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Report on telecom sector Report on telecom sector Document Transcript

  • Report on telecom sector — Document Transcript 1. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 1 2. Page no. Acknowledgement 04 Executive summary 05 Introduction about Telecom Industry 06 History 07 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 VAS 18 Mobile VAS in Rural Market 19 Access Device /3G Handset 20 Key trends in Telecom Industry 21 Inhibitors 22 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 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 2 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 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 3 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 comfortable environment. - JONTY MOHTA IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 4 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 2010. 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- 10. 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 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 5
  • 6. The exactly ten years ago, Jyoti Basu in culcutta called Sukh Ram in Delhi Sukh Ramin Delhi was the first mobile phone call in India. Brick sized cell phone used to costRs.45000 and each call coasted Rs.16.50/minute. Back then, cell phones was a statussymbol. Today, there are over 60 million mobile connections in India (expected to doublein number in next 12 months.). A local call costs around less then Rs.50paisa/min and acell phone can be purchased for less than Rs.1500. India growth story has already got theworld to sit up and take a note of the changing economic scenario. The Indiangovernment 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 ofthe Indian soils, have helped the sectors achieve the highs like never before. Andcurrently, the flavor of the month seems to be the telecom industry. IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 67. History of Indian Telecommunications started in 1851 when the first operational landlines were laid by the government near Calcutta (seat of British power). In 1883telephone services were merged with the postal system. Indian Radio TelegraphCompany (IRT) was formed in 1923. After independence in 1947, all the foreigntelecommunication companies were nationalized to form the Posts, Telephone andTelegraph (PTT), a monopoly run by the governments Ministry of Communications.Telecom sector was considered as a strategic service and the government considered itbest to bring under states control. The first wind of reforms in telecommunications sectorbegan to flow in 1980s when the private sector was allowed in telecommunicationsequipment manufacturing. In 1985, Department of Telecommunications (DOT) wasestablished. It was an exclusive provider of domestic and long- distance service thatwould be its own regulator (separate from the postal system). In 1986, two whollygovernment-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 benefitedfrom the general opening up of the economy. National Telecom Policy (NTP) 1994 wasthe first attempt to give a comprehensive roadmap for the Indian telecommunicationssector. In 1997, Telecom Regulatory Authority of India (TRAI) was created. TRAI wasformed to act as a regulator to facilitate the growth of the telecom sector. New NationalTelecom Policy was adopted in 1999 and cellular services were also launched in the sameyear. Indian telecom industry has the highest growth rate in the world. A record 5.9Million new mobile phone subscribers were drawn by the Telecom sector in India in themonth 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 (8.62million in May 2008), is the fastest growing telephone market in the world. Thegovernment has reiterated the target of 500 million telecom subscribers and 20 millionbroadband connections by 2010. IIPM – AHMEDABAD SALES AND DISTRIBUTIONPage 78. The Indian telecom market has been displaying sustained high growth rates. Riding onexpectations of overall high economic growth and consequent rising income levels, itoffers an unprecedented opportunity for foreign investment. A combination of factors isdriving 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 iseverywhere. India is the fourth largest telecom market in Asia after China, Japan and
  • South Korea. Asia pacific region: expecting highest growth in next 5years. TheIndian telecom network is the eighth largest in the world and the second largest amongemerging economies. The Indian telecom market size of over US $ 8 billion isexpected to increase three fold by 2012. The expansion of the telecom industry in Indiahas been fuelled by a massive growth in mobile phone users, which has reached a level of10 million users in December 2002, an increase of nearly 100 per cent in 2002. Thisexponential growth of mobile telephony can be attributed to the introduction of digitalcellular technology and decrease in tariffs due to competitive pressures. For the first timein India, the growth of cellular subscriber base has exceeded the fixed line subscriberbase. However, cellular penetration is still 1 per cent as compared to world average ofaround 16 per cent. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 89. 19% China 12% India 62% USA 7% Others Source: EIU (Economist IntelligenceUnit) Indian Telecom sector, like any other industrial sector in the country, has gonethrough many phases of growth and diversification. Starting from telegraphic andtelephonic systems in the 19th century, the field of telephonic communication has nowexpanded to make use of advanced technologies like GSM, CDMA, and WLL to thegreat 3G Technology in mobile phones. Day by day, both the Public Players and thePrivate Players are putting in their resources and efforts to improve thetelecommunication technology so as to give the maximum to their customers. TheIndian telecom sector can be broadly classified into Fixed Line Telephony and mobiletelephony. The major players of the telecom sector are experiencing a fierce competitionin both the segments. The major players like BSNL, MTNL, VSNL in the fixed lineand Airtel, Vodafone (Hutch), Idea, Tata, Reliance in the mobile segment are coming upwith new tariffs and discount schemes to gain the competitive advantage. IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 9 10. The Public Players and the Private Players share the fixed line and the mobilesegments. Currently the Public Players have more than 60% of the market share.Internet/Broadband subscribers are 14.05m internet subscribers & 6.62m broadbandsubscribers (June 2009) Advanced Technologies – GSM, CDMA, WLL, 3G andupcoming 4G Telecom sector Contribution of nearly 1% to India‟s GDP GSMCDMA/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•RELIANCE •VIDEOCON •TATA DOCCOMO •TATA INDICOM •VIDEOCONTotal 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 to136.27 Million. According to the Vision 2020 document of the Planning Commissionof India, the country will witness continued urbanization. The urban population isexpected to rise from 28 per cent to 40 per cent of total population by 2020. Futuregrowth is likely to be concentrated in and around 60 to 70 large cities having a populationof one million or more. This profile of concentrated urban population will IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 1011. facilitate customized telecom offerings from operators. Both fixed line and mobilesegments 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 themobile arena. Traditional telephones have been replaced by the codeless and the wirelessinstruments. Every month 8-10 million subscribers are adding in the market. Wehave mobile 350 million subscribers, next to China Tata Teleservices – invest anadditional US $ 1 billion in TATA DoCoMo BSNL – will put US $ 1.16 billion inWiMax Project Vodafone Essar – invest US $ 6 billion next 3 years to increase mobilesubscriber base Bharti Airtel – US $ 126.5 million to strengthen Assam & NortheastCircles. Mobile phone providers have also come up with GPRS enabled multimediamessaging, Internet surfing, and mobile commerce. The much-awaited 3G mobiletechnology has entered in the Indian telecom market. The GSM, CDMA, WLL serviceproviders are all upgrading them to provide 3G mobile services. Radio services havealso been incorporated in the mobile handsets, along with other applications like highstorage memory, multimedia applications, multimedia games, MP3, Players, videogenerators, Cameras, etc. The value added services provided by the mobile serviceoperators contribute more than 10% of the total revenue. The 2009 budget has broughtfurther relief to the customers with the reduction in the tariffs, both local and longdistance, and with slashing down the roaming rentals. This is likely to IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 1112. lead to even more people going for cellular services and more and more use of thevalue added services. However, landline telephony is likely to remain popular, too, inthe foreseeable future. MTNL, the largest landline service provider, has recently takensome bold initiatives to retain its market share and, if possible, expand it. : GrossRevenue (GR) stood at Rs 39,108.33 Crore and Adjusted Gross Revenue (AGR) ofTelecom Sector came in at Rs. 29,732.52 Crores. GR has registered a decline of 3.3%compared to previous quarter whereas AGR increased slightly. Average license fee aspercentage of AGR was 8.43% in June-09 as against 8.4% in previous quarter. The lessoutgo in terms of licensing fees is a big positive for Telecom industry and as such fortelecom subscribers in general as this will allow further scope of reduction in telecomtariffs. 