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TELECOM SECTOR

PRESENTED BY
PALLAVI.B – 66
MMS MARKETING
PRESENTATION FOCUS

1 Telecom Industry Overview

2 Telecom – Investment Attracting Sector

3 Regulatory Framework and Its Impact

4 Emerging Trends in Telecom Market

5 Major Players in Telecom Sector

6 VODAFONE
Indian telecom industry –a snapshot
•INDIA HAS ONE OF THE BIGGEST TELECOM MARKETS IN THE WORLD. IT HAS
MORE THAN .
•TOTAL TELECOM SUBSCRIBERS –
•TELE-DENSITY –
•ADDITION OF MOBILE SUBSCRIBERS (JULY–AUGUST 2009) –
•ANNUAL GROWTH RATE OF TELECOM SUBSCRIBERS (JUNE 2008–JUNE 2009) –

•AVERAGE REVENUE PER USER (ARPU) FOR GSM (AS ON 30 JUNE 2009) –

•TELECOM EQUIPMENT MARKET (2008–09) –


•HANDSET MARKET (2008-09) –
•EXPECTED MOBILE SUBSCRIBER BASE (2013) –
REGULATORY STRUCTURE

The Telecom Regulatory


Authority of India (TRAI)
has divided the market
into 22 service areas
known as “circles.”
 The circles are divided
roughly in line with the
country’s 29 provinces
and are divided into four
categories, as shown
below. Service providers
require a separate license
for each circle
• Divided into 22 circles
– 4 metros
– 19 circles
• Further divided into A, B and C category based on
economic parameters and revenue potential
• Each circle has a licenses
– Four operators per circle are allowed
– Licenses are saleable
Telephony services (mobile and basic) and internet services
dominate the Indian telecom services market.

•The Indian telecom industry can


be primarily divided into basic,
cellular mobile and internet
services.
•It also has smaller segments such
as radio paging services, Very
Small Aperture Terminals (VSATs), Telecom Services – India

Public Mobile Radio Trunked


Services (PMRTS) and Global
Mobile Personal Communications
by Satellite (GMPCS).
•The mobile services in India are
growing more than basic wireline
services.
The wireless segment in India is much larger than
the wireline segment and is growing steadily owing
to convenience and utility.

Basic Services
Market Share of Basic Services Segments in India
•Basic services encompass (2008–09)

fixed wireline and wireless


in local loop (WLL-fixed)
services.
•Wireless services hold a
major market share of 92
per cent in basic services
as compared to the
wireline.
Telephony services (mobile and basic) and internet services
dominate the Indian telecom services market.

•The Indian telecom industry


generated revenues of
approximately US$ 32 billion in
2007–08 with a growth rate of 60
per cent over 2006–07.

•It witnessed a compound


annual growth rate (CAGR) of
approximately 29 per cent from
2002–03 to 2007–08.

•The CAGR is expected to


stabilize at 16 per cent between
2007–08 and 2009–10
The telecom subscriber base in India is likely to reach 550 million by
2010.

The subscriber base grew to


464.82 million (August 2009),
registering a growth of
approximately 42.67 per cent
over last year. It grew at a
CAGR of 45.21 per cent from
June 2004
to June 2009.

Teledensity in India is still


low as compared to that in
some countries. As on June
2009, India had a
teledensity of 39.86 % as
compared to the previous
year’s figure of 33.22 %.
Private players have maximum subscribers in the
wireless services segment

Wireless services have led to


significant growth in the Indian
telecom industry.
Currently, there are 11
players—Bharti Airtel, Reliance,
Vodafone, BSNL, Tata Tele
Services Ltd, Idea, Aircel,
MTNL,BPL, HFCL and Shyam—
active in this segment.
As compared with 2008–09,
the subscriber base of most
wireless service providers has
increased leading to an increase
in their revenues.
Parameters Airtel Vodafone BSNL RCOM MTNL Idea Tata Total Mean
Indicom
Subscribers 8.42 8.03 6.59 6.56 5.95 6.94 5.83 53.47
Base
Local pricing 7.39 7.75 7.04 6.53 6.35 7.22 5.89 54.32
STD pricing 7.53 7.41 6.26 6.83 5.62 6.94 5.65 52.38
Ease of 8.03 7.91 6.78 6.44 5.82 6.22 5.86 52.71
Payment
Network 8.15 7.98 7.19 6.53 4.28 6.08 5.47 50.34
coverage
VAS 7.39 7.46 6.78 6.71 4.48 5.79 5.83 48.60
Problem 7.50 7.46 6.04 5.56 4.55 6.01 5.39 48.15
solving
Brand loyalty 7.84 7.91 7.08 6.39 4.68 5.72 6.03 52.03
Technology 7.51 7.53 6.59 6.97 4.28 5.72 5.83 48.59
issues
Dealership 7.99 8.03 6.11 6.94 5.42 7.51 6.18 53.84
network
Corporate 8.15 8.06 6.67 8.07 6.25 8.07 7.46 60.08
image
Ease of 8.33 8.34 8.22 8.35 7.21 8.15 7.35 62.99
getting new
connection

