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POORNIMA GROUP OF COLLEGES

POORNIMA INSTITUTE OF ENGINEERING & TECHNOLOGY

A
PROJECT REPORT ON

HYPER COMPETITION IN TELECOME SECTORS AND ITS IMPACT


ON PRICING STRATEGY & SALES PROMOTION

SUBMITTED TO: SUBMITTED BY:


Miss VINEETA AGRAWAL PAWAN KUMAR BIJARANIYA
PIET/MBA 1 YEAR
ACKNOWLEDGEMENT
I express my sincere thanks to my project guide Miss Vineeta Agrawal lecturer
Department of management studies, Poornima group of colleges for guiding me right from the
inception till the successful completion of the project. I sincerely acknowledge her for extending
her valuable guidance, support for literature, critical reviews of project and the report and all the
above moral she had provided to me with all stage of the project.

I would also like to acknowledge Mr Amish for extending his valuable guidance.

I would also like to thank the supportive staff of department of management studies,
Poornima Group of colleges for this help and cooperation throughout our project.
PAWAN KUMAR BIJARANIYA

PREFACE
“HYPER Competition in Telecom industry & its impact on pricing sales
promotion.”
Competition is increasing in telecom sectors. Many companies are becoming a part of it as the
competition in telecom sector is now converted into cut-throat competition so, it seems very
difficult to remain in market, telecom industries uses various method of sales promotion like they
are reducing call rates and offering many 0ackages to attract the customer. The rationale behind
the study is, it will help to know the pricing strategy and will enhance our knowledge. Objective
of the study are, to analyze the marketing strategies of various telecom industries, Analyze the
various techniques of sales promotion which are offering adopting by different telecom
industries ,To find out the pricing method, Define a mission statement, to know the impact of
increasing competition, Agree on the top 2-3 practices and implement them.

The methodology of the study is based on secondary data collection via internet, newspaper,
magazines and journals. The objective of the study is increasing competition in telecom sector.
Now various companies entered in this sector and also apply various marketing strategies to
remain in competitions like reducing prices. The limitation of this study in changing price in a
constant manner, due to this it creates trouble in data collection and thus there is no availability
of historical data. The key element include introduction of telecom industry, general pricing
strategies, strategies followed in various companies.

We conclude that due to increase in competition the profit of companies continuously goes down
and companies start hiring charges on toll free number hence there is a cut competition in
telecom sector which is affecting both company as well as general users/customers, increasing it
proves beneficial for the customer and now the customer are enjoying many services at
reasonable prices.
Index

S.NO. TOPIC PAGE NO.

1. Executive summary 1

2. Research methodology 2

2.1 Duration of the project 2

2.2 Type of research 2

2.3 Scope of study 3

3. Core study 4-49

4. Conclusion 50

5. Bibliography 51
EXECUTIVE SUMMARY
“HYPER Competition in Telecom industry & its impact on pricing sales promotion.”

The fast track growth of the Indian telecom industry has made it a key contributor to
India’s progress. India adopted a phased approach for reforming the telecom sector right
from the beginning. Privatization was gradually introduced, first in value-added services,
followed by cellular and basic services. An independent regulatory body, Telecom
Regulatory Authority of India (TRAI), was established to deal with competition in a
balanced manner. This gradual and thoughtful reform process in India has favored
industry growth. Today, there are more than 225 million telecom subscribers in India.
Every month, 6-7 million new subscribers are added. Upcoming services such as 3G and
Wi Max will help to further augment the growth rate. Furthermore, the Indian economy is
slated to sustain its 7-9 per cent growth rate in the near future. This is supported by the
political stability that the country is experiencecurrently.

A conducive business environment is also created by a favorable regulatory regime.


There exists enormous business potential for telecom companies on account of the
country’s low telecom density, which is close to 19 per cent presently. The Indian
telecom industry is growing at the fastest pace in the world and India is projected to be
the second largest telecom market globally by 2010.

Competition is increasing in telecom sectors. Many companies are becoming a part of it


as the competition in telecom sector is now converted into cut-throat competition so, it
seems very difficult to remain in market, telecom industries uses various method of sales
promotion like they are reducing call rates and offering many packages to attract the
customer. The methodology of the study is based on secondary data collection via
internet, newspaper, magazines and journals. The objective of the study is increasing
competition in telecom sector. Now various companies entered in this sector and also
apply various marketing strategies to remain in competitions like reducing prices.
Research methodology

Duration of project: 35 Days


Week 1: Collection of all the secondary data related to project
Week 2: Prepare the Abstract
Week 3: Prepare the Synopsis & Executive Summary
Week 4: Prepare the Core Study
Week 5: Prepare Final Report
Submission on 17th May

Type of research:
Nature of research is descriptive in nature.
Descriptive research includes survey and fact finding enquiries of different kinds. The major
purpose of descriptive research is description of the state of affairs as it exist at present. In social
science and business research we quite often use the term Ex post facto research for descriptive
research studies. The main characteristic of this method are that researcher has no control over
the variables: he can only report what has happened and what is happening. Most ex post facto
research projects are used for descriptive study in which the researcher seek to measure such
items as for example: frequency of shopping, preference of people or similar data. Ex post facto
also include attempts by a researcher to discover causes even they cannot control the variables.

Descriptive studies are not limited to any one method of data collection. They may employ any
or all of the methods of data collection. E.g. open ended interviews, structured scales, and
participant observation. Yet descriptive studies are not characterized by the flexibility that marks
exploratory studies. The procedure used in a descriptive study must be carefully planned and fall
more or less into a pattern.

Scope of the study:

Competition is increasing in telecom sectors. Many companies are becoming a part of it as the
competition in telecom sector is now converted into cut-throat competition so, it seems very
difficult to remain in market, telecom industries uses various method of sales promotion like they
are reducing call rates and offering many packages to attract the customer.

Articles: One month telecom research (Article no. 36932025)


Modeling market dynamics in competitive communication consumer markets.
(Article no. 33971833)
Mobile broadband: still growing but realism sinks in. (Article no. 48213219)
Web-biography:
www.trai.com
www.scribd.com
www.ehow.com
www.ebscohost.com
www.google.com
www.ibef.org

Journals: Telecom, Media & Entertainment Insights Journal Volume 3


Indian Telecom Industry Report 220708
1613 File MOD6 SEC3 India Telecom and Competition Policy
14958264-Indian-Telecom-Industry-Report-220708
Indian Telecom Story (Part XIX) Tariff war and Hyper competition « Ronnie05's
Blog files
27917799-This-is-a-report-on-the-Advertising-effect-in-telecom-industry-in-india
India Brand Equity Foundation (IBEF)
Core Study
Table of contents

S.NO. TOPIC PAGE NO.


