2. Page no.
Executive summary 05
Introduction about Telecom Industry 06
Global Scenario 08
National Scenario 09
Demographic characteristic 10
Market size, Trends & Players 11
Telecom turn over/ Subscribers 12
Opportunities /Competitive landscape 13
Porters generic strategy 14
Progress /Acquiring Subscribers 15
Rural India 15
Government Initiatives / MVAS 16
Mobile VAS in Rural Market 19
Access Device /3G Handset 20
Key trends in Telecom Industry 21
MNP Implementation Globally 24
Wimax Vs. 3G 26
Mobile virtual network operator 27
Regulation for MVN O / IPTV 28
Companies overview 29
4P’s Analysis 43
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3. Advertisement 44
Industry updates 46
Major challenges for Mergers 49
FDI Investment in Telecom sector 50
Outsourcing by Telecom company 51
Future Trends 53
4G Technology 56
Conclusion/ References 56
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4. This project work would never have been an achievable task, had we not been under the great
shelter of guidance of respected Professor Mukta Rae. Her simplified teaching technique based
on examples has helped us gain more understanding of the subject.
The very essence of the project work is the linguistic precision which has an impact of
conveying more details in least possible words. An ample use of various reference readings has
been very frequently made while compiling data for this project. Such rich reading has been
made available at hand by the treasure-like well-maintained library of the IIPM, Ahmedabad.
I am very much under obligation to mention here, the contributions of my batch mates who
have, knowingly or unknowingly, provided me the competitive edge which is the driving force of
the whole labor and extra labor put into the project. I would also take an opportunity to thank
all the respondents, who have taken pains in answering the questions and filled the place of true
representatives for deciding the nature of the problem.
Finally, I feel very much gratified to the administration of IIPM, Ahmedabad for providing
- JONTY MOHTA
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5. The rapid growth in Indian telecom industry has been contributing to India‟s GDP at large.
Telecom Regulatory Authority of India was established to regulate and deal with competition
among the service providers. Upcoming services like 3G and Portability will help to further
increase the growth rate. The Indian telecommunication industry is one of the fastest growing in
the world and India is expected to become the second largest telecom market in the world by
India added 113.26 million new customers in 2008, the largest globally. The country‟s cellular
base witnessed close to 50% growth in 2008, with an average 9.5 million customers added every
month. It is estimated that telecom industry will generate revenues worth US$ 43 billion in 2009-
IN this we have tried to capture the most of areas of telecom industry. Like, History of Telecom
Industry, TRAI role and functions, new trends in industry and latest updates.
To find the reason of tremendous growth in Indian Telecom Industry
To study the role of TRAI
To study upcoming trends in Telecom industry
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6. The exactly ten years ago, Jyoti Basu in culcutta called Sukh Ram in Delhi Sukh Ram in Delhi
was the first mobile phone call in India. Brick sized cell phone used to cost Rs.45000 and each
call coasted Rs.16.50/minute. Back then, cell phones was a status symbol. Today, there are over
60 million mobile connections in India (expected to double in number in next 12 months.). A
local call costs around less then Rs.50paisa/min and a cell phone can be purchased for less
India growth story has already got the world to sit up and take a note of the changing economic
scenario. The Indian government is doing everything that is possible to ensure that this story
remains intact. Factors, like the liberalization in the government stance and the daring
entrepreneurs of the Indian soils, have helped the sectors achieve the highs like never before.
And currently, the flavor of the month seems to be the telecom industry.
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7. History of Indian Telecommunications started in 1851 when the first operational land lines were
laid by the government near Calcutta (seat of British power). In 1883 telephone services were
merged with the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923.
After independence in 1947, all the foreign telecommunication companies were nationalized to
form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry
of Communications. Telecom sector was considered as a strategic service and the government
considered it best to bring under state's control.
The first wind of reforms in telecommunications sector began to flow in 1980s when the private
sector was allowed in telecommunications equipment manufacturing. In 1985, Department of
Telecommunications (DOT) was established. It was an exclusive provider of domestic and long-
distance service that would be its own regulator (separate from the postal system). In 1986, two
wholly government-owned companies were created: „Videsh Sanchar Nigam Limited‟ (VSNL)
for international telecommunications & „Mahanagar Telephone Nigam Limited‟ (MTNL) for
service in metropolitan areas.
In 1990s, telecommunications sector benefited from the general opening up of the economy.
National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensive roadmap for
the Indian telecommunications sector. In 1997, Telecom Regulatory Authority of India (TRAI)
was created. TRAI was formed to act as a regulator to facilitate the growth of the telecom sector.
New National Telecom Policy was adopted in 1999 and cellular services were also launched in
the same year.
Indian telecom industry has the highest growth rate in the world. A record 5.9 Million new
mobile phone subscribers were drawn by the Telecom sector in India in the month of August
2006, according to the COAI (Cellular Operators Association of India). India, which is seeing
over 8 million wireless subscribers being added every month (8.62 million in May 2008), is the
fastest growing telephone market in the world. The government has reiterated the target of 500
million telecom subscribers and 20 million broadband connections by 2010.
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8. The Indian telecom market has been displaying sustained high growth rates. Riding on
expectations of overall high economic growth and consequent rising income levels, it offers an
unprecedented opportunity for foreign investment. A combination of factors is driving growth
in the telecom market, promising rich returns on investments.
Example: TATA DOCOMO
It generated US $1.4 trillion in the year of 2009 when recession is everywhere.
India is the fourth largest telecom market in Asia after China, Japan and South Korea.
Asia pacific region: expecting highest growth in next 5years.
The Indian telecom network is the eighth largest in the world and the second largest
among emerging economies.
The Indian telecom market size of over US $ 8 billion is expected to increase three fold
by 2012. The expansion of the telecom industry in India has been fuelled by a massive growth in
mobile phone users, which has reached a level of 10 million users in December 2002, an increase
of nearly 100 per cent in 2002.
This exponential growth of mobile telephony can be attributed to the introduction of
digital cellular technology and decrease in tariffs due to competitive pressures. For the first time
in India, the growth of cellular subscriber base has exceeded the fixed line subscriber base.
However, cellular penetration is still 1 per cent as compared to world average of around 16 per
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Source: EIU (Economist Intelligence Unit)
Indian Telecom sector, like any other industrial 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 make use of advanced
technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. Day
by day, both the Public Players and the Private Players are putting in their resources and efforts
to improve the telecommunication technology so as to give the maximum to their customers.
The Indian telecom sector can be broadly classified into Fixed Line Telephony and
mobile telephony. The major players of the telecom sector are experiencing a fierce competition
in both the segments.
The major players like BSNL, MTNL, VSNL in the fixed line and Airtel, Vodafone
(Hutch), Idea, Tata, Reliance in the mobile segment are coming up with new tariffs and discount
schemes to gain the competitive advantage.
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10. The Public Players and the Private Players share the fixed line and the mobile segments.
Currently the Public Players have more than 60% of the market share.
Internet/Broadband subscribers are 14.05m internet subscribers & 6.62m broadband
subscribers (June 2009)
Advanced Technologies – GSM, CDMA, WLL, 3G and upcoming 4G
Telecom sector Contribution of nearly 1% to India‟s GDP
GSM CDMA/WLL Fixed LINE
•VODAFONE •BSNL •BSNL
•AIRTEL •MTNL •MTNL
•BSNL •TATA INDICOM •BHARTI
•IDEA •TATA DOCCOMO •TATA TELECOM
•SPICE •VIRGIN MOBILE •VODAFONE
•AIRCELL •RELIANCE •RELIANCE
Total Tele-density stood at 39.86 per cent.
Wire line Tele-density came in at mere 3.22 % whereas wireless subscription contributed
91.9 % of overall Tele-density.
Subscription in Urban Areas was at 328.55 Million and Rural subscribers increased to
According to the Vision 2020 document of the Planning Commission of India, the
country will witness continued urbanization. The urban population is expected to rise from 28
per cent to 40 per cent of total population by 2020.
Future growth is likely to be concentrated in and around 60 to 70 large cities having a
population of one million or more. This profile of concentrated urban population will
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11. facilitate customized telecom offerings from operators.
