INDIANTELECOM INDUSTRY0 Recognized world-over as animportant tool for socio-economicdevelopment of a nation0 Major transformation ensued withreforms introduced with theannouncement of NTP 1994 andfurther through NTP 19990 The Indian Telecommunications thethird largest in the world with 621million connections (as on March2010)
HISTORY OF INDIANTELECOM1851• First operational land lines were laid by thegovernment near Calcutta1881• Telephone services introduced in India1883• Merger with postal system
1923• Formation of Indian radio Telegraph Company1932• Merger of ETC and IRT into Indian Radio and CableCommunication Company1947• Nationalization of all foreign telecommunicationcompanies to form the posts, telephone and telegraph,a monopoly run by the government’s ministryof communications
1985• Department of telecommunication established , anexclusive provider of domestic and long-distance services that would be its own regulator1986• Conversion of DOT into two wholly government –owned companies the VSNL for internationaltelecommunication and MTNL for services inmetropolitan areas1997• Telecom regulatory authority created
STRUCTURALEVOLUTION OF THETELECOM INDUSTRY0 The Indian telecom industry has undergonesignificant structural transformation since itsliberalisation in the 1990’s0 During the last decade, the Indian telecom industryhas evolved into a multi-segment, competitive marketfrom a small supplier-dominated market havingpublic sector monopoly.0 Coherent Government policies have played a crucialrole in shaping the structure of the Indian telecomsector
THE PRE-LIBERALISATIONERA (1980-1990):
0 Before liberalisation, the publicsector held a monopoly inprovision of telecom services0 The entire telecom servicesoperation in the country wascarried out by the Department ofTelecommunication (DoT), apublic sector entity establishedin 19850 It managed the planning,engineering, installation,maintenance, management, andoperations of telecom servicesfor the whole of India
0 To ease out its operations, twonew public sector corporationsviz. MTNL and VSNL were setup under the DoT in 1986.0 While MTNL primarily lookedafter the operation of basictelephony services in Delhi andMumbai, VSNL providedinternational telecom servicesin India0 DoT looked after basictelephony operations in regionsother than Delhi and Mumbai
0 The government initially permitted playersfrom the private sector to provide ValueAdded Services (VAS) such as PagingServices and Cellular Mobile TelephoneServices (CMTS), followed by the FixedTelephony Services (FTS) or Basic services0 Eventually the private sector has beenallowed to provide almost all telecomservices0 During 1994, through a competitive biddingprocess, licenses were granted to 8 CMTSoperators in four metros, 14 CMTS operatorsin 18 state circles, paging operators in 27cities and 18 state circles.0 The need for independent regulation hadrisen with the entry of private players
0 the Telecom Regulatory Authority of India (TRAI) wasestablished in 1997to regulate telecom servicesincluding fixation/revision of tariffs0 Further, in 1998, the Government also declared thepolicy for Internet Service Provision (ISP) by privateoperators and had even begun licensing of the samearound that time0 In 2000, DTS was corporatized and renamed as BharatSanchar Nigam Ltd (BSNL), and thus the functions ofthe incumbent service provider were separated fromthat of the policy maker0 DoT is now responsible for policy-making, licensing andpromoting private investments in both telecomequipment manufacturing and in telecom services0 Subsequently in 2002, even VSNL was privatised and itsmonopoly in ILD services was terminated (from March31, 2002).
CURRENT STRUCTURE0 Currently, both public sectorplayers as well as the privatesector players are actively cateringto the rapidly growingtelecommunication needs in India0 Private participation is permittedin all segments of the telecomindustryThe broad structure of thetelecom industry (in terms ofservice providers) is depicted inthe diagram below:
STRUCTURE OF INDIANTELECOMINDIAN TELECOMPUBLIC SECTORMTNL BSNLPRIVATE SECTORINDIANCOMPANIESFORIGNINVESTEDCOMPANIESSource D&B Research
CHANGE IN MARKET SHARE
INDUSTRYCONCENTRATION0 Industry concentration is a function of the numberof firms and their respective shares of thetotal production (alternatively, total capacity or totalreserves) in a market.0 The Industry or market concentration is measured byHerfindahl index0 Below 0.01 (or 100) indicates a highly competitive index0 Below 0.15 (or 1,500) indicates an unconcentrated index0 between 0.15 to 0.25 (or 1,500 to 2,500) indicates moderateconcentration0 between 0.15 to 0.25 (or 1,500 to 2,500) indicates moderateconcentration
We know : HHIis the sum of the squares of the marketshares of the firms in the industryWhere si is the market share offirm i in the market, and N isthe number of firmsCALCULATION OF HHI
ENTRY AND EXIST0 Monopoly in the telecom sector as aresult of the Telegraph Act of 18850 Private sector made a foray intotelecom sector with the introductionNTP19990 Provided the much needed impetus tothe growth of this industry and set thetrend for libralisation in the industry0 Introduction of FDI in Indian Telecom
BARRIER FOR ENTRY0 High capital investments0 License fee0 Well-established players whohave a nationwide network0 Continuously evolvingtechnology and lowest tariffs inthe world.
