Telecom Industry


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Telecom Industry

  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 ( contd ) <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 )
  10. 10. Segmental Performance( contd )
  11. 11. Segmental Performance( contd )
  12. 12. Segmental Performance( contd ) Market share of Top 5 ISP ISP Subscriber base share in % BSNL 5640191 50.82 MTNL 1899747 17.12 Bharti Airtel Ltd. 815360 7.35 Reliance Communications ltd 696440 6.28 sify technologies 576047 5.19
  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. Increasing Subscriber Base The per subscriber mE usage has increased from 12-15 mE per subscriber in 1999 to ~30 mE per subscriber in 2005. The minutes of usage per month per subscriber has also increased from 114 minutes in 1999 to 367 minutes in 2005
  15. 15. 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
  16. 16. Problems in Telecom Sector( contd) <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>
  17. 17. Problems in Telecom Sector( contd) <ul><li>Global average ARPU – USD 21 </li></ul><ul><li>Indian Average ARPU – USD 8 </li></ul>
  18. 18. 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 Paging Fixed Line
  19. 19. 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
  20. 20. 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>
  21. 21. 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>
  22. 22. 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>
  23. 23. Recommendations <ul><li>Govt. should encourage the vendors to manufacture handsets rather than just reducing import duty </li></ul><ul><li>Infrastructure sharing be mandated by the government </li></ul><ul><li>A single window clearance system should be put in place to expedite all clearance related issues </li></ul>