Both fixed line and mobile segments serve the basic needs of local calls, long distance calls and
the international calls, with the provision of broadband services in the fixed line segment and
GPRS in the mobile arena. Traditional telephones have been replaced by the codeless and the
Every month 8-10 million subscribers are adding in the market.
We have mobile 350 million subscribers, next to China
Tata Teleservices – invest an additional US $ 1 billion in TATA DoCoMo
BSNL – will put US $ 1.16 billion in WiMax Project
Vodafone Essar – invest US $ 6 billion next 3 years to increase mobile subscriber base
Bharti Airtel – US $ 126.5 million to strengthen Assam & Northeast Circles.
Mobile phone providers have also come up with GPRS enabled multimedia messaging,
Internet surfing, and mobile commerce.
The much-awaited 3G mobile technology has entered in the Indian telecom market.
The GSM, CDMA, WLL service providers are all upgrading them to provide 3G mobile
Radio services have also been incorporated in the mobile handsets, along with other
applications like high storage memory, multimedia applications, multimedia games, MP3,
Players, video generators, Camera's, etc. The value added services provided by the mobile service
operators contribute more than 10% of the total revenue.
The 2009 budget has brought further relief to the customers with the reduction in the
tariffs, both local and long distance, and with slashing down the roaming rentals. This is likely to
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12. lead to even more people going for cellular services and more and more use of the value added
However, landline telephony is likely to remain popular, too, in the foreseeable future.
MTNL, the largest landline service provider, has recently taken some bold initiatives to retain its
market share and, if possible, expand it.
Gross Revenue (GR) stood at Rs 39,108.33 Crore and Adjusted Gross Revenue (AGR)
of Telecom Sector came in at Rs. 29,732.52 Crores.
GR has registered a decline of 3.3% compared to previous quarter whereas AGR
Average license fee as percentage of AGR was 8.43% in June-09 as against 8.4% in
The less outgo in terms of licensing fees is a big positive for Telecom industry and as
such for telecom subscribers in general as this will allow further scope of reduction in telecom
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
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13. India offers an unprecedented opportunity for telecom service operators, infrastructure vendors,
manufacturers and associated services companies. A host of factors are contributing to enlarged
opportunities for growth and investment in telecom:
an expanding Indian economy with increased focus on the services sector
population mix moving favourably towards a younger age profile
urbanization with increasing incomes
Investors can look to capture the gains of the Indian telecom boom and diversify their
operations outside developed economies that are marked by saturated telecom markets and
lower GDP growth rates.
Demand is driven by technological innovation and by growth in business activity. The
profitability of individual companies depends on efficient operations and good marketing.
Large companies have big economies of scale in providing a highly automated service to
large numbers of customers, and have the financial resources required building and maintaining
a large network.
Smaller companies can compete effectively only in small markets or by providing
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14. Porter has identified three types of generic strategies that help a firm to cope with competitive
forces and outperform other firms in the industry. These strategies are:-
1. Overall Cost leadership strategy
2. Differentiation strategy, and
3. Focus strategy
The Overall Cost leadership strategy is aimed at gaining a competitive advantage through
The low cost leader in any market gains competitive advantage from being able to many
to produce at the lowest cost. Factories are built and maintained; labor is recruited and trained to
deliver the lowest possible costs of production. 'cost advantage' is the focus.
Financial considerations and budgetary constraints play a critical role here in shaping
competitive price of the products.
Besides the production effiency, brand and marketing skills plays a important role in this
kind of competition.
For example:--Some organizations, such as Toyota, are very good not only at producing high
quality autos at a low price, but have the brand and marketing skills to use a premium pricing
A firm with a differentiation strategy attempts to achieve a competitive advantage by
creating a product or service that is perceived as unique.
Differentiated goods and services satisfy the needs of customers through a sustainable
competitive advantage. This allows companies to desensitize prices and focus on value that
generates a comparatively higher price and a better margin.
The benefits of differentiation require producers to segment markets in order to target
goods and services at specific segments, generating a higher than average price.
For example, British Airways differentiates its service by providing focus on
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15. exceptional good quality of service rather than focusing on low price.
The differentiating organization will incur additional costs in creating their competitive
advantage. These costs must be offset by the increase in revenue generated by sales.
There is also the chance that any differentiation could be copied by competitors.
Therefore there is always an incentive to innovated and continuously improve.
The focus strategy is also known as a 'niche' strategy. Where an organization can afford
neither a wide scope cost neither leadership nor a wide scope differentiation strategy, a niche
strategy could be more suitable.
Here an organization focuses effort and resources on a narrow, defined segment of a
market. Competitive advantage is generated specifically for the niche.
A niche strategy is often used by smaller firms. A company could use either a cost focus
or a differentiation focus.--
With a cost focus a firm aims at being the lowest cost producer in that niche or segment.
With a differentiation focus a firm creates competitive advantage through differentiation
within the niche or segment.
There are potentially problems with the niche approach. Small, specialist niches could
disappear in the long term. Cost focus is unachievable with an industry depending upon
economies of scale e.g. telecommunications.
The target for the 11th Plan period (2007-12) is 600 million phone connections with an
investment of US$ 73 billion. Apart from the basic telephone service, there is an enormous
potential for various value-added services. In fact, the real potential for telecom service growth is
still lying untapped. According to the CII Ernst & Young report titled 'India 2012: Telecom
growth continues', revenue from India's telecom services industry is projected to reach US$ 54
billion in 2012, as against US$ 31 billion in 2008
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16. Source: COAI
The progression chart below depicts the major regulations and events driving the extra ordinary
growth of Telecom sector from year 1999 to 2008. In order to capitalize this opportunity of
meeting the consumer needs in highly competitive market the operators have reduced the tariffs
to attract consumers with low purchasing power primarily in semi urban and rural India. In fact
lucrative offers like being paid for incoming calls have transformed the scenario completely.
Through these changing regulations and events, the Industry players are aiming to achieve the
Acquiring new subscribers by expanding in Semi Urban and Rural India
Selling more services to existing subscribers
The recent TRAI recommendation permitting PC-to-phone calls where ISPs can offer cheaper
STD calls and even free local calls. This would result in further reduction of voice tariffs. This
would lead to increased focus on MVAS by mobile operators.
Acquiring customers have always been a great challenge for companies. Given the current level
of saturation in Metros and Urban Market and cut throat competition among operators,
increasing subscriber base in urban market would be all the more challenging. Therefore a lot of
operators with adequate support from Government are eyeing the rural market for future
growth. Big operators like Airtel have claimed that soon mobile connections and recharge
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17. vouchers etc will be available at all such places from where people buy match boxes. This
certainly explains the future penetration of these services in remotest of villages.
This is relatively easier as compared to acquiring new customers. Also since now the new
subscriptions will largely happen at the bottom of the pyramid therefore the new subscriptions will
further lower the average revenue per user. In such a scenario mobile VAS sector is a potential long-
term revenue stream as it will be easier to sell more to the existing customers.
Government also has supported the growth of this sector by coming out with a number of
initiatives for the low end subscribers of rural India, and Universal Service Obligation (USO)
fund was one such initiatives. The USO fund was an initiative taken up by the government to
increase rural teledensity. In recent developments, BSNL and two private operators will erect
427 towers in remote areas offering over four lakh mobile connections. All the towers are
expected to be erected and commissioned by December 2008. Under the second phase, DoT
aims at erecting 11,000 towers throughout the country to offer over 11 million mobile
connections ADC was levied by Telecom Regulatory Authority of India (TRAI) in 2003 to
provide support for BSNL's rural telephone obligation. Telecom Regulatory Authority of India
(TRAI) has recently given orders for the withdrawal of the ADC (Access Deficit Charge) and
the subsequent passing of the benefit to the consumers by the telecom operators.
Decrease in ARPU despite increase in MOU: Though the subscriber base is growing
at a rapid pace and has positively impacted industry revenues, operator margins also have shrunk
owing to competition and lower “Average Revenue per User” (ARPU) as the major growth is
coming from bottom of the pyramid. As ARPU declines and voice gets commoditized, the
challenge is to develop alternative revenue streams and retain customers by creating a basis for
differentiation in high-churn markets. Need for differentiation: There is a greater need among
the telecom operators to differentiate themselves from each other.