1 History 6
2 Introduction 7
3 Global scenario 8-10
4 Indian telecom 11
5 TRAI 12-13
6 Top 5 companies 14
7 Bharti 15
8 Reliance 16
9 Vodafone 17
10 Bharat SancharNigam 18
11 Idea 19
12 Monthly update 20
13 Life cycle 21
14 Economic Benefits 22-23
15 Telecom service 24
16 Major Facts 25-27
17 Impact of Economy 28-29
18 Economic Crisis 30-31
19 5 Forces 32-37
20 Advertising trends 38-39
21 Market players 40
22 Research & 41-42
development
23 Findings 43
24 SWOT Analysis 44-46
25 Recommendations 47
26 Limitations 48
27 Conclusion 49
28 Bibliography 50
History of Telecommunication Industry

The history of telecommunication industry started with the first public demonstration of Morse’s
electric telegraph, Baltimore to Washington in 1844. In 1876 Alexander Graham Bell filed his
patent application and the first telephone patent was issued to him on 7th of March.
In 1913, telegraph was popular way of communication. AT&T commits to dispose its telegraph
stocks and agreed to provide long distance connection to independence telephone system.
In 1956, the final judgment limited the Bell System to Common Carrier Communications and
Government projects but preserving the long-standing relationships between the manufacturing,
researches and operating arms of the Bell System. In this judgment AT&T retained bell
laboratories and Western Electric Company. This final judgment brought to a close the justice
departments seven –year-old antitrust suit against AT&T and Western Electric which sought
separation of the Bell Systems Manufacturing from its operating and research functions. AT&T
was still controlling the telecommunication industry.
In 1982 , AT&T was requested to divestiture its stock ownership in Western Electric;
termination of exclusive relationship between AT&T and Western Electric; divestiture by
Western Electric of its fifty percent interest in Bell Telephone Laboratories, AT&T ‘s
telecommunication research and development facility, is a jointly owned subsidiary in which
AT&T and Western Electric each own 50% of the stock; separation of telephone manufacturing
from provision of telephone service and the compulsory licensing of patents owned by AT&T on
a non-discriminatory basis.It was telecommunication act of 1996 that true competition was
allowed. The act of 1996 opened the market to all competitors. AT&T being the first
telecommunication company paved the road for the telecommunication industry as well as set
the policy and standards for others to follow.
Introduction
The purpose of this paper is to construct a vision of Indian telecom sector for the
year 2020, i.e., about two decades from now. Development being a continuous process, the
choice
of the year 2020 is just an arbitrary division of time, a predefined time horizon to take stock of
what is likely to be achieved. Pre-portrayal of a stage of development in future requires
understanding of the process of change, the dynamics that set law of motion. In attempting to do
so,
the present paper deciphers the recent past.

Process of change is often volatile and responsive to intervention and global


circumstances impacting it. In such an inherently dynamic situation it is convenient to assume
that cross-country experiences incubate the most recent seeds of change. This is because
countries at various stages of development encapsulate developmental experiences that occur
with the passage of time. The present paper isolates the agents of change based on international
experiences and situates India in this development continuum. The agents of change, as observed
from international
perspective, have been broadly categorized into economic structure, competition policy and
technology.

Economic reforms and liberalization have driven telecom sector through several
transmission channels of which these three categories are of major significance. The paper, as it
unfolds, is divided into six sections. Section 1 gives a brief account of the era of competition that
was heralded in Indian telecom sector and the results achieved. Analysis of the results,
particularly comparison with other major countries intrigued further discussions on economic
structure, synergy
between telecom and IT, competition policy and technology in sections 2,3.4 and 5 respectively.
Logical extension of the arguments, as they developed, extended to a vision for 2020 in each of
these sections.
GLOBAL SCENARIO

World telecom industry is an uprising industry, proceeding towards a goal of achieving two third
of the world's telecom connections. Over the past few years information and communications
technology has changed in a dramatic manner and as a result of that world telecom industry is
going to be a booming industry. Substantial economic growth and mounting population enable
the rapid growth of this industry.
The world telecommunications market is expected to rise at an 11 percent compound annual
growth rate at the end of year 2010. The leading telecom companies like AT&T, Vodafone,
Verizon, SBC Communications, Bell South, Qwest Communications are trying to take the
advantage of this growth. These companies are working on telecommunication fields like
broadband technologies, EDGE(Enhanced Data rates for Global Evolution) technologies, LAN-
WAN inter networking, optical networking, voice over Internet protocol, wireless data service
etc.
Economical aspect of telecommunication industry: World telecom industry is taking a crucial
part of world economy. The total revenue earned from this industry is 3 percent of the gross
world products and is aiming at attaining more revenues. One statistical report reveals that
approximately 16.9% of the world population has access to the Internet.
Present market scenario of world telecom industry: Over the last couple of years, world
telecommunication industry has been consolidating by allowing private organizations the
opportunities to run their businesses with this industry. The Government monopolies are now
being privatized and consequently competition is developing. Among all, the domestic and small
business markets are the hardest.
Until the 1980s the world telecommunications systems had a simply administrative structure.
The United States telephone service was supplied by a regulated monopoly, American Telephone
and Telegraph (AT&T). Telegraph service was provided mainly by the Western Union
Corporation. In almost all other countries both services were the monopolies of government
agencies known as PTTs (for Post, Telephone, and Telegraph). In the United States beginning in
1983, AT&T agreed in a court settlement to divest itself of the local operating companies that
provided basic telephonic service. They remained regulated local monopolies, grouped together
into eight regional companies.
AT&T now offers long distance service in competition with half a dozen major and many minor
competitors while retaining ownership of a subsidiary that produces telephonic equipment,
computers and other electronic devices. During the same period Great Britain’s national
telephone company was sold to private investors as was Japan’s NTT telephone monopoly. For
telegraphy and data transmission, Western Union was joined by other major companies, while
many multinational firms formed their own telecommunications services that link offices
scattered throughout the world. New technology also brought continuing changes in the
providers of telecommunication. Private companies such as Comsat in the United States were
organized to provide satellite communication links within the country.
Around the world we are witnessing remarkable changes to the telecoms environment. After
years of debate, structural separation is now taking place in many parts of the world including
Hong Kong, New Zealand, Singapore and some European markets. Structural separation – or at
least full-blown operational separation – is required to advance the entire industry and to create
new business opportunities and innovations which will benefit our society, our economy and
ultimately our industry.
The focus is also shifting away from broadband to what it can actually achieve. Next Generation
Telecommunications better describes this new environment and is essential for the emerging
digital economy. Important services that depend on NGT include telehealth, e-education, e-
business, digital media, e-government and environmental applications such as smart utility
meters.
In order to meet this burgeoning consumer demand for NGT applications, we are seeing
increasing investment in All-IP Next Generation Networks and fiber networks. A proper
inventory of national infrastructure assets is required if we want to establish an efficient and
economically viable national broadband structure for these services. In the developing markets,
next generations telecoms will take the form of wireless NGNs (i.e., LTE/WiMAX).
These are some of the elements of the broader ICT revolution that is unfolding before our very
eyes. We are right in the midst of the transition from old communications structures (mainly one-
way streets) to new structures that are fully-interactive and video-based.
One of the drivers behind the industry changes are the declining revenues experienced by the
telcos in their traditional markets. Over the past 10 years or so, fixed-line operators have been
affected by deregulation, a severe industry downturn, declining prices and major inroads by
mobile
services. In addition, people are drifting to other forms of communication, such as email, online
chat, and mobile text messaging instead of the traditional phone.
This has also led to an increased need for bandwidth, which in turn has revived the submarine
cable sector. In recent times there have been many cable build-out announcements around the
world, and some major systems are again being constructed. Over 25 systems are expected to be
built over the next two to three years and network upgrades are also on the agenda for some
existing systems.
It is clear that the mobile industry is also undergoing profound changes. The saturated developed
markets are forcing the industry to find new revenue streams and we are now seeing other
organizations such as media companies, content providers, Internet media companies and private
equity companies becoming involved in this market.
For the time being however, voice will remain the killer application for mobile with some data
services included as support services and niche market services. 4G (ie, WiMAX/LTE) is the real
solution for mobile data and by 2015 it is expected that the majority of mobile revenues will
come from data.
With the Internet economy, digital media and other telecommunications activities becoming
further established, the need for modern and efficient infrastructure is becoming more critical.
Today the Indian telecommunications network with over 375 Million subscribers is second
largest network in the world after China. India is also the fastest growing telecom market in the
world with an addition of 9- 10 million monthly subscribers. The teledensity of the Country has
increased from 18% in 2006 to 33% in December 2008, showing a stupendous annual growth of
about 50%, one of the highest in any sector of the Indian Economy. The Department of
Telecommunications has been able to provide state of the art world-class infrastructure at
globally competitive tariffs and reduce the digital divide by extending connectivity to the
unconnected areas. India has emerged as a major base for the telecom industry worldwide. Thus
Indian telecom sector has come a long way in achieving its dream of providing affordable and
effective communication facilities to Indian citizens. As a result common man today has access
to this most needed facility.
TELECOM SECTOR IN INDIA
The telecom industry is one of the fastest growing industries in India. India has nearly 200
million telephone lines making it the third largest network in the world after China and USA,
with a growth rate of 45%. Indian telecom industry has the highest growth rate in the world. A
record 5.9 Million new mobile phone subscribers were drawn by the Telecom sector in India in
the month of August 2006, according to the COAI (Cellular Operators Association of India).

