Report on telecom sector


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Report on telecom sector

  2. 2. Page no. Acknowledgement 04 Executive summary 05 Introduction about Telecom Industry 06 History 07 Global Scenario 08 National Scenario 09 Demographic characteristic 10 Market size, Trends & Players 11 Telecom turn over/ Subscribers 12 Opportunities /Competitive landscape 13 Porters generic strategy 14 Progress /Acquiring Subscribers 15 Rural India 15 Government Initiatives / MVAS 16 VAS 18 Mobile VAS in Rural Market 19 Access Device /3G Handset 20 Key trends in Telecom Industry 21 Inhibitors 22 MNP Implementation Globally 24 Wimax Vs. 3G 26 Mobile virtual network operator 27 Regulation for MVN O / IPTV 28 Companies overview 29 4P’s Analysis 43 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 2
  3. 3. Advertisement 44 Industry updates 46 Major challenges for Mergers 49 FDI Investment in Telecom sector 50 Outsourcing by Telecom company 51 Future Trends 53 4G Technology 56 Conclusion/ References 56 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 3
  4. 4. This project work would never have been an achievable task, had we not been under the great shelter of guidance of respected Professor Mukta Rae. Her simplified teaching technique based on examples has helped us gain more understanding of the subject. The very essence of the project work is the linguistic precision which has an impact of conveying more details in least possible words. An ample use of various reference readings has been very frequently made while compiling data for this project. Such rich reading has been made available at hand by the treasure-like well-maintained library of the IIPM, Ahmedabad. I am very much under obligation to mention here, the contributions of my batch mates who have, knowingly or unknowingly, provided me the competitive edge which is the driving force of the whole labor and extra labor put into the project. I would also take an opportunity to thank all the respondents, who have taken pains in answering the questions and filled the place of true representatives for deciding the nature of the problem. Finally, I feel very much gratified to the administration of IIPM, Ahmedabad for providing comfortable environment. - JONTY MOHTA IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 4
  5. 5. The rapid growth in Indian telecom industry has been contributing to India‟s GDP at large. Telecom Regulatory Authority of India was established to regulate and deal with competition among the service providers. Upcoming services like 3G and Portability will help to further increase the growth rate. The Indian telecommunication industry is one of the fastest growing in the world and India is expected to become the second largest telecom market in the world by 2010. India added 113.26 million new customers in 2008, the largest globally. The country‟s cellular base witnessed close to 50% growth in 2008, with an average 9.5 million customers added every month. It is estimated that telecom industry will generate revenues worth US$ 43 billion in 2009- 10. IN this we have tried to capture the most of areas of telecom industry. Like, History of Telecom Industry, TRAI role and functions, new trends in industry and latest updates.  To find the reason of tremendous growth in Indian Telecom Industry  To study the role of TRAI  To study upcoming trends in Telecom industry IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 5
  6. 6. The exactly ten years ago, Jyoti Basu in culcutta called Sukh Ram in Delhi Sukh Ram in Delhi was the first mobile phone call in India. Brick sized cell phone used to cost Rs.45000 and each call coasted Rs.16.50/minute. Back then, cell phones was a status symbol. Today, there are over 60 million mobile connections in India (expected to double in number in next 12 months.). A local call costs around less then Rs.50paisa/min and a cell phone can be purchased for less than Rs.1500. India growth story has already got the world to sit up and take a note of the changing economic scenario. The Indian government is doing everything that is possible to ensure that this story remains intact. Factors, like the liberalization in the government stance and the daring entrepreneurs of the Indian soils, have helped the sectors achieve the highs like never before. And currently, the flavor of the month seems to be the telecom industry. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 6
  7. 7. History of Indian Telecommunications started in 1851 when the first operational land lines were laid by the government near Calcutta (seat of British power). In 1883 telephone services were merged with the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923. After independence in 1947, all the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications. Telecom sector was considered as a strategic service and the government considered it best to bring under state's control. The first wind of reforms in telecommunications sector began to flow in 1980s when the private sector was allowed in telecommunications equipment manufacturing. In 1985, Department of Telecommunications (DOT) was established. It was an exclusive provider of domestic and long- distance service that would be its own regulator (separate from the postal system). In 1986, two wholly government-owned companies were created: „Videsh Sanchar Nigam Limited‟ (VSNL) for international telecommunications & „Mahanagar Telephone Nigam Limited‟ (MTNL) for service in metropolitan areas. In 1990s, telecommunications sector benefited from the general opening up of the economy. National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensive roadmap for the Indian telecommunications sector. In 1997, Telecom Regulatory Authority of India (TRAI) was created. TRAI was formed to act as a regulator to facilitate the growth of the telecom sector. New National Telecom Policy was adopted in 1999 and cellular services were also launched in the same year. Indian telecom industry has the highest growth rate in the world. A record 5.9 Million new mobile phone subscribers were drawn by the Telecom sector in India in the month of August 2006, according to the COAI (Cellular Operators Association of India). India, which is seeing over 8 million wireless subscribers being added every month (8.62 million in May 2008), is the fastest growing telephone market in the world. The government has reiterated the target of 500 million telecom subscribers and 20 million broadband connections by 2010. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 7
  8. 8. The Indian telecom market has been displaying sustained high growth rates. Riding on expectations of overall high economic growth and consequent rising income levels, it offers an unprecedented opportunity for foreign investment. A combination of factors is driving growth in the telecom market, promising rich returns on investments. Example: TATA DOCOMO  It generated US $1.4 trillion in the year of 2009 when recession is everywhere.  India is the fourth largest telecom market in Asia after China, Japan and South Korea.  Asia pacific region: expecting highest growth in next 5years.  The Indian telecom network is the eighth largest in the world and the second largest among emerging economies.  The Indian telecom market size of over US $ 8 billion is expected to increase three fold by 2012. The expansion of the telecom industry in India has been fuelled by a massive growth in mobile phone users, which has reached a level of 10 million users in December 2002, an increase of nearly 100 per cent in 2002.  This exponential growth of mobile telephony can be attributed to the introduction of digital cellular technology and decrease in tariffs due to competitive pressures. For the first time in India, the growth of cellular subscriber base has exceeded the fixed line subscriber base. However, cellular penetration is still 1 per cent as compared to world average of around 16 per cent. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 8
  9. 9. 19% China 12% India 62% USA 7% Others Source: EIU (Economist Intelligence Unit) Indian Telecom sector, like any other industrial sector in the country, has gone through many phases of growth and diversification. Starting from telegraphic and telephonic systems in the 19th century, the field of telephonic communication has now expanded to make use of advanced technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. Day by day, both the Public Players and the Private Players are putting in their resources and efforts to improve the telecommunication technology so as to give the maximum to their customers.  The Indian telecom sector can be broadly classified into Fixed Line Telephony and mobile telephony. The major players of the telecom sector are experiencing a fierce competition in both the segments.  The major players like BSNL, MTNL, VSNL in the fixed line and Airtel, Vodafone (Hutch), Idea, Tata, Reliance in the mobile segment are coming up with new tariffs and discount schemes to gain the competitive advantage. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 9
  10. 10.  The Public Players and the Private Players share the fixed line and the mobile segments. Currently the Public Players have more than 60% of the market share.  Internet/Broadband subscribers are 14.05m internet subscribers & 6.62m broadband subscribers (June 2009)  Advanced Technologies – GSM, CDMA, WLL, 3G and upcoming 4G  Telecom sector Contribution of nearly 1% to India‟s GDP GSM CDMA/WLL Fixed LINE •VODAFONE •BSNL •BSNL •AIRTEL •MTNL •MTNL •BSNL •TATA INDICOM •BHARTI •IDEA •TATA DOCCOMO •TATA TELECOM •SPICE •VIRGIN MOBILE •VODAFONE •AIRCELL •RELIANCE •RELIANCE •RELIANCE •VIDEOCON •TATA DOCCOMO •TATA INDICOM •VIDEOCON  Total Tele-density stood at 39.86 per cent.  Wire line Tele-density came in at mere 3.22 % whereas wireless subscription contributed 91.9 % of overall Tele-density.  Subscription in Urban Areas was at 328.55 Million and Rural subscribers increased to 136.27 Million.  According to the Vision 2020 document of the Planning Commission of India, the country will witness continued urbanization. The urban population is expected to rise from 28 per cent to 40 per cent of total population by 2020.  Future growth is likely to be concentrated in and around 60 to 70 large cities having a population of one million or more. This profile of concentrated urban population will IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 10