Ads & 8.17 8.17 5.96 7.33 4.62 7.44 6.15 53.99
Promotion
Availability 6.88 6.84 5.59 6.09 5.42 6.46 5.47 48.31
of VIP No.
Private players have maximum subscribers in the wireless
services segment
Indian Mobile Services Market Share
(As of June 2009)
M
A
R H
K I
E G AIRTEL BSNL
T H VODAFONE IDEA CELLULAR
RELIANCE AIRCEL
S TATA INDICOM
H
A
R L
E O
W
I
N VIRGIN
% MOBILE
HIGH
HIGH LOW
RELATIVE MARKET SHARE
1 Telecom Industry Overview

2 Telecom – Investment Attracting Sector

3 Regulatory Framework and Its Impact

4 Emerging Trends in Telecom Market

5 Major Players in Telecom Sector

6 VODAFONE
Why India is an ideal destination for
investments????
•World’s largest democracy
•Independent judiciary
•Third-largest telecom network in the world, second-largest among the emerging
economies after China
•On an average, approximately 8 million users are added per month, making India the
world’s fastest growing telecom market.
•Liberal Foreign Investment Regime: FDI limit increased from 49 per cent to 74 per
cent; the rural telecom equipment market also open to large investments
•Among countries offering the highest rates of return on investment
•The large untapped potential in India’s rural markets revealed by 9.21 per cent
teledensity in rural markets as compared to the national level of 28 per cent in 2008.
•The government is promoting telecom manufacturing by providing tax sops and
establishing telecom-specific Special Economic Zones
•Fully repatriable dividend income and capital invested in telecom equipment
manufacturing
1 Telecom Industry Overview

2 Telecom – Investment Attracting Sector

3 Regulatory Framework

4 Emerging Trends in Telecom Market

5 Major Players in Telecom Sector

6 VODAFONE
The regulatory framework provides a level-playing
field for all operators.

The Department of telecommunications


(Government of India) is the main governing body for
the industry.

Telephone Regulatory Authority of India (TRAI)


assists the Government of India (GoI) to take timely
decisions and introduce new technologies in the
country.
Indian Telecom Industry Framework

Indian Government Bodies Independent Bodies

They formulate various policies and pass laws They undertake various research activities
to regulate the telecom industry in India. and monitor the quality of service provided in
the Indian telecom industry. They also provide
various recommendations to improve the
status of telecom operations in India.

Handles spectrum allocation


Wireless Planning Telecom Regulatory
and management
and Coordination Authority of India
(WPC) (TRAI)

DoT – Licensee and frequency


Department of management for telecom Telecom Disputes
Telecommunications Settlement and
Appellate Tribunal
(TDSAT)
Exclusive policy making body
of DoT
Telecom Commission

Handles ad hoc issues of the


Group on Telecom telecom industry
and IT (GoT-IT)
1 Telecom Industry Overview

2 Telecom – Investment Attracting Sector

3 Regulatory Framework

4 Emerging Trends in Telecom Market

5 Major Players in Telecom Sector

6 VODAFONE
FDI in the Indian Telecom Sector
The Indian government allows FDI of upto
74 %, subject to licensing and security
requirements, in the following categories:
FDI in telecommunications sector
•Basic and cellular services
•National/international long distance services
•Value-added services such as PMRTS and
GMPCS
•Radio paging service
•Internet services (providing service gateway)
•Infrastructure providers (Category-II)The
Indian government allows FDI of up to 100 per
cent in the following categories:
•Manufacturing of telecom equipment
•Internet services (not providing international
gateways)
•Infrastructure providers providing dark fibre,
right of way, duct space, tower (IP Category-I)
•Electronic mail
•Voice mail
1 Telecom Industry Overview