India, which is seeing over 8 million wireless subscribers being added every month (8.62 million
in May 2008), is the fastest growing telephone market in the world. No wonder the whole world
has set its eyes on India, a glimpse of which can seen from the recent acquisition of Hutch by
Vodafone and consolidation phase which has just begun. The government has reiterated the
target of 500 million telecom subscribers and 20 million broadband connections by 2010.
Undoubtedly, the Indian telecom industry is at an inflexion point and everyone wants to have a
slice of this lucrative market, given the under-penetrated market and untapped potential.

The August of 1995 saw the launch of the first mobile service in India, ‘Modi Telstra’ in
Calcutta. However, the call rate structure; with an outgoing call rate of Rs.16 a minute, incoming
call rate of Rs.8 a minute and cell phones costing around Rs.15,000 were the prime reasons why
the cellular communication did not get the desired popularity. The New Telecom Policy in 1999
introduced several consumer-friendly initiatives. Only after the entry of private operators like
Bharti Airtel, Hutch, Reliance, Tata, BPL, Idea, etc., who created a competitive market which
further reduced operational costs, did the upward trend in the number of mobile subscribers
started. The tariffs have come down substantially with Indian Mobile rates being the lowest in
the world. The number of wireless subscribers rose from 16 million in 2003 to 317 million at the
end of May 2008. With this, India has become one of the fastest growing mobile markets in the
world. Already, The Indian market leader, Bharti Airtel has already crossed the 50 million
customer mark to become one of the world’s top 10 operators and has become the fastest private
telecom company in the world to achieve this milestone.
Telecom Regulatory Authority of India (TRAI)

Mission
To ensure that the interest of consumer is protected and at the same time encourage the
development of telecommunications, broadcasting and cable services in a manner and at a pace
which will enable India to play a leading role in the emerging global information society.

Role of TRAI
One of the main objectives of TRAI is to provide a fair and transparent policy environment
which promotes a level playing field and facilities fair competition. TRAI has issued from time
to time a large number of regulations, orders and directives to deal with the issues coming
before. These regulations cover a wide range of subjects including tariff, interconnection and
quality of services etc.

Functions of TRAI
 Need and timing for introduction of new service provider
 Terms and condition of license to a service provider
 Technological improvement in services by service provider
 Maintain inter-connect agreement register
 Levy fees and other charges as determined by regulations
 Measures for technological development
 Measures to facilitate competition and promote efficiency in the operation to facilitate
growth in industry
MAJOR PLAYERS IN INDIAN TELECOME INDUSTRY

TOP FIVE COMPANIES:

The Top five companies, on the basis of ‘Market Share’ as on 31st January, 2009 are:

1. Bharti Airtel Ltd.


2. Reliance Communications Ltd.
3. Vodafone Essar Ltd.
4. BSNL
5. Idea Cellular + Spice
BHARTI AIRTEL LTD.

Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. The Bharti Group has
a diverse business portfolio and has created global brands in the telecommunication sector. Airtel
comes from Bharti Airtel Limited, India’s largest integrated and the first private telecom services
provider with a footprint in all the 23 telecom circles. Bharti Airtel since its inception has been at
the forefront of technology and has steered the course of the telecom sector in the country with
its world class products and services. The businesses at Bharti Airtel have been structured into
three individual strategic business units (SBU’s) - Mobile Services, Airtel Telemedia Services &
Enterprise Services. The mobile business provides mobile & fixed wireless services using GSM
technology across 23 telecom circles while the Airtel Telemedia Services business offers
broadband & telephone services in 95 cities and has recently launched India's best Direct-to-
Home (DTH) service, Airtel digital TV. The Enterprise services provide end-to-end telecom
solutions to corporate customers and national & international long distance services to carriers.
All these services are provided under the Airtel brand.
The company served an aggregate of 88,270,194 customers as of December 31, 2008; of whom
85,650,733 subscribed to GSM services and 2,619,461 use the Telemedia Services either for
voice and/or broadband access delivered through DSL. Bharti Airtel is the largest wireless
service provider in the country, based on the number of subscribers as of December 31, 2008.
They also offer an integrated suite of telecom solutions to their enterprise customers, in addition
to providing long distance connectivity both nationally and internationally. They have recently
forayed into media by launching their DTH and IPTV Services. All these services are rendered
under a unified brand "Airtel".
The company also deploys, owns and manages passive infrastructure pertaining to telecom
operations under its subsidiary Bharti Infratel Limited. Bharti Infratel owns 42% of Indus
Towers Limited. Bharti Infratel and Indus Towers are the two top providers of passive
infrastructure services in India. Company shares are listed on The Stock Exchange, Mumbai
(BSE) and The National Stock Exchange of India Limited (NSE).

RELIANCE COMMUNICATIONS LTD.

Reliance Communications is the flagship company of the Anil Dhirubhai Ambani Group
(ADAG) of companies. Listed on the National Stock Exchange and the Bombay Stock
Exchange, it is India’s leading integrated telecommunication company with over 71 million
customers.
Their business encompasses a complete range of telecom services covering mobile and fixed line
telephony. It includes broadband, national and international long distance services and data
services along with an exhaustive range of value-added services and applications. Our constant
endeavour is to achieve customer delight by enhancing the productivity of the enterprises and
individuals we serve.
Reliance Mobile (formerly Reliance India Mobile), launched on 28 December 2002, coinciding
with the joyous occasion of the late Dhirubhai Ambani’s 70th birthday, was among the initial
initiatives of Reliance Communications. It marked the auspicious beginning of Dhirubhai’s
dream of ushering in a digital revolution in India. Today, the company can proudly claim that
they were instrumental in harnessing the true power of information and communication, by
bestowing it in the hands of the common man at affordable rates.
They endeavour to further extend their efforts beyond the traditional value chain by developing
and deploying complete telecom solutions for the entire spectrum of society. It was established
in the year 2004 as Reliance Infrastructure Developers Private Limited, Reliance
Communications started laying 60,000 route kilometers of a pan-India fiber optic backbone with
high capacity, integrated (wireless and wireline), convergent (voice, data and video) digital
network and to offer services spanning the entire infocomm value chain. It is capable of
delivering a range of services spanning the entire infocomm (information and communication)
value chain, including infrastructure and services for enterprises as well as individuals,
applications, and consulting.

VODAFONE ESSAR LTD.

Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced operations in
1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai.
Vodafone Essar now has operations in 22 circles with over 65.92 million customers**. The
company is a joint venture of Essar Communication Holdings Ltd and the UK-based Vodafone
Group. Vodafone has partnered with the Essar Group as their principal joint venture partner for
the Indian market. They are in the business of cellular telephony. Over the years, Vodafone
Essar, under the Hutch brand, has been named the ‘Most Respected Telecom Company’, the
‘Best Mobile Service in the country’ and the ‘Most Creative and Most Effective Advertiser of
the Year’.
Vodafone is the world’s leading international mobile communications company. It currently has
equity interests in 27 countries across 5 continents and 40 partner networks with over 289
million proportionate customers worldwide. Vodafone has partnered with the Essar Group as its
principal joint venture partner for the Indian market.
Essar Global Limited (EGL) is a diversified business group spanning the manufacturing and
services sectors of Steel, Energy, Power, Communications, Shipping & Logistics, and Projects.
The group has operations and investments in India, Canada, USA, Africa, the Middle East, the
Caribbean and South East Asia and employs 30,000 people worldwide.
Vodafone Essar Ltd provides services like 2G, which are based on 1800 Mhz and 900Mhz GSM
digital technology. They offers voice and data services. In addition, they offers postpaid
connections activation, prepaid SIM cards and recharge coupons sale, service
activation/deactivation, postpaid tariff plan change, customer query resolution, prepaid/postpaid
SIM card replacement and upgradation, mobile number change, and information on and
subscription of value added services through stores.

BHARAT SANCHAR NIGAM LTD.

Bharat Sanchar Nigam Ltd. formed in October, 2000, is World's 7th largest Telecommunications
Company providing comprehensive range of telecom services in India: Wireline, CDMA mobile,
GSM Mobile, Internet, Broadband, Carrier service, MPLS-VPN, VSAT, VoIP services, IN
Services etc. Within a span of five years it has become one of the largest public sector unit in
India.
It has about 47.3 million line basic telephone capacity, 4 million WLL capacity, 20.1 Million
GSM Capacity, more than 37382 fixed exchanges, 18000 BTS, 287 Satellite Stations, 480196
Rkm of OFC Cable, 63730 Rkm of Microwave Network connecting 602 Districts, 7330
cities/towns and 5.5 Lakhs villages.
BSNL is the only service provider, making focused efforts and planned initiatives to bridge the
Rural-Urban Digital Divide ICT sector. In fact there is no telecom operator in the country to beat
its reach with its wide network giving services in every nook & corner of country and operates
across India except Delhi & Mumbai.
BSNL is numero uno operator of India in all services in its license area. The company offers vide
ranging & most transparent tariff schemes designed to suite every customer.
BSNL cellular service, CellOne, has more than 17.8 million cellular customers, garnering 24
percent of all mobile users as its subscribers. That means that almost every fourth mobile user in
the country has a BSNL connection. In basic services, BSNL is miles ahead of its rivals, with
35.1 million Basic Phone subscribers i.e. 85 per cent share of the subscriber base and 92
percent share in revenue terms.
BSNL has more than 2.5 million WLL subscribers and 2.5 million Internet Customers who
access Internet through various modes viz. Dial-up, Leased Line, DIAS, Account Less Internet
(CLI). BSNL has been adjudged as the NUMBER ONE ISP in the country. BSNL has set up a
world class multi-gigabit, multi-protocol convergent IP infrastructure that provides convergent
services like voice, data and video through the same Backbone and Broadband Access Network.
At present there are 0.6 million DataOne broadband customers.

IDEA CELLULAR LTD.

IDEA Cellular is a publicly listed company, having listed on the Bombay Stock Exchange (BSE
and the National Stock Exchange (NSE) in March 2007. Idea Cellular Ltd. is India's leading
GSM mobile services operator. It has licenses to operate in 11 circles. The company has a
customer base of over 17 million. It is the first cellular company to launch music messaging with
Cellular Jockey, Background Tones, Group Talk, a voice portal with Say IDEA and a complete
suite of mobile email Services.
A brand known for many firsts, Idea was the first to launch GPRS and EDGE in the country.
Idea has received international recognition for its path-breaking innovations when it won the
GSM Association Award for "Best Billing and Customer Care Solution" for 2 consecutive years.
IDEA Cellular is part of the Aditya Birla Group, India's first truly multinational corporation. The
group operates in 25 countries, and is anchored by over 1,25,000 employees belonging to 25
nationalities.
The combined holding of the Aditya Birla Group companies in Idea stands at 98.3 per cent. Mr.
Kumar Mangalam Birla has been named the Chairman of the company.
Customer Service and Innovation are the drivers of this Cellular Brand. A brand known for their
many firsts, IDEA is the only operator to launch General Packet Radio Service (GPRS) and
EDGE in the country. IDEA has seen phenomenal growth since its inception, the company's
footprint idea is to first achieve critical mass, then drill deep instead of
spreading thin, however, does not increasing geographic footprint only, it also drills deep and
successfully attempts to provide excellent network coverage in all its circles of operations.

Telecom Monthly Update – October 2009


In Oct’ 09, India added the highest ever monthly wireless subscribers at ~16.7mn, an increase of
11% mom. TTL led the mobile growth for the third month in a row, with addition of 3.9mn new
users, down 3.5% from September. Vodafone and Aircel posted their best ever monthly tally of
~3mn and 2mn respectively while Bharti net adds recovered to 2.7mn as compared 2.5mn in
Sep’ 09. MTNL subscriber base added the most since Mar’ 09 while volatility in BSNL wireless
intake continued as user growth halved from previous month.

Pricing war, which started with Tata DoCoMo’s novel per second billing, has now spilled over
in to the roaming arena as Bharti cuts roaming tariffs. Consolidation is likely to rationalize
competition but the timing of the same remains uncertain, especially given the lack of enabling
regulations. Despite the current turmoil, we believe Bharti is the best bet in the sector, given
strong cash flows and healthy return ratios, and retain it as our top pick. 

TTL ahead of the pack but growth slows on mom basis  


TTL grabbed the top spot in terms of new users added but the pace of additions declined 3.5%
mom. Vodafone Essar posted an impressive 51% mom surge in subscriber growth to ~3mn, its
best monthly tally ever and reversing a six-month period of slower growth. Idea+Spice combine
user growth jumped 36%, aided by Idea’s ~43% rise in new user additions, its best since at least
Jan’ 08. 

Aircel net adds at record highs; BSNL growth halves 


Aircel monthly growth jumped ~54% to 2mn, again the highest ever for the company while
MTNL too added the most users since Mar’ 09. The volatility in BSNL wireless intake continued
as subscriber growth halved to 0.7mn on a mom basis. TTL market share now stands at 10.4%
and the company has managed to narrow the gap with BSNL to just 180bps from about 435bps
in Mar’ 09.

Monthly wireless additions

Additions (mn)
Company Subscribers (mn) Oct-09 Sep-09 % mom
Bharti Airtel 113.2 2.70 2.51 7.4
Rcom 88.2 2.10 2.01 4.6
Vodafone Essar 85.8 2.98 1.97 51.2
BSNL 59.4 0.68 1.45 (53.5)
Idea Cellular 48.5 1.69 1.19 42.6
Tata Teleservices 50.7 3.87 4.01 (3.5)
Aircel 27.7 2.02 1.31 53.7
MTNL 4.7 0.06 0.02 228.9
Spice 4.9 0.21 0.21 (0.3)

Life Cycle Stage of Indian Telecom

Dynamic
Equilibrium Rumblings Identity Refocus competition
crisis
State Technological Traditional Competitor Fully adjusted
regulated advances lead assumption s find niche marketplace
firms to substitutes s challenged or die out No distinction
Strategy Niche players Marketing Industry between
heavily evolve / Call- and sales settles incumbents &
influenced back focus Greater challengers
by operators Increasing emphasis Wide range of
Government provide competition on customer
and National Telecom service Losing key shareholde choice Unified Licensing
Policy, 1994 Regime
Regulators Regulators competenci r value Normal
Upto
Limited 1995-
formed es 1999 Focus
2001 on market
1994 1997 1998 2000 2002 2003 2004 forces
1994 1996
customer Competition customer apply
choice begins satisfaction
Threats of
privatisation
ECONOMIC BENEFITS OF MOBILE SERVICES IN INDIA
 
  According to a study conducted by the reputed international agency, Ovum on “The economic
benefits of mobile services in India” the Indian mobile industry is a major contributor to the
social and economic growth of the country, in terms of employment generation, revenues to the
Government, GDP growth and rural development.

