COMPANY PROFILE 1

CHAPTER 1
INDUSTRY PROFILE
TELE COMMUNICATION:
The history of telecommunication began with the use of smoke signals and drums in
Africa, the Americas and parts of Asia. In the 1790s, the first fixed semaphore systems emerged
in Europe. The first commercial telephone services were set up in 1878 and 1879 on both sides
of the Atlantic in the cities of New Haven and London. Alexander Graham Bell held the master
patent for the telephone that was needed for such services in both countries.
The key innovators were Alexander Graham Bell and Gardiner Greene Hubbard, who created the
first telephone company, the Bell Telephone Company in the United States, which later evolved
into American Telephone & Telegraph (AT&T), at times the world's largest phone company.

HISTORY:Visual, auditory and ancillary methods (non-electrical):

Prehistoric: Fires, Beacons, Smoke signals, Communication drums, Horns

4th century BCE: Hydraulic semaphores

5th century BCE: Pigeon post

6th century BCE: Mail

15th century CE: Maritime flag semaphores

1672: First experimental acoustic (mechanical) telephone

1790: Semaphore lines (optical telegraphs)

1867: Signal lamps

1877: Acoustic phonograph

Basic electrical signals:

1838: Electrical telegraph. See: Telegraph history

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1858: First trans-Atlantic telegraph cable

1876: Telephone. See: Invention of the telephone, History of the telephone, Timeline of
the telephone

1880: Telephony via light beam photo phones

Advanced electrical and electronic signals:

1893: Wireless telegraphy

1896: Radio. See: History of radio.

1914: First North American transcontinental telephone calling

1927: Television. See: History of television

1927: First commercial radio-telephone service, U.K.U.S.

1930: First experimental videophones

1934: First commercial radio-telephone service, U.S.Japan

1936: World's first public videophone network

1946: Limited capacity Mobile Telephone Service for automobiles

1956: Transatlantic telephone cable

1962: Commercial telecommunications satellite

1964: Fiber optical telecommunications

1965: First North American public videophone network

1969: Computer networking

1973: First modern-era mobile (cellular) phone

1979: INMARSAT ship-to-shore satellite communications

1981: First mobile (cellular) phone network

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1982: SMTP email

1983: Internet. See: History of Internet

1998: Mobile satellite hand-held phones

2003: VoIP Internet Telephony

2008: Google Glass

TOP TELECOM COMPANIES IN WORLD:This is a list of the world's largest telecommunications companies measured by total
revenues.
Rank Company

Total Revenue (US$ Billions) Headquarters

AT&T

128.7

United States

Verizon Communications

120.6

United States

Nippon Telegraph & Telephone

109.1

Japan

China Mobile Communications

107.6

China

Deutsche Telekom

79.8

Germany

Telefnica

75.7

Spain

Softbank

66.5

Japan

Vodafone Group

65.9

United Kingdom

Comcast

64.7

United States

10

China Telecommunications

62.0

China

11

AmricaMvil

61.6

Mexico

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Rank Company

Total Revenue (US$ Billions) Headquarters

12

Orange S.A.

55.9

13

China United Network Communications 49.3

China

14

KDDI

43.3

Japan

15

Telecom Italia

36.5

Italy

16

Vivendi

35.9

France

17

DirecTV

31.8

United States

18

BT Group

29.1

United Kingdom

19

Telstra

26.3

Australia

20

VimpelCom Limited

23.1

Netherlands

21

KT Corporation

21.8

South Korea

22

Liberty Global

20.0

United Kingdom

23

CenturyLink

18.1

United States

24

Telenor

16.4

Norway

25

TeliaSonera

15.8

Sweden

26

MTN Group

14.93

South Africa

France

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Rank Company

Total Revenue (US$ Billions) Headquarters

27

Bharti Airtel

14

India

28

SingTel

13.7

Singapore

29

Oi Telecommunications

13.1

Brazil

30

Mobile TeleSystems

12.4

Russia

INDIAN TELECOM INDUSTRY:Wireless and wire line revenues in India:-

Composition of telephone subscribers in India:-

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Tele density in India:-

Wireless market share in terms of total subscribers in India:-

Introduction:-

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Telecom services have been acknowledged globally as an essential tool for the socio-economic
development of a nation. India is currently the worlds second-largest telecommunications
market and has registered exceptional growth in the past few years.
The Indian mobile economy is growing rapidly and will contribute approximately US$ 400
billion to Indias gross domestic product (GDP), according to report prepared by GSMA in
collaboration with BCG.
The rapid strides in the telecom sector have been facilitated by liberal policies of the
Government of India that provide easy market access for telecom equipment and a fair regulatory
framework for offering telecom services at affordable prices. The deregulation of foreign direct
investment (FDI) norms has made the sector one of the fastest growing and a top five
employment opportunity generator in the country.

Market Size:Telecommunications is one of the prime support services needed for rapid growth and
modernization of various sectors of the economy. Driven by strong adoption of data consumption
on handheld devices, the total mobile services market revenue in India will reach US$ 29.8
billion in 2014 and is expected to touch US$ 37 billion in 2017, registering a compound annual
growth rate (CAGR) of 5.2 per cent, according to research firm IDC.
According to a study by GSMA, it has been expected that Smartphone will account for two out
of every three mobile connections globally by 2020 and India is all set to become the fourth
largest Smartphone market.
India is projected to have 213 million mobile internet users by June 2015, a 23 per cent rise over
a six month period, according to Mobile Internet in India 2014 report.
The broadband services user-base in India is expected to grow to 250 million connections by
2017, according to the UK-based GSM Association (GSMA).
India saw the fastest growth in new mobile-phone connections with 18 million net additions in
the third quarter of 2014, followed by China with 12 million new additions, according to a report
by Swedish mobile network equipment maker Ericsson.
The Indian telecom sector is expected to create four million direct and indirect jobs over the next
5 years on the back of the governments efforts to increase penetration in rural areas along with
the growth in the Smartphone numbers and internet usage, according to estimates by Randstad
India. The telecom sector has been growing aggressive at an average for 35 per cent a year for
close to two decades, said Mr K Uppaluri, CEO, Randstad India.

Investment:With daily increasing subscriber base, there have been a lot of investments and
developments in the sector. The industry has attracted FDI worth US$ 16,994.68 million during

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the period April 2000 to January 2015, according to the data released by Department of Industrial
Policy and Promotion (DIPP).
Some of the major developments in the recent past are:

Sterlite Technologies Ltd has announced an annual seed fund of US$ 100,000 to
strengthen Indias investments in broadband technology research, by investing in Indian
start-ups, working on innovative broadband deployment technologies.

Maxx Mobilink plans to start production of mobile handsets at its Haridwar plant,
beginning with assembling devices from April 2015. Maxx will invest over Rs 6cr (US$
965,615.81) initially in setting up the R&D laboratory.

Huawei Technologies has won two contracts worth a combined US$ 120 million from
Bharti Airtel and Idea Cellular to upgrade their wire line networks.

Tata Communications has invested in acquiring capacity in Seabras-1, a submarine cable

being developed between the US and Brazil, seeking to increase services in the Latin
American region.

Bharti Airtel and IHS Holding have signed an agreement under which latter will acquire
about 1,100 telecom towers across Zambia and Rwanda.

Ericsson has won a seven-year deal worth more than US$ 1 billion to manage the
network of Reliance Communications across 11 service areas, making the Swedish
telecom gear maker the only service provider to manage the pan-India network of a
mobile phone operator.

Government Initiatives:The government has fast-tracked reforms in the telecom sector and plans to clear the proposal
allowing spectrum trading and sharing ahead of the year-end deadline as it wants to lift the
business sentiment for the forthcoming airwave auction. Some of the other major initiatives
taken by the government are as follows:

The Government of Uttar Pradesh (UP) has secured investment deals valued at Rs 5,000
crore (US$ 804.64 million) for setting up mobile manufacturing units in the state.

The Government of India plans to roll out free high-speed Wi-Fi in 2,500 cities and towns
across the country over the next three years and the programme, involving an investment
of up to Rs 7,000 crore (US$ 1.12 billion), will be implemented by state-owned Bharat
Sanchar Nigam Ltd (BSNL).

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Citizens of India are expected to get a minimum of 2 megabits per second (MBPS) Wi-Fi
speed at every government owned service point such as railways stations, airports, bus
stops, hospitals and all government departments that deal with the public on a daily basis.

The Union Cabinet of India has approved the largest ever telecom spectrum auction that
is targeted to fetch at least Rs 64,840 crore (US$ 10.43 billion). The government will sell
380.75 megahertz (MHz) of second generation (2G) spectrum in three bandsthe
premium 900 MHz, 1800 MHz and 800 MHz

To speed up the national optical fiber network (NOFN) project, the Department of
Telecommunications (DOT) has advised officials to use public buildings such as post
offices, railway stations and schools.

The Government of Kerala has decided to allow mobile telecom service providers to set
up towers on government land and buildings. This is the first time that a State
Government has opened its own land, buildings and offices to mobile companies.

MICHAEL E PORTER'S FIVE FORCES MODEL:-

Competition in the industry:-

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Concentration Market Share and Structure

Financial Analysis Past, Present, Future

Global Presence and Marketing Network

Future Prospects

Overall Analysis

Concentration Market Share

More than 15 players in the market.Airtel, Vodafone, Idea and RCOM itself captures more than
75%
Average revenue per user for big players is around Rs. 110 Rs. 120
Reliance has lesser ARPU because major of its subscribers are low end customers
Concentration Market Share and Structure

Telecom operator

Revenue Growth Analysis

AIRTEL

Increased mobility revenue(9% CAGR) due to increasing

traffic(7.9% CAGR) at stable ARPM; Bhartis revenue will
also be helped by African revenues expected to grow at
30.9% CAGR

RCOM

RCOM, which has been struggling with the KPIs and

subscriber quality, is expected to grow at 4.5% CAGR over
FY11 to FY14E driven by a 5.9% CAGR in traffic to 445.4
billion minutes and a stable ARPM of ~ 45 paisa.

IDEA

Increased mobility revenue(18.5% CAGR) due to increasing

traffic(17.7% CAGR) at stable ARPM

Overall Analysis
Telecom sector is one of the fastest growing sectors. This is due to strong competition that has
brought down tariffs and simplification of policy environment that has promoted healthy
competition amongst various players. The government has eased the rules regarding inter circle
and intra circle mergers. This has led to a slew of mergers and acquisitions in the recent pastAs
the sector is moving closer to maturity, further consolidation is a reality and this will lead to the

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survival of more profitable players in this segmentInfrastructure equipment cost is down to a
fraction of what prevailed just a few years ago operators can plan better expansion plan
nowincreased viability for the operators to expand to semi-urban and rural markets. Hence,
competition in this market would increase.

Buyer Power High

Buyers Price Sensitivity

(High)

Relative Bargaining Power

(High)

Cost of product relative to total

cost (High)
Product differentiation (High)
Competition between buyers (?)

Size and concentration of buyers

relative to products (high)
Buyers switching cost (low)
Buyers information (High)
Buyers ability to backward
integrate (low)

Buyers in Telecom industry generally land in two categories:

Individual and Enterprise Customers like IT companies, Banks etc.
There are ample number of telecom providers in the market with big
product variance and cheaper prices which gives buyer many options
to select operators and thus have a large bargaining leverage.

Buyer Power Analysis

Cost of product relative to total cost
Telecom products e.g. Voice calls, 3g etc cost 100% of the total cost of service and buyers are
more sensible to pricing.

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Product differentiation
Airtel, Relience,Idea and all other companies have similar prices for similar products and less
likely for anyone to maintain product differentiation and hence buyers have the option to switch
over.
Competition between buyers
The individual buyers dont have any competition among themselves but enterprise customers
like IT or banks do have. Enterprise customers generate major part of the revenues for any
telecom companies like Relience, Airtel or Idea which means higher buyer power. But this is not
significant for the newbie or the one who deals with individual customersSize and concentration
of buyers relative to products960.9 Million of individual telecom subscribers as on May, 2012.
Big size and low concentration of consumption per individual gives lower leverage to buyer
power.Enterprise customers Big size and big concentration of consumption accrues high buyer
powerTogether we can say its moderate buyer power in terms of size and concentration.
Buyers switching cost
Low switching cost Low new connection cost. With MNP, switching has become easier. TRAI
expected that the subscriber has to pay not more than Rs. 200. Some of the operators have
estimated the charges can be as low as Rs. 20.
Mobile Number Portability requests increased from 50.16 million subscribers at the end of May
2012 to 54.33 million at the end of June 2012. 4.16 million Requests for the month of June
itselfMeaning Low switching cost and high buyer power.
Buyers information
Buyers information regarding the availability of other options has become highincreased social
networking; high advertisements through TV, hoardings, banners and word of mouth, buyers are
well informed about the substitute products with better offerings urban as well as rural areas.
Means high buyer power
Buyers ability to backward integrate
Not much intermediaries between the producer and the consumers. High Investment required for
backward integration. Less likely to have backward integration and hence low buyer power

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Suppliers Power - Low

Price Sensitivity

Bargaining Power

(Low)

(Low)

Cost of product relative to total

cost (Low)
Product differentiation (Low)
Competition between
suppliers(High)

Size and concentration of

suppliers relative to products
(Low)
Buyers switching cost (Low)
Buyers information (High)
Suppliers ability to forward
integrate (Low)

Suppliers for the Telecom Operators:The suppliers bargaining power has increased influence on the profitability of the company.
Increase in the bargaining power of the supplier will lead to a decrease in profits or increase in
the price of the end product (Buyer).
There is a price war happening between the different mobile operators, so even the suppliers are
chosen carefully so that they do not drag down the profitability of the company .So the suppliers
have less bargaining power in this industry.
Mobile Tower Companies

SIM cards
Mobile phone handsets

Mobile Tower companies in India:There are two types of tower companies in India
Telecos owned tower companies

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Independently telecom tower companies (ITTC)
Sim Card Manufacturers:Sim card for the mobile operators are mostly produced in India and some are imported.The
mobile operator doesnt always procure the sim card from a single supplier to avoid any
delays.The Bargaining power of suppliers is lessThere is little or no threat of forward integration.
Mobile Phone handsets:

Two types of mobile phones are generally used. (CDMA & GSM).
The leading CDMA phone manufacturers are Samsung, Blackberry, ZTE, Motorola,
Spice etc
Top 4 leading Mobile phone manufacturer (GSM & CDMA) in India (2011-12)
Bargaining power of suppliers is less.
Little or no threat of Forward integration.

Threat of Substitutes:

Buyer Propensity To Substitute

Relative Prices

Performance Of Substitute

Buyer Propensity to Substitute

Internet subscriber base increasing in India by 18.06%, compared to 10.60% for GSM/CDMA
services.Representations from the industry and from within the DoT to open up Net telephony.If
allowed, this will open up Indias domestic voice market to all operators which have a unified
access services license such as Reliance Infotel and Aircel to offer voice services along with data
to its consumers.DOT also contemplating allowing operators without a unified access license,
which includes broadband and Internet companies such as Google and Skype to offer telephony
services for international calling and PC-to-PC domestic calls.
Relative Prices
Internet Telephony eating into the revenue of GSM/CDMA telephony.Flat/ fixed rate revenues
from internet services - cannibalization of revenues from GSM/CDMA services.
Performance of Substitute

Voice quality is an issue with internet telephony.

