INDUSTRY ANALYSIS TELECOM INDUSTRY Presented by: Aruna K Rihal 6010010918327 Krishan Lamba 6010020752379 Ravindra Sony 6010010702800
AgendaOverview-Overview-Global & IndiaValue ChainDemand and SupplySegmentCompetitionGrowth DriversRegulationTechnologyIssues & ChallengesOutlook
Overview Global Global subscribers(dec2010)India is the fourth China 19%largest telecom USA 7%market in Asia. Others India5.3bn mobile 62% 12%subscribers(2010).Top global player- player- China USA India OthersAmerica Source:IUTMovil(Mexico, USA).Movil(Mexico,India’s Bharti Airtelis 3rd largest inworld.
Indian overviewIndia Telecom network has 846.32 millionsubscribers(31Mar 2011).Covered by 14 Telecom operators.Overall teledensity reaches 70.89%;urban-157.32% & 70.89%;urban-rural-rural-33.79%(31Mar 2011).Private operators hold 88.01% of wireless marketshare((31Mar 2011).Mobile Number Portability stands at 6.42 millionsubscribers(31Mar 2011).Internet broadband subscription reaches to 11.87million(31Mar 2011).Advanced technology-GSM,CDMA,WLL,3G,upcoming 4G. technology-Contribute nearly 1% to India’s GDP.Highly organized industry;regulated by TRAI(TelecomRegulatory Authority of India).74% FDI is allowed.
Structure of Indian Telecom Telecom Industry Private sectorPublic sector-BSNL, Private sector (Indian) MTNL (Foreign) Bharti,Reliance, Vodafone. TATA
Value Chain Government License/TRAIHand Set & Equipment Service Providers Manufacturer Dealer/Franchisees Value Added Service Providers Customers
Demand & SupplyNumber of serviceoperators is high(14) as Trend of subscribers(millions)against 3-4;supply 3-4;supplymore than demand. 900 800Annual subscription 700 600 millionsgrowth rate is 500 4007.50%(Mar2011). 300 200Circle A is largest(; 100 0Penetration in tier-II tier- 2009 2010 2011cities like Guwahati,, subscribersSurat, Nagpur, Indore. Source:TRAIVAS increases growth.Dip in tariff rates @1paise/second, ARPU &MoU.Low price handsets.
Decreasing ARPU & MoU All India ARPU(Quarterly)ARPU 250 Lower call rates 200 Rs/sub/month 150 High market competition 100 Increasing VAS 50 0 Low growth income category Mar-10 Jun-10 Sep-10 Dec-10 GSM CDMAMoU Source:TRAI Higher miss call rate All India MoU(monthly) VAS- VAS-SMS,chat,alerts etc min/sub/month 800 Rural population 700 600 500 400 300 200 100 0 GSM CDMA Source:TRAI Source:TRAI
Segment Growing subscriber base Wireline vs WirelessIncreased focus on 900 800services sector. 700 600 millions 500 400Growing younger 300 200 100population. 0 2009 2010 2011 wireless wirelineCircle B shows Source:TRAIhighest annual growth Urban vs Ruralof 42.21% in 100% 90% 80%wireless(Mar2011). 70% millions 60% 50% 40%Wireless growing- growing- 30% 20% 10% 0%GSM,CDMA,WiMax. 2009 2010 rural urban 2011 Source:TRAI
Trend of Teledensity Growth of Teledensity•Urban 80teledensity is 60 % 40higher;stands at 20157.32 0•Rural teledensity Source:TRAI total rural urbanto grow faster Segmental Teledensity•Rural area not 100% 90%hit by recession 80% 70% 60%•Dip in handset 50% % 40% 30%price 20% 10% 0% Wireless Wireline Rural Urban Source:TRAI
Technology favours growth GSM vs CDMACDMA is growing 100% 90% 80%more than GSM 70% 60% 50% %CDMA have more 40% 30% 20%spectrum space;more 10% 0% 2009 2010 2011subscribers for CDMA GSM CDMABroadband shows Source:TRAI & www.ibef.org.in Growing Broadband subscribersgrowth;reach is stillat 0.7% as against 15worlwide 8.1% millions 10outreach(Nov2010) 5 0 2009 2010 2011 broadband Source:TRAI
Competition Michael Porter’s analysisForces High/Low/ Reason ModerateBarrier to entry Low License is required,complexBargaining power of High More servicesupplier providers,large variety of hand sets & high licensing fee by govt.Bargaining power of High 14 Telecom companies.buyers Supply more than demand.Inter firm rivalry High More service providersSubstitute Low Post office-letter, office- parcel,money order,speedpost
Market Share Service provider wise market share(Mar2011)Wireless is larger than WIRELESSwireline. TATABharti Airtel vodafone 11% Idea 11% Airceldominates wireless 16% Other 25% 7% BSNL 11% others]market with 19%. reliance 17% bharti 20% 7%BSNL is with largestmarket share in Source:TRAIwireline(72%). Service provider wise market share(Mar2011) WIRELINEMTNL is present inDelhi & Mumbai. MTNL 10% Bharti 9% Reliance 3% BSNL MTNLBSNL covers the rest TATA 4% others Bharti Reliancepart of country. BSNL 73% Other 5% 1% TATA others source:TRAI
Service providers-GSM/CDMA providers- Market Share-GSM(Mar2010)Bharti Airtel is the Airtel Others 1% MTNLmajor player in 27% 21% TATA 6%GSM;market Vodafone 1% Idea Aircel 8% Relianceshare-share- 13% BSNL 13% 10%27%(mar2010) MTNL TATA Aircel Reliance BSNL Idea Vodafone Airtel Others Source:TRAIReliance Maket Share-CDMA(MAr2010)communications is BSNL MTNL 6%leading in 4%CDMA;market Reliance 53% TATA 37%share-share-53%(mar2010) BSNL TATA Reliance MTNL Source:TRAI
Growth driversReduced cost of hand sets(affordability factor)Low call costsBusiness Education,TelepathyWireless in remote areasPopulation mix moving towards younger ageprofile3 G telecom servicesWiMax,Mobile banking and Broadband wirelessservicesMobile number portabilityValue added services(VAS)Global calling card
RegulationsTRAI regulatory and tariff functionIntroduction of new service providersConditions of License to serviceprovidersEnsure compliance of terms &conditions of licenseEffective management of spectrumEnsure effective compliance ofuniversal service obligation
TechnologyGSM narrow band T.D.M.A technologyCDMA spread spectrum technique3G for access of internet on mobilehandsetsWIMAX 1G5it/s fixed speedWIFI enables personal computers, videogames to connect to internetMVNO buy minute of use from opertors
Issues & ChallengesShortage of infrastructureLack of skilled manpowerAllocation of 3G licenseLack of spectrumTariff ratesDecreasing ARPU & MoUHigh competitionLack of clarity from GovernmentRising oil prices
OutlookWireless subscribers are likelyto reach 1bn by 2014 Rural teledensity to reach Expected subscribers by 2014close to 40% by 2012Wimax is expected to attract8.10mn subscribers by 2012 1500 m illions 1000Top 10 broadband market by2013 500 0Technology-Technology- rise of3G,4G,digitalised network 2009 2010 2011 2012 2013 2014Telecom in postal departmentfor financial inclusion Series1Coverage of ruralmarket;increase in Source:ibef.org.inpenetration rateIncreasing Merger &AcquisitionsInnovative advertisingcampaign