1. Employment

Because of the mobile industry about 3.6 million jobs could be generated directly or indirectly.
Ovum has also estimated that employment dependent on the industry is expected to rise by at
least 30% over the next 12 months.
 

2. Government Revenues
The Government can generate Rs. 145 billion per annum  through License Fees, Spectrum
Fees, Import Duties, Taxes, etc. from  Mobile industry.
 

3. GDP  
The mobile services industry can generate an annual GDP contribution of Rs. 313 billion.
4. Rural Development
Research shows that having access to telecommunications would substantially improve the
social and economic conditions of people living in rural areas by improving access to family,
education, health and financial services and by enabling the development of non-agricultural
economic activity. Government has set a target of 20% for rural mobile coverage by the end of
2004 and 75% by the end of 2006.
 
 Taking the OVUM findings as the base, COAI has tried to estimate the benefits from mobile
communications for the future years. The benefits listed by OVUM are for a subs base of 48
million in January 2005. Pro-rating the data on a simplistic estimate at a mobile subscriber
base of 200 million in 2007, the industry would contribute 10 million jobs and Rs 500 billion
annual revenue to the Government.
TELECOM SERVICE AVAILABLE IN INDIA

The telecom services available in India include-

1. Basic Fixed Line Services


2. Mobile Services (GSM & CDMA)
3. Internet Services
4. International Long Distance Services
5. National Long Distance Service
6. Pager Services
Major Facts & Figures:
Telecom Subscriber Base:
 Telecom Subscribers Base in April-June quarter reached 464.82 million users compared
to 429.72 Million in march quarter.
 Subscriber base registered a 8.17 percent Q-o-Q growth.
The telecom subscriber base continues to grow positively and has been able to provide record
net-additions in recent past.

Mobile Subscriber Base:

 Total mobile subscriber base stood at 427.29 at the end of June-09 Quarter.
 Net quarterly additions in total wireless segment (GSM+CDMA) came in 35.53Mn.
 Wireless Tele-density reached 36.64 per cent.

Teledensity & Demographics:


 Total Tele-density stood at 39.86 per cent.
 Wireline Tele-density came in at mere 3.22 % whereas wireless subscription contributed
91.9 % of overall Tele-density.
 Subscription in Urban Areas was at 328.55 Million and Rural subscribers increased to
136.27 Million.

Indian Telecom Market


Indian telecom market is currently the most attractive telecom market with a lot of interest being
shown by foreign players. The country was divided into 23 circles when the mobile phones were
introduced in the country. Now DOT recognises Chennai as part of TN. Separate licenses were
given out for each of the circles in 1994. The circles were classified as Metros, A,
B or C depending upon the revenue potential for the circle with Metros & A circles expected to
have the highest potential. The following table lists the current wireless penetration by Metro.

India is the now the second largest market in terms of mobile subscriber base after China but still
it is at 32% teledensity and adding 10-12 million new subscribers every month. Indian market is
not only the most attractive but also the most competitive with over 7 operators in each circle
and another five new operators likely to start operations in the near future. Nowhere in the world
does any country have so many carriers. The dominant players are Airtel, Reliance, Vodafone,
BSNL (state owned), Idea and Tata. Reliance and Tata offer CDMA technology while all the
other players are in the GSM space. GSM has a 75% share of sbscribers and now even Reliance
and Tata have either launched or in the process of launching nation-wide GSM services. Apart
from the current players, there are several new players like Aircel, Unitech-Telenor, Shyam-
Siestema, Etisalat that have got the license and spectrum to launch mobile services in several
telecom circles. Shyam-Siestema is the only player to launch CDMA services while all the new
operators are in the lucrative GSM space.

Impact of Economic Crisis on Telecom Industry

The financial crisis that engulfed the world last year is now playing out in full proportions.
This has spread to each industry and telecom industry is no exception. The impact of the
recession in the western world and economic slowdown in the emerging countries is being felt in
a big way by all the players in the ecosystem. It can be predicted that 2009-2010 will mark a very
difficult and crucial period for the entire industry. This post is to analyze the impact of the crisis
on each of the players and what can they do to minimize the impact

Carriers: It was earlier thought that the carriers would be spared from the impact of economic
crisis. However, it is increasingly evident that they are indeed getting impacted due to restricted
access to capital and consumers limiting their usage. In many emerging markets across Asia and
Africa, the operators are small and dependant on the foreign capital to expand. The operators are
constrained not only by the capital for investment but also by the lack of working capital. Lack
of new investments is having an adverse impact on network coverage expansion. 3G auctions
planned in many countries have also been shelved for fear of non participation by large
operators. Investments in new technologies like LTE and WiMax are likely to be scaled down
and I would not be surprised if many proposed installations of WiMax are permanently
permanently after reviewing the business plans in light of current crisis. International long
distance carriers are likely to see sharp fall in the traffic, due to lower IT spending and lower
cross-country investments, which is unlikely to be compensated by the increase in traffic due to
travel restrictions across the companies. The operators may resort to tariff reduction in a bid to
increase the minutes of usage (MoU) but this would restrict their ability to offer flat data prices
or other innovative data models. I foresee consolidation happening amongst carriers as the
weaker ones bow out of the industry.

The operators would do well by concentrating on cost reduction initiatives. They may follow the
initiatives of the Indian operators by adopting light-asset operation models, putting greater
pressure on equipment vendors to adopt new models like managed service and capacity service.
The carriers would do well by actively engaging in all kinds of infrastructure sharing
opportunities. The cash rich operators may look for new M&A opportunities and cash strapped
carriers will do well by limiting the handset subsidies. It is estimated that the industry spends
over $50 billion in handset subsidies alone.

At least in the next three years, the traditional CAPEX will experience a CAGR of -3% to -4%,
which forebodes a turning point for industry transformation. When revenue from voice services
and traditional CAPEX cannot cover operators’ total cost of ownership (TCO), new services and
new investment will become new opportunities and breakthrough points. New information
consumption models, mobile broadband, and Internet applications will become the highlights of
growth. This is the right time to evolve new business models to increase services consumption.
HOW TELECOM TURNED FREE INDIA’S
ECONOMIC
DREAM INTO REALITY
During the first war of independence in 1857, the biggest advantage the imperialists had over the
revolutionaries was the telecom network, which helped them communicate revolutionaries’
moves and pre-plan strategy against them.

