Dynamics of the Indian Telecom Industry

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  • Thanks. This report was put together back in 2010 and things have changed since then with 3G (and now LTE). Would love to here any new insights you may have.

    Jyothin
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  • I won't BLUFF that i read entire slide report carefully.....but.......
    i saw (which i didn't knew earlier) in ur report that bharti airtel is the
    leading operator in telecom industry, mobile tariffs in India is the lowest as compared to other countries, nokia is the highest selling brand (i knew this earlier)..........i liked this report & am glad to hear that u r a part of this growing industry..........
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Dynamics of the Indian Telecom Industry

  1. 1. Dynamics of Indian Telecom Industry Research Report By Jyothin Madari
  2. 2. Executive Summary  Third largest telecom network in the world  Fastest growing – Forecasted CAGR growth rate of over 15.3% by the end of 2012  Monthly additions of above 8 million subscribers  Growth impetus from wireless segment with 84% wireless and 16% wired  National teledensity at 22%, rural teledensity at 7%, while urban at 57%  9 million Internet and 2.5 million broadband subscribers  Six major operators and eight minor operators 2
  3. 3. Future Outlook  Need for massive investments in infrastructure development – expected to require 330,000 network towers from the present 100,000  Decrease in wireline subscriber base however strong growth in mobile subscriber base  Improvements in mobile quality of service, quick service delivery, affordable pricing plans, and lower handset costs.  VAS* - Key revenue stream for mobile operators  Broadband penetration is low => high growth expected  New Technologies paving the way for new services, additional revenue streams and rural penetration * Value added-Service 3
  4. 4. Market Forces/Growth Drivers Service Industry Specific Factors Providers Subscribers Handsets Infrastructure/ Younger Equipment Population Growth Burgeoning Growing Middle Urbanization Class Booming Rising Knowledge Income Macro Economic Factors Sector High GDP Levels Growth 4
  5. 5. Market Size & Growth  Currently valued at $100B  Telephone coverage in India rose to 34.5% in Jan ’09 from 33.23% in Dec ’08.  Growth spurred by fall in tariffs and fall in handset prices  Wireless accounts for nearly 70% of the total telephone subscriber base  Total telecom subscribers growth rate during quarter ending March 2009 – 11.68%  Total wireline subscribers growth rate for quarter ending March 2009 – 0.15% 5
  6. 6. Subscriber Base Total Telecom Subscribers (Wireline+Wireless)* Total Subscribers 429.72 Million % Growth QoQ 11.68% Urban Subscribers 309.43 Million (72%) Rural Subscribers 120.29 Million (28%) Overall Teledensity 36.98 Urban Teledensity 88.66 Rural Teledensity 14.8 * All figures for March end 2009 6
  7. 7. Teledensity 160 140 135 120 100 (% ) 80 81.06 66.39 60 58 48.52 40 39.45 33.23 26.88 26.22 25 20 20.74 18.31 12.74 9.46 13.13 7.02 8.95 5.38 0 1.57 1.73 1.83 2004 2005 2006 2007 2008 2008 (Dec) 2012 Urban Total Rural 7
  8. 8. Service Types Fixed-line Internet Subscribers Mobile Broadband 8
  9. 9. ICT* Statistics  Fixed Telephone lines per 100 inhabitants : 3.5  Mobile subscribers per 100 inhabitants: 18.4  Internet subscribers per 100 inhabitants: 0.8  Broadband subscribers per 100 inhabitants: 0.22 * Information and Communication Technology 9
  10. 10. Subscriber Base (Fixed-line and Mobile) 600 Number of Subscribers (in millions) 500 400 300 462 200 325 229 250 192.87 150 100 100 40 39 39.42 38 37.9 37.75 37.96 0 2006 J un-07 J ul-07 Dec-07 Dec-08 J an-09 2010 Fixed-line Mobile 10
  11. 11. Subscriber Base (Broadband and Internet) 16 Number of Subscribers (in millions) 14 13.54 12.85 12 11 10.4 10 8 8 6 6.22 6 5.45 5 3.87 4 3.1 2.34 2 1.35 0.18 0 2006 2005 2007 2008 (Dec) (Dec) (Mar) (J an) 2007 2008 2009 Broadband I nternet 11
