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Telecom Industry
 

Telecom Industry

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    Telecom Industry Telecom Industry Presentation Transcript

    • INDIAN TELECOM SECTOR DEBMALYA KHAN
    • Key Facts and Figures
      • Fifth largest network in the world, global standards
      • Contributor of 2% of India’s GDP
      • Second largest in the emerging economies of Asia( more than a 110 million subscribers)
      • 40% growth in subscriber base in 2005, expected to reach 280 million by end of 2008
      • Wireless subscriber growth aims to surpass 2.5 million subscribers by 2008
      • Industrial output growth slipped to 8.6% in 2008 as compared to 11.6% in 2006-07
    • Key Facts and Figures ( contd )
      • Currently used wireless Technologies ( CDMA and GSM )
      • Increased Indian tele-density to 12
      • Current Value of the Indian Telecom Market- $100b
      • Market leaders: Bharti Airtel ( 27% ) and Reliance Communications( 20% )
      • Projected to reach $54b in 2012 as compared to $31B in 2008
    • Major Players
    • Bharat Sanchar Nigam Limited( BSNL)
      • India’s largest telecommunications company with largest public sector undertaking
      • Expanded its network in line with the tenth Five year plan ( 1992-97 )
      • Planning to overtake Bharati as the largest operator of GSM
      • 23% of the entire subscriber base in the internet market
    • MAJOR MARKET TRENDS
      • Embracing mobile technology in a big way
      • 4 million subscribers added every month in the past six months
      • Wireless subscriber base has increased 75% CAGR from 2001 to 2007 as compared to negligible wire line growth
      • 18% of the mobile users willing to change their mobile handsets
      • Great prospect for value added services.
      • Issues pertaining to bith 2G and 3G markets needs to be evolved
    • Comparative Market shares( GSM )
      • Airtel ,a market share with 32.16% GSM market share
      • Vodafone , closely behind with 22% of the market share
      • BSNL , Third place 18.79% market share
      • Idea, 12.45% market share
      • Aircel , 5.51% market share
    • Segmental Performance
      • Telephone Segment:
      • MOBILE SERVICES
        • Wireless subscriber base experiencing strong growth, added 95.96m subscribers in FY08
        • Bharti airtel, Reliance, Vodafone, Idea, BSNL, tata tele services in decreasing order
      • GSM
        • Subscriber base reached 192.70M in the quarter ending March 2008( growth of 11.89% )
        • Bharti remains the biggest GSM operator, followed by Vodafone ( 44.13M ),BSNL ( 36.21M ), Idea ( 21M )
    • Segmental Performance( contd )
    • Segmental Performance( contd )
    • Segmental Performance( contd )
    • Segmental Performance( contd ) Market share of Top 5 ISP ISP Subscriber base share in % BSNL 5640191 50.82 MTNL 1899747 17.12 Bharti Airtel Ltd. 815360 7.35 Reliance Communications ltd 696440 6.28 sify technologies 576047 5.19
    • Inter-Firm Comparison
      • Telecom service providers
        • Operational Performance
          • In terms of Sale value, Airtel is the market leader ( 52.39% growth )
          • MTNL showed decline of sales
          • Tata teleservices and tata communications showed considerable growth ( 21.47% and 9.10% respectively )
      • Telecom equipment Manufacturers
        • Tata communications major loser with 30.16% loss in returns
        • Reliance and Tata Teleservices saw 15% decline in market cap
    • Increasing Subscriber Base The per subscriber mE usage has increased from 12-15 mE per subscriber in 1999 to ~30 mE per subscriber in 2005. The minutes of usage per month per subscriber has also increased from 114 minutes in 1999 to 367 minutes in 2005
    • Problems in Telecom Sector
      • Levies and Duties:
        • Has one of the highest levies and duties attached to it( 17-26%)adversely affecting availability of funds for network expansion
        • Return on capital for mobile services is 7.8%
      Source: TRAI Regulatory charges % age of revenue Service tax, GST 10% + GST License Fee 5 – 10% Spectrum Charge 2 ~ 6%* USO Included in license fees Total Regulatory charges 17%~26% + GST
    • Problems in Telecom Sector( contd)
      • Connecting Rural India:
        • Contribution from Rural India stands at a mere 20%
        • Mobile and wireless services not penetrated rural areas
      • Infrastructure sharing and Clearing issues:
        • duplication of infrastructure a colossal waste
        • Enormous delays in obtaining Right of way from different agencies like NHAI, pollution board
      • Low ARPU- Cause of concern
    • Problems in Telecom Sector( contd)
      • Global average ARPU – USD 21
      • Indian Average ARPU – USD 8
    • The New Business Strategy: From Services to Business Ecosystem Legacy Telecom Fixed Line Wireless Diversified Telecom Solutions Wireless Applications E/M Payment New Telecom Business Ecosystem Telecom Service Focused Business Telecom Service Blended with Emerging Areas like VAS & Mobile Applications Transform to be Telecom Ecosystem Enabler Early Vertical Specific programs Mobile Wallets and Payment Third-party consumer and early enterprise Access and early applications Historic Transition Future Radio Paging Fixed Line
    • The New Telecom Ecosystem – Feeder Model New Telecom Business Ecosystem Wireless Service Provider Fixed Line Service Provider Telecom Handset Manufacturers Telecom Network Equipment Manufacturers Telecom Transmission Equipment Manufacturers Application & Content Providers Active & Passive Infrastructure Providers Drive Indian Economy Towards the 10% Economy Growth Target
    • What the New Ecosystem Will do ?
      • If the new ecosystem is established to meet the target of 250 million subscribers, then the
      • Increase in tele-density will increase the rate of growth of GDP
        • A 1% increase in tele-density results in 3% increase in rate of GDP growth rate
      • Current 5 million jobs generated by this sector can increase to 12 million
      • Proper facilitation to various sub-sectors in the ecosystem can increase revenues generated by the telecom industry for the government
        • Mobile services industry’s annual contribution of INR 32,000 crores can increase beyond INR 50,000 crores
        • Annual revenues contributed mobile industry can increase from INR 15,000 crores to INR 65,000 crores
    • Objective of FICCI telecom committee
      • Identifying major areas of growth in the sector
      • Identifying the competitiveness & potential areas for synergy in the global market
      • To organize interactive meetings among the members for taking up the challenges and working towards the opportunities
      • Conducting Workshops/ Seminars/ Conferences/ Training Programmes for promotion and better understanding of the sector and taking up the issues and challenges and working towards the opportunities
      • Organized an international Conference & Exhibition  'India Telecom 2006- Mapping the Road Ahead'
    • Challenges faced by Indian Equipment Manufacturers Industry
      • Current – Demand supply Mismatch
        • Needs to add capacity in tunes of 150 million lines to achieve 250 million subscribers by 2008
        • Required to import requisite telecom equipment
      • Inverted Duty structure hampering the industry
        • Imported telecom equipment are levied 5% customs duty
    • Recommendations
      • Govt. should encourage the vendors to manufacture handsets rather than just reducing import duty
      • Infrastructure sharing be mandated by the government
      • A single window clearance system should be put in place to expedite all clearance related issues