464.82 325.79 225.01 153.42 104.22 76.53 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08Jan-09 Source: TRAI IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 1213. India offers an unprecedented opportunity for telecom service operators,infrastructure vendors, manufacturers and associated services companies. A host offactors are contributing to enlarged opportunities for growth and investment in telecom: an expanding Indian economy with increased focus on the services sector populationmix moving favourably towards a younger age profile urbanization with increasingincomes Investors can look to capture the gains of the Indian telecom boom anddiversify their operations outside developed economies that are marked by saturatedtelecom markets and lower GDP growth rates. Demand is driven by technologicalinnovation and by growth in business activity. The profitability of individual companiesdepends on efficient operations and good marketing. Large companies have bigeconomies of scale in providing a highly automated service to large numbers ofcustomers, and have the financial resources required building and maintaining a largenetwork. Smaller companies can compete effectively only in small markets or byproviding specialty services. IIPM – AHMEDABAD SALES AND DISTRIBUTIONPage 13
  • 14. Porter has identified three types of generic strategies that help a firm to cope withcompetitive forces and outperform other firms in the industry. These strategies are:- 1.Overall Cost leadership strategy 2. Differentiation strategy, and 3. Focus strategy TheOverall Cost leadership strategy is aimed at gaining a competitive advantage throughlower costs. The low cost leader in any market gains competitive advantage from beingable to many to produce at the lowest cost. Factories are built and maintained; labor isrecruited and trained to deliver the lowest possible costs of production. cost advantage isthe focus. Financial considerations and budgetary constraints play a critical role here inshaping competitive price of the products. Besides the production effiency, brand andmarketing skills plays a important role in this kind of competition. For example:--Someorganizations, such as Toyota, are very good not only at producing high quality autos at alow price, but have the brand and marketing skills to use a premium pricing policy. Afirm with a differentiation strategy attempts to achieve a competitive advantage bycreating a product or service that is perceived as unique. Differentiated goods andservices satisfy the needs of customers through a sustainable competitive advantage. Thisallows companies to desensitize prices and focus on value that generates a comparativelyhigher price and a better margin. The benefits of differentiation require producers tosegment markets in order to target goods and services at specific segments, generating ahigher than average price. For example, British Airways differentiates its service byproviding focus on IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 14 15. exceptional good quality of service rather than focusing on low price. Thedifferentiating organization will incur additional costs in creating their competitiveadvantage. 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. Thefocus strategy is also known as a niche strategy. Where an organization can affordneither a wide scope cost neither leadership nor a wide scope differentiation strategy, aniche strategy could be more suitable. Here an organization focuses effort andresources on a narrow, defined segment of a market. Competitive advantage is generatedspecifically for the niche. A niche strategy is often used by smaller firms. A companycould use either a cost focus or a differentiation focus.-- With a cost focus a firm aimsat being the lowest cost producer in that niche or segment. With a differentiation focusa firm creates competitive advantage through differentiation within the niche or segment. There are potentially problems with the niche approach. Small, specialist niches coulddisappear in the long term. Cost focus is unachievable with an industry depending uponeconomies 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 fromthe basic telephone service, there is an enormous potential for various value-addedservices. 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 Indias telecom services industry is projected to reach US$ 54 billion in2012, as against US$ 31 billion in 2008 IIPM – AHMEDABAD SALES ANDDISTRIBUTION Page 1516. Source: COAI The progression chart below depicts the major regulations and eventsdriving 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 marketthe operators have reduced the tariffs to attract consumers with low purchasing powerprimarily in semi urban and rural India. In fact lucrative offers like being paid forincoming calls have transformed the scenario completely. Through these changingregulations and events, the Industry players are aiming to achieve the followingAcquiring new subscribers by expanding in Semi Urban and Rural India Selling moreservices 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 wouldresult in further reduction of voice tariffs. This would lead to increased focus on MVASby mobile operators. Acquiring customers have always been a great challenge forcompanies. Given the current level of saturation in Metros and Urban Market and cutthroat competition among operators, increasing subscriber base in urban market would beall the more challenging. Therefore a lot of operators with adequate support fromGovernment are eyeing the rural market for future growth. Big operators like Airtel haveclaimed that soon mobile connections and recharge IIPM – AHMEDABAD SALESAND DISTRIBUTION Page 1617. 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 newsubscriptions will largely happen at the bottom of the pyramid therefore the newsubscriptions will further lower the average revenue per user. In such a scenario mobileVAS sector is a potential long- term revenue stream as it will be easier to sell more to theexisting customers. Government also has supported the growth of this sector by comingout with a number of initiatives for the low end subscribers of rural India, and UniversalService Obligation (USO) fund was one such initiatives. The USO fund was an initiativetaken up by the government to increase rural teledensity. In recent developments, BSNLand two private operators will erect 427 towers in remote areas offering over four lakhmobile connections. All the towers are expected to be erected and commissioned byDecember 2008. Under the second phase, DoT aims at erecting 11,000 towers throughoutthe country to offer over 11 million mobile connections ADC was levied by TelecomRegulatory Authority of India (TRAI) in 2003 to provide support for BSNLs ruraltelephone obligation. Telecom Regulatory Authority of India (TRAI) has recently givenorders for the withdrawal of the ADC (Access Deficit Charge) and the subsequentpassing of the benefit to the consumers by the telecom operators. Decrease in ARPUdespite increase in MOU: Though the subscriber base is growing at a rapid pace and haspositively impacted industry revenues, operator margins also have shrunk owing tocompetition and lower “Average Revenue per User” (ARPU) as the major growth iscoming 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 abasis for differentiation in high-churn markets. Need for differentiation: There is a greaterneed among the telecom operators to differentiate themselves from each other. Numberof Licensees: With increasing number of licensees (98 UASL, and 37 cellular licenses) inthe telecom space the average numbers of operators in many circles have increased to 5-6operators offering more choices to the consumer. Thus the competition among the IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 17