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Internet voice services also currently limited due to regulatory road blocks.

Threat of Entry - Low

Threat of entry

Access to optical fiber network

Declining ARPU

Government and legal barriers

Retaliation by established producers

Capital Requirements

The cost of active equipment is estimated to be 40 percent of the telecom operator's total
capex, while the balance is accounted for by passive infrastructure.
Bharti has invested close to Rs. 230 billion to create the cellular infrastructure with
45,000 towers across the country. Typically, a ground based tower costs Rs. 25-30 lakh. A
roof-based tower can be built for Rs.13-14 lakhs.
Cost of maintaining one tower (active + passive) is estimated at Rs. 60,000-65,000 per
month.
If tower is rented then monthly rent of Rs. 40,000-45,000 for active network.
The monthly outflow of a TSP would be close to Rs. 80,000-85,000 per tower per month.
However, the recent announcement made by BSNL about leasing its towers will help
both the older and newer players to penetrate into new markets.
This factor makes the telecom industry moderately attractive for the new players and
investors

Access to Optical Fiber Network

The largest optical fiber has been built by the incumbent operator BSNL who is also the
long distance operator.
The private sector players such as Bharti and Reliance have also constructed optical fiber
cable network connecting mainly cities and towns but their presence is very limited in the
rural areas and difficult terrains.
It is fairly difficult and cost- ineffective for new entrants to lay down optical fiber
connecting remote places as well.

Retaliation by Established Players

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Also known as Incumbent Wrath signifies the leverage the players in the market
commands. The incumbents grow because of an established network presence, a brand
that consumers are aware of and sheer economies of scale.
Mobile termination charge which one operator pays to the other when the customer of the
former uses the roaming charges of the latter. This is 30 paise a minute charge as of
today. This is charged to the consumer as the cost of roaming. With an all India footprint
(or 80% coverage), the incumbents effectively do not have to pay termination charges.
The incumbents have either been pocketing the termination charges or passing them to
consumers no roaming charge kind of schemes. This factor makes the industry
unattractive for the new entrants and investors.
The existing Telecom players might begin to bundle broadband, voice, wireless, video
and other emerging technologies together, as well as a variety of value added content, in
an effort to remain competitive, offer seamless services and attract more customers, at a
cheaper price (incumbent wrath)

Government and Legal Barriers

Private operators will have to enter into an arrangement with fixed-service providers
within a circle for traffic between long-distance and short-distance charging centers.
Seven years time frame set for rollout of network, spread over four phases. Any shortfall
in network coverage would result in encashment and forfeiture of bank guarantee of that
phase.
Private operators to pay one-time entry fee of Rs.25 million plus a Financial Bank
Guarantee (FBG) of Rs.200 million. The revenue sharing agreement would be to the
extent of 6%.
Private operators allowed setting up landing facilities that access submarine cables and
use excess bandwidth available.
No industrial license required for setting up manufacturing units for telecom equipment.
100% Foreign Direct Investment (FDI) is allowed through automatic route for
manufacturing of telecom equipments. Moderate threat entry based on Government
Policies.

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CHAPTER 2
COMPANY ANALSIS

ABOUT THE COMPANY:Reliance Communications Ltd. (commonly called RCOM) is an Indian Internet access
(commonly called "broadband") and telecommunications company headquartered in Navi
Mumbai, India. RCOM is India's second largest telecom operator, only after Bharti Airtel. It is
the 15th largest mobile phone operator with over 150 million subscribers. Established in 2004, it
is a subsidiary of Reliance Anil Dhirubhai Ambani Group
Reliance Group, an offshoot of the Group founded by Shri Dhirubhai H Ambani (19322002), ranks among India's top private sector business houses in terms of net worth. The group
has business interests that range from telecommunications (Reliance Communications Limited)
to financial services (Reliance Capital Ltd) and the generation and distribution of power
(Reliance Power Limited and Reliance Infrastructure Limited).
Reliance Group's flagship company, Reliance Communications is India's foremost and
truly integrated telecommunications service provider. The Company has a customer base of
above 118 million including over 2.6 million individual overseas retail customers. Reliance
Communications corporate clientele includes over 39,000 Indian and multinational corporations
including small and medium enterprises and over 290 global, regional and domestic carriers.
Reliance Communications has established a pan-India, next generation, integrated
(wireless and wire line), convergent (voice, data and video) digital network that is capable of
supporting best-of-class services spanning the entire communications value chain, covering over
21,000 cities and towns and over 400,000 villages. Reliance Communications owns and operates
the world's largest next generation IP enabled connectivity infrastructure, comprising over
280,000 kilometers of fiber optic cable systems in India, USA, Europe, Middle East and the Asia
Pacific region.
ABOUT THE FOUNDER:Few men in history have made as dramatic a contribution to their countrys economic
fortunes as did the founder of Reliance, Sh. Dhirubhai H Ambani. Fewer still have left behind a
legacy that is more enduring and timeless.As with all great pioneers, there is more than one
unique way of describing the true genius of Dhirubhai: the corporate visionary, the unmatched

COMPANY PROFILE 18
strategist, the proud patriot, the leader of men, the architect of Indias capital markets, and the
champion of shareholder interest. But the role Dhirubhai cherished most was perhaps that of
Indias greatest wealth creator. In one lifetime, he built, starting from the proverbial scratch,
Indias largest private sector enterprise. When Dhirubhai embarked on his first business venture,
he had a seed capital of barely US$ 300 (around Rs 14,000). Over the next three and a half
decades, he converted this fledgling enterprise into a Rs 60,000 crore colossusan achievement
which earned Reliance a place on the global Fortune 500 list, the first ever Indian private
company to do so.
Dhirubhai is widely regarded as the father of Indias capital markets. In 1977, when Reliance
Textile Industries Limited first went public, the Indian stock market was a place patronized by a
small club of elite investors which dabbled in a handful of stocks
The late Dhirubhai Ambani dreamt of a digital India an India where the common man would
have access to affordable means of information and communication. Dhirubhai, who singlehandedly built Indias largest private sector company virtually from scratch, had stated as early
as 1999: Make the tools of information and communication available to people at an
affordable cost. They will overcome the handicaps of illiteracy and lack of mobility.
It was with this belief in mind that Reliance Communications (formerly Reliance Infocomm)
started laying 60,000 route kilometers of a pan-India fiber optic backbone. This backbone was
commissioned on 28 December 2002, the auspicious occasion of Dhirubhais 70th birthday,
though sadly after his unexpected demise on 6 July 2002.
Reliance Communications has a reliable, high-capacity, integrated (both wireless and wireline)
and convergent (voice, data and video) digital network. It is capable of delivering a range of
services spanning the entire infocomm (information and communication) value chain, including
infrastructure and services for enterprises as well as individuals, applications, and consulting.
"Think big. Think different. Think ahead."
He would always say that if a telephone call could be made cheaper than a postcard, it would
transform every home, empower every Indian, remove every obstacle to opportunity and growth,
and tear apart every barrier that divides Indian society. He was convinced that infocom could
energize enterprises, drive governance, and render learning an interesting experience, apart from
making life exciting.
ABOUT THE CHAIRMEN:Personal:

Anil Dhirubhai Ambani, born on 4th June, 1959, in Mumbai.

He is the younger son of the visionary entrepreneur Shri Dhirubhai Ambani and lives
with his mother Kokilaben Dhirubhai Ambani in Mumbai.

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Graduated (B.Sc. in Science) from K.C. College, Mumbai University and MBA at
Wharton, University of Pennsylvania.
He is married to former actress - Tina Munim and has two sons - Jai Anmol (23 Years)
and Jai Anshul (19 Years).
He has an elder brother Mr. Mukesh Ambani and two younger sisters Mrs. Dipti
Salgaocar and Mrs. Nina Kothari.

Corporate:
Anil Dhirubhai Ambani is one of India's leading business leaders and founder of the Reliance
Group; whose constituent business enterprises are engaged in pivotal roles in the ongoing
economic transformation of India.
He is the Chairman of the Reliance Group; including, Reliance Communications, Reliance
Capital, Reliance Infrastructure, and Reliance Power.
Anil or ADA, as he is often referred to by his colleagues, founded the Reliance Group in 2006
and in less than 10 years, the Reliance Group has built a leadership position in major growth
sectors of the Indian economy, including telecommunications, generation, transmission and
distribution of renewable and non-renewable sources of power, national road highways, metro
rail systems, cement, financial services, education, healthcare, media and entertainment.
Key Indicators of Reliance Group:
Reliance Group is amongst India's top 5 business houses and has the world's largest
Shareholder/Investor base of over 13 million shareholders and investors. Reliance Group has
assets in excess of Rs. 2, 60,000 Crore (US $ 43 billion); annual Revenues of the order of Rs.
56,000 Crore (US $ 9 billion); Net Worth of over Rs. 98,000 Crore (US $ 16 billion); and over 1,
00,000 employees.
Business Partnerships:

Reliance Life Insurance is in partnership with Nippon Life Insurance of Japan

Reliance Asset Management is in partnership with Nippon Life Insurance of Japan.

Sumitomo Mitsui Trust Bank (SMTB) is now one of the largest shareholders of Reliance
Capital Limited, through a strategic partnership.

Veolia Transport of France is in partnership with Mumbai Metro One Pvt. Ltd. (MMOPL)
- part of Reliance Infrastructure Limited.

Partnership with Steven Spielberg and DreamWorks Studios, USA, which has produced
highly acclaimed - Oscar winning/Oscar nominated movies, such as Lincoln, War Horse,
and The Help.

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Partnership with Bloomberg TV for one of India's most influential business TV channels.

VISION OF THE COMPANY:To be amongst the top 3 most valued Indian companies by 2015 leading in providing
Information, Communication and Entertainment services Being the industry benchmark in
Customer Experience, Employee Centricity and Innovation.

MISSION OF THE COMPANY:Excellence in Communication Arena

To attain global best practices and become a world-class communication service provider
- guided by its purpose to move towards greater degree of sophistication and maturity.

To work with vigor, dedication and innovation to achieve excellence in service, quality,
reliability, safety and customer care as the ultimate goal.

To earn the trust and confidence of all stakeholders, exceeding their expectations and
make the Company a respected household name.

To consistently achieve high growth with the highest levels of productivity.

To be a technology driven, efficient and financially sound organization.

To contribute towards community development and nation building.

To be a responsible corporate citizen nurturing human values and concern for Society, the
environment and above all, the people.

To promote a work culture that fosters individual growth, team spirit and creativity to
overcome challenges and attain goals. To encourage ideas, talent and value systems.

To uphold the guiding principles of trust, integrity and transparency in all aspects of
interactions and dealings

BUSINESS OF THE COMPANY:WIRELESS AND Mobile:-

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Indias leading integrated telecom company Reliance Communications is the flagship company
of the Reliance Group. Listed on the National Stock Exchange and the Bombay Stock Exchange,
it is Indias leading integrated telecommunication company with over 150 million customers.
Reliance Mobile (formerly Reliance India Mobile), launched on 28 December 2002, coinciding
with the joyous occasion of the late Dhirubhai Ambanis 70th birthday, was among the initial
initiatives of Reliance Communications. It marked the auspicious beginning of Dhirubhais
dream of ushering in a digital revolution in India.
With over 150 million subscribers across India, Reliance Mobile is Indias largest mobile service
brand. Reliance Mobile services now cover over 24,000 towns, 6 lakh villages, and still
counting.
In 2003, AC Nielsen voted Reliance Mobile (formerly Reliance India Mobile) as Indias Most
Trusted Telecom Brand. In July 2003, it created a world record by adding one million subscribers
in a matter of just 10 days through its Monsoon Hungama offer.
Reliance Mobile has ushered in a mobile revolution by offering advanced multimedia handsets to
the common man at very affordable rates. This innovative low pricing has increased the number
of mobile phone users and its result is clearly reflected in the meteoric rise in Indias tele-density
over the past four years.
Our pan-India wireless network runs on CDMA2000 1x technology, which has superior voice
and data capabilities compared to other cellular mobile technologies. CDMA2000 1x is more
cost-effective as it utilises the scarce radio spectrum more efficiently than other technologies do.
Enhanced voice clarity, superior data speed of up to 144 kbps and seamless migration to newer
generations of mobile technologies are some of its key differentiators.

INTERNET:Broadband:The successful rolling out of real broadband services across the nation marks the second chapter
of Reliance Communications commitment to usher in a digital revolution in India. Reliance
Communications is setting new standards for the world to follow through inventive use of
cutting-edge technologies in the field of fibre optics, Ethernet, microwave radios, switching,
routing, digital compression and encoding. The mass roll out of broadband being carried out by
Reliance Communications across the length and breadth of the country, offering speeds of up to
100 Mbps to millions of users, in itself is a technological marvel.
The uniqueness of Reliance Communications broadband initiative lies in the fact that our entire
nationwide network is being conceptualised and built from ground zero. It is designed to deliver
affordable quality education, drive governance, transform healthcare, enhance efficiency in
business and finally, generate new job opportunities for millions of unemployed Indians.

COMPANY PROFILE 22
Reliance Communications broadband service is set to revolutionise Indian society by removing
the traditional bottlenecks of development including lack of capital and weak infrastructure, and
help tide over the challenges of distribution in a vast country like India.
E-education:The mission of Reliance Communications e-learning initiatives is to bring world-class education
to the doorstep of every Indian home. Utilising our pan-India optical fibre and retail network,
educational institutions can reach out to large sections of students which otherwise would be
very difficult to contact. Leveraging our robust broadband infrastructure two top Indian
management schools the Xavier Institute of Management, Bhubaneshwar and XLRI,
Jamshedpur are imparting fully interactive real-time courses across 105 cities.
The Indian market possesses tremendous potential yet to be tapped. Utilising our real broadband
connectivity, educational institutions can source the best educational material from anywhere in
the world. Libraries and laboratories around the world can be cross-linked making way for
seamless exchange of information and expertise.
E-healthcare:Reliance broadband is set to offer timely quality healthcare facilities at very affordable rates to
large sections of the Indian population irrespective of their geographical location. Our broadband
connectivity is committed to usher in a new generation of online healthcare delivery system.
Access to advance medical expertise can no longer be constrained by geography. A patient can
seek medical advice sitting in the comforts of home. Doctors can attend to patients anywhere in
the world on real-time basis. At the click of the mouse, medical records and documents can be
digitally dispatched thousands of miles away.
Recently, the Apollo Group of Hospitals joined hands with Reliance Communications to offer its
top-of-the-line healthcare facilities online to the benefits of millions of Indians.
Integrated Enterprise Solution:For Indian enterprises, our convergent voice-data-video solution framework, delivered through
fibre-to-the-building (FTTB) architecture introduces true broadband connectivity. Our enterprise
broadband is delivered using Metro Ethernet technology. However, based on specific customer
requirement other high-end technologies including Digital Subscriber Line (DSL), Local
Multipoint Distribution Services (LMDS) and Integrated Service Digital Network (ISDN) are
also being deployed.As per specific requirements of enterprises we provide customized solutions
be it a simple voice solution or complex data solutions that involves nationwide networking of
all branches, sales and field executives, vendors, suppliers and customers at data speeds scalable
from 64 Kbps to 100 Mbps. Reliance Communications core broadband products include MPLS
based VPN, leased lines, Gigabit Internet connectivity, video conferencing and video telephony.

