Indian telecom industry final-bhuvar rajsee r

::: Grand Project Report :::

A study report on Indian Telecom Industry:
“Price-War and its impact on”

Prepared By
Rajshee R. Bhuvar
Guided By
Prof. Vishal Javiya
Academic Year
2008-10
Submitted To
Smt. R D Gardi Department of Business Management,
Saurashtra University, Rajkot

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::: Declaration :::

I, undersigned Mr. Bhuvar Rajshee R. Student of Smt. R. D. Gardi Department of Business
Management, Saurashtra University, Rajkot hear by declare that the project work
presented in this report my own work and has been created by me under the
supervision of Prof. Vishal Javiya

This has not been previously submitted to any other university for any examination.

Date: - 12-4-2010
Place: - Rajkot

Signature

(Bhuvar Rajshee R.)

A study report on Indian Telecom Industry: “Price-War and its impact”
Prepared by: Rajshee R. Bhuvar

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::: Preface :::

“Preface makes man perfect not money”

MBA is a course where getting theoretical knowledge only will not serve the purpose. The
effective application of the theoretical aspects in the practical situations should be given
more importance. So as a part of academic activity the MBA students are required to
undergo research report after the end of 4th Semester. During the research study,I get the
opportunity to apply the concepts they have learned in first three semesters.

Therefore, as a student of MBA, I have taken an excellent opportunity to research on Indian
telecom industry and I really enjoyed my research study and learn many new insights that
probably I never have learned from the classroom.

Here, I tried my level best to represent all the information and I have expressed my
deliberated efforts to make my report clean & specific.


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::: Acknowledgment :::

The successful completion of a research study requires guidance & help from a number of
people. I was fortunate to have all the support from my Professors. I therefore take this
opportunity to express my profound sense of gratitude to the all those who extended their
wholehearted help and support to me in completing this grant research project.

I am sincerely thankful to Dr. Pratapsinh Chauhan (Head of Department-RDGDBM,
Saurashtra University-Rajkot) for allowing me to undertake the report and making available
all facilities for the successful completion of the report besides guiding me to pursue the
study on proper line.

I also express my deep sense of gratitude towards Mr. Vishal Javiya. (Guide, Faculty at
RDGDDBM)

No Acknowledge would suffice for the support my family members, my colleagues, some
bloggers, customer care executive & other friends who work on industry.

Lastly, I extend my thanks to all those whose name have not been mentioned way in
successfully carrying out the project report.

Date: - 12-4-2010
Place: - Rajkot.


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::: Contents :::

SR. NO Particulars Page no.

1 Executive summary 8

2 Introduction 10

 Objective 11

 Research methodologies 12

 Indian Telecom Industry at a glance 13

 Where we stand in world? 16

 Development of mobile phone 18

 History of cellular services in the India 24

 Impact of LPG on cellular service industry 27

 Regulatory Authority 31

 Various Telecom policies 33

3 Major players of the Industry 36

 Cellular Service providers’ Overview 37

 All-over Market share 39

 List of cellular operator with subscriber base 40

1. Airtel 40

2. Reliance communications 44

3. Vodafone Essar 46

4. BSNL 49

5. Idea cellular 52

6. Tata Teleservices limited 55

7. Aircel 59

8. MTNL 62


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9. MTS India 66

10. LOOP Mobile 68

11. Uninor 70

12. S-tel 72

13. HFCL Infotel 75

4 Price-war: - how it happens! 77

 Rs. 16.80 per minute to ½ paisa per second 78

 Reason behind India's lowest telecom tariffs in the world 84

5 Price-war’s impact on industry 86

 What happen after price war? 87

 Price wars impact on stock-market 87

 Price-war’s impact on ARPU 93

 Price-war’s impact on financial performances 95

 Telco’s business model 99

1. Revenue analysis 100

2. Cost analysis 102

6 Value added services- How it helpful to overcome price-war impact 103

 It’s helpful to overcome the price-war impact 104

 The Role of VAS in revenue generation 105

 Market size of VAS 106

 Revenue distribution of VAS 107

 The Road Ahead 108

7 Marketing mix of Value added services as a “Next wave for revenue growth” 110

 Why marketing mix of VAS? 111

 Product 112


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 Price 120

 Promotion 122

 Place 128

8 Opportunities and Threats analysis 133

 Opportunities 134

 Threats 136

9 Finding &suggestions 138

 Finding 139

 suggestions 141

10 Bibliography 143


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::: Executive summary :::

We undertook this project to understand the Cellular Industry as a whole. Also to get better
insight of how External Environment as well as the Competitive Environment can affect it. In
the price-war situation which types problem faced by Indian telecom industry. At present
Telecom Sector is in boom, every day there are new changes happening in the industry. This
project has taught us that how difficult it is for a company to survive in the market with the
continuous changes in terrif, whether these changes are in Technology, or in the pricing
structure or in the legal policies or in the terms of customer preferences. We also came to
know, that the telecom market is having very high Entry as well as Exit barriers, due to the
increased number of players and strong rivalry among existing players.

The government of India recognizes that the provision of a world-class telecommunications
infrastructure and information is the key to rapid economic and social development of the
country. It is critical not only for the development of the Information Technology industry,
but also has widespread ramifications on the entire economy of the country. It is also
anticipated that going forward, a major part of the GDP of the country would be contributed
by this sector.

The process of deregulation began in India in 1980s with the restructuring of Telecom
department to stimulate growth and introduce new technologies. When cellular mobile
services were first introduced, it was duopoly, under a fixed license fee regime and for a
license period of 10 years. The initial response was encouraging because of the perceived
attractiveness of the Indian market in the terms of teledensity, the high latent demand and
the increasing middle class. The Telecom Regulatory Authority of India (TRAI) was formed in
1997 with a view to provide aneffectiveregulatory framework and adequate safeguards to
ensure fair competition and protection of consumer interests. The Government is
committed to a strong and independent regulator with comprehensive powers and clear
authority to effectively perform its functions. Telecom proved to be a powerful attraction of
foreign investment. The cumulative FDI inflow into Telecom since 1993 has exceeded Rs.
43,000 Million. Within telecom, Cellular Industry has attracted most of the foreign
investment since 1993, accounting for almost 50 % of the FDI inflow in to telecom –
representing amongst the biggest investment in any one sector in India.

The concept of Cellular service had been established to target only to Business class people.
But after the revolutions happened in this industry, the technology enhanced and the
competition has made the tariffs cheaper and now it has become the status symbol, and
because of that now not only the business classes people keep it but also service class
people, school & college going students keep the cellular phone with them. It has given the
new uses to this service people keep in touch with their relatives and friends. The living
standard has also changed. The advertising is also in full fledge; this has lead the cellular
service so popular.

At present, we are using the 2.5-generation of mobile system. The 3rd generation of mobile
communication systems will soon by implement. Following on the heels of analog


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technology, the third generation will be digital mobile multimedia offering broadband
mobile communication with voice, video, and graphics, audio and other information.

Indian cellular industry is in full of its color with boom seen in Indian economy. With theentry
of major players, major up fold has been seen in cellular industry since last 8-10 years.
Government continuous intervention in this industry is major factor that has affected
positively & negatively for different technological players.

Today’s price-war situation in competitive environment in cellular industry has inspired us
to study this industry form strategic point of view. We had undertaken this project for our
learning as well as to fulfill academic guideline of Saurashtra University. Objective of our
study is “The core objective of the project is to understand the price-war situation and its
impact on Cellular industry of India.Also understand the marketing mix of VAS as a “next
wave for revenue growth”.

To achieve objective of our study we had given importance to secondary data collection and
its analysis & conclusion.

In our research secondary data collected from various magazines, newspapers, internet,
library, reports of different companies etc.


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::: Introduction :::


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::: Objective :::

Main-objective

To study the present scenario of cellular (GSM +CDMA) service industry of India and
understand the price-war and its impact on industry.

