Telecom Industry

K J SOMAIYA INSTITUTE OF MANAGENENT STUDIES AND RESEARCH
Telecommunication
Industry overview
Group 1
Arnab Roy (001)
Rik Chakraborty (011)
Aman Jain (021)
Abhilash Mohandas (031)
Chandana Rayachoti
(041)
Vishal Shah (051)

Table of Contents
Table of Contents................................................................................................... 2
Introduction
The advancement made by the telecom industry over the last 10 years is
phenomenal. Only 15% of the world population had access to telephone in
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1999 while it grew to 70% by 2009. Some of the major changes in the
telecom industry were decline in the public switched telephone network
(PSTN) usage, increase in wireless communication services and
phenomenal growth in the mobile communication users.
The telecom sector has to meet the increasing needs of the customer at
affordable costs. The Service providers, Policy makers and Regulators
have the complex task of promoting heavy capital investments and
healthy competition. Even though the mobile market has reached a point
of saturation in many countries, the introduction of new technology and
services into this sector promises it a bright future.
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Technology Timeline
1876 - Alexander Graham Bell invented the telephone.

1900 - John J. Carty installed loading coils, which extended range
and utilized open wire transposition which in turn reduced
crosstalk which is an inductive pickup from ac transmission lines.
1915 - Vacuum tube amplifiers were used for the first time in
coast-to-coast telecom circuits.
1935 - First telephone call around the world was made.
1958 - Jack Kilby, Texas Instruments, developed the first integrated
circuit. They introduced the first silicon based transistor which
eclipsed germanium devices in production volume.
1965 - AT&T introduced stored program controlled switching.
1980 - Digital local offices and optical fiber transmission were
deployed.
1981 - Bell Telephone Labs design a network-embedded database
of Personal Identification Numbers (PINs) for calling card
customers to be accessed by public telephones over Signaling
System 7.
1982 – Global System for Mobile communication, GSM, is
established to create a common European mobile telephone
standard that would formulate specifications for European mobile
radio system operating at 900MHz.
1983 - Carolyn Doughty, Bell Telephone Laboratories, filed a
patent on Caller ID.
1987 - Bell implemented first Caller ID.
1995 – Code Division Multiple Access, CDMA, was introduced
commercially which increased both the system capacity and the
service quality.
2003 – 3G is introduced. It included capabilities like enhanced
multimedia, broad bandwidth, high speed. It is used in mobile
broadband, fixed wireless and portable wireless.
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Global Scenario
GLOBAL OVERVIEW
Most of the sectors were affected in the recent years due to the Economic
Recession. Telecom was one of the few sectors that showed resistance to
it by being able to maintain their revenue levels.
America:
Experts are of the opinion that the U.S economic improvements in 2010
have a low probability to influence and improve the growth of the telecom
sector until 2011.
South East Asia:
In 2005 Mobile formed 60.1% of all telephone connections in Asia while by

2010 the figure rose to 79.7%. The Major players in the region are China
and India with estimated 750 and 525 million subscribers respectively. On
the down side these countries have the lowest mobile penetrations in the
region while Hong Kong and Singapore have the highest. Japan and New
Zealand suffered from the region’s lowest mobile subscriber growth in
2009.
Latin America:
The Telecom sector continued to make progress in all Latin American

markets during 2009 in terms of penetration and infrastructure
modernization. The recession had some dampening effect on the growth
during this period.
Eastern Europe:
Mobile accounted for 81.9% of all telephone connections by the end of

2009. The major markets in this region are Russia, Ukraine and Poland
with estimated 208.55 and 45 million connections by the end of 2009.
Lithuania, Russia and Bulgaria have the highest mobile penetration rates.
Middle East:
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The telecom network in the U.A.E. is one of the most technologically

advanced in the world. Recently a second operator has come to the
market and hence tariff levels have gone down.
Saudi Arabia is the largest country in the Middle East and also has the
highest spending levels. The entry of many operators has increased
spending in this sector. Broadband
penetration is one of the lowest in the region. According to Frost &