ENTERTAINMENT:-

COMPANY PROFILE 23
Reliance Digital TV:Entertainment avenues in India today are expanding from mass entertainment to lifestyle
entertainment. Consumers are looking at the best life has to offer when it comes to enjoyment,
entertainment, expression and creativity. They are seeking products and services that will create a
rich, personalized and social media environment that maximize the limited time
available.Imagine a digital television service that suits you and your familys interests, passions
and busy schedules. Picture all of your favorite channels, shows, and movies at your fingertips
its time to step into the BIG world of entertainment.
Reliance Reliance Digital TV presents the next landmark in entertainment in India. The launch of
Reliance Reliance Digital TV brings true digitization and a transformation of the current
television viewing experience, and marks a shift in the controls from the broadcaster to the hand
of the consumer.
It has a significant technological advantage over other television platforms in terms of the
number of digital channels it can broadcast, the quality of its audio and video, DVR (Digital
Video Recording) and HD (High Definition) readiness and many more features because it uses
MPEG-4 compression technology. It is also in a superior position to take advantage of the
content boom, the synergies with the BIG Entertainment group, and the Reliance Group retail
distribution network.

NETWORKING:Global network Reliance Communications is a National Long Distance (NLD) and International
Long Distance (ILD) service provider, rendering national and international transport links
between other telecommunication service providers' networks.It is also an infrastructure provider
for end-to-end bandwidth requirements as well as providing dark duct and dark fiber on lease to
service providers and companies.
The acquisition of Flag Telecom by Reliance in January 2004 has strengthened the bouquet of
our service offerings to national and global service providers and companies.
Our wholesale customers include Indian and international telephony service providers, Internet
service providers, long-distance carriers, call centre operators, multinational companies, business
process outsourcing (BPO) companies, IT-enabled service (ITES) providers and government and
quasi-government organizations.
Highlights of International and National Long Distance (ILD & NLD) services

ILD gateways in Mumbai, Delhi, Chennai, Kolkata and Ernakulum.

International Points of Presence (Pops) in New York, Los Angeles, London and Hong
Kong integrated seamlessly with domestic gateways.

COMPANY PROFILE 24

Submarine fiber cable network connecting gateways to India in ring architecture for
resilience.

Satellite route for media diversity.

Centralized NOC for International and National network management

TDM and VoIP based interconnect.

Domestic and international data leased circuit.

Value added services MPLS IP-VPN, FR, ATM.

International capacity built to manage >250 mn minutes per month.

Highlights of FLAG Telecom network

Global optic fiber network of 52,000 kms spanning four continents.

Customer base of over 180 international carriers including the top ten.

Global bandwidth, IP, Internet, Ethernet and co-location services.

Low latency global MPLS based IP network connecting world's principal international
Internet exchanges.

DATA CENTERS:Reliance is India's largest Internet Data Center (IDC) service provider, hosting business critical
IT Infrastructure and applications of Indian and foreign blue chip companies, financial
institutions and other important organizations. Reliance Internet Data Centers are truly world
class Level 3 (highest) IDC facilities, with more than 6, 50,000 sq ft of hosting space. Total of
nine IDC's including four IDC's with total hosting space of 256000 sq ft are functioning in
Mumbai, three with hosting space of 1,00,000 sq ft- are functioning at Bangalore, one IDC of
hosting space of 56,000 sq ft is functioning in Chennai and one IDC of hosting space of 2,60,000
sq ft is functioning in Hyderabad. Reliance is also setting up world-class data centers in other
major cities in India making a total of more than 1.4 million sq ft of hosting space available over
the next year.
Reliance data centers, on a daily basis, manage more than 25,000 servers, 350 firewalls and 1600
terabyte of data transfer. All data center's are internationally benchmarked on all parameters
physical and network security, infrastructure, facilities, network connectivity and operations.
Internet Data Centers are critical components of Reliance Communications vision to herald a
digital revolution in India. The Data centers are connected to Reliance's pan-India, optic fibre-

COMPANY PROFILE 25
based, high capacity IP network. The data center is further connected to 52 countries including
US, UK, Mid-east and Asia-Pac through Flag Telecom ( A Reliance Communications group
company) backbone and other undersea cable systems. It also has private peering relationship
with the largest Tier 1 Internet Service Providers (ISPs) and public peering at more than 15
Internet Exchange points across the globe, apart from peering relationship with domestic ISPs on
STM-1 bandwidth.

INFRASTRUCTURE BUSINESS:Reliance Infratel Limited (RITL), a subsidiary of Reliance Communications Limited, was
incorporated in 2001 as a private limited company.RITL now operates as an independent wireless
towers company pursuing its business plan to invest in its wireless towers portfolio and to
acquire additional tenants on its towers. RITL functions as a third-party infrastructure provider,
offering passive infrastructure-sharing to multiple wireless operators and data and entertainment
providers within the industry.
RITL holds an IP 1 License (Infrastructure Provider) issued by the Department of
Telecommunications (Dot) and is an independent wireless telecommunications infrastructure
company, engaged in the business of building, owning and operating communications towers,
optic fiber cable and other related assets at designated sites (together, passive infrastructure),
and to make available this passive infrastructure on a shared basis to wireless and other
communications service providers under long-term contracts. It provides pan-India integrated
(wireless and wire line), convergent (voice, data and video) digital network and its coverage area
includes 24,000 towns and 600,000 villages.
As on February, 2011, RITLs wireless towers portfolio comprised of 45,443 towers which has a
presence in all 23 telecom circles in the country making it the largest pan-India tower player.
RITLs tower portfolio is uniformly distributed with approximately equal number of towers in all
the 4 regions. Most of the towers, especially the ones located in the urban areas, are connected to
RCOMs state of the art fiber network. RITLs tower portfolio is suitable for CDMA, GSM 900,
GSM 1800, 3G and BWA networks. RITL has always followed, and will continue to do so in
future, a conservative policy of building new towers, on a case to case basis, and that too only for
meeting the contractual demand from long term tenants
RITL has entered into master services agreements with RCOM and RTL, and all other existing
and new operators for providing passive infrastructure. RCOM and RTL have nominated RITL
as their exclusive provider of passive telecom infrastructure. Most of these agreements are of
long term around 10 to 15 years. These agreements will result in incremental growth in the
tenancy rates for RTIL and thus, provide significant operating leverage.
RELIANCE WORLD:Reliance World (formerly Reliance Web World) is a world-class nationwide chain of retail outlets
for products and services of the Reliance Anil DhirubhaiAmbani Group. It is designed to give
the customer a delightful experience of the digital world of information, communication,
entertainment and utility services.

COMPANY PROFILE 26
All Reliance World outlets are connected to Reliances countrywide optic fiber network. The
Broadband Centre at Reliance World leverages this broadband network to bring you innovative
digital services. With 241 Reliance World outlets across 105 cities in the country, you are sure to
find one in your vicinity.
RURAL COMMUNICATION:The Reliance Communications in association with Department of Information Technology (DIT),
Government of India is working to facilitate the establishment of a network of more than 7000
internet enabled Information and Communication Technology (ICT) access points termed as
CSC [Common Service Centre]. These CSCs are meant to provide high quality and cost effective
video, voice and data content, in the areas of E-Government, education, health, tele-medicine,
entertainment as well as possible government and private services
Under this program Reliance is committed to provide self employment to rural people residing in
many districts of following states:

Maharashtra

Uttarakhand

Madhya Pradesh

Gujarat

This program is creating Village Level Entrepreneurs [VLE] who are earning from their own
village by providing various G2C, B2C services to local masses.

PRODUCTS AND SERVICES:Wireless

Mobile (CDMA, GSM and 3G)
VAS (Mobile World)
Wireless Data
Fixed Wireless
Public Access Business

COMPANY PROFILE 27

Telecom Infrastructure
Multi tenancy towers
Pan-India coverage
Backhaul
Support systems

Globalcom
Submarine cable
Ethernet Data services
Global Managed Network Services
Long Distance (NLD/ILD)
Global Call

Enterprise
Internet Data Center
Broadband

COMPANY PROFILE 28

Leased Line
Office Centrex
MPLS and VPN
WiMax

Home
DTH
IPTV

OTHER BUSINESSES
Tech Services Leveraging Internal IT Development Capabilities
BPO Expertise in Telecom BFSI, Utilities and Media
Retail Reliance World

ENVIRONMENT OF THE COMPANY:The company is the leading integrated and converged telecommunications operator in India, and,
through our international Subsidiaries, are one of the leading global data communications service
providers. The company established a pan-India, integrated (wireless and wired) and convergent
(voice, data and video) digital network capable of supporting services spanning the entire
telecommunications value chain, and covering over 21,000 cities and towns and over 400,000
villages. We provide 3G services across 13 Circles covering 334 cities, including the
metropolitan Circles and additionally five more Circles through ICR arrangements, thus

COMPANY PROFILE 29
increasing our 3G coverage to 18 Circles. We provide wireless broadband services on our own
network in 1,624 cities and towns and offer Internet connectivity in over 19,000 towns across
India. Our telecommunications towers, used for both CDMA and GSM mobile networks and
service multiple mobile service providers, including ourselves, are located in all 22 Circles in
India, and are supported by an OFC network of over 190,000 RKm. In India, we also offer
nationwide DTH services through our wholly-owned subsidiary, Reliance Big TV, in 8,350 cities
and towns.
As at December 31, 2014, we had a customer base of approximately 115 million customers,
including 106.3 million wireless customers (including 31.4 million of who subscribed to data
services, of which 16.7 million subscribed to our 3G services), 1.2 million wired customers, over
2.6 million overseas retail customers and 4.9 million DTH customers. Our enterprise clientele
includes over 39,000 Indian and multinational corporations, including SMEs and over 290
global, regional and domestic carriers. Our enterprise customers include over 900 prominent
enterprises in India.

Key Company Highlights

Presence in an Industry with high growth potential

Large customer base with strong market position and leadership in data subscribers

Ample wireless spectrum portfolio with long validity period

Comprehensive domestic and international network

Extensive distribution network with strong brand recognition

Experienced management team

Consistent financial performance

Stock Exchange Listing
Bombay Stock Exchange Limited (BSE)
National Stock Exchange of India Limited (NSE)
Luxembourg Stock Exchange

MARKETING:7P's
The Marketing mix of Reliance communications discusses the service marketing mix of Reliance
communications and thereby the 7Ps involved in the service marketing mix.
Product

COMPANY PROFILE 30
Reliance mobile always faced the problem of weak network. So to correct the major have
invested over Rs 300 crore to upgrade to NGIP (Next Generation IP) network. Product has to sell
itself. Now they are launching about more than 1100 network towers to provide more coverage
to its customers.
Price
There are many ways to price a product. The pricing policy/ strategy vary in various situations.
In case of Reliance mobiles they have priced their product at a very low price & they also come
up with new plans.
Place
Another element of Marketing Mix is Place. Place is also known as channel, distribution, or
intermediary. It is the mechanism through which goods and/or services are moved from the
manufacturer/ service provider to the user or consumer. Reliance Mobiles do not find it very
difficult to find the distribution channel because they are the old players and distribute their
product in India.
Promotion
Another one of the 4Ps is promotion. This includes all of the tools available to the marketer for
marketing communication. Reliance has recently started doing heavy promotions.
Physical Evidence
Physical Evidence is the material part of a service. Strictly speaking there are no physical
attributes to a service, so a consumer tends to rely on material cues. As Reliance mobile provide
various rental plans.
People
Reliance always valued their customers. They provide a very cheap call rates affordable to the
lower class.
Process
Process is another element of the extended marketing mix, or 7Ps. There are a number of
perceptions of the concept of process within the business and marketing literature.

DISTRIBUTION NETWORK:Network reach

o Over 800 global, regional and domestic carriers
o Over 2,100 Indian and Multinational corporations
o Providers of cutting edge connectivity to over 850 of top 1000 companies in India
o Connecting 2.5 million individual overseas customers
o 190,000 kms of fiber optic connecting over 1 million building across 44 cities
with over 1.4 million access lines
o 9 data centre with data storage space of over 6.5 lakh sq. ft.

COMPANY PROFILE 31
Scalability
RCOM uses fiber-to-the-building approach helping in creating a network with unlimited
capacity and ability to support gigabit per second bandwidth services for customers.
Network architecture
Architecturally the network is generations ahead of other incumbent networks in India. A
ring protected FTTB architecture that gives an enhanced uptime.
End-to-end owned infrastructure
Only RCOM has a fully end-to-end owned infrastructure with last mile access, nationally
as well as internationally, thereby keeping things under one control.
Integrated global player in true sense
RCOM, as a telecom player, satisfies your every telecom need, right from a mobile
connection to broadband to International leased circuit.

SALES FORCE:Shorten sales cycles

Connect with more prospects and qualify them more quickly

Generate leads in less time

Reduce travel budgets while bringing decision-makers together

Close deals faster

Communicate more effectively

Introduce new services

Give better presentations, interactively

Create high-impact demonstrations

Edit contracts in real time

Strengthen relationships

Follow-up with leads

COMPANY PROFILE 32

Train customers and retain them

Keep global teams in synch

Promotional Strategies:Contests
Contests are a frequently used promotional strategy. Many contests don't even require a
purchase. The idea is to promote your brand and put your logo and name in front of the public
rather than make money through a hard-sell campaign. People like to win prizes. Sponsoring
contests can bring attention to your product without company overtness.
Social Media
Social media websites such as Facebook and Google+ offer companies a way to promote
products and services in a more relaxed environment. This is direct marketing at its best. Social
networks connect with a world of potential customers that can view your company from a
different perspective. Rather than seeing your company as "trying to sell" something, the social
network can see a company that is in touch with people on a more personal level.
Mail Order Marketing
Customers who come into your business are not to be overlooked. These customers have already
decided to purchase your product. What can be helpful is getting personal information from these
customers. Offer a free product or service in exchange for the information. These are customers
who are already familiar with your company and represent the target audience you want to
market your new products to.
Product Giveaways
Product giveaways and allowing potential customers to sample a product are methods used often
by companies to introduce new food and household products. Many of these companies sponsor
in-store promotions, giving away product samples to entice the buying public into trying new
products.
Point-of-Sale Promotion and End-Cap Marketing
Point-of-sale and end-cap marketing are ways of selling product and promoting items in stores.
The idea behind this promotional strategy is convenience and impulse. The end cap, which sits at
the end of aisles in grocery stores, features products a store wants to promote or move quickly.
This product is positioned so it is easily accessible to the customer. Point-of-sale is a way to
promote new products or products a store needs to move.
Customer Referral Incentive Program
The customer referral incentive program is a way to encourage current customers to refer new
customers to your store. Free products, big discounts and cash rewards are some of the incentives
Causes and Charity
Promoting your products while supporting a cause can be an effective promotional strategy.
Giving customers a sense of being a part of something larger simply by using products they
might use anyway creates a win/win situation. You get the customers and the socially conscious
image; customers get a product they can use and the sense of helping a cause.
Branded Promotional Gifts
Giving away functional branded gifts can be a more effective promotional move than handing
out simple business cards. Put your business card on a magnet, ink pen or key chain. These are a
gift you can give your customers that they may use, which keeps your business in plain sight
rather than in the trash or in a drawer with other business cards the customer may not look at.