  • 18. operators has increased tremendously. Therefore it is very important for them todifferentiate themselves from the others. Now that voice has got commoditized theseoperators are using MVAS for their differentiation and marketing these services heavilyfor creating awareness among the consumers. Decreasing Call Rates: In order to attractconsumers with relatively low purchasing powers primarily from Semi Urban and RuralIndia the operators have drastically reduced the call rates making it affordable to even thelower segment of society. The tariff in India is one of the lowest at Rs.1 per minute ascompared to the tariff in developed nations like USA and UK where the call rates areRs.13 and Rs7-8 respectively. 3G bidders who are non-operators: The arrival of newtechnologies will give rise to greater competition as many non-operators are also biddingfor the 3G licenses. Department of Telecom has planned to allow five 3G operators ineach circle depending on the availability of spectrum. Therefore there would be a greaterneed to differentiate oneself in order to attract new customers and retain the existingones. Saturation in Metro and Urban Market: The metro/urban areas offer high level ofpenetration and have significant mobile subscribers. In such a highly saturated marketwith the entry of MVNO‟s the competition will get fierce. Therefore capitalizing onvalue added services will give operators opportunity to increase ARPU by providingpremium services. Increasing need and demand from consumers: In addition to theabove supply side reasons the „pull effect‟ from consumers asking for more than justbasic telephony is also a key driver for MVAS services. Today most of the consumers areseeking more from their communication device apart from just mobility and desire to stayconnected. As we have seen, Telecommunication has moved beyond providing just basicvoice calls. The mobile phone has evolved from a mere communication device to anaccess mode with an ability to tap a plethora of information and services available in theecosystem. This is the reason why it is now being referred to as the „fourth screen‟, afterCinema halls, Television and PC. But the fundamental question that remains is how VASis defined. A clear MVAS definition is not only required to clear the air among theMVAS providers but it will also have an impact on IIPM – AHMEDABAD SALESAND DISTRIBUTION Page 1819. the dynamics of the Value chain. A detailed definition of VAS might have an impacton the licensing issues surrounding VAS. Let‟s look at different VAS definitions floatingin the market. Value Added Service (VAS) in telecommunication industry refers tonon-core services, the core or basic services being standard voice calls and faxtransmission including bearer services. The value added services are characterized asunder:- 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 orbasic services Can sometimes be provided as standalone. Do not cannibalize core orbasic service. Can be add-on to core or basic service and as such can be sold atpremium price. May provide operational synergy with core or basic services. A valueadded service may demonstrate one or more of these characteristics and not necessarilyall of them. In some cases, the value added service becomes so closely integrated with thebasic 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 aspart of their VAS revenue. The Government of India issues licenses for the followingValue Added Services:- Public mobile trunking service Voice mail service Closed
  • users group domestic 64 kbps data network via INSAT satellites system Videotexservice GMPCS Internet Audiotex Unified messaging service The next wave ofTelecom growth will come from the bottom of the pyramid. For majority of thepopulation in the rural segment, the mobile phone is the first communication device.Rural IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 1920. should not always be interpreted as poor and therefore some categories of MVASmight apply directly to them. But whether the statement can be extended to MVASdepends 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, toprovide an easy and cheap access mode to the rural consumers. All these 3 are quite bigchallenges and therefore needs to be addressed adequately for MVAS to take off in RuralIndia. Apart from the identification of rural consumer needs and development of relevantcontent, communication of these services to the rural population would be a biggerchallenge. One way to do this is to communicate through regional SMS for which aseparate SMS gateway needs to be installed. Literacy level of the geographical area willbe another limitation. Therefore the better communication option is Voice in regionallanguages. The challenge with regional voice is not only investment but also blockage ofthe already scarce spectrum. Marketing the content in rural market is going to be all themore challenging. This would require right packaging and pricing of MVAS. Providingcheap access mode to end consumer would be another key booster to rural MVAS.Current voice MVAS charges are expensive from a rural consumer perspective thereforethat also would need to be addressed for e.g. the „sachet model‟ could prove to besuccessful here. MVAS is going to address two main needs of rural consumers-connectivity and entertainment mode. Connectivity will provide Information VAS onAgriculture 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 evolveas a key entertainment mode considering lack of other entertainment options in ruralareas. The industry has witnessed some type of content being downloaded more in smalltowns of UP and Bihar rather than in metros like Delhi and Mumbai. Therefore byleveraging on these two aspects MVAS can be a success in rural area. GPRS HandsetsIIPM – AHMEDABAD SALES AND DISTRIBUTION Page 2021. Currently the penetration of GPRS enabled handsets are close to 26% in India asagainst 99% in South Korea and 76% in Japan. Of the total mobile subscribers in India 65million possess GPRS-enabled handsets. Of all those who possess GPRS enabledhandsets 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 thesubscribers owning GPRS enabled handsets use it. Population of india 1130mn Mobilesubscriber base 426Mn GPRS Enable 65 Mn. GPRS Activated 15-16 Mn. GPRS USERS9Mn Source: TRAI REPORT,E Technology This clearly indicates that the consumertoday engage more in text based services than the web based applications. Therefore forMVAS to grow to its full potential the handset manufacturers will have to look at ways tomanufacture GPRS enabled phones which are affordable and user friendly. Moreoverthey would also need to increase its awareness and educate the consumers on how to useGPRS. The market for 3G in the country is expected to be huge with over 65 millionwireless subscribers, who use their handsets to access data services on the Web. These
  • subscribers are currently using mobile handsets which are internet-enabled and arepotential broadband IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 2122. subscribers with the deployment of advanced wireless technologies such as 3G.According to Indian Cellular Association (ICA) about 5% of mobile users already havehandsets that can work on 3G spectrum. In addition, out of all those possessing the 3Genabled handsets the number of people who would use 3G services would be determinedby the quality of content available. Unlike most other countries, we are looking at 3Gservices not only as premium services but also as an extension of 2G. Since ourbroadband penetration is abysmal, 3G would provide a much required boost to it. Giventhat mobile phones are much cheaper as compared to PCs, the demand for broadband onmobile is expected to be much greater. More importantly, 3G will solve problems more inrural India. Therefore the shift towards 3G would depend on affordability of handsetsalong with the quality of content available. One of the most frequent definitions thatprevail in the telecom circles for number portability is: "Number portability is a circuit-switch telecommunications network feature that enables end users to retain theirtelephone numbers when changing service providers, service types, and or locations."Why mobile number portability (MNP)? When fully implemented nationwide by bothwire line and wireless providers, portability will remove one of the most significantdeterrents to changing service, providing unprecedented convenience for consumers andencouraging unrestrained competition in the telecommunications industry. In short, this isthe best method to increase the efficiency of the service provider by increasing thecompetition, thereby ensuring better services in all respects. From the subscribers‟perspective, this is a deceptively simple and very welcome change, because they canchange wireless service providers without worrying about notifying friends, family andbusiness 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 changingbusiness cards, stationery, invoices and other materials for businesses. From the wirelesscarrier‟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 criticalsystems and processes that would be affected are: billing, customer service, orderactivation, call delivery, roamer registration and support, short messages service center,directory assistance, caller ID, calling name presentation, switches, maintenance and CSCsystems, home location registers (HLRs), and visiting location registers (VLRs). IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 