  11. 11. facilitate customized telecom offerings from operators. Both fixed line and mobile segments serve the basic needs of local calls, long distance calls and the international calls, with the provision of broadband services in the fixed line segment and GPRS in the mobile arena. Traditional telephones have been replaced by the codeless and the wireless instruments.  Every month 8-10 million subscribers are adding in the market.  We have mobile 350 million subscribers, next to China  Tata Teleservices – invest an additional US $ 1 billion in TATA DoCoMo  BSNL – will put US $ 1.16 billion in WiMax Project  Vodafone Essar – invest US $ 6 billion next 3 years to increase mobile subscriber base  Bharti Airtel – US $ 126.5 million to strengthen Assam & Northeast Circles.  Mobile phone providers have also come up with GPRS enabled multimedia messaging, Internet surfing, and mobile commerce.  The much-awaited 3G mobile technology has entered in the Indian telecom market.  The GSM, CDMA, WLL service providers are all upgrading them to provide 3G mobile services.  Radio services have also been incorporated in the mobile handsets, along with other applications like high storage memory, multimedia applications, multimedia games, MP3, Players, video generators, Camera's, etc. The value added services provided by the mobile service operators contribute more than 10% of the total revenue.  The 2009 budget has brought further relief to the customers with the reduction in the tariffs, both local and long distance, and with slashing down the roaming rentals. This is likely to IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 11
  12. 12. lead to even more people going for cellular services and more and more use of the value added services.  However, landline telephony is likely to remain popular, too, in the foreseeable future. MTNL, the largest landline service provider, has recently taken some bold initiatives to retain its market share and, if possible, expand it. :  Gross Revenue (GR) stood at Rs 39,108.33 Crore and Adjusted Gross Revenue (AGR) of Telecom Sector came in at Rs. 29,732.52 Crores.  GR has registered a decline of 3.3% compared to previous quarter whereas AGR increased slightly.  Average license fee as percentage of AGR was 8.43% in June-09 as against 8.4% in previous quarter.  The less outgo in terms of licensing fees is a big positive for Telecom industry and as such for telecom subscribers in general as this will allow further scope of reduction in telecom tariffs. 464.82 325.79 225.01 153.42 104.22 76.53 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Source: TRAI IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 12
  13. 13. India offers an unprecedented opportunity for telecom service operators, infrastructure vendors, manufacturers and associated services companies. A host of factors are contributing to enlarged opportunities for growth and investment in telecom:  an expanding Indian economy with increased focus on the services sector  population mix moving favourably towards a younger age profile  urbanization with increasing incomes  Investors can look to capture the gains of the Indian telecom boom and diversify their operations outside developed economies that are marked by saturated telecom markets and lower GDP growth rates.  Demand is driven by technological innovation and by growth in business activity. The profitability of individual companies depends on efficient operations and good marketing.  Large companies have big economies of scale in providing a highly automated service to large numbers of customers, and have the financial resources required building and maintaining a large network.  Smaller companies can compete effectively only in small markets or by providing specialty services. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 13
  14. 14. Porter has identified three types of generic strategies that help a firm to cope with competitive forces and outperform other firms in the industry. These strategies are:- 1. Overall Cost leadership strategy 2. Differentiation strategy, and 3. Focus strategy  The Overall Cost leadership strategy is aimed at gaining a competitive advantage through lower costs.  The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Factories are built and maintained; labor is recruited and trained to deliver the lowest possible costs of production. 'cost advantage' is the focus.  Financial considerations and budgetary constraints play a critical role here in shaping competitive price of the products.  Besides the production effiency, brand and marketing skills plays a important role in this kind of competition. For example:--Some organizations, such as Toyota, are very good not only at producing high quality autos at a low price, but have the brand and marketing skills to use a premium pricing policy.  A firm with a differentiation strategy attempts to achieve a competitive advantage by creating a product or service that is perceived as unique.  Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin.  The benefits of differentiation require producers to segment markets in order to target goods and services at specific segments, generating a higher than average price. For example, British Airways differentiates its service by providing focus on IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 14
  15. 15. exceptional good quality of service rather than focusing on low price.   The differentiating organization will incur additional costs in creating their competitive advantage. These costs must be offset by the increase in revenue generated by sales.  There is also the chance that any differentiation could be copied by competitors. Therefore there is always an incentive to innovated and continuously improve.  The focus strategy is also known as a 'niche' strategy. Where an organization can afford neither a wide scope cost neither leadership nor a wide scope differentiation strategy, a niche strategy could be more suitable.  Here an organization focuses effort and resources on a narrow, defined segment of a market. Competitive advantage is generated specifically for the niche.  A niche strategy is often used by smaller firms. A company could use either a cost focus or a differentiation focus.--  With a cost focus a firm aims at being the lowest cost producer in that niche or segment.  With a differentiation focus a firm creates competitive advantage through differentiation within the niche or segment.  There are potentially problems with the niche approach. Small, specialist niches could disappear in the long term. Cost focus is unachievable with an industry depending upon economies of scale e.g. telecommunications. The target for the 11th Plan period (2007-12) is 600 million phone connections with an investment of US$ 73 billion. Apart from the basic telephone service, there is an enormous potential for various value-added services. In fact, the real potential for telecom service growth is still lying untapped. According to the CII Ernst & Young report titled 'India 2012: Telecom growth continues', revenue from India's telecom services industry is projected to reach US$ 54 billion in 2012, as against US$ 31 billion in 2008 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 15
  16. 16. Source: COAI The progression chart below depicts the major regulations and events driving the extra ordinary growth of Telecom sector from year 1999 to 2008. In order to capitalize this opportunity of meeting the consumer needs in highly competitive market the operators have reduced the tariffs to attract consumers with low purchasing power primarily in semi urban and rural India. In fact lucrative offers like being paid for incoming calls have transformed the scenario completely. Through these changing regulations and events, the Industry players are aiming to achieve the following  Acquiring new subscribers by expanding in Semi Urban and Rural India  Selling more services to existing subscribers The recent TRAI recommendation permitting PC-to-phone calls where ISPs can offer cheaper STD calls and even free local calls. This would result in further reduction of voice tariffs. This would lead to increased focus on MVAS by mobile operators. Acquiring customers have always been a great challenge for companies. Given the current level of saturation in Metros and Urban Market and cut throat competition among operators, increasing subscriber base in urban market would be all the more challenging. Therefore a lot of operators with adequate support from Government are eyeing the rural market for future growth. Big operators like Airtel have claimed that soon mobile connections and recharge IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 16
  17. 17. vouchers etc will be available at all such places from where people buy match boxes. This certainly explains the future penetration of these services in remotest of villages. This is relatively easier as compared to acquiring new customers. Also since now the new subscriptions will largely happen at the bottom of the pyramid therefore the new subscriptions will further lower the average revenue per user. In such a scenario mobile VAS sector is a potential long- term revenue stream as it will be easier to sell more to the existing customers. Government also has supported the growth of this sector by coming out with a number of initiatives for the low end subscribers of rural India, and Universal Service Obligation (USO) fund was one such initiatives. The USO fund was an initiative taken up by the government to increase rural teledensity. In recent developments, BSNL and two private operators will erect 427 towers in remote areas offering over four lakh mobile connections. All the towers are expected to be erected and commissioned by December 2008. Under the second phase, DoT aims at erecting 11,000 towers throughout the country to offer over 11 million mobile connections ADC was levied by Telecom Regulatory Authority of India (TRAI) in 2003 to provide support for BSNL's rural telephone obligation. Telecom Regulatory Authority of India (TRAI) has recently given orders for the withdrawal of the ADC (Access Deficit Charge) and the subsequent passing of the benefit to the consumers by the telecom operators.  Decrease in ARPU despite increase in MOU: Though the subscriber base is growing at a rapid pace and has positively impacted industry revenues, operator margins also have shrunk owing to competition and lower “Average Revenue per User” (ARPU) as the major growth is coming from bottom of the pyramid. As ARPU declines and voice gets commoditized, the challenge is to develop alternative revenue streams and retain customers by creating a basis for differentiation in high-churn markets. Need for differentiation: There is a greater need among the telecom operators to differentiate themselves from each other.  Number of Licensees: With increasing number of licensees (98 UASL, and 37 cellular licenses) in the telecom space the average numbers of operators in many circles have increased to 5-6 operators offering more choices to the consumer. Thus the competition among the IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 17
