 2007±08.

Telephony services (mobile and basic) and internet services dominate the Indian telecom services market. Indian Telecom Sector 10 . It also has smaller segments such as radio paging services. cellular mobile and internet services. ‡The Indian telecom industry can be primarily divided into basic. Public Mobile Radio Trunked Services (PMRTS) and Global Mobile Personal Communications by Satellite (GMPCS). ‡The mobile services in India are growing more than basic wireline services. Very Small Aperture Terminals (VSATs).

Basic Services ‡Basic services encompass fixed wireline and wireless in local loop (WLL-fixed) services. ‡Wireless services hold a major market share of 92 per cent in basic services as compared to the wireline. Indian Telecom Sector 11 .The wireless segment in India is much larger than the wireline segment and is growing steadily owing to convenience and utility.

Source: TRAI report Indian Telecom Sector 12 .Government-owned players account for the highest growth in subscriber base in the basic telephony services segment. ‡Though private players such as Bharti Airteland Reliance have registered notable growth. whereas BSNL covers the rest of the country. ‡MTNL is present in Delhi and Mumbai. ‡ Government-owned Bharat Sanchar Nigam Ltd (BSNL) and MahanagarTelephone Nigam Ltd (MTNL) are the two largest operators in the wire line segment. BSNL still dominates the segment in terms of wirelinesubscriber base despite the nominal decrease in its market share. whereas Bharti AirtelLtd is the leader in wireless segment.

Reduction in tariffs have led to a constant reduction in the Average Revenue Per User (ARPU). ‡ The ARPU for GSM service in India is much higher than that for CDMA service. The ARPU per month for GSM services has declined from US$ 6. while that for CDMA services has fallen from US$ 3.10 for the QE March 2009.(1.2) Sources:1) TRAI Report.98 during the same period. 2)Exchange rate as applicable on an average basis for respective quarters Indian Telecom Sector 13 .64 for the quarter ending (QE) March 2008 to US$ 4. The gradual decline in ARPU remains well supported by the increase in subscriber base.99 to US$ 1.

The MoUsfor CDMA service have declined from 364 in March 2008 to 357 in March 2009. 2)Exchange rate as applicable on an average basis for respective quarters Indian Telecom Sector 14 .Reduction in tariffs have led to a constant reduction in the Average Revenue Per User (ARPU). ‡ The Minutes of Usage (MoU) for GSM have been significantly higher than those for CDMA. The gradual decline in ARPU remains well supported by the increase in subscriber base. Sources:1) TRAI Report. whereas those for GSM have decreased from 493 to 484 during the same period.

registering a growth of approximately 42.07 million (August 2009).The telecom subscriber base in India is likely to reach 500 million by 2010. India had a teledensity of 42. It grew at a CAGR of 45.67 per cent over last year.27 per cent as compared to the previous year¶s figure of 29. As on August 2009. Indian Telecom Sector Source: TRAI Report 15 . ‡The subscriber base grew to 494.83 per cent.21 per cent from June 2004 to June 2009. ‡Teledensity in India is still low as compared to that in some countries.

Reliance. As compared with 2007±08. there are 11 players² Bharti Airtel. BSNL. Aircel. Vodafone. Tata Tele Services Ltd. Currently.BPL. MTNL. ‡ Indian Telecom Sector 16 . HFCL and Shyam²active in this segment.Private players have maximum subscribers in the wireless services segment ‡ ‡ Wireless services have led to significant growth in the Indian telecom industry. the subscriber base of most wireless service providers has increased leading to an increase in their revenues. Idea.

followed by Reliance (79.38 million in 2007±08 to 102.62 million subscribers) and Vodafone (76.45 million subscribers).Private players have maximum subscribers in the wireless services segment The subscriber base of Bharti Airtel. Indian Telecom Sector 17 . GSM preferred to CDMA segment by a large margin in terms of subscriber numbers.37 million in 2008±09. increased from 69. a leader in this market.

out of the total subscriber base of 328.19 million ‡ Indian Telecom Sector 18 . private players accounted for approximately 84 per cent.GSM preferred to CDMA in number of additions to subscriber base ‡ Bharti has the largest market share in the GSM segment. while the public sector operators (BSNL and MTNL) accounted for the remaining share (16 per cent). During 2008±09.83 million. Reliance Communications dominates the Indian CDMA mobile services segment with a subscriber base of 54.