By the last leg of freedom struggle, the nationalists had access to the same communication
system. When India finally got its political freedom, it came with around 86,000 telephone
connections.
Today, the country is adding more than twice that number every day to its 250 million strong
network, with 7 million new subscribers joining in July 2007. This connectivity has brought with
it jobs and knowledge based exports of services that are driving the 9 per cent plus growth.
When we celebrate the IT and software revolution, remember, it stands on a strong telecom
backbone — in 1991, knowledge based exports stood at $40 million; today, the figure is around
$40 billion. Take that further and you see how Tele-density of any country is directly related to
its economic development.
Until 15 years ago, it raised no eyebrows to see a 15-20 year wait for a new telephone connection
in cities, with almost zero connectivity in large parts of rural areas. Department of
telecommunications (DoT) under ministry of Post & Telegraph (P&T) was the sole telecom
service provider.

It’s a different landscape today and with six service providers in metros and category A circles,
operators are chasing subscribers, turning scarcity into abundance, luxury into necessity.
History of telecommunications in India can be broadly divided into two periods — before
Liberalisation and post Liberalisation.

Contrary to popular belief, Liberalisation in telecom equipment took place first and then
followed Liberalisation in services. In the 1980s, Sam Pitroda played an important role in the
development of telecom network.

His first achievement was to convince the government about the significance of communications
for socio-economic development of the country.
His second major contribution was in developing indigenous switches and passing on the low
cost (and no air-conditioners required) technology to local manufacturers, which helped bring
down prices of switches and allow DoT to provide more connections within the same budget.
His third achievement was in bringing PCO policy that was responsible for providing access to
telephone to all even in far flung areas.
With the formulation of New Telecom Policy in 1994 (NTP 94), a major step was taken in
liberalization of telecom services.

The policy permitted DoT to award licenses to private operators to offer telecom services. Thus,
competition began in a field that was hitherto a government monopoly.
NTP 94 also envisaged setting up Telecom Regulatory Authority of India, essential to ensure
competition.
NTP 94 was revised five years later and was replaced by NTP 99. This further liberalized
telecom services and made licenses technology-neutral.

As a result, India has became one of the most competitive markets in the world, with one of the
lowest telephone tariffs in the world and with two telecom companies -Airtel and Reliance —
among the top five most valued companies of India. That’s freedom.
Porter’s Five Forces of Indian Telecom Industry

There is continuing interest in the study of the forces that impact on an organisation or an
industry, particularly those that can be harnessed to provide competitive advantage. The ideas
and models which emerged during the period from 1979 to the mid-1980s (Porter, 1998) were
based on the idea that competitive advantage came from the ability to earn a return on investment
that was better than the average for the industry sector (Thereby, 1998).

As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature of
competition within it, the forces inside the industry (microenvironment) that influence the way in
which firms compete, and so the industry’s likely profitability is conducted in Porter’s five
forces model. A business has to understand the dynamics of its industries and markets in order to
compete effectively in the marketplace. Porter (1980) defined the forces which drive
competition, contending that the competitive environment is created by the interaction of five
different forces acting on a business. In addition to rivalry among existing firms and the threat of
new entrants into the market, there are also the forces of supplier power, the power of the buyers,
and the threat of substitute products or services. Porter suggested that the intensity of
competition is determined by the relative strengths of these forces.

The nature of competition in an industry is strongly affected by suggested five forces. The
stronger the power of buyers and suppliers, and the stronger the threats of entry and substitution,
the more intense competition is likely to be within the industry. However, these five factors are
not the only ones that determine how firms in an industry will compete – the structure of the
industry itself may play an important role. Indeed, the whole five-forces framework is based on
an economic theory know as the “Structure-Conduct-Performance” (SCP) model: the structure of
an industry determines organizations’ competitive behaviour (conduct), which in turn determines
their profitability (performance). In concentrated industries, according to this model,
organizations would be expected to compete less fiercely, and make higher profits, than in
fragmented ones.
Main Aspects of Porter’s Five Forces Analysis
The original competitive forces model, as proposed by Porter, identified five forces which would
impact on an organization’s behavior in a competitive market. These include the following:

 The rivalry between existing sellers in the market


 The power exerted by the customers in the market
 The impact of the suppliers on the sellers
 The potential threat of new sellers entering the market
 The threat of substitute products becoming available in the market

Understanding the nature of each of these forces gives organizations the necessary insights to
enable them to formulate the appropriate strategies to be successful in their market (Thurlby,
1998). We will examine these concepts as described by Porter’s 5 force model and as applied to
Indian telecom industry simultaneously.
Force 1: The Degree of Rivalry
The intensity of rivalry, which is the most obvious of the five forces in an industry, helps
determine the extent to which the value created by an industry will be dissipated through head-
to-head competition. The most valuable contribution of Porter's “five forces” framework in this
issue may be its suggestion that rivalry, while important, is only one of several forces that
determine industry attractiveness.
 This force is located at the centre of the diagram
 Is most likely to be high in those industries where there is a threat of substitute products;
and existing power of suppliers and buyers in the market

Now let us understand the implication of degree of revelry in Indian telecom sector. The
dimensions of this parameter are determined by:

High Exit Barriers: In any industry, if the exit barrier is high it increases the difficulty of
any organization to leave the industry sector. So it makes any difficult to any willing to leave
company to leave the industry. The telecom industry suffers from high exit barriers, mainly due
to its specialized equipment. Networks and billing systems cannot really be used for much else,
and their swift obsolescence makes liquidation pretty difficult.

High Fixed Cost: The industry also suffers from high fixed cost which makes the entry
barrier also very high for the industry. It comes as no surprise that in the capital-intensive
telecom industry the biggest barrier to entry is access to finance. To cover high fixed costs,
serious contenders typically require a lot of cash. When capital markets are generous, the threat
of competitive entrants escalates. When financing opportunities are less readily available, the
pace of entry slows. Meanwhile, ownership of a telecom license can represent a huge barrier to
entry.
 6-7 players in each region
 3 out of 4 BIG-Four present in each region

Very less time to gain advantage by an innovation : Every company in this industrial
sector in investing a huge amount in research and development and marketing strategy. That is
why we see any offer launched by any company is counter attacked by other companies very
soon. This makes the industry rivalry most prominent.
Price wars: The price war is really very fierce in this industry. Price war in telecom industry
has commoditized the market that branding has taken a backseat.

Force 2: The Threat of New Entrants


Both potential and existing competitors influence average industry profitability. The threat of
new entrants is usually based on the market entry barriers. They can take diverse forms and are
used to prevent an influx of firms into an industry whenever profits, adjusted for the cost of
capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not
economically feasible for an outsider to replicate the incumbents’ position. The most common
forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:
 Economies of scale: In telecom industry the economies of scale exists from the supplier
side. That is why companies try to increase their subscriber base at drastic rate.
 Distribution channels: Distribution channels are also providing a major determining
factor. These channels are not loyal to any company and competitors can easily access
them and make out work for them.
 Customer Switching Costs: Customer switching cost is very low, as cost of new
connection is really low. And new connection offers more benefits to the customers.

Force 3: The Threat of Substitutes


The threat that substitute products pose to an industry's profitability depends on the relative
price-to-performance ratios of the different types of products or services to which customers can
turn to satisfy the same basic need. The threat of substitution is also affected by switching costs –
that is, the costs in areas such as retraining, retooling and redesigning that are incurred when a
customer switches to a different type of product or service. It also involves:
 Product-for-product substitution (email for mail, fax); is based on the substitution of
need;
 Generic substitution (Video suppliers compete with travel companies);
 Substitution that relates to something that people can do without (cigarettes, alcohol).
Now let us discuss this concept for telecom industry. The potential major substitutes for telecom
industry are as follows:
 VOIP (Skype, Messenger etc.)
 Online Chat
 Email
 Satellite phones
All of these technologies have a huge potential, though none of the above a major threat in
current scenario. So the telecom industry has to keep a close look on these substitutes.

