Namaskar  你好   Indian Telecoms: Competitiveness & Globalisation  By Dr T.H. CHOWDARY* * Director: Center for Telecom Manag...
Globalisation (1) Indian Telcos foray abroad  (1) <ul><li>VSNL acquired </li></ul><ul><li>TYCO’ globe-girdling OF submarin...
Globalisation (2) Indian Telcos foray abroad  (2) <ul><li>VSNL (Contd) </li></ul><ul><li>Opened overseas offices in Sri La...
Globalisation (3) Indian Telcos foray abroad  (3) <ul><li>Bharti Telecom laid an undersea cable across the Bay of Bengal t...
Globalisation (4) Foreign Telcos into India  (1)   <ul><li>Are two varieties </li></ul><ul><li>Network & service operators...
Globalisation (5) Foreign Telcos into India  (2)   <ul><li>AT&T, BT, US Sprint, etc. foreign Telcos are competing with abo...
Globalisation (6) Foreign Equipment Manufacturers <ul><li>Have a field day </li></ul><ul><li>Foreign equity can be 100% </...
Globalisation (7) Chief Consequences are  (1) <ul><li>Global broadband connectivity and competition (local and foreign) </...
Globalisation (8)  Chief Consequences are  (2) <ul><li>Foreign companies are buying & investing in Indian companies; selli...
Competition  (1) <ul><li>Skewed, imperfect because P-Telcos had to compete against the incumbent which was a government De...
Competition  (2) <ul><li>Competition is technology neutral; national/foreign company neutral </li></ul><ul><li>Indirect su...
Competition  (3) <ul><li>2007 – Addl licences offered using spectrum released by Defence services </li></ul><ul><li>500 ap...
Competition  (4) <ul><li>Dual-SIM Handsets (GSM-CDMA) </li></ul><ul><li>SPICE P-Telco (Brand Ambassador – Priyanka Chopra,...
Constraints and burdens on competition  (1) <ul><li>India is divided into 23 separate service areas; each requiring a sepa...
Constraints and burdens on competition  (2) <ul><li>Tax deducted at source (TDS) and is to be deposited within one week of...
THANK YOU: DHANYAWAD INDIA
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S360 indian telecoms competitiveness globalisation china-2

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S360 indian telecoms competitiveness globalisation china-2

  1. 1. Namaskar 你好 Indian Telecoms: Competitiveness & Globalisation By Dr T.H. CHOWDARY* * Director: Center for Telecom Management and Studies Chairman: Pragna Bharati (intellect India ) Former: Chairman & Managing Director Videsh Sanchar Nigam Limited & Information Technology Advisor, Government of Andhra Pradesh T: +91(40) 6667-1191/ 2784-6137(O) 2784-3121® F: +91 (40) 6667-1111, 2789-6103 [email_address] thc@satyam.com Presentation # II At BUPT, Beijing on Monday, the 16 th October, 2007 INDIA
  2. 2. Globalisation (1) Indian Telcos foray abroad (1) <ul><li>VSNL acquired </li></ul><ul><li>TYCO’ globe-girdling OF submarine cable system for just$ 130 mln (US Chapter II distress sale) </li></ul><ul><li>Teleglobe of Canada </li></ul><ul><li>A telephone Operating licence in South </li></ul><ul><li>Africa providing every type of Telecom service </li></ul>INDIA
  3. 3. Globalisation (2) Indian Telcos foray abroad (2) <ul><li>VSNL (Contd) </li></ul><ul><li>Opened overseas offices in Sri Lanka, Singapore serving global-multi-nationals </li></ul><ul><li>2007 revenues $2.0 billion </li></ul><ul><li>Reliance Infocom </li></ul><ul><ul><li>Acquired FLAG (a US Chapter II company) </li></ul></ul><ul><ul><li>Is laying a large capacity submarine cable to West Asia and Europe </li></ul></ul><ul><ul><li>Bought US datacoms Company with 1000 enterprises customers </li></ul></ul>INDIA
  4. 4. Globalisation (3) Indian Telcos foray abroad (3) <ul><li>Bharti Telecom laid an undersea cable across the Bay of Bengal to Singapore and connects to trans-pacific cable systems </li></ul><ul><li>Bharti Telecom is second telecom service provided in seychelles </li></ul><ul><li>MTNL/BSNL State-owned enterprises have public telephone service provider subsidiaries in Mauritius, Nepal and Sri Lanka </li></ul>INDIA
  5. 5. Globalisation (4) Foreign Telcos into India (1) <ul><li>Are two varieties </li></ul><ul><li>Network & service operators/partners </li></ul><ul><li>Equipment suppliers </li></ul><ul><li>In the 1 st phase of entry of P-Telcos into services sector 1993-1996, the essential licence condition was foreign Telco Equity participation of a minimum of 10% and a maximum of 49% </li></ul><ul><li>AT&T, US West, Nynex, Hutch, SingTel etc got in. </li></ul><ul><li>NTP:99 removed this obligatory equity share-holding by foreign Telcos </li></ul><ul><li>In 2006, WTO obligations hastened the process </li></ul>INDIA
  6. 6. Globalisation (5) Foreign Telcos into India (2) <ul><li>AT&T, BT, US Sprint, etc. foreign Telcos are competing with about a dozen Indian companies in all varieties of telecom services. </li></ul><ul><li>WTO & Globalisation have exposed Indian Telcos to foreign competition. </li></ul><ul><li>Foreign Telcos largely serve India-based foreign enterprises (banks, consultancy, insurance, BPO/KPO, construction, Internet i/c SKYpe etc. enterprises </li></ul>INDIA
