Presented by :Mohit vats (23) Parveen kumar (32) Sanjeet solanki(..) Vineet awasthi (..

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Overview: Indian Telecom Industry

Introduction of the telephone
• In 1880, two telephone companies namely The Oriental Telephone Company Ltd. and The Anglo-Indian Telephone Company Ltd. approached the Government of India to establish telephone exchanges in India. • The permission was refused . • It is a Government monopoly and that the Government itself would undertake the work. • By 1881, license was granted to the Oriental Telephone Company Ltd. of England for opening telephone exchanges at Kolkata, Mumbai, Chennai (Madras) and Ahmadabad. • 28 January 1882, is a Red Letter Day in the history of telephone in India, Major E. Baring, Member of the Governor General of India's Council declared open the Telephone Exchange in Kolkata, Chennai and Mumbai.

Cont….
• • • • • • • • • The exchange at Kolkata named "Central Exchange”. The Central Telephone Exchange had 93 numbers of subscribers. Bombay opening the Telephone Exchange in 1882. 1902 First wireless Islands and Sand heads. Telegraph station Established between Saugor. 1907 First Central Battery of telephones introduced in Kanpur. 1913-1914 First Automatic Exchange installed in Shimla. 23 July 1927 - Radio-telegraph system between the UK and India. 1960 First subscriber between Kanpur and Lucknow. trunk dialing route commissioned. • 1975 First PCM (pulse call modulation) system and Andheri telephone exchanges.

in/ataglance/achievement3. . • 1985 .First mobile telephone service started on non-commercial basis in Delhi.07 million in 1991.First mobile telephone service started on non-commercial basis in Delhi.• http://mumbai.First optical fibre system for local junction commissioned at Pune. • Even after independence. • The number of telephones grew leisurely to 980. • While country were linked with telephones during the British period.000. the total number of telephones in 1948 was only around 80. 2.15 million in 1981 and 5.net.mtnl. growth was extremely slow.000 in 1971.html • 1979 . • While innovative steps are taken like introduction of the telex service in Mumbai in 1953 and commissioning of the first [subscriber trunk dialing] route between Delhi and Kanpur in 1960. • 1985 .

• Conservative estimates put a tag of a 3% increase in the growth of GDP for every 1% rise in the tele-density in the nation. • Many private operators. BPL. • In 1990s the telecom sector was opened up by the Government for private investment as a part ofLiberalisation-Privatization-Globalization policy.. Tata Telecom. successfully entered the high potential Indian telecom market.Industry capacity • The real transformation in scenario came with the announcement of the National Telecom Policy in 1994. • The Government of India corporatized the operations wing of DoT on 01 October 2000 and named it as Bharat Sanchar Nigam Limited (BSNL). Vodafone. such as Reliance India Mobile. Idea etc. .Bharti. • Emergence as a major player • In 1975. the Department of Telecom (DoT) was separated from P&T.

65 million.Overview…Facts • • • • • • • • Fastest growing telecom market. To become second largest telecom market in world by 2010. Source: trai .08%. Tele density: 41.66 million.41 million. Wire line subscriber base: 37. Total subscriber base: 525. CAGR: more than 50% (since 2003). Last month additions: 14.38 million. Wireless subscriber base: 441.

Expected mobile subscriber base by 2012: 690 to 700 million. Monthly broadband growth rate: 2. Urban region teledensity: 88%. Rural region teledensity: 16.80 million.54% (by May 2009). • ARPU per month: INR 205 (by Mar 2009) Source: trai .Overview…Facts • • • • • Total broadband subscriber base: 6.7%.

Overview…Facts • Divided into 23 circles – 4 metros – 19 circles Further divided into A. B and C category based on economic parameters and revenue potential • Each circle has licenses – Licenses are Rajasthan Jammu & Kashmir Himachal Pradesh Punjab Haryana Uttar Pradesh W DELHI Uttar Pradesh E Bihar Gujarat Madhya Pradesh West Bengal Maharashtra MUMBAI Andhra Pradesh Orissa KOLKATA Karnataka METRO Circles CHENNAI Tamil Nadu Kerala A Circles B Circles C Circles .

82 millions on June 2009. registering a growth of approximately 43% over last year. • On Jun 09.Success story • The subscriber base grew to 464.33% last year. Indian teledensity stood at 41.08% as compared to 28. Source: trai .

Paradigm Shift in Telecom scenario • Traditionally. a government owned monopoly : BSNL incumbent monopoly operator till 1992 • Characteristics of monopoly: – – – – A single seller Unique product Blockaded entry and exit Price makers instead of takers • Duopoly existed with bharti and BSNL being the two players. .