COMPANY PROFILE 33
Customer Appreciation Events
An in-store customer appreciation event with free refreshments and door prizes will draw
customers into the store. Emphasis on the appreciation part of the event, with no purchase of
anything necessary, is an effective way to draw not only current customers but also potential
customers through the door. Pizza, hot dogs and soda are inexpensive food items that can be used
to make the event more attractive.
After-Sale Customer Surveys
Contacting customers by telephone or through the mail after a sale is a promotional strategy that
puts the importance of customer satisfaction first while leaving the door open for a promotional
opportunity. Skilled salespeople make survey calls to customers to gather information that can
later be used for marketing by asking questions relating to the way the customers feel about the
products and services purchased.

Brand ambassador:Reliance Communications has appointed Bollwood actor Anushka Sharma as the companys
brand ambassador. Through this association, Reliance Communications will look to highlight the
core value of the group- bringing products to customers that fulfill their needs with unceasing
affordability. Sharma will feature in Reliance Communications new campaign which will feature
four new TVCs (two will be released soon). The TVCs will highlight the greater benefits of the
Unlimited Talk Time and Call Connect features of Reliance Communications.Commenting on
their association with Anushka Sharma, Sanjay Behl, group head, brand and marketing, Reliance
Communications said, Reliance Mobiles superior 3G, and Pan India 2G edge GSM and high
performance CDMA network have been demonstrated in this communication. What also goes
without saying is that just like our network; Anushka too is also a superlative performer which
makes her the perfect fit for the brand.

Customer Services:-

COMPANY PROFILE 34
It is a self service solution, to manage your account online for the various products and
services you availed from us. This website is a single point online access to your account and
once registered you can view and pay your bills, raise and track service requests, buy new
products and services, activate and manage subscriptions. My Services, with these unique
customer experiences, also gives you the required direction and support to conduct all the
mentioned activities with your account.
My Services Registration
To register, simply select the New User tab in the My Services page and choose a username
of your choice, available in the record. You can use the Check Availability option to verify
the same. After you have filled up all the requisite registration data, the username and
password will be sent to you through a preferred mode of communication chosen at the time
of registration.
Manage My Services
It includes services offered in multiple lines of businesses like Wireless (CDMA and GSM),
Wired and Big TV. For registering to any of the services under them, there are different set of
rules and hence, to register please take the following steps: Log in to My Services My
Account Register Account tab the respective Line of Business
Service Requests
Under this module, a user can raise and track a service request online.

Create service requests online

Update and track the status of the service requests
Add notes to the service request that one has created
View, download and e-mail the service request details

Bills and Payments

This section is applicable only for post-paid users.

View bills and download your bill details

Inspect and pay your bills online
Track your payment trends through the payment history screen
Track your unbilled usage and credit information

E-Recharge
This section is applicable only for wireless pre-paid users. For online e-recharge, click on the
Registered Accounts section (left hand pane) and follow the link CAN BAN Services.

Top-up your prepaid accounts online

View prepaid account details

COMPANY PROFILE 35

Track recharge trends

MARKET STRUCTURE:-

RCOM is a fully integrated and converged telecommunications service provider operating across
the full spectrum of wireless, wireline, voice, data, video, internet and IT infrastructure services
and have an extensive international presence through the provision of long distance voice, data
and internet services and submarine cable network infrastructure. With a customer base of
around 119.4 million (including 111 million wireless customers, 1.2 million wireline customers,
over 2.6 million overseas retail customers and 4.8 million Reliance Digital TV customers) as on
March 31, 2014, our corporate clientele includes over 39,000 Indian and multinational
corporations including small and medium enterprises and over 290 global, regional and domestic
carriers. The enterprise customer base of the Company includes 880 of the top 1,000 enterprises
in India.
RCOM is Indias first telecom service provider offering nationwide CDMA and GSM mobile
services with digital voice clarity. The Company has established a pan-India, next generation,

COMPANY PROFILE 36
integrated (wireless and wireline), convergent (voice, data and video) digital network capable of
supporting best-of-class services spanning the entire communications value chain, covering over
21,000 cities and towns and over 4,00,000 villages.
RCOM also provides 3G services in 13 circles including key metros of Delhi, Mumbai and
Kolkata. RCOMs 3G services are available in 334 towns across 13 circles. Recently, we have
launched 3G services in additional 5 circles namely Andhra Pradesh, Karnataka, Kerala, Tamil
Nadu and Uttar Pradesh (East), through Intra Circle Roaming arrangements taking our 3G
coverage to 18 circles. Our 3G network has the capacity to provide speeds up to 28 Mbps.
RCOMs network is Built for Internet and its common packet core delivers a seamless
experience across 1x, 2G, HSD and 3G. RCOM has deployed end-to-end IP enabled connectivity
across our transport and access network and backhaul including microwave. i.e. Ethernet Super
Highway. RCOM continues to provide nationwide seamless Wireless Broadband experience on
its network, in 1,624 top towns across the country. This, coupled with our extensive 1X Data
presence offering high quality internet connectivity in over 19,000 towns, has positioned RCOM
extremely well to take advantage of the expected rapid increase in data consumption across the
country.
RCOM has adopted a spectrum based Go to Market strategy to maximize revenue growth. The
Company has a differential approach in terms of products, services, and retail engagements for
improving our reach and enhancing channel efficiency, for our 3G States 900 MHz Circles, 3G
Metro 1800 MHz circles, and 3G Dark circles. The Company has adopted Circle as a Country
approach rather than having a Pan India Fit for All approach.
RCOM offers the most comprehensive portfolio of Enterprise, IT infrastructure, National and
International long distance voice, video and data network services on an integrated and highly
scalable platform. Our business segments comprise Carrier, Enterprise and Consumer business
units. RCOM has the largest optic fibre network of over 2,80,000 km and the largest IDC space
of 11,00,000 sq ft including the latest IDC 5 being set up in Navi Mumbai.
In India, RCOM provide long distance business services including wholesale voice, bandwidth
and infrastructure services, national and international private leased circuits, broadband internet
access, audio and video conferencing, MPLS-VPN, remote access VPN, Centrex, toll-free
services voice services for offices, voice VPN for corporates and managed internet data centre
(IDC) services. RCOM offer unique, value-added products and services to large, medium and
small enterprises for their communications, networking, and IT infrastructure needs across the
country. The Company has a range of more than 38 products to suit the needs of all customer
segments, more than any other service provider in India.
RCOM offers Nationwide Direct-To-Home (DTH) service through its wholly owned subsidiary,
Reliance Big TV Limited in about 8,350 towns across the country. Reliance Digital TV was the
first Company to introduce High Definition DVR. Using the state-of-the art MPEG 4 technology,
it offers close to 250 channels in HD like quality. The Company also offers 4 exclusive movie
channels and 5 interactive services. A unique combination of High Definition content and digital
voice / picture quality delivers a vastly superior viewing experience to its subscribers.

COMPANY PROFILE 37

New Initiatives
3G Speed @ 2G Prices
As an inherent part of RCOMs objective to take high-speed data services to every Smartphone
and tablet user in the country, RCOM announced the launch of an exciting new 3G data offer at
2G data prices for Smartphone and Tablet users, targeting the fast-growing segment. The
aggressive and affordable pricing is all set to trigger a wave of 3G adoption in the country,
ensuring greater traction from mid- to high-level data users, and resulting in significant data
usage and revenue growth across customer segments. By breaking the 3G entry barrier, the
Company plans to bring about a behavioral change and take the benefits of quick data access to
everyone and impact not just lives, but lifestyles as well.
With this offer, all new and existing Reliance subscribers can avail of best-priced 3G services,
across the post-paid and pre-paid segments. Reliance 3G customers can enjoy the Smartphone
experience on the Companys Built-for-Internet superior network with lightning-fast video
streaming on their Smartphone and tablets, without any delay and buffering, anytime, anywhere.
Launch of Zero Plan
RCOM launched first of its kind plan called Zero Plan with multiple handset manufacturers.
This revolutionary way to buy Smartphone offer includes handset cost, unlimited local and STD
calls, unlimited SMS, national roaming and unlimited 3G data for 24 months. So the customer
gets benefit of zero down-payment on the handset, zero bills for next 24 months and zero limits
on voice, data and SMS.
RCOM shall meet this objective by creating new alliances and partnerships including with select
credit card companies. The proposition is win-win for both customer and RCOM as with the
single swipe of a credit card, it promises to deliver a quality customer to RCOM and on the other
side it offers a total peace of mind to customers, taking away the tediousness of monthly bills for
the next two years.
Reliance Globalcom Network Expansion
Reliance Globalcom (RGCOM) started the year with induction of state of the art high capacity
technology systems (100G) in submarine network to enhance the fiber carrying capacity bymany
fold with intent to meet the growing traffic demand in data services. High capacity systems has
been inducted in Trans Atlantic (FA-1) cable network between UK, France and US East coast,
Hawk European network is upgraded with higher capacity system.
With the induction of Hawk cable system, added to the Reliance Globalcom network last year
which connects the Middle East and extends connectivity further to London, Paris and Frankfurt

COMPANY PROFILE 38
through our European terrestrial network, latency has been improved offering better customer
experience for various emerging and real time and high bandwidth intensive applications.

Reliance Globalcom Network Upgrades

RCOM successfully upgraded global Transmission and IP backbones, spread over multiple cable
systems and segments. Deployment of high-end carrier-grade routers in key business markets in
Asia, Europe, the US and the Middle East regions enabled us to offer economical and scalable
services to our customers.
The upgrades across various segments of our global network enabled Reliance Globalcom to
provide more cost effective 10 Gig Ethernet based solutions with improved manageability.
New relationship with leading handset manufacturers
RCOM has developed relationship with leading handset manufacturers to bring their flagship
Smartphone under our newly launched Zero Plan scheme. With these tie-ups, the Company is
also trying to penetrate GSM+CDMA handset in the market to make CDMA handset ecosystem
more accessible and affordable.
Long-term Agreements
RCOM unveiled plans to expand its network significantly through strategic 2G GSM Intra-Circle
Roaming (ICR) agreements with existing operators, offering our customers wider coverage and
uninterrupted service across the country. These arrangements will help in a fast-paced expansion
of RCOMs GSM network footprint at no extra cost, optimize Capex and Opex spends and allow
the Companys customers a seamless roaming experience on partner networks. In addition,
increased capacities will significantly improve both outdoor and in-building coverage, providing
RCOM customers with an enriched mobility and data experience.
These ICR agreements will increase RCOMs national 2G GSM network foot print by 10,000
base stations and bring in market of over 150 million addressable populations.
Reliance Infratel Limited (RITL) new agreements signed
During the year under review, RCOM has signed three agreements with Reliance JioInfocomm
(R-Jio) under an intended comprehensive framework of business co-operation to provide for
optimal utilization of the existing and future infrastructure of both companies on reciprocal basis,
including inter-city fiber, intra-city fiber, towers and related assets. The first agreement with RJio was signed for approx. ` 1,200 crore as one time indefeasible right to use (IRU) fees for
sharing RCOMs nationwide inter-city fiber optic network infrastructure. Under the terms of the
agreement, R-Jio will utilize fiber across RCOMs 120,000 kilometers inter-city fiber optic
network to provide a robust and future-proof backbone for rolling out its 4G services. RCOM
will in turn have reciprocal access to optic fiber infrastructure to be built by R-Jio in the future.

COMPANY PROFILE 39
The second agreement is a long term nationwide tower sharing deal. Under the agreement,
RCOMs 43,379 towers will be utilized for rolling out 4G services and aggregate value of the
agreement is over ` 12,000 crore during lifetime of the agreement. Recently, the Company signed
a third agreement with R-Jio, for sharing of RCOMs extensive intra-city optic fiber
infrastructure. Under the terms of this agreement, BWA service provider will utilize RCOMs
nationwide intra-city fiber network for roll-out of its 4G services across the country. The
agreement is based on arms length pricing at prevailing market prices. RCOMs intra-city optic
fiber network extends to nearly 500,000 fiber pair kilometers, across the top more than 300 cities
and towns in India.
Reliance Net Call
RCOM is launching Reliance Net Call in Global markets apart from India. Reliance Net Call is a
hybrid calling app which enables calling from Smart Phones, Tablets, PCs and Browsers with
and uniquely without internet on smart phones. With Reliance NetCall, customers can make free
Voice Video calling and Conference calls and send Instant Messages to other users who have the
application. Reliance Net Call will provide extremely economical rates to call any landline /
mobile in more than 200 countries.
Enterprise
In our effort to offer cutting edge technology solutions, we have collaborated with market leaders
in the Enterprise OEM including System Integrators. Renowned global technology partners such
as Fortinet, Checkpoint, Riverbed, Ipanema, Cisco, Bluecoat, Polycom, Intercall, Hughes Escorts
Communications, Wipro and HCL Infosystems depend upon our deep insights and understanding
of customer needs to deliver relevant products and services.
RCOM has been a partner to various System Integrators and Value added Service Providers for
Machine-to-Machine (M2M) applications such as Smart Metering. We are partnering with the
Government for Smart City Surveillance Projects, Smart Grids or State wise APDRP
(Accelerated Power Development and Reform Programme) and SCADA (Supervisory Control
and Data Acquisition).
Industry Structure and Regulatory Developments
During fiscal year 2011 and 2012, the Indian Wireless industry had double digit annualized
growth rate of 12 per cent and 16 per cent. In the years 2013 and 2014, the industry revenue
growth tapered down to single digit, slightly above 9 per cent for both the years. The Industry
growth is likely to remain modest in the current fiscal year as well. This clearly demonstrates that
voice business is entering into a maturity phase and data contribution is still low inspite of high
growth rate. However, voice still remains the bread and butter for the industry and contributed
over 75 per cent of total revenues in fiscal year 2014. Data is going to be the next frontier of
growth for the industry. Industry estimates indicate that data contributed ` 12,000 crore in FY
2013, which will grow to ` 36,000 crore by FY 2016, with an estimated CAGR of 85 per cent. In
the coming 2-3 years, the industry is expected to witness data revenue growth similar to what we
have seen in voice revenues few years back.

