TELECOM INDUSTRY

Question and Answer

Samples and Techniques

TIMELIN
E

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EVOLUTION OF TELECOM INDUSTRY

PRESENT SCENARIO
India is 4th largest market in Asia after China, Japan and South

Korea.
India is the 5 th largest in the world
2 nd largest among emerging economies of Asia.
Contribution of telecom sector in terms of revenue is 2.1 % of

GDP as compared to 2.8% in developed economies.

Lowest tariff charges in the world.

INDIAN TELECOM INDUSTRY FACTS

One of the fastest growing cellular markets in the world in terms of

number of subscriber additions 19.35 million in 3 months (April to

June 2007)
Expected to reach total subscriber base of about 500 million by
2010 (i.e., more than one phone for every household)
Annual growth rate of the telecom subscribers 47 percent (2006
07)
More GSM subscribers than fixed-line subscribers
Total telecom subscribers 225.21 million (June 2007)
Tele density 19.86 percent (June 2007)
Number of new mobile subscribers added every month 7.34 million
(June 2007)
Handset market USD 4,750 million (200607)

MAJOR
PLAYERS

MARKET SHARE OF WIRELESS

SERVICE PROVIDERS

MARKET SHARE OF GSM PROVIDERS

MARKET SHARE OF CDMA PROVIDERS

MARKET SHARE OF WIRELINE

SUBSCRIBERS

Competition Extent

COMPETITIVE LANDSCAPE

EMERGING MARKETS
Africa, Asia, Eastern Europe, Middle East and Latin America.

Wireless technologies and services enabling communication explosion over last decade

Nature of markets and competitive dynamics is undergoing an important shift.

COMPETITION
Competition in the telecom space will now be focused on quality and not merely the

number of subscribers.
It has changed from reliability and scale of networks to choice and flexibility of

services
Reliance Communications move to offer Apples latest iPhone 5c and 5s models

bundled with unlimited voice calls, SMS and 3G mobile internet for a fixed monthly
fee over two years is significant for at least three reasons : -

Proves competitions still alive in India

Tie-up with one of the best smartphone company

The RCom-Apple deal breaks new ground--allows purchase of a high-end smartphone in

instalments with free voice, SMS and uncapped 3G data usage plans.

 Bezeq was the Israeli monopoly

that controlled all international

calls coming out of Israel.
In 1997, 15 years ago, the

monopoly was broken,

competition was allowed, and
telephone rates dropped through
the floor! International calls
became cheap.

COST
STRUCTURE

COST STRUCTURE OF INDIAN

TELECOM INDUSTRY
The telecom sector is characterised by very large investment

costs
High fixed cost Industry suffers from high fixed cost which

prove an entry barrier for new entrants

High Sunk Costs These Include - Infrastructure tenancy costs,

Customer Switching Costs, Falling ARPU etc.

Wage shares are at about 1/3 of the total operating costs

MAJOR COSTS INVOLVED

Infrastructure costs
Spectrum costs
Government Licences
Joint Ventures, mergers and acquisitions
Cost for sharing of infrastructure resources

Operating costs
Sunk Costs

INFRASTRUCTURE COSTS
Investments in telecom networks can be divided into the following
functional elements:
Terminal equipment
Access Network
Switching

Transmission/Long line
Other (buildings etc.)

ANNUAL SPECTRUM COSTS

The license fee and the spectrum charges given by the
Telecom Service Providers during the last three years is
given in the following Table:

COST BREAKUP

COST BREAKUP

COST BREAKUP

GROSS REVENUES OF OPERATORS

PAT MARGINS OF OPERATORS

Key Success
Factors

 The

Telecommunications industry today is a key enabler of

productivity across economies and societies.

Not only a significant contributor towards the economic activities of

countries, but also towards the growth of other industries.

In recent times, developing nations have witnessed significant

transformation within this sector due to the impact it has had on

their economies.
The booming and emerging economies of China and India have been

impacted the most by the rapid growth of the Telecom industry in

the past decade.

 It has a significant social, cultural and economic impact on the

modern society. In 2008, estimates placed the industry's revenue at

$3.85 trillion or just under 3 percent of the gross world product.
India has become the most competitive and one of the fastest

growing telecom markets with an expected growth rate of over 26%

and generated employment opportunities for about 10 million people
(PTI, 2007).
The number of subscribers are growing at a rapid pace, which is

adding to the growth and importance of the industry. This makes the
telecom one of the most lucrative sectors today.

HRM STRATEGY

STRATEGIC ROLE OF HRM

o Employee Service Assurance

o Talent acquisition
o Employee engagement & development
o Attrition Management
o Policy and Programs

 Talent acquisition:
As per the New Telecom Policy, about 2.8 million jobs will be available by 2015
Employee engagement & development:
Employee Engagement Activities are mainly conducted for the lower ranked

sales force, people who are out on the field.

Common activities are:
Induction programme for new employees.
Employee suggestion systems / quick responses.
Best employee awards.
Team building activities.
Leadership/career development activities

 Attrition Management
Attrition rate is high.
The growth of the industry prompted the government to allow

more players on the field.

This led to large scale migration of intellectual capital between

organizations.
Hence focus is on methodology and techniques to increase

employee engagement and reduce attrition.

 Policies & programs

Telecom specific training for:
Processes management
Operations & Maintenance
Installations
Budgeting
Planning

Sales-marketing
Distribution

Porter's Five Forces

SWOT ANALYSIS

SWOT ANALYSIS
Strengths

Largest
telecom
infrastructure
in the world
(US$108.98
Billion)

Global
impressive
brand image
Robust research
and
development
department
(Annual patent
fees revenue
from various
organizations at
US$2.9 Billion)

S
Highperforming
cable
equipment.
Global
Operational
costs down by
2.9%

Pioneer in GPS
technology

SWOT ANALYSIS
Weaknesses

Lowest
Average
Revenue Per
User in India's
telecom posses
a significant
problem on
duration of
Return on
Investments.

Most
competitive
market
E.g.-10 to 12
companies offer
mobile services
in most parts of
India, globally,
the average is 4.

W
Will have to
invest
heavily in
infrastructure
as the
interconnecti
vity charges
are going to
be high

Difficult to
enter
because of
requirement
of huge
financial
resources.

Poor
Telecommun
ication
Infrastructure
due to which
there is large
number of
call drops.

Late adopters of
New Technology.

SWOT ANALYSIS
Opportunities

Acquisition
or merger
can lower
cost of entry
in Indian
scenario.

Wireless
market in
metros is
saturated but
rural areas is
majorly
untapped..

O
TRAI and
DoT are
efficient
telecom
regulators as
compared
with agencies
in other
countries .

New
technologies
like LTE,
Wi-max

Discounted
value added
service could
be beneficial
factor

The relative
young
generation of
the populous
also adds to
the lucrative
market of the
smart
phones.

SWOT ANALYSIS
Threats

Cut throat
competition in
India is the
biggest threat.

T
Important
decisions
impacting
economic growth
and welfare are
difficult to pass
due to the vested
interests of
various political
parties and
groups

Developing own
telecom
infrastructure
will be a
challenge as to
get the laws
passed will take
considerable
time

VALUE CHAIN ANALYSIS

VALUE CHAIN ANALYSIS