STUDY ON VODAFONE SALES AND MARKET PENETRATION (INDIA

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Prepared by: PIYUSH SINGH KUMAR Presented to: Dr. SURENDER

Roll No. 35

ABSTRACT

This study includes study VODAFONE sales, its advertising study, mobile penetration in INDIA, growth of telecom sector in INDIA. This study has been done in response to growing importance of telecom sector and Vodafone’s contribution to it. The secondary data has been collected from various websites.

History of Cellular Telephony in India 1992 Telecommunication sector in India liberalized to bridge the gap through government spending & to provide additional resources for the nation’s telecom target. Private sector allowed participating 1993 1994 The telecom industry gets an annual foreign investment Rs 20.6 million License for providing cellular mobile services granted by the government of India for the Metropolitan cites of Delhi, Mumbai, Kolkata & Chennai. Cellular mobile service to be duopoly (i.e. not more than two cellular mobile operators could be licensed in each telecom circle), under a fixed license fee regime for 10 years. 19 more telecom circles get mobile licenses Kolkata became the first metro to have a cellular network

1995 1995(August)

1997 1998 1999 1999 1999(March) 2000(June) 2000 (January)

Telecom Regulatory Authority of India is set up Annual foreign investment in telecom stands at Rs 17,756.4 million. FDI inflow into telecom sector falls by almost 90% to Rs. 2126.7 million Tariff rebalancing exercise gets initiated National Telecom Policy is announced. FDI inflow drops further down to Rs 918 million coming Amendment of TRAI Act.

Telecommunication Companies in India

The stupendous growth of the telecommunication companies in India over the last fifteen years can be attributed to the liberal government of India, economic policy. The economic renaissance affected in the early 1990s brought around a paradigm shift on the overall business scenario of India. The telecommunication companies in India went through a huge make-over during the implementation of the open-market policy of India. The erstwhile closed market policy was replaced by a more liberal form of economic policy. A whole new form of Indian Telecommunication Policy was drafted to compliment the change effected in the economic policy of India. The amendment affected the new telecommunication policy of India made huge changes with respect to investments and entry of Foreign Direct Investments (FDI) and Foreign Institution Investors (FII) respectively, into the virgin Indian telecommunication market. This resulted entry of private, domestic and

foreign telecommunication companies in India. The economic contribution made by these newly formed telecommunication companies of India is really mentioned worthy and this industry witnessed highest growth after the Indian Information Technology industry. The robust growth of Indian economy after the economic liberalization in the 1990s induced massive change in the telecom policy and new draft was framed and implemented by the 'Telecom Regulatory Authority of India' (TRAI) and 'Department of Telecommunication' (DOT), under the Ministry of Telecommunication government of India. The main aim of these telecommunication companies in India is to provide basic telephony services to each and every Indian. With the advent of private telecommunication companies in India, the industry witnessed introduction of mobile telephones into the Indian market and it became popular amongst the Indian masses in no time. Today two types of mobile phone service providers operates in the Indian market, like the following • Global System for Mobile Communications (GSM) • Code Division Multiple Access (CDMA) The main binding objective for all the telecommunication companies operating in India are as follows • To facilitate telecommunication for all • Ensuring quick availability of telephone connectivity • Achieve universal service access at affordable price covering all Indian villages, as early as possible

• Providing world class telecommunication services • Solving consumer complaints, resolve disputes, and special attention to be given to public interface • To provide widest possible range of services at reasonable prices • To emerges as a major manufacturing base and major exporter of telecommunication equipment • To protect the defense and security interests of the country Three types of service providers exist in the Indian stelecommunication sector, like the following • State owned companies like - Bharat Sanchar Nigam Ltd, Videsh Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd • Private Indian owned companies like - Reliance Infocomm and Tata Teleservices. • Foreign invested companies like - Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications etc.  Bharat Sanchar Nigam Limited  Mahanagar Telephone Nigam Limited  Vodafone Essar  Tata Teleservices  Idea Cellular  BPL Mobile  Videsh Sanchar Nigam Limited  Bharti Airtel  Reliance Communications  Spice Telecom  Sasken Network Engineering Limited

Communications

Limited

Mobile penetration of mobile in the world (% as on dec 2006)

Penetration is expected to exceed 40% by FY2012 and exceed 50% in the longer time. The above graph is showing mobile penetration in some of the major countries of the world.

VODAFONE-GLOBAL REACH

The breakup of wireless subscriber base in India as of May 2009[update] is given below
Operator Subscriber base

1- Bharti Airtel

99,549,208 74,080,707 53,598,591 41,243,253 20,685,711 4,568,269 2,256,862 4,235,023 77,223,264 382,602 936,189 36,486,763 415,246,442

2- Vodafone Essar

3- BSNL

4- Idea Cellular

5- Aircel

6- MTNL

7- BPL

8- Spice Telecom

9- Reliance Communications

10- HFCL Infotel
11-Sistema Shyam

12-Tata Teleservices

All India

The above pie chart is showing the subscribers base in INDIA of different companies.