2223. : One of the most common barriers in MNP implementation, within any country, hasbeen the implementation cost. Service Providers have been constantly bargaining fortime, based on the cost factor, from their respective governments. Referring to the recentexample of the US, where each of the large carriers would need to spend $50–60 millionto institute the service and an equivalent sum to maintain it. The FCC on this plea gavewireless carriers in the US another year, i.e., till November 2003, for resolvingimplementation issues. The experience of developed countries exhibits that local numberportability for fixed wireline was introduced within two to three years of introduction ofcompetition to incumbent state telcos. The cost estimate for the implementation of WNPin developed nations like the US can be very helpful for the other countries, who wish tothink 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 isimplemented, 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 bestservices so as to save them from porting. It‟s like a blessing in disguise for thecustomers, as they would get better service irrespective of the carrier, albeit with thesame number. Infrastructure Upgrade: To support WNP, a company has to upgrade bothits hardware and software capabilities, which will amount to some cost. Softwares needto be upgraded to provide proper routing of calls. The carriers need to upgrade theirnetworks to handle portability requests. The provider, which has its portabilitycompatible would be expected to attract maximum customers and will emerge thewinner. Cost Recovery and Bill Reconciliation/Query Processing: When a customer plansto shift, the old service provider (OSP) has to perform a query to identify if there are anybilling amounts pending, which they need to recover before the subscriber moves to thenew service provider (NSP). Globally, Singapore was the first country to implementMNP in 1997, followed by Hong Kong in 1999 and Australia in 2001. Off late, manycountries have adopted the MNP model to prevent IIPM – AHMEDABAD SALES ANDDISTRIBUTION Page 2324. market doldrums and putting pressure on service providers to furnish more services ata competitive price level. However, it has not been able to produce any significant resultsin these markets. While it has worked in markets like Hong Kong and Australia, it failedto bear fruit in the UK, France, Germany, Pakistan, Ireland, Malta, among others. MNPworked in Hong Kong due to the speedy porting process and the availability of alreadyimplemented solution (for fixed- line services). In Australia, the regulator effectivelypromoted number portability and was able to maintain the maximum porting time of justunder three hours. Furthermore, in Finland, where initially the implementation wasviewed as a success due to dearth of minimal contract periods and high migrationincentives, operators failed to sustain the momentum. The failure in most markets whereMNP was implemented is attributed to factors like half- hearted implementation, issuesrelated to contract, lack of consumer awareness, overboard of paperwork, technicaldifficulties and poor customer service. The WiMAX vs. 3G cellular showdown is poisedto become one of the next great market battles in the telecom industry. Fortunes will bemade and lost in this battle, and the user experience of the Internet will be irreversiblychanged in the process. 3G scores for voice; Wimax may lead to increased broadbandpenetration. With the Department of Telecommunications gearing up for simultaneousrelease of 3G and WiMax spectrum, analysts expect the two emerging wirelesstechnologies to battle it out for supremacy. WiMax or Worldwide Interoperability forMicrowave 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). Itoffers downloads of up to 70 Mbps as compared to the 15 Mbps that 3G provides. MobileWiMax offers download speeds of around 20 Mbps. In India, companies like TataCommunications Internet Services, Intel, Bharat Sanchar Nigam Ltd, Bharti Airtel andReliance Communications are the proponents of WiMax. Most of the companies havehad beta- runs of the technology. According to a top official with a service provider,telecom service providers are in various stages of WiMax implementation. Somecompanies have commercially launched fixed WiMax services in certain cities. Whileopponents 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 industrypinning its hopes on WiMax is its ability to increase the broadband penetration. WiMaxmakes huge sense for companies as it enables them to provide cheaper mobile internetand broadband IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 2425. services, in turn, increasing the internet penetration. However, this will adverselyimpact 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 broadbandconnections by 2010 from the current 4.3 million. The industry expects WiMax to bridgethe gap. According to a consultant of Ernst & Young service providers would mainly usethe technology for gaining traction with the customers, as providing the last mile over theconventional digital subscriber lines would be time-consuming and costly. Operators willhave to use 3G spectrum to revive voice services that are being choked by a dearth of 2Gspectrum, Patel added. The WiMax customer premise equipment (CPE) is priced at Rs5,000-10,000, while the CPEs for 3G would be cost Rs 10,000 and above. The industrywill 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 orcompany which does not own a licensed spectrum and generally with out ownnetworking infrastructure. Instead MVNOs resell wireless services under their brandname, using regular telecom operators network with which they have a businessarrangements. Usually they they buy minutes of use from the licensed telecom operatorand then resell minutes of usage to their customers of MVNO. Currently MVNOs areemerging in fast pace in European markets and beginning in USA also. Slowly MVNOphenomenon catching up in Asia and other parts of the world also. An example forMVNO is Virgin Mobile. Virgin Mobile plc is a mobile phone service provider operatingin the UK, Australia and Canada, and the US. The company was the worlds first IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 2526. Mobile Virtual Network Operator, launched in the UK in 1999. It does not maintainits own network, and instead has contracts to use the existing network(s) of otherproviders. In the UK, Virgin Mobile uses the T-Mobile network. In the US, the Sprintnetwork is the carrier. In Australia, Virgin Mobile operates on the Optus network. InCanada, 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 MVNOs donot have their own infrastructure, some providers are actually deploying their ownMobile Switching Centers (MSC) and even Service Control Points (SCP) in some cases.Some MVNOs deploy their own mobile Intelligent Network (IN) infrastructure in orderto facilitate the means to offer value-added services. In this way, MNVOs can treatincumbent infrastructure such as radio equipment as a commodity, while the MVNOoffers its own advanced and differentiated services based on exploitation of their own INinfrastructure. The goal of offering value-added services is to differentiate versus theincumbent mobile operator, allowing for customer acquisition and preventing the MVNOfrom needing to compete on the basis of price alone. MVNOs have full control over theSIM card, branding, marketing, billing, and customer care operations. While sometimesoffering operational support systems (OSS) and business support systems (BSS) tosupport the MVNO, the incumbent mobile operators most keep their own OSS/BSSprocesses 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 forspecific 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 nichemarkets and form customized detailed services that would expand their customer reachand brand. So far MVNOs have not been regulated in any country. The ITU has receivedseveral requests to study the issue, specifically to provide input on whether governmentintervention is necessary to allow MVNOs to offer services and applications at a lowerprice to consumers. This would IIPM – AHMEDABAD SALES AND DISTRIBUTIONPage 2627. help to ensure a more efficient use of the spectrum but some incumbent providersargue that the market is already competitive and intervention is not necessary. IPTV(Internet Protocol Television) delivers television programming to households via abroadband 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 overIP (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 positionto offer IPTV services initially, but it is expected that other carriers will offer thetechnology in the future. IPTV promises more efficient streaming than presenttechnologies, and therefore theoretically reduced prices to operators and subscribersalike. However, it also adds many advantages that may play into market pricing. One ofthe advantages of IPTV is the ability for digital video recorders (DVRs) to