Special report on communication sectorDocument Transcript
www.TheEquicom.com +919200009266 Page 1
REPORT ON TELECOM SECTOR
www.TheEquicom.com +919200009266 Page 2
India's tele density has improved from under 4% in March 2001 to around 78% by the end of March
2013. Cellular telephony continues to be the fastest growing segment in the Indian telecom industry.
The mobile subscriber base (GSM and CDMA combined) has grown from under 2 m at the end of
FY00 to touch 919 m at the end of March 2012 (average annual growth of nearly 65% during this 13
year period). Tariff reduction and decline in handset costs has helped the segment to gain in scale.
The cellular segment is playing an important role in the industry by making itself available in the
rural and semi urban areas where tele density is the lowest.
The fixed line segment continues to decline in terms of the subscriber base. It has declined to 30.58
m subscribers in March 2013 from 32.17 m in March 2012. The decline was mainly due to
substitution of landlines with mobile phones.
As far as broadband connections (>=256 kbps) are concerned, India currently has a subscriber base
of 13.8 m. Broadband penetration received a boost from the auction of broadband spectrum. The
network providers have stated that they would be looking at boosting the contribution of data to
their revenues. This bodes well for the future of broadband services.
Given the low tariff environment and relatively low rural and semi urban penetration levels,
demand will continue to remain higher in the foreseeable future across all the segments. High
capital investments, well-established players who have a nationwide network, license fee,
continuously evolving technology and lowest tariffs in the world. Improved competitive scenario and
commoditization of telecom services has led to reduced bargaining power for services providers.
www.TheEquicom.com +919200009266 Page 3
TABLE OF CONTENT:
HISTORY OF TELECOM SECTOR IN INDIA:
NEW RELEASE UPDATE OF TRAI:
OVERVIEW ON TELECOM BUSINESS:
EXPANTION OF THE NETWORK:
PRESENT STATUS OF TELECOM SECTORE:
IMPRESSIVE GROWTH IN TELECOM SECTORE:
MAJOR PLAYERS IN THE INDIAN TELECOM SECTORE:
TECHNICAL VIEW ON STOCKS:
www.TheEquicom.com +919200009266 Page 4
The telecom industry is one of the fastest growing industries in India. India’s more than 100
million telephone network is the third largest network in the world after China and USA. With a
growth rate of 45%, Indian telecom industry has the highest growth rate in the world. In terms of
phones, India occupies the fifth position, after China, USA, Japan and Germany.
The development of world class telecommunication infrastructure is the key to rapid
economic growth and to bring social change of the country. Indian telecommunication sector has
undergone a major process of transformation through significant policy reforms, particularly
beginning with the announcement of NTP 1994 and was subsequently re-emphasized and carried
forward under NTP 1999. Driven by various policy initiatives, the Indian telecom sector witnessed a
complete transformation in the last decade. It has achieved a phenomenal growth during the last
few years and is poised to take a big leap in the future also. Such rapid growth in the communication
sector has become necessary for further modernization of Indian economy through rapid
development in IT.
HISTORY OF TELECOM SECTOR IN INDIA:
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: the Videsh Sanchar Nigam Limited (VSNL) for
international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in
metropolitan areas. In 1990s, telecommunications sector benefited from the general opening up of
the economy. Also, examples of telecom revolution in many other countries, which resulted in better
quality of service and lower tariffs, led Indian policy makers to initiate a change process finally
resulting in opening up of telecom services sector for the private sector. 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.
www.TheEquicom.com +919200009266 Page 5
NEW RELEASE UPDATE OF TRAI:
The Telecom Regulatory Authority of India (TRAI) puts on notice the cable TV subscribers of
Digital Addressable Cable TV Systems (DAS) for non-submission of consumer application
TRAI releases draft amendments to the interconnection Regulations applicable for Digital
Addressable cable Television Systems (DAS) and Tariff Order applicable for all addressable
TRAI releases consultation paper on “Monopoly/ Market dominance in Cable TV services”
Calling applications for filling up the post of Assistant in the Pay Band PB-2 Rs.9300-34800
with the grade pay of Rs.4200 in TRAI on deputation on Foreign Service basis.
