Case Question 2

Telstra Considers Entering Indian Telecom Market

The client Telstra Corporation Limited (known as Telstra) is Australia’s largest

telecommunications and media company which builds and operates telecom networks and
markets voice, mobile, internet access, pay television and other entertainment products and
services. Telstra’s head office is the office is the Telstra Corporate Centre located in
Melbourne, Australia.

For this case, our client Telstra wants to enter the Indian telecommunications sector. Let us
look at 2 scenarios. The first scenario is that the client wants to enter the Indian telecom
market and hasn’t purchased any license yet. The second scenario is that the client already
has a 3G license in India. What will be your advice to the client in both the scenarios?
 Solution
Clarifying Questions/Statements:- Purchased License:
3G license in India
1. What is the objective? Since Telstra Corporation
- Possibly to acquire market of Limited (known as Telstra)
telecom in India is Australia’s largest
2. PAN India telecommunications and
3. Considering to launch telecom media company, let
service in India assume that they are
4. Considering to launch 4g service in entering in India for
all over the India Telecom Service

Structure

For an initial workflow of this problem, we may refer to the following structure which caters to the required objective
(some assumptions will be mentioned if required)
Market Analysis Operational Feasibility Risks

Market Size, Production Plant Before Entry (economic factors)

Market Share, Growth & Mode of entry Legal and Technology

Trends Competition
 India Market Sizing for Telecommunication

• India Population: 130 crores

• Rural Population: 60%of 130 crores- 780 cr
• Urban Population: 40 % of 130 cr- 520 cr
• Assuming 5 persons per Household in Rural Areas
• No of Rural Households= 780/5 = 156 Million
• Assuming 3 Persons per household in Urban Areas
• No of Urban Households= 520/3= 174 Million
• In Rural Areas assuming 70% of the households are Above Poverty Line
• No of Rural Households above Poverty Line= 70% of 156 =110 Million
• No of Rural Households below Poverty Line= 46 Million
• No of Phones in Rural areas= 100*2+46*1 = 246 Million (2 phones per household above poverty line and 1 phone per
household below poverty line)
 India Market Sizing for Telecommunication

• Assuming 2 Phones per household in Urban areas,

• No of Phones in Urban Areas= 2=174 = 334 Million
• In rural areas, assuming phones are bought every 5 years and for urban areas, Phones are bought every 3 years,
• No of Phones bought annually = 246/5+334/3 = 161 Million

Since around 161 millions Phones bought annually in India and around 80% of Consumer also purchase Sim when they
bought the Phone, 80% of 161 Million- 129 millions SIM sold annually.

Scenario 1- hasn’t purchased any license yet

• Since India Market Size for Telecommunication is huge I would recommend that they should purchase 4G network
license and Start they their 4G network in Metro cities first as no of smart phones in metro cities is large as compare to
rural area
Scenario 2-already has a 3G license in India

Since they have already have 3G License in india I would recommend that they continue their 3g service in rural area as
most of the rural population have not smart phone and most of areas in India have not proper netwro and for 4G they can