  18. 18. operators has increased tremendously. Therefore it is very important for them to differentiate themselves from the others. Now that voice has got commoditized these operators are using MVAS for their differentiation and marketing these services heavily for creating awareness among the consumers.  Decreasing Call Rates: In order to attract consumers with relatively low purchasing powers primarily from Semi Urban and Rural India the operators have drastically reduced the call rates making it affordable to even the lower segment of society. The tariff in India is one of the lowest at Rs.1 per minute as compared to the tariff in developed nations like USA and UK where the call rates are Rs.13 and Rs7-8 respectively.  3G bidders who are non-operators: The arrival of new technologies will give rise to greater competition as many non-operators are also bidding for the 3G licenses. Department of Telecom  has planned to allow five 3G operators in each circle depending on the availability of spectrum. Therefore there would be a greater need to differentiate oneself in order to attract new customers and retain the existing ones.  Saturation in Metro and Urban Market: The metro/urban areas offer high level of penetration and have significant mobile subscribers. In such a highly saturated market with the entry of MVNO‟s the competition will get fierce. Therefore capitalizing on value added services will give operators opportunity to increase ARPU by providing premium services.  Increasing need and demand from consumers: In addition to the above supply side reasons the „pull effect‟ from consumers asking for more than just basic telephony is also a key driver for MVAS services. Today most of the consumers are seeking more from their communication device apart from just mobility and desire to stay connected. As we have seen, Telecommunication has moved beyond providing just basic voice calls. The mobile phone has evolved from a mere communication device to an access mode with an ability to tap a plethora of information and services available in the ecosystem. This is the reason why it is now being referred to as the „fourth screen‟, after Cinema halls, Television and PC. But the fundamental question that remains is how VAS is defined. A clear MVAS definition is not only required to clear the air among the MVAS providers but it will also have an impact on IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 18
  19. 19. the dynamics of the Value chain. A detailed definition of VAS might have an impact on the licensing issues surrounding VAS. Let‟s look at different VAS definitions floating in the market.  Value Added Service (VAS) in telecommunication industry refers to non-core services, the core or basic services being standard voice calls and fax transmission including bearer services. The value added services are characterized as under:-  Not a form of core or basic service but adds value in total service offering.  Stands alone in terms of profitability and also stimulates incremental demand for core or basic services  Can sometimes be provided as standalone.  Do not cannibalize core or basic service.  Can be add-on to core or basic service and as such can be sold at premium price.  May provide operational synergy with core or basic services. A value added service may demonstrate one or more of these characteristics and not necessarily all of them. In some cases, the value added service becomes so closely integrated with the basic offering that neither the user nor the provider acknowledge or realize the difference. A classic example is of P2P SMS. Some of the operators do not consider P2P SMS as part of their VAS revenue. The Government of India issues licenses for the following Value Added Services:-  Public mobile trunking service Voice mail service  Closed users group domestic 64 kbps data network via INSAT satellites system  Videotex service  GMPCS  Internet  Audiotex  Unified messaging service The next wave of Telecom growth will come from the bottom of the pyramid. For majority of the population in the rural segment, the mobile phone is the first communication device. Rural IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 19
  20. 20. should not always be interpreted as poor and therefore some categories of MVAS might apply directly to them. But whether the statement can be extended to MVAS depends on some key factors. One is to clearly identify the need of the rural segment, second is to communicate the services to them i.e. generate awareness and thirdly, to provide an easy and cheap access mode to the rural consumers. All these 3 are quite big challenges and therefore needs to be addressed adequately for MVAS to take off in Rural India. Apart from the identification of rural consumer needs and development of relevant content, communication of these services to the rural population would be a bigger challenge. One way to do this is to communicate through regional SMS for which a separate SMS gateway needs to be installed. Literacy level of the geographical area will be another limitation. Therefore the better communication option is Voice in regional languages. The challenge with regional voice is not only investment but also blockage of the already scarce spectrum. Marketing the content in rural market is going to be all the more challenging. This would require right packaging and pricing of MVAS. Providing cheap access mode to end consumer would be another key booster to rural MVAS. Current voice MVAS charges are expensive from a rural consumer perspective therefore that also would need to be addressed for e.g. the „sachet model‟ could prove to be successful here. MVAS is going to address two main needs of rural consumers- connectivity and entertainment mode. Connectivity will provide Information VAS on Agriculture necessary for the farmer‟s livelihood e.g. mandi rates, weather, etc. Health, finance, job opportunities etc are potential areas. Mobile also has the potential to evolve as a key entertainment mode considering lack of other entertainment options in rural areas. The industry has witnessed some type of content being downloaded more in small towns of UP and Bihar rather than in metros like Delhi and Mumbai. Therefore by leveraging on these two aspects MVAS can be a success in rural area. GPRS Handsets IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 20
  21. 21. Currently the penetration of GPRS enabled handsets are close to 26% in India as against 99% in South Korea and 76% in Japan. Of the total mobile subscribers in India 65 million possess GPRS-enabled handsets. Of all those who possess GPRS enabled handsets only 20-25% of them have got the GPRS activated and only about 15% use it. Even in case of developed nations like South Korea and Japan not more than 50% of the subscribers owning GPRS enabled handsets use it. Population of india 1130mn Mobile subscriber base 426Mn GPRS Enable 65 Mn. GPRS Activated 15-16 Mn. GPRS USERS 9Mn Source: TRAI REPORT,E Technology This clearly indicates that the consumer today engage more in text based services than the web based applications. Therefore for MVAS to grow to its full potential the handset manufacturers will have to look at ways to manufacture GPRS enabled phones which are affordable and user friendly. Moreover they would also need to increase its awareness and educate the consumers on how to use GPRS. The market for 3G in the country is expected to be huge with over 65 million wireless subscribers, who use their handsets to access data services on the Web. These subscribers are currently using mobile handsets which are internet-enabled and are potential broadband IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 21
  22. 22. subscribers with the deployment of advanced wireless technologies such as 3G. According to Indian Cellular Association (ICA) about 5% of mobile users already have handsets that can work on 3G spectrum. In addition, out of all those possessing the 3G enabled handsets the number of people who would use 3G services would be determined by the quality of content available. Unlike most other countries, we are looking at 3G services not only as premium services but also as an extension of 2G. Since our broadband penetration is abysmal, 3G would provide a much required boost to it. Given that mobile phones are much cheaper as compared to PCs, the demand for broadband on mobile is expected to be much greater. More importantly, 3G will solve problems more in rural India. Therefore the shift towards 3G would depend on affordability of handsets along with the quality of content available. One of the most frequent definitions that prevail in the telecom circles for number portability is: "Number portability is a circuit-switch telecommunications network feature that enables end users to retain their telephone numbers when changing service providers, service types, and or locations." Why mobile number portability (MNP)? When fully implemented nationwide by both wire line and wireless providers, portability will remove one of the most significant deterrents to changing service, providing unprecedented convenience for consumers and encouraging unrestrained competition in the telecommunications industry. In short, this is the best method to increase the efficiency of the service provider by increasing the competition, thereby ensuring better services in all respects. From the subscribers’ perspective, this is a deceptively simple and very welcome change, because they can change wireless service providers without worrying about notifying friends, family and business contacts that their wireless number is changing. In addition, being able to ‘port’ a number from one provider to another eliminates the hassle and expenses of changing business cards, stationery, invoices and other materials for businesses. From the wireless carrier’s perspective the change is anything, but simple. Virtually all of wireless carriers’ systems are affected. Especially any system that relies on mobile identity numbers (MINs) or mobile directory numbers (MDNs) will be affected. Examples of critical systems and processes that would be affected are: billing, customer service, order activation, call delivery, roamer registration and support, short messages service center, directory assistance, caller ID, calling name presentation, switches, maintenance and CSC systems, home location registers (HLRs), and visiting location registers (VLRs). IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 22