COMPANY PROFILE 40
During the fiscal year under review, the industry has gone through virtual consolidation,
improvement in the headline voice tariffs and bringing down free and promotional minutes. Very
recently, the industry increased 2G data tariffs in order to further support continuous hardening
of realized Rate per Minute (RPM).
The Company expect the financial year 2014-2015 to see the beginning of real consolidation in
the industry. The Company also expects that the development in M&A norms will provide a
better opportunity for the industry to consolidate. We expect the industry to consolidate to approx
5 Pan India players as small operators will not be able to sustain costs in longer term and
eventually become consolidation participants. Once that happens, the industry will further see
tariff hardening with pricing power returning to Pan India operators. The rise in tariffs will also
be driven by high spectrum cost in the industry. However, this will lead to improve performance
and help better cash flow generation for RCOM, as RCOM does not have significant cash
outflow on spectrum renewal.
Internet and Broadband
Total internet subscriber base has increased to approximately 252 million at the end of March 31,
2014. We have seen a tremendous growth in our broadband subscriber base both in terms of
quality and quantity. Our Internet subscriber base as of March 31, 2014 is 37.6 million. The
Company commands 14.9 per cent of market share. Customers now prefer higher bandwidth
plans. Commensurate with the increasing bandwidth demand, the Company is currently
augmenting its capacity to provide better customer experience and further improve revenue.
Telecom Infrastructure
a) Government had conducted 3 rounds of spectrum auction for 800MHz / 900MHz / 1800MHz
bands. All operators who have won the spectrum through auction are long term customers, which
assure future revenue opportunities.
b) The demand for telecom infrastructure in India is driven by the subscriber growth in the
mobile Industry and focus on expansion of rural market.
c) The Company expects BWA spectrum holders to firm up their roll-out plan and start offering
4G services soon. This will also lead to greater demand for Telecom Infrastructure.
d) Hyper competition in the mobile industry, regulatory / legal uncertainty and falling revenues
has put cost pressure on the Telecom industry, which has impacted the incremental towers and
tenancies. Tower companies are now focusing on increasing tenancy on existing towers as
against adding further towers.
e) With the completion of network footprint expansion, the focus will be on ensuring delivery of
the best Quos to customers and also building up network capacity as traffic grows.
Industry Trends

COMPANY PROFILE 41
1. Moderating Competitive Intensity
During the year under review, Indian Telecom Sector witnessed virtual consolidation as many
operators have either completely exited the business or reduced their footprint considerably. The
Company expects the year 2014 to see the beginning of real consolidation in the industry. The
Company also expects that the development in M&A norms will provide a better opportunity for
the industry to consolidate. As stated earlier, the Company expects the industry will consolidate
to approx 5 Pan India players as small operators will not be able to sustain costs and eventually
become consolidation participants.
2. Improved Revenue per Minute
The telecom industry has witnessed positive structural changes in terms of a reduction in the
number of players, resulting in a move towards more rational tariffs, data services gaining
traction, and improvement in the 3G ecosystem allowing affordable adoption and meaningful
consumption of services. During the year under review, most of the operators have increased
headline tariffs both for voice as well as data. Telecom operators are concentrating on quality
acquisition resulting in higher contribution per customer. During the year, almost all operators
have reduced promotional and free minutes
3. Data and Wireless Broadband
The industry is witnessing tangible evidence of accelerating mobile data adoption where
consumers and business customers are seizing the benefits of fast, reliable mobile data networks
using affordable smart-phones and other mobile data devices such as Dongles and Tablets. This
is further supported by greater availability of content and applications.
This positive change in the eco-system is creating huge opportunity in data and wireless
broadband services. 3G services are finally starting to take-off, primarily for high speed mobile
internet usage, and for a plethora of data applications like live mobile TV, video and music
streaming, video calling and conferencing, among others.
4. Mobile Number Portability (MNP)
With intense competition in the telecom sector, there is enough choice for customers to choose a
quality network provider by MNP. By the end of March, 2014, about 117 million subscribers
have submitted their requests to different service providers for porting their mobile numbers. The
Company is witnessing an increasing trend of high ARPU customers coming into our network
compared to much lower ARPU customers leaving our network.
5. Rural Penetration
Rural area network coverage remains one of the key parameters for the growth of wireless
business. While urban wireless teledensity is greatly saturated at 139.9 per cent, there is a lot of
potential for rural growth with rural wireless teledensity still at 43.3 per cent as on March 31,
2014.

COMPANY PROFILE 42
6. Enterprise Business
Enterprises have begun to keep an intense eye on consumer trends and are eager to adopt
solutions that integrate the Enterprise and Consumer worlds without sacrificing security and data
integrity. Trends like Smart Cities, Big Data, Cloud, etc. are opening up many new opportunities
for the Communications business and are reshaping the ICT ecosystem. Our endeavour is to help
CIOs connect the dots by creating enabling services.
RCOM has already leveraged Cloud as an enabler for business and revenue growth. It already
provides Mail, Storage, Video Conferencing, Audio Conferencing, Web Conferencing, Hosted
Contact Center, Hosted Voice and other services on the Cloud model to various customers.

Segmentation, Target and Positioning:Access Service Provider-wise Market Shares in the Wireless Subscribers as on 31st January,
2015

COMPANY PROFILE 43

Net Additions in Wireless Subscriber Bases of Access Service Providers in the Month of January,
2015

Access Service Provider-wise Proportion of VLR Subscribers In the Month of January, 2015

COMPANY PROFILE 44

Access Service Provider-wise Market Shares in the Wired Subscribers as on 31st January, 2015

COMPANY PROFILE 45

Service Provider-wise Market Share of Broadband (wired and wireless) Services

COMPANY PROFILE 46
COMPETITORS:Rank Operator's Name

Technology

GSM

EDG

HSDPA

HSPA+

BSNL

CDMA2000

EVDO REV. 0

WiMAX

Wi-Fi

GSM

EDG

Bharti Airtel

Vodafone India

Idea Cellular

HSPA

TD-LET

GSM

EDGE

HSPA+

GSM

EDGE

HSPA

Subscribers
in crores
(10m)

Ownership

Market
Share

8.67

State-owned

9.32%
(September
2014)

22.5

1Bharti Enterprises
22.74%
(64.76%)
(September
SingTel (32%)
2014)
Vodafone (4.4%)

17.38

Vodafone Group
(100%)

18.69%
(September
2014)

15.55

Aditya Birla
(49.05%)
Axiata Group
Berhad (19.96%)

15.43%
(September
2014)

COMPANY PROFILE 47

Rank Operator's Name

Reliance
Communications

Technology

CDMA2000

EVDO REV. B

GSM

EDGE

HSDPA

HSPA+

WiMAX

GSM

EDGE

Aircel

Tata DOCOMO

HSDPA

TD-LTE

CDMA2000

EVDO REV. B

GSM

EDGE

HSPA+

CDMA2000

MTS India

Videocon

EVDO REV. B

GSM

Subscribers

Ownership

Market
Share

13.4

Reliance ADAG
(67%)
Public (26%)

11.44%
(September
2014)

7.58

Maxis
Communications
(74%)
Apollo Hospital
(26%)

8.15%
(September
2014)

6.42

Tata Teleservices
(74%)
NTT DoCoMo
(26%)

6.91%
(September
2014)

0.91

Sistema (73.71%)
Shyam Group
(23.79%)

0.98%
(September
2014)

0.59

Videocon

0.64%
(September

in crores
(10m)

COMPANY PROFILE 48

Rank Operator's Name

Technology

Subscribers
in crores
(10m)

Ownership

Market
Share

GPRS
2014)

10

MTNL

EDGE

GSM

HSDPA

CDMA2000

0.33

State-owned

0.37%
(September
2014)

TECHNOLOGIES USED:SAP ERP

Consolidate business data to avoid duplication of effort

Streamline business processes with consistent, reliable information and real-time

transparency

Quickly respond to customer demand with efficient, fast, and flexible processes

Outperform the competition with improved financial insights and results

Innovate without disruption by updating and activating specific business functions on

demand

Rely on a foundation that supports best practices for more than 25 different Industries

Solutions for Enterprise Resource Planning

Procure to Pay (ERP)

Maximize cost savings with support for your end-to-end procurement and logistics
processes from self-service requisitioning to invoicing and payments.
o Streamline and optimize the flow of materials
o Actively manage your end-to-end procure-to-pay processes

COMPANY PROFILE 49
o Reduce unnecessary stock and improve spend performance
o Rely on a single, complete, and integrated solution

Plan to Product (ERP)

Accelerate your entire manufacturing process from planning and scheduling to
monitoring and analysis while improving efficiency across your value chain.
o Be first to market with innovative, high-quality products
o Proactively identify and fix potential issues with real-time tracking and analysis
o Quickly respond to changes in demand with accelerated planning and execution
o Improve plant performance with real-time visibility into shop floor processes

Order to Cash (ERP)

Support a wide range of customer-focused processes from selling products and
delivering services to aftermarket warranty claims, service orders, and returns.
o Simplify and accelerate the entire order-to-cash cycle
o Deliver orders on time and improve customer satisfaction
o Streamline processes and reduce operational costs
o Boost productivity and increase sales and profit margins
o Benefit from profitable sales and interaction channels

Request to Service (ERP)

Help your organization increase sales and profit margins, enhance customer satisfaction,
and differentiate its brand by delivering exceptional service in every customer
experience.
o Understand and engage with your customers and exceed their expectations
o Offer immediate responsiveness and quick resolution to customer issues
o Streamline your service operations to increase efficiency and reduce cost

Core Human Resources (ERP)

COMPANY PROFILE 50
Better manage your most valuable asset your people with support for recruiting, on
boarding, and administration to professional development and promotion.
o Improve workforce efficiency, productivity, and satisfaction
o Deliver best-in-class HR processes at the lowest possible cost
o Predict and plan for future workforce needs and demands
o Align corporate strategies with team and individual goals

Core Finance (ERP)

Streamline and automate your financial operations while ensuring regulatory
compliance and gaining real-time insight into overall performance.
o Enhance your core financial capabilities and generate accurate reports in real time
o Capture processes from different applications for a single version of financial
truth
o Reduce cost of goods sold (COGS) and maximize profitability
o Ensure compliance with IFRSS, US-GAAP, and local GAAP regulations
o Analyze customer behavior and sales to quickly identify and seize new
opportunities

Platform and Technology

Complement your central SAP ERP components by adding innovations in analytics,
cloud, mobile, in-memory, and user experience (UX) quickly and cost-effectively.
o Leverage a packaged bundle of powerful extensions to complement your SAP
ERP
o Gain industry best practices, unparalleled integration tools, and role-based ERP
access
o Maximize ROI by running SAP ERP on the SAP HANA platform

OFFICE:Apache Open Office Product Description

COMPANY PROFILE 51

Writer a word processor you can use for anything from writing a quick letter to
producing an entire book.

Calc a powerful spreadsheet with all the tools you need to calculate, analyze, and present
your data in numerical reports or sizzling graphics.

Impress the fastest, most powerful way to create effective multimedia presentations.

Draw lets you produce everything from simple diagrams to dynamic 3D illustrations.

Base lets you manipulate databases seamlessly. Create and modify tables, forms, queries,
and reports, all from within Apache Open Office.

Math lets you create mathematical equations with a graphic user interface or by directly
typing your formulas into the equation editor

Apache Open Office is synonymous with quality:

The roots of Apache Open Office go back twenty years, creating a mature and powerful
product

Many millions of users

Independent reviewers around the world have recommended the product

Apache Open Office is easy to use:

The software looks and feels familiar and is instantly usable by anyone who has used a
competitive product

It's easy to change to Apache Open Office - the software reads all major competitors' files

Apache Open Office is free software:

You may download Apache Open Office completely free of any license fees

Install it on as many PCs as you like

Use it for any purpose - private, educational, government and public administration,
commercial...

Pass on copies free of charge to family, friends, students, employees, etc.

HUMAN RESOURCE:-

COMPANY PROFILE 52
Senior Management

H
u
b
H
R

l e

t
O
L

i s i t i o
p e r a t i o n s
e a d T a l e n t
g e m
e n t L e

H
e
a
d
Departments and Functions:RCPL: - Reliance Communication Ltd.
RCIL: - Reliance Infrastructure Ltd.
RWSL:-Reliance Web store Ltd.
RTIL:-Reliance Infratel Ltd.
RISPL:-Reliance Integrated Services Private Ltd.
RCIL: - Reliance Communication Infrastructure Ltd.
RNL: - Reliance Nextlink Ltd.
RIEL: - Reliance Infocomm Engineering Ltd.

FINANCE:-

&
a

COMPANY PROFILE 53

COMPANY PROFILE 54

COMPANY PROFILE 55
ORGANIZATIONAL HIERACHY

SWOT ANALYSIS:SWOT Analysis

Strength

1. Telecom Partner for INTERNET.ORG

2. Flexible plans
3. Good advertising
4. High brand visibility
5. Ability to attract customers with various plans

COMPANY PROFILE 56

6. Low Entry Cost

7. Commission Structure
8. Fast Activation Process
9. Network
10. Connectivity
11. Strong brand recognition
12. Well Integrated operations
13. Strong distribution channel ( RWorld, FLAG Telecom)
Weakness

1. Price competition from BSNL and MTNL

2. Branding Image
3. Distribution problem
4. Limited product portfolio- Only Mobile
5. Lack of Competitive Strength
6. Low ARPU compared to competitors
7. Weakness in Rural Market

Opportunity

1. 4th Generation Network

2. Fast expanding cellular market
3. Latest and low cost technology
4. Untapped rural market Preference of GSM over CDMA
5. New Market, Vertical, Horizontal
6. Competitors` Vulnerabilities
7. Low penetration Rates

COMPANY PROFILE 57

8. Global expansion due to resource based acquisition of

FLAG
9. Huge GSM subscriber base (76.67%) with economies of
scale for GSM operators
Threats

1. Some people believe that Internet.org is against "net

neutrality"
2. Saturation point in Basic telephony service
3. Mobile Number Portability
4. Market Demand
5. Seasonality, Weather Effects
6. Increasing competition with domestic players
7. Decreasing ARPU due to competition
8. High switching costs for customers to move to GSM

Chapter 3
Task Accomplished

COMPANY PROFILE 58
An income statement (US English) or profit and loss account (UK English)(also referred to as
a profit and loss statement (P&L), revenue statement, statement of financial performance,
earnings statement, operating statement, or statement of operations) is one of the financial
statements of a company and shows the companys revenues and expenses during a particular
period. It indicates how the revenues (money received from the sale of products and services
before expenses are taken out, also known as the top line) are transformed into the net income
(the result after all revenues and expenses have been accounted for, also known as net profit or
the bottom line). It displays the revenues recognized for a specific period, and the cost and
expenses charged against these revenues, including write-offs (e.g., depreciation and
amortization of various assets) and taxes. The purpose of the income statement is to show
managers and investors whether the company made or lost money during the period being
reported.