  7. 7. Globalisation (6) Foreign Equipment Manufacturers <ul><li>Have a field day </li></ul><ul><li>Foreign equity can be 100% </li></ul><ul><li>They can go into SEZs </li></ul><ul><li>Nokia, Motorola, Ericsson, LG, CISCO, IBM, Microsoft, Google, Intel, ZTE, HUAWI, have US $ 10 bln sales/annum </li></ul><ul><li>Bharti Airtel alone placed contracts worth $ 2.0 bln with Ericsson and $ 900 mln with Nokia-Siemens Networks </li></ul>INDIA
  8. 8. Globalisation (7) Chief Consequences are (1) <ul><li>Global broadband connectivity and competition (local and foreign) </li></ul><ul><li>Enables India as s/w, BPO, KPO services supplier to the world </li></ul><ul><li>Killed local telecom network and devices manufacturing & R&D owned by Indians. </li></ul><ul><li>Some Indian companies have become global companies (eg.VSNL, Bharti....) </li></ul>INDIA
  9. 9. Globalisation (8) Chief Consequences are (2) <ul><li>Foreign companies are buying & investing in Indian companies; selling their equity after appreciation; cashing the profit & quitting (eg.Hutch, AT&T-Nynex, US West...) </li></ul><ul><li>Mergers & Acquisitions begun [Tata Tele +AT&T; Birla AT&T –Tata (BATATA) </li></ul><ul><li>Vodafone acquired 67% equity from Hutch-Essar; now sells Vodafone brand </li></ul><ul><li>Orange (France Telecom) bought the managed enterprise services division of India’s GTL </li></ul>INDIA
  10. 10. Competition (1) <ul><li>Skewed, imperfect because P-Telcos had to compete against the incumbent which was a government Department; which was also licensor & regulator </li></ul><ul><li>Under foreign company/government pressure & WTO </li></ul><ul><ul><li>Statutory regulator created in 1997 </li></ul></ul><ul><ul><li>Department’s telecoms were corporatised </li></ul></ul><ul><ul><li>Going through restructures to correct flaws & over a period of six years [2001-07] </li></ul></ul><ul><ul><li>Regulators have become powerful & competition is market-driven; full and fierce in every segment; it is global and beneficial to customers </li></ul></ul>INDIA
  11. 11. Competition (2) <ul><li>Competition is technology neutral; national/foreign company neutral </li></ul><ul><li>Indirect subsidies (from rival pts) to SOEs (BSNL & MTNL) wound down </li></ul><ul><li>Domestic competition prior to 1992 followed by foreign competition completely killed the state-owned Hindustan Cables Co & debilitated the Indian Telephone Industries Corporation (ITI). ITI kept ‘alive’ by reserving one-third of procurement by BSNL/MTNL to ITI but at the (lowest) price paid to private company. </li></ul>INDIA
  12. 12. Competition (3) <ul><li>2007 – Addl licences offered using spectrum released by Defence services </li></ul><ul><li>500 applications from about 50 companies [i/c Real Estate, Retail etc.) Entry Fee $375 mln </li></ul><ul><li>An operator is allowed to acquire 10% (to be raised to 20%) in rival Telcos in the same licenced area. Telcos in the same licenced area </li></ul><ul><li>GSM operators are given 15 MHZ/state </li></ul><ul><li>Telcos pay 1% of their revenue to government for addl spectrum (2x5 MHZ) </li></ul>INDIA
  13. 13. Competition (4) <ul><li>Dual-SIM Handsets (GSM-CDMA) </li></ul><ul><li>SPICE P-Telco (Brand Ambassador – Priyanka Chopra, a Miss World Beauty) Rs.9849 [$240] </li></ul><ul><li>Tata Indicom [Samsung Duo Rs.11,999 ($300)] </li></ul><ul><li>Cell talk is US 1cent/mnt </li></ul><ul><li>ARPUs falling [$ 10.0 or less] even as minutes of usage increase </li></ul><ul><li>Content creators emerge </li></ul><ul><li>Cable TVs & ISPs & Telcos now offer VOIP & IPTV </li></ul>INDIA
  14. 14. Constraints and burdens on competition (1) <ul><li>India is divided into 23 separate service areas; each requiring a separate licence (ET 27.8.2007) </li></ul><ul><li>A call from one P-Telco’s subscriber, to a subscriber on another Telco’s network is subject to </li></ul><ul><ul><li>A port (point of inter-connection) charge </li></ul></ul><ul><li>Roaming is app.10% of an operators earning; </li></ul><ul><li>Interconnect accounts for 30% of call charge </li></ul><ul><li>Roaming +Interconnect revenues are taxed </li></ul>INDIA
  15. 15. Constraints and burdens on competition (2) <ul><li>Tax deducted at source (TDS) and is to be deposited within one week of the monthly inter-company billing </li></ul><ul><li>Burdened with USF cess @5% service tax @ 10% in addition to revenue share as condition of licence </li></ul><ul><li>The financial impositions amount to about 30% of the cost of service. if removed, demand will go up by (50 to 60)% </li></ul>INDIA
  16. 16. THANK YOU: DHANYAWAD INDIA
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