Sullivan, the total telecom spending in the Saudi market was USD 6,576.5
million in 2008 and is expected to decline with a negative CAGR of around
1.59 percent between 2008 and 2015 to USD 5,875.1 million.
MAJOR GLOBAL TELECOM OPERATORS
RANK COMPANY COUNTRY SUBSCRIB REVENUE MARKET EMPLOYE

ERS CAPITALI ES
ZATION
1 China China 554 $66.2 $225.0 138268
Mobile million billion billion
2 Vodafone UK 333 $65.7 $115.7 79097
Group million billion billion
3 China China 284 $22.6 $27.9 205200
Unicom million billion billion
4 Telefonica Spain 264 $79.1 $107.1 250000
million billion billion
5 AmericaM Mexico 201 $29.3 $78.3 55627
ovil million billion billion
6 France France 193 $64 billion $62.6 180000
Telecom million billion
7 Bharathi India 164 $9.2 $46.91 31201
8 AT&T USA 150 $123 $154.6 394600
9 Verizon USA 87.7 $108 $86.1 224366
10 NTT Do Japan 54.6 $44.4 $69.4 21831
Como million billion billion
CHINA MOBILE
The Company was incorporated in 1997 at Hong Kong. The company has
the largest mobile network and the largest mobile Customer base in the
world. China Mobile provides mobile communications and related services
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and concentrates its services over Mainland China and Hong Kong.
China Mobile was selected as one of “FT Global500” by Financial Times
and “The World’s 2000 Biggest Public Companies” by Forbes magazine in
2009.
VODAFONE
Vodafone Group is a mobile telecommunications company headquartered

in Newbury, England. The company concentrates in voice and data
communications The Company has major operations in Europe, United
States, Africa, India, and Middle East. It also has joint ventures in Australia.
Vodafone owns 45% stake of Verizon Wireless, the wireless
telecommunications network in the United States and has become a
wireless giant.
TELEFONICA
Spain's Telefonica, a publicly listed company, and its subsidiaries operate

in the telecommunications and media. It has its headquarters in Madrid,
Spain. The company operates through three business lines: Telefonica
Spain, Telefonica Europe and Telefonica Latin America. In Latin America,
Telefonica provides service to more than 158 million customers in Brazil,
Argentina, Chile and Peru, and has substantial operations in Colombia,
Ecuador, El Salvador, Guatemala, Mexico and Nicaragua, among other
countries.
AMERICAN MOVILE
American Movile is the largest telecom operator in Latin America and the
fifth largest in the world in terms of number of equity subscribers. The
Company, started by Carlos Slim Helu, provides services to over 200
million subscribers primarily in Latin America and the Caribbean. The
Headquarters is situated in Mexico City, Mexico.
MERGERS AND AQUISITIONS
Some of the recent mergers and Acquisitions in the Telecom Industry are:
1) NTT DoCoMo Inc buying 26% stake of Tata Teleservices for $2.7Billion.
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2) Telecom Italia buying 49% stake of Unitech Telecom for $2Billion.

3) Emirates Telecommunications Corp (Etisalat Dubai based) buying 45%
stake of Swan Telecom private Ltd.
4) Bharti Airtel acquired Kuwait based Zain telecom’s African business for
USD 10.7 billion.
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Indian Telecom Sector

History of Telecom in India
The journey of Indian Telecommunication started with the establishment

of first military landline from Fort William to Lalbazaar (Calcutta) by the
British Govt in 1851. Since then lot of changes have taken place, few
milestones are:-
1947: Formation of Posts Telephone & Telegraphs under Ministry of