SERVICE INDUSTRY:The service sector consists of the "soft" parts of the economy, i.e. activities where people offer
their knowledge and time to improve productivity, performance, potential, and sustainability,
what is termed affective labor. The basic characteristic of this sector is the production of services
instead of end products. Services (also known as "intangible goods") include attention, advice,
access, experience, and discussion. The production of information is generally also regarded as a
service, but some economists now attribute it to a fourth sector, the quaternary sector.
Examples of tertiary sector industries

Entertainment

Government

Telecommunication

Hospitality industry/Tourism

Mass media

Healthcare/hospitals

Public health

Information technology

Waste disposal

Financial services
o Banking

COMPANY PROFILE 59
o Insurance
o Investment management

FMCG

Professional services
o Accounting
o Legal services
o Management consulting

Consulting

Gambling

Retail sales

Franchising

Real estate

Education

MANUFACTURING INDUSTRY:It is the production of merchandise for use or sale using labor and machines, tools,
chemical and biological processing, or formulation. The term may refer to a range of human
activity, from handicraft to high tech, but is most commonly applied to industrial production, in
which raw materials are transformed into finished goods on a large scale. Such finished goods
may be used for manufacturing other, more complex products, such as aircraft, household
appliances or automobiles, or sold to wholesalers, who in turn sell them to retailers, who then
sell them to end users the "consumers".
Manufacturing takes turns under all types of economic systems. In a free market
economy, manufacturing is usually directed toward the mass production of products for sale to
consumers at a profit. In a collectivist economy, manufacturing is more frequently directed by
the state to supply a centrally planned economy. In mixed market economies, manufacturing
occurs under some degree of government regulation.
Manufacturing Industry Categories:-

COMPANY PROFILE 60
Apparel Industry: All establishments producing clothing and fabricating products by cutting
and sewing purchased woven or knit textile fabrics and related materials, such as leather,
rubberized fabrics, plastics, and furs.
Chemical and Allied Industry: All establishments producing basic chemicals and
establishments manufacturing products by predominantly chemical processes.
Electronic and Electrical Equipment Industry: All establishments engaged in manufacturing
machinery, apparatus, and supplies for the generation, storage, transmission, transformation, and
utilization of electrical energy.
Fabricated Metal Industry: All establishments engaged in fabricating ferrous and nonferrous
metal products, such as metal cans, tin ware, hand tools, cutlery, general hardware, nonelectric
heating apparatus, fabricated structural metal products, metal forgings, metal stampings, and a
variety of metal and wire products not elsewhere classified.
Food and Kindred Industry: All establishments manufacturing or processing foods and
beverages for human consumption, and certain related products, such as manufactured ice,
chewing gum, vegetable and animal fats and oils, and prepared feeds for animals and fowls.
Furniture and Fixtures Industry: All establishments engaged in manufacturing household,
office, public building, and restaurant furniture; and office and store fixtures.
Industrial and Commercial Machinery Industry: All establishments engaged in
manufacturing industrial and commercial machinery and equipment and computers. This
includes machines powered by built-in or detachable motors, with the exception of electrical
household appliances. This includes power-driven hand tools.
Leather Industry: All establishments engaged in tanning, currying, and finishing hides and
skins, leather converters, and establishments manufacturing finished leather and artificial leather
products and some similar products made of other materials.
Lumber and Wood Industry: All establishments engaged in cutting timber and pulpwood; mills
engaged in producing lumber and wood basic materials; and establishments engaged in
manufacturing finished articles made entirely or mainly of wood or related materials.
Measuring, Analyzing and Controlling Instrument Industry: All establishments engaged in
manufacturing instruments for measuring, testing, analyzing, and controlling, and their
associated sensors and accessories; optical instruments and lenses; surveying and drafting
instruments; hydrological, hydrographic, meteorological, and geophysical equipment; search,
detection, navigation, and guidance systems and equipment; surgical, medical, and dental
instruments, equipment and supplies; photographic equipment and supplies; watches and clocks.
Miscellaneous Manufacturing Industries: All establishments primarily engaged in
manufacturing products not classified in any other manufacturing category. This includes
establishments engaged in the production of goods such as jewelry, musical instruments, toys,
sporting goods, etc.
Paper and Allied Industry: All establishments primarily engaged in the manufacture of pulps
from wood and other cellulose fibers, and from rags; the manufacture of paper and paperboard;
and the manufacture of paper and paperboard into converted products, such as paper bags and
paper boxes. Also included are establishments primarily engaged in manufacturing bags of
plastics film and sheet.
Petroleum Refining and Related Industry: All establishments primarily engaged in petroleum
refining, manufacturing paving and roofing materials, and compounding lubricating oils and
greases from purchased materials.

COMPANY PROFILE 61
Primary Metal Industry: All establishments engaged in smelting and refining ferrous and
nonferrous metals from ore, pig, or scrap; in rolling, drawing, and alloying metals; in
manufacturing castings and other basic metal products; and in manufacturing nails, spikes, and
insulated wire and cable.
Printing, Publishing, and Allied Industry: All establishments engaged in printing and those
establishments which perform services in the printing trade, such as bookbinding and plate
making. This also includes establishments engaged in publishing newspapers, books, and
periodicals, regardless of whether they do their own printing.
Rubber and Miscellaneous Plastic Industry: All establishments not elsewhere classified
manufacturing products from plastics resins and from natural, synthetic, or reclaimed rubber,
guttapercha, balata, or guttasiak. Many products made from these materials are classified in other
industries, such as boats, toys, Buttons, etc. This includes the manufacture of tires.
Stone, Clay, Glass, and Concrete Industry: All establishments engaged in manufacturing flat
glass and other glass products, cement, structural clay products, pottery, concrete and gypsum
products, cut stone, abrasive and asbestos products, and other products from materials taken
principally from the earth in the form of stone, clay, and sand.
Textile Mill Industry: All establishments engaged in the preparation of fiber and subsequent
manufacturing of yarn, thread, braids, twine, and cordage; in manufacturing broad woven
fabrics, narrow woven fabrics, knit fabrics, and carpets and rugs from yarn; in dyeing and
finishing fiber, yarn, fabrics, and knit apparel.
Tobacco Industry: All establishments engaged in manufacturing cigarettes, cigars, smoking and
chewing tobacco, snuff, and reconstituted tobacco and in stemming and redrying tobacco. This
also includes the manufacture of nontobacco cigarettes.
Transportation Equipment Industry: All establishments engaged in manufacturing equipment
for transportation of passengers and cargo by land, air and water. This includes the manufacture
of products such as motor vehicles, aircraft, guided missiles and space vehicles, ships, boats, and
railroad equipment.

ANALYSIS:-

COMPANY PROFILE 62

COMPANY PROFILE 63

COMPANY PROFILE 64

COMPANY PROFILE 65

COMPANY PROFILE 66
SERVICE VS MANUFACTURING INDUSTRY:

Manufacturing has very little contact with the end consumer whereas there is
an active and crucial participation of customer in the service industry
The focus is on technology, machinery, and labor in manufacturing where the
focus in service is on expertise or knowledge of the service provider
There is a tangible output in manufacturing whereas there is no tangible
output in the form of a product in service
There are differences in strategies, planning, core competencies,
technologies, environments, and the welfare measures used in manufacturing
and service.

COMPANY PROFILE 67

COMPANY PROFILE 68
COST MANAGEMENT:It is the process of effectively planning and controlling the costs involved in a business. It is
considered one of the more challenging tasks in business management. Generally, the costs or the
expenses in a business are recorded by a team of experts using expense forms.
The process involves various activities such as collecting, analyzing, evaluating and reporting
cost statistics for budgeting. By implementing an effective cost management system, a
companys overall budgeting can be brought under control.
Cost management is employed by many businesses as an integral part of business management.
Cost management is also considered a form of management accounting that helps to identify
future expenditures in a business to reduce budget overages. When cost management is applied
to a specific project, the expected costs in the business are analyzed in the beginning phase of the
planning period. The project manager then approves the predicted expenses in purchasing the
materials required for the project.
The costs and expenses are recorded and monitored during the project execution period to ensure
that the cost is in line with the actual cost management plan. Once the project is complete, the
actual costs are compared with the predicted costs, which will help in predicting future expenses.
Some of the advantages of cost management include:

The ability to predict a project's future expenses and costs

The maintenance of a central record of all predicted expenses

The ability to ensure that costs are approved before purchases are made

The ability to control a project's expenses

COST MANAGEMENT ON TELECOM INDUSTRY:The Cost Structure of a Telecom Network

The telecom sector is characterized by very large investment costs. The precise percentage of
total costs attributed to investments depends of course on the definition of investments and of
telecom activities (e.g. whether research, marketing or similar activities are included).
In telecom and other network based utilities (electricity, gas and water) wage shares are at about
1/3 (and therefore capital shares at about 2/3).
Investments in telecom networks divide into the following functional elements:

Terminal equipment

COMPANY PROFILE 69

Access Network
Switching
Transmission/Long line
Other (buildings etc.)

Terminal equipment:Once telephones were, for the vast majority of users, the only type of customer terminal
connected to the network. These were all provided by the operator and rent was included in the
access charge. It was part of a bundled service. Today a wide range of terminals are connected to
the network in addition to telephones (faxes, PCs, PABXs etc.), and customers are now allowed
to buy their own terminals, either from the network operator or from other suppliers. These
terminals are owned by the customers and are not a part of the operators fixed capital. This
allows users to become more independent of the operator, but it also reduces the network
operators requirements for investments. Terminal equipment is now, in most countries,
unbundled from the telecom network, and for many purposes is not considered part of it.
Access Network:The local access network connects the customers to the national and international networks. The
most common form of access is a twisted pair of copper wires from the users terminal to a local
switch. Coaxial cables provide more bandwidth than twisted pairs and are most common in cable
TV-networks. Optical fibers are used for certain broadband services, but are mainly used in the
interexchange network, where its higher levels of capacity can be used more efficiently.
Investments in cables are long term investments with a lifetime of more than 20 years. Once
investments in the access network in a certain area are made, profit must be generated through
communication services provided to customers located there. It is extremely difficult, if not
impossible, to move investments to other maybe more attractive markets. The access network is
by far the most expensive part of the network. It covers between one-third and one-half of the
investment costs. As access network assets have a relatively longer than average lifetime their
significance on costs is even greater. The main cost components are cables and construction work
related to the laying of cables.
Switching:The switching function is performed at the exchange by automatic, computer controlled
equipment (or in older offices by electromechanical switches). Next to the access network,
switching is the most expensive function. According to an Australian study, 90 percent of the
switching costs are in local exchanges.3 Major portions of the investments made in local
exchanges, however, can be attributed to long distance communication or special services. The
major part of the upgrading of the telecom network involves an upgrading of switching
capability, especially with the conversion from analogue to digital technology.
Transmission/Long-line:This type of equipment includes cables, radio-links and satellites connecting transit exchanges,
as well as transmitters, repeaters, etc. It provides the capacity to provide all kinds of long
distance services. Although new technologies have reduced long distance transmission costs
dramatically in recent years, they are not really as significant in the total cost picture as access
and switching costs.

COMPANY PROFILE 70

The Role of Technological Innovation:-

Changing structures of network costs:Reductions in transmission costs limit investments needed for delivery of the same services. In
particular the unit costs of the interexchange network capacity are being reduced continuously.
Development of broadband services:Itis closely related to reductions in costs of transmission. However, substantial demand for
broadband services will multiply the demand for transmission capacity, and the costs of both the
access and interexchange network will increase as a result of this major network upgrade.
Lifetime of equipment is reduced:With rapid technological innovations old equipment becomes obsolete more quickly. This
increases capital costs (a faster rate of depreciation is needed), shortens the planning horizon and
increases the risk.
Digitalization:-

COMPANY PROFILE 71
It increases economies of scope for provision of facilities, but reduces economies of scope for
service provision. If effective interconnection rules are established, digitalization improves the
conditions for service providers without their own physical infrastructure.
Satellite and cellular services:It can provide alternatives for some local exchange network services. The cost structure of airborne services involves fewer economies of density than wired services. Therefore a degree of
infrastructure competition can be introduced at lower costs. Although satellite and cellular
services cannot be complete substitutes for wired based services they do reduce the monopoly
power of local exchange operators somewhat, and provide an alternative for some business and
residential services and customers although far less than a majority.

INTERCONNECT USAGE CHARGES:Introduction

In a multi-operator multi-service scenario, an Interconnection Usage Charges (IUC) regime is an
essential requirement to enable subscribers of one service provider to communicate with
subscribers of another service provider. Providing interconnection entails costs for which service
providers need to be fairly compensated. The IUC regime not only determines the revenue
accruable to the service providers but also how this revenue is to be distributed among them. An
efficient interconnection and charging regime is central to efficient and seamless connectivity
between various networks.
Impact of IUC on telecom sector
The primary purpose of an IUC regime is to facilitate inter-operator settlement. The
establishment of IUC has far-reaching consequences for the telecom sector. It is an important
tool for implementing policy and to give desired direction and impetus to growth of services. It
enables competition, welfare of consumers, and sustained growth of telecom services and
economic development of the country. The IUC regime determines revenue accruals and also
their distribution amongst services providers, various networks, and services, and promotes their
development in correct measure. Though IUC defines the wholesale inter-operator charges and
not directly the retail tariffs payable by customers, it is naive to assume that it has no bearing on
the retail tariff. A well-designed IUC regime should not only allow recover costs of service
provider but also provide flexibility to service providers to offer innovative tariff plans.
An IUC regime regulates the transfer of network costs between service providers and thus affects
their relative scale and prosperity. Therefore, the IUC regime should also ensure that a service
provider does not pass on the burden of its own tariff decision to other networks involved in
completing the call or to new competing service providers in the form of a high IUC. The IUC
regime should provide flexibility for introducing innovative tariff plans by the service providers.
An important objective in the design of any IUC regime is to balance investment incentives and
the interest of competition, while at the same time ensuring that the benefits of positive network
externalities are delivered in practice to consumers. In jurisdictions such as India, characterized
by asymmetries in network sizes of different service providers, this balancing act must take into

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account both pecuniary externalities that work through the price system by benefiting some and
harming other operators as well as no pecuniary spillover effects arising from technological
considerations that impose benefits or costs outside of market mechanisms. For example,
termination charges could be set at a particular level, as a ceiling, or as a range (i.e., a
combination of ceiling and floor within which service providers have price flexibility on a nondiscriminatory basis); the price system that is finally mandated would have network-wide
pecuniary effects that are different for different service providers. At the same time, the system
would also have an impact on technological aspects such as traffic routing, congestion, etc. It is
necessary therefore to design the IUC regime in a manner that negative externalities are
minimized and positive externalities are internalized in the best possible manner.