2 Telecom – Investment Attracting Sector

3 Regulatory Framework

4 Emerging Trends in Telecom Market

5 Growth Avenues in Telecom Sector

6 VODAFONE
India presents a host of opportunities for telecom
companies… Enterprise telecom
Rural Telephony service 3G

Value added GROWTH WiMax


services AVENUES

Infrastructure
Managed services sharing
Virtual Private network
COMPOSTION OF NET SERVICE REVENUES
RURAL COVERAGE
• About 70 percent of India's near 1.2 billion inhabitants live in rural communities
• rural teledensity was a mere 12.6 percent
• Rural wireline connections totalled 10.68 million at the end of December, down by 2.46
percent from 10.95 million at the end of September 2008
• The rural wireless subscriber base hit 93.15 million at the end of the year, up 2.38 percent
from 90.98 million at the end of September
• Department of Telecom and BSNL have signed an agreement to provide 861,000 connections
to individual users and government institutions through rural and remote exchanges by 2014
• To promote rural rollout by the private operators, the Indian government imposed Universal
Service Obligations (USO) on the country's operators to build a fund that can finance the
rollout of services in areas where there isn't an obvious or pressing business case to do so
• The first phase of mobile infrastructure deployment under the USO fund scheme
commissioned six different service providers to deploy 7,871 towers
• However, by the end of October 2008, only 1,934 towers had been installed
• The second phase, complete with a tender for an additional 11,049 sites, has yet to be
started
• The phased rollouts associated with the USO scheme require an additional 40,875 mobile
towers to be erected
• Add this to the number of towers required for the five new 2G networks, additional coverage
and capacity for existing operators, and the introduction of 3G networks, and there is a huge
demand for new cell sites right across the country
MARKET SWOT ANALYSIS
Strengths Weaknesses
• Lowest call tariffs in the world
•Huge wireless subscriber potential
• Market strongly regulated by Govrenment body
•Fastest growing mobile market in the – Governing both ISP and Telecom sectors
world • Too many authorities ruling the sector
•Consumers are ready to pay for cutting • Huge potential for low end and cheap handsets
edge services • Wide scale Consumer churn in Telecom and ISP
•Government proposes to hike FDI limit • Wide spread VAS deployment is restricted due to
in Telecom to 74% language and literacy problems
•Unified license regime • Primarily a voice based market

Opportunities Threats
• To offer value added services on GSM, CDMA • Low cost service providers – no possibility
and IP of breaking even in short term
• Language independent services • Weak IPR protection
• Mobile Marketing concepts
• Software and digital content Piracy
• Content influenced by local culture and Global
success stories • Political instability
• M-Commerce • Regulatory interference
• Unified messaging platforms
• Foreign investment in form of equity or
Conclusion:
India is huge market and none of the service providers can
dare to ignore its potential. Hence the Indian mobile service
provider industry has grown by leaps and bounds in the last
decade. The journey from 1 million to 50 million will keep its
pace until each citizen in India will have his own mobile.
Industry has many phases in its growth. Now, mobile doesn’t
mean an only a medium of communication. Service providers
are now willing to provide various facilities like entertainment
(music, video etc.) and even banking. We can say that
business is transforming from e-commerce to m-commerce
(mobile-commerce). To conclude, a drastic change has come
over the industry. Alongwith expansion of the base of its
subscribers, they take the first mover advantage and also
provide with new innovative facilities.
Mumbai, March 5, 2008
WFA/ISA - Global Advertiser Conference 28
The name
Vodafone comes
from Voice data
fone, chosen by
the company to
"reflect the
provision of voice
and data services
over mobile
phones.“
Vodafone is a mobile network
operator with its headquarters
in Newbury, Berkshire, England, UK. It
is the largest mobile
telecommunications network
company in the world by turnover •cvc

and has a market value of about £75


billion (August 2008). Vodafone
currently has operations in 25
countries and partner networks in a
further 42 countries.

