Telecommunications Reforms in India

Mushtaq Khan 03
Himanshu Ahire 13
Presentation Plan

1 Introduction

2 History

3 Major Players in Telecom Sector

4 Growth of the Industry (Analysis)

5 Major reforms

6 SWOT analysis

7 Problems and prospects

Presentation Plan

1 Introduction

2 History

3 Major Players in Telecom Sector

4 Growth of the Industry (Analysis)

5 Major reforms

6 SWOT analysis

7 Problems and prospects

Introduction to Indian Telecom Industry – Recent facts & figures

 The total wireless subscriber base {GSM, CDMA and WLL (F)}
stood at 391.76 million at the end of financial year.
 The number of wireline subscribers on 31st March 2009 was
37.96 million.
 On an average, more than 10 million subscribers were added
every month during the financial year.
 The overall teledensity at the end of March 2009 was
36.98% as compared to 26.22% ending March 2008.
 The rural teledensity at the end of March 2009 was 15.20%
as compared to 9.20% ending March 2008
 There were 13.54 million internet subscribers on 31st March
2009 as compared to 11.09 million on 31st March 2008.
 The number of broad-band connections on 31st March 2009
was 6.22 million compared to 3.87 million for the same
period during previous year.
*Source : http://www.trai.gov.in/ Annual Report
Presentation Plan

1 Introduction

2 History

3 Major Players in Telecom Sector

4 Growth of the Industry (Analysis)

5 Major reforms

6 SWOT analysis

7 Problems and prospects

History of Indian Telecom Industry

• 1851 First operational land lines were laid by the

government near Calcutta (seat of British power)
• 1881 Telephone service introduced in India
• 1883 Merger with the postal system
• 1923 Formation of Indian Radio Telegraph Company (IRT)
• 1932 Merger of ETC and IRT into the Indian Radio and
Cable Communication Company (IRCC)
• 1947 Nationalization of all foreign telecommunication
companies to form the Posts, Telephone and Telegraph
(PTT), a monopoly run by the government's Ministry of
Communications
History of Indian Telecom Industry

• 1985 Department of Telecommunications (DOT)

established, an exclusive provider of domestic and
long-distance service that would be its own regulator
(separate from the postal system)
• 1986 Conversion of DOT into two wholly government-
owned companies: the Videsh Sanchar Nigam Limited
(VSNL) for international telecommunications and
Mahanagar Telephone Nigam Limited (MTNL) for
service in metropolitan areas.
• 1997 Telecom Regulatory Authority of India created.
• 1999 Cellular Services are launched in India. New
National Telecom Policy is adopted.
• 2000 DoT becomes a corporation, BSNL
Presentation Plan

1 Introduction

2 History

3 Major Players in Telecom Sector

4 Growth of the Industry (Analysis)

5 Major reforms

6 SWOT analysis

7 Problems and prospects

Major Players in different segments of Indian telecom industry

Basic Services Operators

MOBILE SERVICES GSM Services Operators
BSNL
Airtel
MTNL

Vodafone
Reliance

Idea
TTSL

Reliance

BSNL
Internet Services Operators

BSNL
CDMA Services Operators

MTNL Reliance

Reliance
TTSL
TTSL
BSNL

Airtel

MTNL – Mahanagar Telecom Nigam Ltd. TTSL – Tata Teleservices Ltd.

BSNL – Bharat Sanchar Nigam Ltd.
Subscribers (Rural & Urban) & Market share (GSM & CDMA) - 2009
Subscribers (Rural & Urban) & Market share (GSM & CDMA)
Presentation Plan

1 Introduction

2 History

3 Major Players in Telecom Sector

4 Growth of the Industry (Analysis)

5 Major reforms

6 SWOT analysis

7 Problems and prospects

Growth of Subscriber base from 1999 to 2009
Growth of Indian Telecom Sector

Wirelline Subscriber in Million

Growth of Indian Telecom Sector

Wireless Subscriber in Million

Growth of Indian Telecom Sector

Internet Subscriber in Million

Growth of Indian Telecom Sector

Broadband Subscriber in Million

Growth of Indian Telecom Sector

Growth of Teledensity
Presentation Plan

1 Introduction

2 History

3 Major Players in Telecom Sector

4 Growth of the Industry (Analysis)

5 Major reforms

6 SWOT analysis

7 Problems and prospects

Regulatory Framework provides level playing field for all operators

The Department of telecommunications (Government of India) is the main

governing body for the industry.

