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    Low-cost, High-Quality networks & Innovative Marketing

    Telecom Industry in India is the fastest growing markets in the World and become the second

    largest mobile market in the world just after China. India has added around 13 million new

    mobile subscribers to the network each month for the year 2008. 3G has been launched.

    Upcoming services such as 4G and WiMax (Worldwide Interoperability for Microwave Access)

    will help for further growth rate. The service providers are offering services at cheap call rates,

    low-cost handsets and network expansion is fuelling the boom for the industry.

    The sector ranks second in the world, with over 509.03 million telephone subscriptions by Sep

    2008 end. The fast track growth of the Indian telecom industry has made it a key contributor to

    Indias progress. India adopted a phased approach for reforming the telecom sector right from

    the beginning. Privatization was gradually introduced, first in value-added services, followed by

    cellular and basic services. An independent regulatory body, Telecom Regulatory Authority of

    India (TRAI), was established to deal with competition in a balanced manner.

    This gradual and thoughtful reform process in India has favored industry growth. Today, there

    are more than 509 million telecom subscribers in India. Every month, 10-14 million new

    subscribers are added. Upcoming services such as 3G and WiMax will help to further augment

    the growth rate. Furthermore, the Indian economy is slated to sustain its 7-9 per cent growth rate

    in the near future. This is supported by the political stability that the country is experiencing

    currently. Indias demographic outlook makes it one of the largest markets in the world. A

    conducive business environment is also created by a favorable regulatory regime. There exists

    enormous business potential for telecom companies on account of the countrys low tele-density,

    which is close to 19 per cent presently. Indian Telecom sector, like any other sector in the

    country, has gone through many phases of growth and diversification. Starting from telegraphic

    and telephonic systems in the 19th century, the field of telephonic communication has now

    expanded to advanced technologies like GSM, CDMA, and WLL to the much awaited great 3G

    (Third Generation) Technology in mobile phones.


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    There exists enormous business potential for telecom companies on account of the countrys low

    teledensity, which stand at 40.31 for September 2009. Every day there is an addition in Value

    added Services (VAS), technology advancement and reduction in traffic charges. Increase in

    private and public players in the sector has enhanced the telecommunication technology to give

    the maximum benefits to their customers.


    1851First operational land lines were laid by the government near Calcutta(seat of British power)

    1881Telephone service introduced in India

    1883Merger with the postal system

    1923Formation of Indian Radio Telegraph Company (IRT)


    Merger of ETC and IRT into the Indian Radio and Cable Communication Company(IRCC)


    Nationalization of all foreign telecommunication companies to form the Posts,

    Telephone and Telegraph (PTT), a monopoly run by the government's Ministry ofCommunications


    Department of Telecommunications (DOT) established, an exclusive provider ofdomestic and long-distance service that would be its own regulator(separate from the postal system)


    Conversion of DOT into two wholly government-owned companies: the VideshSanchar Nigam Limited (VSNL) for international telecommunications and

    Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas

    1997 Telecom Regulatory Authority of India created.

    1999Cellular Services are launched in India. New National Telecom Policy is adopted.

    2000 DoT becomes a corporation, BSNL


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    India's growth story in the telecom space shows no signs of slowdown. The country added

    113.26 million new customers in 2008, the largest globally. To put this growth into perspective,

    the countrys cellular base witnessed around 48.50 per cent growth in 2008, with an average 9.5

    million customers added every month. The country had 471.7 million mobile phone users as of

    September 2009 compared to 346.89 million in the corresponding period a year ago and the total

    number of telephone connections (wireless and wireline) is 509.03 million as of September end,

    taking the telecom penetration to over 36 per cent. It implies that one out of every three Indian

    has a telephone connection.

    The Indian telecom industry has been growing rapidly at a CAGR of 40.63 per cent from 2003 to

    2008. Telecom sector contributed 3.4 per cent to Indias gross domestic product in for the year

    2008 and is expected to contribute 5.4 per cent by 2010. There is still a big room for further

    growth. The growth will primarily driven by the rise in communications demand from semi

    urban and rural India. The teledensity in rural areas being a little more than 10 per cent against

    the national average of 33.23 per cent, there is huge untapped potential for mobile phone

    penetration in rural India.