To understand the marketing mix of VAS as a “next wave for revenue growth”

Sub-objective;

 To review Indian scenario of cellular service industry.

 To review major Indian players of cellular service.

 To review of new players in cellular services industry.

 To know the subscribers growth rate of different players.

 To understand price-war.

 To find out reason behind price-war.

 To understand the ARPU (Average Revenue per User).

 To find out price-war impact on ARPU.

 To find out price-war impact on stock market performances.

 To find out price-war impact on financial performances.

 To understand V.A.S. (value added services).

 To understand V.A.S. roll in price-war situation.

 To compare V.A.S. revenue v/s calling revenue.

 To find out V.A.S. market size

 To understand V.A.S. revenue distribution.

 To find out opportunities and threats for cellular service industry.


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::: Research methodologies :::
Research is an art of scientific investigation, which helps to search for knowledge. Research
methodology considers following items:

Types of data:

There are main two types of data.

 Primary Data: -data are those, which are collected for the first time and thus happen
to be original in character.

 Secondary Data: - Secondary data, on the other hand are those, which have already
been collected by someone in the past. For this research study, secondary data is
used.

Data Source:

Secondary data are collected from the magazines, different reports, publishes, newspapers,
Internet, etc.

We have taken secondary data thatare related to prepare project. For comparison also we
taken secondary data and from that we have prepared interpretation. Other analysis we
have made from collected data only. This way, we have prepared project by using secondary
data.

Define the problem andr esearch objectives

Develop the research plan

Collect the information
Secondary Data

Analyze the information

price war and its impact VAS "next wave for revunue groth"

Present the findings

Finding suggestions


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::: Indian Telecom Industry at a glance :::
Where we stand today…

 525.15 Million Mobile Subscriber.

 In year 2015 India beat china with 'billion plus' Subscriber.

 Monthly growth rate of 3.78%.

 Avg.15million (19.20 million in Jan.) New Subscriber added every month.

 Tele-density stands at 44.73%.

 13 major players………8 old…….5 new………other 3 waiting for lunched.

 Lowest call charge in the world……….1/2(half) paisa per second.

 1 rupee, 1 sms to 1 paisa, 1 sms.

 New SIM-card in 10 Rupees with free 50 Rupees talk time + 30 sms.

 ARPU reduce 173.66 to155.60 (-10.40%) in last quarter.

Above figure told everything about Indian cellular industry!

The Indian telecommunication industry, with about 525 million mobile phone connections
(Dec 2009) , is the third largest telecommunication network in the world and the second
largest in terms of number of wireless connections. The Indian telecom industry is one of
the fastest growing in the world and is projected that India will have 'billion plus' mobile
users by 2015. Projection by several leading global consultancies is that India’s telecom
network will overtake China’s in the next 10 years. For the past decade or so,
telecommunication activities have gained momentum in India. Efforts have been made from
both governmental and non-governmental platforms to enhance the infrastructure. The
idea is to help modern telecommunication technologies to serve all segments of India’s
culturally diverse society, and to transform it into a country of technologically aware people.

The telecom services have been recognized the world-over as an important tool for socio-
economic development of a nation. Telecommunication is one of the prime support services
needed for rapid growth and modernization of various sectors of the economy. It has
become especially important in recent years because of enormous growth of information
technology and its significant potential for the impact on the rest of the economy.

Telecommunications is one of the few sectors in India, which has witnessed the most
fundamental structural and institutional reforms since1991. Considering the great potential
for the growth of telephone demand with the accelerated growth of economic activities,


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the Government of India announced the National Telecom Policy in 1994 and the New
Telecom Policy in 1999. The National Telecom Policy provides for private sector
participation to supplement the efforts of Dot in basic telephone services. The opening up of
the basic services provided a big opportunity for private & foreign investors. More policy
initiatives included Addendum to NTP-1999.

The entire sector is now open to unrestricted competition in all. The opening of the sector has
not only led to rapid growth but also helped a great deal towards maximization of consumer
benefits. The tariffs have been falling continuously across the board because of healthy and
unrestricted competition and India today has one of the lowest tariffs in the world. Besides,
because of the various measures and initiatives taken by the Government, India is now fast
emerging as one of the leading telecom nations.

The reforms process in the telecom sector is still on, aiming to remove the balance hurdles and
limitations. With a strong population of over 1.16 Billion, India has become one of the most
dynamic and promising. Telecom markets of the world. In recent times, the country has
emerged as one of the fastest growing telecom markets in the world. It has third largest
telecom network and the second largest wireless network in the world.


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::: Growth of Mobile subscriber base from 1999 to Jan-2010 (In millions) :::

SUBSCRIBERS
1200

1000
1000

800
(in Millions)

600
525.15

429.72

400
304.49

206.83
200
98.41 104.32
75.54
44.97 54.62
22.81 28.53 36.29
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2015

Note: - 2015 figure is projected by govt. agency.

Dec.2009 India have the 525.15 million subscribers, it is 22x times higher than 1999.
During this period call charges reduce 56 x times, in compare to 1999’s Rs 16.80 per minute.


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::: Where we stand in the world :::

List of countries by number of mobile lines in use
Country-wise mobile subscribers

Rank Country or region Number of mobile phones Population % of population
1 China 747,380,000 1,335,330,000 55.97
2 India 525,147,922 1,174,040,000 44.73
3 United States 276,610,580 308,505,000 89.0
4 Russia 207,900,000 141,915,979 143.2
5 Brazil 173,960,000 191,480,630 90.84
6 Indonesia 140,200,000 231,369,500 60.53
7 Japan 107,490,000 127,530,000 84.11
8 Germany 107,000,000 81,882,342 130.15
9 Pakistan 97,579,940 168,500,500 59.60
10 Italy 88,580,000 60,090,400 147.41
11 Mexico 79,400,000 109,610,000 72.44
12 United Kingdom 75,750,000 61,612,300 122.95
13 Vietnam 70,000,000 87,375,000 80.11
14 Philippines 67,900,000 92,226,600 73.62
15 Turkey 66,000,000 71,517,100 92.29
16 Nigeria 64,000,000 154,729,000 41.36
17 France 58,730,000 65,073,842 90.25
18 Ukraine 55,170,908 46,143,700 119.56
19 Thailand 51,377,000 65,000,000 79.0
20 Spain 50,890,000 45,828,172 111.05
21 Bangladesh 50,400,000 162,221,000 31.11
22 South Korea 47,000,000 48,333,000 97.24
23 Argentina 40,402,000 40,482,000 99.8
24 South Africa 42,300,000 47,850,700 82.9
25 Iran 39,400,000 71,208,000 54.2
26 Poland 36,746,000 38,115,967 96.4
27 Colombia 29,763,000 44,068,000 67.5
28 Egypt 30,065,000 75,498,000 23.8
29 Algeria 28,500,000 33,858,000 92
30 Venezuela 27,400,000 28,200,000 98.0
31 Taiwan 23,249,000 22,958,000 101.3
32 Romania 22,800,000 21,438,000 108.5
33 Peru 24,650,000 29,000,000 85.0
34 Canada 21,455,000 33,487,208 64.2
35 Morocco 20,029,000 34,343,000 58.4
36 Australia 19,760,000 21,179,211 93.3
37 Saudi Arabia 19,663,000 24,735,000 79.5
38 Malaysia 19,464,000 27,484,000 70.8
39 Netherlands 18,914,000 16,402,414 115.3


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40 Chile 15,768,000 16,598,074 95
41 Portugal 14,500,000 10,632,000 137
42 Hungary 11,732,000 10,020,000 115.1
43 Hong Kong 10,550,000 7,008,900 150.5
44 Azerbaijan 7,000,000 8,900,000 31.4
45 Singapore 4,770,000 6,400,000 134
46 New Zealand 4,245,000 4,173,460 101.7
47 Estonia 1,982,000 1,340,602 147.8

World 4,100,000,000 6,797,100,000 60.6%


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::: Development of mobile phone :::
This history of mobile phones chronicles the development of radio telephone technology
from two-way radios in vehicles to handheld cellular communicating devices.

