Telecommunications Reforms in India

Mushtaq Khan 03
Himanshu Ahire 13

Presentation Plan

Introduction

History

Major Players in Telecom Sector

Growth of the Industry (Analysis)

Major reforms

SWOT analysis

Problems and prospects

Presentation Plan

Introduction

History

Major Players in Telecom Sector

Growth of the Industry (Analysis)

Major reforms

SWOT analysis

Problems and prospects

Introduction to Indian Telecom Industry Recent facts & figures

The total wireless subscriber base {GSM, CDMA and WLL (F)}
stood at 391.76 million at the end of financial year.
The number of wireline subscribers on 31st March 2009 was
37.96 million.
On an average, more than 10 million subscribers were added
every month during the financial year.
The overall teledensity at the end of March 2009 was
36.98% as compared to 26.22% ending March 2008.
The rural teledensity at the end of March 2009 was 15.20%
as compared to 9.20% ending March 2008
There were 13.54 million internet subscribers on 31st March
2009 as compared to 11.09 million on 31st March 2008.
The number of broad-band connections on 31st March 2009
was 6.22 million compared to 3.87 million for the same
period during previous year.
*Source : http://www.trai.gov.in/ Annual Report

Presentation Plan

Introduction

History

Major Players in Telecom Sector

Growth of the Industry (Analysis)

Major reforms

SWOT analysis

Problems and prospects

History of Indian Telecom Industry

1851 First operational land lines were laid by the

government near Calcutta (seat of British power)
1881 Telephone service introduced in India
1883 Merger with the postal system
1923 Formation of Indian Radio Telegraph Company (IRT)
1932 Merger of ETC and IRT into the Indian Radio and
Cable Communication Company (IRCC)
1947 Nationalization of all foreign telecommunication
companies to form the Posts, Telephone and Telegraph
(PTT), a monopoly run by the government's Ministry of
Communications

History of Indian Telecom Industry

1985 Department of Telecommunications (DOT)

established, an exclusive provider of domestic and
long-distance service that would be its own regulator
(separate from the postal system)
1986 Conversion of DOT into two wholly governmentowned companies: the Videsh Sanchar Nigam Limited
(VSNL) for international telecommunications and
Mahanagar Telephone Nigam Limited (MTNL) for
service in metropolitan areas.
1997 Telecom Regulatory Authority of India created.
1999 Cellular Services are launched in India. New
National Telecom Policy is adopted.
2000 DoT becomes a corporation, BSNL

Presentation Plan

Introduction

History

Major Players in Telecom Sector

Growth of the Industry (Analysis)

Major reforms

SWOT analysis

Problems and prospects

Major Players in different segments of Indian telecom industry

Basic Services Operators

MOBILE SERVICES

GSM Services Operators

BSNL
Airtel
MTNL
Vodafone

Reliance

Idea
TTSL
Reliance

Internet Services Operators

BSNL

BSNL

CDMA Services Operators

MTNL

Reliance

Reliance
TTSL
TTSL
BSNL
Airtel

MTNL Mahanagar Telecom Nigam Ltd.

BSNL Bharat Sanchar Nigam Ltd.

TTSL Tata Teleservices Ltd.

Subscribers (Rural & Urban) & Market share (GSM & CDMA) - 2009

Subscribers (Rural & Urban) & Market share (GSM & CDMA)

Presentation Plan

Introduction

History

Major Players in Telecom Sector

Growth of the Industry (Analysis)

Major reforms

SWOT analysis

Problems and prospects

Growth of Subscriber base from 1999 to 2009

Growth of Indian Telecom Sector

Wirelline Subscriber in Million

Growth of Indian Telecom Sector

Wireless Subscriber in Million

Growth of Indian Telecom Sector

Internet Subscriber in Million

Growth of Indian Telecom Sector

Broadband Subscriber in Million

Growth of Indian Telecom Sector

Growth of Teledensity

Presentation Plan

Introduction

History

Major Players in Telecom Sector

Growth of the Industry (Analysis)

Major reforms

SWOT analysis

Problems and prospects

Regulatory Framework provides level playing field for all operators

The Department of telecommunications (Government of India) is the main

governing body for the industry.
Telephone Regulatory Authority of India (TRAI) assists the Government of
India (GoI) to take timely decisions and introduce new technologies in the
country.

Indian Telecom Industry Framework

Indian Government Bodies

They formulate various policies and pass laws to

regulate the telecom industry in India.

Wireless Planning and

Coordination (WPC)

Handles spectrum allocation and

management

Department of
Telecommunications

DoT Licensee and frequency

management for telecom

Telecom Commission

Exclusive policy making body of

DoT

Group on Telecom and IT

(GoT-IT)

Handles ad hoc issues of the

telecom industry

Independent Bodies

They undertake various research activities and monitor

the quality of service provided in the Indian telecom
industry. They also provide various recommendations to
improve the status of telecom operations in India.
Telecom Regulatory
Authority of India (TRAI)

Telecom Disputes
Settlement and Appellate
Tribunal (TDSAT)

Independent regulatory body

Telecom disputes settlement body

Ministry of Communication & Information Technology

Licensor
Dept of Telecom
Regulator
Telecom Regulatory
Authority of India
Judiciary
Telecom Dispute
Settlement
Appellate Tribunal

Unified License Operators

Fixed Line Operators
National Long Distance
Operators
International Long Distance
Operators

CDMA
1800M
hz

Wireless Operators

FDI in telecom recently revised to 74%.