Number of Licensees: With increasing number of licensees (98 UASL, and 37 cellular
licenses) in the telecom space the average numbers of operators in many circles have increased
to 5-6 operators offering more choices to the consumer. Thus the competition among the
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18. operators has increased tremendously. Therefore it is very important for them to differentiate
themselves from the others. Now that voice has got commoditized these operators are using
MVAS for their differentiation and marketing these services heavily for creating awareness
among the consumers.
Decreasing Call Rates: In order to attract consumers with relatively low purchasing
powers primarily from Semi Urban and Rural India the operators have drastically reduced the
call rates making it affordable to even the lower segment of society. The tariff in India is one of
the lowest at Rs.1 per minute as compared to the tariff in developed nations like USA and UK
where the call rates are Rs.13 and Rs7-8 respectively.
3G bidders who are non-operators: The arrival of new technologies will give rise to
greater competition as many non-operators are also bidding for the 3G licenses. Department of
has planned to allow five 3G operators in each circle depending on the availability of
spectrum. Therefore there would be a greater need to differentiate oneself in order to attract
new customers and retain the existing ones.
Saturation in Metro and Urban Market: The metro/urban areas offer high level of
penetration and have significant mobile subscribers. In such a highly saturated market with the
entry of MVNO‟s the competition will get fierce. Therefore capitalizing on value added services
will give operators opportunity to increase ARPU by providing premium services.
Increasing need and demand from consumers: In addition to the above supply side
reasons the „pull effect‟ from consumers asking for more than just basic telephony is also a key
driver for MVAS services. Today most of the consumers are seeking more from their
communication device apart from just mobility and desire to stay connected. As we have seen,
Telecommunication has moved beyond providing just basic voice calls. The mobile phone has
evolved from a mere communication device to an access mode with an ability to tap a plethora
of information and services available in the ecosystem. This is the reason why it is now being
referred to as the „fourth screen‟, after Cinema halls, Television and PC.
But the fundamental question that remains is how VAS is defined. A clear MVAS definition is
not only required to clear the air among the MVAS providers but it will also have an impact on
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19. the dynamics of the Value chain. A detailed definition of VAS might have an impact on the
licensing issues surrounding VAS. Let‟s look at different VAS definitions floating in the market.
Value Added Service (VAS) in telecommunication industry refers to non-core services,
the core or basic services being standard voice calls and fax transmission including bearer
services. The value added services are characterized as under:-
Not a form of core or basic service but adds value in total service offering.
Stands alone in terms of profitability and also stimulates incremental demand for core or
Can sometimes be provided as standalone.
Do not cannibalize core or basic service.
Can be add-on to core or basic service and as such can be sold at premium price.
May provide operational synergy with core or basic services.
A value added service may demonstrate one or more of these characteristics and not necessarily
all of them. In some cases, the value added service becomes so closely integrated with the basic
offering that neither the user nor the provider acknowledge or realize the difference. A classic
example is of P2P SMS. Some of the operators do not consider P2P SMS as part of their VAS
The Government of India issues licenses for the following Value Added Services:-
Public mobile trunking service Voice mail service
Closed users group domestic 64 kbps data network via INSAT satellites system
Unified messaging service
The next wave of Telecom growth will come from the bottom of the pyramid. For majority of
the population in the rural segment, the mobile phone is the first communication device. Rural
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20. should not always be interpreted as poor and therefore some categories of MVAS might apply
directly to them. But whether the statement can be extended to MVAS depends on some key
factors. One is to clearly identify the need of the rural segment, second is to communicate the
services to them i.e. generate awareness and thirdly, to provide an easy and cheap access mode
to the rural consumers. All these 3 are quite big challenges and therefore needs to be addressed
adequately for MVAS to take off in Rural India. Apart from the identification of rural consumer
needs and development of relevant content, communication of these services to the rural
population would be a bigger challenge. One way to do this is to communicate through regional
SMS for which a separate SMS gateway needs to be installed. Literacy level of the geographical
area will be another limitation. Therefore the better communication option is Voice in regional
languages. The challenge with regional voice is not only investment but also blockage of the
already scarce spectrum. Marketing the content in rural market is going to be all the more
challenging. This would require right packaging and pricing of MVAS. Providing cheap access
mode to end consumer would be another key booster to rural MVAS. Current voice MVAS
charges are expensive from a rural consumer perspective therefore that also would need to be
addressed for e.g. the „sachet model‟ could prove to be successful here. MVAS is going to
address two main needs of rural consumers- connectivity and entertainment mode. Connectivity
will provide Information VAS on Agriculture necessary for the farmer‟s livelihood e.g. mandi
rates, weather, etc. Health, finance, job opportunities etc are potential areas. Mobile also has the
potential to evolve as a key entertainment mode considering lack of other entertainment options
in rural areas. The industry has witnessed some type of content being downloaded more in small
towns of UP and Bihar rather than in metros like Delhi and Mumbai. Therefore by leveraging
on these two aspects MVAS can be a success in rural area.
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21. Currently the penetration of GPRS enabled handsets are close to 26% in India as against 99% in
South Korea and 76% in Japan. Of the total mobile subscribers in India 65 million possess
GPRS-enabled handsets. Of all those who possess GPRS enabled handsets only 20-25% of
them have got the GPRS activated and only about 15% use it. Even in case of developed nations
like South Korea and Japan not more than 50% of the subscribers owning GPRS enabled
handsets use it.
Population of india 1130mn
Mobile subscriber base 426Mn
GPRS Enable 65 Mn.
Source: TRAI REPORT,E Technology
This clearly indicates that the consumer today engage more in text based services than the web
based applications. Therefore for MVAS to grow to its full potential the handset manufacturers
will have to look at ways to manufacture GPRS enabled phones which are affordable and user
friendly. Moreover they would also need to increase its awareness and educate the consumers on
how to use GPRS.
The market for 3G in the country is expected to be huge with over 65 million wireless
subscribers, who use their handsets to access data services on the Web. These subscribers are
currently using mobile handsets which are internet-enabled and are potential broadband
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22. subscribers with the deployment of advanced wireless technologies such as 3G. According to
Indian Cellular Association (ICA) about 5% of mobile users already have handsets that can work
on 3G spectrum. In addition, out of all those possessing the 3G enabled handsets the number of
people who would use 3G services would be determined by the quality of content available.
Unlike most other countries, we are looking at 3G services not only as premium services but
also as an extension of 2G. Since our broadband penetration is abysmal, 3G would provide a
much required boost to it. Given that mobile phones are much cheaper as compared to PCs, the
demand for broadband on mobile is expected to be much greater. More importantly, 3G will
solve problems more in rural India. Therefore the shift towards 3G would depend on
affordability of handsets along with the quality of content available.
One of the most frequent definitions that prevail in the telecom circles for number portability is:
"Number portability is a circuit-switch telecommunications network feature that enables end users
to retain their telephone numbers when changing service providers, service types, and or locations."
Why mobile number portability (MNP)? When fully implemented nationwide by both wire line and
wireless providers, portability will remove one of the most significant deterrents to changing
service, providing unprecedented convenience for consumers and encouraging unrestrained
competition in the telecommunications industry. In short, this is the best method to increase the
efficiency of the service provider by increasing the competition, thereby ensuring better services in
all respects. From the subscribers’ perspective, this is a deceptively simple and very welcome
change, because they can change wireless service providers without worrying about notifying
friends, family and business contacts that their wireless number is changing. In addition, being able
to ‘port’ a number from one provider to another eliminates the hassle and expenses of changing
business cards, stationery, invoices and other materials for businesses. From the wireless carrier’s
perspective the change is anything, but simple. Virtually all of wireless carriers’ systems are affected.
Especially any system that relies on mobile identity numbers (MINs) or mobile directory numbers
(MDNs) will be affected. Examples of critical systems and processes that would be affected are:
billing, customer service, order activation, call delivery, roamer registration and support, short
messages service center, directory assistance, caller ID, calling name presentation, switches,
maintenance and CSC systems, home location registers (HLRs), and visiting location registers (VLRs).