  23. 23. : One of the most common barriers in MNP implementation, within any country, has been the implementation cost. Service Providers have been constantly bargaining for time, based on the cost factor, from their respective governments. Referring to the recent example of the US, where each of the large carriers would need to spend $50–60 million to institute the service and an equivalent sum to maintain it. The FCC on this plea gave wireless carriers in the US another year, i.e., till November 2003, for resolving implementation issues. The experience of developed countries exhibits that local number portability for fixed wireline was introduced within two to three years of introduction of competition to incumbent state telcos. The cost estimate for the implementation of WNP in developed nations like the US can be very helpful for the other countries, who wish to think on the lines of number portability. To add on increased marketing costs are to be realized as the carriers look to lock up their current base before number portability is implemented, and then aggressively pursue the customers of other carriers thereafter. : Every subscriber in a race to retain its customer would like to offer its customers best services so as to save them from porting. It‟s like a blessing in disguise for the customers, as they would get better service irrespective of the carrier, albeit with the same number. Infrastructure Upgrade: To support WNP, a company has to upgrade both its hardware and software capabilities, which will amount to some cost. Softwares need to be upgraded to provide proper routing of calls. The carriers need to upgrade their networks to handle portability requests. The provider, which has its portability compatible would be expected to attract maximum customers and will emerge the winner. Cost Recovery and Bill Reconciliation/Query Processing: When a customer plans to shift, the old service provider (OSP) has to perform a query to identify if there are any billing amounts pending, which they need to recover before the subscriber moves to the new service provider (NSP). Globally, Singapore was the first country to implement MNP in 1997, followed by Hong Kong in 1999 and Australia in 2001. Off late, many countries have adopted the MNP model to prevent IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 23
  24. 24. market doldrums and putting pressure on service providers to furnish more services at a competitive price level. However, it has not been able to produce any significant results in these markets. While it has worked in markets like Hong Kong and Australia, it failed to bear fruit in the UK, France, Germany, Pakistan, Ireland, Malta, among others. MNP worked in Hong Kong due to the speedy porting process and the availability of already implemented solution (for fixed- line services). In Australia, the regulator effectively promoted number portability and was able to maintain the maximum porting time of just under three hours. Furthermore, in Finland, where initially the implementation was viewed as a success due to dearth of minimal contract periods and high migration incentives, operators failed to sustain the momentum. The failure in most markets where MNP was implemented is attributed to factors like half- hearted implementation, issues related to contract, lack of consumer awareness, overboard of paperwork, technical difficulties and poor customer service. The WiMAX vs. 3G cellular showdown is poised to become one of the next great market battles in the telecom industry. Fortunes will be made and lost in this battle, and the user experience of the Internet will be irreversibly changed in the process. 3G scores for voice; Wimax may lead to increased broadband penetration. With the Department of Telecommunications gearing up for simultaneous release of 3G and WiMax spectrum, analysts expect the two emerging wireless technologies to battle it out for supremacy. WiMax or Worldwide Interoperability for Microwave Access is a telecom technology that enables wireless transmission of data. The technology is available as IEEE 802.16D (fixed) and IEEE 802.16E (mobile). It offers downloads of up to 70 Mbps as compared to the 15 Mbps that 3G provides. Mobile WiMax offers download speeds of around 20 Mbps. In India, companies like Tata Communications Internet Services, Intel, Bharat Sanchar Nigam Ltd, Bharti Airtel and Reliance Communications are the proponents of WiMax. Most of the companies have had beta- runs of the technology. According to a top official with a service provider, telecom service providers are in various stages of WiMax implementation. Some companies have commercially launched fixed WiMax services in certain cities. While opponents of WiMax say currently it cannot be used for mobile applications, the first mobile WiMax network was introduced in Italy this July. Another reason for the industry pinning its hopes on WiMax is its ability to increase the broadband penetration. WiMax makes huge sense for companies as it enables them to provide cheaper mobile internet and broadband IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 24
  25. 25. services, in turn, increasing the internet penetration. However, this will adversely impact services like GPRS and e-mail on mobile as users might move over to WiMax-enabled devices for data, even though they might stick with 3G or 2G spectrum for voice. The Telecom Regulatory Authority of India has set a target of 20 million broadband connections by 2010 from the current 4.3 million. The industry expects WiMax to bridge the gap. According to a consultant of Ernst & Young service providers would mainly use the technology for gaining traction with the customers, as providing the last mile over the conventional digital subscriber lines would be time-consuming and costly. Operators will have to use 3G spectrum to revive voice services that are being choked by a dearth of 2G spectrum, Patel added. The WiMax customer premise equipment (CPE) is priced at Rs 5,000-10,000, while the CPEs for 3G would be cost Rs 10,000 and above. The industry will know the winner in the next six months, when the spectrum allocation is complete. Mobile Virtual Network Operator (MVNO) is a GSM phenomenon where an operator or company which does not own a licensed spectrum and generally with out own networking infrastructure. Instead MVNOs resell wireless services under their brand name, using regular telecom operator's network with which they have a business arrangements. Usually they they buy minutes of use from the licensed telecom operator and then resell minutes of usage to their customers of MVNO. Currently MVNOs are emerging in fast pace in European markets and beginning in USA also. Slowly MVNO phenomenon catching up in Asia and other parts of the world also. An example for MVNO is Virgin Mobile. Virgin Mobile plc is a mobile phone service provider operating in the UK, Australia and Canada, and the US. The company was the world's first IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 25
  26. 26. Mobile Virtual Network Operator, launched in the UK in 1999. It does not maintain its own network, and instead has contracts to use the existing network(s) of other providers. In the UK, Virgin Mobile uses the T-Mobile network. In the US, the Sprint network is the carrier. In Australia, Virgin Mobile operates on the Optus network. In Canada, it uses the Bell Mobility network. These networks use different technology (GSM in the UK and Australia and CDMA in the US and Canada). Usually MVNO's do not have their own infrastructure, some providers are actually deploying their own Mobile Switching Centers (MSC) and even Service Control Points (SCP) in some cases. Some MVNO's deploy their own mobile Intelligent Network (IN) infrastructure in order to facilitate the means to offer value-added services. In this way, MNVO's can treat incumbent infrastructure such as radio equipment as a commodity, while the MVNO offers its own advanced and differentiated services based on exploitation of their own IN infrastructure. The goal of offering value-added services is to differentiate versus the incumbent mobile operator, allowing for customer acquisition and preventing the MVNO from needing to compete on the basis of price alone. MVNO's have full control over the SIM card, branding, marketing, billing, and customer care operations. While sometimes offering operational support systems (OSS) and business support systems (BSS) to support the MVNO, the incumbent mobile operators most keep their own OSS/BSS processes and procedures separate and distinct from those of the MVNO. In the future a cell phone user may be able to subscribe to a network operator plus multiple MVNOs for specific data services over the same phone. One MVNO could provide sports news, another weather and traffic and still another could provide instant messaging capabilities. In this way, each MVNO and the network operator could focus on their own niche markets and form customized detailed services that would expand their customer reach and brand. So far MVNOs have not been regulated in any country. The ITU has received several requests to study the issue, specifically to provide input on whether government intervention is necessary to allow MVNOs to offer services and applications at a lower price to consumers. This would IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 26