recordmultiple broadcasts at once. According to Alcatel, one leading provider, it will also beeasier to find favorite programs by using "custom view guides." IPTV even allows forpicture-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 overfunctionality 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 dinnerfunction runs longer than expected, you dont have to miss your favorite program. Justcall home and remotely set the IPTV box to record it. However, the real advantage ofIPTV is that it uses Internet protocols to provide two-way communication for interactivetelevision. One application might be in game shows in which the studio audience is askedto participate by helping a contestant choose between answers. IPTV opens the door toreal-time participation from people watching at home. Another application would be theability to turn on multiple angles of an event, such as a touchdown, and watch it fromdual angles simultaneously using picture-in-picture viewing. One can also receive Webservice notifications while watching IPTV for things such as incoming email and instantmessages. If you IPTV is packaged with digital phone, Caller ID might pop up on screenas your telephone rings. IPTV is already growing in the international market, withproviders in many countries including Japan, Hong Kong, Italy, France, Spain, Ireland,and the United Kingdom. In the United States SBC, reportedly purchased a softwaredelivery system for IPTV services from Microsoft in 2004 IIPM – AHMEDABADSALES AND DISTRIBUTION Page 2728. for $400 million dollars. Alcatel is working with Microsoft to develop a "globalsolution" 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 serviceswith presence in all the 22 licensed jurisdictions (also known as Telecom Circles) inIndia, 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 useTelemedia Services either for voice and/or broadband access delivered through DSL.They also offer an integrated suite of telecom solutions to their enterprise customers, inaddition to providing long distance connectivity both nationally and internationally. Theyhave launched DTH and IPTV Services also. All these services are rendered under aunified brand “Airtel”. The company also deploys, owns and manages passiveinfrastructure pertaining to telecom operations under its subsidiary Bharti InfratelLimited. Bharti Infratel owns 42% of Indus Towers Limited. Bharti Infratel and IndusTowers are the two top providers of passive infrastructure services in India. Telecomgiant Bharti Airtel is the flagship company of Bharti Enterprises. Airtel comes to youfrom Bharti Airtel Limited, India‟s largest integrated and the first private telecomservices provider with a footprint in all the 23 telecom circles. Bharti Airtel isstructured into three strategic business units - Mobile services, Telemedia services andEnterprise services. The mobile business provides mobile & fixed wireless servicesusing GSM technology. Airtel was voted as the „Best Cellular Service‟ in the countryfor four consecutive years. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page2829. The Stock Exchange, Mumbai (BSE) The National Stock Exchange of India TypeLimited (NSE) Founded 1985 Headquarters New Delhi, India Key people Sunil MittalIndustry Telecom Products Mobile and Fixed-Line Telecommunication operator, AirtelDTH Revenue $6 Billion Slogan Express Yourself Website www.airtel.in ShahrukhKhan, Karina Kapoor,Sachin Tendulkar,A.R.Rahman, Brand Ambassador 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 mostadmired brand in India. Loved by more customers. Targeted by top talent.Benchmarked by more businesses. Leading Competitors- VODAFONE, IDEA, BSNL,RELIANCE, TATA, AIRCEL IIPM – AHMEDABAD SALES AND DISTRIBUTIONPage 2930. Vodafone is a British multinational mobile network operator headquartered inNewbury, United Kingdom. Vodafone is the worlds largest mobile telecommunicationnetwork company, based on revenue, and has a market value of about £71.2 billion(November 2009). Vodafone is the worlds largest mobile telecommunicationscommunity, employing over 65,000 staff and with over 130 million customers. Thebusiness operates in 26 countries worldwide. Vodafone is a public limited company withlistings on the London and New York stock exchanges. Global recognition of theVodafone 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 tomaintaining the trust of customers. To help promote its image worldwide, Vodafone usesleading sports stars from high profile global sports, including David Beckham andMichael Schumacher. This Case Study concentrates on how such promotion can help tokeep a leading brand at the forefront of public awareness For that reason our teamdecided to work on few steps which were basically to get the feed back from the marketas 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 thecustomer is after the Quality of the product. After the price of the product. After thegood presentation of the product which includes the servicing. If the consumer is afteror comes for particular product and why, either because of effective advertisement on themedia like television or news papers or other means of advertisement. IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 3031. LOGO: Founded 1983 as Racal Telecom, independent 1991 Headquarters Newbury,England, UK Arun Sarin, CEO Sir John Bond, Chairman Key people John Buchanan,Deputy Chairman Andy Halford, CFO Industry Mobile telecommunications ProductsMobile networks, Telecom services, Etc. Revenue ▲ £31.104 billion GBP (2007) Netincome ▼ £-1.564 billion GBP (2007) Slogan Happy to help Websitewww.vodafone.com Main Attractions of advertisement Dog, Zoo zoos IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 3132. Idea Cellular is a wireless telephony company operating in all the 22 telecom circlesin India. It initially started in 1995 as a joint venture among the Tatas, Aditya Birla Groupand 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. Initiallyhaving a very limited footprint in the GSM arena, the acquisition of Escotel in 2004 gaveIdea 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 outletsunder the "Idea n U" banner. The company has also been the first to offer flexible tariffplans for prepaid customers. It also offers GPRS services in urban areas. Idea Cellularwon the GSM Association Award for "Best Billing and Customer Care Solution" for 2consecutive years. Type Spice: Public, Listed on BSE IIPM – AHMEDABAD SALESAND DISTRIBUTION Page 3233. Idea: Subsidiary Spice: 1997 Founded Idea: 1995 Spice: Mohali, India HeadquartersIdea: Indore, Delhi, Pune, India Spice: Dilip Modi Key people Idea: Chairman: KumarMangalam Birla ; MD: Sanjeev Aga Industry Telecom Products Mobile operatorhttp://www.moneycontrol.com/india/news/business/idea-cellulars- Revenue revenue479-/394751 Spice: Spice Hai toh life hai (If theres Spice then theres Life.) Slogan Idea: An!dea can change your life. Spice: Spice Telecom ; Website Idea: www.ideacellular.comBrand Ambassador Abhishek Bachan RELIANCE OVERVIEW IIPM – AHMEDABADSALES AND DISTRIBUTION Page 3334. Reliance Communications, formerly known as Reliance Info comm, along withReliance Telecom and Flag Telecom, is part of Reliance Communications Ventures. It isan Indian telecommunications company. According to National Stock Exchange data,Anil Dhirubhai Ambani controls 66.77 per cent of the company, which accounts for morethan 1.36 billion shares.[3] It is the flagship company of the Reliance-Anil DhirubhaiAmbani Group, comprising of power (Reliance Energy), financial services (RelianceCapital) and telecom initiatives of the Reliance ADAG. It uses CDMA2000 1xtechnology for its existing CDMA mobile services, and GSM-900/GSM-1800 technologyfor its existing/newly launched GSM services. RelCom is also into Wire line Businessthroughout India and has the largest optical fiber communication (OFC) backbonearchitecture [roughly 110,000 km] in the country. Reliance Communications haslaunched 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 inthe world. BID FOR HUTCH: In 2007, Reliance Communications had bid for 67% ofHutch but lost to Vodafone, which had been led by its CEO at the time Mr.PIYUSH.P.ACQUISITIONS In July 2007, the company announced it is buying US-based managedEthernet and application delivery services company Yipes Enterprise Services for a cashamount of Rs. 1200 crore rupees (equivalent of USD 300 million). The deal was announcoverseas acquisition, the Reliance group has amalgamated the United States-based FlagTelecom for $ 211 million [roughly Rs 950 crore (Rs 9.50 billion)]. Type Public (BSE:RCOM) IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 3435. Founded 2004 Headquarters Navi Mumbai, Maharashtra, India Key people AnilAmbani (Chairman) & (MD) Vice-Chairman Reliance-ADA Group IndustryTelecommunications Products Wireless Telephone Internet Television Revenue US$ 4.26billion (2008) Net income US$ 1.35 billion (2008) Total assets US$ 19.31 billion (2008)Employees 33,000 Brand ambassador Hritik Roshan TATA: AN OVERVIEW IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 3536. Tata Comm. is Indias leading international telecom service provider. It is today partof the Tata Group. It started as a successor to the erstwhile Overseas CommunicationServices, and went on to become the premier provider of international voice and dataservices. Tata Teleservices Limited (TTSL) is a part of the Tata Group of companies, anIndian conglomerate. It operates under the brand name Tata Indicom in various telecomcircles of India. In Nov 2008, Japanese telecom giant NTT Docomo picked up a 26 percent equity stake in Tata Teleservices for about Rs 13,070 crore ($2.7 billion) or anenterprise value of Rs 50,269 crore ($10.38 billion).