Quotation for procurement of APC make 10 KVA online UPS systems with latest feature along
with three phase in & single phase out and two hours backup.
TRAI issues Tariff Orders prescribing Standard Tariff Packages for set top boxes for Digital
Cable TV subscribers and DTH subscribers.
The Telecommunication (Broadcasting And Cable) Services (Sixth) (The Direct To Home
Services) Tariff Order, 2013
TRAI releases “The Telecom Commercial Communications Customer Preference (Twelfth
Amendment) Regulations, 2013”.
Quality of Service (Code of Practice for Metering and Billing Accuracy) (Amendment)
Regulation 2013 (Clarification)
www.TheEquicom.com +919200009266 Page 6
OVERVIEW ON TELECOM BUSINESS:
As far as the fixed line business goes, the low penetration levels in the country and the
increasing demand for data based services such as the Internet will act as major catalysts in
the growth of this segment.
Increasing choice and one of the lowest tariffs in the world have made the cellular services in
India an attractive proposition for the average consumer. The penetration levels in urban
areas have already crossed 100%. Therefore the main driver for future growth would be the
rural areas where tele-density is around 39.22%.
During FY12, a number of things were carried out. The Supreme Court cancelled the 2G
licenses that were issued in 2008 by the erstwhile telecom minister. The Court also directed
the regulator to formulate new rules for auctioning the spectrum and cancelled licenses.
The cancellation of the licenses and subsequent TRAI's proposals on pricing of the new
spectrum prompted the exit of 2 foreign operators from the country.
The operators continued to operate on thin margins during FY12. Due to intense competition,
tariffs continue to remain low. At the same time rising operating costs will force operating
margins to continue remaining depressed during the current fiscal as well.
In a latest move, operators have cut tariffs on the premium 3G services. Most of them have
stated that the decline in tariffs would be offset by increase in volumes which would help
boost 3G revenues. Indian consumers are known to be highly sensitive to price decrease and
therefore this move to cut prices is expected to drive growth for 3G in the coming years.
www.TheEquicom.com +919200009266 Page 7
EXPANTION OF THE NETWORK:
The telecom sector has shown robust growth during the past few years. It has also undergone a
substantial change in terms of mobile versus fixed phones and public versus private participation.
The following table will shows the growth of telecom sector since 2003:
During 2012-13, the wireless connections grew at 84%, whereas landlines registered a negative
growth. The number of Internet subscribers grew at 38%, while the broadband subscribers grew
from a meager 2.16 million to 3.86 million during the year 2012-13.
www.TheEquicom.com +919200009266 Page 8
PRESENT STATUS OF TELECOM SECTOR:
Further, National Internet Exchange of India (NIXI) has been set up by DIT to ensure that Internet
traffic, originating and destined for India is routed within India. This will substantially bring down
the cost of Internet usage. It is expected that NIXI will take appropriate steps for increasing the
utilization of such facilities.
5.12 2.26 3.03
www.TheEquicom.com +919200009266 Page 9
IMPRESSIVE GROWTH IN TELECOM SECTOR:
According to the data released by the sectoral regulator, the Telecom Regulatory Authority of India
(TRAI), the industry revenue grew at a sluggish pace of 2.9% to Rs 38,803 crore at the end of March,
an increase of 1,082 crore from the quarter ending December when it had recorded Rs 37,731 crore
in aggregate revenue. Buoyed by an 8.5% growth in the voice traffic over its network, the Aditya
Birla Group's Idea Cellular BSE -0.12 % gained 90 basis points to earn 15.7% of the total revenue
generated in the mobile telephony market during the quarter.
www.TheEquicom.com +919200009266 Page 10
MAJOR PLAYERS IN THE INDIAN TELECOM SECTOR:
Airtel operates in all telecom circles of India. Its network is present in 5,121
census towns and 457,053 non-census towns and villages, covering
approximately 86.6% of the country’s population as of September 2012. Airtel is
the largest operator in rural India with 83.82 million subs. as of April 2013.