Communication
1985: DOT established separate from Postal system
1995: 1st call on Mobile phone; telecom minister Sukh Ram (Delhi) to
Jyoti Basu (Calcutta)
1997: TRAI created
1999: Cellular Service launched
2009: For 3 months India beats China for the maximum subscribers
added every month
Quick Facts
Category Figures
Total Subscribers 621.28 Million
Total Wireless Subscribers 584.32 Million
Total Wireline Subscribers 36.96 Million
Total Internet Subscribers 16.18 Million
Average Revenue Per User (ARPU) GSM Rs. 131
Average Revenue Per User (ARPU) CDMA Rs. 76
Minutes of Usage (MOU) GSM 410 Minutes
Minutes of Usage (MOU) CDMA 307 Minutes
Minutes of Usage for Internet Telephony 122.96 Million
The number of telephone subscribers in India increased from 562.16

Million at the end of Dec-09 to 621.28 Million at the end of Mar-10,
registering a sequential growth of 10.52% over the previous quarter. This
reflects year-on-year (Y-O-Y) growth of 44.58% over the same quarter of
last year. The overall Teledensity in India has reached 52.74 as on 31st
March 2010.
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Trends in Telephone subscribers and Teledensity in India
About 56% of the total net additions have been in urban areas as
compared to 57% in the previous quarter. This, in other words implies a
rapid increase in rural subscriptions during the quarter. However, this
uptake in rural subscription is in wireless segment. The share of rural
subscribers has increased to 32.3% in total subscription from 31% in Dec-
09.
Composition of Telephone Subscribers
Major Players
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As on Mar 2010 there are 15 players in Wireless segment, viz.

Bharti, Reliance, Vodafone, BSNL, Tata, IDEA, Aircel, MTNL, Unitech,
Sistema, LoopMobile, STel, HFCL, Videocon, Etisalat.
The details of Top 5 players are:-
Mergers & Acquisition
If an entity merges or acquires another entity operating in the same

industry then it is termed as horizontal merger. Telecom sector M&As fall
in this category.
The first M&A deal in India was the sale of Mumbai license by Max group to
Hutchison Whampoa group of Hong Kong. The deal fetched over half a
billion dollars for Max group and was touted as a major success for Indian
entrepreneur in telecom venture. This followed a series of M&A in
subsequent years as stated hereunder.
Company % Stake hold Buyer Seller Year

Name
Orange, Mumbai 41% Hutchison Group, Max Group, Delhi 1998
Hong Kong
Hutch, India 8.33% Max India Kotak Mahindra, 2006
India
Hutch Essar, 5.1% Hutchison Group, Hinduja 2006
India Hong Kong
Idea Cellular 48.14% Aditya Birla Tata Group 2005
Group
Bharti Airtel 10% Vodaphone Bharti Group 2005
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Aircel, Chennai 79.24% Sterling Group, RPG Group 2003

Chennai
Aircel, TN, 74% Maxis, Malaysia Sterling Group 2006
Chennai
and NE
Spice, (Punjab 49% Telekom NA 2006
and Malaysia,
Bangalore) Malaysia
However, in recent times also we have witnessed some mergers. They are
summarized as below:-
Reliance Communication  GTL infrastructure Ltd (USD 11 billion)
Bharti Airtel  Zain telecom’s African business (USD 10.7
billion)
Reliance Industries Infotel broadband (USD 1 Billion)
There have been a lot of investments in Indian telecom companies since
last year. This includes the deals between Tata Teleservices Ltd and NTT
DoCoMo, Inc.; Unitech Telecom and Norwegian telecom firm Telenor ASA
at $1.36 billion; Swan Telecom and Emirates Telecommunications Corp
(Etisalat) at $900 million; and Bahrain Telecommunications Co and S Tel
Ltd for $225 million.
Reliance Industries Limited (RIL) is all set to enter the Indian telecoms
market. They are equipped with an investment of around $5 billion. RIL is
open to sharing Reliance Communications’ (Rcom) infrastructure for the
investment. RIL would also invest around $1 billion for rolling out
broadband services. This is to enable the company achieve its target of
100 million subscribers through its other recent acquisition, Infotel, in a
five year period.
Value Added Services (VAS)
There is a huge scope for VAS in India. Briefly we can categorize VAS as
below:
 SMS
o Bulk SMS
o Alerts & News
o Mobile Banking
o Ticketing
 Voice IVR
o Mobile Radio
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o English Learning
o Music on Demand
 Content downloads
o Mobile WAP Portal
 CRBT (Caller ring back tones)
 USSD
o Message along with *141#
o Flash Alerts
The reasons for emergence of VAS are:-
 Decrease in ARPU for telecom operators