Government gets 15% of revenues from Unified Licensing

GSM
900
&
1800

Various important regulations and laws have been passed in the Indian
telecom industry post-liberalisation era
INDIA

Private players
were allowed in
Value Added
Services

BSNL was
established
by DoT

Independent
regulator, TRAI,
was established

1992

1997

National
Telecom Policy
(NTP) was
formulated

Go-ahead to
the CDMA
technology

1999

1994

ILD services was

opened to
competition

2002
2000

NTP-99 led to
migration from highcost fixed license
fee to low-cost
revenue sharing
regime

Calling Party Pays

(CPP) was
implemented
2003

Internet
telephony
initiated
Reduction of
licence fees

Unified Access
Licensing
(UASL) regime
was introduced
Reference
Interconnect
order was
issued

3G Spectrum
Was Auctioned.
In April Airtel
launched 3G
Number portability
Intra-circle merger
Service and
was proposed
guidelines were
MTNL in
established
Attempted to (pending)
December 11
boost Rural
telephony

2004

2006
Broadband
policy 2004
Decision on 3G
was formulated
services (awaited)
FDI limit was
targeting 20
increased from
million
49 to 74 percent
subscribers by
2010

Department of Telecommunication (DoT) is the main body formulating laws

and various regulations for the Indian telecom industry.

ILD International Long Distance

2007

2005

2008

Presentation Plan

Introduction

History

Major Players in Telecom Sector

Growth of the Industry (Analysis)

Major reforms

SWOT analysis

Problems and prospects

Market SWOT Analysis

Strengths

Huge wireless subscriber potential

Fastest growing mobile market in the world
Consumers are ready to pay for cutting edge
services
Government proposes to hike FDI limit in
Telecom to 74%
Unified license regime

Weaknesses

Opportunities

To offer value added services on GSM, CDMA and IP

Language independent services
Mobile Marketing concepts
Content influenced by local culture and Global
success stories
M-Commerce
Unified messaging platforms
Foreign investment in form of equity or technology

Lowest call tariffs in the world

Market strongly regulated by Govrenment body
Governing both ISP and Telecom sectors
Too many authorities ruling the sector
Huge potential for low end and cheap handsets
Wide scale Consumer churn in Telecom and ISP
Wide spread VAS deployment is restricted due to
language and literacy problems
Primarily a voice based market

Threats

Low cost service providers no possibility of

breaking even in short term
Weak IPR protection
Software and digital content Piracy
Political instability
Regulatory interference

Presentation Plan

Introduction

History

Major Players in Telecom Sector

Growth of the Industry (Analysis)

Major reforms

SWOT analysis

Problems and prospects

Prospects of Indian Telecom sector

Fifth largest telecom network in the world; second largest among the
emerging economies after China
On an average, about 67 million new users added per month,
making India the worlds fastest growing wireless services market
Liberal Foreign Investment RegimeFDI limit increased from 49
percent to 74 percent; the rural telecom equipment market is also
open to large investments
Among the countries offering the highest rates of return on investment
The large untapped potential in Indias rural markets1.9 percent
teledensity in rural markets as compared to the national level of 18
percent
The government promoting telecom manufacturing by providing tax
sops and establishing telecom specific Special Economic Zones

FDI and other M&A activities increasing in number

Major trends in the telecom sector is increasing M&A activity, de-regulation of telecom policies and growing
interest of international investors.
Recent Deals in Telecom Sector

Vodafone purchased stake in Hutch

from Hong Kong's Hutchison
Telecom International for USD
11.08 billion.
Reliance Communications Limited has sold a five percent
equity share capital of its subsidiary Reliance Telecom
Infrastructure Limited to international investors across the
US, Europe and Asia. The deal was worth USD 337.5
million.

Telekom Malaysia acquired a 49

percent stake in Spice
Communications for USD 179
million.

Maxis Communications acquired a

74 percent stake in Aircel for USD
1.08 billion.

Ericsson to design, plan, deploy and

manage Bharti Airtel network and
facilitate their expansion in the rural
areas, under a USD 2 billion
contract.

Fight for the Sweet pie

FDI and other M&A activities increasing in number

Major trends in the telecom sector is increasing M&A activity, de-regulation of telecom policies and growing
interest of international investors.

Vodafone purchased stake in Hutch

from Hong Kong's Hutchison
Telecom International for USD
11.08 billion.
Reliance Communications Limited has sold a five percent
equity share capital of its subsidiary Reliance Telecom
Infrastructure Limited to international investors across the
US, Europe and Asia. The deal was worth USD 337.5
million.

Telekom Malaysia acquired a 49

percent stake in Spice
Communications for USD 179
million.

Maxis Communications acquired a

74 percent stake in Aircel for USD
1.08 billion.

Ericsson to design, plan, deploy and

manage Bharti Airtel network and
facilitate their expansion in the rural
areas, under a USD 2 billion
contract.

The Indian telecom industry has a 74 percent FDI limit in the

telecom services segment.
The GoI has permitted 100 percent FDI in manufacturing of
telecom equipment in India.

FDI in Telecom Sector

680

700
FDI (USD million)

Recent Deals in Telecom Sector

521
500
300
116

129

200304

200405

100
200506

200607

The Indian telecom industry has always attracted foreign

investors. In fact, the cumulative FDI inflow, during the August
1991 to March 2007 period, in the telecommunication sector
amounted to USD 3,892 million. It is the third largest sector to
attract FDI in India in the post-liberalisation era.
FDI calculation takes into account radio paging, cellular mobile
and basic telephone services in the telecommunication sector.

Problems of Indian Telecom sector

Lowest call tariffs in the world

Market strongly regulated by Govrenment body Governing both ISP and Telecom
sectors
Low cost service providers no possibility of breaking even in short term
Political instability
Wide scale Consumer churn in Telecom and ISP
Wide spread VAS deployment is restricted due to language and literacy problems
Primarily a voice based market

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