[1] In Feb 2008, TTSL announcedthat it would provide CDMA mobile services targeted towards the youth, in associationwith the Virgin Group on a Franchisee model basis. Tata Teleservices Provides mobileservices under 3 Brand names: Tata Indicom Tata DoCoMo Virgin Mobile TataTeleservices Limited (TTSL) IIPM – AHMEDABAD SALES AND DISTRIBUTIONPage 3637. Type Private Founded 2000 Headquarters Navi Mumbai, India Mr. Ratan N. Tata(Chairman) Key people Anil Kumar Sardana (MD) Industry TelecommunicationsWireless Telephone Products Internet Television Employees 350,000 Parent Tata GroupIIPM – AHMEDABAD SALES AND DISTRIBUTION Page 3738. BSNL OVERVIEW Bharat Sanchar Nigam Limited (known as BSNL) is a publicsector telecommunication company in India. It is Indias largest telecommunicationcompany with, 24% market share as on March 31, 2008. Its headquarters are at BharatSanchar Bhawan, Harish Chandra Mathur Lane, Janpath, New Delhi. It has the status ofMini Ratna, a status assigned to reputed public sector companies in India. BSNL isIndias oldest and largest Communication Service Provider (CSP). Currently has acustomer base of 90 million as of June 2008. It has footprints throughout India except forthe metropolitan cities of Mumbai and New Delhi which are managed by MTNL. As monMarch 31, 2008 BSNL commanded a customer base of 31.55 million Wire line, 4.58million CDMA- WLL and 54.21 million GSM Mobile subscribers. BSNLs earnings forthe Financial Year ending March 31, 2007 stood at INR 397.15b (US$ 9.67 b) with netprofit of INR 78.06b (US$ 1.90 billion). BSNL has an estimated market value of $ 100Billion. 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 $100 billion. IIPM – AHMEDABADSALES AND DISTRIBUTION Page 3839. Founded 19th century, incorporated 2000 Headquarters Bharat Sanchar Bhawan,Harish Chandra Mathur Lane, Janpath, New Delhi Kuldeep Goyal Key people (CMD)Industry Telecommunications Wireless Telephone Products Internet Television RevenueUS$ 9.67 billion (2007) Owner(s) The Government of India IIPM – AHMEDABADSALES AND DISTRIBUTION Page 3940. Type Joint Venture Industry Telecommunications Founded 2009 HeadquartersGurgaon, India Stein-Erik Vellan (CEO) Key people Sanjay Chandra (Chairman)Wireless Products Telephone Internet Employees 2,000 Telenor (67.25%) Parent UnitechGroup (32.75%) Website Uninor.in IIPM – AHMEDABAD SALES ANDDISTRIBUTION Page 4041. Type Public (BSE: 511389) Industry Conglomerate Founded 1979 Founder(s)Nandlal Madhavlal Dhoot Headquarters Aurangabad, Maharashtra, India VenugopalDhoot (Chairman) Key people K. R. Kim (CEO) Consumer Electronics HomeAppliances Components Office Automation Mobile phones Products Wireless InternetPetroleum Satellite television Power Revenue ▲ US$4 billion (2010) Net income ▲US$276 million (2010) Employees 5,000 (2010) Website Videocon.com IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 4142. FOUR P‟S ARE:- 1) PRODUCT 2) PRICE 3) PLACE 4) PROMOTION Product-Sim cards, Plug to surf devices, Handsets for CDMA Price- Offers, SchemesPromotion: Print media, Electronic media, Outdoor media, Sales promotion Place:Every retail shop, Offices, Home, Institutions The study shows it clearly that Vodafonehave a huge market share due to its better service and good network. But the thing thatdifferentiate it from the competitors that it provide the more and more number of thevalue added services. Latest advertisement of Vodafone: Zoo zoos” is very attractingand it increases the sales of the Vodafone , the marketing manager of Vodafone revealsthat statement. Study clearly shows that Vodafone is a has a brand image in the mind ofpublic due to their willingness to provide the best service. IIPM – AHMEDABADSALES AND DISTRIBUTION Page 4243. Vodafone focused more and more on the value added service and marketing.Recently Vodafone gave its whole concentration by a series of advertisements ofZOOZOO series. This move of Vodafone proved very successful to attract the more andmore number of the customers . Airtel basically uses two appeal to connect to the users Emotional Humorous attracting In 2002, Airtel signed on music composerA.R.Rehman and changed its tune to "live every moment": rah man‟s signature tune forAirtel is the most downloaded ringbone in India. But that was just part of the ongoingcommunication. The following year Airtel adopted the "express yourself" positioning,which is also its current tagline. Youth icons like Shahrukh khan and SachinTendulakar were brought in as brand ambassadors to attract youngsters Add campaignwith an eye on the rural market IIPM – AHMEDABAD SALES AND DISTRIBUTIONPage 4344. The whole advertisement and promotion is designed by taking urban youth in focusbut there are large no of youths in rural sector as well and they can be their futureconsumers. Taking big stars as brand ambassador is good decision. But organizations canfurther 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 ruralpeople will start associating themselves with that brand “SABKA AIRTEL”. Airtel canalso use BALIKA VADHU fame “ANANDI” (Avika gaur) targeting rural women andrural 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 playa major role in this competition. Attracting the Youth:-- To attract more youthcommunity 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 Airtelshould 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. Mobileservice providers should provide the web access at cheaper cost. Telecom market isquite competitive so mobile service providers should provide the services at cheaper cost. Mobile service providers should focus on providing better network coverageEspecially BSNL. Mobile service providers should provide various schemes for theirexisting customers. BSNL have to make more attractive ads. Add some otherpromotional offers. Makes some sense full ads for Tata Doccomo For makinginteractive add to connect with customers. Consolidation in Industry. IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 4445. Telecom players are looking to tap into global funds to finance their aggressivegrowth plans. This will result in partnerships joint ventures and equity sellout to foreignplayers. New license holders will continue to look to sell their stake at a premium. Newpolicies will seek to curb this license arbitrage. Smaller players with operations in only afew circles will find in difficult to compete with the nationwide players. The industrymay 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 ofscale and lower startup cost by infrastructure sharing. 3G and WiMax license will spurM&A and partnership activity. Idea Cellular‟s Acquisition of Spice Telecom Therewere 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 TMInternational Bhd (TMI). With respect to shares, Idea acquired 40.8% stake of SpiceCommunications at Rs 77.30 a share for Rs 2,716 crore. There was a share swap in whichSpice shareholders got 49 Idea shares for every 100 Spice shares held. An additional Rs544 crore was paid to the promoters of Spice group as non-compete fee. The deal wasstrategically important for Idea Cellular as it was looking forward to transfer itself into apan-India telecom service provider. The spectrum auctioned by GoI is a scarce resourcenowadays and cost a premium. Also there‟s restriction by TRAI with respect to numberof 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 adiscounted price of $10.9 billion in cash for acquiring the 52% stake held by HutchisonTelecom International (HTIL) in Indian mobile firm Hutch-Essar. HTIL declared aspecial 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 $11.08billion. 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 theworld. Telenor-Unitech Deal IIPM – AHMEDABAD SALES AND DISTRIBUTIONPage 4546. Norwegian Telecom major Telenor is in the process of acquiring controlling stake of67.25% in Unitech wireless via equity infusion. The enterprise valuation of UnitechWirelsss is about Rs 10,900 crore. As per the deal, Telenor will infuse cash in four stagesand at each phase, by increasing its stake in Unitech Wireless. In the first phase, they got33.5% ownership in Unitech Wireless. In the second phase they completed theacquisition for a 49 per cent stake in Unitech Wireless by paying Rs 1,130 crore for afurther 15.5 per cent stake in the company. The acquisition is expected to be completedby end of this quarter. TTSL – DoCoMo Deal. Japanese carrier NTT DoCoMoacquired 26 per cent stake in Tata Teleservices (TTSL). The Tata DoCoMo-brandedGSM service has already started in Southern India and gradually will be expandednationwide. 