Shraddha Mishra

MBA(G), 3rd Sem

Section -A
 TELECOMMUNICATION INDUSTRY

   

TELECOMMUNICATION INTRODUCTION

Telecommunication is sending and receiving messages, over significant distance that is used for
the purpose of communication.

Indian Telecom Industry

The telecom network in India is the fifth largest network in the world meeting up with global
standards. Presently, the Indian telecom industry is currently slated to an estimated contribution
of nearly 1% to India’s GDP. It is the second largest among the emerging economies of Asia.
Today, it is the fastest growing market in the world and represents unique opportunities for U.S.
companies in the stagnant global scenario.

According to Broadband Policy 2004, Government of India aims at 9 million broadband

connections and 18 million internet connections by 2007. The wireless subscriber base has
jumped from 33.69 million in 2004 to 62.57 million in FY2004-2005. In the last 3 years, two out of
every three new telephone subscribers were wireless subscribers. Consequently, wireless now
accounts for 54.6% of the total telephone subscriber base, as compared to only 40% in 2003.
Wireless subscriber growth is expected to bypass 2.5 million new subscribers per month by 2007.
The wireless technologies currently in use are Global System for Mobile Communications (GSM)
and Code Division Multiple Access (CDMA). There are primarily 9 GSM and 5 CDMA operators
providing mobile services in 19 telecom circles and 4 metro cities, covering 2000 towns across the
country.

EVOLUTION OF INDUSTRY

E-COMMERCE AND MARKETING

 Year 1851- First land lines were laid by the government

 Year 1881- Introduction of telephone in India

 Year 1883- Merger of telephone services with postal services

 Year 1923- Indian Radio Telegraph Company was formed

 Year 1947- Nationalization of all telecommunication companies

 Year 1985- Establishment of department of telecommunication (DOT)

  Year 1986- Videsh Sanchar Nigam Limited (VSNL) for international telecommunications
and 
Mahanagar Telephone Nigam Limited (MTNL) for service in Metropolitan areas was
introduced.

 Year 1997- Telecom Regulatory Authority of India (TRAI) came into existence

 Year 1999- Launch of cellular services in India. Adoption of new national telecom policy.

 Year 2000- DOT becomes a corporation, BSNL.

MAJOR TELECOM COMPANIES IN INDIA

1. Bharti Airtel

2. Reliance Communication

3. Vodaphone

4. BSNL/MTNL

5. Idea

6. Tata

7. Tata Indicom

8. Tata Docomo

9. Virgin Mobile

10. Aircel

11. Uninor

12. Vidiocon

13. MTS

BRIEF ABOUT SOME OF TELECOM COMPANIES

BSNL

On October 1, 2000 the Department of Telecom Operations, Government of India became a

corporation and was renamed Bharat Sanchar Nigam Limited (BSNL). BSNL is now India’s leading
Telecommunications Company and the largest public sector undertaking. It has a network of over
45 million lines covering 5000 towns with over 35 million telephone connections. The state-
controlled BSNL operates basic, cellular (GSM and CDMA) mobile, Internet and long distance
services throughout India. 
BSNL is also the largest operator in the Internet market, with a share of 21 per cent of the entire
subscriber base.

BHARTI

Established in 1985, Bharti has been a pioneering force in the telecom sector with many firsts and
innovations to its credit, ranging from being the first mobile service in Delhi, first private basic
telephone service provider in the country, first Indian company to provide comprehensive
telecom services outside India in Seychelles and first private sector service provider to launch
National Long Distance Services in India. Bharti Tele-Ventures Limited was incorporated on July 7,
1995 for promoting investments in telecommunications services.Bharti Tele-Ventures' strategic
objective is “to capitalize on the growth opportunities the company believes are available in the
Indian telecommunications market and consolidate its position to be the leading integrated
telecommunications services provider in key markets in India, with a focus on providing mobile
services”.

MTNL

MTNL was set up on 1st April 1986 by the Government of India to upgrade the quality of telecom
services, expand the telecom network, introduce new services and to raise revenue for telecom
development needs of India’s key metros – Delhi, the political capital, and Mumbai, the business
capital. In the past 17 years, the company has taken rapid strides to emerge as India’s leading and
one of Asia’s largest telecom operating companies. The company has also been in the forefront of
technology induction by converting 100% of its telephone exchange network into the state-of-the-
art digital mode.

RELIANCE

It offers a complete range of telecom services, covering mobile and fixed line telephony including
broadband, national and international long distance services, data services and a wide range of
value added services and applications. It is providing services in both CDMA and GSM.

TATA TELESERVICES

Tata Teleservices is a part of the $12 billion Tata Group, which has 93 companies, over 200,000
employees and more than 2.3 million shareholders. Tata Teleservices provides basic (fixed line
services), using CDMA technology in six circles: Maharashtra (including Mumbai), New Delhi,
Andhra Pradesh, Tamil Nadu, Gujarat, and Karnataka. It has over 800,000 subscribers. It has now
migrated to unified access licenses, by paying a Rs. 5.45 billion ($120 million) fee, which enables it
to provide fully mobile services as well.

