Brief overview of the Telecom industry and future analysis

1. TELECOM INDUSTRY
Presented By-
SIDDHARTHA GHOSE
SUMAN DAS
EKTA ROY CHOWDHURY

2. Industry overview
Introduction
 India is currently the world’s second-largest telecommunications market with
a subscriber base of 1.05 billion and has registered strong growth in the past
decade and half.
 The country is the fourth largest app economy in the world.
 The Indian telecom sector is expected to generate four million direct and
indirect jobs over the next five years according to estimates by Randstad
India.
 The employment opportunities are expected to be created due to combination
of government’s efforts to increase penetration in rural areas and the rapid
increase in smartphone sales and rising internet usage.

3. Telecom
Mobile(Wireless) Fixed-line(Wire Line) Internet Services
 Comprises
establishment
operating and
maintaining
switching and
transmission
facilities to
provide direct
communications
via airwaves
 Consists of
companies that
operate and
maintain switching
and transmission
facilities to provide
direct
communication
through landline,
microwave or a
combination of
landline and satellite
link-ups
 Includes Internet
Service
Providers(ISPs) that
offer broadband
internet
connections
through consumer
and corporate
channels

4. Mobile Phone and
Accessories
Mobile Phones
Mobile Chargers
Switches & switch
boxes
Electrical switches
Modular switches
Pressure & limit switches
Electric Cables and
wires
Electric wires
Electric cables
Electrical & electronic
connectors
Electrical connectors
HDMI cables
BNC & Female connector
Antennas, wifi &
communication tower
Dish antenna
Telecom tower
Transmission &
communication
tower

5. Telecommunication
equipment & parts
EPABX system
Public Address system
Mobile phone jammer
Wireless
communication system
Insulators & Insulation
materials
Electric Materials
Thermal Insulation
materials
Tele conferencing &
VOIP service
Mobile & DTH recharge service
Communication services
Video Conferencing services
Telecom Services,
Engg & Maintenance
Online Payment
Solution
Telecommunication
Services

6. Major companies in telecom industry with their market share
Company Market Share
Vodafone- Idea Vodafone – 17.74%, Idea – 16.34%
Airtel 23.70%
Jio 10.83%
BSNL Mobile 8.81%
Aircel 7.58%
Tata DoCoMo 3.55%
MTS India 0.33%
MTNL 0.30%
Reliance Communication 6.85%
Telenor India 3.97%

7.  India is currently the 2nd largest
telecommunication market and has
the 3rd highest number of internet
users in the world
 India’s telephone subscriber base
expanded at a CAGR of 19.16 per
cent, reaching 1188.5million during
FY-17
 Tele-density in India, increased from
17.9 in FY07 to 92.59 in FY17
 The Indian mobile economy is
growing rapidly and will contribute
substantially to India’s Gross
Domestic Product (GDP)
Growth Rate of the Industry

8. Telecom Revenues
 Indian telecom sector’s revenue grew at a
CAGR of 7.17% to US$39.2 billion in
FY16 as compared to US$ 19.6 billion in
FY 06
 Revenues from the telecom equipment is
estimated at US$20 billion in FY 16
 It would generate around 3 million direct
job opportunities and 2 million indirect
jobs during this period. The total number of
telephone subscribers in the country rose
by 11.13 per cent year-on-year to 1,151.78
million.
 India is expected to lead in the growth of
smartphone adoption globally with an
estimated net addition of 350 million by
year 2020.

9. Pest Analysis of Telecom Industry
Political
❖ The government of India plans to cut license fees by up 33% for operators.
❖ The government has been proactive in its efforts to transform India into global
telecommunication hub.
❖ Relaxed FDI (foreign direct Investment) norms.
❖ The government recently revised the M&A (Mergers & Acquisition) guidelines for the
telecom sector; it raised the limit on the market share of a merged entity in a circle to 50%
from 35% earlier.
❖ To boost local research and manufacturing of telecom products, the government has
proposed in investment of USD32.2 billion in three phases:
▪ USD 9.2 billion to the telecom research and development fund
▪ USD4.6 billion for the telecom entrepreneurship promotion fund
▪ USD 18.4 billion to the telecom manufacturing promotion fund during the 12th fiveyear
plan

