The Indian telecom industry has experienced rapid growth with over 846 million subscribers as of March 2011. It is dominated by private operators who hold 88% of the wireless market share. While demand continues to grow with increasing rural penetration, supply currently exceeds demand due to the large number of service providers. This high competition has led to decreasing revenue metrics like ARPU and MoU. The industry is expected to continue growing driven by technology advancements, lower tariffs, and the shift to value-added services. However, it faces challenges around heavy regulation and maintaining profitability.

1. INDUSTRY ANALYSIS
TELECOM
INDUSTRY
Presented by:
Aruna K Rihal 6010010918327
Krishan Lamba 6010020752379
Ravindra Sony 6010010702800

2. Agenda
Overview-
Overview-Global & India
Value Chain
Demand and Supply
Segment
Competition
Growth Drivers
Regulation
Technology
Issues & Challenges
Outlook

3. Overview
Global Global subscribers(dec2010)
India is the fourth China
19%
largest telecom USA
7%
market in Asia. Others India
5.3bn mobile 62% 12%
subscribers(2010).
Top global player-
player- China USA India Others
America Source:IUT
Movil(Mexico, USA).
Movil(Mexico,
India’s Bharti Airtel
is 3rd largest in
world.

4. Indian overview
India Telecom network has 846.32 million
subscribers(31Mar 2011).
Covered by 14 Telecom operators.
Overall teledensity reaches 70.89%;urban-157.32% &
70.89%;urban-
rural-
rural-33.79%(31Mar 2011).
Private operators hold 88.01% of wireless market
share((31Mar 2011).
Mobile Number Portability stands at 6.42 million
subscribers(31Mar 2011).
Internet broadband subscription reaches to 11.87
million(31Mar 2011).
Advanced technology-GSM,CDMA,WLL,3G,upcoming 4G.
technology-
Contribute nearly 1% to India’s GDP.
Highly organized industry;regulated by TRAI(Telecom
Regulatory Authority of India).
74% FDI is allowed.

5. Structure of Indian Telecom
Telecom
Industry
Private sector
Public sector-BSNL, Private sector
(Indian)
MTNL (Foreign)
Bharti,Reliance,
Vodafone.
TATA

6. Value Chain
Government License/TRAI
Hand Set & Equipment
Service Providers
Manufacturer
Dealer/Franchisees Value Added Service Providers
Customers

7. Demand & Supply
Number of service
operators is high(14) as Trend of subscribers(millions)
against 3-4;supply
3-4;supply
more than demand. 900
800
Annual subscription 700
600
millions
growth rate is 500
400
7.50%(Mar2011). 300
200
Circle A is largest(; 100
0
Penetration in tier-II
tier- 2009 2010 2011
cities like Guwahati,, subscribers
Surat, Nagpur, Indore. Source:TRAI
VAS increases growth.
Dip in tariff rates @
1paise/second, ARPU &
MoU.
Low price handsets.

8. Decreasing ARPU & MoU
All India ARPU(Quarterly)
ARPU 250
Lower call rates 200
Rs/sub/month
150
High market competition 100
Increasing VAS 50
0
Low growth income category Mar-10 Jun-10 Sep-10 Dec-10
GSM CDMA
MoU Source:TRAI
Higher miss call rate All India MoU(monthly)
VAS-
VAS-SMS,chat,alerts etc
min/sub/month
800
Rural population 700
600
500
400
300
200
100
0
GSM CDMA
Source:TRAI
Source:TRAI

9. Segment
Growing subscriber base
Wireline vs Wireless
Increased focus on 900
800
services sector. 700
600
millions
500
400
Growing younger 300
200
100
population. 0
2009 2010 2011
wireless wireline
Circle B shows Source:TRAI
highest annual growth Urban vs Rural
of 42.21% in 100%
90%
80%
wireless(Mar2011). 70%
millions
60%
50%
40%
Wireless growing-
growing-
30%
20%
10%
0%
GSM,CDMA,WiMax. 2009 2010
rural urban
2011
Source:TRAI

10. Trend of Teledensity
Growth of Teledensity
•Urban 80
teledensity is 60
%
40
higher;stands at 20
157.32 0
•Rural teledensity Source:TRAI
total rural urban
to grow faster Segmental Teledensity
•Rural area not 100%
90%
hit by recession 80%
70%
60%
•Dip in handset 50%
%
40%
30%
price 20%
10%
0%
Wireless Wireline
Rural Urban
Source:TRAI