Components of IUC:Termination charge:These are the charges payable by a service provider, whose subscriber originates the call, to the
service provider in whose network the call terminates. In the calling party pays (CPP) regime,
only the calling party pays for the call and the calling partys service provider usually pays
termination charge to the called partys service provider, to cover the interconnection/ network
usage cost.
International termination charge:These are the charges payable by an International Long Distance Operator (ILDO) who is
carrying calls from outside the country, to the service provider in the country in whose network
the call terminates.
Transit charge:When two telecommunication networks are not directly connected, an intermediate network is
used through which the calls are transmitted to the terminating network. Such an intermediate
network is known as the transit network and charges to be paid to the transit network to cover the
interconnection/ network usage cost are called transit charges.
Carriage charge:In India, access service providers are licensed on the basis of service areas and inter service area
traffic has to be routed through a National Long Distance Operator (NLDO). The charges to be
paid to the carriage network (i.e. the NLDO) to cover the cost for carrying the call are called
carriage charges.
Origination charge:An originating network is required to pay, from the amount collected from its subscribers (tariff),
the carriage and termination charges for the call and retain the balance towards the expenses of
originating the call. Origination charges are not specified and are under forbearance which
provides flexibility in setting tariff to a service provider.
International settlement charge:These are the charges paid between foreign service providers and Indian ILDOs for exchanging
international traffic. The international settlement charge includes international carriage charge,
national carriage charge if any, and termination charges as applicable in the respective country.

Regulatory treatment of IUC so far

The Authority notified the first interconnection Regulation on 24.01.2003 which, inter-alia,
contained charges for origination, transit and termination of a call. This Regulation came into

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effect from 01.05.2003. With this, the IUC Regulation introduced the regime of Calling Party
Pays (CPP). In this regime, the originating, carriage and termination charges were based on the
type of network in which a call originated terminated and the distance travelled in a service
providers network. In the case of a cellular network, the charges were also based on whether the
destination network was in a metro or a nonmetro city. The termination charges then varied from
Rs.0.15 (15 paisa) per minute to Rs.0.50 (50 paisa) per minute and carriage charges were from
Rs.0.20 (20 paisa) per minute to Rs.1.10 per minute depending on the distance. 1.13 On
29.10.2003, a revised Regulation was issued superseding the earlier Regulation of 24.01.2003.
This Regulation prescribed a uniform termination charge of Rs.0.30 (30 paisa) per minute for all
types of calls. The carriage charges remained distance-based.
The IUC regime was reviewed again in 2005. However, after a detailed consultation process, the
Authority decided to keep termination charges at the same level. In the amendment dated
23.02.2006, implemented from 01.03.2006, a ceiling was placed on carriage charges while other
IUC components remained unchanged. The reduction in the carriage charges provided a strong
basis to service providers to reduce long-distance tariffs and offer a uniform STD tariff.
A revised IUC regime was notified on 09.03.2009 and became effective on 01.04.2009. The
termination charge for local and national long-distance voice calls to fixed line and mobile were
uniformly fixed at the rate of Rs. 0.20 (20 paisa) per minute and termination charges for
incoming international long-distance calls were fixed at the rate of Rs. 0.40 (40 paisa) per
minute. The carriage charges were retained with a ceiling of Rs. 0.65 (65 paisa) per minute.
Transit carriage charge was also reduced to Rs. 0.15 (15 paisa) per minute from Rs. 0.20 (20
paisa) per minute.
Some service providers challenged the IUC Regulations dated 09.03.2009 before the TDSAT
(Telecom Disputes Settlement & Appellate Tribunal) on various grounds. TDSAT passed its
judgment on 29.09.2010 and directed TRAI to consider determining the IUC afresh, on the basis
of its observations and directions.

Approaches for regulating Termination Charges:Bill and keep (BAK) or sender keeps all:In this method, a service provider does not pay any termination charge to its interconnecting
operator. Each service provider bills its own customers for outgoing traffic that it sends to other
interconnecting service providers and keeps all the revenue received from its subscribers.
Cost-based or cost-oriented:Cost-based IUC have a strong economic rationale; however, there is no single, simple way to
estimate the interconnection cost. The determination of cost-based charges is a complex exercise.
The moot question in a cost-based exercise is the relevant costs to be taken into account for
determining the IUC. A related issue is whether current costs or historical costs have to be
considered. Lastly, there are a number of methodologies like Fully Allocated Cost (FAC), Long
Run Incremental Cost (LRIC) and Pure LRIC, which are used in various jurisdictions across the
globe. Therefore, the regulator also has to choose the methodology to be used for determining
IUC.
Retail minus method:-

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In this method, IUC is determined on the basis of retail tariff either prevailing in the market or
the regulated tariff fixed by the regulator. Thus, in this method, IUC are determined by
subtracting avoidable costs from the retail tariff. This method was also raised in the previous
consultation process. However, since retail tariffs for voice calls (except tariff for national
roaming) are under forbearance and service providers are offering various tariff schemes, it
appears to be difficult to fix IUC on the basis of the retail minus method.
Revenue sharing:A revenue sharing arrangement between service providers is also sometimes used in place of
paying explicit IUC. This method was used in India before implementation of the IUC regime.
However, this regime limits the capability of offering innovative tariff plans by a service
provider as the calling partys service provider has to share a certain percentage with the
interconnecting service providers which would require prior consent from them. This could
potentially restrict innovations in tariff offerings.
Bill and Keep (BAK):In a regime where one service provider pays termination charges to another service provider, the
net revenue realization to the service provider depends on the difference in minutes exchanged
between the two networks. Under BAK, there are no per minute termination charges levied
between interconnected service providers for the exchange of traffic; hence, no payments are
exchanged. The service provider can recover the cost of termination of any traffic originated
from other networks, from their own consumers in whatever way they choose.
Supporters of this regime argue that BAK provides a solution to address the issue of market
power of call-terminating networks. They also argue that the theory and practice of identifying
an optimal termination charge is complex. The result is that any determination of a termination
charge, even if done with great care and at a cost, could be disputed by a set of service providers
who perceive it to be loaded against them. Various factors like determination of costs, the method
of allocation, determining costs sensitive to traffic volumes and the extent to which different
products/services should contribute to common costs, etc. can at times be debated. They further
argue that a termination charge becomes an effective floor for retail tariffs. BAK helps to remove
this barrier to retail pricing for off-net calls (i.e. inter-operator calls) and has been proven to
result in significantly higher levels of calling activity as service providers are given the flexibility
to offer innovative customized tariff plans to their consumers.
With the evolution of technology and convergence, more and more telecom networks are
migrating towards an IP-based network. Regulators the world over are working towards
facilitating migration towards Next Generation Networks (NGN) which are IP-based networks so
that innovative services could be provided to customers. One argument is that the termination
charges work as a disincentive to deployment of IP-based telecom networks by the service
providers. Moving towards BAK will encourage deployment of IP-based telecom networks.
Since IP based networks are poised to be the networks of the future for providing telecom
services, a BAK regime may be seen as a natural progression in line with the development of
technology.
At the same time, it is argued by the detractors of BAK that it may result in a race to the bottom
in that service providers may be incentivized to set prices well below costs to enter new market
segments and capture larger market share. As already discussed at paragraph 1.4, this may result
in inadequate investment in network infrastructure and consequent inefficiencies in capturing
positive externalities. This is particularly salient in India which suffers from poor rural coverage,
both in fixed line and mobile.

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Cost-based or cost-oriented Principles of cost recovery:Efficiency:The goal of economic efficiency is generally achieved by establishing charges that are as close to
cost as possible, and are specifically based upon cost causation. That is, when certain costs stem
from the activities of a given service provider or customer, they should be recovered through
charges levied on that service provider or customer. Moreover, the relationship between costs
and charges should be direct. Variable (traffic-sensitive) costs should be recovered through traffic
sensitive charges, and fixed (non-traffic sensitive) costs should be recovered through fixed or
flat charges. Under a pure efficiency policy, these differences should be suitably reflected in
interconnection charges.
Equity and competitive balance:In markets where the number of service providers is few, sustaining and nurturing competition is
often a more immediate policy priority than achieving short-term economic efficiency. The
competitive balance principle calls for interconnection charges to be generally set at the same
levels for all similarly situated service providers. They may even be set at deliberately favorable
levels for new market entrants. The equity principle may lead regulators to impose
interconnection costs equally, or at least proportionally, on both interconnected service providers,
even though, from a cost-causation point of view, one service provider may be generating more
costs than the other. Equity can also be the motivating philosophy behind interconnection
policies that base charges on discounts from relevant retail prices.
Costing Methodologies:The two most commonly followed international practices or methodologies for determination of
IUC are Fully Allocated Cost (FAC) and Long Run Incremental Cost (LRIC). FAC involves the
allocation of all historical costs incurred to date for individual services based on a set of criteria
such as relative capacity utilization, minutes of usage or proportional revenue generated. On the
other hand, the LRIC approach involves determining the incremental cost of providing an
additional unit of service over current levels and over a defined future period of time.
Costing Methodologies for Determination of IUC:As already mentioned, the two most commonly used methodologies for cost determination are
FAC and LRIC. LRIC also has variants such as LRIC+ and pure LRIC. A brief discussion of
Operating Expenditure (OPEX), Capital Expenditure (CAPEX) recovery in the form of
Depreciation and Return on Capital Employed i.e. Weighted Average Cost of Capital (WACC)
would be in order before embarking on a detailed evaluation of these costing methodologies.

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Depreciation:It is an important cost element since assets utilized in operations are not consumed fully in a
particular accounting period. Such assets have an economically useful life which is typically
longer than the accounting period. Thus, the assets can and will be used to produce benefits in
future. This is why the cost relating to the acquisition of such assets is likely to be spread over
their useful life rather than being recovered fully in the year of acquisition itself. Such a cost
(depreciation) must be charged in future years of use in a rational and systematic manner.
Depreciation occurs due to use, wear and tear, passage of time, change in technology and
obsolescence. Depreciation is a non-cash item of cost and represents the recovery of a part of the
Capital Expenditure (CAPEX) incurred on the acquisition of assets.The most commonly used are
the Straight Line Method (SLM) and the Diminishing Balance (Written Down Value or WDV)
Method.
The service-wise Accounting Separation Reports (ASR) submitted by the service providers under
the Reporting System on Accounting Separation Regulations 2012, provide information on
depreciation charged on fixed assets (Gross Block) of the respective telecom service. There are
differences in the estimation of useful life of the assets used and the rates of annual depreciation
adopted by various service providers.
Weighted Average Cost of Capital (WACC):WACC is used to measure the firm's cost of capital or the expected return on the funds (both debt
and equity) deployed in the business. Firms are generally financed through a mix of debt and
equity resources. The measure of the overall cost of capital of a firm is the WACC. WACC may
vary from service provider to service provider depending on the particular service providers
debt-equity ratio, risk factors, the cost of procuring debt, the cost of equity and other related
factors. In the past, the Authority has used a WACC of 15% (pre-tax) in most regulatory
exercises and this has met with general acceptance by stakeholders.

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In this methodology, shared and common costs are assigned to individual services or service
elements. Obviously, there is no single correct way of assigning costs. One way is to allocate
costs according to relative capacity utilized; another could be by minutes of use. In some cases,
the proportionate revenues generated by different services are used as the basis of allocation. The
FAC method has the advantage of simplicity; it also ensures that costs corresponding to each
network element are reckoned on the basis of work done. It can be used both in top-down and
bottom-up costing exercises. It uses the accounting data submitted by service providers in their
balance sheet, profit & loss account and ASRs.
Allocation of costs to different network elements and activities
It is based on reasonable criteria like appropriateness, practicability, state of the market,
causation principle, consistency, objectivity, etc. The goals of economic efficiency and financial
viability are generally achieved by setting charges that are cost-oriented and that are specifically
based upon cost causation. That is, when certain costs arise from the activities of a given service
provider or customer, they should be recovered through charges levied on that service provider
or customer. Moreover, the relationship between cost and charges should be direct.
The total cost of providing a product or a service has both fixed and variable elements. Further,
there are costs which may not be directly linked/ attributable to termination charges, both OPEX
and CAPEX. Alternatively, OPEX as well as CAPEX can be taken as relevant to the product/
service/ activity and can be recovered through per minute termination charges. However, the
utility of two-part tariffs is debatable in the Indian market context as the latter is predominantly
mobile (not fixed line) and is further dominated by pre-paid subscriptions.
Treatment of revenue from other sources
Service Providers earn revenues from various sources (apart from voice call charges) like rental/
activation charges, short messaging service (SMS), data services, other Value Added Services
(VAS) and other income etc. Ideally, the costs associated with these services should not form part
of costs relevant for termination charges.
Long Run Incremental Cost (LRIC) method
An access service provider offers a wide range of services. While some services (viz. telephony,
SMS, data transfer and other value added services) are offered in retail markets, some other
services such as off-net incoming minutes are offered at a wholesale level.
In the LRIC model, the following basic assumptions are used.
(i) The model is built for a hypothetical efficient operator.
(ii) The hypothetical efficient operator incurs costs that would occur in a competitive market.
(iii) The method of costing is long-run costing i.e. the size of the network deployed is reasonably
matched to the level of network demand; any over- or under- provisioning would be leveled out
in the long run.

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(iv) The model identifies incremental cost, which would be incurred to support the service
demand of the wholesale services i.e. Off-net incoming calls.

CUSTOMER ACQUISITION COST:It is the cost associated in convincing a customer to buy a product/service. This cost is incurred
by the organization to convince a potential customer. This cost is inclusive of the product cost as
well as the cost involved in research, marketing, and accessibility costs. This is an important
business metric. It plays a major role in calculating the value of the customer to the company and
the resulting return on investment (ROI) of acquisition. The calculation of customer valuation
helps a company decide how much of its resources can be profitably spent on a particular
customer. In general terms, it helps to decide the worth of the customer to the company
It Includes

Channel Cost

Selling and Distribution cost

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Sim Cost

Customer Verification Cost

CHANNEL COST

CHANNEL COST

COMPANY PROFILE 80
CUSTOMER VERIFICATION COST

CAF (Application Forms, Feedback Forms, Etc...)

Address Verification(Prepaid)/Credit Verification(Postpaid)

Tele AV(Prepaid)

CUSTOMER SERVICE COST:

Call Center Cost

Billing (Postpaid)

Collection (Postpaid)

Customer Retention Activity (Gifts, Bones Cards etc..)

MARCOM:Marketing communications are messages and related media used to communicate with a
market. Marketing communications is the "promotion" part of the "marketing mix" or the "four
Ps": price, place, promotion, and product. It can also refer to the strategy used by a company or
individual to reach their target market through various types of communication.
Those who practice advertising, branding, brand language, direct marketing, graphic design,
marketing, packaging, promotion, publicity, sponsorship, public relations, sales, sales promotion
and online marketing are termed marketing communicators, marketing communication
managers, or more briefly, marcom managers.
There are three types of Techniques

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ATL (Above the Line)

BTL (Below the Line)

Event Cost
Examples of Above the Line

Examples of Below the Line

Television

Posters

Print

Pamphlets

Radio
Hoardings
Email, Digital marketing, Internet
Event Cost:- Participation, Sponsorship, Road show

MANPOWER COST:

Salaries of the Regular, Contract Employees and Agency Staff

Employee Engagement

Recruitment

Learning and Development

Salary/Wage including allowances & perquisites

Company contribution to Pf and ESI

Bonus / Performance Pay

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TRANSPORTATION AND ADMIN COST:

If commonly provided to all the employees, Subsidized Canteen, Recruitment Cost - such
as Advertisement in News Paper.

