Upload

340 x 284 425 x 355 510 x 426

0 comments
Write a comment...

Embed Video
Post Comment

Subscribe to comments

Overview of Indian Telecom Industry - Presentation Transcript

1. Indian Telecom Market:-Indian Telecom market has continued to show consistent growth during the last one year, withexciting Successful auction Rollout of newer circles by operatorsdevelopments such as: Growing push by telecom operators to rollout network inof 3G and BWA spectrum Highly Increased focus on the value added services marketsemi-rural areas Competitivecompetitive market with some circles having more than 10 operators intensity in the market contributing to reduction in tariffsTelecom continues to be one of the fastest growing sectors of the Indian economy, becoming astrong contributor to Indias overall GDP and is expected to grow further. 2. Current Telecom Market in a Nutshell subscriber base of 707 million (August 2010) comprises 476 million urban subscribers and 230 million rural subscribers. Approx revenue of INR 1100 1200 High growth rate (addition of 16-18 million subscribers every month,Billion. Low ARPUs (~INR 122 per month in June, 2010) and significantApr Sept 2010), In the prepaid segment, ARPU declined by 6.2 percent from INR 113churn rates. Launch of innovative schemes likein March, 2010 to INR 106 in June, 2010. Low cost handset bundling which further reduced the entry lifetime prepaid With a large part of the population yet to obtain access to the telecommunication market, there is immense potential for the sector to grow, especially in non-urban areas, where wireline and internet services are yet to make significant in-roads. Source: Telecom Subscription Data as on 31st August 2010, TRAI, October 2010 3. Indian Telecom Market VAS contributionVAS market is worth INR 110-120 billion, which translates into approximately 10 percent ofwireless industry revenues. The share of VAS in wireless revenue is likely to Increasedincrease to 12-13percent by 20118. This growth would be driven by: Increasingoperator focus on VAS due to continuous fall in voice tariffs Availability of vernacular content andpenetration of feature rich handsets Increased user adoption of VAS applications. Source: Telecom Subscription Data as on 31st August 2010, TRAI, October 2010 4. Indian telecom key highlights:Despite the presence of 15 players in the Indian telecom space, Telecom industry is still dominated by top 6 players Bharti, Idea, RCOM, Tata Teleservices, Vodafone and PSU Tariffs have been stableoperators holding 95% of the revenue market share. over the last year with no major headline rate cuts. Industry is not expecting significant tariff disruption as operators have paid huge sums for 3G spectrum and new entrants have not benefited from a price war. The business model for new operators is weak as they gained only 0.8% revenue market share in the year to Sector is upbeat on 3G in India and estimate a 3G adoption rateSeptember 2010. of 16% in FY15. Industry estimate a low risk of irrational pricing in 3G given that operators have invested USD15bn in the spectrum and will work on a collaborative basis to offer pan-India services as no operator has won a pan- India spectrum. 7 5. TheIndian telecom government implemented mobile number portability (MNP) on 25 November 2010 in Haryana with other circles following suit. Potential risks from MNP are: 1. Risk of loss of high-end subscribers, especially the post-paid subscribers, 2. Fall in post-paid tariffs to prepaid levels, thereby impacting operators ARPUs. The

event is a risk to price stability given that 7% of the total subscriber base The wireless segment has witnessed robustaccounts for 20% of sector revenues. subscriber growth of 45% in subscribers to 723.8mn in November 2010 from 500mn in November 2009, with implies net adds per month of 18.6mn. However, revenue growth over the last year was only 10%, which implies the addition of marginal subscribers as well as an increase in dual SIM users over the last year. Industry estimates that wireless penetration to reach 72% at the end of 2012 and sector revenues to increase by 25% to USD40bn by 2012 driven by a pick-up in 3G services. Expectations is sector ARPU to be INR152 at the end of 2012, marginally below current levels. Also expect the sector EBITDA to increase by 13%, with sector EBITDA margins dropping to 25% from 28% currently. 8