    The total Broadband subscriber base has reached 7.21 million by the end of September 2009 as

    compared to 6.98 million by the end of August 2009. Even there is a huge potential in broadband


    The growth in 2008 was led by Bharti Airtel, the countrys largest communications provider.

    Bharti had 110.51 million customers as of September end, Vodafone had 82.84 million and

    BSNL of about 53.35 million. In fact, Bharti has more customers than the state-owned BSNLs

    mobile and landline users combined.

    India's telecom services industry revenues is projected to reach $54 billion in 2012, as

    compared with $31 billion in 2008 according to the CII Ernst & Young report titled 'India

    2012: Telecom growth continues.' According to Capitaline Data-base, total revenue for

    Tele-com industry for current year is around 100,000 Crores.


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    As on sep 30, 2010

    Recent updates in Telecom Industry

    Around 15 million mobile subscribers added in the month September

    According to telecom regulator TRAI, 14.98 million mobile subscribers were added in the month

    September, the highest monthly addition, against 14.12 mobile subscribers in the month August.

    3G Auction

    With the announcement of a 3G policy on 1 August 2008, India joined a select list of countries

    to have a policy on the much-hyped 3G revolution. Third generation mobile services which

    would offer voice, video, data and downloading services on mobile phones has at last been

    launched in the earlier days of September 2009. The launch of 3G and WiMax (Worldwide

    Interoperability for Microwave Access) services is expected to drive the data revolution. Mobile

    entertainment and mobile banking are likely to be the biggest drivers for data services.

    3G and WiMax services are expected to gain popularity initially in the top 20 cities in India and

    then gradually penetrate to the rest of the country. By 2012, India could have around 25-30


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    million 3G subscribers and around $4-5 billion 3G revenues. WiMax, on the other hand, could

    attract about 8-10 million subscribers and could account for about $1-1.5 billion by 2012. The

    average revenue per user per month is likely to drop further since most of the growth in

    subscriber additions is coming due to expansion in non-metro regions.

    Mobile number portability gets nod and bid invited for mobile number portability

    Department of Telecommunications (DoT) has invited bids for mobile number portability.

    Mobile Number Portability (MNP) will provide the customer the facility to retain the same

    number while switching over from one operator (service provider) to another within the same

    service area. A recent study pointed out that having to give up their mobile numbers was the

    single most reason that subscribers did not want to change their operator despite poor quality of

    services. This will be an advantage for the customer.

    99 per cent of new mobile connections in India are pre-paid

    Call it the death of post-paid mobile user in the worlds fastest-growing mobile market. Out of

    new mobile user additions in the country, pre-paid connections accounts for around 99 per cent.

    Telecom Industry on robust expansion plans

    The total outstanding investment in the telecom industry at the end of December 2008 quarter

    stood at $3.27 Billion spread over 140 projects. Of these, close to 70 projects entailing an

    investment of $1.68 Billion are under implementation and seven projects encompassing an

    investment of $0.015 Billion are stalled. Most of the existing telecom companies have robust

    expansion plans out of which majority have not witnessed any delay in execution.

    According to Gartner Inc., India's mobile subscriber base is projected to exceed 737 million

    connections by 2012 growing at a CAGR of 21 per cent. The Government has plans to raise

    teledensity to 40-45 per cent by 2010, thereby offering greater growth opportunities for

    service providers.

    Facts & Figures of Telecom Industry

    Total mobile phone subscribers: 509.03 million (Aug 2010)


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    Teledensity: 43.5 % (Aug 2010)

    Average Addition of new mobile subscribers per month: 12.43 Million (Year 2010)

    Fastest growing cellular telephony markets in the world

    Average Revenue per User (ARPU) for GSM: INR 304 per month (September 2010)

    Average Revenue per User (ARPU) for CDMA: INR 194 per month (September 2010)

    More Wireless subscribers than Wireline subscribers

    Minute of Usage (MoU) for GSM: 546 Minute per month (September 2010)

    Minute of Usage (MoU) for CDMA: 425 Minute per month (September 2010)

    Of the wireless operators GSM continues to dominate with a healthy 76% lead. CDMA users

    have crossed 110 million after March 2010.