 Very low operating margins
 Decreasing call rates: Lowest in the world 1p/sec
 Increase in number of operators in each circle
 Saturation in metro market: Over 100% tele-density in 4 metros
The VAS Value Chain can be summed up as below:
 Content Generators
o Music Companies
o Website Portals
 Content Aggregators
o Spice Digital, Hungama.com, Mauj.com
 Telecom Operators
o Airtel, Vodafone, Idea
Rural VAS
Good potential for Indian Rural Markets. Some of the potential areas are:
 Local Mandi Rates

 Weather forecasts
 Health & job related information
 Train services
India’s Competitive Advantage
Undoubtedly the coming century belongs to Asia and India is one of the
emerging economies of Asia. Thus, the future of telecom industry is bright
here. Below are some of the reasons to back the claim:-
 Fastest growing free market democracy

 Cost advantage in product development and back office processing
 Stable economic outlook – Decade long reforms
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 Huge market potential – one of the largest consumer markets

 Large talent pool
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Past Strategies & Shortcomings

Penetration Level in Pre-liberalization Era
Since liberalization the Indian telecom industry has been growing but still
the growth has not been able to reach its peak. Most of its growth has
been provided by the urban market where the penetration of the telecom
industry is close to 60% whereas in rural market it is close to 15%. The
biggest problem faced by the telecom industry is the average per user
which is $7 for urban locations and drop to a meagre $2 in rural market.
Initial critical problems of the Indian Telecom

There have been couple of big hurdles that were faced by the telecom
industry such as:-
1) Low penetrations
2) Service providers incur huge initial investments in the initial stages

making the break-even difficult
3) Limited spectrum availability and inter connection charges issue

between the state and private players
Strategies of Indian Telecom Players in the past
The past years were generally ruled by monopoly of the telecom market
by Government of India through the BSNL telephone services. There were
very few players in the market and the major players such as ESSAR in the
private sectors charged heavy rates for both incoming and outgoing calls.
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The strategies of the Players in the past had been less customer oriented
and more monopolistic, few basic points below derive the present fact:-
1) High incoming and outgoing rates for cellular

The incoming and the outgoing rates for the earlier telecom providers
were pretty high to high infrastructure cost involved, due to a heavy
tax regime of the government of India and the lack of the entry of FDI
in the Indian telecom sector. The earlier telecom players were then
serving the high end customers as per the cost-benefit realization and
providing the services to the affluent ones.
2) More of a wired technology then the wireless ones

The technology used by the service providers then, which comprised
mostly of BSNL was
more on obsolete wired basis rather than GSM and other related
wireless technologies. The national telecom policy in 1999 was
announced later than allowed more foreign investors entry in the
telecom sector of India.
3) Working under a tightly regulated domestic market

The companies in the past had been working under the tightly
regulated market where the long distance calls were completely
regulated by the Government floated agencies and the market which
opened up in 2000 was also allowed to have flexible policies in
domestic markets only.
Present Strategies in Infrastructure, Sales,