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23. : One of the most common barriers in MNP implementation, within any country, has
been the implementation cost. Service Providers have been constantly bargaining for time, based on
the cost factor, from their respective governments. Referring to the recent example of the US,
where each of the large carriers would need to spend $50–60 million to institute the service and an
equivalent sum to maintain it. The FCC on this plea gave wireless carriers in the US another year, i.e.,
till November 2003, for resolving implementation issues. The experience of developed countries
exhibits that local number portability for fixed wireline was introduced within two to three years of
introduction of competition to incumbent state telcos. The cost estimate for the implementation of
WNP in developed nations like the US can be very helpful for the other countries, who wish to think
on the lines of number portability. To add on increased marketing costs are to be realized as the
carriers look to lock up their current base before number portability is implemented, and then
aggressively pursue the customers of other carriers thereafter.
: Every subscriber in a race to retain its
customer would like to offer its customers best services so as to save them from porting. It‟s like
a blessing in disguise for the customers, as they would get better service irrespective of the
carrier, albeit with the same number. Infrastructure Upgrade: To support WNP, a company
has to upgrade both its hardware and software capabilities, which will amount to some cost.
Softwares need to be upgraded to provide proper routing of calls. The carriers need to upgrade
their networks to handle portability requests. The provider, which has its portability compatible
would be expected to attract maximum customers and will emerge the winner. Cost Recovery
and Bill Reconciliation/Query Processing: When a customer plans to shift, the old service
provider (OSP) has to perform a query to identify if there are any billing amounts pending,
which they need to recover before the subscriber moves to the new service provider (NSP).
Globally, Singapore was the first country to implement MNP in 1997, followed by Hong Kong
in 1999 and Australia in 2001. Off late, many countries have adopted the MNP model to prevent
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24. market doldrums and putting pressure on service providers to furnish more services at a
competitive price level. However, it has not been able to produce any significant results in these
markets. While it has worked in markets like Hong Kong and Australia, it failed to bear fruit in
the UK, France, Germany, Pakistan, Ireland, Malta, among others. MNP worked in Hong Kong
due to the speedy porting process and the availability of already implemented solution (for fixed-
line services). In Australia, the regulator effectively promoted number portability and was able to
maintain the maximum porting time of just under three hours. Furthermore, in Finland, where
initially the implementation was viewed as a success due to dearth of minimal contract periods
and high migration incentives, operators failed to sustain the momentum.
The failure in most markets where MNP was implemented is attributed to factors like half-
hearted implementation, issues related to contract, lack of consumer awareness, overboard of
paperwork, technical difficulties and poor customer service.
The WiMAX vs. 3G cellular showdown is poised to become one of the next great market battles
in the telecom industry. Fortunes will be made and lost in this battle, and the user experience of
the Internet will be irreversibly changed in the process. 3G scores for voice; Wimax may lead to
increased broadband penetration. With the Department of Telecommunications gearing up for
simultaneous release of 3G and WiMax spectrum, analysts expect the two emerging wireless
technologies to battle it out for supremacy.
WiMax or Worldwide Interoperability for Microwave Access is a telecom technology that
enables wireless transmission of data. The technology is available as IEEE 802.16D (fixed) and
IEEE 802.16E (mobile). It offers downloads of up to 70 Mbps as compared to the 15 Mbps that
3G provides. Mobile WiMax offers download speeds of around 20 Mbps. In India, companies
like Tata Communications Internet Services, Intel, Bharat Sanchar Nigam Ltd, Bharti Airtel and
Reliance Communications are the proponents of WiMax. Most of the companies have had beta-
runs of the technology. According to a top official with a service provider, telecom service
providers are in various stages of WiMax implementation. Some companies have commercially
launched fixed WiMax services in certain cities.
While opponents of WiMax say currently it cannot be used for mobile applications, the first
mobile WiMax network was introduced in Italy this July. Another reason for the industry
pinning its hopes on WiMax is its ability to increase the broadband penetration. WiMax makes
huge sense for companies as it enables them to provide cheaper mobile internet and broadband
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25. services, in turn, increasing the internet penetration. However, this will adversely impact services
like GPRS and e-mail on mobile as users might move over to WiMax-enabled devices for data,
even though they might stick with 3G or 2G spectrum for voice. The Telecom Regulatory
Authority of India has set a target of 20 million broadband connections by 2010 from the
current 4.3 million. The industry expects WiMax to bridge the gap. According to a consultant of
Ernst & Young service providers would mainly use the technology for gaining traction with the
customers, as providing the last mile over the conventional digital subscriber lines would be
time-consuming and costly.
Operators will have to use 3G spectrum to revive voice services that are being choked by a
dearth of 2G spectrum, Patel added. The WiMax customer premise equipment (CPE) is priced at
Rs 5,000-10,000, while the CPEs for 3G would be cost Rs 10,000 and above. The industry will
know the winner in the next six months, when the spectrum allocation is complete.
Mobile Virtual Network Operator (MVNO) is a GSM phenomenon where an operator or
company which does not own a licensed spectrum and generally with out own networking
infrastructure. Instead MVNOs resell wireless services under their brand name, using regular
telecom operator's network with which they have a business arrangements. Usually they they buy
minutes of use from the licensed telecom operator and then resell minutes of usage to their
customers of MVNO. Currently MVNOs are emerging in fast pace in European markets and
beginning in USA also. Slowly MVNO phenomenon catching up in Asia and other parts of the
An example for MVNO is Virgin Mobile. Virgin Mobile plc is a mobile phone service provider
operating in the UK, Australia and Canada, and the US. The company was the world's first
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26. Mobile Virtual Network Operator, launched in the UK in 1999. It does not maintain its own
network, and instead has contracts to use the existing network(s) of other providers. In the UK,
Virgin Mobile uses the T-Mobile network. In the US, the Sprint network is the carrier. In
Australia, Virgin Mobile operates on the Optus network. In Canada, it uses the Bell Mobility
network. These networks use different technology (GSM in the UK and Australia and CDMA in
the US and Canada). Usually MVNO's do not have their own infrastructure, some providers are
actually deploying their own Mobile Switching Centers (MSC) and even Service Control Points
(SCP) in some cases. Some MVNO's deploy their own mobile Intelligent Network (IN)
infrastructure in order to facilitate the means to offer value-added services. In this way, MNVO's
can treat incumbent infrastructure such as radio equipment as a commodity, while the MVNO
offers its own advanced and differentiated services based on exploitation of their own IN
infrastructure. The goal of offering value-added services is to differentiate versus the incumbent
mobile operator, allowing for customer acquisition and preventing the MVNO from needing to
compete on the basis of price alone. MVNO's have full control over the SIM card, branding,
marketing, billing, and customer care operations. While sometimes offering operational support
systems (OSS) and business support systems (BSS) to support the MVNO, the incumbent
mobile operators most keep their own OSS/BSS processes and procedures separate and distinct
from those of the MVNO. In the future a cell phone user may be able to subscribe to a network
operator plus multiple MVNOs for specific data services over the same phone. One MVNO
could provide sports news, another weather and traffic and still another could provide instant
messaging capabilities. In this way, each MVNO and the network operator could focus on their
own niche markets and form customized detailed services that would expand their customer
reach and brand.
So far MVNOs have not been regulated in any country. The ITU has received several requests
to study the issue, specifically to provide input on whether government intervention is necessary
to allow MVNOs to offer services and applications at a lower price to consumers. This would
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27. help to ensure a more efficient use of the spectrum but some incumbent providers argue that the
market is already competitive and intervention is not necessary.
IPTV (Internet Protocol Television) delivers television programming to households via a
broadband connection using Internet protocols. It requires a subscription and IPTV set-top box,
and offers key advantages over existing TV cable and satellite technologies. IPTV is typically
bundled with other services like Video on Demand (VOD), voice over IP (VOIP) or digital
phone, and Web access, collectively referred to as Triple Play.