NUMBER AND SIZE OFFIRMSWIRELINEBharat Sanchar Nigam Limited (BSNL)Mahanagar Sanchar Nigam limited(MTNL)Tata DocomoReliance InfocommAirTel
MARKET STRUCTURE & OUTPUTPRICE DECISION“How much control over price thefirm have”Weather the firm is competing inPerfectcompetition, Monopoly, Monopolistic competition or OligopolyMarket, is an important factorwhich influence price.
0 August, 1995 : GSM entered India0 Historic first cell phone-call was madeby Mobile Net-joint venture betweenTelstra (Australia) & B.K. Modigroup.0 Mobile revolution began in Kolkata0 Handset costs-40,000 & Call tariff-17₹/min.
55911922High LowHighLowGAME THEORY OFTELECOMMUNICATION2:2 is the NashequilibriumA Nash equilibrium, named after John Nash, is a set of strategies, one foreach player, such that no player has incentive to unilaterally change heraction. Players are in equilibrium if a change in strategies by any one of them wouldlead that player to earn less than if she remained with her current strategy. For games inwhich players randomize (mixed strategies), the expected or average payoff must be atleast as large as that obtainable by any other strategy
ADVERTISING IN TELECOM
Marketing in telecommunications is well-targeted, whichassists companies in running a cost-efficient advertisingcampaign. However, telecommunication advertisingcampaigns can be complex; so to ensure that you get themost out of your marketing budget, consider the followingwhen choosing a telecommunications advertising plan:0Who is your target audience for your telecommunicationsmarketing or telecommunications advertising?0What is your budget for advertising intelecommunications?0Are there some free or low-cost ways your company canconduct marketing in telecommunications?
INNOVATION INADVERTISING0 Conceptual Innovation-Product Offering and MoralAppeal.0 Medium Innovation-Traditional & contemporary.0 Sole to Theme- Series ofdifferent advertisement basedon particular themes
ANALYSIS ON CHANGINGTRENDS0 Life style product to Massproduct.0 Emphasis on Call Rates toVAS( Value Added Service).0 Shift From Print Media toElectronic Media (i.e.Newspaper to SMS, Spam)
THE RECENT MERGERS& ACQUISITIONSDETAIL AT GLANCEExpands market share to 11.1 per cent post-mergerGain access to efficient 900MHZ spectrum bandSpice Karnataka and Punjab have reasonableARPU (average revenue per user)TMI takes preferential allotment in Idea at apremiumExchange ratio is 49 Idea Shares for 100 Spiceshares
Tata Teleservices (74%) and NTT DoCoMo (26%) gotmerged and started an company called Tata Docomo.
BENEFIT OF MERGERS INTHE TELECOM0 Acquisition of licenses or geographical territories0 Acquisition of spectrum0 Acquisition of telecom infrastructure & network0 Acquisition of customer base to achieve aneconomic base0 Acquisition of brand value0 Acquisition of customer base
PROFITABLITY0 According to TRAI ( Telecom Regulatory Authority ofIndia ) there is an increase of telecom subscriber of3.5 percent i.e from 543.20 million in November 2009to 562.21 million in December 20090 Indian Telecom Industry notched up US $ 8.56 billonin revenue during the quarter ended December 31st2009 earned by both landline and mobile service0 Study shows that Airtel and BSNL are considered asthe major companies in the industry due to their largesubscriber base and revenue.
0 In (2004-2005) the growth rate of Airtel was a veryhigh rate (12866.1 percent). So (2004-2005) wasconsidered as a turning point in the growth of Airtelcompany in Telecom Industry0 According to economic survey Telecom sector profitmay fall 84.7 percent in 2011-2012 due to thepressure of borrowing of 3G service0 India’s Telecom equipment manufacturing sector isset to become one of the largest globally. Revenue areestimated to grow at a CAGR ( Compound AnnualGrowth Rate ) of 26.6 per cent from 2006-2011touching US $ 13.6 billion
SOCIAL WELFARE0 National Telecom Policy- 2012 (NTP-2012)0 The unprecedented increase in teledensity and sharpdecline in tariffs in the Indian Telecom sector havecontributed significantly to the country’s economicgrowth. Besides contributing to about 3 percent toIndia’s GDP, Telecommunication, along withInformation Technology has greatly accelerated thegrowth of the economic and social sectors
MAIN VISION OF NTP-20120 To promote creation of jobs0 Increase rural teledensity fromaround 39 to 70 by the year 2017and 100 by the year 20200 Enable citizens to participate inand contribute to e-governancein key sector likehealth, education, skilldevelopment, employment, governance, banking, etc. to ensureequitable and inclusive growth
0 Provide high quality and highspeed broadband access to allvillage panchayats through acombination of technologies by theyear 20140 Enhance and continued adoption ofgreen policy in telecom andincentivise use of renewableenergy source for sustainability0 Protect consumer interest bypromoting informed consent,transparency and accountability inquality of service, tariff, usage, etc
THANK YOUGROUP 11Sazid MohammedParomita ChatterjeeNilanka GhoshSweta SinghAbhijeet Roy