. reliance. Idea.Contd… – Bharti: cellular service – BSNL: fixed line service – NTP 94 allowed one private service provider to compete in basic services with DoT . Tata indicom. It allowed duopoly in cellular mobile services in each circle. bharti. – Handful of competitors sheltered by significant barriers to entry – Price/output relationship of firms are interrelated – Sellers have homogenous or unique products. vodafone. • Oligopoly -> Open competition – Majors players include BSNL. MTNL.

Tariffs Local call charges decreased from Rs. 35 pm to Rs 1. 18 in 1999 to Rs. • National call charges decreased from Rs. • USD .5 now. 0.5.

Market share • Currently 12 major players. Source: trai . • Bharti occupies approx. 24% of the total wireless market.

The number of Broadband subscribers (with a download speed of 256 Kbps or more) was 6.85 million Internet subscribers at the end of December 2008 registering a growth of 5.22 million at the end of March 2009 .30%. There were 13.54 million Internet subscribers. • Source: trai .54 million Internet subscribers at the end of March 2009 as compared to 12.Internet Services • •  India currently has only 13. which includes broadband.

Regulating Bodies and policies .

of Telecom (DoT) Licensing and Frequency Management Indian Telecom Industry Framework Telecom Regulatory Authority of India (TRAI) Telecom Disputes Settlement and Appellate Tribunal (TDSAT) Adjudicates over disputes in telecom sector .Regulating Bodies Regulates the sector and fix tariffs Dept.

• Unable to fulfill some of the objectives. – ensuring India’s emergence as major manufacturing/export base of telecom equipment. . • Actual revenue lesser than the projections.Regulatory Framework Policy • New Telecom Policy 1994 – provision of world class services at reasonable prices. • The private sector entry has been slower than what was envisaged in the NTP 1994. – License distribution to private players. – Availability of basic telecom services to all villages. – 1 PCO per 500 urban population and coverage of all 6 lac villages.

Regulatory Framework Policy • New Telecom Policy 1999 – Strengthening of Regulator. – Provide Internet access to all district headquarters by 2000. hilly and tribal areas of the country. – Strengthen research and development efforts in the country and provide an impetus to build world-class manufacturing capabilities. . – Protect defence and security interests of the country. – Encourage development of telecommunication facilities in remote. – Enable Indian Telecom Companies to become truly global players. – Achieve efficiency and transparency in spectrum management.

– does not take into account the national and international long-distance services and Internet access services.Regulatory Framework Policy • Universal Services Obligation – implemented along with NTP ’99 to widen the reach of telephony services in rural India. • Unified Access Licensing Regime (UALR 2003) – Eliminated the need for separate licences for different services. – Allows players to offer both mobile and fixed-line services under a single licence after paying an additional entry fee. – Bridge the wide gap between urban and rural teledensity. . – All telecom operators are bound to contribute five per cent of their revenues to this fund.

Integrated Operators .

The typical services of an integrated operator like Reliance would include: • • • • • • • Reliance Reliance Reliance Reliance Reliance Reliance Reliance mobile global call.S. local calling.between 4 continents passport. U.K . broadband as well as landline.e. • Example: Airtel.U.A and Canada PCO Netconnect – broadband Hello –landline service international calling . Reliance.Integrated Operators • Provide services in all categories i. BSNL etc. international calling. national calling.

Example. – Improves market share through presence in all areas. – High costumer retention through integrating his all telecom related requirements. cost effective services. • Advantages: – Better.. – Enjoy internal economies of scale .

Competition .

67 0.40 China 2004-05 0. • HHI Index for few countries (for fiscal year ending mar 2009): Country HHI Index India Pakistan USA China Fiscal Year HHI Index in basic services HHI Index in mobile services 1620 2300 2588.58 0.16 India 2005-06 0.58 0.77 5900 Particulars 2004 0.15 .Degree of Competition • Indian mobile market much more competitive than many other countries.

1800 > 1800 Concentration Low Moderate High HHI in mergers: • Example: Airtel + Vodafone(Combined market share 39%) • • • • Initial HHI: 1620 (Mod.HHI Analysis HHI Value < 1000 1000 . .) New HHI: 2356 (High Conc. Conc.) Change in HHI: 736 This greatly reduces competition.

Investment and Opportunities… .

tower (IP Category-I) – Voice Mail .FDI • The Indian government allows FDI of up to 74 per cent. duct space. in the following categories: – – – – Basic and cellular services National/international long distance 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. subject to licensing and security requirements. right of way.