6. Mobile Number Portability (MNP) : An Opportunity & MNP poses two key risks for the operators: (1) risk of loss ofa Challenge high-end subscribers, especially the post-paid subscribers, and (2) fall in MNPpost-paid tariffs to prepaid levels, thereby impacting operators ARPUs. was rolled out in Haryana on November 25, 2010 with other circles to follow suit. As per industry figures, 30,000- 35,000 customers have requested to change their operator in Haryana, which is 0.2% of total wireless subs in Haryana and MNP is an importantindicates that the initial impact of MNP has been low. event as 7% of active sector subscriber base accounts for 20% industry revenues, all the better as these same subscribers will be early adopters of 3G services. Postpaid revenue per minute are INR0.75/min, which is at a 44% premium to prepaid realized rates of INR0.52/min. In our view, the differential is due to higher roaming usage (both domestic and international) and data services If post-paid tariffs were to decline to the pre-paid(BlackBerry charges) levels post the launch of MNP, we estimate it would impact Bhartis wireless Regionalrevenues by 3%, Idea revenues by 8% and RCOMs revenues by 3%. operators with poor investments in infrastructure, such as BPL, would be impacted significantly , PSU operators like BSNL and MTNL could also be CDMA subscribers estimated at 110m will also be vulnerable, givenvulnerable. more choice in GSM. However, network quality and investment in GSM handset to be a constraint. 18 3g: Risk of irrational pricing will be Business Case low in the sector given limited spectrum, huge sums paid out by the operators to buy 3G spectrum and collaboration among industry players to offer pan-India We estimate 3G subscribersservices as no single operator has won 3G spectrum. at 3% of 2G subs by FY12 and, 9% by FY13. We expect 3G revenues to contribute 12% of 2G revenues and 15% of 2G EBITDA by FY14e. We expect 3G to become PAT positive only in FY17. We further estimate a payback period of 9 years for the We expect the 3G auction andindustry and an IRR of 12% for 3G services. capex-related interest costs to hit the profitability of telecom operators Bhartis 3G related interest cost at USD260mn in FY12 and USD300mn for FY13, RCOMs 3G related interest cost at USD170mn in FY12 and FY13, and Ideas 3G If there wererelated interest cost at USD124mn in FY12 and USD140mn in FY13. no interest costs on 3G, EPS would have been higher by 11% in FY12e and 9% in FY13e for Bharti, 38% in FY12e and 21% in FY13e for RCOM and 37% for Idea in 3G will result in lower network operating costs in theFY13e on our

estimates. long term as integrated base stations are available that are compatible with both 2G and 3G networks. 19 Regulatory issues: TRAI has License cancellation recommended cancellation of 69 licenses of new operators for failing to meet rollout obligations; this is a significant negative for new players. However, this will not be easy given the various considerations around FDI in the telecom sector and the stakes of various other governments in these operators. The government has already collected fines totaling INR1,050mn from companies not The 69 licenses that are proposed to be meeting their rollout obligations. cancelled include 15 licenses for Etisalat, 20 for Loop Telecom, 10 for TRAI draft recommendations Videocon, 8 for Uninor, 11 for MTS and 5 for Aircel. suggest rollout obligations should be replaced by rollout obligations requiring coverage of habitat and linking incremental spectrum allocation with rollout Overcapacity has been a key concern for the Indian telecom sector. These norms. developments are likely to lead to a regime where non-serious players may either seek a license fee refund or merge with other operators. However, present M&A rules are not encouraging. To sum up, all this should free up more spectrum in the near to medium term and the emphasis will be more on the efficient use of spectrum. 20 Conclusion: Indian telecom sector has proved to be an international success story. Nearly all major international telecom operators have made significant efforts towards making inroads into the Indian market in order to tap the immense potential offered as well as to leverage on the low The sector has cost outsourcing model which has been pioneered in India. witnessed a commendable growth over the past 2 years. At present there are 15 operators in the market offering the lowest mobile tariffs across the globe. With an overall subscriber base of 707 million and a teledensity of about 60 With the percent, the sector continues to growth from strength to strength. urban teledensity crossing 100 percent, the market has been showing signs of maturity, especially in case of the uptake of voice-based services. The urban markets may continue to add more users; however, usage of multiple SIMs, multiple tariff corrections and swelling competition continues to exert immense pressure on the operator margins. 3G and BWA are expected to reinvigorate the maturing urban markets and help the telecom companies to achieve margin The aggressive growth observed by mobile services is yet to be enhancement. replicated in case of broadband services, where the subscriber base currently stands at 10.08 million as on August 31, 2010. However, the broadband sector can expect tremendous growth in the future, considering that there are more than 650 million potential customers waiting to be tapped. The successfully concluded auction of the BWA and 3G spectrum will enhance the wireless broadband penetration across the country and help connect the remotest locations across India. 21

