Indian telecom industry


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Indian telecom industry

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