  12. 12. Fixed-line Telecom Market Total Wireline Subscribers 37.96 Million % Growth QoQ 0.15% Urban Wireline Subscribers 27.38 Million (72.13%) Rural Wireline Subscribers 10.58 Million (27.87%) Village Public Telephones (VPT) 5.61 Million Public Call Office (PCO) 6.20 Million All figures for March end 2009 12
  13. 13. Operator wise Market Share of Fixed-line Service Urban Fixed-line Operators MTNL 13.00% Urban+Rural Fixed-line Operators Other Other Private Private Operators 18.00% 13.29% BSNL MTNL 69.00% 9.41% Rural Fixed-line Operators Other Private 0.35% BSNL 77.30% BSNL 99.65% 13
  14. 14. Mobile Telecom Market Total Wireless Subscribers 391.76 Million % Growth QoQ 12.93% Urban Wireless Subscribers 282.05 Million (72%) Rural Wireless Subscribers 109.71 Million (28%) GSM Subscribers 297.26 Million (75.88%) CDMA Subscribers 94.50 Million (24.12%) All figures for March end 2009 14
  15. 15. Development and Penetration 200 180 180 160 140 120 (millions) 105.4 100 85 80 58.5 60 44.2 37.4 40 22 19.1 20 10.5 6.4 10.9 3.1 5.05 0.8 0 2000 2001 2002 2003 2004 2005 2006 2007 GSM Subscriptions CDMA Subscriptions 15
  16. 16. Operator wise Total Market Share of Mobile Service Others Aircel 2.99% 4.73% Idea Bharati Airtel 8.96% 23.97% Tata 9.93% BSNL Reliance 13.31% 18.56% Vodafone 17.55% 16
  17. 17. GSM vs. CDMA Statistic* GSM CDMA Share of Prepaid 94% 0.7% Incoming Minutes of 249 192 Usage per subscriber per month Outgoing Minutes of 235 164 Usage per subscriber per month Outgoing SMS per 30 10 subscriber per month ARPU# $4 $2 # Average Revenue Per User *March End 2009 17
  18. 18. Operator-wise Market Share of GSM BPL MTNL Aircel 0.73% 1.41% 6.22% Vodafone Reliance 23.13% 6.73% Spice 1.39% Idea Bharati 13.08% 31.60% BSN L 15.71% 18
  19. 19. Operator-wise Market Share of CDMA BSNL Shyam Telelink 0.63% HFCL 5.76% 0.41% MTNL 0.32% Tata Teleservices 37.16% Reliance 55.72% 19
  20. 20. Internet Service Total Internet Subscribers (including Broadband) 13.54 Million % Growth QoQ 5.30% Broadband Subscribers 6.22 Million Wireless Data Subscribers 117.82 Million (i.e. through mobile handsets) Total International Bandwidth owned by ISPs 209 GB Total National Bandwidth owned by ISPs 174GB All figures for March end 2009 20
  21. 21. Operator wise Market Share of ISPs Data Infosys Ltd. You Telecom Pvt. Ltd. Hathway Cable & Others 1.83% 1.47% Datacom Pvt. Ltd. 4.26% 2.50% Tata Communications Internet Services Ltd. 2.72% Sify Technologies Ltd. 2.99% Reliance Communications Infrastructure Ltd. 6.91% BSN L Bharati Airtel Ltd. 53.62% 8.01% MTN L 15.69% 21
  22. 22. Broadband Service (>= 256 Kbps)  Move into high-speed broadband Internet access has been distinctly slow  Broadband penetration still remains at only around 0.2%  Most of the local loops are owned and operated by state owned service providers, which pose a significant bottleneck for Broadband penetration  Broadband services account for only 25% of the total Internet subscriber base 22
  23. 23. Technology wise Market Share of Broadband Subscribers 6 5.364 Subscriber Base (in millions) 5 4 3 2 1 0.474 0.244 0.074 0.042 0.02 0 DSL Cable Ethernet Fiber Leased Line Other Modem LAN All figures for March end 2009 23
  24. 24. Operator wise Market Share of Broadband Service Providers Reliance Others Sify Limited HFCL I nfotel Ltd Communication 4% 2% 1% I nfrastructure Ltd. 2% You Telecom I ndia Pvt. Ltd. 2% Tata Communications I nternet Services Ltd. 4% Hathway Cable & Datacom Pvt. Ltd. 4% BSNL 57% MTNL 11% Bharati Airtel 13% 24
  25. 25. ARPU & Pricing Trend  India has one of lowest mobile tariffs in the world resulting in low ARPU  ARPU have been on the decline since 2004 due to price wars and increased competition in the mobile telecom sector  ARPUs continue to drop by 5% while tariffs decrease further by 15%  Low tariffs building margin pressure on operators 25
  26. 26. Mobile Pricing/Tariffs Mobile Tariffs in Absolute terms 0.25 0.23 0.22 0.2 0.19 0.17 0.16 0.15 Lowest in USD 0.11 0.11 0.11 India 0.1 0.09 0.05 0.05 0.05 0.04 0.03 0.02 0 UK I taly I ndia China France Belgium Brazil Taiwan Pakistan Malaysia Thailand Philippines Hong Kong Argentina 26
  27. 27. Mobile Pricing/Tariffs  Tariff war has intensified in the past few months and competition has reached a new level  The price war has spread to the SMS segment as well, with negative impact on operator revenues 27