Figures of 2006 Nationwide penetration currently at 13%, and is expected to touch 50% in the longer term

HISTORY OF VODAFONE
Vodafone is a British mobile network operator with its headquarters in Newbury, Berkshire, England, UK. It is the largest mobile telecommunications network company in the world by

turnover and has a market value of about £75 billion (August 2008). Vodafone currently has operations in 25 countries and partner networks in a further 42 countries. The name Vodafone comes from Voice data fone, chosen by the company to "reflect the provision of voice and data services over mobile phones." As of 2009 Vodafone had an estimated 303 million customers in 25 markets across 5 continents. On this measure, it is the second largest mobile telecom group in the world behind China Mobile. In the United States, Vodafone owns 45% of Verizon Wireless, the largest American mobile telecommunications company Vodafone Essar, previously Hutchison Essar is a cellular operator in India that covers 23 telecom circles in India. Despite the official name being Vodafone Essar, its products are simply branded Vodafone. It offers both prepaid and postpaid GSM cellular phone coverage throughout India with good presence in the metros. Vodafone Essar provides 2.75G services based on 900 MHz and 1800 MHz digital GSM technology, offering voice and data services in 23 of the country's 23 licensed areas. It is among the top three GSM mobile operators of India

OBJECTIVES OF STUDY
1. 2.

To study the sales in previous years. To study factors influencing increase in customers base.

Data collection method

Secondary data has been used in the present study. Secondary data was collected from various newspapers and internet.

interpretation

Analysis and

For the quarter ended June 30th 2009, Vodafone India has reported an increase 23 percent in revenue at constant exchange rates, and 33 percent, taking into account exchange rate fluctuations. The revenues included a 7 percent benefit of revenue from their stake in Indus Towers. Data revenues for Vodafone remained flat quarter on quarter, but were up 30 percent year on year. Strangely enough, messaging (SMS) revenues declined quarter on quarter.

Looking at trends for the last couple of years, data revenues appear to be lop sided, with Q4 registering data revenues significantly higher than other quarters. We’ve written to Vodafone for more color on how they account data revenues.

However, much like BhartiAirtel and Idea Cellular, Vodafone India reported a decline in ARPU, impacted by the mobile termination rate cut.

REPRESENTATION OF VODAFONE CONNECTIONS THROUGH LINE GRAPH SHOWING AVERAGE REVENUE PER UNIT

The above graph shows that there has been a continuous decrease in the ARPU in both postpaid and prepaid connections from 3rd quarter of2008. The 3rd and 4th quarter of 2009 and 1st quarter of 2010 has been estimated using extrapolation.

Customer base of Vodafone India in different quarters of year 2008-2009

Of its total customer base, 93.2 percent was Prepaid. The company’s average customer base grew by

56 percent year on year, on launching in seven new circles.

With this graph we can say that both postpaid connections and prepaid connections sale have increased considerably.

ANALYSIS OF TURNOVER IN DIFFERENT YEARS
2009 2008 2007 2006 2005

Turnover

41017.0

35478.0

31104.0

29350.0

26678.0

Representation of turnover through bar graph

Representation of turnover through pie chart

From the above we can clearly analyze that the turnover of Vodafone has been increasing continuously which shows the capability of the company and its continuous innovation. So analysis shows that there has been a continuous and sound increase in the turnover of Vodafone, and the telecom major is growing at a brisk pace.

Descriptive Analysis of turnover

Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count

32725 .4 2519. 134 31104 #N/A 5632. 955 31730 187 0.230 1 0.762 371 14339 26678 41017 16362 7 5

From the above descriptive analysis that the average sale for the last five years have been 32725.4 millions. The total sale is 163627 millions. Sale have been taken for past 5 years i.e. fy2004-05,2005-06,2006-07,2007-08,200809.The data is positively skewed as the skewness is 0.762371 .

Comparison of revenue with profit
yea r reve nue prof it 120 05 124 91 108 60 886 6 647 8

200 5518 9 7 200 4817 8 8 200 4114 7 6 200 3404 6 3 200 2731 5 5

In the above graph 1 refers to 2009 and so on.

Interpretation with correlation
120 05 120 05 1

The analysis shows that both profit and revenue are positively correlated as when the revenue is increasing profit is also increasing. The below analysis is done using regression taking profit revenue of Vodafone for last five years.

SUMMARY OUTPUT Regression Statistics 0.9352 Multiple R 3413 0.8746 R Square 6287 0.8328 Adjusted R Square 8383 4516.9 Standard Error 1773 Observations 5 revenue=28992.52 +7.07(profit) se=960.71+.911(pr ofit)

Coeffic

Standar

t Stat

P-value

ients Intercept X Variable 1

d Error 0.117927 151 0.913577929 4.575526 741 0.019592439

1115.6 9460.70 7434 8002 4.1705 0.91149 596 2782

RESIDUAL OUTPUT Predict Residua ed Y ls 48951. 6235.10 8937 6346 50978. 2800.78 7856 562 44176. 3030.60 6029 2912 35860. 1817.50 5071 707 25901. 1413.78 2107 9255 Standard Residual s 1.593936 638 0.715990 164 0.774740 437 0.464625 773 0.361419 736

Observation 1 2 3 4 5

87.46%chances that when revenue increases profit also increase.

Results and findings

1. Revenue is increasing at a healthy rate. 2. The customer base is also increasing continuously. 3. Customers are happy with the add-on services provided by Vodafone. 4. The call rates are highly competitive due to presence of large number of competitors. 5. The advertising strategy of Vodafone is quiet effective which reflect on its increasing customer base, the latest example of zoo zoo ads. 6. It is highly probable that when the revenue is increasing profit is also increasing.

CONCLUSION
The study revealed that the sale of Vodafone India is continuously rising which is clearly reflected in its increasing customer base.

BIBLIOGRAPHY
• • • • • • • Wikipedia.com Vodafone.com Moneycontrol.com Coai.com Commerce.wsj.com Sharekhan.com Vodacom.com

• Journal of IMS • Medianama.com

End of the report