    The Telecom sector in India has witnessed unparalleled growth by global standards. In a little

    over a decade of wireless telephony, India has moved from a subscriber base of zero to

    becoming the second-largest market in the world after China. Rural telephony, 3G, WiMax and


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    data services will drive sector growth in 2012. The industry will witness sustained growth in

    mobile services and data revenues. Network expansion will continue in order to support the rural

    growth. It is imperative for the government to revisit high levies on the telecom sector and lay

    down a clear roadmap for future spectrum allocation.

    Subscriber base to grow

    Further growth will be primarily driven by a rise in communications demand from semi urban

    and rural India. Over past few years, Circle B and Circle C have witnessed the highest growth

    rate as compare to Metros and Circle A.

    The availability of adequate spectrum could remain a hurdle for wireless growth. The telecom

    sector could witness another round of Mergers & Acquisitions. As new operators roll-out

    networks, there could be 10-12 operators in each circle. However, by end of 2012, industry

    consolidation will result in about five to seven large operators.

    According to Springboard Research, India will become the leading market for WiMAX in

    the Asia pacific region and is expected to have 15.8 million WiMAX subscribers by 2012,accounting for 46.7 per cent of total subscribers in Asia-Pacific and 35.7 per cent of

    revenues from the region. According to Gartner, the value-added services (VAS) market in

    India is expected to grow to about US$ 5.6 billion by 2011.


    Mobile Services


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    India's telecom growth pattern continues with mobile operators adding 509.03 million

    subscribers in the year 2010 to the world's second largest wireless market.


    The GSM subscriber base has reached to 297.26 million in March 2009. Bharti with 110.51

    million subscriber base remains the largest GSM mobile operator followed by Vodafone, BSNL

    and Idea with subscribers base of 82.84 million, 53.35 million, and 51.45 million respectively.


    The CDMA subscriber base has reached 94.50 million in March 2009. Reliance remains the

    largest CDMA mobile operator followed by Tata Teleservices and BSNL with subscriber base of

    55.52 millions, 34.28 million and 4.70 million respectively.

    Wire line

    Wire line services subscriber base stood at 37.96 million for the financial year ended March

    2009 compared to 39.42 million last year. The Wire line has registered a decline of 3.63 per cent.

    The market leader in wire line is BSNL and market follower is MTNL. The fixed (Wire line)

    subscriber base registered a decline of 1.52 million in the year 2009. Reduction in the subscriber

    base of wire line is mainly due to switching to wireless which is more convenient and cheaper.

    Other Telephone Services

    Public Call Offices

    Number of Public Call Offices (PCOs) has reported a positive number over past few years. In

    Public Call Offices, BSNL is market leader with a share of little more than 30 per cent. MTNL

    market share is a little less than 4 per cent and the rest of market is capture by other private


    Village Public Telephones

    Number of Village Public Telephones (VPT) has decreased from 5.63 lakh in quarter ending

    June 2009 to 5.61 lakh in quarter ending March 2010. There are around 6 lakh villages in India.

    More than 85 per cent of the villages have VPTs. 100 per cent of Villages in Haryana and Punjab

    have access to Village Public Telephone.


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    Wire line internet subscriber

    Broadband Growth: Total Broadband subscribers base has reached to 7.22 million by the end of

    September 2009 as compared to 6.98 million last month August 2009 to register a growth of

    3.03 per cent.

    Non Voice Services

    Value added service has registered a robust growth rate. It contributes more than 10 per cent of

    the total revenue.

    According to Gartner, India's mobile subscriber base is projected to exceed 737 mil-lion

    connections by 2012 growing at a compound an-nual growth rate (CAGR) of 21 per cent

    and India is likely to remain the world's second largest wireless market after China in terms

    of mobile connections. The overall cellular services revenue in India is projected to grow at

    a CAGR of 18 per cent from 2008-2012 to exceed US$ 37 billion.


    Government Policy Initiatives


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    The Government has taken many proactive initiatives to facilitate the rapid growth of the Indian

    telecom industry. The Indian telecom industry has a 74 percent FDI limit in the telecom services

    segment. The Government of India (GOI) has permitted 100 percent FDI in manufacturing of

    telecom equipment in India through the automatic route.