Because IPTV arrives over telephone lines, telephone companies are in a prime position to offer
IPTV services initially, but it is expected that other carriers will offer the technology in the
future. IPTV promises more efficient streaming than present technologies, and therefore
theoretically reduced prices to operators and subscribers alike. However, it also adds many
advantages that may play into market pricing. One of the advantages of IPTV is the ability for
digital video recorders (DVRs) to record multiple broadcasts at once. According to Alcatel, one
leading provider, it will also be easier to find favorite programs by using "custom view guides."
IPTV even allows for picture-in-picture viewing without the need for multiple tuners. You can
watch one show, while using picture-in-picture to channel surf! IPTV viewers will have full
control over functionality such as rewind, fast-forward, pause, and so on. Using a cell phone or
PDA, a subscriber might even utilize remote programming for IPTV. For example, if a dinner
function runs longer than expected, you don't have to miss your favorite program. Just call
home and remotely set the IPTV box to record it.
However, the real advantage of IPTV is that it uses Internet protocols to provide two-way
communication for interactive television. One application might be in game shows in which the
studio audience is asked to participate by helping a contestant choose between answers. IPTV
opens the door to real-time participation from people watching at home. Another application
would be the ability to turn on multiple angles of an event, such as a touchdown, and watch it
from dual angles simultaneously using picture-in-picture viewing.
One can also receive Web service notifications while watching IPTV for things such as incoming
email and instant messages. If you IPTV is packaged with digital phone, Caller ID might pop up
on screen as your telephone rings.
IPTV is already growing in the international market, with providers in many countries including
Japan, Hong Kong, Italy, France, Spain, Ireland, and the United Kingdom. In the United States
SBC, reportedly purchased a software delivery system for IPTV services from Microsoft in 2004
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28. for $400 million dollars. Alcatel is working with Microsoft to develop a "global solution" for
IPTV services, and Verizon has also made a deal with Microsoft for IPTV software.
Bharti Airtel is one of Asia‟s leading providers of telecommunication services with presence in
all the 22 licensed jurisdictions (also known as Telecom Circles) in India, and in Srilanka.
They served an aggregate of 105,195,762 customers as of June 30, 2009; of whom 102,367,881
subscribe to their GSM services and 2,827,881 use Telemedia Services either for voice and/or
broadband access delivered through DSL.
They also offer an integrated suite of telecom solutions to their enterprise customers, in
addition to providing long distance connectivity both nationally and internationally. They have
launched DTH and IPTV Services also. All these services are rendered under a unified brand
The company also deploys, owns and manages passive infrastructure pertaining to
telecom operations under its subsidiary Bharti Infratel Limited. Bharti Infratel owns 42% of
Indus Towers Limited.
Bharti Infratel and Indus Towers are the two top providers of passive infrastructure
services in India.
Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises.
Airtel comes to you from Bharti Airtel Limited, India‟s largest integrated and the first
private telecom services provider with a footprint in all the 23 telecom circles.
Bharti Airtel is structured into three strategic business units - Mobile services, Telemedia
services and Enterprise services.
The mobile business provides mobile & fixed wireless services using GSM technology.
Airtel was voted as the „Best Cellular Service‟ in the country for four consecutive years.
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29. The Stock Exchange, Mumbai (BSE) The National Stock Exchange of India
Headquarters New Delhi, India
Key people Sunil Mittal
Products Mobile and Fixed-Line Telecommunication operator, Airtel DTH
Revenue $6 Billion
Slogan Express Yourself
Shahrukh Khan, Karina Kapoor,Sachin Tendulkar,A.R.Rahman,
Saifali Khan, Madhvan,Vidhya Balan,Anandi (Avika guar) Balika vadhu.
Shares in Issue: 1,898,373,280 as at June 30, 2009
Company Vision: By 2010 Airtel will be the most admired brand in India.
Loved by more customers.
Targeted by top talent.
Benchmarked by more businesses.
Leading Competitors- VODAFONE, IDEA, BSNL, RELIANCE, TATA, AIRCEL
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30. Vodafone is a British multinational mobile network operator headquartered in Newbury, United
Kingdom. Vodafone is the world's largest mobile telecommunication network company, based
on revenue, and has a market value of about £71.2 billion (November 2009).
Vodafone is the world's largest mobile telecommunications community, employing over 65,000
staff and with over 130 million customers. The business operates in 26 countries worldwide.
Vodafone is a public limited company with listings on the London and New York stock
Global recognition of the Vodafone brand is growing as the company rolls out its identity into
new markets. However, it retains local names and imagery in markets where this is essential to
maintaining the trust of customers.
To help promote its image worldwide, Vodafone uses leading sports stars from high profile
global sports, including David Beckham and Michael Schumacher. This Case Study concentrates
on how such promotion can help to keep a leading brand at the forefront of public awareness
For that reason our team decided to work on few steps which were basically to get the feed back
from the market as fallow.
Basically our objectives were to find out the behaviors of the consumers or the customers
towards the product available in the market that either consumer or the customer is after the
Quality of the product.
After the price of the product.
After the good presentation of the product which includes the servicing.
If the consumer is after or comes for particular product and why, either because
of effective advertisement on the media like television or news papers or other means of
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Founded 1983 as Racal Telecom, independent 1991
Headquarters Newbury, England, UK
Arun Sarin, CEO
Sir John Bond, Chairman
John Buchanan, Deputy Chairman
Andy Halford, CFO
Industry Mobile telecommunications
Products Mobile networks, Telecom services, Etc.
Revenue ▲ £31.104 billion GBP (2007)
Net income ▼ £-1.564 billion GBP (2007)
Slogan Happy to help
Main Attractions of advertisement Dog, Zoo zoos
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32. Idea Cellular is a wireless telephony company operating in all the 22 telecom circles in India. It
initially started in 1995 as a joint venture among the Tatas, Aditya Birla Group and AT&T by
merging "'Wings Cellular'" operating in Madhya Pradesh, Uttar Pradesh (UP) West, Rajasthan
and Tata Cellular as well as Birla AT&T Communications.
Initially having a very limited footprint in the GSM arena, the acquisition of Escotel in 2004 gave
Idea a truly pan-India presence covering Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya
Pradesh, Chhattisgarh, Uttar Pradesh (East and West), Haryana, Kerala, Rajasthan, Delhi
(inclusive of NCR) and West Bengal.
The company has its retail outlets under the "Idea n' U" banner. The company has also been the
first to offer flexible tariff plans for prepaid customers. It also offers GPRS services in urban
areas. Idea Cellular won the GSM Association Award for "Best Billing and Customer Care
Solution" for 2 consecutive years.
Type Spice: Public, Listed on BSE
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33. Idea: Subsidiary
Spice: Mohali, India
Idea: Indore, Delhi, Pune, India
Spice: Dilip Modi
Idea: Chairman: Kumar Mangalam Birla ; MD: Sanjeev Aga
Products Mobile operator
Spice: Spice Hai toh life hai (If there's Spice then there's Life.)
Idea: An !dea can change your life.
Spice: Spice Telecom ;
Brand Ambassador Abhishek Bachan
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34. Reliance Communications, formerly known as Reliance Info comm, along with Reliance
Telecom and Flag Telecom, is part of Reliance Communications Ventures. It is an Indian
telecommunications company. According to National Stock Exchange data, Anil Dhirubhai
Ambani controls 66.77 per cent of the company, which accounts for more than 1.36 billion
shares. It is the flagship company of the Reliance-Anil Dhirubhai Ambani Group, comprising
of power (Reliance Energy), financial services (Reliance Capital) and telecom initiatives of the
Reliance ADAG. It uses CDMA2000 1x technology for its existing CDMA mobile services, and
GSM-900/GSM-1800 technology for its existing/newly launched GSM services.
RelCom is also into Wire line Business throughout India and has the largest optical fiber
communication (OFC) backbone architecture [roughly 110,000 km] in the country.
Reliance Communications has launched its Direct To Home (DTH) TV also, known as "Big
TV". RelCom have presence across all B2C communications channel in one of the fastest
growing markets in the world.
BID FOR HUTCH: In 2007, Reliance Communications had bid for 67% of Hutch but lost to
Vodafone, which had been led by its CEO at the time Mr.PIYUSH.P.