Distribution and Service
The present strategies of the contemporary companies in Indian Telecom
sector are far diverse and exclusive than what they were with respect to
the past era. There has been a significant change in the infrastructure
front, the tariffs placement, the distribution and the Quality of services
provided by them to the customer at various levels.
Changes on Infrastructure front:
Active & Passive Infrastructure sharing:
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The passive infrastructure sharing has been a very important component

in the development of mobile networks and the same critical operations
area was used by the telecommunication industry in India. There has been
a great surge in the demand of the telecommunication services in India
and due to the limited capital resources the active & passive infrastructure
has been outsourced to the independent players in the tower industry.
Lowering of the Tariff and more market penetration:

The present telecom market in India has got a huge number of players
that have created a scenario where the lower tariff and better services
have been the need of the hour for the companies. The lower tariff based
market penetration was initially used by Reliance India Mobile and this
scenario changed the landscape of the Indian telecom industries. Today
the Market consists of a large number of players such as RIM, Idea,
Vodafone, Airtel, Aircel, etc. The companies have been able to increase
their revenue as well as the volume of the customers in the present few
years.
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The Key-Stake Holders and Strategies of the Companies

for them
There are a few key stakeholders that have been identified by the industry
and suitable strategies have been formulated for the maximum benefit of
all the stakeholders involved.
The key stakeholders that have been identified by the telecom sector are:-
The Telecom Owners The Infrastructure

The Telecom Owners The Infrastructure
Partners
partners
The Retailers The Customers.
TheTelecom
The TelecomOwners:
Owners:
The telecom owners have understood the benefits of cost cutting as well
as diversifying their existing product portfolio to increase the productivity.
The various players in the telecom such as Airtel etc, have gone for an
expansion in the foreign markets such as the deals with ZAIN in Africa and
entry in other foreign companies such as SriLanka. The overall revenue of
the telecom market has risen on this account and the below shown:
Important areas as opportunities for operators are:
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• Customer care – Customers should be provided a pleasant

experience & a variety of choices in terms of product packages &
different technologies
• Outsourcing: The network & other I.T. related functions should be
outsourced so that one can focus on its core aspects of business
• Inside building coverage – It is expected that more than 70% of
voice & data calls would be originating indoors. So, good coverage
must be ensured for this even if this leads to sharing of network
resources with their competitors
• Coverage/Penetration in Rural areas – Companies should try to
penetrate & enhance their coverage & communication in rural areas
more effectively
• Fuel bill reduction – Operators should try to reduce their fuel &
power consumption levels by the use of various new technologies.
This also leads to approvals better environment conditions &
approvals.
The Infrastructure Partners:
With the costs falling the Telecom companies have started looking after
the ways of cutting the costs. Majority of the costs which the Telecom
Companies incurred were the site based costs and the tower infrastructure
required for the distribution of signals. The companies then came up with
the concept of tower sharing that would increase their Average Revenue
Per User (ARPU).
The main factors which drive the use of tower sharing are mainly:
1) Need for more towers to handle limited spectrum availability
2) More emphasis on better quality of service with increasing competition,

and hence need for additional infrastructure.
3) Low operating cost and capital expenditure leading to better profit

margins.
4) Shorter rollout time for new entrants
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5) It can be used in the start-up phase to make inroads in the rural

areas.
With the upcoming plans for implementing Mobile Number Portability (MNP)
and launch of WIMAX services by various mobile operators, it will certainly
fuel the demand for sharing of passive infrastructure.
Distribution and Sales
Distribution and Sales
The major market players in the telecom industry as of April 09, in terms of
market share are Bharti Airtel, Reliance Communication, Vodafone, BSNL,
Idea Cellular, Tata teleservices, Tata communication and GTL.
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The Retailers:
With the diverse portfolio of the products the Telecom companies have
provided the retailers also a great choice of the products they can keep at
lower prices. This has increased the distribution model of the telecom
companies and the total market penetration of the companies has also
increased.
There have been diverse products offering that the companies have been
using to woo the customers that have also been adding to the base that
the retailers can keep and make money out of it.
The Customers:
The customer has become the king in the current war of tariffs in the
present telecom Industry. The companies have slashed rates to a great
extent that has enabled the companies to expand their market cap as well
as the customer volume.
The Telecom Companies have specifically started laying emphasis on the