IDEA

Indian regional operator IDEA Cellular Ltd. has a new ownership structure and grand designs to
become a national player, but in doing so is likely to become a thorn in the side of Reliance
Communications Ltd. It is known for its tariff plans and aggressive marketing. Abishek Bachan is
the brand ambassador of it.

VODAFONE

Vodaphone is one of the worlds largest telecommunication company. Its headquarter is in

Newbury, Berkshire United Kingdom. CEO of Vodaphone is VittorioColao. Company is official
partner of both England cricket team and Maneshter united club. It is listed on London stock
exchange.

EXPANDING NETWORK

The Indian telecom industry has grown rapidly during the last few years. India has the third largest
(based on the total number of fixed/mobile subscriber lines) telecom network in the world and
the second¹ largest mobile network with over 600 million subscribers while the total number of
telephone lines reached over 650 m at the end of May 2010. While subscriber volumes continue
to grow in the larger urban areas, the maximum growth potential lies within rural India comprising
of over 600,000 villages and well below average teledensity levels. Coverage is increasing rapidly,
e.g. Reliance Mobile's network covers 400,000 villages and 14,000 towns across India as of Feb
'09. The number of phone subscribers in rural areas (rural population amounts to 70 % of India's
over 1.1 billion inhabitants) was only 64 m at the end of Nov '07. An estimated base of 650 million
subscribers is envisaged by 2012. Revenue from fixed and mobile services amounted to an
estimated Rs 880 bn in fiscal year 2005. National long distance (NLD) and international long
distance (ILD) service revenues grew to an estimated Rs 93 bn in the same year. While the number
of mobile subscribers increased by 27.9 m in 2005, this figure skyrocketed to 83 m in 2007 and
grew even further to around 113 million added mobile subscribers in 2008. India's telecom market
is now the largest in the world based on the number of new monthly subscribers added.

MAJOR MARKET TRENDS

The telecoms trends in India will have a great impact on everything from the humble PC, internet,
broadband (both wireless and fixed), and cable, handset features, talking SMS, IPTV, soft switches,
and managed services to the local manufacturing and supply chain. 

Higher acceptance for wireless services

Indian customers are embracing mobile technology in a big way (an average of four million
subscribers added every month for the past six months itself). They prefer wireless services
compared to wire-line services, which is evident from the fact that while the wireless subscriber
base has increased at 75 percent CAGR from 2001 to 2006, the wire-line subscriber base growth
rate is negligible during the same period. In fact, many customers are returning their wire-line
phones to their service providers as mobile provides a more attractive and competitive solution.
MERGERS

Demand for new spectrum as the industry grows and the fact the spectrum allocation in done on
the basis of number of subscribers will force companies to merge so as to claim large number of
subscribers to gain more spectrum as a precursor to the launch of larger and expanded services.
However it must also be noted that this may very well never happen on account of low telecom
penetration.

NEW CIRCLES

As mentioned earlier there is a significant number of tier-2 and tier 3 cities that can accommodate
more players we expect aggressive response by the companies to such opportunities as and when
they are created.

GROWTH TRENDS

Telecom sector in India will maintain its growth rate in future despite the global economic
downturn. The growth in the telecom sector will be driven by expanding mobile subscriber base
which has outperformed all other segments of the industry in terms of growth rate. The mobile
subscriber base is projected to reach around 800 Million users by the fiscal year 2014. We have
found that India's telecommunication sector is experiencing strong growth as rising income and
falling tariffs are making mobile phones affordable for millions of new customers. Mobile players
are seeing rural areas as their new growth avenues.

As the urban market has almost reached the saturation level, most of the cellular service
providers have turned their attention towards the rural India to extend their reach and broaden
base. With saturation in the urban market, growth in the Indian mobile market will be driven by
an increased focus on the rural market, aggressive promotions and handset bundle offers.

3 G AUCTION

Recently auction of third generation or 3 G auction happened. In which total 22 spectrum were
allotted to the telecom companies based on auction. By introduction of 3 G serviceability of
telecommunication will increase, for example network, value added services, internet connectivity
etc will improve substantially. List of number of circle got by major telecom companies are as
follows

Airtel- 13
Reliance- 13
Aircel- 13
Idea- 11
Vodaphone- 9
Tata- 9
IMPORTANT FACTS AND FIGURES

 Number of telecom (mobile and landlines) subscribers: 638 million (as on 30.4.10)

 Number of fixed line subscribers: 36.8 m (as on 30.4.10)

 Number of cellular (GSM, CDMA and WLL-Fixed) subscribers: 601 m (as on 30.4.10)

 Number of broadband subscribers: 9.0 m (as on 30.4.10)

 Number of GSM cellular subscribers: 444 m (as on 31.5.10)

 Number of CDMA cellular subscribers: 155 m (as on 31.12.09)

 Number of VPT's (Village Public Telephones): 0.55 m (as on 31.3.06)