In July 2007, the company announced it is buying US-based managed Ethernet and application
delivery services company Yipes Enterprise Services for a cash amount of Rs. 1200 crore rupees
(equivalent of USD 300 million). The deal was announc overseas acquisition, the Reliance group
has amalgamated the United States-based Flag Telecom for $ 211 million [roughly Rs 950 crore
(Rs 9.50 billion)].
Type Public (BSE: RCOM)
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35. Founded 2004
Headquarters Navi Mumbai, Maharashtra, India
Key people Anil Ambani
(Chairman) & (MD)
Vice-Chairman Reliance-ADA Group
Revenue US$ 4.26 billion (2008)
Net income US$ 1.35 billion (2008)
Total assets US$ 19.31 billion (2008)
Brand ambassador Hritik Roshan
TATA: AN OVERVIEW
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36. Tata Comm. is India's leading international telecom service provider. It is today part of
the Tata Group. It started as a successor to the erstwhile Overseas Communication Services, and
went on to become the premier provider of international voice and data services.
Tata Teleservices Limited (TTSL) is a part of the Tata Group of companies, an Indian
conglomerate. It operates under the brand name Tata Indicom in various telecom circles of
India. In Nov 2008, Japanese telecom giant NTT Docomo picked up a 26 per cent equity stake
in Tata Teleservices for about Rs 13,070 crore ($2.7 billion) or an enterprise value of Rs 50,269
crore ($10.38 billion). In Feb 2008, TTSL announced that it would provide CDMA mobile
services targeted towards the youth, in association with the Virgin Group on a Franchisee model
Tata Teleservices Provides mobile services under 3 Brand names:
Tata Teleservices Limited (TTSL)
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37. Type Private
Headquarters Navi Mumbai, India
Mr. Ratan N. Tata
Anil Kumar Sardana
Parent Tata Group
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38. BSNL OVERVIEW
Bharat Sanchar Nigam Limited (known as BSNL) is a public sector telecommunication
company in India. It is India's largest telecommunication company with, 24% market share as on
March 31, 2008. Its headquarters are at Bharat Sanchar Bhawan, Harish Chandra Mathur Lane,
Janpath, New Delhi. It has the status of Mini Ratna, a status assigned to reputed public sector
companies in India.
BSNL is India's oldest and largest Communication Service Provider (CSP). Currently has a
customer base of 90 million as of June 2008. It has footprints throughout India except for the
metropolitan cities of Mumbai and New Delhi which are managed by MTNL. As mon March
31, 2008 BSNL commanded a customer base of 31.55 million Wire line, 4.58 million CDMA-
WLL and 54.21 million GSM Mobile subscribers. BSNL's earnings for the Financial Year ending
March 31, 2007 stood at INR 397.15b (US$ 9.67 b) with net profit of INR 78.06b (US$ 1.90
billion). BSNL has an estimated market value of $ 100 Billion. The company is planning an IPO
within 6 months to offload 10% to public in the Rs 300-400 range valuing the company at over
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39. Founded 19th century, incorporated 2000
Headquarters Bharat Sanchar Bhawan, Harish Chandra Mathur Lane, Janpath, New Delhi
Revenue US$ 9.67 billion (2007)
Owner(s) The Government of India
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40. Type Joint Venture
Headquarters Gurgaon, India
Unitech Group (32.75%)
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41. Type Public (BSE: 511389)
Founder(s) Nandlal Madhavlal Dhoot
Headquarters Aurangabad, Maharashtra, India
K. R. Kim
Revenue ▲ US$4 billion (2010)
Net income ▲ US$276 million (2010)
Employees 5,000 (2010)
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42. FOUR P‟S ARE:-
Product- Sim cards, Plug to surf devices, Handsets for CDMA
Price- Offers, Schemes
Promotion: Print media, Electronic media, Outdoor media, Sales promotion
Place: Every retail shop, Offices, Home, Institutions
The study shows it clearly that Vodafone have a huge market share due to its better
service and good network. But the thing that differentiate it from the competitors that it provide
the more and more number of the value added services.
Latest advertisement of Vodafone: Zoo zoos” is very attracting and it increases the
sales of the Vodafone , the marketing manager of Vodafone reveals that statement.
Study clearly shows that Vodafone is a has a brand image in the mind of public due to
their willingness to provide the best service.
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43. Vodafone focused more and more on the value added service and marketing. Recently
Vodafone gave its whole concentration by a series of advertisements of ZOOZOO series. This
move of Vodafone proved very successful to attract the more and more number of the
Airtel basically uses two appeal to connect to the users
In 2002, Airtel signed on music composer A.R.Rehman and changed its tune to "live
every moment": rah man’s signature tune for Airtel is the most downloaded ringbone in
India. But that was just part of the ongoing communication.
The following year Airtel adopted the "express yourself" positioning, which is also its
Youth icons like Shahrukh khan and Sachin Tendulakar were brought in as brand
ambassadors to attract youngsters
Add campaign with an eye on the rural market
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44. The whole advertisement and promotion is designed by taking urban youth in focus but there
are large no of youths in rural sector as well and they can be their future consumers. Taking big
stars as brand ambassador is good decision. But organizations can further use recent bronze
medallist Boxer Vijendra kumar as there endorsement. Vijendra is having good looking
personality and he belongs to rural area so in this way rural people will start associating
themselves with that brand “SABKA AIRTEL”. Airtel can also use BALIKA VADHU fame
“ANANDI” (Avika gaur) targeting rural women and rural youth
Youth to Drive Growth:--Airtel should more concentrate towards the youth. As the increasing
market share of rivalry brand Virgin, clearly shows that youth can play a major role in this
competition. Attracting the Youth:-- To attract more youth community Airtel can go for more
and more plans for youth under the same brand “SABKA AIRTEL”. In this plan Airtel can give
SMS pack (it‟s for SMS generation), cheaper call rates schemes only for school and college going
students. In this plan Airtel should go for the heavy youth promo with fast dance track and cute
guys and gals.
Mobile service providers should provide the facility of portability of number.
Mobile service providers should provide the web access at cheaper cost.
Telecom market is quite competitive so mobile service providers should provide the
services at cheaper cost.
Mobile service providers should focus on providing better network coverage Especially
Mobile service providers should provide various schemes for their existing customers.
BSNL have to make more attractive ads.
Add some other promotional offers.
Makes some sense full ads for Tata Doccomo
For making interactive add to connect with customers.
Consolidation in Industry.
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45. Telecom players are looking to tap into global funds to finance their aggressive growth plans.
This will result in partnerships joint ventures and equity sellout to foreign players. New license
holders will continue to look to sell their stake at a premium. New policies will seek to curb this
license arbitrage. Smaller players with operations in only a few circles will find in difficult to
compete with the nationwide players. The industry may see consolidation with these smaller
operators being acquired by the larger ones. “Unbundling of the corporation” will continue as
companies will seek f or economies of scale and lower startup cost by infrastructure sharing. 3G
and WiMax license will spur M&A and partnership activity.
Idea Cellular’s Acquisition of Spice Telecom
There were three transactions as part of this acquisition; acquisition of shares of Spice, a non-
compete fee and a capital infusion of about Rs 7300 crores received from TM International Bhd
(TMI). With respect to shares, Idea acquired 40.8% stake of Spice Communications at Rs 77.30
a share for Rs 2,716 crore. There was a share swap in which Spice shareholders got 49 Idea
shares for every 100 Spice shares held. An additional Rs 544 crore was paid to the promoters of
Spice group as 'non-compete fee'. The deal was strategically important for Idea Cellular as it was
looking forward to transfer itself into a pan-India telecom service provider. The spectrum
auctioned by GoI is a scarce resource nowadays and cost a premium. Also there‟s restriction by
TRAI with respect to number of operators per telecom circle. So it makes sense to acquire a
small telecom operator. Small players like Spice Telecom operating at only a few
circles(Karnataka and Punjab) will find difficult to compete with the nationwide players in the
long run. So it was a win-win deal for both companies.
VODAFONE’S ENTRY INTO INDIA
Vodafone paid a discounted price of $10.9 billion in cash for acquiring the 52% stake held by
Hutchison Telecom International (HTIL) in Indian mobile firm Hutch-Essar. HTIL declared a
special dividend of 6.75 HK dollars per share following the completion of the formalities. The
final price was a reduction of $180 million from the originally agreed price of $11.08 billion.