  27. 27. help to ensure a more efficient use of the spectrum but some incumbent providers argue that the market is already competitive and intervention is not necessary. IPTV (Internet Protocol Television) delivers television programming to households via a broadband connection using Internet protocols. It requires a subscription and IPTV set-top box, and offers key advantages over existing TV cable and satellite technologies. IPTV is typically bundled with other services like Video on Demand (VOD), voice over IP (VOIP) or digital phone, and Web access, collectively referred to as Triple Play. Because IPTV arrives over telephone lines, telephone companies are in a prime position to offer IPTV services initially, but it is expected that other carriers will offer the technology in the future. IPTV promises more efficient streaming than present technologies, and therefore theoretically reduced prices to operators and subscribers alike. However, it also adds many advantages that may play into market pricing. One of the advantages of IPTV is the ability for digital video recorders (DVRs) to record multiple broadcasts at once. According to Alcatel, one leading provider, it will also be easier to find favorite programs by using "custom view guides." IPTV even allows for picture-in-picture viewing without the need for multiple tuners. You can watch one show, while using picture-in-picture to channel surf! IPTV viewers will have full control over functionality such as rewind, fast-forward, pause, and so on. Using a cell phone or PDA, a subscriber might even utilize remote programming for IPTV. For example, if a dinner function runs longer than expected, you don't have to miss your favorite program. Just call home and remotely set the IPTV box to record it. However, the real advantage of IPTV is that it uses Internet protocols to provide two-way communication for interactive television. One application might be in game shows in which the studio audience is asked to participate by helping a contestant choose between answers. IPTV opens the door to real-time participation from people watching at home. Another application would be the ability to turn on multiple angles of an event, such as a touchdown, and watch it from dual angles simultaneously using picture-in-picture viewing. One can also receive Web service notifications while watching IPTV for things such as incoming email and instant messages. If you IPTV is packaged with digital phone, Caller ID might pop up on screen as your telephone rings. IPTV is already growing in the international market, with providers in many countries including Japan, Hong Kong, Italy, France, Spain, Ireland, and the United Kingdom. In the United States SBC, reportedly purchased a software delivery system for IPTV services from Microsoft in 2004 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 27
  28. 28. for $400 million dollars. Alcatel is working with Microsoft to develop a "global solution" for IPTV services, and Verizon has also made a deal with Microsoft for IPTV software. Bharti Airtel is one of Asia‟s leading providers of telecommunication services with presence in all the 22 licensed jurisdictions (also known as Telecom Circles) in India, and in Srilanka. They served an aggregate of 105,195,762 customers as of June 30, 2009; of whom 102,367,881 subscribe to their GSM services and 2,827,881 use Telemedia Services either for voice and/or broadband access delivered through DSL.  They also offer an integrated suite of telecom solutions to their enterprise customers, in addition to providing long distance connectivity both nationally and internationally. They have launched DTH and IPTV Services also. All these services are rendered under a unified brand “Airtel”.  The company also deploys, owns and manages passive infrastructure pertaining to telecom operations under its subsidiary Bharti Infratel Limited. Bharti Infratel owns 42% of Indus Towers Limited.  Bharti Infratel and Indus Towers are the two top providers of passive infrastructure services in India.  Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises.  Airtel comes to you from Bharti Airtel Limited, India‟s largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles.  Bharti Airtel is structured into three strategic business units - Mobile services, Telemedia services and Enterprise services.  The mobile business provides mobile & fixed wireless services using GSM technology.  Airtel was voted as the „Best Cellular Service‟ in the country for four consecutive years. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 28
  29. 29. The Stock Exchange, Mumbai (BSE) The National Stock Exchange of India Type Limited (NSE) Founded 1985 Headquarters New Delhi, India Key people Sunil Mittal Industry Telecom Products Mobile and Fixed-Line Telecommunication operator, Airtel DTH Revenue $6 Billion Slogan Express Yourself Website Shahrukh Khan, Karina Kapoor,Sachin Tendulkar,A.R.Rahman, Brand Ambassador Saifali Khan, Madhvan,Vidhya Balan,Anandi (Avika guar) Balika vadhu. Shares in Issue: 1,898,373,280 as at June 30, 2009 Company Vision: By 2010 Airtel will be the most admired brand in India.  Loved by more customers.  Targeted by top talent.  Benchmarked by more businesses. Leading Competitors- VODAFONE, IDEA, BSNL, RELIANCE, TATA, AIRCEL IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 29
  30. 30. Vodafone is a British multinational mobile network operator headquartered in Newbury, United Kingdom. Vodafone is the world's largest mobile telecommunication network company, based on revenue, and has a market value of about £71.2 billion (November 2009). Vodafone is the world's largest mobile telecommunications community, employing over 65,000 staff and with over 130 million customers. The business operates in 26 countries worldwide. Vodafone is a public limited company with listings on the London and New York stock exchanges. Global recognition of the Vodafone brand is growing as the company rolls out its identity into new markets. However, it retains local names and imagery in markets where this is essential to maintaining the trust of customers. To help promote its image worldwide, Vodafone uses leading sports stars from high profile global sports, including David Beckham and Michael Schumacher. This Case Study concentrates on how such promotion can help to keep a leading brand at the forefront of public awareness For that reason our team decided to work on few steps which were basically to get the feed back from the market as fallow. Basically our objectives were to find out the behaviors of the consumers or the customers towards the product available in the market that either consumer or the customer is after the  Quality of the product.  After the price of the product.  After the good presentation of the product which includes the servicing.  If the consumer is after or comes for particular product and why, either because of effective advertisement on the media like television or news papers or other means of advertisement. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 30
  31. 31. LOGO: Founded 1983 as Racal Telecom, independent 1991 Headquarters Newbury, England, UK Arun Sarin, CEO Sir John Bond, Chairman Key people John Buchanan, Deputy Chairman Andy Halford, CFO Industry Mobile telecommunications Products Mobile networks, Telecom services, Etc. Revenue ▲ £31.104 billion GBP (2007) Net income ▼ £-1.564 billion GBP (2007) Slogan Happy to help Website Main Attractions of advertisement Dog, Zoo zoos IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 31
  32. 32. Idea Cellular is a wireless telephony company operating in all the 22 telecom circles in India. It initially started in 1995 as a joint venture among the Tatas, Aditya Birla Group and AT&T by merging "'Wings Cellular'" operating in Madhya Pradesh, Uttar Pradesh (UP) West, Rajasthan and Tata Cellular as well as Birla AT&T Communications. Initially having a very limited footprint in the GSM arena, the acquisition of Escotel in 2004 gave Idea a truly pan-India presence covering Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chhattisgarh, Uttar Pradesh (East and West), Haryana, Kerala, Rajasthan, Delhi (inclusive of NCR) and West Bengal. The company has its retail outlets under the "Idea n' U" banner. The company has also been the first to offer flexible tariff plans for prepaid customers. It also offers GPRS services in urban areas. Idea Cellular won the GSM Association Award for "Best Billing and Customer Care Solution" for 2 consecutive years. Type Spice: Public, Listed on BSE IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 32
  33. 33. Idea: Subsidiary Spice: 1997 Founded Idea: 1995 Spice: Mohali, India Headquarters Idea: Indore, Delhi, Pune, India Spice: Dilip Modi Key people Idea: Chairman: Kumar Mangalam Birla ; MD: Sanjeev Aga Industry Telecom Products Mobile operator Revenue revenue479-/394751 Spice: Spice Hai toh life hai (If there's Spice then there's Life.) Slogan Idea: An !dea can change your life. Spice: Spice Telecom ; Website Idea: Brand Ambassador Abhishek Bachan RELIANCE OVERVIEW IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 33
  34. 34. Reliance Communications, formerly known as Reliance Info comm, along with Reliance Telecom and Flag Telecom, is part of Reliance Communications Ventures. It is an Indian telecommunications company. According to National Stock Exchange data, Anil Dhirubhai Ambani controls 66.77 per cent of the company, which accounts for more than 1.36 billion shares.[3] It is the flagship company of the Reliance-Anil Dhirubhai Ambani Group, comprising of power (Reliance Energy), financial services (Reliance Capital) and telecom initiatives of the Reliance ADAG. It uses CDMA2000 1x technology for its existing CDMA mobile services, and GSM-900/GSM-1800 technology for its existing/newly launched GSM services. RelCom is also into Wire line Business throughout India and has the largest optical fiber communication (OFC) backbone architecture [roughly 110,000 km] in the country. Reliance Communications has launched its Direct To Home (DTH) TV also, known as "Big TV". RelCom have presence across all B2C communications channel in one of the fastest growing markets in the world. BID FOR HUTCH: In 2007, Reliance Communications had bid for 67% of Hutch but lost to Vodafone, which had been led by its CEO at the time Mr.PIYUSH.P. ACQUISITIONS In July 2007, the company announced it is buying US-based managed Ethernet and application delivery services company Yipes Enterprise Services for a cash amount of Rs. 1200 crore rupees (equivalent of USD 300 million). The deal was announc overseas acquisition, the Reliance group has amalgamated the United States-based Flag Telecom for $ 211 million [roughly Rs 950 crore (Rs 9.50 billion)]. Type Public (BSE: RCOM) IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 34
