SWOT analysis of RCOM in 2006:

Strengths:

 Strong brand recognition

 Well Integrated operations
 Significant execution and technological capabilities
 Strong distribution channel ( RWorld, FLAG Telecom )
 Unified License obtained by RCom in 8 circles

Weaknesses:

 Low ARPU compared to competitors

 Weakness in Rural Market
 Low capabilities in Ethernet and application delivery services

Opportunities:

 Low penetration Rates

 Strategic Alliances ( FLAG)
 Global expansion due to resource based acquisition of FLAG
 Huge GSM subscriber base (76.67%) with economies of scale for GSM operators
 Telecom policy in more in favor of GSM than CDMA
 Higher ARPU in GSM sector

Threats:

 Increasing competition with domestic players

 Decreasing ARPU due to competition
  High regulation in Indian Telecom sector
 Changing political scenario could change Regulations
 High switching costs for customers to move to GSM

Indian Telecom Industry in 2006

 India’s Telecom Network had 203 million connections

 Third largest in the world and the second largest among the emerging economies of Asia
 One of the key sectors responsible for India’s resurgent India’s economic growth ( 1% of GDP )
 Contributed 30 percent to India’s total service tax revenue
 Liberal Government policies to provide easy access to telecom equipment and fair regulatory
framework
 Robust growth in Tele-density (11.4% in 2006)
 Increasing preference to wireless service compared to landline ( 93 million users in 2006 )
 Increasing participation of private players. 57% share of Industry by PSUs
 Great opportunities in GSM. 70% Technology market share of GSM IN 2006
 A liberal licensing scheme was set up to increase Internet penetration across the country with
10.83 million subscribers in Dec 2006. Reliance communication had a 10.32% subscriber base in
Dec 2006
 The Government set up a Telecom Equipment and Services Export Promotion Forum and
Telecom Testing and Security Certification Centre (TETC).
 Companies like Alcatel, Cisco began showing interest in setting up their R&D centers in India.

Major players in the Market

There were three types of players in telecom services:

 State owned companies (BSNL and MTNL)
 Private Indian owned companies (Reliance Infocomm, Tata Teleservices,)
  Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL
Mobile, Spice Communications)
The market share of various players on Internet and Wireless services is given in the Exhibit X below.

Appendix