    Foreign investors are rushing to India, which is coming out of the economic slowdown very fast, and

    giving a strong signal of recovery. Foreign direct investment (FDI) inflow in August has gone up by

    40.4% to $3.27 billion as against $2.3 billion in the same period last year.

    FDI inflow got a push since July 2009, when it rose 55% to $3.5 billion over $2.25 billion in

    July 2008, according to RBI data. Because of the global financial crisis and economic slowdown,

    FDI fell sharply in the first two months of the current financial year by over 37% to $2.3

    billion in April 2009, from $3.8 billion in the same month last year.

    In May, 2009, the dip was even steeper by 46% to $2.1 billion from $3.9 billion in May 2008.

    However, the inflow picked up after that. In June, it increased by around 7%.

    A senior investment banker said as Indian economy is not very badly affected due to global

    recession, foreign investors have started coming back to invest. Even in the present slowdownscenario, India is providing them a good opportunity for growth, he added.

    The double digit growth in the industrial production would further improve the sentiments.

    HDFC Bank economist Jyotinder Kaur said as the recovery becomes stronger, FDI inflows are

    likely to rise in the coming months. According to RBI data, in 2009-10, the country received an

    FDI of $35.2 billion including the reinvested earnings and inter-company debt transactions that

    qualify for FDI. The net pure FDI, however, was around $27.3 billion, which fell short of

    governments projections of $35 billion.

    For 2010-11, investment bankers felt that the total FDI inflow may cross $35 billion. In the first

    five months (April-August) so far, India's total FDI touched $16.2 billion including the

    reinvested earnings and intercompany debt transactions.


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    However, the pure inflows, without taking into account these two factors, contracted by about

    6% to $13.8 billion, from $14.7 billion in same period of 2008-09. In 2009-10, India may attract

    a pure FDI of $35 billion, bankers added.

    Since 2000, FDI witnessed a huge jump. According to data, while in 2000 India attracted FDI of$4 billion only, in 2008-09, it went up to over $27 billion. Portfolio investment in August also

    increased by 56.2% to $926 million compared to $593 million in the corresponding period of the

    last year. During the first five months of the current financial year, portfolio investment

    increased to $11.23 billion from $4 billion in the same period last year.

    According to an IMRB paper for the Internet and Mobile Association of India, VAS, or the sale of

    ring tones, caller tunes, wallpapers, SMSes (for contests and communica-tion), among other non-voice

    services, generated Rs 7,500 Crores in revenues in 2008


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    What is 3rd Generation Technology (3G)????

    The 3rd generation technology (3G) represents a shift from voice centric services to mul-timedia

    oriented services like video, voice, data and fax services. 3G networks have po-tential transfer

    speeds of up to 3 Mbps (about 15 seconds to download a 3-minute MP3 song). For comparison,

    the fastest 2G phones can achieve up to 144Kbps (about 8 min-utes to download a 3-minute

    song). The high speed of data transfer can accommodate broadband applications like video

    conferencing, receiving streaming video from the internet, sending and receiving faxes, instantly

    downloading e-mail messages with at-tachments and international roaming.

    What will be the impact on Revenue????

    We have seen a decline in Average Revenue per User (ARPU) and the decline is due to

    continuous fall in the tariff charges as competition in the industry increases. There is substantial

    rise in subscriber base from Circle B and Circle C compare to Metros and Circle A. The usage is

    less in Circle B and Circle C as compare to other circle.

    Around 129.79 million GSM subscribers are from Metros or Circle A. It accounts for more that

    50 per cent of the total GMS subscriber base. We expect atleast 5 per cent of the customer to opt

    for 3G within 2 years. This could result for 3G subscriber base of more than 10 million. This

    would leads to sharp rise in ARPU from this Circle. Recently Mahanagar Telephone Nigam

    Limited (MTNL) has become the first telecom operator in the country to launch 3G mobile

    services. Although the service is on the higher side as mobile users will have to pay a one-time

    fee of INR 500 as activation charges and a monthly rental of INR 599, but the company has

    receive good response from the customer. Apart from the rental charges, there will be an

    increase in revenue from usage of the service.

    Although we expect a decrease in the tariff charges, there would be an increase in Aver-age

    Revenue per User. There is a constant rise in subscriber base of wireless where as there has been

    a con-stant decrease in wireline subscriber.