Make the most of now

Mumbai, March 5, 2008


WFA/ISA - Global Advertiser Conference 30
• Vodafone in INDIA came with
acquiring Hutchison essar limited.
• Vodafone was launched officially on
21st September 2007.
• Than on hutch was rebranded as
vodafone
…..and we have made a commitment to customers
through our new Customer Promise

Our Promise to you

We value your time more than anyone else. That’s why,


wherever you see Vodafone, you can expect:

• A network you can rely on when you need it

• Expert, friendly help and advice – you only have to ask once

• When you’re abroad, the services you need will be as easy


to use as at home, and you’ll know what you are paying

• New and inspiring solutions to help you make the most of


your time

Mumbai, March 5, 2008


WFA/ISA - Global Advertiser Conference 32
The brand is built on a foundation of a
number of strategic components, with the
Marketing Framework at their heart
BRANDED CUSTOMER
EXPERIENCE

MARKETING
FRAMEWORK
BRAND
COMMUNICATIONS BRAND
VALUES & ENGAGEMENT
VISION
To enrich our customers’ lives
through unique power of mobile
communication.
PASSION
• 1. FOR CUSTOMERS:
In anticipation of their customers’ trust Vodafone understands their needs
& delights thems with its services.

• 2. FOR OUR PEOPLE:


Outstanding people working together make Vodafone exceptionally
successful.

• 3.FOR RESULTS:
Vodafone believes in being action oriented & is driven by a desire to be the
BEST.

• 4. FOR THE WORLD AROUND US:


Vodafone believes helping people of the world to have fuller lives through
their services & its impacts.
BUSINESS STRATEGIES.
Products
• Prepaid Cellphone connection
• Prepaid recharge card
• Top - ups
• Vodafone Postpaid
• Calling Cards
• Vodafone PCO
• Vodafone Handyphone
Service Section
• Tunes & Downloads
• Entertainment
• Sports
• Devotional
• News & updates
• Astrology
Service Section contd.
• Finance
• Travel
• Mail, messaging & more
• Dial in services
• Bill info
• Miscellaneous
FINANCIAL RESULTS
COUNTRY NETWORK OWNERSHIP MARKET RANK
SHARE

INDIA (V) HUTCH 52% 22.93% 3/9

AUSTRALIA VODAFONE 100% 16.8% 3/4

N.ZEALAND (V)BELL- 100% 52.3% 1/2


-SOUTH

ITALY (V)OMNITEL 76.86% 31.1% 2/4

TURKEY (V)TELSIM 100% 26% 2/3


YEAR TURNOVER
(MILLION POUNDS)

2005 34073

2006 29350

2007 31104

2008 35478
MARKET COMPETITORS IN INDIA

• AIRTEL
• BHARTI
• RELIANCE
• BSNL

• UNIVERSAL COMPETITORS
• ORANGE
• T-MOBILE INTERNATIONAL
• TELEFONICA02EUROPE
DETAILS ABOUT HUTCHISON ESSAR
Hutchison Essar is a leading India telecommunications mobile
operator with 25 million customers currently, representing a 16.4%
national market share. Hutchison Essar has over 6,000 employees,
operates in 16 circles and has licenses in an additional six circles. In
the year to 31 December 2005, Hutchison Essar reported revenue of
US$1.3 billion, EBITDA of US$415 million, and operating profit of
US$313 million. In the six months to 30 June 2006, Hutchison Essar
reported revenue of US$908 million, EBITDA of US$297 million, and
operating profit of US$226 million.
ACQUISITION DETAILS
 Enterprise value of Hutchison Essar is $18.8 billion
 Value of 67% stake in Hutch Essar - $11.1 billion
 Vodafone is selling 5.6% stake in Bharti for $1.6 billion
 Vodafone will retain 4.4% in Bharti as pure financial investment
 Vodafone acquired 10% in Bharti for $1.5 billion in Oct 2005
 Vodafone and Bharti to share infrastructure
 Hutch has 23.3 million subscribers as of Dec 31, 2006
 Vodafone is targeting a 20-25 per cent market share by 2012
 The mobile market is expected to grow at 40% CAGR till 2012
WHY HUTCH

• Accelerates Vodafone’s move to a controlling position in a


leading operator in the attractive and fast growing Indian
mobile market
• Hutch Essar delivers a strong existing platform in India
• Driving additional value in Hutch Essar
• Increases Vodafone’s exposure to high growth emerging
markets
CONCLUSION
• Taken steps to make a positive difference, by
supporting recycling campaigns
• Win-win-win situation for shareholders,
employees & the environment
• Improved relationships between stakeholders
& has helped to ensure future growth
THANKYOU