In the beginning, two-way radios (known as mobile rigs) were used in vehicles such as
taxicabs, police cruisers, ambulances, and the like, but were not mobile phones because
they were not normally connected to the telephone network. Users could not dial phone
numbers from their vehicles. A large community of mobile radio users, known as the
mobileers, popularized the technology that would eventually give way to the mobile phone.
Originally, mobile two-way radios were permanently installed in vehicles, but later versions
such as the so-called transportable or "bag phones" were equipped with a cigarette lighter
plug so that they could also be carried, and thus could be used as either mobile or as
portable two-way radios. During the early 1940s, Motorola developed a backpacked two-
way radio, the Walkie-Talkie and later developed a large hand-held two-way radio for the US
military. This battery powered "Handy-Talkie" (HT) was about the size of a man's forearm.

In 1910Lars Magnus Ericsson installed a telephone in his car, although this was not a radio
telephone. While travelling across the country, he would stop at a place where telephone
lines were accessible and using a pair of long electric wires he could connect to the
=9781840464191 In Europe, radio telephony was first used on the first-class passenger
trains between Berlin and Hamburg in 1926. At the same time, radio telephony was
introduced on passenger airplanes for air traffic security. Later radio telephony was
introduced on a large scale in German tanks during the Second World War. After the war
German police in the British zone of occupation first used disused tank telephony
equipment to run the first radio patrol cars. In all of these cases the service was confined to
specialists that were trained to use the equipment. In the early 1950s ships on the Rhine
were among the first to use radio telephony with an untrained end customer as a user.

In 1946 soviet engineers G. Shapiro and I. Zaharchenko successfully tested their version of a
radio mobile phone mounted inside a car. The device could connect to local telephone
network with a range of up to 20 kilometers.


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::: Pioneers of the cell phone :::

Dr. Martin Cooper of Motorola, made the first US
analogue mobile phone call on a larger prototype
model in 1973.


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In December 1947, Douglas H. Ring and W. Rae Young, Bell Labs engineers, proposed
hexagonal cells for mobile phones in vehicles.[1] Philip T. Porter, also of Bell Labs, proposed
that the cell towers be at the corners of the hexagons rather than the centers and have
directional antennas that would transmit/receive in three directions (see picture at right)
into three adjacent hexagon cells. The technology did not exist then and the frequencies
had not yet been allocated. Cellular technology was undeveloped until the 1960s, when
Richard H. Frenkiel and Joel S. Engel of Bell Labs developed the electronics.

Recognizable mobile phones with direct dialing have existed at least since the 1950s. In the
1954 movie Sabrina, the businessman Linus Larrabee (played by Humphrey Bogart) makes a
call from the phone in the back of his limousine.

The first person to have a mobile phone in the United Kingdom was reputedly Prince Philip,
who had a system fitted into the trunk of his Aston Martin in 1957. The Prince could make
phone calls to the Queen while driving, which was thought to be quite amazing at the time.
The Duke of Gloucester heard about the mobile phone and tried to obtain one, but the Post
Office denied his request. They were prepared to indulge the husband of Her Majesty, but
nobody else, as the system used an entire dedicated radio frequency.

The first fully automatic mobile phone system, calledMTA (Mobile Telephone system A), was
developed by Ericsson and commercially released in Sweden in 1956. This was the first
system that did not require any kind of manual control in base stations, but had the
disadvantage of a phone weight of 40 kg (90 lb.). MTB, an upgraded version with transistors,
weighing 9 kg (20 lb.), was introduced in 1965 and used DTMF signaling. It had 150
customers in the beginning and 600 when it shut down in 1983.

In 1957 young Soviet radio engineer Leonid Kupriyanovich from Moscow created the
portable mobile phone, named after himself as LK-1 or "radiophone". This true mobile
phone consisted of a relatively small-sized handset equipped with an antenna and rotary
dial, and communicated with a base station. Kupriyanovich's "radiophone" had 3 kilogram of
total weight, could operate up to 20 or 30 kilometers, and had 20 or 30 hours of battery
lifespan. LK-1 and its layout was depicted in popular Soviet magazines as Nauka i zhizn, 8,
1957, p. 49, Yuniytechnik, 7, 1957, p. 43–44. Engineer Kupriyanovich patented his mobile
phone in the same year 1957 (author's certificate (USSR Patent) # 115494, 1.11.1957). The
base station of LK-1 (called ATR, or Automated Telephone Radio station) could connect to
local telephone network and serve several customers.

In 1958, Kupriyanovich resized his "radiophone" to "pocket" version. The weight of
improved "light" handset was about 500 grams.

In 1958 the USSR also began to deploy the "Altay" national civil mobile phone service
especially for motorists. The newly-developed mobile telephone system was based on
Soviet MRT-1327 standard. The main developers of the Altay system were the Voronezh
Science Research Institute of Communications (VNIIS) and the State Specialized Project
Institute (GSPI). In 1963 this service started in Moscow, and in 1970 the Altay service already
was deployed in 30 cities of the USSR. The last upgraded versions of the Altay system are
still in use in some places of Russia as a trunking system.


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In 1959 a private telephone company located in Brewster, Kansas, USA, the S&T Telephone
Company, (still in Business today) with the use of Motorola Radio Telephone equipment and
a private tower facility, offered to the public mobile telephone services in that local area of
NW Kansas. This system was a direct dial up service through their local switchboard, and
was installed in many private vehicles including grain combines, trucks, and automobiles.
For some as yet unknown reason, the system after being placed online and operated for a
very brief time period was shut down. The management of the company was immediately
changed, and the fully operable system and related equipment was immediately dismantled
in early 1960, not to be seen again.

In 1966, Bulgaria presented the pocket mobile automatic phone RAT- 0.5 combined with a
base station RATZ-10 (RATC-10) on Interorgtechnika-66 international exhibition. One base
station, connected to one telephone wire line, could serve up to six customers.

In 1967, each mobile phone had to stay within the cell area serviced by one base station
throughout the phone call. This did not provide continuity of automatic telephone service to
mobile phones moving through several cell areas. In 1970 Amos E. Joel, Jr., another Bell Labs
engineer invented an automatic "call handoff" system to allow mobile phones to move
through several cell areas during a single conversation without loss of conversation.

In December 1971, AT&T submitted a proposal for cellular service to the Federal
Communications Commission (FCC). After years of hearings, the FCC approved the proposal
in 1982 for Advanced Mobile Phone System (AMPS) and allocated frequencies in the 824–
894 MHz band.[6] Analog AMPS was superseded by Digital AMPS in 1990.

One of the first successful public commercial mobile phone networks was the ARP network
in Finland, launched in 1971. Posthumously, ARP is sometimes viewed as a zero generation
(0G) cellular network, being slightly above previous proprietary and limited coverage
networks.

First generation:
On April 3, 1973, Motorola employee Dr. Martin Cooper placed a call to Dr. Joel S. Engel,
head of research at AT&T's Bell Labs, while walking the streets of New York City talking on
the first Motorola DynaTAC prototype in front of reporters. Motorola has a long history of
making automotive radios, especially two-way radios for taxicabs and police cruisers.

Second generation:
In the 1990s, 'second generation' (2G) mobile phone systems such as GSM, IS-136
("TDMA"), iDEN and IS-95 ("CDMA") began to be introduced. In 1991 the first GSM network
(Radiolinja) opened in Finland. 2G phone systems were characterized by digital circuit
switched transmission and the introduction of advanced and fast phone-to-network
signaling. In general the frequencies used by 2G systems in Europe were higher than those
in America, though with some overlap. For example, the 900 MHz frequency range was used
for both 1G and 2G systems in Europe, so the 1G systems were rapidly closed down to make
space for the 2G systems. In America the IS-54 standard was deployed in the same band as
AMPS and displaced some of the existing analog channels.