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 influencetheir strategy. It has been less prepared to take majority stakes and impose its will, asother leading carriers have chosen to do. The difficulties faced by the firm in spreadingits domestically successful i-mode service internationally typify the obstacles it has facedoverseas. With Tata, DoCoMo had said “participating proactively in TTSL‟smanagement by providing human resources and technical assistance to help realiseimproved network quality and the possible introduction of leading- edge, value-addedservices.” Bharti-MTN deal (in talks). Recently Bharti Airtel has re-started itsaudacious merger bid with MTN that could create a $61- billion transnational telecomgoliath with combined revenues of $20 billion and over 200 million subscribers acrossAfrica, Asia and Middle East, will be among the worlds 10 biggest telecom companies.The deal could be win-win for both parties. Bharti is under pressure in its home countrydue to severe competition and looking forward to spread its risk across geographies.Meanwhile, the African telecom operator is also encountering some of the problems thatits 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 Synergieswould be sought from a number of areas, including procurement, operational bestpractice, R&D and international network sharing. The two companies will not overlap ineach other‟s business operations: Bharti Airtel will be the primary vehicle for Bharti andMTN to pursue further expansion in Africa and the Middle East. IIPM – AHMEDABADSALES AND DISTRIBUTION Page 4647. With both Bharti and MTN operating in high-growth geographies, it would beimperative for them to incrementally expand into untapped areas. Collaborating with eachother would seem the logical way ahead. The most important, and visible fallout of thedeal, if it materializes, will be the advantage of economies of scale for the new entity. Inrecent 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 morecollaboration if corporate intend to expand. Bharti would not be involved only in MTN‟sday-to-day activities, but it would also have a say while making bigger strategicdecisions, such as those pertaining to investments in other geographies or sourcing ofequipment. The high subscriber base and financial muscle will give Bharti-MTN thedesired 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 hesitateto lap it up, as there could be orders worth a billion dollars in other projects. This wouldoffset whatever concerns there may be with respect to the small population size incountries where MTN operates. Takeaways for Bharti The biggest takeaway for Bhartiis 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-consumingand capital intensive. Besides, without local knowledge (with respect to the market andgovernment regulations), Bharti could be on a sticky wicket. The Indian telco does nothave the expertise in running multi-country operations. MTN has operations in 21countries across Africa and the Middle East and is one of the largest emerging marketmobile operators globally. While Africa has one-third of the world‟s population, itstelephonic density is just 30 per cent. This offers plenty of room for expansion. The factthat 95 percent of Africa is prepaid, which ensures all cash operations, fits perfectly intoBharti‟s plans. The options for Bharti were to go either the Greenfield way or with anexperienced partner. MTN‟s strong foothold in some growing markets such as SouthAfrica, Botswana, Iran and Nigeria ensures that when the growth in India starts to slowdown, Bharti would be ready to take off in other geographies. Besides, there is a lot ofpotential in Africa as three-fourths of the continent is still untapped. IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 4748. Africa is quite like rural India and from that perspective; Bharti could learn how toroll out infrastructure in rural India. In addition, MTN is strong in the value-addedservices (VAS) and mobile commerce space. So, as and when mobile commerce picks upin India (after RBI‟s approval), Bharti would be able to tap this market through MTN‟sexpertise. MTN has a vast experience in running multi-country operations andovercoming regulatory hurdles. By working with MTN, life for Bharti will get a lot ofeasier. One of the major challenges would be the integration of the company on theground. It is tough for intercontinental companies to merge seamlessly because ofcultural 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 thecompanies were European. The Black Empowerment Act could pose a challenge, as itis meant to safeguard the rights of the black population. As per this Act, blacks areensured a minimum shareholding management seats and voting rights. The country‟sstrong trade union, Congress of South African Trade Unions (COSATU), which hasinfluence over President Jacob Zuma, had almost wrecked the Vodafone-Vodacom deal. The Indian telecom industry has always allured foreign investors. In fact, thecumulative FDI inflow, from August 1991 to March 2007, in the telecommunicationsector 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 wasmajorly in handset manufacturing and telecom service provider. IIPM – AHMEDABADSALES AND DISTRIBUTION Page 4849. With stable macroeconomic impetus and numerous other advantages, India has thepotential to become the electronics manufacturing hub of the world. Excited by therecord-breaking industry growth, investors have outlaid US$ 1.5 billion in the past twoand 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‟smanufacturing potential, the Indian telecom handset manufacturing market is likely touchUS$ 7 billion by 2010. An example is Nokia. The company has already produced 25million handsets in its Chennai facility. It will pump in an additional US$ 150 million tothis 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 centcountervailing duties on imported handsets, thereby further reducing the cost. Managedservice is another segment that is attracting telecom companies. On account of the rapidlygrowing subscriber base, service providers find it difficult to manage their infrastructureand network. In such cases, they completely or partially outsource their infrastructure ornetwork management operations. Hutchitson Essar (now Vodafone) and Nokia Deal: Acase in point is Nokia which is managing the network for Hutchison Essar Limited in 19circles in India. Having successfully capitalized on the business potential of managedservice, IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 4950. Nokia is already earning 30 per cent of its total revenue from this segment. Thecompany has also shifted its first Global Network Solutions Centre (GNSC) to India. Thecompany manages 39 cellular networks in 30 countries. Its Indian center will act as aglobal hub for other Nokia operation centers. Advantages of Managed Service • Smoothmanagement of technological complexity • Opportunity to strengthen core competency •Reduction in financial outlay • Touching base with new processes and technologiesAnother dimension of managed service is telecom, communication and networkmanagement solutions for enterprises. Bharti Televentures and IBM, together offertelecom and IT solutions in India. The solutions and services portfolio comprises of theremote monitoring of servers, security operations and network operations, providing datacenter services (including server hosting, server management and storage management),IT help desk services and end-to-end connectivity and fulfilling all telecom andcommunication requirements. This information technology outsourcing deal withinfotech major IBM is estimated to be in the range of $700- 750 million for a ten-yearperiod. The deal involved outsourcing of BTVLs hardware, software and IT servicerequirements to IBM. The agreement specifies that payments made to IBM India will belinked to the percentage of revenue generation by BTVL and pre-defined service levelagreements. The percentage-linked revenue payment is modeled to decrease with BTVLsincrease in revenue. The deal includes all customer-facing IT applications like billing,customer relationship management and data warehousing. In addition, Internet, e-mailand online collaborations are included in it. On the infrastructure front, IBM willconsolidate BTVLs data center, IT helpdesk and enhance its disaster recovery centercapabilities, he said. Bharti‟s Outsourcing to Alcatel-Lucent: Telecom major Bharti Airtelhas a $500-million deal to Alcatel-Lucent for outsourcing the management and servicingof its broadband and fixed line network for five years. The deal involves the creation of ajoint venture with Alcatel-Lucent holding 76 per cent of the equity, and Bharti