11. Technology favours growth
GSM vs CDMA
CDMA is growing 100%
90%
80%
more than GSM 70%
60%
50%
%
CDMA have more
40%
30%
20%
spectrum space;more 10%
0%
2009 2010 2011
subscribers for CDMA GSM CDMA
Broadband shows Source:TRAI & www.ibef.org.in
Growing Broadband subscribers
growth;reach is still
at 0.7% as against 15
worlwide 8.1% millions
10
outreach(Nov2010) 5
0
2009 2010 2011
broadband
Source:TRAI

12. Competition
Michael Porter’s analysis
Forces High/Low/ Reason
Moderate
Barrier to entry Low License is
required,complex
Bargaining power of High More service
supplier providers,large variety
of hand sets & high
licensing fee by govt.
Bargaining power of High 14 Telecom companies.
buyers Supply more than
demand.
Inter firm rivalry High More service providers
Substitute Low Post office-letter,
office-
parcel,money
order,speedpost

13. Market Share
Service provider wise market share(Mar2011)
Wireless is larger than
WIRELESS
wireline.
TATA
Bharti Airtel vodafone
11%
Idea
11%
Aircel
dominates wireless 16%
Other
25%
7%
BSNL
11%
others]
market with 19%. reliance
17%
bharti
20%
7%
BSNL is with largest
market share in Source:TRAI
wireline(72%). Service provider wise market share(Mar2011)
WIRELINE
MTNL is present in
Delhi & Mumbai. MTNL
10%
Bharti
9%
Reliance
3%
BSNL
MTNL
BSNL covers the rest TATA
4%
others
Bharti
Reliance
part of country. BSNL
73% Other
5%
1%
TATA
others
source:TRAI

14. Service providers-GSM/CDMA
providers-
Market Share-GSM(Mar2010)
Bharti Airtel is the Airtel
Others
1% MTNL
major player in 27% 21%
TATA
6%
GSM;market Vodafone
1%
Idea
Aircel
8%
Reliance
share-
share- 13% BSNL
13% 10%
27%(mar2010) MTNL TATA Aircel Reliance BSNL Idea Vodafone Airtel Others
Source:TRAI
Reliance Maket Share-CDMA(MAr2010)
communications is BSNL
MTNL 6%
leading in 4%
CDMA;market Reliance
53%
TATA
37%
share-
share-
53%(mar2010) BSNL TATA Reliance MTNL
Source:TRAI

15. Growth drivers
Reduced cost of hand sets(affordability factor)
Low call costs
Business Education,Telepathy
Wireless in remote areas
Population mix moving towards younger age
profile
3 G telecom services
WiMax,Mobile banking and Broadband wireless
services
Mobile number portability
Value added services(VAS)
Global calling card

16. Regulations
TRAI regulatory and tariff function
Introduction of new service providers
Conditions of License to service
providers
Ensure compliance of terms &
conditions of license
Effective management of spectrum
Ensure effective compliance of
universal service obligation

17. Technology
GSM narrow band T.D.M.A technology
CDMA spread spectrum technique
3G for access of internet on mobile
handsets
WIMAX 1G5it/s fixed speed
WIFI enables personal computers, video
games to connect to internet
MVNO buy minute of use from opertors

18. Issues & Challenges
Shortage of infrastructure
Lack of skilled manpower
Allocation of 3G license
Lack of spectrum
Tariff rates
Decreasing ARPU & MoU
High competition
Lack of clarity from Government
Rising oil prices

19. Outlook
Wireless subscribers are likely
to reach 1bn by 2014
Rural teledensity to reach Expected subscribers by 2014
close to 40% by 2012
Wimax is expected to attract
8.10mn subscribers by 2012 1500
m illions
1000
Top 10 broadband market by
2013 500
0
Technology-
Technology- rise of
3G,4G,digitalised network 2009 2010 2011 2012 2013 2014
Telecom in postal department
for financial inclusion Series1
Coverage of rural
market;increase in Source:ibef.org.in
penetration rate
Increasing Merger &
Acquisitions
Innovative advertising
campaign

20. THANK YOU