  35. 35. Founded 2004 Headquarters Navi Mumbai, Maharashtra, India Key people Anil Ambani (Chairman) & (MD) Vice-Chairman Reliance-ADA Group Industry Telecommunications Products Wireless Telephone Internet Television Revenue US$ 4.26 billion (2008) Net income US$ 1.35 billion (2008) Total assets US$ 19.31 billion (2008) Employees 33,000 Brand ambassador Hritik Roshan TATA: AN OVERVIEW IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 35
  36. 36. Tata Comm. is India's leading international telecom service provider. It is today part of the Tata Group. It started as a successor to the erstwhile Overseas Communication Services, and went on to become the premier provider of international voice and data services. Tata Teleservices Limited (TTSL) is a part of the Tata Group of companies, an Indian conglomerate. It operates under the brand name Tata Indicom in various telecom circles of India. In Nov 2008, Japanese telecom giant NTT Docomo picked up a 26 per cent equity stake in Tata Teleservices for about Rs 13,070 crore ($2.7 billion) or an enterprise value of Rs 50,269 crore ($10.38 billion).[1] In Feb 2008, TTSL announced that it would provide CDMA mobile services targeted towards the youth, in association with the Virgin Group on a Franchisee model basis. Tata Teleservices Provides mobile services under 3 Brand names:  Tata Indicom  Tata DoCoMo  Virgin Mobile Tata Teleservices Limited (TTSL) IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 36
  37. 37. Type Private Founded 2000 Headquarters Navi Mumbai, India Mr. Ratan N. Tata (Chairman) Key people Anil Kumar Sardana (MD) Industry Telecommunications Wireless Telephone Products Internet Television Employees 350,000 Parent Tata Group IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 37
  38. 38. BSNL OVERVIEW Bharat Sanchar Nigam Limited (known as BSNL) is a public sector telecommunication company in India. It is India's largest telecommunication company with, 24% market share as on March 31, 2008. Its headquarters are at Bharat Sanchar Bhawan, Harish Chandra Mathur Lane, Janpath, New Delhi. It has the status of Mini Ratna, a status assigned to reputed public sector companies in India. BSNL is India's oldest and largest Communication Service Provider (CSP). Currently has a customer base of 90 million as of June 2008. It has footprints throughout India except for the metropolitan cities of Mumbai and New Delhi which are managed by MTNL. As mon March 31, 2008 BSNL commanded a customer base of 31.55 million Wire line, 4.58 million CDMA- WLL and 54.21 million GSM Mobile subscribers. BSNL's earnings for the Financial Year ending March 31, 2007 stood at INR 397.15b (US$ 9.67 b) with net profit of INR 78.06b (US$ 1.90 billion). BSNL has an estimated market value of $ 100 Billion. The company is planning an IPO within 6 months to offload 10% to public in the Rs 300-400 range valuing the company at over $100 billion. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 38
  39. 39. Founded 19th century, incorporated 2000 Headquarters Bharat Sanchar Bhawan, Harish Chandra Mathur Lane, Janpath, New Delhi Kuldeep Goyal Key people (CMD) Industry Telecommunications Wireless Telephone Products Internet Television Revenue US$ 9.67 billion (2007) Owner(s) The Government of India IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 39
  40. 40. Type Joint Venture Industry Telecommunications Founded 2009 Headquarters Gurgaon, India Stein-Erik Vellan (CEO) Key people Sanjay Chandra (Chairman) Wireless Products Telephone Internet Employees 2,000 Telenor (67.25%) Parent Unitech Group (32.75%) Website IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 40
  41. 41. Type Public (BSE: 511389) Industry Conglomerate Founded 1979 Founder(s) Nandlal Madhavlal Dhoot Headquarters Aurangabad, Maharashtra, India Venugopal Dhoot (Chairman) Key people K. R. Kim (CEO) Consumer Electronics Home Appliances Components Office Automation Mobile phones Products Wireless Internet Petroleum Satellite television Power Revenue ▲ US$4 billion (2010) Net income ▲ US$276 million (2010) Employees 5,000 (2010) Website IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 41
  42. 42. FOUR P‟S ARE:- 1) PRODUCT 2) PRICE 3) PLACE 4) PROMOTION  Product- Sim cards, Plug to surf devices, Handsets for CDMA  Price- Offers, Schemes  Promotion: Print media, Electronic media, Outdoor media, Sales promotion  Place: Every retail shop, Offices, Home, Institutions The study shows it clearly that Vodafone have a huge market share due to its better service and good network. But the thing that differentiate it from the competitors that it provide the more and more number of the value added services.  Latest advertisement of Vodafone: Zoo zoos” is very attracting and it increases the  sales of the Vodafone , the marketing manager of Vodafone reveals that statement.  Study clearly shows that Vodafone is a has a brand image in the mind of public due to their willingness to provide the best service. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 42
  43. 43. Vodafone focused more and more on the value added service and marketing. Recently Vodafone gave its whole concentration by a series of advertisements of ZOOZOO series. This move of Vodafone proved very successful to attract the more and more number of the customers .  Airtel basically uses two appeal to connect to the users  Emotional  Humorous  attracting  In 2002, Airtel signed on music composer A.R.Rehman and changed its tune to "live every moment": rah man’s signature tune for Airtel is the most downloaded ringbone in India. But that was just part of the ongoing communication.  The following year Airtel adopted the "express yourself" positioning, which is also its current tagline.  Youth icons like Shahrukh khan and Sachin Tendulakar were brought in as brand ambassadors to attract youngsters  Add campaign with an eye on the rural market IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 43
  44. 44. The whole advertisement and promotion is designed by taking urban youth in focus but there are large no of youths in rural sector as well and they can be their future consumers. Taking big stars as brand ambassador is good decision. But organizations can further use recent bronze medallist Boxer Vijendra kumar as there endorsement. Vijendra is having good looking personality and he belongs to rural area so in this way rural people will start associating themselves with that brand “SABKA AIRTEL”. Airtel can also use BALIKA VADHU fame “ANANDI” (Avika gaur) targeting rural women and rural youth Youth to Drive Growth:--Airtel should more concentrate towards the youth. As the increasing market share of rivalry brand Virgin, clearly shows that youth can play a major role in this competition. Attracting the Youth:-- To attract more youth community Airtel can go for more and more plans for youth under the same brand “SABKA AIRTEL”. In this plan Airtel can give SMS pack (it‟s for SMS generation), cheaper call rates schemes only for school and college going students. In this plan Airtel should go for the heavy youth promo with fast dance track and cute guys and gals.  Mobile service providers should provide the facility of portability of number.  Mobile service providers should provide the web access at cheaper cost.  Telecom market is quite competitive so mobile service providers should provide the services at cheaper cost.  Mobile service providers should focus on providing better network coverage Especially BSNL.  Mobile service providers should provide various schemes for their existing customers.  BSNL have to make more attractive ads.  Add some other promotional offers.  Makes some sense full ads for Tata Doccomo  For making interactive add to connect with customers.  Consolidation in Industry. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 44
  45. 45. Telecom players are looking to tap into global funds to finance their aggressive growth plans. This will result in partnerships joint ventures and equity sellout to foreign players. New license holders will continue to look to sell their stake at a premium. New policies will seek to curb this license arbitrage. Smaller players with operations in only a few circles will find in difficult to compete with the nationwide players. The industry may see consolidation with these smaller operators being acquired by the larger ones. “Unbundling of the corporation” will continue as companies will seek f or economies of scale and lower startup cost by infrastructure sharing. 3G and WiMax license will spur M&A and partnership activity.  Idea Cellular’s Acquisition of Spice Telecom There were three transactions as part of this acquisition; acquisition of shares of Spice, a non- compete fee and a capital infusion of about Rs 7300 crores received from TM International Bhd (TMI). With respect to shares, Idea acquired 40.8% stake of Spice Communications at Rs 77.30 a share for Rs 2,716 crore. There was a share swap in which Spice shareholders got 49 Idea shares for every 100 Spice shares held. An additional Rs 544 crore was paid to the promoters of Spice group as 'non-compete fee'. The deal was strategically important for Idea Cellular as it was looking forward to transfer itself into a pan-India telecom service provider. The spectrum auctioned by GoI is a scarce resource nowadays and cost a premium. Also there‟s restriction by TRAI with respect to number of operators per telecom circle. So it makes sense to acquire a small telecom operator. Small players like Spice Telecom operating at only a few circles(Karnataka and Punjab) will find difficult to compete with the nationwide players in the long run. So it was a win-win deal for both companies.  VODAFONE’S ENTRY INTO INDIA Vodafone paid a discounted price of $10.9 billion in cash for acquiring the 52% stake held by Hutchison Telecom International (HTIL) in Indian mobile firm Hutch-Essar. HTIL declared a special dividend of 6.75 HK dollars per share following the completion of the formalities. The final price was a reduction of $180 million from the originally agreed price of $11.08 billion. Vodafone is the largest mobile telecommunications network company in the world. The deal gave them access to one of the fastest growing mobile markets in the world.  Telenor-Unitech Deal IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 45