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Coinciding with the introduction of 2G systems was a trend away from the larger "brickle"
phones toward tiny 100–200g hand-held devices, which soon became the norm. This change
was possible through technological improvements such as more advanced batteries and
more energy-efficient electronics, but also was largely related to the higher density of
cellular sites caused by increasing usage levels. This decreased the demand for high
transmission powers to reach distant towers for customers to be satisfied.

The second generation introduced a new variant to communication, as SMS text messaging
became possible, initially on GSM networks and eventually on all digital networks. The first
machine-generated SMS message was sent in the UK in 1991. The first person-to-person
SMS text message was sent in Finland in 1993. Soon SMS became the communication
method of preference for the youth. Today in many advanced markets the general public
prefers sending text messages to placing voice calls.

2G also introduced the ability to access media content on mobile phones, when Radiolinja
(now Elisa) in Finland introduced the downloadable ring tone as paid content. Finland was
also the first country where advertising appeared on the mobile phone when a free daily
news headline service on SMS text messaging was launched in 2000, sponsored by
advertising.

Third generation:
Not long after the introduction of 2G networks, projects began to develop third generation
(3G) systems. Inevitably there were many different standards with different contenders
pushing their own technologies. Quite differently from 2G systems, however, the meaning
of 3G has been standardized in the IMT-2000 standardization processing. This process did
not standardize on a technology, but rather on a set of requirements (2 Mbit/s maximum
data rate indoors, 384 Kbit/s outdoors, for example). At that point, the vision of a single
unified worldwide standard broke down and several different standards have been
introduced.

The first pre-commercial trial network with 3G was launched by NTT DoCoMo in Japan in the
Tokyo region in May 2001. NTT DoCoMo launched the first commercial 3G network on
October 1, 2001, using the WCDMA technology. In 2002 the first 3G networks on the rival
CDMA2000 1xEV-DO technology were launched by SK Telecom and KTF in South Korea, and
Monet in the USA. Monet has since gone bankrupt. By the end of 2002, the second WCDMA
network was launched in Japan by Vodafone KK (now Softbank).pooEuropean launches of
3G were in Italy and the UK by the Three/Hutchison group, on WCDMA. 2003 saw a further
8 commercial launches of 3G, six more on WCDMA and two more on the EV-DO standard.

During the development of 3G systems, 2.5G systems such as CDMA2000 1x and GPRS were
developed as extensions to existing 2G networks. These provide some of the features of 3G
without fulfilling the promised high data rates or full range of multimedia services.
CDMA2000-1X delivers theoretical maximum data speeds of up to 307 Kbit/s. Just beyond
these is the EDGEsystem which in theory covers the requirements for 3G system, but is so
narrowly above these that any practical system would be sure to fall short.


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By the end of 2009 there were 325+ Million subscribers on 3G networks worldwide, which
reflected 9% of the total worldwide subscriber base. About two thirds of these are on the
WCDMA standard and one third on the EV-DO standard. The 3G telecoms services
generated over 120 Billion dollars of revenues during 2009 and at many markets the
majority of new phones activated were 3G phones. In Japan and South Korea the market no
longer supplies phones of the second generation. Earlier in the decade there were doubts
about whether 3G might happen, and also whether 3G might become a commercial success.
By the end of 2009 it had become clear that 3G was a reality and was clearly on the path to
become a profitable venture.


P a g e | 24

::: History of cellular services in India :::

The popular meaning of telecom always involves electrical signals and nowadays people
exclude postal or any other raw telecommunication methods from its meaning. Therefore,
the history of Indian telecom can be started with the introduction of telegraph. As the
cellular service is the part of telecom.

Introduction of Telegraph:

The postal and telecom sectors had a slow and uneasy start in India. In 1850, the first
experimental electric telegraph Line was started between Kolkata and Diamond.

In 1851, it was opened for the British East India Company. The Posts and Telegraphs
department occupied a small corner of the Public Works Department at that time.
Construction of 4,000 miles (6,400 km) of telegraph lines connecting Kolkata (Calcutta) and
Peshawar in the north via Agra, Mumbai (Bombay) through Sindwa Ghats, and Chennai in
the south, as well as Ootacamund and Bangalore was started in November 1853. Dr. William
O'Shaughnessy, who pioneered telegraph and telephone in India, belonged to the Public
Works Department. He tried his level best for the development of telecom throughout this
period. A separate department was opened in 1854 when telegraph facilities were opened
to the public.

Introduction of the Telephone:

In 1880, two telephone companies namely The Oriental Telephone Company Ltd. and The
Anglo-Indian Telephone Company Ltd. approached the Government of India to establish
telephone exchanges in India. The permission was refused on the grounds that the
establishment of telephones was a Government monopoly and that the Government itself
would undertake the work. By 1881, the Government changed its earlier decision and a
licensewas granted to the Oriental Telephone Company Limited of England for opening
telephone exchanges at Kolkata, Mumbai, Chennai (Madras) and Ahmadabad. January 28,
1882, is a Red Letter Day in the history of telephone in India. On this day Major E. Baring,
Member of the Governor General of India's Council declared open the Telephone Exchange
in Kolkata, Chennai and Mumbai. The exchange at Kolkata named "Central Exchange" was
opened at third floor of the building at 7, Council House Street. The Central Telephone
Exchange had 93 subscribers. Bombay also witnessed the opening of Telephone Exchange in
1882.

Further developments:

 1902 - First wireless telegraph station established between Saugor Islands and Sand
heads.
 1907 - First Central Battery of telephones introduced in Kanpur.


P a g e | 25

 1913-1914 - First Automatic Exchange installed in Shimla.
 1927(July 23,) - Radio-telegraph system between the UK and India.
 1933 - Radiotelephone system inaugurated between the UK and India.
 1953 - 12 channel carrier system introduced.
 1960 - First subscriber trunk dialing route commissioned between Kanpur and
Lucknow.
 1975 - First PCM system commissioned between Mumbai City and Andheri
telephone exchanges.
 1976 - First digital microwave junction introduced.
 1979 - First optical fiber system for local junction commissioned at Pune.
 1980 - First satellite earth station for domestic communications established at
Secunderabad, Andhra Pradesh.
 1983 - First Analog signal Stored Program Control exchange for trunk lines
commissioned at Mumbai.
 1984 - C-DOT established for indigenous development and production of digital
exchanges.
 1985 - First mobile telephone service started on non-commercial basis in Delhi.
 1986 - Conversion of DOT into two wholly government-owned companies: theVidesh
Sanchar Nigam Limited (VSNL) for international telecommunicationsandMahanagar
Telephone Nigam Limited (MTNL) for service inMetropolitan areas.
 1994- Startinga cellular service in India.
 1997 - Telecom Regulatory Authority of India created.
 1999 - Cellular Services are launched in India. New National Telecom Policy
isadopted.
 2000 - Dot becomes a corporation, BSNL

While all the major cities and towns in the country were linked with telephones during the
British period, the total number of telephones in 1948 was only around 80,000. Even after
independence, growth was extremely slow. The number of telephones grew leisurely to
980,000 in 1971, 2.15 million in 1981 and 5.07 million in 1991.

