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Telecom Industry Analysis

Click to edit Master subtitle style Submitted By A-14: Nikhil Singhal A-15: Niraj Agrawal A-22: Prateek Sharma

8/26/12

Industry Overview

15 Major Players

960 Million Subscriber

65% Urban 35% Rural

4% contribution to GDP

Teledensity
Urban: 169/100 Rural: 40/100

»

Current worth around $25 billion

Division

Growth and Revenue

FY 11-12: 15% Subscribers base 1998-2012: +900% (Y-o-Y)

Regulatory Framework

Telecom Regulatory Authority of India (TRAI)

Recommendatory Regulatory Tariff setting Facilitator to Competition

Telecom Disputes Settlement and Appellate Tribunal (TDSAT)

Companies

Department Of Telecom (telegraph,telephone,wireless and data

Policy

Major Players and Market Share

Porter 5 Forces
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Threat of substitutes

Some Substitutes:

VOIP (Skype, Messenger etc.) Online Chat Email Satellite phones

None of the above a major threat in current scenario, but a potential threat for near future.

Power of supplier

Large number of suppliers. Shared tower infrastructure. Limited pool of skilled managers and engineers especially those well versed in the latest technologies.

Medium cost of switching since changing their hardware would lead to additional cost in modifying the architecture.

Overall influence on the industry - Medium

Rivalry among competitors

High Exit Barriers High Fixed Cost 6-7 players in each region 3 out of 4 BIG, present in each region Price wars

Bargaining power of customer

Lack of differentiation among the service provider Cut throat competition Customer is price sensitive Low switching costs Number portability to have negative impact Overall influence on the industry - High

Threat of New Entrants

Declining Average Revenue Per User. Infrastructure tenancy costs. Brand pull exists to some extent for brands like Airtel / Idea/ Vodafone. Extremely high infrastructure setup costs Spectrum License cost- Lotteries, auctions. Incumbent Advantages: Established brand image, Reliability of network Overall threats to the industry - Low

SWOT Analysis
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Strengths

Fastest growing telecom market. Formulation of policies in tune with the growth requirement. Adaptation of technological development i.e. Mobile Number Portability(MNP), Next generation Network (NGN), 3G and Broadband Wireless Access(BWA), IPv6 etc. Establishment of Regulatory / Dispute resolution bodies. Framework for responsive Customer Grievance Mechanism. Liberal FDI policy. Healthy competition resulting in the most

Weaknesses

Comparatively slower growth of Telecom services in rural/remote areas. Low Broadband penetration in the country Lack of local content/application development. Low profitability of Telecom PSUs. Non availability of adequate spectrum Non availability of adequate power supply for Telecom Services. Poor infrastructure – large call drops

Opportunities

Teledensity growth in the country can be accelerated. For creation of telecom infrastructure in rural and remote areas. Laying off Optical Fibre Cable to uncovered areas and effective utilization of the existing resources to provide backhaul connectivity. Country has a huge Broadband potential. Development of local content/application. Development of affordable equipment at the customer end. Adoption of emerging technologies.

Threats

Non availability of adequate spectrum for telecom services Cyber threats on ICT networks, leading to security concerns. Obsolesce of existing network elements due to fast changing telecom technologies. Intense Competition & Shortage of Bandwidth Telecom policies and scams Declining ARPU Partial government policies

Telecom Industry:Business Risk

PEST Analysis

Foreign Funds Flow in Industry
FDI Investments (million US $)
12

10

8

6

4

2

0

Financial Analysis - Ratios
Debt-Equity
12 10 8 6 4 2 0

Long Term Debt-Equity Ratio
12 10 8 6 4 2 0

Current Ratio
12 10 8 6 4 2 0

Financial Analysis - Ratios
Interest Cover Ratio
12 10 8 6 4 2 0

Fixed Asset Turnover Ratio
12 10 8 6 4 2 0

Debtor Turnover Ratio
12 10 8 6 4 2 0

Financial Analysis - Ratios
PBIDTM (%)
12 10 8 6 4 2 0 60 50 40 30 20 10 0

PBDTM (%)

PBITM (%)
12 10 8 6 4 2 0

APAT
12 10 8 6 4 2 0

Financial Analysis - Ratios
ROCE(%)
12 10 8 6 4 2 0 12 10 8 6 4 2 0

RONW(%)

CPM (%)
12 10 8 6 4 2 0

Lifecycle Analysis
Current Stage of Telecom Industry

Conclusion
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Thank You
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