  46. 46. Norwegian Telecom major Telenor is in the process of acquiring controlling stake of 67.25% in Unitech wireless via equity infusion. The enterprise valuation of Unitech Wirelsss is about Rs 10,900 crore. As per the deal, Telenor will infuse cash in four stages and at each phase, by increasing its stake in Unitech Wireless. In the first phase, they got 33.5% ownership in Unitech Wireless. In the second phase they completed the acquisition for a 49 per cent stake in Unitech Wireless by paying Rs 1,130 crore for a further 15.5 per cent stake in the company. The acquisition is expected to be completed by end of this quarter.  TTSL – DoCoMo Deal. Japanese carrier NTT DoCoMo acquired 26 per cent stake in Tata Teleservices (TTSL). The Tata DoCoMo-branded GSM service has already started in Southern India and gradually will be expanded nationwide. DoCoMo‟s international expansion plans have not always proven successful, with the firm historically preferring to take small stakes in firms and then try to influence their strategy. It has been less prepared to take majority stakes and impose its will, as other leading carriers have chosen to do. The difficulties faced by the firm in spreading its domestically successful i-mode service internationally typify the obstacles it has faced overseas. With Tata, DoCoMo had said “participating proactively in TTSL‟s management by providing human resources and technical assistance to help realise improved network quality and the possible introduction of leading- edge, value-added services.”  Bharti-MTN deal (in talks). Recently Bharti Airtel has re-started its audacious merger bid with MTN that could create a $61- billion transnational telecom goliath with combined revenues of $20 billion and over 200 million subscribers across Africa, Asia and Middle East, will be among the world's 10 biggest telecom companies. The deal could be win-win for both parties. Bharti is under pressure in its home country due to severe competition and looking forward to spread its risk across geographies. Meanwhile, the African telecom operator is also encountering some of the problems that its counterpart in India is confronting. MTN may have higher ARPUs (in the range of $12-20), but they are also falling fast.  Strategic benefits to both players Synergies would be sought from a number of areas, including procurement, operational best practice, R&D and international network sharing. The two companies will not overlap in each other‟s business operations: Bharti Airtel will be the primary vehicle for Bharti and MTN to pursue further expansion in Africa and the Middle East. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 46
  47. 47. With both Bharti and MTN operating in high-growth geographies, it would be imperative for them to incrementally expand into untapped areas. Collaborating with each other would seem the logical way ahead. The most important, and visible fallout of the deal, if it materializes, will be the advantage of economies of scale for the new entity. In recent times, companies are more amenable to mergers and acquisitions. Of late, companies are finding it tough to obtain easy funds for expansion, which calls for more collaboration if corporate intend to expand. Bharti would not be involved only in MTN‟s day-to-day activities, but it would also have a say while making bigger strategic decisions, such as those pertaining to investments in other geographies or sourcing of equipment. The high subscriber base and financial muscle will give Bharti-MTN the desired edge while dealing with vendors. Once the merger happens, the economies of scale of the complete outfit (Bharti-MTN) would be taken into account. For instance, even if the company places an order worth just $1 million, the vendor would not hesitate to lap it up, as there could be orders worth a billion dollars in other projects. This would offset whatever concerns there may be with respect to the small population size in countries where MTN operates.  Takeaways for Bharti The biggest takeaway for Bharti is in the form of access to new geographies with high growth potential. Without a partner, Bharti would have to embark on a Greenfield project, which would be time-consuming and capital intensive. Besides, without local knowledge (with respect to the market and government regulations), Bharti could be on a sticky wicket. The Indian telco does not have the expertise in running multi-country operations. MTN has operations in 21 countries across Africa and the Middle East and is one of the largest emerging market mobile operators globally. While Africa has one-third of the world‟s population, its telephonic density is just 30 per cent. This offers plenty of room for expansion. The fact that 95 percent of Africa is prepaid, which ensures all cash operations, fits perfectly into Bharti‟s plans. The options for Bharti were to go either the Greenfield way or with an experienced partner. MTN‟s strong foothold in some growing markets such as South Africa, Botswana, Iran and Nigeria ensures that when the growth in India starts to slow down, Bharti would be ready to take off in other geographies. Besides, there is a lot of potential in Africa as three-fourths of the continent is still untapped. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 47
  48. 48. Africa is quite like rural India and from that perspective; Bharti could learn how to roll out infrastructure in rural India. In addition, MTN is strong in the value-added services (VAS) and mobile commerce space. So, as and when mobile commerce picks up in India (after RBI‟s approval), Bharti would be able to tap this market through MTN‟s expertise. MTN has a vast experience in running multi-country operations and overcoming regulatory hurdles. By working with MTN, life for Bharti will get a lot of easier.  One of the major challenges would be the integration of the company on the ground. It is tough for intercontinental companies to merge seamlessly because of cultural divide.  Alcatel-Lucent for instance is still trying to adjust to cultural divide. Although Nokia-Siemens has bridged this divide faster, it was because both the companies were European.  The Black Empowerment Act could pose a challenge, as it is meant to safeguard the rights of the black population. As per this Act, blacks are ensured a minimum shareholding management seats and voting rights.  The country’s strong trade union, Congress of South African Trade Unions (COSATU), which has influence over President Jacob Zuma, had almost wrecked the Vodafone-Vodacom deal.  The Indian telecom industry has always allured foreign investors. In fact, the cumulative FDI inflow, from August 1991 to March 2007, in the telecommunication sector amounted to US$ 7,513.22 million. This makes telecommunication the third-largest sector to attract FDI in India in the post liberalization era. The investment was majorly in handset manufacturing and telecom service provider. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 48
  49. 49. With stable macroeconomic impetus and numerous other advantages, India has the potential to become the electronics manufacturing hub of the world. Excited by the record-breaking industry growth, investors have outlaid US$ 1.5 billion in the past two and a half years in the Indian telecom sector. India will receive an additional US$ 2 billion investment in the next one year. With the world now recognizing India‟s manufacturing potential, the Indian telecom handset manufacturing market is likely touch US$ 7 billion by 2010. An example is Nokia. The company has already produced 25 million handsets in its Chennai facility. It will pump in an additional US$ 150 million to this set up. The company exports around 20 per cent of its volume to South- east Asia, the Middle East and Africa. Local manufacturing allows companies to avoid 4 per cent countervailing duties on imported handsets, thereby further reducing the cost. Managed service is another segment that is attracting telecom companies. On account of the rapidly growing subscriber base, service providers find it difficult to manage their infrastructure and network. In such cases, they completely or partially outsource their infrastructure or network management operations. Hutchitson Essar (now Vodafone) and Nokia Deal: A case in point is Nokia which is managing the network for Hutchison Essar Limited in 19 circles in India. Having successfully capitalized on the business potential of managed service, IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 49
  50. 50. Nokia is already earning 30 per cent of its total revenue from this segment. The company has also shifted its first Global Network Solutions Centre (GNSC) to India. The company manages 39 cellular networks in 30 countries. Its Indian center will act as a global hub for other Nokia operation centers. Advantages of Managed Service • Smooth management of technological complexity • Opportunity to strengthen core competency • Reduction in financial outlay • Touching base with new processes and technologies Another dimension of managed service is telecom, communication and network management solutions for enterprises. Bharti Televentures and IBM, together offer telecom and IT solutions in India. The solutions and services portfolio comprises of the remote monitoring of servers, security operations and network operations, providing data center services (including server hosting, server management and storage management), IT help desk services and end-to-end connectivity and fulfilling all telecom and communication requirements. This information technology outsourcing deal with infotech major IBM is estimated to be in the range of $700- 750 million for a ten-year period. The deal involved outsourcing of BTVL's hardware, software and IT service requirements to IBM. The agreement specifies that payments made to IBM India will be linked to the percentage of revenue generation by BTVL and pre-defined service level agreements. The percentage-linked revenue payment is modeled to decrease with BTVL's increase in revenue. The deal includes all customer-facing IT applications like billing, customer relationship management and data warehousing. In addition, Internet, e-mail and online collaborations are included in it. On the infrastructure front, IBM will consolidate BTVL's data center, IT helpdesk and enhance its disaster recovery center capabilities, he said. Bharti’s Outsourcing to Alcatel-Lucent: Telecom major Bharti Airtel has a $500-million deal to Alcatel-Lucent for outsourcing the management and servicing of its broadband and fixed line network for five years. The deal involves the creation of a joint venture with Alcatel-Lucent holding 76 per cent of the equity, and Bharti having the remainder 24 percent. The joint venture will help accelerate performance as Bharti migrates to the next generation networks for the broadband and telephone customers. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 50