Vodafone is the largest mobile telecommunications network company in the world. The deal
gave them access to one of the fastest growing mobile markets in the world.
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46. Norwegian Telecom major Telenor is in the process of acquiring controlling stake of 67.25% in
Unitech wireless via equity infusion. The enterprise valuation of Unitech Wirelsss is about Rs
10,900 crore. As per the deal, Telenor will infuse cash in four stages and at each phase, by
increasing its stake in Unitech Wireless. In the first phase, they got 33.5% ownership in Unitech
Wireless. In the second phase they completed the acquisition for a 49 per cent stake in Unitech
Wireless by paying Rs 1,130 crore for a further 15.5 per cent stake in the company. The
acquisition is expected to be completed by end of this quarter.
TTSL – DoCoMo Deal.
Japanese carrier NTT DoCoMo acquired 26 per cent stake in Tata Teleservices (TTSL). The
Tata DoCoMo-branded GSM service has already started in Southern India and gradually will be
expanded nationwide. DoCoMo‟s international expansion plans have not always proven
successful, with the firm historically preferring to take small stakes in firms and then try to
influence their strategy. It has been less prepared to take majority stakes and impose its will, as
other leading carriers have chosen to do.
The difficulties faced by the firm in spreading its domestically successful i-mode service
internationally typify the obstacles it has faced overseas. With Tata, DoCoMo had said
“participating proactively in TTSL‟s management by providing human resources and technical
assistance to help realise improved network quality and the possible introduction of leading-
edge, value-added services.”
Bharti-MTN deal (in talks).
Recently Bharti Airtel has re-started its audacious merger bid with MTN that could create a $61-
billion transnational telecom goliath with combined revenues of $20 billion and over 200 million
subscribers across Africa, Asia and Middle East, will be among the world's 10 biggest telecom
companies. The deal could be win-win for both parties. Bharti is under pressure in its home
country due to severe competition and looking forward to spread its risk across geographies.
Meanwhile, the African telecom operator is also encountering some of the problems that its
counterpart in India is confronting. MTN may have higher ARPUs (in the range of $12-20), but
they are also falling fast.
Strategic benefits to both players
Synergies would be sought from a number of areas, including procurement, operational best
practice, R&D and international network sharing. The two companies will not overlap in each
other‟s business operations: Bharti Airtel will be the primary vehicle for Bharti and MTN to
pursue further expansion in Africa and the Middle East.
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47. With both Bharti and MTN operating in high-growth geographies, it would be imperative for
them to incrementally expand into untapped areas. Collaborating with each other would seem
the logical way ahead. The most important, and visible fallout of the deal, if it materializes, will
be the advantage of economies of scale for the new entity.
In recent times, companies are more amenable to mergers and acquisitions. Of late, companies
are finding it tough to obtain easy funds for expansion, which calls for more collaboration if
corporate intend to expand. Bharti would not be involved only in MTN‟s day-to-day activities,
but it would also have a say while making bigger strategic decisions, such as those pertaining to
investments in other geographies or sourcing of equipment. The high subscriber base and
financial muscle will give Bharti-MTN the desired edge while dealing with vendors. Once the
merger happens, the economies of scale of the complete outfit (Bharti-MTN) would be taken
into account. For instance, even if the company places an order worth just $1 million, the
vendor would not hesitate to lap it up, as there could be orders worth a billion dollars in other
projects. This would offset whatever concerns there may be with respect to the small population
size in countries where MTN operates.
Takeaways for Bharti
The biggest takeaway for Bharti is in the form of access to new geographies with high growth
potential. Without a partner, Bharti would have to embark on a Greenfield project, which would
be time-consuming and capital intensive.
Besides, without local knowledge (with respect to the market and government regulations),
Bharti could be on a sticky wicket. The Indian telco does not have the expertise in running
MTN has operations in 21 countries across Africa and the Middle East and is one of the largest
emerging market mobile operators globally. While Africa has one-third of the world‟s
population, its telephonic density is just 30 per cent. This offers plenty of room for expansion.
The fact that 95 percent of Africa is prepaid, which ensures all cash operations, fits perfectly into
The options for Bharti were to go either the Greenfield way or with an experienced partner.
MTN‟s strong foothold in some growing markets such as South Africa, Botswana, Iran and
Nigeria ensures that when the growth in India starts to slow down, Bharti would be ready to take
off in other geographies. Besides, there is a lot of potential in Africa as three-fourths of the
continent is still untapped.
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48. Africa is quite like rural India and from that perspective; Bharti could learn how to roll out
infrastructure in rural India.
In addition, MTN is strong in the value-added services (VAS) and mobile commerce space. So,
as and when mobile commerce picks up in India (after RBI‟s approval), Bharti would be able to
tap this market through MTN‟s expertise.
MTN has a vast experience in running multi-country operations and overcoming regulatory
hurdles. By working with MTN, life for Bharti will get a lot of easier.
One of the major challenges would be the integration of the company on the ground. It is
tough for intercontinental companies to merge seamlessly because of cultural divide.
Alcatel-Lucent for instance is still trying to adjust to cultural divide. Although Nokia-Siemens
has bridged this divide faster, it was because both the companies were European.
The Black Empowerment Act could pose a challenge, as it is meant to safeguard the rights of
the black population. As per this Act, blacks are ensured a minimum shareholding management
seats and voting rights.
The country’s strong trade union, Congress of South African Trade Unions (COSATU), which
has influence over President Jacob Zuma, had almost wrecked the Vodafone-Vodacom deal.
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$ 7,513.22 million. This makes telecommunication the third-largest sector to attract FDI in
India in the post liberalization era. The investment was majorly in handset manufacturing and
telecom service provider.
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49. With stable macroeconomic impetus and numerous other advantages, India has the potential to
become the electronics manufacturing hub of the world. Excited by the record-breaking industry
growth, investors have outlaid US$ 1.5 billion in the past two and a half years in the Indian
telecom sector. India will receive an additional US$ 2 billion investment in the next one year.
With the world now recognizing India‟s manufacturing potential, the Indian telecom handset
manufacturing market is likely touch US$ 7 billion by 2010. An example is Nokia. The company
has already produced 25 million handsets in its Chennai facility. It will pump in an additional
US$ 150 million to this set up. The company exports around 20 per cent of its volume to South-
east Asia, the Middle East and Africa. Local manufacturing allows companies to avoid 4 per cent
countervailing duties on imported handsets, thereby further reducing the cost.
Managed service is another segment that is attracting telecom companies. On account of the
rapidly growing subscriber base, service providers find it difficult to manage their infrastructure
and network. In such cases, they completely or partially outsource their infrastructure or
network management operations.
Hutchitson Essar (now Vodafone) and Nokia Deal:
A case in point is Nokia which is managing the network for Hutchison Essar Limited in 19
circles in India. Having successfully capitalized on the business potential of managed service,
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50. Nokia is already earning 30 per cent of its total revenue from this segment. The company has
also shifted its first Global Network Solutions Centre (GNSC) to India. The company manages
39 cellular networks in 30 countries. Its Indian center will act as a global hub for other Nokia
Advantages of Managed Service
• Smooth management of technological complexity
• Opportunity to strengthen core competency
• Reduction in financial outlay
• Touching base with new processes and technologies
Another dimension of managed service is telecom, communication and network management
solutions for enterprises. Bharti Televentures and IBM, together offer telecom and IT solutions
in India. The solutions and services portfolio comprises of the remote monitoring of servers,
security operations and network operations, providing data center services (including server
hosting, server management and storage management), IT help desk services and end-to-end
connectivity and fulfilling all telecom and communication requirements. This information
technology outsourcing deal with infotech major IBM is estimated to be in the range of $700-
750 million for a ten-year period.