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    Wireless Vs Wireline

    Figures are in millions

    Wireless subscribers saw an impressive growth while the wire line subscribers were stagnant and

    contribute to only 9% of the total telephone subscribers as in march 2010.

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    According to a report by industry body FICCI and telecom consulting firm BDA, "3G

    subscriber base will reach 90 million by 2013 and the revenue from 3G is expected to reach$ 15.8 billion by the same year." Even introduction of 3G would also in-crease the Average

    revenue per users (ARPU).

    Value-added Services (VAS) brings in 9 per cent of telecom industry revenues. As average

    revenues per user (ARPU) fall, the pressure on making more money from VAS will keep

    going up.


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    It uses concepts developed in Industrial Organization economics to derive five forces that

    determine the competitive intensity and therefore attractiveness of a market. Porter referred to

    these forces as the micro- environment, to contrast it with the more general term macro-

    environment. They consist of those forces close to a company that affect its ability to serve its

    customers and make a profit. A change in any of the forces normally requires a company to re-

    assess the marketplace.

    1. Rivalry among Competing Firms


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    Competition in Indian Telecom Industry Major Players

    There are three types of players in telecom services: State owned companies (BSNL and MTNL).

    Private Indian owned companies (Reliance Infocomm, TataTeleservices. Foreign invested

    companies (Vodafone, Bharti Tele-Ventures, Idea Cellular, Spice Communications).


    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 Indias

    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 (except Delhi and Mumbai). BSNL will be expanding the

    network in line with the Tenth Five-Year Plan (1992-97). The aim is to provide a telephone

    density of 13.6 per hundred by March 2008. BSNL, which became the third operator of GSM

    mobile services in most circles, is now planning to overtake Bharti to become the largest GSM

    operator in the country. BSNL is also the largest operator in the Internet market, with a share of 21

    per cent of the entire subscriber base


    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. Its subsidiaries operate telecom

    services across India. Bhartis operations are broadly handled by two companies: the Mobilitygroup, which handles the mobile services in 16 circles out of a total 23 circles across the country;

    and the Infotel group, which handles the NLD, ILD, fixed line, broadband, data, and satellite-

    based services.


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    Together they have so far deployed around 23,000 km of optical fiber cables across the country,

    coupled with approximately 1,500 nodes, and presence in around 200 locations. The group has a

    total customer base of 110.51 million, of which 95.86 million are mobile and 14.65 fixed line

    customers, as of September 30, 2009. In mobile, Bhartis footprint extends across 15 circles.

    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, and introduce new services and to raise revenue for telecom

    development needs of Indias 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 Indias leading and

    one of Asias 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. The Govt. of India currently holds 56.25% stake in the company. In the year

    2003-04, the company's focus would be not only consolidating the gains but also to focus on new

    areas of enterprise such as joint ventures for projects outside India, entering into national long

    distance operation, widening the cellular and CDMA-based WLL customer base, setting up

    internet and allied services on an all India basis. MTNL has over 5 million subscribers and

    329,374 mobile subscribers. While the market for fixed wireline phones is stagnating, MTNL

    faces intense competition from the private playersBharti, Hutchison and Idea Cellular, Reliance

    Infocommin mobile services. MTNL recorded sales of Rs. 60.2 billion ($1.38 billion) in the

    year 2002-03, a decline of 5.8 per cent over the previous years annual turnover of Rs. 63.92



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    Reliance is a $16 billion integrated oil exploration to refinery to power and textiles conglomerate.

    It is also an integrated telecom service provider withlicenses for mobile, fixed, domestic long

    distance and international services. Reliance Infocomm 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.

    Reliance IndiaMobile, the first of Infocomm's initiatives was launched on December 28, 2002.

    This marked the beginning of Reliance's vision of ushering in a digital revolution in India by

    becoming a major catalyst in improving quality of life and changing the face of India. Reliance

    Infocomm plans to extend its efforts beyond the traditional value chain to develop and deploy

    telecom solutions for India's farmers, businesses, hospitals, government and public sector

    organizations. Until recently, Reliance was permitted to provide only limited mobility services

    through its basic services license. However, it has now acquired a unified access license for 18

    circles that permits it to provide the full range of mobile services. It has rolled out its CDMA

    mobile network and enrolled more than 6 million subscribers in one year to become the countrys

    largest mobile operator. It now wants to increase its market share and has recentlylaunched pre-

    paid services. Having captured the voice market, it intends to attack the broadband market.