• Worldwide Interoperability for Microwave Access (WiMax) – – – – India is the largest single-country WiMAX opportunity in the world. 60 million WiMax users by 2014 (ASSOCHAM).Opportunities for Growth… • 3G – Major investment Opportunity. – 20 million 3G-based broadband subscribers by 2014 (ASSOCHAM). – Expected to attract US $8–10 billion during 2008-11. – International and foreign players can enter this segment through jointventures with Indian companies with a stake of not more than 74 per cent. . increased use of telecom services. Internet and value added services. network access in inaccessible areas at a speed of more than 4 Mbps.

• Availability of mobile T. • Rural Telephony – Huge untapped potential.Opportunities for Growth… • Value added Services (VAS) – The VAS industry was worth USD 632 million in 2007–08. • Development of video based applications.. – The industry is estimated to grow by 60 percent in 2008–09 and become an USD 1.011 million opportunity. – Major drivers: • Availability of contents in local language. • M-commerce applications.V. .

Current Scenario .

2009 in 12 cities.20 billion. • Govt expect to raise INR 250 billion through auction of 3G and Wi Max services. • Govt aims to sell four 3G licenses and three broadband wireless access licenses in 20 of the 22 zones.3G • BSNL and MTNL were given the 3G spectrum last year ahead of auction. • BSNL launched 3G services on 27th Feb. 3G Auction • Base price of 3G spectrum auction increased to INR 35 billion from the earlier decided INR 20. .

• 30% tax benefit on the profits for the subsequent 5 years.Tax benefits • DoT is considering a proposal so that the bidders of the 3G spectrum can enjoy tax benefits. . Proposal: • 100% tax benefit on the profits to 3G spectrum bidder telcos for initial 5 years.

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.4G • US Motorola is planning to next level that is the 4G in India. • Motorola is all set to start trial services of technology called Long Term Evolution(LTE) that can offer speeds up to 70Mbps. • Motorola and other telecom vendors are planning to meet DoT for trial spectrum.

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refers to the ability to transfer either an existing fixed-line or mobile telephone number assigned by a local exchange carrier (LEC) and reassign it to another carrier.Number Portability – Local number portability (LNP) for Fixed lines. . – Full mobile number portability (FMNP) for mobile phone lines.

• Free of charge in countries and chargeable in some countries. . • The first MNP implementation was made in 1990 Singapore. • The time taken to port a subscriber between the service providers should not be greater than the time taken to activate a new subscriber.Facts about MNP • United Kingdom is yet to switch to centralized solution ( as of Jan2008). • It takes only 3 minutes in Australia to port a subscriber successfully.

• The charges are likely to be less than Rs. Chennai. • Analysis: – Switching cost more than the avg. – No change in already low churn rate. – Kolkata.MNP • Mobile Number Portability Details : – Delhi. – Rest of the country by March 20. Maharashtra and Gujarat Service comprise Zone I – MNP to be implemented by Sep 20. 2009. 2009. 2010. Tamil Nadu. Mumbai. Andhra and Karnataka comprise Zone 2 and details will be finalized by Sep. – Syniverse Technologies (Zone 1) and MNP Interconnection (Zone 2) are the two companies who have been licensed by the DoT to carry out the MNP exercise. . 300/ and operators will take maximum 2 days to change the provider. monthly rent.

either free or at low costs . • It may put pressure on margins. nefits to phone subscribers Free mobility from one service provider to another without changing mobile nu Price competition it the market is competitive Competition among force service providers will lead to improvement in quality ervice and product innovation order to retain and expand the customer base many value-added services may ered by service providers to attract customers. • Increases price competition.MNP Costs for telecom operators • Increase in churn rate directly affects the revenues of the service provider. as product innovation costs and marketing costs may increase. • Increased investments in back-end services.

7% 2.4% 11.1% 9.80:20 Rule • 80% of the total revenue comes from 20% of the total customer base.000 5.001-10.000 501-1.7% Contribution In Revenue 46.000 1.5% 7.001-5.6% 10% 8.000 0-500 Percentage of subscribers 2.9% 14% 21.1% .001-2.3% 51.8% 13.000 2. Usage Rate (bimonthly) More than 10.

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‘09) • Only for Prepaid subscribers. • Fixed charge on a per-call basis regardless of the call duration.Pay Per Call ( just –in) • Tata Indicom launched it on Tuesday (1st sept. . • Re 1 per local call. • Re 3 per STD call. • And Now its coverted into pay/sec service. • 1p/sec or 2p/sec .

Thank You .

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