The deal involved outsourcing of BTVL's hardware, software and IT service requirements to
IBM. The agreement specifies that payments made to IBM India will be linked to the percentage
of revenue generation by BTVL and pre-defined service level agreements. The percentage-linked
revenue payment is modeled to decrease with BTVL's increase in revenue. The deal includes all
customer-facing IT applications like billing, customer relationship management and data
warehousing. In addition, Internet, e-mail and online collaborations are included in it. On the
infrastructure front, IBM will consolidate BTVL's data center, IT helpdesk and enhance its
disaster recovery center capabilities, he said.
Bharti’s Outsourcing to Alcatel-Lucent:
Telecom major Bharti Airtel has a $500-million deal to Alcatel-Lucent for outsourcing the
management and servicing of its broadband and fixed line network for five years. The deal
involves the creation of a joint venture with Alcatel-Lucent holding 76 per cent of the equity,
and Bharti having the remainder 24 percent. The joint venture will help accelerate performance
as Bharti migrates to the next generation networks for the broadband and telephone customers.
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51. Bharti Outsourcing Deal with Nokia & Ericsson
Bharti Airtel awarded a $400m contract to Nokia for expanding its managed GSM networks in
eight circles. This also marks Bharti‟s third major deal with Nokia in the last two years. Bharti
would have 100% ownership of the networks supplied by Nokia, with the actual payment being
linked to utilization of capacity and fulfillment of agreed quality of service parameters. This
comes close on the heels of Bharti‟s recent signing of a $1bn three-year service contract with
Ericsson towards design, planning, supply, installation, commissioning and upgrading of its
network in 15 telecom circles. This emphasizes Bharti‟s policy towards outsourcing all
operational activities, including customer services to global majors. This has enabled Bharti to
focus on its core areas: product innovation, value added services, marketing, branding and
pricing. It has enabled Bharti to concentrate on customers, finances and regulation. As per the
three-year contract, Nokia will provide managed services and expand Airtel‟s
GSM/GPRS/EDGE networks in eight circles of Mumbai, Maharashtra & Goa, Gujarat, Bihar,
Orissa, Kolkata, West Bengal and Madhya Pradesh. The network monitoring operations will be
carried out from Nokia‟s state-of-the-art Global Network Services Center in Chennai. The deal
also envisages Nokia to deploy its WAP solution across Bharti‟s national network to enhance its
mobile packet core network capabilities. This will make usage of data services easy, thereby
increasing the consumption of content on the Bharti network.
Future Technology Trends
In this section we have listed down the future technologies which are in roadmap and are
speculated to make an impact on current business model of telcos.
IP Multimedia Subsystem (IMS)
IP Multimedia Subsystem (IMS) is a generic architecture for offering multimedia and voice over
IP services, defined by 3rd Generation Partnership Project (3GPP). IMS is access independant
as it supports multiple access types including GSM, WCDMA, CDMA2000, WLAN, Wireline
broadband and other packet data applications. IMS will make Internet technologies, such as web
browsing, e-mail, instant messaging and video conferencing available to everyone from any
location. It is also intended to allow operators to introduce new services, such as web browsing,
WAP and MMS, at the top level of their packet-switched networks. IP Multimedia Subsystem is
standardized reference architecture. IMS consists of session control, connection control and an
applications services framework along with subscriber and services data. It enables new
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52. converged voice and data services, while allowing for the interoperability of these converged
services between internet and cellular subscribers. IMS uses open standard IP protocols, defined
by the IETF. So users will be able to execute all their services when roaming as well as from
their home networks. So, a multimedia session between two IMS users, between an IMS user
and a user on the Internet, and between two users on the Internet is established using exactly the
same protocol. Moreover, the interfaces for service developers are also based on IP protocols.
Some of the possible applications where IMS can be used are:
Full Duplex Video Telephony
Push-to services, such as push-to-talk, push-to-view, push-to-video
Effectively, IMS provides a unified architecture that supports a wide range of IP-based services
over both packet- and circuit-switched networks, employing a range of different wireless and
technologies. A user could, for example, pay for and download a video clip to a chosen mobile
or fixed device and subsequently use some of this material to create a multimedia message for
delivery to friends on many different networks. A single IMS presence-and-availability engine
could track a user's presence and availability across mobile, fixed, and broadband networks, or a
user could maintain a single integrated contact list for all types of communications. A key point
of IMS is that it is intended as an open-systems architecture: Services are created and delivered
by a wide range of highly distributed systems (real-time and non-real-time, possibly owned by
different parties) cooperating with each other. It is a different approach to the more traditional
telco architecture of a set of specific network elements implemented as a single telco-controlled
High Speed Downlink Packet Access (HSDPA)
High Speed Downlink Packet Access (HSDPA) is a packet based technology for W-CDMA
downlink with data transmission rates of 4 to 5 times that of current generation 3G networks
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53. (UMTS) and 15 times faster than GPRS. The latest release boosts downlink speeds from the
current end-user rate of 384 kbps (up to 2 Mbps according to standards) to a maximum value
according to standards of 14.4 Mbps. Real life end-user speeds will be in the range of 2 to 3
HSDPA provides a smooth evolutionary path for Universal Mobile Telecommunications System
(UMTS) networks to higher data rates and higher capacities, in the same way as Enhanced Data
rates for GSM Evolution (EDGE) does in the Global System for Mobile communication (GSM)
world. The introduction of shared channels for different users will guarantee that channel
resources are used efficiently in the packet domain, and will be less expensive for users than
4G or Fourth Generation Networks
4G or Fourth Generation is future technology for mobile and wireless comunications. It will be
the successor for the 3Rd Generation (3G) network technology. Currently 3G networks are
under deployement. Approximatly 4G deployments are expected to be seen around 2010 to
2015. The basic voice was the driver for second-generation mobile and has been a considerable
success. Currently , video and TV services are driving forward third generation (3G)
deployment. And in the future, low cost, high speed data will drive forward the fourth
generation (4G) as short-range communication emerges. Service and application ubiquity, with a
high degree of personalization and synchronization between various user appliances, will be
another driver. At the same time, it is probable that the radio access network will evolve from a
centralized architecture to a distributed one.
The evolution from 3G to 4G will be driven by services that offer better quality (e.g. multimedia,
video and sound) thanks to greater bandwidth, more sophistication in the association of a large
quantity of information, and improved personalization. Convergence with other network
(enterprise, fixed) services will come about through the high session data rate. It will require an
always-on connection and a revenue model based on a fixed monthly fee. The impact on
network capacity is expected to be significant. Machine-to-machine transmission will involve
two basic equipment types: sensors (which measure parameters) and tags (which are generally
read/write equipment). It is expected that users will require high data rates, similar to those on
fixed networks, for data and streaming applications. Mobile terminal usage (laptops, Personal
digital assistants, handhelds) is expected to grow rapidly as they become more user friendly.
Fluid high quality video and network reactivity are important user requirements. Key
infrastructure design requirements include: fast response, high session rate, high capacity, low
user charges, rapid return on investment for operators, investment that is in line with the growth
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54. in demand, and simple autonomous terminals. The infrastructure will be much more distributed
than in current deployments, facilitating the introduction of a new source of local traffic:
The Indian Telecom Service provider industry is gearing for a revolution. The customer is
driving this revolution and will see more unique and sophisticated offerings coming his way. The
3G which will pave the way for 3.5G, 3.75G and the next big thing-4G and the VAS services
will keep the customer asking for more. The rural areas which have remained untapped will see
an insurgence of services. Also the easing of the regulations by TRAI ,the ease of spectrum
licensing, the FDI influx will make the telecom space in India a must watch in the coming years.
[1} IBEF report 2007-08/08-09 : Telecommunication - MARKET & OPPORTUNITIES.
 Cellular Statistics – Cellular Operator Association of India
 IAMAI & eTechnology Group@IMRB: MOBILE VALUE ADDED SERVICES IN INDIA- A Report.
 Telenor Entering India: Investment Update
 Voice and Data(May 2009): Mobile Number Portability - Poaching with Portability.
 Business India : Telecom Takeover, Bharti-MTN deal
 Moneycontrol.com: Idea Spice deal
 Business Standard: Vodafone Hutch deal
*9+ IntoMobile: India’s 3G License Plans Updated.
 World Bank Report: Spectrum auctions in India: lessons from experience
IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 54
Times of India
Industrial Handbook 2009
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