Telephone Regulatory Authority of India (TRAI) assists the Government of

India (GoI) to take timely decisions and introduce new technologies in the
country.

Indian Telecom Industry Framework

Indian Government Bodies Independent Bodies

They formulate various policies and pass laws to They undertake various research activities and monitor
regulate the telecom industry in India. the quality of service provided in the Indian telecom
industry. They also provide various recommendations to
improve the status of telecom operations in India.

Wireless Planning and Handles spectrum allocation and Telecom Regulatory

Coordination (WPC) management Authority of India (TRAI) Independent regulatory body

Department of DoT – Licensee and frequency

Telecom Disputes Telecom disputes settlement body
Telecommunications management for telecom
Settlement and Appellate
Tribunal (TDSAT)
Exclusive policy making body of
Telecom Commission DoT

Group on Telecom and IT Handles ad hoc issues of the

(GoT-IT) telecom industry
Ministry of Communication & Information Technology

Licensor
Dept of Telecom Unified License Operators

Fixed Line Operators

Regulator
Telecom Regulatory National Long Distance
Authority of India Operators CDMA
International Long Distance
1800M
Judiciary Operators
hz
Telecom Dispute
Wireless Operators
Settlement
Appellate Tribunal GSM
FDI in telecom recently revised to 74%. 900
&
Government gets 15% of revenues from Unified Licensing
1800
 Various important regulations and laws have been passed in the Indian
telecom industry post-liberalisation era

INDIA

3G Spectrum
Was Auctioned.
In April Airtel
ILD services was launched 3G
BSNL was Number portability
Independent opened to Intra-circle merger Service and
established was proposed
Private players regulator, TRAI, competition guidelines were MTNL in
by DoT Calling Party Pays
were allowed in was established (CPP) was
established Attempted to (pending) December 11
Value Added Go-ahead to implemented boost Rural
Services the CDMA telephony
technology
1994 1999 2002 2005 2007
2003 2004

1992 2000 Internet Unified Access 2006 2008

1997
telephony Licensing
initiated (UASL) regime Broadband
was introduced policy 2004
National Decision on 3G
NTP-99 led to Reduction of was formulated
Telecom Policy FDI limit was services (awaited)
migration from high- licence fees Reference —targeting 20
(NTP) was increased from
cost fixed license Interconnect million
formulated 49 to 74 percent
fee to low-cost order was subscribers by
revenue sharing issued 2010
regime

Department of Telecommunication (DoT) is the main body formulating laws

and various regulations for the Indian telecom industry.

ILD – International Long Distance

Presentation Plan

1 Introduction

2 History

3 Major Players in Telecom Sector

4 Growth of the Industry (Analysis)

5 Major reforms

6 SWOT analysis

7 Problems and prospects

 Market SWOT Analysis
Strengths Weaknesses
• Lowest call tariffs in the world
• Huge wireless subscriber potential • Market strongly regulated by Govrenment body –
• Fastest growing mobile market in the world Governing both ISP and Telecom sectors
• Consumers are ready to pay for cutting edge • Too many authorities ruling the sector
services • Huge potential for low end and cheap handsets
• • Wide scale Consumer churn in Telecom and ISP
Government proposes to hike FDI limit in
Telecom to 74% • Wide spread VAS deployment is restricted due to
language and literacy problems
• Unified license regime • Primarily a voice based market

Opportunities Threats
• To offer value added services on GSM, CDMA and IP • Low cost service providers – no possibility of
• Language independent services breaking even in short term
• Mobile Marketing concepts • Weak IPR protection
• Content influenced by local culture and Global • Software and digital content Piracy
success stories • Political instability
• M-Commerce • Regulatory interference
• Unified messaging platforms
• Foreign investment in form of equity or technology
Presentation Plan