having theremainder 24 percent. The joint venture will help accelerate performance as Bhartimigrates to the next generation networks for the broadband and telephone customers.IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 5051. Bharti Outsourcing Deal with Nokia & Ericsson Bharti Airtel awarded a $400mcontract to Nokia for expanding its managed GSM networks in eight circles. This alsomarks 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 beinglinked 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 servicecontract with Ericsson towards design, planning, supply, installation, commissioning andupgrading of its network in 15 telecom circles. This emphasizes Bharti‟s policy towardsoutsourcing all operational activities, including customer services to global majors. Thishas 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 managedservices 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-artGlobal Network Services Center in Chennai. The deal also envisages Nokia to deploy itsWAP solution across Bharti‟s national network to enhance its mobile packet corenetwork capabilities. This will make usage of data services easy, thereby increasing theconsumption of content on the Bharti network. Future Technology Trends In this sectionwe have listed down the future technologies which are in roadmap and are speculated tomake an impact on current business model of telcos. IP Multimedia Subsystem (IMS) IPMultimedia Subsystem (IMS) is a generic architecture for offering multimedia and voiceover IP services, defined by 3rd Generation Partnership Project (3GPP). IMS is accessindependant as it supports multiple access types including GSM, WCDMA, CDMA2000,WLAN, Wireline broadband and other packet data applications. IMS will make Internettechnologies, such as web browsing, e-mail, instant messaging and video conferencingavailable to everyone from any location. It is also intended to allow operators tointroduce new services, such as web browsing, WAP and MMS, at the top level of theirpacket-switched networks. IP Multimedia Subsystem is standardized referencearchitecture. IMS consists of session control, connection control and an applicationsservices framework along with subscriber and services data. It enables new IIPM –AHMEDABAD SALES AND DISTRIBUTION Page 5152. converged voice and data services, while allowing for the interoperability of theseconverged services between internet and cellular subscribers. IMS uses open standard IPprotocols, defined by the IETF. So users will be able to execute all their services whenroaming as well as from their home networks. So, a multimedia session between two IMSusers, between an IMS user and a user on the Internet, and between two users on theInternet is established using exactly the same protocol. Moreover, the interfaces forservice developers are also based on IP protocols. Some of the possible applicationswhere IMS can be used are: Presence services Full Duplex Video Telephony Instantmessaging Unified messaging Multimedia advertising Multiparty gaming Videostreaming Web/Audio/Video Conferencing Push-to services, such as push-to-talk,push-to-view, push-to-video Effectively, IMS provides a unified architecture thatsupports a wide range of IP-based services over both packet- and circuit-switchednetworks, employing a range of different wireless and fixed access technologies. A usercould, for example, pay for and download a video clip to a chosen mobile or fixed deviceand subsequently use some of this material to create a multimedia message for delivery tofriends on many different networks. A single IMS presence-and-availability engine couldtrack a users presence and availability across mobile, fixed, and broadband networks, or
  • a user could maintain a single integrated contact list for all types of communications. Akey point of IMS is that it is intended as an open-systems architecture: Services arecreated 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 adifferent approach to the more traditional telco architecture of a set of specific networkelements implemented as a single telco-controlled infrastructure. High Speed DownlinkPacket Access (HSDPA) High Speed Downlink Packet Access (HSDPA) is a packetbased technology for W-CDMA downlink with data transmission rates of 4 to 5 timesthat of current generation 3G networks IIPM – AHMEDABAD SALES ANDDISTRIBUTION Page 5253. (UMTS) and 15 times faster than GPRS. The latest release boosts downlink speedsfrom the current end-user rate of 384 kbps (up to 2 Mbps according to standards) to amaximum value according to standards of 14.4 Mbps. Real life end-user speeds will be inthe range of 2 to 3 Mbps. HSDPA provides a smooth evolutionary path for UniversalMobile Telecommunications System (UMTS) networks to higher data rates and highercapacities, in the same way as Enhanced Data rates for GSM Evolution (EDGE) does inthe Global System for Mobile communication (GSM) world. The introduction of sharedchannels for different users will guarantee that channel resources are used efficiently inthe packet domain, and will be less expensive for users than dedicated channels. 4G orFourth Generation Networks 4G or Fourth Generation is future technology for mobileand wireless comunications. It will be the successor for the 3Rd Generation (3G) networktechnology. Currently 3G networks are under deployement. Approximatly 4Gdeployments are expected to be seen around 2010 to 2015. The basic voice was the driverfor second-generation mobile and has been a considerable success. Currently , video andTV services are driving forward third generation (3G) deployment. And in the future, lowcost, high speed data will drive forward the fourth generation (4G) as short-rangecommunication emerges. Service and application ubiquity, with a high degree ofpersonalization and synchronization between various user appliances, will be anotherdriver. At the same time, it is probable that the radio access network will evolve from acentralized architecture to a distributed one. The evolution from 3G to 4G will be drivenby services that offer better quality (e.g. multimedia, video and sound) thanks to greaterbandwidth, more sophistication in the association of a large quantity of information, andimproved personalization. Convergence with other network (enterprise, fixed) serviceswill come about through the high session data rate. It will require an always-onconnection and a revenue model based on a fixed monthly fee. The impact on networkcapacity is expected to be significant. Machine-to-machine transmission will involve twobasic equipment types: sensors (which measure parameters) and tags (which are generallyread/write equipment). It is expected that users will require high data rates, similar tothose on fixed networks, for data and streaming applications. Mobile terminal usage(laptops, Personal digital assistants, handhelds) is expected to grow rapidly as theybecome more user friendly. Fluid high quality video and network reactivity are importantuser requirements. Key infrastructure design requirements include: fast response, highsession rate, high capacity, low user charges, rapid return on investment for operators,investment that is in line with the growth IIPM – AHMEDABAD SALES ANDDISTRIBUTION Page 53
  • 54. in demand, and simple autonomous terminals. The infrastructure will be much moredistributed than in current deployments, facilitating the introduction of a new source oflocal traffic: machine-to-machine. The Indian Telecom Service provider industry isgearing for a revolution. The customer is driving this revolution and will see more uniqueand 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 formore. 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 FDIinflux will make the telecom space in India a must watch in the coming years.REFERENCES [1} IBEF report 2007-08/08-09 : Telecommunication - MARKET &OPPORTUNITIES. [2] Cellular Statistics – Cellular Operator Association of India [3]IAMAI & eTechnology Group@IMRB: MOBILE VALUE ADDED SERVICES ININDIA- A Report. [4] Telenor Entering India: Investment Update [5] Voice andData(May 2009): Mobile Number Portability - Poaching with Portability. [6] BusinessIndia : Telecom Takeover, Bharti-MTN deal [7] Moneycontrol.com: Idea Spice deal [8]Business Standard: Vodafone Hutch deal *9+ IntoMobile: India‟s 3G License PlansUpdated. [10] World Bank Report: Spectrum auctions in India: lessons from experienceWEBSITES USED: http://www.airtel.in http://en.wikipedia.org/wiki/Idea_Cellularhttp://en.wikipedia.org/wiki/Spice_Telecom http://www.pluggd.in/indian-telecom-industry/idea-tmi-acquires-spice-telecom-1805/ IIPM – AHMEDABAD SALES ANDDISTRIBUTION Page 54 55. http://www.adityabirlanuvo.com/media/features/features.aspx?ID=1d95UDdxCdM http://www.mobiles.in/mobile-service-providers.htm http://www.bsnl.co.in/about.htm www.vodafone.co.in www.ideacellular.com www.google.com MAGAZINESUSED: 4PS Business Economics Times of India Industrial Handbook 2009 IIPM– AHMEDABAD SALES AND DISTRIBUTION Page 55