History of Telecom in India- I Merger of ETC &IRT to form First Military Landline from Merger with the Postal service (IRCC) Indian Radio Telegraph Fort William to Lalbazaar Cable Company(Calcutta ) by the British Govt 1851 1881 1883 1923 1932 1947First Civil landline serviceintroduced for the British Formation of Indian Radio Formation of Posts TelephoneViceroy and his team Telegraph Company (IRT) & Telegraphs under Ministry of Communication
History of Telecom in India- II •1st call on Mobile phone •Cellular service For 3 months in a rowDOT established separate •Telecom Minister Sukh launched. India beats China forfrom Postal system Ram(Delhi) to Jyoti Basu •New Telecom the maximum subs (Calcutta) Policy(NTP) is adopted added every month 1985 1986 1995 1997 1999 2000 2009 DOT spilt into 3 : TRAI created •MTNL (metros) DOT becomes a corporation = (Telecom Regulatory •DOT (others) BSNL Authority of India) •VSNL (International)
Quick Facts Source: TRAI Report May 2011 (in Mn)
Strategic Flow 500 Mn Mobile and Wire line subscribers in India today Rs. 40,000 Crore quarterly revenue figures for this industry Clear PolicySo How all this happened? Cheap tariff Competition regime
TRAI functions Consumer Protection Ensure Quality of Service Ensure Affordable Tariff Regulate Interconnections Regulation, Directions, Orders Recommendations
Spectrum AllocationNeed for Spectrum Allocation• Spectrum auctions ensure the efficient use of spectrum by allocating it to those entities that value it most, while also generating revenues for governments.• In order to allocate spectrum amongst competing service providers, regulatory agencies often use auctions.• The key challenge before regulatory agencies is to design auctions in such a way as to foster competition while at the same time ensuring that bidders can effectively use the spectrum for their business.
Spectrum Allocation in India • In India, telecom licences were auctioned for basic and cellular services from 1991 by the Department of Telecom (DoT). • The entire country was divided into roughly 20 circles, categorized as A, B, or C Circles depending upon their revenue potential. • Required to seek Foreign partners. • For cellular licences, Global System for Mobile Communications (GSM) was the chosen technology and for basic services, a combination of fiber optic and wireless in GSM&WLL the local loop (WLL) was selected.
India’s Competitive Advantage 1. Fastest growing free market democracy 2. Cost advantage in product development and back office processing 3. Stable economic outlook – Decade long reforms 4. Huge market potential – one of the largest consumer markets 5. Large talent poolSource: www.telenor.com
FDI in Telecom Sector largest sector to Third attract FDI in India FDI in Telecommunication Sector (US$ million) 2008-09 2345.38 2007-08 1275.65 2006-07 521 2005-06 680 2004-05 129 2003-04 116Source: IBEF Report
VAS (Value Added Services)SMSVAS services, Bulk Messaging, B2B and B2CVoice IVRMobile Radio, Voice chat, English Learning, Devotionaland Astrology, Music on DemandContent downloadsMobile WAP PortalConsumer ApplicationsEnterprise solutions : Mobile CRM, Mobile SFACRBT (Caller ring back tones)USSDMessage along with *141#Flash alerts
VAS market in India VAS: Not a form of basic service but adds value to the total service offering Contributes to 10% of total revenue from telecom operators The corresponding figure in developed nations is 25%
Present Segments Population of India – 1,130 mn Mobile Subscriber Base – 509 mn GPRS Enabled – 70 mn GPRS Activated – 17 mn GPRS Users – 10 mnSource: IAMAI Report
Why mobile VAS ?Decrease in ARPU for telecom operatorsVery low operating marginsDecreasing call rates: Lowest in the world @ 1p/secIncrease in number of operators in each circleSaturation in metro market: Over 100% tele-density in 4 metros
Rural VASOnly 12% tele-density in rural areas as compared to 72% in urban areasHuge market potentialSachet model of VAS promotionLocalization content • Local Mandi Rates • Weather forecasts • Health and job related information • Train services
Industry UpdatesIdea Cellular’s Acquisition of Spice Telecom• 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.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) Telenor-Unitech Deal • Telenor is in the process of acquiring controlling stake of 67.25% in Unitech wireless via equity infusionTTSL – DoCoMo Deal.• Japanese carrier NTT DoCoMo acquired 26 per cent stake in Tata Teleservices (TTSL).
Bharti-MTN deal To create a $61-billion Reasons for failure - transnational telecom Takeaways for Bharti Dual listing goliath.• Combined revenues of • Access to new • Indian rupee is not $20 billion geographies with high fully convertible• Over 200 million growth potential. • Not possible to go in subscribers across • Greenfield for dual listing of Africa, Asia and project, time- shares. Middle East. consuming and capital • which allows people intensive. to buy shares in the stock exchanges of one country and sell in the bourses of the other country
India 3G Story In India, 3G mainly for voice? DoT looking to hike the reserve price for the auctions of Indiatimes - Sep 8 2008 the pan-India 3G spectrum TopNews - Jun 12 2009 India 3G kicks off; but at what cost? CIOL - Jan 16 2009 India 3G auction may happen sooner than expected Telecoms.com - Aug 27 2009 India 3G News: BSNL flips the switchSource: Google Trends - Mar 5 2009 Product Reviews SK C&C, Reliance team on India 3G roll out EE Times India - Oct 20 2009
Jan 14th 2010 • 3G – Rs 35 bnReserve Price • WiMax – Rs 17.5 bn • EVDO – Rs 8.25 bn • 2-3 times the reserve prices - to total at Expected Bid least Rs65bn–Rs120bn. • with no current presence in India have toForeign players pay an additional Rs 16.50bn for 2G spectrum. • relaxing the normal US$500m limit on ECB external commercial borrowings
Mobile Number Portability(MNP) The Inhibitors Huge Costs Infrastructure Upgrade Customer Retention/Increased Cost Recovery and Bill Competition Reconciliation/Query ProcessingSource: Voice and Data
Generations 4G 10MBPS TO 3G 20 MBPS 600KBPS TO 2MBPS2gDATA RATE14.4
Top Ten Challenges Sustenance of same EBITDA Competitive tariffs VAS applications on Device Spectrum management Broadband expansion in Rural Transition to NGN Content Regulation of Data Ecosystem to facilitate M&A Reduce Circles to relax Roaming Alternate Technologies (Solar/Wind for power back-up)
Road Ahead People with and without mobile connections (in millions) Not Connected Connected 604 Highest Number Not Connected 661 People 720 510 36 91 25 271 71 140 165 96China India USA Indonesia Brazil Pakistan54.4% 43.6% 88.4% 60.5% 86.6% 57.6% http://en.wikipedia.org/wiki/List_of_countries_by_number_of_mobile_phones_in_use
References1. Trai – Quaterly Report (May 2011 ).2. http://www.trichytalks.com3. IBEF report 2007-08 : Telecommunication - MARKET & OPPORTUNITIES.4. Cellular Statistics – Cellular Operator Association of India5. IAMAI & eTechnology Group@IMRB: MOBILE VALUE ADDED SERVICES IN INDIA- A Report.6. Telenor Entering India: Investment Update7. Voice and Data(May 2009): Mobile Number Portability - Poaching with Portability.8. Business India : Telecom Takeover, Bharti-MTN deal Thank You