    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. The company is also expanding its footprint, and has

    paid Rs. 4.17 billion ($90 million) to DoT for 11 new licenses under the IUC (interconnect usagecharges) regime. The new licenses, coupled with the six circles in which it already operates,

    virtually gives the CDMA mobile operator a national footprint that is almost on par with BSNL

    and Reliance Infocomm.. The circles include Bihar, Haryana, Himachal Pradesh, Kerala, Kolkata,

    Orissa, Punjab, Rajasthan, Uttar Pradesh (East) & West and West Bengal.


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    On April 1, 1986, the Videsh Sanchar Nigam Limited (VSNL) - a wholly Government owned

    corporation - was born as successor to OCS. The company operates a network of earth stations,

    switches, submarine cable systems, and value added service nodes to provide a range of basic and

    value added services and has a dedicated work force of about 2000 employees. VSNL's main

    gateway centers are located at Mumbai, New Delhi, Kolkata and Chennai. The international

    telecommunication circuits are derived via Intelsat and Inmarsat satellites and wide band

    submarine cable systems e.g. FLAG, SEA-ME-WE-2 and SEA-ME-WE-3. The company's ADRs

    are listed on the New York Stock Exchange and its shares are listed on major Stock Exchanges in

    India. The Indian Government owns approximately 26 per cent equity, M/s Pantone Finvest

    Limited as investing vehicle of Tata Group owns 45 per cent equity and the overseas holding

    (inclusive of FIIs, ADRs, Foreign Banks) is approximately 13 per cent and the rest is owned by

    Indian institutions and the public. The company provides international and Internet services as

    well as a host of value-added services. Its revenues have declined from Rs. 70.89 billion ($1.62

    billion) in 2001-02 to Rs. 48.12 billion ($1.1 billion) in 2002-03, with voice revenues being the

    mainstay. To reverse the falling revenue trend, VSNL has also started offering domestic long

    distance services and is launching broadband services. For this, the company is investing in Tata

    Teleservices and is likely to acquire Tata Broadband.

    HUTCH (Vodafone) :

    Hutchs presence in India dates back to late 1992, when they worked with local partners to

    establish a company licensed to provide mobile telecommunications services in Mumbai.

    Commercial operations began in November 1995. Between 2000 and March 2004, Hutch acquired

    further operator equity interests or operating licenses. With the completion of the acquisition of

    BPL Mobile Cellular Limited in January 2006, it now provides mobile services in 16 of the 23

    defined license areas across the country. Hutch India has benefited from rapid and profitablegrowth in recent years. It had over 27.8 million customers by the end of June 2008.


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    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.

    IDEA operates in eight telecom circles, or regions, in Western India, and has received additional GSMlicenses to expand its network into three circles in Eastern India -- the first phase of a major expansion

    plan that it intends to fund through an IPO, according to parent company Aditya Birla Group Potential

    2. Entry of New Competitors

    Indian telecom sector offers unprecedented opportunities for foreign companies in various areas,

    such as 3G, virtual private network, international long distance calls, value added services, etc.

    The market is witnessing M&A activities that are leading to consolidations in the industry. This

    trend has assisted companies in expanding their reach in the Indian telecom market to offer better

    services to customers.The Indian telecom industry has always allured foreign investors. In fact, the

    cumulative FDI inflow, from August 1991 to March 2007, in the telecommunication sector

    amounted to US$ 3,892.19 million. This makes telecommunication the third-largest sector to

    attract FDI in India in the post liberalization eraIn India large numbers of players are emerging in

    the market on the national level from its state level existence such as:





    Unitech etc..