Force 4: Buyer Power


Buyer power is one of forces that influence the appropriation of the value created by an industry.
The most important determinants of buyer power are the size and the concentration of customers.
Other factors are the extent to which the buyers are informed and the concentration or
differentiation of the competitors. Kippenberger (1998) states that it is often useful to distinguish
potential buyer power from the buyer's willingness or incentive to use that power, willingness
that derives mainly from the “risk of failure” associated with a product's use.
 This force is relatively high where there a few, large players in the market, as it is the
case with retailers a grocery stores;
 Present where there is a large number of undifferentiated, small suppliers, such as small
farming businesses supplying large grocery companies;
 Low cost of switching between suppliers, such as from one fleet supplier of trucks to
another.

In the context of Indian telecom industry we can say that the following points influence
the buyer power:
 Lack of differentiation among the service provider
 Cut throat competition
 Customer is price sensitive
 Low switching costs
 Number portability to have negative impact
Force 5: Supplier Power
Supplier power is a mirror image of the buyer power. As a result, the analysis of supplier power
typically focuses first on the relative size and concentration of suppliers relative to industry
participants and second on the degree of differentiation in the inputs supplied. The ability to
charge customers different prices in line with differences in the value created for each of those
buyers usually indicates that the market is characterized by high supplier power and at the same
time by low buyer power.

In the drawback of Indian telecom industry the following should be kept in mind:
 Large number of suppliers: The industry basically has a large number of suppliers,
which helps them to choose from a lot of options. So they try to select the best option to
deliver the value to the customers and to have a competitive advantage from their
competitor.
 Shared tower infrastructure: Technology has helped them to share the tower
infrastructure. This basically helps them to reduce the initial investment a lot.
 Limited pool of skilled managers and engineers especially those well versed in the latest.
 Medium cost of switching since changing their hardware would lead to additional cost in
modifying the architecture.
 Overall influence on the industry – medium.
Advertising Trends in Indian Telecom

The way telecom firms advertise, gives an approximate idea about the telecom trends. I would
try to uncover some of them, which come to my mind. At the initial launch of the mobile
services, they were advertised as lifestyle products. The message that sought to be conveyed was
that if you have a mobile phone, you have arrived in life. A few well-healed people could afford
the high call rates at that time. It was in no way for the masses. I am sure that the mobile
companies made a large profit out of it. Perhaps for the first time, Indians were exposed to
concepts alien to them: Customer Care Support. It saw a booming of the ancillary services and
fresh graduates, stunted in mental development though, came out in droves for the well-paid
jobs.

Airtel then sought the services of Sachin Tendulkar. He was the brand ambassador and saw his
earnings sharply increasing. I saw his picture everywhere exhorting me buy the mobile prepaid
card. After the initial publicity passed away, A.R. Rahman gave his now famous tune. All the
other companies have variously tried other gimmicks to sell their connections.

However, the landscape changed after Reliance came in the mobile services. Mukesh Ambani
was seen telling people about his father’s dream. The initial launch was lackluster. With the
launch of the prepaid services, the punch line was “mujhme hai who baat” or “I have that thing!”
I wonder how many people actually signed up after those ads. I believe that it was solely because
of the Monsoon Hungama that Reliance was able to ramp up its numbers. Then came the ad line
“Kar lo duniya muthi mein”. (Have the world in your fist). I remember that this became the butt
of dirty jokes on the GSM networks! So much for imagination of creative heads of the ad
agency.
The icing on the cake goes to Hutch. They designed the simple ad with the kid and cute Chinese
Pug. It was a hit of all sorts. It conveyed the effectiveness of the message succinctly. I believe
that it drove Hutch connections across the places where it offered its services. However, it was
considered too elitist for the masses. The advertisement should be able to convey the message
effectively; one with which people could identify with. In this regard, BSNL could claim
something. BSNL advertisements depicted typically government mentality for awarding the
contract to lowest in the tender process. The quality clearly shows. Is there anyway people could
identify themselves with that advertisements? What of those places where BSNL is the sole
service provider?

As the title goes, advertising trends are reflective of the current scenario in telecom. Airtel has
been advertising its group card labeled as Friends. In fact, until now, the market was treated as
homogenous. Over the period, classification has been sought to target the specific customers
with specific needs. Airtel took the lead in announcing Senior citizen cards targeted at those
above 60. The Friends card is for those who wish to restrict themselves to their group with low
calling rates and some free messages.

Reliance has realized early on about targeting the businesses. Its offer of flat rate for making
STD calls to anyone across its network is unparalleled. This way it can ensure that there would
be higher converts towards it services. R-Connect is its portal that differentiated Reliance early
on from other operators. It knows that future revenues are going to come from value added
services. This way it has foreseen the development in the industry.

Following this, Airtel introduced its Airtel Live! I guess so have the other operators across
board. The voice calls would not yield much as much as revenue as would the value added
services. Hence, for the same reason they have introduced value added cards, which would help
to download ring tones and other fancy stuff.

This is the reason I have always insisted that Telecom operators should get bullish on data
services. 3G mobile services look good as technology demonstrators. Until the time, the prices
for the 3G enabled handsets fall down to manageable levels, it would not take off. I believe that
it takes up a large chunk of the scarce spectrum, which does not make any sense to introduce.
WAP and GPRS were heavily promoted but have been more or less non-starters. The real
differentiator would be the quality of services, cheap offering if these companies have to venture
in the rural areas and the reach of the network.

In this regard, the division of India in circles is not in the right spirit. It should be taken as a
homogenous land mass. The day is not far when it would be local call to call anywhere across
the nation. Reliance has made this possible to some extent.

MARKET-SIZE, PLAYERS AND TRENDS:-

Both fixed line and mobile segments serve the basic needs of local calls, long distance calls and the
international calls, with the provision of broadband services in the fixed line segment and GPRS in
the mobile arena. Traditional telephones have been replaced by the codeless and the wireless
instruments.
Mobile phone providers have also come up with GPRS-
enabled multimedia messaging, Internet surfing, and mobile-
commerce.
The much-awaited 3G mobile technology has entered in the
Indian telecom market.
The GSM, CDMA, WLL service providers are all upgrading
them to provide 3G mobile services.
Radio services have also been incorporated in the mobile
handsets, along with other applications like high storage
memory, multimedia applications, multimedia games, MP3
Players, video generators, Camera's, etc. The value added
services provided by the mobile service operators contribute
more than 10% of the total revenue.
The 2009 budget has brought further relief to the customers
with the reduction in the tariffs, both local and long distance,
and with slashing down the roaming rentals. This is likely to
lead to even more people going for cellular services and
more and more use of the value added services.
However, landline telephony is likely to remain popular, too,
in the foreseeable future. MTNL, the largest landline service
provider, has recently taken some bold initiatives to retain its
market share and, if possible, expand it.

Recent developments
Recent things to watch in Indian telecom sector are:
1. 3G and BWA auctions
2. MVNO
3. Mobile Number Portability
4. New Policy for Value Added Services
5. Market dynamics once the recently licensed new telecom operators start rolling out
6. Services.
7. Increased thrust on telecom equipment manufacturing and exports.
8. Reduction in Mobile Termination Charges as the cost per line has substantially reduced
9. Due to technological advancement and increase in traffic.

India's telecommunications industry is booming, and the country's mobile-phone market is one of
the fastest growing in the world. India added 113.26 million new customers in 2008, the largest
globally. From 1995 with Telecom Operators Charging Rs 32 per minute and Rs. 16 for
incoming calls, India now has become the country with the lowest calling rates, with call rates
are as low as Rs.0.50 per minute with free unlimited incoming calls.

