INDIAN TELECOM SECTOR
AN INDUSTRY ANALYSIS.
Most vibrant sector with highest growth rate –
more than 60 lakh customers are added every
Plethora of services
Easier access/ availability
Drastic reduction in tariff
World class service
Major classes of
• Fixed Copper, Optical Fibre, Wireless
• Mobile GSM and CDMA based
• Narrow band Voice, Internet, Fax
• Broad band High speed Internet, Video
MOBILE TARIFFS IN INDIA ONE OF
0.11 0.11 0.11
KEY POLICY INITIATIVES/MILESTONES
New Economic Policy (1991)
Opening up of Telecom service sector (Mobile –
National Telecom Policy 1994
Telecom, key for development
Inadequacy of public resource to meet demand
Private sector to supplement Govt.
Provide world class telecom service at affordable
Optical fiber based wireline networks
Wireless networks GSM,CDMA based mobile
Next Generation Networks: Voice , Data, Video
Telecom networks increasingly software intensive
issues to be addressed in the
Unique Rural Scenario : low teledensity
Need for Spectrum re-farming & re-allocation
Lack of Content in Local Languages
Mobile. 2699.270 M
Total. 3929.257 M
Population 6563.69 M
Telephone connecTions inmillions-
Divided into 23 circles
Further divided into A, B
and C category.
Division based on
and revenue potential
Each circle has a
licenses, which are a
Uttar Pradesh E
CURRENT INDUSTRY STRUCTURE
FDI in telecom recently revised to 74%.
Government gets 15% of revenues from Unified Licensing
Ministry of Communication & Information Technology
Authority of India
Telecom Dispute Settlement
Dept of Telecom Unified License Operators
Fixed Line Operators
National Long Distance Operators
International Long Distance Operators
AUTHORITY OF INDIA
•Setup in 1997
•Protection of Consumer Interest
•Nurture Conditions for Growth of Telecom in
Reduced levies on Operators.
Reduced upper limit in tariff (Local, STD & ISD)
and other Inter-operators tariffs.
Directives on number of network access service
Policy guidelines on new services like 3G, Wi-
MAX, Internet Telephony, Radio Paging, VSAT,
Regular monitoring of Quality of Service
MAJOR PLAYERS OF INDIAN
The Top five companies, on the basis of ‘Market Share’ as on
31st January, 2009 are:
1. Bharti Airtel Ltd.
2. Reliance Communications Ltd.
3. Vodafone Essar Ltd.
5. Idea Cellular + Spice
•Bottom five companies, on the basis of ‘Market Share’ as on
31st January, 2009 are:
1. Aircel Cellular Ltd. + Dishnet
2. Mahanagar Telephone Nigam Ltd. (MTNL)
3. BPL Mobile Communications Ltd.
4. HFCL Infotel Ltd.
5. Shyam Telecom Ltd.
MARKET SHARE OF TELECOM
COMPANIES AS ON JANUARY, 2009
THREAT OF SUBSTITUTES- LOW
VOIP (Skype, Messenger etc.)
None of the above a major threat in current scenario,
but a potential threat for near future.
THREAT OF NEW ENTRANTS-
Declining Average Revenue Per User.
Infrastructure tenancy costs.
Brand pull exists to some extent for brands like
Airtel / Idea/ Vodafone.
Extremely high infrastructure setup costs
Spectrum License cost- Lotteries, auctions.
Incumbent Advantages: Established brand image,
Reliability of network
POWER OF SUPPLIER- LOW
Large number of suppliers.
Shared tower infrastructure.
Limited pool of skilled managers and engineers especially
those well versed in the latest technologies.
Medium cost of switching since changing their hardware
would lead to additional cost in modifying the
Overall influence on the industry - medium
BARGAINING POWER OF CUSTOMER-
Lack of differentiation among the service provider
Cut throat competition
Customer is price sensitive
Low switching costs
Number portability to have negative impact
RIVALRY AMONG COMPETITORS-
High Exit Barriers
High Fixed Cost
6-7 players in each region
3 out of 4 BIG, present in each region
Very less time to gain advantage by an
innovation (Eg. Caller tunes, life time card)
Player in India -
Strategic Alliance with
other stakeholders in
Bharti Airtel include
Sony-Ericsson, Nokia -
and Sing Tel
Pan India Presence
Outsourcing of Core
Lack of emerging market
• Bharti Infratel – Cutting
Down cost in Rural area
• Match Box Strategy –
Scale of Penetration
• Current Tele-Density –
30.6 is still low among
• Low Broadband
India centric – Major
revenues from India
Intense Competition &
Shortage of Bandwidth
AIRTEL – STRATEGY
MANTRA : Focus on Core Competencies and
Outsource the rest!
• Airtel partnered with leading players in
telecommunication players across the globe.
• It has managed to work with the best of domain
specialists globally and emerge as a world class
• Partnerships include operational contracts with
vendors and strategic investors ranging from
private equity investors to global telecom giants.
SHAREHOLDERS – TECHNOLOGY
Warburg Pincus – a celebrated PE investor held a
stake for a substantial period of time and was
instrumental in providing Airtel support in its early
Vodafone was a strategic investor in Airtel.
Temasek – the Singapore based investor holds a
considerable stake in it.
Was also affiliated with Singapore Telecom.
OUTSOURCING DEALS IN 2004
Ericsson was given the mandate to provide,
manage and maintain the equipment as well as
provide quality assurance in Airtel
IBM was given the mandate to handle the back
office requirements of Airtel’s presence in India
• Higher emphasis on ARPU/min – stark contrast with
other operators who concentrate on ARPU only.
• Aim to become a one stop shop for all
telecommunication services under the Bharti
• Exploring opportunities in international markets.
• Hived off tower infrastructure into a separate