rural market, along with that the growth in the domestic telecom industry
has been aggregated in the big Metros and Class A cities in the past ten
years, with the coverage levels reaching to 90% and 35%, but the
coverage in the Class B and Class C cities is still pretty low. Thus the urban
as well as the rural penetration has been the buzzword among the telecom
providers. Keeping this point of view the Bharti Airtel, RIM and BSNL has
ventured in the Class B and C cities.
We have the Airtel friends’ scheme. Reliance has various schemes where
one has night calling free and BSNL provides connectivity in the far flung
areas of villages also. The level of penetration by the Telecom Companies
in Indian cities can be gauged by the following graphs.
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To sum up customers always look for high quality, value for money & a
variety of choices at their disposal at minimum cost. Important areas to
focus are:
• Quality: High quality of services for voice, data should be offered to
customer for better communication at all times.
• Quantity: Variety of different services like data, voice, video &
mobility should be made available at all times from the same device
& at high data speeds.
• Cost: Customers want the telecom services at low & affordable rates
& they expect the trend of declining rates even in the near future.
Future Strategies of the Telecom

Industry
Emerging Technologies in Telecommunication
Technology advancements are driven by the applications which customers

find appealing and solve the operational issues faced by operators. Some
of the key ones which can be described as emerging technologies &
growth avenues for the Telecom sector are shown in the below figure.
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• 3G (Third Generation Mobile Services)
Customers want to use the triple play services (Voice, Data and
Video) all the time and everywhere – indoor or outdoor. Multi-billion
dollars are being invested in development and enhancement of
mobile technologies like 3G & WiMAX.
It offers voice capacity that is four to five times higher than that of
2G services. Therefore, it is an ideal platform for low-cost cellular
services. It can fulfill the need of fast developing mobile penetration
in rural areas. It can meet the demand for high- Speed data and
content rich services in the urban landscape. It can be a way forward
to achieve the Government’s broadband objectives. In addition, it
will be a good solution for education, telemedicine, etc.
On May 19, 2010 in India auction for 3G spectrum ended after

rounds of auction. Also allocation of broadband wireless access
(BWA) was done. The value of pan-India bid for 3G spectrum stood
at US$ 3.6 billion. The government is set to gather revenue worth
US$ 14.6 billion. Seven different operators were sold all possible
slots across 22 circles.
The details of top bidders were:-
Reliance Communication  13 circles (US$ 1.9 billion)

Bharti Airtel  12 circles
Idea  11 circles
Vodafone  9 circles
Tata  9 circles
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MTNL & BSNL paid US$ 1.42 billion and US$ 2.2 billion respectively.
Government of India has already sent Letter of Intent to 3G winners
and the spectrum shall be allotted by September 1, 2010.
• WiMAX (Worldwide Interoperability for Microwave Access)
WiMAX has been one of the most significant developments in

wireless communication in the recent past. This mode of
communication provides network access in inaccessible areas at
high speed of data. So, it can lead to an increased use of various
telecom, value added & internet services. It is also an
economically feasible option as the resource requirement is
comparatively less. Installing WiMAX will facilitate the broadband
accessibility within a radius of 25 kilometres. Voice over Internet
Protocol (VoIP) will make it possible to telecast entertainment
programs in remote areas. Improved communication could
integrate remote villages with the world economy. It can be used
for national literacy programs for rural students by the use of
videoconferencing.
• IP Multimedia Subsystem, IMS