Various other services emerged by leveraging the telecom services industry. ‡ Indian Telecom Sector 19 . At present. The market for VSAT services registered a 5. Bharti Airtel.(1/2) ‡ Radio Paging Services Radio paging services were launched in India in 1995.9 per cent. there are 8 VSAT service providers in India including BSNL. however.. Hughes Communication is the market leader.98 per cent growth for the quarter ending June 2009. could not compete well with cellular services in general and SMS technology in particular and is shrinking continuously. Very Small Aperture Terminals (VSATs) At present. The number of subscribers of VSAT services increased on a quarterly basis by 6.4 per cent. This service. followed by Bharti Airtel with 25.. all but four radio paging service providers have been marginalized in the Indian market.328 in June 2009. with a market share of 29. Hughes Communication and HCL Comnet Ltd.108 to 108.

thereby inhibiting its growth. In India.951 subscribers. Iridium India Telecom Limited is the pioneer in GMPCS services in India.(2/2) ‡ Public Mobile Radio Trunked Services (PMRTS) PMRTS services have been showing a negative growth. The Government of India has restricted foreign equity participation in this segment to 74 per cent.. irrespective of the subscriber¶s location. Moreover. 2)DOTTELECOM Indian Telecom Sector 20 .06 per cent during the quarter ending June 2009. the telephone number remains unchanged.Various other services emerged by leveraging the telecom services industry. 12 operators are offering this service to a total of more than 30.1High license fee for this service leaves low margin for services providers. These services allow a subscriber to communicate with others from any point on earth through a hand-held terminal. PMRTS¶ subscriber base decreased by 2. ‡ Sources: 1)TRAI Report. Global Mobile Personal Communication by Satellite (GMPCS) GMPCS2 services were launched in India in 1999..

6 million subscribers. ‡ ‡ Source: TRAI Report Indian Telecom Sector 21 . followed by MTNL. ‡ The total number of internet subscribers grew from 11. Reliance and Sify Technologies. Bharti Airtel. BSNL is the biggest player in this market with 7.05 million in June 2009.62 million at the end of June 2009.Despite a slow penetration rate. Internet services can also be accessed through phones (CDMA and GSM).66 million in June 2008 to 14. Bharti Airtel is the leader among the wireless internet operators with a market share of approximately 24 per cent in June 2008.38 million in June 2008 to 6. This is primarily attributed to an increase In broadband subscriber base from 4. the Internet services segment embodies huge growth potential in India.

Indian Telecom Sector 22 .

mobile TV and others facilities Sources: 1) TRAI Report. The subscribers also get additional features such as video telephony.India presents a host of opportunities for telecom companies«(1/9) 3G Services ‡ The Indian government plans to auction the spectrum for 3G services by inviting bids from domestic as well as foreign players. Internet access. video on demand. The 3G spectrum is among the major investment opportunities and is expected to attract investments worth US$ 8±10 billion during 2008±11.com Ltd Indian Telecom Sector 23 . They will also have to pay an additional entry fee of US$ 344 million to acquire Unified Services Access Licence (USAL).4Companies such as AT&T and NTT DoCoMoare planning to enter this sector.09 billion. ‡ The Telecom Ministry would auction four licences for 3G services including one reserved licence for US$ 4. 2)International Business Times. ‡ International and foreign players can enter this segment through joint-ventures with Indian companies with a stake of not more than 74 per cent. 3) Indiapwire4) Business Standard 5) e-Eighteen. ‡ BSNL launched 3G services under the proposed 'India-Golden 50' scheme that allows customers to make long-distance calls for 50 paise(About US 1cent) per minute.

com Ltd.India presents a host of opportunities for telecom companies«(2/9) Sources: 1) TRAI Report. 3) Indiapwire4) Business Standard 5) e-Eighteen. 2)International Business Times. Indian Telecom Sector 24 .

especially the wireless services. ‡ ‡ Source: TRAI.07billionwithanapproxima teauctioncostofUS$358millioneach.India presents a host of opportunities for telecom companies«(3/9) Worldwide Interoperability for Microwave Access (WiMax) ‡ WiMax has been one of the most significant developments in wireless communication in the recent past. e-Eighteen. internet. TheTelecomMinistryisalsoplanningtoauctionthreeWiMaxslotsforUS$1. it is expected to be a major factor in driving telecom services in India.com Ltd Indian Telecom Sector 25 . it Will lead to the increased use of telecomservices. ICOMMTeleandBeceemCommunicationsjointlyannouncedthecommercialavailabilityofWiMAX modemsfortheIndianmarket. Thus. Since this mode of communication provides network access in inaccessible terrains at a speed of more than 4Mbps. Indiapwire. value added services and enterprise services. Indiapwire.

On account of the rapidly growing subscriberbase. e-Eighteen. service providers find it difficult to manage their infrastructure and network.India presents a host of opportunities for telecom companies«(4/9) Managed Service ‡ Managed service is another segment that is attracting telecom companies. Indiapwire. Bharti Airtel is able to leverage Nortel¶s solution to provide its customers with interactive voice and video response capabilities ‡ ‡ Indian Telecom Sector Source: TRAI. Indiapwire. In turn.com LtdGROWTH 26 . In such cases. they completely or partially outsource their infrastructure or network management operations. Bharti Airtel and Nortel entered into an enhanced managed-services agreement in November2008 that allows Nortel to continue providing contact centre technology(CCT) solutions.