In 1975, the Department of Telecom (DoT) was separated from P&T. DoT was responsible
for telecom services in entire country until 1985 when Mahanagar Telephone Nigam Limited
(MTNL) was carved out of DoT to run the telecom services of Delhi and Mumbai. In 1990s
the telecom sector was opened up by the Government for private investment as a part of
Liberalization-Privatization-Globalization policy. Therefore, it became necessary to separate
the Government's policy wing from its operations wing. The Government of India
corporatized the operations wing of DoT on October 01, 2000 and named it as Bharat
Sanchar Nigam Limited (BSNL). Many private operators, such as Reliance India Mobile, Tata
Telecom, Vodafone, BPL, Bharti, Idea etc., successfully entered the high potential Indian
telecom market.


P a g e | 26

Development of cellular industry:

The telecom services have been recognized the world-over as an important tool for socio-
economic development for a nation. Telecommunication is one of the prime support
services needed for rapid growth and modernization of various sectors of the economy. It
has become especially important in recent years because of enormous growth of
information technology and its significant potential for the impact on the rest of the
economy. In the past decade or so the distinction between communications & IT has been
diminishing with emerging common infrastructures blurring the differentiation between
content & carrier methods. At the same time, as has been the case in most of the developed
world, the combination of enhanced computing power and improved telecommunications-
equated by some to the introduction of steam power in the 18th century and electricity in
the 19th, has spurred a major improvement in the productive capacities of the economies.

India is perceived to have a special comparative advantage in information technology and in
IT enabled services. The extent of advantage depends critically on high quality
telecommunication infrastructure. Telecom infrastructure is treated as a crucial factor to
realize the socio-economic objectives in India.


P a g e | 27

::: Impact of LPG on cellular service industry :::

Introduction:

Globalization, liberalization and privatization are the three most spoken words in today’s
world. These initiatives paved way for all-round reforms,

Especially in developing economies, like India. These countries realized that development
ofeffectiveand efficient means of communications and information technology is important
to push them onto the path of development. The growth of the telecom sector in India
during post- liberalization has been phenomenal. This research aims to throw light on the
factors that contributed to growth in the segment and presents an insight on the present
status of the industry.

Liberalization:

No meaningful liberalization of the telecom sector is possible unless there is aneffectiveand
strong regulatory authority. In view of the raging controversy between the TRAI and the
DOT over the powers and jurisdictions of each other, the Union Government intends
suitable amendments in the TRAI Act to create investors' confidence and a level-playing field
between public and private operators. Taking into account the convergence of telecom,
computers, television and electronics, a group of experts is being constituted to recommend
a new legislation in place of the India Telegraph Act 1885 as it has lost its relevance.

In the early 1990s was the impact of economic reforms promulgated by the Government of
India to align its economy with the world economy. Further the economic renaissance of
India catalyzed the need for the opening of Indian cellular industry. Since independence the
number of basic telecommunication services network has expanded from about 84
thousand connections to around 385.95 lakh connections as on March 31 2002. The basic
service network represents the majority of the telephone subscription, which accounts for
around 86% of the total telecommunication network in India. Post 1990s, the Government
of India did away with its old monopoly-market concept and shifted to open-market policy
regime.

In the course of liberalization, licenses were granted for providing cellular mobile service in
the metro cities of Delhi, Mumbai, Kolkata, and Chennai. To avoid overlaps, the NTP stated
that not more than two cellular providers could operate in a given telecom circle. Service
providers were now free to provide all types of mobile services including voice and non-
voice messages and data services in their service area of operation.

Bharti, a part of Bharti Enterprises, was the first to launch its cellular service on July 7, 1995.
Bharti's cellular services were launched under the brand name ‘AirTel'and was categorized
as pre-paid services and post-paid services. The postpaid service was launched under the
brand name “Airtel” whereas its prepaid services were launched under the brand name
“Magic”...


P a g e | 28

Established in 1976, Bharti Enterprises was India's leading Telecom and Healthcare
conglomerate. It had profits of $320 million and revenues of $ 1,790.776 million for the
financial year 2004. Pre-paid services are the mobile service where the user needs to
purchase a “prepaid” card that offers talk-time and other services depending on the talk-
time value of the card.

Post-paid services refer to mobile services that are billed on a monthly basis. The user needs
to pay the bills at the end of the month's usage of the service.

Privatization:

For decades, we have wanted the government to stop baking bread, running hotels,
operating airlines, offering phone services, providing insurance or running any business that
requires high standards of customer service. Also, we wanted government to stop being
both, a service provider and a regulator, or a player and a referee. And in the last five years,
the government is actually making a serious attempt to get out of several businesses
through its privatization programmed. It has also set up several independent regulators to
ensure a fair competition between service providers and to deal with the impact of changing
technology on the way businesses are run.

Privatizations and competition alone have led to big improvements in service quality in
many areas. Unfortunately, the regulatory systems seem to operate on the belief that
competition alone is enough to protect consumer interests. Take for instance the Telecom
Regulatory Authority of India (TRAI). It follows the open house route to policy making, but
does not entertain the mounting number of individual complaints. However, it is now
planning to set up a telecom ombudsman to interface with customers. Meanwhile,
subscribers across the spectrum of telephone services continue to report a variety of
complaints.

ArunSaxena, president of the International Consumer Rights Protection Council (ICRPC),
forwarded Pole’s complaint to the company. Other civic activists point out that the problem
is not restricted to Reliance. Kisan Mehta of the Save Bombay Committee points to several
problems with the Tata Indicom service. Almost all mobile companies are extremely difficult
to reach through their help lines, tardy in their billing and seldom respond to complaints or
queries sent to their email addresses. None of them allow access to senior executives if a
consumer wants to take an unresolved complaint to a higher level.

Calls to mobile phones are the most annoying form of telemarketing because they are not
only a brazen invasion of privacy but often make the victim pay long distance charges. Some
of our leading banks and finance companies have no qualms about letting telemarketers
harass their customers. My experience with a leading Indian bank and a foreign bank reveals
that we cannot get off the list until we make multiple complaints to the top management of
these institutions. We can say that most mobile phone companies are indeed protective of
their subscribers and do not parts with telephone lists, so most call centers create lists by
dialing random numbers and hoping to strike lucky. The problem is that they simply refuse
to strike out numbers even when the person emphatically asks them never to call.


P a g e | 29

The solution is obvious: Introducing a ‘do-not-call-registry’ and making the invasion of
consumer privacy punishable with a hefty fine. Even the US has experimented with such a
registry only recently and less than a week ago a federal appeals court has upheld the
government’s right to help people block unwanted telemarketing calls. In India, filing a
complaint against companies, which harass consumers through telemarketing, would again
require a long battle with a consumer court. The alternative would be consumer action in
the form of circulating the names of such companies on Internet groups and encouraging
the boycott the products of companies that invade our privacy.

Civil courts are crowded and consumer courts are slowed down by inadequate
infrastructure and often a poor understanding of consumer issues. The solution lies in
expanding the role of independent regulators and asking them to create grievance
redressed courts or ombudsmen to hear consumer complaints and grant swift justice. But
unless the judicial system makes it much too expensive for companies to ignore their
customers, the benefits of privatization will invariably taper off within a couple years after
any sector is opened up to competition.

Policy Initiatives:

India is one of the most deregulated telecom markets in the world. Private participation is
permitted in all segments of the services – international long distance, domestic long
distance, basic, cellular, internet, radio-paging, and a number of value-added services.
Private participation in international voice services has been a significant step undertaken
by the government. Private players have been allowed to provide international long
distance services since April 2002; two years ahead of schedule. The government has
announced the New Telecom Policy (NTP) 1999 to further de-regulate the sector with
respect to services like basic, international long distance (ILD), national long distance (NLD)
and Wireless in Local Loop (WLL) among others.

The government has liberalized the sector with the following objectives:

 Ensure availability of telephones on demand

 Benchmark telecom services with global standards

 India Positioning as a major manufacturing base and exporter of telecom equipment.