IMS is access independent and supports multiple access types
including GSM, WCDMA, Wireline broadband and other packet data
applications. IMS will also make Internet technologies like web
browsing, e-mail, instant messaging and video conferencing
available to everyone from any location.
• Mobile TV
Mobile TV is the latest technology where the TV services are
streamed on to the mobile or hand-held devices.
• 4G Networks
Low cost, high speed data coupled with Service and application
ubiquity, and a high degree of personalization and synchronization
between various user appliances are the main drivers.
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• Infrastructure Sharing
To increase their productivity as well as reduce the operational

costs, many service providers are opting for infrastructure
sharing.Infrastructure sharing promises several advantages:
• Significant reductions in equipment set up costs.
• Increased environmental conditions & operations.
• Lower costs of operations for individual service providers.
• Service quality is improved.
• Increased affordability for customers.
• Ease & faster roll out of various services in rural and remote areas.
• Virtual Private Network (VPN)
Virtual Private Network is a private data network which provides

connectivity within closed user groups via public telecommunication
infrastructure. It is similar to leasing/owning lines but still getting
exclusive or private access. Sharing of the public infrastructure
makes it a less expensive option and it is known as Closed User
Group (CUG). Due to the emergence of the telecom market, various
CUG tariff plans have been introduced in the voice telephony
segment, which primarily target groups comprising of a large
family, friends or colleagues.
• Rural Telephony
The rural market holds great potential for telecom companies.
Rural telephony will require major investments in the near future
as the Government is planning to increase rural teledensity from
the current level of 4-6 per cent. This segment will boost the
demand for telecom services, equipment, internet services and
other value added services, thereby offering a great market
opportunity for telecom players. The government has a target to
achieve 40% rural teledensity by 2012 & reduce urban-rural digital
divide from present 25:1 to 5:1 by 2010.
• Mobile Number Portability
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Mobile Number Portability (MNP) enables a subscriber to retain his

telephone number when changing from one mobile network operator
to another. However there are few inhibitor in this regard, they are:-
 Huge Costs
 Customer Retention/ Increased Competition
 Infrastructure Upgrade
 Cost Recovery & Bill Reconciliation/ Query Processing
Source: http://www.scribd.com/doc/19526600/telecom
Future of Telecommunication Sector
India is the fastest growing free market democracy in the world. It has a
mature and dynamic private sector, which accounts for 75 per cent of
India’s GDP, and a market with enormous potential due to its large size
and diversity. The most important reasons for the growth of private
industries in India are stable economic outlook, large market potential
which varies according to size, income, consumption, etc. & Government
regulations which facilitate industrial growth.
The Union Government has taken various steps in line with strategy to
spur Telecom Sector Growth. These are as follows:
• Opening up of its telecom sector to foreign investors up to 100

percent holding in manufacturing of telecom equipment, internet
services, and infrastructure providers (e-mail and voice mail), 74
percent in radio-paging services, internet (international gateways)
and 49 percent in national long distance, basic telephone, cellular
mobile, and other value added service.
• Decision of not capping on the number of access providers in any
service area. 122 new UAS licenses were granted in 2008 to 17
companies in 22 service areas for benefit of consumers by increased
competition.
• Permission of dual technology spectrum.
• Decision to introduce Mobile Number Portability (MNP) that will allow
subscribers to retain their existing numbers while switching over
from one service provider to another.
• Conclusion of Auction of 3G/BWA Spectrum in 22 circles for Telecom
Service Providers. Rollouts expected by the end of 2010.
Source: http://pib.nic.in/release/release.asp?relid=64813
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Combining these efforts made by the government & the economic stability
prevalent in the country, there have been estimates of prosperous growth
for Indian Telecom sector till 2013. The future estimates are as follows:
• The revenues for the Telecom sector would cross the $30 billion
mark by 2013 with a compound annual growth rate (CAGR) of 12.5
percent from the year 2009-2013.
• The subscriber base for Telecom would cross the 770 million mark
by the year 2013 & is expected to grow at a CAGR of 12.5 percent.
• Mobile market penetration is expected to increase to 63.5 percent in
2013 from 38.7 percent in 2009.
• The rate at which a subscriber switches/changes their operator
(churn rate) – would increase from the current 56% to 59% by 2013.
• The number of prepaid connections which comprise for 93 percent of
the total subscriber base in 2008 will continue to further increase to
96 percent by 2013, exceeding the 740 million mark.
• The revenues from data services like internet will contribute