India presents a host of opportunities for telecom companies«(5/9) Infrastructure Sharing In order to curtail their network deployment costs. many service providers are considering infrastructure sharing. ‡ The sharing of infrastructure includes sharing of antenna. Some of which are: ‡ Significant reduction in initial set up costs ‡ Increased environmental aesthetics ‡ Lower operating costs for service providers ‡ Improved service quality ‡ Increased affordability for customers ‡ Faster roll out of services in rural and remote areas New Guidelines for Infrastructure Sharing in Mobile Telephony ‡ TRAI has recommended all mobile service providers in India to share infrastructure so as to meet the requirements of the flourishing telecom industry. nodes. Indian Telecom Sector 27 . Infrastructure sharing promises several advantages. It is a major step towards India¶s ambitious target of 500 million subscribers by 2010. ‡ Its proposal to Department of Telecommunications (DoT) states that the mobile telephony service providers should have better cooperation among them and have least regulatory interventions. ‡ The service providers can share active infrastructure if they have entered into a mutual agreement. radio access networkand transmission system only. feeder cable.

etc.It is similar to leasing/owning lines and yet getting exclusive access. IT infrastructure-enabled unified communication services.India presents a host of opportunities for telecom companies«(6/9) Virtual Private Network Virtual Private Network is a private data network that provides connectivity within closed user groups(CUG) via public telecommunication infrastructure. Source: TRAi Indian Telecom Sector 28 . This segment is expected to witness major developments as the demand for enhanced telecom infrastructure is increasing along with the growth in the information and communication technology (ICT) industry . Some of the key services include VoIP. Enterprise Telecom Services Telecom service providers are increasingly targeting enterprises by providing them dedicated services. dedicated telecom communication systems.

such as booking tickets and making bill payments Availability of mobile TV and development of shows. Availability of complete subscriber data has helped in reaching niche audience leading to a growth in advertising revenue through M-marketing Development of video-based applications. Major growth drivers for VAS in India ‡ Increasing focus on localisation and availability of content in local languages ‡ Development of M-commerce applications. films..0 billion by 2015. 3) Indiapwire Value-Added Services in India (2007±08) ‡ ‡ ‡ 29 . such as video SMS and podcasts Indian Telecom Sector Sources: 1)India PRwire. images. 2) Exchange rate as on 20 November 2008.India presents a host of opportunities for telecom companies«(7/9) Value-Added Services The VAS industry in India generated revenue of US$ 1. news. etc.2 billion in 2007±08 and is expected to reach US$ 4.

Voice mail service 3.India presents a host of opportunities for telecom companies«(7a/9) Definition as per TRAI In the Unified Access Service License (UASL). Videotex service 5. GMPCS 6. VAS is defined as follows ³Value Added Services are enhanced services which add value to the basic teleservices and bearer services for which separate licence are issued´ The Government of India issues licenses for the following Value Added Services: 1. Public mobile trunking service 2. Unified messaging service Indian Telecom Sector 30 . Closed users group domestic 64 kbps data network via INSAT satellites system 4. Audiotex 8. Internet 7.

India presents a host of opportunities for telecom companies«(7b/9) Indian Telecom Sector 31 .

India presents a host of opportunities for telecom companies«(7c/9) Indian Telecom Sector 32 .

India presents a host of opportunities for telecom companies«(7d/9) Indian Telecom Sector 33 .

India presents a host of opportunities for telecom companies«(7e/9) Indian Telecom Sector 34 .

India presents a host of opportunities for telecom companies«(8/9) Current Initiatives ‡ Mumbai-based Mobile Value Added Service company called Planet41 Mobi-Venture Ltd is planning an initial public offer in the coming months. 3) Indiapwire Indian Telecom Sector 35 . 2) Exchange rate as on 20 November 2008. ‡ The telecom companies can leverage VAS services to increase ARPU through content rather than voice services. Sources: 1)India PRwire.

‡ ‡ ‡ ‡ Sources: 1) TRAI Report . from 2008 to 2009.India presents a host of opportunities for telecom companies«(9/9) Rural Telephony ‡ Under the Bharat Nirman Programme. the government will invest US$ 2 billion. 3) TRAI Indian Telecom Sector 36 . In March 2009. to set up about 100.000 community service centres in rural areas to provide broadband connectivity. there seems to be huge untapped potential for mobile phone penetration in rural India. The suggested measures focus on the Universal Service Obligation Fund (USOF) to empower effective investments in less-lucrative rural areas. With the teledensity in rural areas at less than 10 per cent against the national teledensity of approximately 28 per cent in 2008. TRAI released recommendations for accelerating growth of telephony in the rural areas. 2) ZDNet Asia Report.

in Indian Telecom Sector 37 .gov.com www.mapsofindia.ibef.dot.com www.References: www.com www.wikipedia.org www.google.trai.org www.

THANKS««« Indian Telecom Sector 38 .

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