 Introduce all value added services available internationally

 Achieve higher telecom penetration
The government has relaxed significantly the foreign investment norms in the sector.
Presently 49 per cent equity participation is permitted in telecom services and 74 per cent in
Internet services under the automatic route. Maximum foreign equity participation for
Internet Service Providers (ISPs) is 100 per cent. Private investors, both domestic and
foreign, have already invested over US $ 2,449 million in different segments of the industry.
100 per cent FDI is allowed for manufacturing telecom equipment.


P a g e | 30

To impactively regulate the sector, facilitate growth and development, promote
transparency and ensure fair competition, the government has set up the Telecom
Regulatory Authority of India (TRAI) as an independent regulatory body and the Telecom
Dispute Settlement Appellate Tribunal as a dispute settlement body.

Globalization:

With the advent of globalization and deregulation, the dynamics of the Telecom industry is
undergoing a sea change. This is also affected by the convergence of voice, data, and video.
In order to stay ahead of competition, telecom service providers need to operate with low
delivery costs, offer efficient services to retain existing customers, and come up with new
schemes to attract new customers. Several telecom operators offer a variety of telecom
services.

In 1995, the Indian cellular industry looked very promising. With ever increasing
globalization and expanding business activities, cell phones became a necessity for business
on the move. The younger generation also began to flaunt the cell phone as a status symbol.
Soon cell phones were being used not only as a tool for communication but also as a source
of entertainment.

As per the FDI policy for the Telecom Sector, investment up to 49% is permitted in Basic,
Cellular and other value added services, which is hiked to 74%; up to 74% is permitted in
Internet, infrastructure and radio paging services and up to 100% is permitted in
manufacturing, Internet service, voice and electronic mail, based on certain conditions for
fulfillment as a part of licensing and security requirements, laid down by the Department of
Telecommunications, Government of India. Several announcements were made relating to
policy change covering change of ADC from per minute charges to revenue share, and
mobile number portability. FDI ceiling increment has led to an increase in FDI in mobile
services whereas ADC has resulted in reduction of mobile tariffs in the country. On the
policy front, per minute ADC on domestic calls was changed to revenue share regime. And
the percentage charged is 1.5% of AGR (adjusted gross revenue).


P a g e | 31

::: Regulatory Authority :::

Department of Telecom:

The Department of Telecom has been formulating developmental policies for the
accelerated growth of the telecommunication services. The Department is also responsible
for grant of licenses for various telecom services like Unified Access Service Internet and
VSAT service. The Department is also responsible for frequency management in the field of
radio communication in close coordination with the international bodies. It also enforces
wireless regulatory measures by monitoring wireless transmission of all users in India.

Telecom Commission:

The Telecom Commission was set up by the Government of India vide Notification dated
April 11, 1989 with administrative and financial powers of the Government of India to deal
with various aspects of Telecommunications. The Commission consists of a Chairman, four
full time members, who are ex-office Secretary to the Government of India in the
Department of Telecommunications and four part time members who are the Secretaries to
the Government of India of the concerned Departments. The Telecom Commission and the
Department of Telecommunications are responsible for policy formulation, licensing,
wireless spectrum management, administrative monitoring of PSUs, research and
development and standardization/validation of equipment etc. The multi-pronged strategies
followed by the Telecom Commission have not only transformed the very structure of this
sector but have motivated all the partners to contribute in accelerating the growth of the
sector.

COAI (Cellular Operators Association of India):

COAI (Cellular Operators Association of India) was set up in 1995 as a registered non-
governmental, and non-profit society. The Cellular Operators Association of India was
established with the aim that it would be dedicated to the advancement of modern
communication.
COAI encourages the advancement of communication through Services of Mobile Cellular
Telephone. The vision of COAI (Cellular Operators Association of India) is to set up and
sustain cellular infrastructure that is of world class standard and also to encourage mobile
communication services that is affordable in the country.
Cellular Operators Association of India is the official voice for the cellular industry in India
and interacts on its behalf with the licensor, the telecom industry associations, the
management spectrum agency, and the policy makers. The chairman of COAI (Cellular
Operators Association of India) is Mr. Sanjeev Aga and the vice- chairman is Mr. Naresh
Gupta. COAI (Cellular Operators Association of India) has many committees under it such as
the Executive Council Committee, Business Development Committee, Finance and
Commercial committee, Regulatory Council Committee, and Technology Committee.


P a g e | 32

COAI (Cellular Operators Association of India) objectives includes to upgrade and maintain
services such as security, speech transmission, coverage, and access in order to help in the
expansion of the cellular services in the country and to make continuous efforts to satisfy
the customers. Further the various objectives of COAI are to address the problems of the
cellular operators that relate to financial, operational, licensing, or regulatory by interacting
with the Ministry of Finance, Department of telecommunications, Financial Institutions,
Ministry of Communications & IT, Ministry of Commerce, and Telecom Regulatory Authority
of India. Also the objectives of Cellular Operators Association of India are to make efforts to
achieve the country's objectives of better rural access and increased teledensity and also
to spread information and dispense awareness among consumers and operators on issues
relating to the various kinds of services provided by the service operators to their
customers.
The various cellular companies that are members of COAI (Cellular Operators Association of
India) are;

 Loop mobile
 Reliance Telecom Ltd
 Idea Cellular Ltd
 Aircel Ltd
 Vodafone Group
 Bharti Airtel Ltd

TRAI as a regulatory authority:

Government of India had set-up telecom regulatory authority of India (TRAI) as a regulatory
authority for telecom sector. GoI has given a power to TRAI for development of telecom
sector. TRAI act as an immediate between industries and government. TRAI was formed in
Jan 1997 with a view to provide aneffectiveregulatory framework and adequate safeguard
to ensure fair competition and protection of consumer interest. The government is
committed to strong and independent regulator with comprehensive powers and player
authority to impactively perform its functions. TRAI, 1993 deals with the powers and
functions of the authority. One of the important function to be discharge by the authority is
to laid down the standard of quality of service to be provided by the service provide and for
that the prescribed quality of service is maintained by the service provides and for that
purpose one of the means adopted would be to conduct periodical survey of the such
service provided by the service provider. In pursuance of this objective the authority notify a
regulation on quality of service of basic and cellular mobile service in July, 2000. The
purpose of the regulation is to create suitable conditions for customer satisfaction by
meeting down the quality of service that the service providers are required to provide and
customer as a right to accept. Satisfaction by making known the quality of service that the
service providers are required to provide and the consumer has the right to accept. The
regulation also provides for measuring customer perception regarding telecom services
through surveys. The authority through independent agency may conduct such service. The
regulation further provides for meeting the results of the surveys public so as to improve
the quality of the service by generating healthy competition among the service providers.


P a g e | 33

::: Various Telecom policies :::
Government policy:

Policy Initiatives by Govt. of India in the Telecommunication Sector have been one of the
largest causes for the success of the telecom market in India. The national parties before the
administrative unit have lifted private telecom units based on license-fee.

The government of India has adopted a new economic policy for the telecommunication
market in India. This policy has beeneffectivefrom 1994 and the Govt. of India with the aim
to accelerate India's growth in export production and international market formulated it.
The national telecom policy as has been designed by the government of India also ensures
foreign direct investment and exhilarating domestic investiture. This national economic
policy of telecom department demands superior quality telecommunication services and
therefore the development of telecom services are to be given the utmost importance to
attain the peak of success. The national telecom policy covers the following objectives:

A number of policy changes have been made in the recent past which, if implemented, is
bound to have a significant impact on the telecom scenario. The most significant among the
changes is the announcement of a New Telecom Policy (NTP) 1999. The Policy envisages
development of telecom facilities in remote, rural and tribal areas of the country and their
availability to the masses at affordable costs.

The NPT 1999, which has come into impact from April 1, 1999, aims at making telephones
available on demand by the year 2002 and to achieve teledensity of seven per hundred
persons by the year 2005. In case of rural areas, the current teledensity is proposed to be
raised from 0.4 to 4 by the year 2010. The policy document of NPT outlines rapid growth in
the telecom sector in India with a projected teledensity of 15 by the year 2010.