    3. Potential Development of Substitute Products

    PRODUCT Telecom sectors offers a wide range of services in India, such as wireline, CDMA

    mobile, GSM mobile, internet, broadband, carrier, MPLS-VPN, VSAT, VoIP, IN, etc. Internet

    telephone It is emerging as a best option in place of because it is cheaper and video as an added



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    Internet service providers Market share (%)BSNL 45.2

    MTNL 19

    SIFY 8.9


    RELIANCE 6.1

    As we can see that use of internet in our country is on growing rate. As there are many tools which

    can be accessed through internet like video conferencing other important tool is talking through

    internet for eg. Google talk, rediff bol, yahoo messenger. Important thing is that internet is cheaper

    medium of communication and one can have many facilities if he/she is connected to the world

    through the internet.

    4. Bargaining Power of Suppliers

    As far as telecom industry is concerned, it is service based industry which is intangible, so in this

    case there are less suppliers or we can say the role of suppliers are almost negligible in the case of

    telecom industry. We are trying to analyze that minor role

    1. Mobile hand set suppliers: - There can be many suppliers for handset, some of them are Nokia,

    Sony Ericsson, Motorola, and Siemens etc. Many big telecom giants have their own handset

    manufacturing (back ward integration) like Reliance Classic, Tata Indicom or they have

    collaboration with some known companies like Reliance communication have tie ups with

    Samsung and LG for their CDMA services

    2. Some other suppliers for this industry can be the Optical fiber suppliers, Aluminum suppliers

    (aluminum is required for the tower) but their bargaining power is limited.

    3. Other important parameters can be the software assistance where suppliers can have the edge

    some of the main software solution provider are TCS, Infosys, Wipro, Satyam etc. Again one thing

    is noticeable that big giants like Reliance and Tata have their own units for software solution and

    companies like Vodafone, Spice are taking services from above stated companies. So here

    software providers have bargaining power because suppose Vodafone cant go to Reliance info for

    their software solution so here suppliers can have edge over the companies


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    5. Bargaining Power of Consumers

    Recent Status: Indian Telecom industry is one of the fastest growing telecom markets in the world.

    In telecom industry, service providers are the main drivers; whereas equipment manufacturers are

    witnessing growth and decline in successive quarters as sales is dependent on order undertaken bythe companies. Airtel, Reliance, Tata and Sterlite are some of the companies that are expected to

    spur the growth in 2008, as compared to AMJ07. According to Cygnus estimates, telecom industry

    was expected to grow by 25% in 2008 as compared to AMJ07, in terms of sales. EBDITA and

    PAT are expected to grow by 32% and 34% respectively in 2008 as cost expenses are being

    control by major companies like Airtel and Reliance. The major booster is the wireless mobile

    subscriber base; crossing over 261m in March 2008. Other services like Internet subscriber base

    has also provided significant impetus with its subscriber base reaching over 11m in March 2008.

    The total subscriber base of Wireline services stood at 39.42 million as on 31st March 2008. The

    incumbents BSNL and MTNL have 80.05% and 9.33% market share respectively in the subscriber

    base, while all the five private operators together have 10.62% share. Wireline subscriber base has

    been declining in the last few years. Subscriber base for some of the companies like Bharti, Tata

    (Tele & Communications), MTNL and Reliance increased marginally. On the other hand, BSNL,

    Shyam and Telelinks have lost marginal subscriber base in 3rd QUARTER OF 2008, as compared

    to the previous quarter.

    Porter's Five Forces model outlines the primary forces about competitiveness within the


    . The intensity of rivalry among competitors is very high

    . Potential Entry of New Competitors is very low

    . Product development and enhancement is serviced by the market player

    . Medium to low bargaining power of suppliers

    . Bargaining Power of Consumers is little high



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    Technology Advancement has offered enhanced services

    Widening of network coverage to rural areas also

    Low Operational Costs

    Demand of Mobile Commerce


    High start-up cost

    Reducing ARPU

    Reducing MoU


    Large domestic market over a billion populations

    Low Teledensity as compare to other developed countries

    Potential in rural market

    3G and WiMax to be launched


    Higher bidding cost for 3G

    Government control companies get regulatory benefits over private player


    Key Take Away for Investors

    Rapid CAGR of more than 40 per cent over last from few years


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    Low Teledensity as compare to other developed countries leave place for future growth

    Upcoming 3G and WiMax Technology to result in high ARPU

    Telecom Industry Whats Road Ahead

    Growth Potential

    The Indian rural market is going to be the next big thing for wireless telecom providers. With the

    teledensity in rural areas being a little more than 10 per cent against the national average of 33.23

    per cent, there seems to be huge untapped potential for mobile phone penetration in rural India.