1 Introduction

2 History

3 Major Players in Telecom Sector

4 Growth of the Industry (Analysis)

5 Major reforms

6 SWOT analysis

7 Problems and prospects

 Prospects of Indian Telecom sector

Fifth largest telecom network in the world; second largest among the
emerging economies after China
On an average, about 6–7 million new users added per month,
making India the world’s fastest growing wireless services market
Liberal Foreign Investment Regime–FDI limit increased from 49
percent to 74 percent; the rural telecom equipment market is also
open to large investments
Among the countries offering the highest rates of return on investment
The large untapped potential in India’s rural markets–1.9 percent
teledensity in rural markets as compared to the national level of 18
percent
The government promoting telecom manufacturing by providing tax
sops and establishing telecom specific Special Economic Zones
FDI and other M&A activities increasing in number

Major trends in the telecom sector is increasing M&A activity, de-regulation of telecom policies and growing
interest of international investors.

Recent Deals in Telecom Sector

Vodafone purchased stake in Hutch

from Hong Kong's Hutchison
Telecom International for USD
11.08 billion.

Reliance Communications Limited has sold a five percent

equity share capital of its subsidiary Reliance Telecom
Infrastructure Limited to international investors across the
US, Europe and Asia. The deal was worth USD 337.5
million.

Telekom Malaysia acquired a 49

percent stake in Spice
Communications for USD 179
Fight for the Sweet pie
million.

Maxis Communications acquired a

74 percent stake in Aircel for USD
1.08 billion.

Ericsson to design, plan, deploy and

manage Bharti Airtel network and
facilitate their expansion in the rural
areas, under a USD 2 billion
contract.
FDI and other M&A activities increasing in number

Major trends in the telecom sector is increasing M&A activity, de-regulation of telecom policies and growing
interest of international investors.

Recent Deals in Telecom Sector The Indian telecom industry has a 74 percent FDI limit in the
telecom services segment.

The GoI has permitted 100 percent FDI in manufacturing of

Vodafone purchased stake in Hutch
from Hong Kong's Hutchison telecom equipment in India.
Telecom International for USD
11.08 billion. FDI in Telecom Sector

Reliance Communications Limited has sold a five percent 680

700
equity share capital of its subsidiary Reliance Telecom
Infrastructure Limited to international investors across the 521

FDI (USD million)

US, Europe and Asia. The deal was worth USD 337.5 500
million.
300
116 129
Telekom Malaysia acquired a 49 100
percent stake in Spice 2003–04 2004–05 2005–06 2006–07
Communications for USD 179
million.
The Indian telecom industry has always attracted foreign
investors. In fact, the cumulative FDI inflow, during the August
Maxis Communications acquired a
74 percent stake in Aircel for USD 1991 to March 2007 period, in the telecommunication sector
1.08 billion. amounted to USD 3,892 million. It is the third largest sector to
attract FDI in India in the post-liberalisation era.
FDI calculation takes into account radio paging, cellular mobile
Ericsson to design, plan, deploy and and basic telephone services in the telecommunication sector.
manage Bharti Airtel network and
facilitate their expansion in the rural
areas, under a USD 2 billion
contract.
 Problems of Indian Telecom sector

• Lowest call tariffs in the world

• Market strongly regulated by Govrenment body – Governing both ISP and Telecom
sectors
• Low cost service providers – no possibility of breaking even in short term
• Political instability
• Wide scale Consumer churn in Telecom and ISP
• Wide spread VAS deployment is restricted due to language and literacy problems
• Primarily a voice based market
“Nigahen nigahon se milake to dekho. Naye logo se rishta
bana kar to dekho
Thank You for your patience
Happy Talking !
Khamoshi se kab hoti hai khwahishein poori dil ki baat
bata kar to dekho
&
Till Then…
Jo hai dil mei use kar do bayaan khud ko ek baar jata kar
to dekho

Dil ki baat bata kar to dekho”