10. Economical
❖ The Indian Telecom industry has been playing an important role in the world economy
and global revenues.
❖ Revenues from the telecom equipment stood at USD 20 billion in FY2016, which is
further expected to touch USD30 billion by FY2020.
❖ Universal Service Obligation Fund(USOF) to extend financial support operators
providing services in rural areas.
Socio-cultural
❖ Telecommunications horizontal growth is limited. Specifically, it’s difficult (and
expensive) to
expand in rural regions. Customers are left with less than a handful of options when it
comes to buying internet, mobile, and television packages.
❖ Because telecommunication corporations are monopolies, they’re in charge of both
internet and mobile carriers. Customers need these packages to communicate with friends,
partake in social media challenges, buy products online, find stable careers and more.
❖ Telecommunication has become a vastly important aspect of the daily life of the average
person.

11. Technological
❖ Both needs and requirements for telecom services are advancing. For example, telephone
companies install fiber wire in their builds over copper now. Phones are becoming more
compact, moving the telecom business into a primarily wireless business.
❖ Basic needs in smartphones, like voicemail, caller ID, and messaging are covered. Now
people want internet access on the go. So, data is added to mobile plans. Wi-Fi has been
built into buses and cars too.
❖ This ‘need’ leads to more investments in companies who hold a strong influence over
telecom developments in computers, smartphones, and laptops.

12. Porter’s Analysis of the Industry

13. 1. Threats of substitutes
❖ The threat of substitutes is low.
❖ With Emergence of wireless devices and other technological break-through, the market
share of wire line companies has been diminished.
❖ Some of the substitutes like IP telephone Email and Instant Messaging etc. have also
reduced the volume of voice traffic of the wireless telecom operators however there are no
commercially viable substitutes available as of now.
2. Threat of new entrant
❖ The threat of new entrant is high.
❖ Huge barriers to entry in form of large economies of scale, low product differentiation, large
capital requirements, heavy switching cost to buyers, and unfavorable government policies in
form of high license costs, spectrum usage charges, exit barriers etc. and presence of 6-7 players
in each region dissuades new players from entering the market.
❖ Government and Legal Barriers

14. 3. Bargaining power of buyers
❖ The bargaining power of buyers is high.
❖ The low differentiation between the services provided by the telecom operators and
low cost of switching for retail customers backed by Mobile Number Portability has
resulted in the services being treated by customers as a commodity.
❖ The customers are price takers in the market; their bargaining power is moderate on
account of the ease of switching. The business customers will however find it difficult to
switch to alternative service provider.
4. Bargaining power of suppliers
❖ Although it might appear that the telecom equipment suppliers have considerable
bargaining power over telecom operators, it is not the case. Large number of equipment
manufacturers along with enough number of vendors dilutes the bargaining power.
❖ The industry is highly fragmented with 15 players, such that there are as many as five-
six players in one region. With low product and service differentiation, lower prices and
innovative services are means of attracting new customers.
❖ This tends to drive the margins and profits down. In addition, the high exit barriers in
form of regulations and specialized equipment have increased the overall competition.

15. Future outlook of the industry
❖ The year 2016 is a landmark year in the Indian telecoms industry. The much awaited
sector consolidation set-in. Some of the key drivers for market consolidation include
increasing pressure on profitability, hyper-competition, spectrum trading and sharing
guidelines and favorable M&A policy.
❖ According to an analyst study, the telecom towers industry is expected to grow at 3%
CAGR for the next 5 years. This growth is fueled not only by liberalization of spectrum to
provide 4G services on lower bands across sub-urban and rural areas, but also by the
government’s initiatives of Digital India and Make in India. These initiatives have
fashioned greater opportunities for tower operators and equipment manufacturers as well.
The Digital India vision envisages transforming India into a knowledge economy, which
requires new infrastructure development to enable Pan-India connectivity.

16. THANK YOU