  51. 51. Bharti Outsourcing Deal with Nokia & Ericsson Bharti Airtel awarded a $400m contract to Nokia for expanding its managed GSM networks in eight circles. This also marks Bharti‟s third major deal with Nokia in the last two years. Bharti would have 100% ownership of the networks supplied by Nokia, with the actual payment being linked to utilization of capacity and fulfillment of agreed quality of service parameters. This comes close on the heels of Bharti‟s recent signing of a $1bn three-year service contract with Ericsson towards design, planning, supply, installation, commissioning and upgrading of its network in 15 telecom circles. This emphasizes Bharti‟s policy towards outsourcing all operational activities, including customer services to global majors. This has enabled Bharti to focus on its core areas: product innovation, value added services, marketing, branding and pricing. It has enabled Bharti to concentrate on customers, finances and regulation. As per the three-year contract, Nokia will provide managed services and expand Airtel‟s GSM/GPRS/EDGE networks in eight circles of Mumbai, Maharashtra & Goa, Gujarat, Bihar, Orissa, Kolkata, West Bengal and Madhya Pradesh. The network monitoring operations will be carried out from Nokia‟s state-of-the-art Global Network Services Center in Chennai. The deal also envisages Nokia to deploy its WAP solution across Bharti‟s national network to enhance its mobile packet core network capabilities. This will make usage of data services easy, thereby increasing the consumption of content on the Bharti network. Future Technology Trends In this section we have listed down the future technologies which are in roadmap and are speculated to make an impact on current business model of telcos. IP Multimedia Subsystem (IMS) IP Multimedia Subsystem (IMS) is a generic architecture for offering multimedia and voice over IP services, defined by 3rd Generation Partnership Project (3GPP). IMS is access independant as it supports multiple access types including GSM, WCDMA, CDMA2000, WLAN, Wireline broadband and other packet data applications. IMS will make Internet technologies, such as web browsing, e-mail, instant messaging and video conferencing available to everyone from any location. It is also intended to allow operators to introduce new services, such as web browsing, WAP and MMS, at the top level of their packet-switched networks. IP Multimedia Subsystem is standardized reference architecture. IMS consists of session control, connection control and an applications services framework along with subscriber and services data. It enables new IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 51
  52. 52. converged voice and data services, while allowing for the interoperability of these converged services between internet and cellular subscribers. IMS uses open standard IP protocols, defined by the IETF. So users will be able to execute all their services when roaming as well as from their home networks. So, a multimedia session between two IMS users, between an IMS user and a user on the Internet, and between two users on the Internet is established using exactly the same protocol. Moreover, the interfaces for service developers are also based on IP protocols. Some of the possible applications where IMS can be used are:  Presence services  Full Duplex Video Telephony  Instant messaging  Unified messaging  Multimedia advertising  Multiparty gaming  Video streaming  Web/Audio/Video Conferencing  Push-to services, such as push-to-talk, push-to-view, push-to-video Effectively, IMS provides a unified architecture that supports a wide range of IP-based services over both packet- and circuit-switched networks, employing a range of different wireless and fixed access technologies. A user could, for example, pay for and download a video clip to a chosen mobile or fixed device and subsequently use some of this material to create a multimedia message for delivery to friends on many different networks. A single IMS presence-and-availability engine could track a user's presence and availability across mobile, fixed, and broadband networks, or a user could maintain a single integrated contact list for all types of communications. A key point of IMS is that it is intended as an open-systems architecture: Services are created and delivered by a wide range of highly distributed systems (real-time and non-real-time, possibly owned by different parties) cooperating with each other. It is a different approach to the more traditional telco architecture of a set of specific network elements implemented as a single telco-controlled infrastructure. High Speed Downlink Packet Access (HSDPA) High Speed Downlink Packet Access (HSDPA) is a packet based technology for W-CDMA downlink with data transmission rates of 4 to 5 times that of current generation 3G networks IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 52
  53. 53. (UMTS) and 15 times faster than GPRS. The latest release boosts downlink speeds from the current end-user rate of 384 kbps (up to 2 Mbps according to standards) to a maximum value according to standards of 14.4 Mbps. Real life end-user speeds will be in the range of 2 to 3 Mbps. HSDPA provides a smooth evolutionary path for Universal Mobile Telecommunications System (UMTS) networks to higher data rates and higher capacities, in the same way as Enhanced Data rates for GSM Evolution (EDGE) does in the Global System for Mobile communication (GSM) world. The introduction of shared channels for different users will guarantee that channel resources are used efficiently in the packet domain, and will be less expensive for users than dedicated channels. 4G or Fourth Generation Networks 4G or Fourth Generation is future technology for mobile and wireless comunications. It will be the successor for the 3Rd Generation (3G) network technology. Currently 3G networks are under deployement. Approximatly 4G deployments are expected to be seen around 2010 to 2015. The basic voice was the driver for second-generation mobile and has been a considerable success. Currently , video and TV services are driving forward third generation (3G) deployment. And in the future, low cost, high speed data will drive forward the fourth generation (4G) as short-range communication emerges. Service and application ubiquity, with a high degree of personalization and synchronization between various user appliances, will be another driver. At the same time, it is probable that the radio access network will evolve from a centralized architecture to a distributed one. The evolution from 3G to 4G will be driven by services that offer better quality (e.g. multimedia, video and sound) thanks to greater bandwidth, more sophistication in the association of a large quantity of information, and improved personalization. Convergence with other network (enterprise, fixed) services will come about through the high session data rate. It will require an always-on connection and a revenue model based on a fixed monthly fee. The impact on network capacity is expected to be significant. Machine-to-machine transmission will involve two basic equipment types: sensors (which measure parameters) and tags (which are generally read/write equipment). It is expected that users will require high data rates, similar to those on fixed networks, for data and streaming applications. Mobile terminal usage (laptops, Personal digital assistants, handhelds) is expected to grow rapidly as they become more user friendly. Fluid high quality video and network reactivity are important user requirements. Key infrastructure design requirements include: fast response, high session rate, high capacity, low user charges, rapid return on investment for operators, investment that is in line with the growth IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 53
  54. 54. in demand, and simple autonomous terminals. The infrastructure will be much more distributed than in current deployments, facilitating the introduction of a new source of local traffic: machine-to-machine. The Indian Telecom Service provider industry is gearing for a revolution. The customer is driving this revolution and will see more unique and sophisticated offerings coming his way. The 3G which will pave the way for 3.5G, 3.75G and the next big thing-4G and the VAS services will keep the customer asking for more. The rural areas which have remained untapped will see an insurgence of services. Also the easing of the regulations by TRAI ,the ease of spectrum licensing, the FDI influx will make the telecom space in India a must watch in the coming years. REFERENCES [1} IBEF report 2007-08/08-09 : Telecommunication - MARKET & OPPORTUNITIES. [2] Cellular Statistics – Cellular Operator Association of India [3] IAMAI & eTechnology Group@IMRB: MOBILE VALUE ADDED SERVICES IN INDIA- A Report. [4] Telenor Entering India: Investment Update [5] Voice and Data(May 2009): Mobile Number Portability - Poaching with Portability. [6] Business India : Telecom Takeover, Bharti-MTN deal [7] Idea Spice deal [8] Business Standard: Vodafone Hutch deal *9+ IntoMobile: India’s 3G License Plans Updated. [10] World Bank Report: Spectrum auctions in India: lessons from experience WEBSITES USED:     IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 54
  55. 55.       MAGAZINES USED:  4PS  Business Economics  Times of India  Industrial Handbook 2009 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 55