The rapid growth in Indian telecom industry has been contributing to Indias GDP at large. Telecom Regulatory Authority of India was established to regulate and deal with competition

among the service providers. Upcoming services like 3G and Portability will help to further increase the growth rate. The Indian telecommunication industry is one of the fastest growing in the world and India is expected to become the second largest telecom market in the world by 2010. India added 113.26 million new customers in 2008, the largest globally. The countrys cellular base witnessed close to 50% growth in 2008, with an average 9.5 million customers added every month. It is estimated that telecom industry will generate revenues worth US$ 43 billion in 200910. IN this we have tried to capture the most of areas of telecom industry. Like, History of Telecom Industry, TRAI role and functions, new trends in industry and latest updates. introduction The exactly ten years ago, Jyoti Basu in culcutta called Sukh Ram in Delhi Sukh Ram in Delhi was the first mobile phone call in India. Brick sized cell phone used to cost Rs.45000 and each call coasted Rs.16.50/minute. Back then, cell phones was a status symbol. Today, there are over 60 million mobile connections in India (expected to double in number in next 12 months.). A local call costs around less then Rs.50paisa/min and a cell phone can be purchased for less than Rs.1500. India growth story has already got the world to sit up and take a note of the changing economic scenario. The Indian government is doing everything that is possible to ensure that this story remains intact. Factors, like the liberalization in the government stance and the daring entrepreneurs of the Indian soils, have helped the sectors achieve the highs like never before. And currently, the flavor of the month seems to be the telecom industry. Indian telecom sector Indian Telecom sector, like any other industrial sector in the country, has gone through many phases of growth and diversification. Starting from telegraphic and telephonic systems in the 19th century, the field of telephonic communication has now expanded to make use of advanced technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. Day by day, both the Public Players and the Private Players are putting in their resources and efforts to improve the telecommunication technology so as to give the maximum to their customers. The Indian telecom sector can be broadly classified into Fixed Line Telephony and mobile telephony. The major players of the telecom sector are experiencing a fierce competition in both the segments. The major players like BSNL, MTNL, VSNL in the fixed line and Airtel, Vodafone (Hutch), Idea, Tata, Reliance in the mobile segment are coming up with new tariffs and discount schemes to gain the competitive advantage. The Public Players and the Private Players share the fixed line and the mobile segments. Currently the Public Players have more than 60% of the market share. Internet/Broadband subscribers are 14.05m internet subscribers & 6.62m broadband subscribers (June 2009) Advanced Technologies GSM, CDMA, WLL, 3G and upcoming 4G Telecom sector Contribution of nearly 1% to Indias GDP Total Tele-density stood at 39.86 per cent. Wire line 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. According to the Vision 2020 document of the Planning Commission of India, the

country will witness continued urbanization. The urban population is expected to rise from 28 per cent to 40 per cent of total population by 2020. Future growth is likely to be concentrated in and around 60 to 70 large cities having a population of one million or more. This profile of concentrated urban population will

GSM

VODAFONE AIRTEL BSNL IDEA SPICE AIRCELL RELIANCE TATA DOCCOMO TATA INDICOM VIDEOCON

CDMA/WLL
BSNL MTNL TATA INDICOM TATA DOCCOMO VIRGIN MOBILE RELIANCE VIDEOCON

Fixed LINE
BSNL MTNL BHARTI TATA TELECOM VODAFONE RELIANCE

4G or Fourth Generation Networks 4G or Fourth Generation is future technology for mobile and wireless comunications. It will be the successor for the 3Rd Generation (3G) network technology. Currently 3G networks are under deployement. Approximatly 4G deployments are expected to be seen around 2010 to 2015. The basic voice was the driver for second-generation mobile and has been a considerable success. Currently , video and TV services are driving forward third generation (3G) deployment. And in the future, low cost, high speed data will drive forward the fourth generation (4G) as short-range communication emerges. Service and application ubiquity, with a high degree of personalization and synchronization between various user appliances, will be another driver. At the same time, it is probable that the radio access network will evolve from a centralized architecture to a distributed one. The evolution from 3G to 4G will be driven by services that offer better quality (e.g. multimedia, video and sound) thanks to greater bandwidth, more sophistication in the association of a large quantity of information, and improved personalization. Convergencewith other network (enterprise, fixed) services will come about through the high session data rate. It will require an always-on connection and a revenue model based on a fixed monthly fee. The impact on network capacity is expected to be significant. Machine-to-machine transmission will involve two basic equipment types: sensors (which measure parameters) and tags (which are generally read/write equipment). It is expected that users will require high data rates, similar to those on

fixed networks, for data and streaming applications. Mobile terminal usage (laptops, Personal digital assistants, handhelds) is expected to grow rapidly as they become more user friendly. Fluid high quality video and network reactivity are important user requirements. Key infrastructure design requirements include: fast response, high session rate, high capacity, low user charges, rapid return on investment for operators, investment that is in line with the growth.

Conclusion: The Indian Telecom Service provider industry is gearing for a revolution. The customer is driving this revolution and will see more unique and sophisticated offerings coming his way. The 3G which will pave the way for 3.5G, 3.75G and the next big thing-4G and the VAS services will keep the customer asking for more. The rural areas which have remained untapped will see an insurgence of services. Also the easing of the regulations by TRAI ,the ease of spectrum licensing, the FDI influx will make the telecom space in India a must watch in the coming years.