significantly to the telecom services, with a CAGR of 16.8% from
2009 to 2013.
• The increased usage of various value-added services would also help
in increasing the revenues, which are relevant to both rural and
urban markets.
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References
http://www.trai.gov.in/Reports_list_year.asp
http://www.trai.gov.in/Reports_list_year.asp
www.icai.org/resource_file/9846927-941.pdf
http://www.ibef.org
http://www.cclab.com/billhist.htm
http://www.telecomspace.com/
http://www.telephonetribute.com/timeline.html
http://pib.nic.in/release/release.asp?relid=64813
http://www.gartner.com/technology/home.jsp
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Telecom Industry

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K J SOMAIYA INSTITUTE OF MANAGENENT STUDIES AND RESEARCH

Rik Chakraborty (011)

Aman Jain (021)

Abhilash Mohandas (031)

Vishal Shah (051)

1876 - Alexander Graham Bell invented the telephone.

South East Asia:

In 2005 Mobile formed 60.1% of all telephone connections in Asia while by

The Telecom sector continued to make progress in all Latin American

Mobile accounted for 81.9% of all telephone connections by the end of

The telecom network in the U.A.E. is one of the most technologically

penetration is one of the lowest in the region. According to Frost &

MAJOR GLOBAL TELECOM OPERATORS

RANK COMPANY COUNTRY SUBSCRIB REVENUE MARKET EMPLOYE

Vodafone Group is a mobile telecommunications company headquartered

Spain's Telefonica, a publicly listed company, and its subsidiaries operate

MERGERS AND AQUISITIONS

2) Telecom Italia buying 49% stake of Unitech Telecom for $2Billion.

Indian Telecom Sector

The journey of Indian Telecommunication started with the establishment

1947: Formation of Posts Telephone & Telegraphs under Ministry of

The number of telephone subscribers in India increased from 562.16

Trends in Telephone subscribers and Teledensity in India

Composition of Telephone Subscribers

As on Mar 2010 there are 15 players in Wireless segment, viz.

The details of Top 5 players are:-

Mergers & Acquisition

If an entity merges or acquires another entity operating in the same

Company % Stake hold Buyer Seller Year

Aircel, Chennai 79.24% Sterling Group, RPG Group 2003

Value Added Services (VAS)

The reasons for emergence of VAS are:-

 Decrease in ARPU for telecom operators

The VAS Value Chain can be summed up as below:

 Local Mandi Rates

India’s Competitive Advantage

 Fastest growing free market democracy

 Huge market potential – one of the largest consumer markets

Past Strategies & Shortcomings

Initial critical problems of the Indian Telecom

2) Service providers incur huge initial investments in the initial stages

3) Limited spectrum availability and inter connection charges issue

Strategies of Indian Telecom Players in the past

1) High incoming and outgoing rates for cellular

2) More of a wired technology then the wireless ones

3) Working under a tightly regulated domestic market

Present Strategies in Infrastructure, Sales,

Changes on Infrastructure front:

Active & Passive Infrastructure sharing:

The passive infrastructure sharing has been a very important component

Lowering of the Tariff and more market penetration:

The Key-Stake Holders and Strategies of the Companies

The Telecom Owners The Infrastructure

Important areas as opportunities for operators are:

• Customer care – Customers should be provided a pleasant

The Infrastructure Partners:

1) Need for more towers to handle limited spectrum availability

2) More emphasis on better quality of service with increasing competition,

3) Low operating cost and capital expenditure leading to better profit

4) Shorter rollout time for new entrants

5) It can be used in the start-up phase to make inroads in the rural

Distribution and Sales

Distribution and Sales