National Telecom policy 1994:

The Government of India (Government) recognizes that provision of world class
telecommunications infrastructure and information is the key to rapid economic and social
development of the country. It is critical not only for the development of the Information
Technology industry, but also has widespread ramifications on the entire economy of the
country. It is also anticipated that going forward, a major part of the GDP of the country
would be contributed by this sector. Accordingly, it is of vital importance to the country that
there be a comprehensive and forward looking telecommunications policy which creates an
enabling framework for development of this industry.

Objectives and achievements:

In 1994, the Government announced the National Telecom Policy which defined certain
important objectives, including availability of telephone on demand, provision of world class
services at reasonable prices, ensuring India's emergence as major manufacturing / export


P a g e | 34

base of telecom equipment and universal availability of basic telecom services to all villages.
It also announced a series of specific targets to be achieved by 1997. As against the NTP
1994 target of provision of 1 PCO per 500 urban population and coverage of all 6 lac villages,
DoT has achieved an urban PCO penetration of 1 PCO per 522 and has been able to provide
telephone coverage to only 3.1 lac villages. As regards provision of total telephone lines in
the country, DoT has provided 8.73 million telephone lines against the eighth plan target of
7.5 million lines.

Need for a new telecom policy:

In addition to some of the objectives of NTP 1994 not being fulfilled, there have also been
far reaching developments in the recent past in the telecom, IT, consumer electronics and
media industries world-wide. Convergence of both markets and technologies is a reality that
is forcing realignment of the industry. At one level, telephone and broadcasting industries
are entering each other's markets, while at another level technology is blurring the
difference between different conduit systems such as wire line and wireless. As in the case
of most countries, separate licenses have been issued in our country for basic, cellular, ISP,
satellite and cable TV operators each with separate industry structure, terms of entry and
varying requirement to create infrastructure. However, this convergence now allows
operators to use their facilities to deliver some services reserved for other operators,
necessitating a relook into the existing policy framework. The new telecom policy
framework is also required to facilitate India's vision of becoming an IT superpower and
develop a world class telecom infrastructure in the country.

TRAI Act 1997:

This Act may be called the Telecom Regulatory Authority of India Act, 1997.

Introduction:

The new economic policy adopted by the Government aims at improving India's
competitiveness in the global market and rapid growth of exports. Another element of the
new economic policy is attracting foreign direct investment and stimulating domestic
investment. Telecommunication services of world class quality are necessary for the success
of this policy. It is, therefore, necessary to give the highest priority to the development of
telecom services in the country.

Changing telecom scenario:

India has registered an impressive growth in the telecom sector. Over the years the country
has developed a vast telecom network comprising over 25000 telephone exchanges and
21.5 million working connections. There is a large network of optical fibre cables, digital
microwave and satellite communication systems. A very strong industrial base has been
built in the telecom sector with a large number of national and multi-national telecom
companies.


P a g e | 35

The NPT 1999, which has come into impact from April 1, 1999, aims at making telephones
available on demand by the year 2002 and to achieve teledensity of seven per hundred
persons by the year 2005. In case of rural areas, the current teledensity is proposed to be
raised from 0.4 to 4 by the year 2010. The policy document of NPT outlines rapid growth in
the telecom sector in India with a projected teledensity of 15 by the year 2010.

This will require a massive investment of over 23 billion dollars in the next five years and 65
billion over the next 10 years in the telecom sector.

Accelerator:

Telecommunication is by itself an accelerator of economic growth. As per the calculations
made by experts even one percent increase in teledensity results in a three percent increase
in the gross national product (GNP).

The NPT 1999 has been hailed the world over as a progressive and forward-looking policy in
tune with the high technological changes of the 21st century. It addresses the various
problems affecting the telecom sector. The new policy comes as a breath of fresh air for the
beleaguered telecom industry. It is expected to encourage investments in the telecom
sector and holds the promise of boosting the entry of world class infrastructure in the
country.

Bail-out package:

The Government later came out with what came to be known as a bail-out package allowing
licensees of all telecom services including basic, cellular, paging and other value-added
services to migrate to the revenue-sharing system under the NPT 1999. According to the
Government, this was necessitated because a large number of licensees under the 1994
Telecom Policy were finding it difficult to pay the license fee and wanted to switch over to
the revenue-sharing regime under the new policy.

The Government clarified that it did not want to discriminate between the existing telecom
operators and the new licensees. Moreover, future collections under the old license fee
regime were uncertain as many cellular operating companies were likely to turn sick.

Under the bail-out package, the private telecom operators were required to pay up 30 per
cent of arrears of license fee including interest last by August 31 as provided in the license
agreement for migrating to the New Telecom Policy. Requisite bank guarantees for the
remaining amount of arrears, including interest, were to be furnished for the period till the
arrears were cleared by January 31 next year. Relief was provided to the licensees by
extending the period of their licenses from the present 10 years to 20 years from the date of
existing license agreement.


P a g e | 36

::: Major players of the Industry :::


P a g e | 37

::: Cellular Service providersOverview :::

India is the developing country and so all the industry in India are developing day by day,
but cellular service industry in India is in emerging stage. So, there are much chances of
development in this industry and chances of new players to enter into this industry. In India,
more than 45% people have mobiles and the others do not have mobiles.The mobiles are
useless without SIM card and the companies who provide the SIM card are known as cellular
service companies. In India, public companies as well as private companies are in this
business. The companies who provide cellular services are as follows.

List of cellular operator

Rank Operator Technology Frequency Subscribers Ownership
(in millions)
(As of
January
2010)

1 Airtel GSM GSM 900/1800 118.864031 Bharti
Enterprises
(64.76%)
SingTel (30.84%)
Vodafone (4.4%)

2 Reliance CDMAOne CDMA2000 1x 93.795613 Reliance - Anil
Communication GSM, DhirubhaiAmbani
Group

3 Vodafone Essar GSM GSM 900/1800 91.401959 Vodafone (67%)
Essar Group
(33%)

4 BSNL GSM, GSM 900, 62.861214 State-owned
CDMAOne, CDMA2000 1x

5 Idea Cellular GSM GSM 1800 57.611872 Aditya Birla
Group
Axiata Group
Berhad (15%)
6 Tata CDMA, CDMA2000 1x 57.329449 [Tata Indicom--
Teleservices GSM, Tata Group]
(Tata Indicom)


P a g e | 38

(Tata DoCoMo) [Tata DoCoMo--
Tata Group,
(74%) &NTT
DoCoMo, (26%)]

[Virgin Mobile
(Virgin mobile) (50%)
Tata Tele. (50%)]

7 Aircel GSM GSM 900/1800 31.023997 Maxis
Communication
(74%)
Apollo Hospital
(26%)

8 MTNL GSM, GSM 900, 4.875913 State-owned
CDMA CDMA2000 1x

9 MTS India CDMA CDMA2000 1x 3.042741 Sistema (73.71%)
Shyam Group
(23.79%)

10 Loop Mobile GSM GSM 2.649730 Essar Group
900(Mumbai)/1800

11 Uninor GSM - 1.208130 Telenor (67.25%)
Unitech Group
(32.75%)

12 HFCL Infotel CDMA - 3.41862 HFCL Group

13 S Tel GSM - 1.41411 Siva Group (51%)
Batelco (49%)


P a g e | 39

::: All over market share (as of January 2010) :::

2.64973
1.41411
3.042741

3.41862 1.20813

4.875913

31.023997
118.864031
57.329449

57.611872

93.795613

62.861214

91.401959

Airtel Reliance Communication Vodafone Essar
BSNL Idea Cellular Tata Teleservices
MTNL Aircel HFCL Infotel
MTS India Loop Mobile S Tel
Uninor


