INDIAN TELECOM SECTOR an industry analysis.<br /><ul><li>Tanmay Jauhary</li></li></ul><li>Telecom Sector- introduction<br />Most vibrant sector with highest growth rate – more than 60 lakh customers are added every month<br />Plethora of services<br />Easier access/ availability<br />Drastic reduction in tariff<br />World class service<br />
Major classes of Services<br /><ul><li>Fixed Copper, Optical Fibre, Wireless
Broad bandHigh speed Internet, Video</li></li></ul><li>Mobile Tariffs in India one of the Lowest<br />USD<br />
Key Policy Initiatives/milestones<br />New Economic Policy (1991)<br />Opening up of Telecom service sector (Mobile –metros)<br />National Telecom Policy 1994<br />Telecom, key for development<br />Inadequacy of public resource to meet demand <br />Private sector to supplement Govt.<br />Provide world class telecom service at affordable cost<br />
Technology Trend<br />Optical fiber based wirelinenetworks<br />Wireless networks GSM,CDMA based mobile<br />Next Generation Networks: Voice , Data, Video convergence<br />Telecom networks increasingly software intensive<br />
Issues to be addressed in the Indian Scenario <br /><ul><li>Unique Rural Scenario : low teledensity
Network Security</li></li></ul><li>Mobile. 2699.270 M <br />Fixed.1229.987 M <br />Total. 3929.257 M<br />Population 6563.69 M <br /> Teledensity. 60.02<br />
Market Structure<br />Jammu & Kashmir<br />Himachal Pradesh<br />Punjab<br />Uttar Pradesh W<br />Haryana<br />DELHI<br />Rajasthan<br />Uttar Pradesh E<br />Bihar<br />West Bengal<br />Madhya Pradesh<br />Gujarat<br />KOLKATA<br />Orissa<br />Maharashtra<br />MUMBAI<br />Andhra Pradesh<br />Karnataka<br />METRO Circles<br />CHENNAI<br />A Circles<br />Tamil Nadu<br />B Circles<br />Kerala<br />C Circles<br />Divided into 23 circles<br />4 metros <br />19 circles<br />Further divided into A, B and C category.<br /> Division based on economic parameters and revenue potential<br />Each circle has a licenses, which are a saleable.<br />North Eastern States<br />Source :COAI<br />
Current Industry Structure<br />Ministry of Communication & Information Technology<br />Licensor<br />Unified License Operators <br />Dept of Telecom<br />Fixed Line Operators <br />Regulator<br />Telecom Regulatory Authority of India<br />National Long Distance Operators<br />CDMA<br />1800Mhz<br />International Long Distance Operators<br />Judiciary<br />Telecom Dispute Settlement Appellate Tribunal<br />Wireless Operators<br />GSM <br />900 & 1800<br />FDI in telecom recently revised to 74%.<br />Government gets 15% of revenues from Unified Licensing<br />
Telecom Regulatory Authority of India<br /><ul><li>Setup in 1997
Reduced upper limit in tariff (Local, STD & ISD) and other Inter-operators tariffs.
Directives on number of network access service providers.
Policy guidelines on new services like 3G, Wi-MAX, Internet Telephony, Radio Paging, VSAT, etc.
Regular monitoring of Quality of Service parameters</li></li></ul><li>Major players of Indian telecom industry<br />The Top five companies, on the basis of ‘Market Share’ as on 31st January, 2009 are:<br />1. BhartiAirtel Ltd.<br />2. Reliance Communications Ltd.<br />3. Vodafone Essar Ltd.<br />4. BSNL<br />5. Idea Cellular + Spice<br /><ul><li>Bottom five companies, on the basis of ‘Market Share’ as on 31st January, 2009 are:</li></ul>1. Aircel Cellular Ltd. + Dishnet<br />2. Mahanagar Telephone Nigam Ltd. (MTNL)<br />3. BPL Mobile Communications Ltd.<br />4. HFCL Infotel Ltd.<br />5. Shyam Telecom Ltd.<br />
Market share of telecom companies as on January, 2009 <br />
Threat of substitutes- LOW<br />Some Substitutes:<br />VOIP (Skype, Messenger etc.)<br />Online Chat <br />Email<br />Satellite phones<br />None of the above a major threat in current scenario, but a potential threat for near future.<br />
Threat of new entrants- LOW<br />Declining Average Revenue Per User.<br />Infrastructure tenancy costs.<br />Brand pull exists to some extent for brands like Airtel / Idea/ Vodafone.<br />Extremely high infrastructure setup costs<br />Spectrum License cost- Lotteries, auctions.<br />Incumbent Advantages: Established brand image, Reliability of network<br />
Power of supplier- LOW<br /><ul><li>Large number of suppliers.
Very less time to gain advantage by an innovation (Eg. Caller tunes, life time card)
Price wars</li></li></ul><li>BhartiAirtel- The Market Leader<br />
SWOT<br />STRENGTHS<br />WEAKNESS<br />Largest Telecom Player in India - ~80Mn, 22.6%<br />Strategic Alliance with other stakeholders in BhartiAirtel include Sony-Ericsson, Nokia - and Sing Tel<br />Pan India Presence<br />Strong Financials<br />Outsourcing of Core Systems<br />Lack of emerging market investment opportunity<br />
SWOT<br />OPPORTUNITIES<br />THREATS<br /><ul><li>BhartiInfratel – Cutting Down cost in Rural area
Current Tele-Density – 30.6 is still low among developing countries
Low Broadband Penetration, Rural Telephony </li></ul>India centric – Major revenues from India<br />Falling ARPU <br />Intense Competition & Shortage of Bandwidth <br />
Airtel – Strategy<br />MANTRA : Focus on Core Competencies and Outsource the rest!<br />
Strategy<br /><ul><li>Airtelpartnered with leading players in telecommunication players across the globe.
It has managed to work with the best of domain specialists globally and emerge as a world class entity.
Partnerships include operational contracts with vendors and strategic investors ranging from private equity investors to global telecom giants.</li></li></ul><li>Strategic partnerships/ Shareholders – Technology and Capital<br />Warburg Pincus – a celebrated PE investor held a stake for a substantial period of time and was instrumental in providing Airtel support in its early stages.<br />Vodafone was a strategic investor in Airtel.<br />Temasek – the Singapore based investor holds a considerable stake in it.<br />Was also affiliated with Singapore Telecom.<br />
Outsourcing deals in 2004<br />Ericsson was given the mandate to provide, manage and maintain the equipment as well as provide quality assurance in Airtel<br />IBM was given the mandate to handle the back office requirements of Airtel’s presence in India<br />
Operational Strategies.<br /><ul><li>Higher emphasis on ARPU/min – stark contrast with other operators who concentrate on ARPU only.
Aim to become a one stop shop for all telecommunication services under the Bharti umbrella.
Exploring opportunities in international markets.
Hived off tower infrastructure into a separate entity.</li></li></ul><li>Thank You !<br />