IDEA Cellular has been recognized as the 'Most Customer Responsive Company'
in the Telecom sector, at the prestigious Avaya Global Connect Customer
Responsiveness Awards 2010. Idea's subscriber base as at the end of August
2011 according to the statistics is totaling to 98,441,714 or 16.09% (Approx.) of
the total mobile connections in India.
May 23rd, 2013 - Tata Communications, a leading provider of A New World of
Communications, today announces that it has signed a five-year strategic voice
sourcing agreement with Vonage Holdings Corp. This partnership is a first of its
kind between Tata Communications and a major Over-The-Top provider.
Reliance Group’s flagship company, Reliance Communications, is India's largest
private sector information and communications company, with over 150 million
subscribers. It has established a pan-India, high-capacity, integrated (wireless
and wireline), Reliance Mobile services now cover over 24,000 towns, 6 lakh
villages, and still counting.
www.TheEquicom.com +919200009266 Page 11
As per our technical view BHARTI AIRTEL has consolidation phase so investors CAN TAKE LONG POSITION
above 300 for the target 325
As per our technical view IDEA has consolidation phase & stochastic oscillators indicating sell signal so this
consolidation is not good for investment so investors should not take any long position in IDEA.
www.TheEquicom.com +919200009266 Page 12
As per our technical view TATA COMMUNICATION have making bullish engulf pattern & stochastic
oscillators indicating buy signal so this is good for investment and investor CAN TAKE LONG POSITION above
180 for the target 200.
As per our technical view RCOM has bullish trend & had broken its consolidation phase so investors CAN
TAKE LONG POSITION above 135 for the target 145
www.TheEquicom.com +919200009266 Page 13
This report is based on our best research and various information of different informative sites.
From the past few years in India telecommunication business has been altered. Earlier when
telecom industry was dominant in the market but now it is transformed in to more competitive
market with further competitors and provides additional services. In India there are so many
leading and superior telecommunication service provider companies. The industry has recorded
phenomenon growth during the last decade. In modern telecommunication technologies, the
requirement for signal reliability is higher and higher but fading is the main challenge for signal
reliability. Different types of techniques have been studied to mitigate this fading but MIMO
(Multiple Input Multiple Output) has been studied extensively
THEEQUICOM is India's leading Research Tips Providing Company. THEEQUICOM offers all over India’s customers a
unique combination of local insights and global perspectives, delivering independent information, opinions and
solutions that help them make better informed business and investment decisions, improve the efficiency of markets
and market participants, and help shape infrastructure policy and projects. Its integrated range of capabilities
includes research and portfolio management; research on India's Equity & Commodity market; equity & commodity
research; fund services & risk management advisory services.
About TheEquicom Research
THEEQUICOM Research is India's largest independent, integrated research house. We leverage our unique, integrated
research platform and capabilities spanning the entire economy-industry-company spectrum to deliver superior
perspectives and insights to over 350 domestic clients, through a range of subscription products and customized
THEEQUICOM Research, a Division of THEEQUICOM Pvt Limited has taken due care and caution in preparing this
Report. Information has been obtained by THEEQUICOM from sources which it considers reliable. However,
THEEQUICOM does not guarantee the accuracy, adequacy or completeness of any information and is not responsible
for any errors or omissions or for the results obtained from the use of such information. THEEQUICOM is not liable for
investment decisions which may be based on the views expressed in this Report. THEEQUICOM especially states that it
has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of this Report. THEEQUICOM
Research operates independently of, and does not have access to information obtained by THEEQUICOM Research
Division, which may, in its regular operations, obtain information of a confidential nature which is not available to
THEEQUICOM Research. No part of this Report may be published/reproduced in any form without THEEQUICOM prior