P a g e | 40

::: Bharti Airtel :::

Type Public
Founded July 07, 1995
Founder(s) Sunil Bharti Mittal
Headquarters New Delhi, India
Key people Sunil Mittal
(Chairman) & (MD)
Sanjay Kapoor
(CEO)
Industry Telecommunications
Products Wireless
Telephone
Internet
Satellite television
Revenue ▲ US$ 7.254 billion (2009)
Operating income ▲ US$ 2.043 billion (2009)
Net income ▲ US$ 1.662 billion (2009)
Total assets ▲ US$ 11.853 billion (2009)
Owner(s) BhartiEnterprises (64.76%)
SingTel (30.5%)
Vodafone (4.4%)
Website www.bharti.com
www.airtel.in

Introduction:

Bharti Airtel formerly known as Bharti Tele-Ventures LTD (BTVL) is the largest cellular service
provider in India, with more than 110 million subscribers as of 2009. With this, Bharti is now
the world’s third-largest, single-country mobile operator and sixth-largest integrated
telecom operator. It also offers fixed line services and broadband services. It offers its
TELECOM services under the Airtel brand and is headed by Sunil Bharti Mittal. The company
also provides telephone services and broadband Internet access (DSL) in top 95 cities in
India. It also acts as a carrier for national and international long distance communication
services. The company has a submarine cable landing station at Chennai, which connects
the submarine cable connecting Chennai and Singapore

The businesses at Bharti Airtelhave always been structured into three individual strategic
business units (SBU's) - Mobile Services, Airtel Telemedia Services & Enterprise Services. The
mobile business provides mobile & fixed wireless services using GSM technology across 23
telecom circles while the Airtel Telemedia Services business offers broadband & telephone


P a g e | 41

services in 95 cities and has recently launched a Direct-to-Home (DTH) service, Airtel Digital
TV. Shahrukh Khan is the brand ambassador of the mobile company and KareenaKapoor and
Saif Ali Khan are the brand ambassadors of the DTH Company. The company provides end-
to-end data and enterprise services to the corporate customers through its nationwide fiber
optic backbone, last mile connectivity in fixed-line and mobile circles, VSATs, ISP and
international bandwidth access through the gateways and landing station.

Globally, Bharti Airtel is the 3rd largest in-country mobile operator by subscriber base,
behind China Mobile and China Unicom. In India, the company has a 24.6% share of the
wireless services market, followed by 17.7% for Reliance Communications and 17.4% for
Vodafone Essar. In January 2010, company announced that ManojKohli, Joint Managing
Director and current Chief Executive Officer of Indian and South Asian operations, will
become the Chief Executive Officer of the International Business Group from 1st April 2010.
He will be overseeing Bharti's overseas business. Current Dy. CEO, Sanjay Kapoor, will
replace ManojKohli and will be the CEO witheffectivefrom 1st April, 2010.

Brand “Airtel” in sub-continent:

Airtel is a brand of telecommunication services in India, Bangladesh and in Sri Lanka owned
and operated by Bharti Airtel. It is the largest cellular service provider in India in terms of
number of subscribers. Services are offered under the brand name Airtel: Mobile Services
(using GSM Technology), Broadband & Telephone Services (Fixed line, Internet Connectivity
(DSL) and Leased Line), Long Distance Services and Enterprise Services (Telecommunications
consulting for corporate). It has presence in all 23 circles of the country and covers 71% of
the current population (as of Financial Year 2007). Airtel has also launched 16Mbps
broadband plans in India, making it the first ISP to do so.

Airtel in Sri Lanka:

In December 2008, Bharti Airtel rolled out third generation services in Sri Lanka in
association with Singapore Telecommunications. SingTel is a major player in the 3G space in
Asia. It operates third generation networks in several markets across Asia.

Airtel's operation in Sri Lanka, known as Airtel Lanka, commenced operations on the 12th of
January 2009.

Airtel in Bangladesh:

In January 2010, it was announced that the Bangladesh Telecommunications Regulatory
Commission (BTRC) of The People's Republic of Bangladesh had given Bharti Airtel the go
ahead to acquire a 70% stake in the Bangladesh business of Abu Dhabi based Warid
Telecom. The latter had till date invested a total of $600 million, with plans to bring their
Bangladesh investments to the $1 billion mark. Airtel's 70% stake in the company is said to


P a g e | 42

be at a cost of an initial $300 million. Warid will be later named Airtel and the price of the
sim will go higher and call rates will be lower....!

Touchtel:

Until September 18, 2004, Bharti provided fixed-line telephony and broadband services
under the Touchtel brand. Bharti now provides all telecom services including fixed-line
services under a common brand "Airtel".

BlackBerry:

On 19 October 2004 Airtel announced the launch of a BlackBerry Wireless Solution in India.
The launch is a result of a tie-up between Bharti Tele-Ventures Limited and Research in
Motion (RIM).

I Phone 3G:

The Apple iPhone 3G was rolled out in India on 22 August 2008 via Airtel& Vodafone.

Merger talks:

In May 2008, it emerged that Bharti Airtel was exploring the possibility of buying the MTN
Group, a South Africa-based telecommunications company with coverage in 21 countries in
Africa and the Middle East. The Financial Times reported that Bharti was considering
offering US$45 billion for a 100% stake in MTN, which would be the largest overseas
acquisition ever by an Indian firm. However, both sides emphasize the tentative nature of
the talks, while The Economist magazine noted, "If anything, Bharti would be
marrying up," as MTN has more subscribers, higher revenues and broader geographic
coverage. However, the talks fell apart as MTN group tried to reverse the negotiations by
making Bharti almost a subsidiary of the new company.

In May 2009, Bharti Airtel again confirmed that it is in Talks with MTN and companies have
now agreed discuss the potential transaction exclusively by July 31, 2009. Bharti Airtel said
in a statement “Bharti Airtel Ltd is pleased to announce that it has renewed its effort for a
significant partnership with MTN Group".

Talks eventually ended without agreement, some sources stating that due to the South
African government opposition.

Now in South Africa:
In March 2010 Airtel acquired Zainmobile.

Promotional Sponsorship:


P a g e | 43

Bharti Airtel signed a five-year deal with ESPN Star Sports to become the title sponsor of the
Champions League Twenty20 cricket tournament. The tournament itself is named "Airtel
Champions League Twenty20."

On the 9th of May, 2009 Airtel signed a major deal with Manchester United Football Club.
As a result of the deal, Airtel gets the rights to broadcast the matches played by the team to
its customers.

Subscriber base:
The Airtel subscriber base according to TRAI - Telecom Regulatory Authority of India as of
February 2009 was:

Airtel’s Subscriber

Metro/circle Dec'09 Jan-10 Monthly %Market % Growth over
Additions Share previous month

Delhi 5720165 5822208 102043
Mumbai 2971598 3003201 31603
Kolkata 2736884 2746100 9216
Chennai 2563834 2593005 29171
A.P. 12145100 12425791 280691
Karnataka 11822980 12153094 330114
T.N. 7913576 8033771 120195
Maharashtra 6460502 6518134 57632
Gujarat 5009245 5112601 103356
Punjab 4490769 4581187 90418
UP (W) 3600826 3653016 52190
Haryana 1512092 1519754 7662
M.P. 5981125 6212992 231867
Kerala 3061391 3076728 15337
H.P. 1257497 1273922 16425
Rajasthan 9608004 9925141 317137
UP (E) 8142972 8462726 319754
WB 4866606 5070213 203607
J&K 1724263 1804047 79784
Orissa 3776610 3836091 59481
Bihar 10052157 10338828 286671
Assam 2139327 2194310 54983
NE 1306508 1357383 50875
Total 118864031 121714243 30.86% 2.40%

Additions 2730140 2732025


Indian telecom industry final-bhuvar rajsee r

Indian telecom industry final-bhuvar rajsee r

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