The country's cellular base witnessed close to 50 per cent .growth in 2008, with an average 9.5
million customers added every month. The year 2009 saw a similar trend with mobile-phone
subscribers rising to 427.29m by June 2009, driven by rising incomes, greater competition,
increase d penetration in rural areas, falling rates, prepaid options and aggressive marketing
campaigns. ARPU's of operators dropped from Rs. 205 and Rs. 99 in March 2009 to Rs. 185 and
Rs. 92 in June 2009 for GSM and CDMA respectively.

Telecom wars
TTSL has been largely instrumental in pulling down the telecom tariffs to a new low with its per-
second tariff. Earlier, it was RCom, which created a similar impact in the market when the
Ambanis entered the telecom industry in 2005 with 40 paise per call tariff. Competition has
yielded rich dividends for the consumers, giving them the lowest tariffs in the world.

Now, with operators having no price differentiation, quality will be the driver for growth. Also
this will most likely lead the valuation model to move from subscriber based one to a model
based on margins and minutes of usage.

With the lowest tariffs in the world, industry analyst have started raising questions on the
viability of the business. With MNP round the corner where a subscriber move to another service
provider it is unlikely that the tariffs will rise from here. Also, on the other hand a further
decrease also looks unlikely and we expect the tariffs to stabilize at this juncture.

India's the lowest tariff plans in the world and competition among mobile operators is set to
increase further with operators coming up with price plans to offset those unveiled by their rivals
which may lead to hyper-competition in 2010.

“This rapid re-basing in pricing by an incumbent will seriously affect and threaten smaller,
regional and startup operators, perhaps shortening the period before which industry consolidation
inevitably takes place," Macquarie said in its research report.

In such a scenario, smaller telecom players could be forced to shut shop as they would be unable
to keep up with the competitive market forces at play and are likely to eventually sell off their
operations to bigger operators, experts believes.
Findings

 A very healthy majority believes that advertisements play a role while making purchase
decision for new connection. So the companies should handle the advertising properly
and should try to deliver the information properly.

 In telecom industry the most important factor which affects the purchase decision of the
customers is advertisement. Suggestions of friends and relatives also plays major role in
this. So the companies should take care of the existing customers so that they can be
recommended to others.

 Majority of the people likes to watch advertisements on television. And after television
people rated newspapers. So the companies should focus more on television ads and
newspaper ads.

 Majority of the people like Vodafone advertisements more than others. After that Airtel
and Idea comes. So the other companies should try to make advertisements which can
connect to the customers.

 Majority of the people believe that advertisements provide information about the
products. So the companies should try to deliver all the information about the plans and
offers through advertisements.
 Majority of the people wants to buy the connections for family and friends on the basis of
advertisements. So advertisements should be given more focus and importance by the
telecom companies.

SWOT ANALYSIS
Strengths
 Huge wireless subscriber potential
 Fastest growing mobile market in the world
 Consumers are ready to pay for cutting edge services.
 India possesses cheap labor to attract foreign investment
 Telecom software, telecom professionals, telecom infrastructure and telecom services are
the key players in shaping today’s economy.
 Revenue sharing strategies are leading to mergers and acquisitions, helping companies to
enter new business opportunities and generate employment boosting the country’s
economy.
 Govt has started rules for relaxing rules for foreign participants.
 Lowest tariff rates in the world.

Weakness
 Market strongly regulated by govt body- the telecom authority of India.
 Existence of entry barriers for private companies
 High costs of services provision
 Low income country like India cannot afford to replicate expensive telecom
infrastructure.

Opportunities
 India as Asia’s third largest economy is adding at least 1mn new mobile phone users
every month.
 Mobile phone user’s rate hitting a saturation point in big cities.
 Income levels in the rural areas rising due to robust agricultural output
 Share of the rural market in the country’s mobile population is however less than 15%.
 Timely policy and regulatory initiatives taken by the govt to encourage foreign players
 Increased availability of bandwidth has opened to new schemes making efficient usage
providing value added services and generating profits.
 Foreign investment in the form of equity or tech
Threats
 High level of risk, uncertainty and cost associated with cellular sector
 Weak intellectual property rights (IPR) protection
 Software and digital content piracy.
 Political instability
 Cost of handset also deters a lot of bias from opting for the service

Recommendations
The DoT’s decision implies that the existing operators will get additional spectrum if
they increase their minimum number of subscribers. Under the earlier policy, a GSM operator in
Delhi and Mumbai who had 10 MHz of spectrum was required to have 1.6 million customers to
be eligible to get 12.4 MHz of radio frequency. It means that TRAI had recommended the
customer base to be increased to 3 million, and now, TEC has proposed it to be increased further
to 13.3 million.
According to the TEC, in a network, for example, New Delhi, where the demand for
mobile services is huge, a telecom operator has to have 600,000 subscribers to get a hand of 4.4
MHz of spectrum, while for the next band of 6.2 MHz it should have 1.9 million subscribers.
LIMITATIONS OF THE STUDY
The study has following limitations:
Lack of contact with company personnel acted as hindrance in the study.
The study is based on the limited knowledge & information provided by the
marketing personnel and individuals who were available for interview.
The size of the sample is too small looking to the nature of the study and due to time
and money constraints relatively smaller sample was chosen.
The basis of selection of sample for the study was vague. Randomly individuals were
picked up to provide their responses on the questionnaire.
Keeping in mind these constraints, best efforts were made to represent the whole view of
competitive strategies prevailing in telecom sector.
CONCLUSION
India has one of the worlds largest telecommunication network. The telecom story
continues to be the best evidence of the efficacy of the reforms process. In just six years, the
number of mobile subscribers has gone from just about one million to 100 million. None can
doubt the correlation between this explosive growth in numbers and the steep decline in the cost
of the mobile phone and of its usage. Effective tariffs have dropped from over Rs 14 a minute to
Re 1, bringing the phone within reach of people even below the middle-class.
In India there are 600,000 village across the country and in this country, there is huge
demand of telecom market. In the telecom company can extend the growth at 1% in each village
they can make the more profit.
  India’s rural telecom connectivity is poised for explosive growth in the next five to 10
years, grabbing a 40 percent share of the new market, a study released Wednesday said. “Of the
estimated new 250 million Indian wireless users, in next 5-10 years approximately 100 million
will be from rural areas,” said the study by the Federation of Indian Chambers of Commerce and
Industry (Ficci) and Ernst and Young.
The Government may have, therefore, landed itself a winner in the mobile phone, but the
task of taking telecom to the other 90 per cent of the population will call for even greater
innovation in policymaking, technology and marketing. Still three-fourths of the land mass is not
illuminated by a cellular signal and the price of the instrument is beyond the reach of a
substantial section of the population let alone the charges for its use. These issues, of course, can
be resolved by decisive policy action, such as a creative use of the Universal Services Obligation
fund that now has over Rs 70 billion, releasing adequate spectrum to operators in the metros, and
a proactive investment policy that invites many more equipment manufacturers to set up base in
this country. The road for India achieving the top most position in telecommunication is no
longer a dream as India is nearing China in all aspects in few years India will over power all
countries and achieve its target of top most position in telecom industry.

BIBLIOGRAPHY

 www.airtel.com

 www.bsnl.com

 www.vodafone.com

 www.loopmobile.com

 www.relianceinfocom.com

 www.ideamobile.com

 www.tatateleservice.com

Growth and marketing related information- www.googl.com-mangement=paradise.com

www.projcetparadise.com

All the graph and performance of the telecom company related,

ARPU -- www.traiindia.com

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