  28. 28. ARPUs are falling Effective margin/ min 2005 Effective Margin/ min 2006 1.6 1 0.9 0.08 1.4 0.25 0.8 1.2 0.7 1 0.6 0.8 0.5 0.95 1.5 0.87 0.6 1.25 0.4 0.3 0.4 0.2 0.2 0.1 0 0 Cost per Margin Effective Cost per Margin Effective minute rate per minute rate per minute minute 28
  29. 29. VAS (Value – added Services)  More Lucrative for operators and content providers as some VAS at 14c make more money than voice at 3c–4c.  VAS include,  SMS, Ring tones, Caller tones  Internet Data Access  Mobile Commerce  On-demand Music, Videos, Animation clips  Contests/Voting  Gaming  Enterprise products (Email, Office, etc.)  New Alerts/Match Scores 29
  30. 30. VAS Forecast and Growth Forecast 2009-2010 VAS Revenues $10 Billion 2006 Parties involved Media content VAS providers, mobile operators, aggregators, Revenues $500 million (this banks, Enterprises includes texting) Parties involved Media content providers, Mobile operators and aggregators 30
  31. 31. Leading VAS and mobile application service providers Mauj.com Hungama Indiagames Mobile VAS OnMobile IMImobile Mobile-2-Win 31
  32. 32. Telecom Administrative Framework  Total of 22 circles  4 Metros  5 ‘A’ Circles  8 ‘B’ Circles  6 ‘C’ Circles  Each circle has LDCAs (Long Distance Charging Areas) and SDCAs (Short Distance Charging Areas) 32
  33. 33. Telecom Regulatory Bodies Government of India Ministry of Communications & Information Technology Timely policy and regulatory intervention has ensured that Sector development has stayed on track. TDSAT DoT TRAI State owned Private operators Operators License Fees/ Spectrum Charges 33
  34. 34. Regulatory Bodies – Key Responsibilities Agency Key Responsibilities Department of Telecommunications  Policy Formulation, licensing, wireless spectrum/frequency management (DoT)  Enforcement of wireless regulatory measurement  Standardization/validation of equipment, R&D, etc. Telecom Regulatory Authority of India  Mandate for Tariffs, Interconnection, Standards for quality of service (TRAI)  Recommendatory: Licensing Timing, terms & conditions, License revocation, competition facilitation, etc. Telecom Disputes Settlement & Appellate Adjucation and disposal of disputes between service providers and/or a group of consumers Tribunal (TDSAT) 34
  35. 35. Upcoming Technologies and Growth Areas  3G  WiMax  Network Infrastructure  Telecom Equipment Exports  Handsets 35
  36. 36. 3G  MTNL and BSNL have launched 3G services  Other Private players are yet to obtain licenses  Expensive affair for operators to upgrade to 3G  3G equipment upgrades will be high 36
  37. 37. WiMax  The total base station equipment market is estimated to be between $50 million and $120 million for WiMax  Projected total WiMax connections by 2012: 6.9 million 37
  38. 38. Network Infrastructure  The industry needs to add additional capacity to sustain growth  Continuing trend towards import of telecom equipment  Shared Wireless infrastructure like, share tower services, help reduce operator costs by 15-18% 38
  39. 39. Telecom Equipment Exports 45000 40000 35000 (in Rs. Crore) 30000 Exports fueled by local 25000 Telecom equipment 20000 manufacturers 15000 10000 5000 0 2006 2007 2008 2012 (Projected) 39
  40. 40. Handsets – Market Share GSM LG Motorol Others 4.40% a Total (GSM+CDMA) 7.30% 7.80% Sony- Others Sony- Erricson 8.40% Erricson 6.80% 8.90% Samsung LG 9.50% 14.40% Nokia Samsun 62.60% g 9.00% Motorola 7.20% Others CDMA LG 11.50% 47.60% Nokia Samsung 53.70% 11.20% Nokia 24.30% 40 Motorola
  41. 41. Feedback/Questions
  42. 42. Sources/References  Capacity Building Workshop on information Society Statistics, 2007  Future Trends in Indian Telecom, 2005  Mobile Services to Mobilize Indian Telecom Sector, 2008  Indian Telecom Sector, www.mas.net.in  Indian Telecom Analysis, Report Summary, 2009  Experiences in Telecom Sector Regulation in India, 2008  Indian Broadband Wireless and WiMax Market Analysis & Forecasts 2007-2014, 2007  Indian Telecom Statistics Forecast, 2003-2007 42

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