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    The much awaited Third Generation (3G) Auction has been delayed. As per Depart-ment of

    Telecom (DoT), set a base price of INR 2,020 crore for a pan-India 3G spectrum where as the

    Union Finance Ministry stepped in with a recommendation to double this price to INR 4,040


    The Cabinet Committee on Economic Affairs (CCEA) is likely to consider the proposal to set INR

    3540 crore by the means of doubling the reserve price for Delhi, Mumbai and category A circles

    and increasing it by 1.5 times for Kolkata and category B circles and retaining the current base


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    price for category C circles. This could again put off the much-awaited roll-out of advanced

    mobile services.

    WiMax, Broadband Wireless Access (BWA), which was been proposed at INR 1,010 Crore could

    be doubled to INR 2,020 Crores as recommend by ministry of finance.

    Mahanagar Telephone Nigam (MTNL) becomes the first telecom company to launch third-

    generation (3G) mobile services in India on 5th February 2009. MTNL competes with private

    firms, including Bharti Airtel, Vodafone, Reliance Communications, Idea Cel-lular and Tata

    Teleservices, in India. State-owned telcos MTNL and BSNL were given 3G spectrum last year

    before the private players, giving them the first mover's advan-tage.

    According to a report by in-dustry body FICCI and tele-com consulting firm BDA, "3G

    subscriber base will reach 90 million by 2013 and the reve-nue from 3G is expected to reach $

    15.8 billion by the same year." Even introduc-tion of 3G would also in-crease the Average

    revenue per users (ARPU).


    INDUSTRYIndustry on High Growth Track

    The telecom industry has been growing at a CAGR of 40 per cent during 2003-2008, with total

    subscriber growing at an average of 9.5 million subscribers per month over the last year. The


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    subscriber base totaled to 346.89 million in December 2008, and is ex-pected to be 500 million

    and 800 million by 2010 and 2012 respectively as per TRAI. The ARPU for the industry is INR

    240, which is among the lowest in the world.

    Rural Expansion & Services Abroad

    The number of mobile users per 100 persons is described by teledensity. Currently, the teledensity

    of the Indian telecom sector is 33.23 per cent, whereas the TRAI expected it to reach around 60

    per cent by 2012.

    Falling Handset Prices and Youth Population

    Falling handset prices along with added features, makes the market more attractive. Today, the

    handsets are available in just three-digit figures with all necessary facilities. Young generation and

    living standard is also one of the factors for the increase in sub-scriber base.

    Alarming Competition

    The rising competition from new entrants in the industry, both domestic and foreign play-ers along

    with new technologies and their core competencies, will heat up the competition in the industry.

    Availability of Spectrum

    The Government has allowed and framed the policies for introduction of new technologies in the

    Indian telecom sector in the form of 3G and Wimax. The Department of Tele-com and TRAI are

    about to auction the required 3G spectrum to various service providers. The scarcity of spectrum

    and the price to be charged at the auction will purely be a matter of time.

    Passive Infrastructure Sharing

    The infrastructure sharing will encourage more efficient operations, thereby resulting in significant

    cost savings. The company is also willing to explore and share active infra-structure, based on

    guideline issued by TRAI.

    Mobile Commerce to Become the Next Big Thing


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    Mobile commerce is the upcoming and growing trend. The increased use of mobile phones for the

    purpose of banking, tele-booking, inquiries, and other commercial ser-vices will lead to further

    increase in the revenues of the companies. The increased use of such services is welcomed by the

    users as it offers high utility and value for money.

    Mobile Number Portability to Become a Reality Soon

    Indian mobile users will soon have the option to switch their service providers without changing

    their mobile numbers. Implementation of mobile number will motivate and stimulate the service

    providers to constantly endeavor to further improve their quality of service in order to retain

    existing customers and attain new subscribers.

    Falling ARPUs Margins under Pressure

    The revenues are showing a fall because of declining call tariff. However, the profit mar-gins are

    stable because of rising subscriber base in the industry. Every month, more than 9.5 million

    subscribers are added in the last year.


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