Reimbursement of travel fare for attending interview.

Hotel accommodation for attending interview etc....

Gratuity / Excreta.

Any other cost directly incurred in connection with staff / labor.

EBITDA:Earnings before interest, tax, depreciation and amortization (EBITDA) are a measure of a
company's operating performance. Essentially, it's a way to evaluate a company's performance
without having to factor in financing decisions, accounting decisions or tax environments.
EBITDA is calculated by adding back the non-cash expenses of depreciation and amortization to
a firm's operating income. EBITDA is one of the operating measures most used by analysts.
EBIDTA allows analysts to focus on the outcome of operating decisions while excluding the
impacts of non-operating decisions like interest expenses (a financing decision), tax rates (a
governmental decision), or large non-cash items like depreciation and amortization (an
accounting decision).
However, EBITDA can also be deceptive when applied incorrectly. It is especially unsuitable for
firms saddled with high debt loads or those who must frequently upgrade costly equipment.
Furthermore, EBITDA can be trumpeted by companies with low net income in an effort to
"window-dress" their profitability. EBITDA will almost always be higher than reported net
income. Also, because EBITDA isn't regulated by GAAP, investors are at the discretion of the
company to decide what is, and is not, included in the calculation. There's also the possibility
that a company may choose to include different items in their calculation from one reporting
period to the next.
Therefore, when analyzing a firm's EBITDA, it is best to do so in conjunction with other factors
such as capital expenditures, changes in working capital requirements, debt payments, and, of
course, net income.

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PAYBACK PERIOD:Payback period is the time in which the initial cash outflow of an investment is expected to be
recovered from the cash inflows generated by the investment. It is one of the simplest investment
appraisal techniques.
The formula to calculate payback period of a project depends on whether the cash flow per
period from the project is even or uneven. In case they are even, the formula to calculate payback
period is:
Initial Investment
Payback Period =
Cash Inflow per Period
When cash inflows are uneven, we need to calculate the cumulative net cash flow for each period
and then use the following formula for payback period:
B
Payback Period = A +
C
In the above formula,
A is the last period with a negative cumulative cash flow;
B is the absolute value of cumulative cash flow at the end of the period A;
C is the total cash flow during the period after A
Decision Rule

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Accept the project only if its payback period is LESS than the target payback period.

Advantages and Disadvantages

Advantages of payback period are:
1. Payback period is very simple to calculate.
2. It can be a measure of risk inherent in a project. Since cash flows that occur later in a
project's life are considered more uncertain, payback period provides an indication of
how certain the project cash inflows are.
3. For companies facing liquidity problems, it provides a good ranking of projects that
would return money early.
Disadvantages of payback period are:
1. Payback period does not take into account the time value of money which is a serious
drawback since it can lead to wrong decisions. A variation of payback method that
attempts to remove this drawback is called discounted payback period method.
2. It does not take into account, the cash flows that occur after the payback period.

Discounted Payback Period:One of the major disadvantages of simple payback period is that it ignores the time value of
money. To counter this limitation, an alternative procedure called discounted payback period may
be followed, which accounts for time value of money by discounting the cash inflows of the
project.
Formulas and Calculation Procedure

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In discounted payback period we have to calculate the present value of each cash inflow taking
the start of the first period as zero point. For this purpose the management has to set a suitable
discount rate. The discounted cash inflow for each period is to be calculated using the formula:
Actual Cash Inflow
Discounted Cash Inflow =
(1 + i)n
Where,
i is the discount rate;
n is the period to which the cash inflow relates.
Usually the above formula is split into two components which are actual cash inflow and present
value factor ( i.e. 1 / ( 1 + i )^n ). Thus discounted cash flow is the product of actual cash flow
and present value factor.
The rest of the procedure is similar to the calculation of simple payback period except that we
have to use the discounted cash flows as calculated above instead of actual cash flows. The
cumulative cash flow will be replaced by cumulative discounted cash flow.
B
Discounted Payback Period = A +
C
Where,
A = Last period with a negative discounted cumulative cash flow;
B = Absolute value of discounted cumulative cash flow at the end of the period A;
C = Discounted cash flow during the period after A.
Note: In the calculation of simple payback period, we could use an alternative formula for
situations where all the cash inflows were even. That formula won't be applicable here since it is
extremely unlikely that discounted cash inflows will be even.
Decision Rule
If the discounted payback period is less that the target period, accept the project. Otherwise
reject.

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Advantages and Disadvantages

Advantage: Discounted payback period is more reliable than simple payback period since it
accounts for time value of money. It is interesting to note that if a project has negative net
present value it won't pay back the initial investment.
Disadvantage: It ignores the cash inflows from project after the payback period.

Net Present Value (NPV):Net present value is the present value of net cash inflows generated by a project including
salvage value, if any, less the initial investment on the project. It is one of the most reliable
measures used in capital budgeting because it accounts for time value of money by using
discounted cash inflows.
Before calculating NPV, a target rate of return is set which is used to discount the net cash
inflows from a project. Net cash inflow equals total cash inflow during a period less the expenses
directly incurred on generating the cash inflow.
Calculation Methods and Formulas
The first step involved in the calculation of NPV is the determination of the present value of net
cash inflows from a project or asset. The net cash flows may be even (i.e. equal cash inflows in
different periods) or uneven (i.e. different cash flows in different periods). When they are even,
present value can be easily calculated by using the present value formula of annuity. However, if
they are uneven, we need to calculate the present value of each individual net cash inflow
separately. In the second step we subtract the initial investment on the project from the total
present value of inflows to arrive at net present value.
Thus we have the following two formulas for the calculation of NPV:
When cash inflows are even:
1 (1 + i)-n
NPV = R

Initial Investment
i

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In the above formula,
R is the net cash inflow expected to be received each period;
i is the required rate of return per period;
n are the number of periods during which the project is expected to operate and generate cash
inflows.
When cash inflows are uneven:
R1

R2

NPV =

R3

+
(1 + i)

+
(1 + i)

+ ... Initial Investment

(1 + i)

Where,
i is the target rate of return per period;
R1 is the net cash inflow during the first period;
R2 is the net cash inflow during the second period;
R3 is the net cash inflow during the third period, and so on ...
Decision Rule
Accept the project only if its NPV is positive or zero. Reject the project having negative NPV.
While comparing two or more exclusive projects having positive NPVs, accept the one with
highest NPV.

Advantage and Disadvantage of NPV

Advantage: Net present value accounts for time value of money. Thus it is more reliable than
other investment appraisal techniques which do not discount future cash flows such payback
period and accounting rate of return.
Disadvantage: It is based on estimated future cash flows of the project and estimates may be far
from actual results.

Profitability Index:Profitability index is an investment appraisal technique calculated by dividing the present value
of future cash flows of a project by the initial investment required for the project.

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Formula:
Profitability Index
Present Value of Future Cash Flows
=
Initial Investment Required

Net Present Value

= 1+
Initial Investment Required
Explanation:
Profitability index is actually a modification of the net present value method. While present value
is an absolute measure (i.e. it gives as the total dollar figure for a project), the profibality index is
a relative measure (i.e. it gives as the figure as a ratio).
Decision Rule
Accept a project if the profitability index is greater than 1, stay indifferent if the profitability
index is zero and don't accept a project if the profitability index is below 1.
Profitability index is sometimes called benefit-cost ratio too and is useful in capital rationing
since it helps in ranking projects based on their per dollar return.

Accounting Rate of Return (ARR):Accounting rate of return (also known as simple rate of return) is the ratio of estimated
accounting profit of a project to the average investment made in the project. ARR is used in
investment appraisal.
Formula
Accounting Rate of Return is calculated using the following formula:

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Average Accounting Profit

ARR =
Average Investment
Average accounting profit is the arithmetic mean of accounting income expected to be earned
during each year of the project's life time. Average investment may be calculated as the sum of
the beginning and ending book value of the project divided by 2. Another variation of ARR
formula uses initial investment instead of average investment.
Decision Rule
Accept the project only if its ARR is equal to or greater than the required accounting rate of
return. In case of mutually exclusive projects, accept the one with highest ARR.

Advantages and Disadvantages

Advantages
1. Like payback period, this method of investment appraisal is easy to calculate.
2. It recognizes the profitability factor of investment.
Disadvantages
1. It ignores time value of money. Suppose, if we use ARR to compare two projects having
equal initial investments. The project which has higher annual income in the latter years
of its useful life may rank higher than the one having higher annual income in the
beginning years, even if the present value of the income generated by the latter project is
higher.
2. It can be calculated in different ways. Thus there is problem of consistency.

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3. It uses accounting income rather than cash flow information. Thus it is not suitable for
projects which having high maintenance costs because their viability also depends upon
timely cash inflows.

Internal Rate of Return (IRR):Internal rate of return (IRR) is the discount rate at which the net present value of an investment
becomes zero. In other words, IRR is the discount rate which equates the present value of the
future cash flows of an investment with the initial investment. It is one of the several measures
used for investment appraisal.
Decision Rule
A project should only be accepted if its IRR is NOT less than the target internal rate of return.
When comparing two or more mutually exclusive projects, the project having highest value of
IRR should be accepted.
IRR Calculation
The calculation of IRR is a bit complex than other capital budgeting techniques. We know that at
IRR, Net Present Value (NPV) is zero, thus:
NPV = 0; or
PV of future cash flows Initial Investment = 0; or
CF1

CF2

CF3

+
(1+r)

+
(1+r)

+ ... Initial Investment = 0

(1+r)

Where,
r is the internal rate of return;
CF1 is the period one net cash inflow;
CF2 is the period two net cash inflow,
CF3 is the period three net cash inflow, and so on ...
But the problem is, we cannot isolate the variable r (=internal rate of return) on one side of the
above equation. However, there are alternative procedures which can be followed to find IRR.
The simplest of them is described below:
1. Guess the value of r and calculate the NPV of the project at that value.
2. If NPV is close to zero then IRR is equal to r.
3. If NPV is greater than 0 then increase r and jump to step 5.

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4. If NPV is smaller than 0 then decrease r and jump to step 5.
5. Recalculate NPV using the new value of r and go back to step 2.

Union Budget 2015 impact on telecommunication industry:Key issues/challenges:Amidst the subscriber success story, growing revenues and policy initiatives, the sector is
stillfacinghurdles on several pressing issues. Some of the issues that continue to plague the
sectorsgrowth are:
Complex tax structure
Absence of country-wide mobile and internet connectivity
Huge debt bill of mobile services operators
Infrastructural status and benefits
Lack of a spectrum roadmap (quantum, auction of other bands, sharing, trading
guidelines, etc.)
Various legal issues related to spectrum, tax, penalties, etc. are pending in various courts
of law
Lack of single-window approval for Right of Way (RoW) norms for network
infrastructure.
What was expected?

Policy

Rationalization and simplification of the tax structure

Implementation of Goods and Services Tax (GST)

Tax incentives to boost manufacturing in line with the Make in India initiative.

Commitment to growth and fiscal discipline

Growth expected at 8 to 8.5 per cent; Inflation targetted at 6 per cent
Head-room for monetary easing and strength in sovereign credit rating
Interest rates likely to be stable in the short to medium term, this is likely to help the
telecom industry
Head-room for monetary easing and strength in sovereign credit rating
Digital India
Speeding up the implementation of the National Fibre Optic Network Programme,
covering 7.5 lakh
kilometres connecting 2.5 lakh villages which will enable bridging the urban-rural

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digital divide
Reimbursement of state government costs will enable greater participation
Proliferation of mobile/internet enabled applications in sectors such as agriculture,
health,
Education and governance is likely to grow.
Investment requirement.
Move towards cashless economy
Positive steps towards integrating Jan Dhan, Aadhaar and Mobile (JAM) for direct
transfer ofbenefits
Focus on banking the unbanked and leveraging ubiquity of mobile devices is a positive
growth driver
To mobile payments system and mobile banking.
Rural electrification
Electrification of 20,000 villages could help the telecom industry gain a better control
over theiroperational costs.
DIRECT TAX
Reduction in corporate tax from 30 to 25 per cent from the next fiscal year is likely to be
welcomedby the industry
Rate of income tax on royalty and fees for technical services reduced from 25 to 10 per
cent
Implementation of General Anti Avoidance Rule ('GAAR') to be deferred by two years
Increase in specified domestic transfer pricing threshold from INR5 crore to INR20 crore.
INDIRECT TAX
Excise duty has been structure from 12 to 2 per cent without CENVAT credit or 12.5 per
cent withCENVAT credit for tablet computers
Excise duty rates on mobile handsets including cellular phones, is revised from one per
cent withoutCENVAT credit or six per cent with CENVAT credit, to one per cent without
CENVAT credit or 12.5per cent with CENVAT credit. NCCD of one per cent on mobile
handsets including cellular phone,remains unchanged
Wafers for use in manufacture of IC modules for smart cards has been modified from12
to 6 per centto assist manufacturers of telecom enabled services such as smart grids and
'internet of things'
Effective Excise duty rate increased from 12.36 to 12.50 per cent w.e.f 1 March 2015,
Education Cessand Secondary Higher Education Cess has been withdrawn
General effective customs duty rate has been increased marginally from 28.85 to 29.44
per cent -Education Cess and SHE cess continues on BCD and CVD
Effective Service tax rate to be increased from 12.36 to 14 per cent (education cesses
have beensubsumed), from a date to be notified after the enactment of the Finance Bill
Proposal to levy two per cent Swachh Bharat Cess on the value of taxable services to be
notified ata later date.

PROVISION COST:In financial accounting, a provision is an account which records a present liability of an entity.
The recording of the liability in the entity's balance sheet is matched to an appropriate expense

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account in the entity's income statement.
Definition
A provision can be a liability of uncertain timing or amount. A liability, in turn, is a present
obligation of the entity arising from past events, the settlement of which is expected to result in
an outflow from the entity of resources embodying economic benefits.
Request amount: - In this we will raise the Request the amount from the given budget which
company will allocate some amount of money to the circle (or) division.

Booked Amount: - On the Bases of budget the head office will give the money and the
remaining amount will be considered as the provision amount

Provision Amount: - The amount which is not paid in that particular month will considered as
provision amount and this money will be carry forwarded to the next month.

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Total Amount: - The amount which is both Provision amount and booked amount is equal to
total amount.

Company Code: - Which represented the department with in the company example RCPL,
RWIL.

Cost center:-Which represents the employee of the company.

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GL Code:-Which represent the division of the company example (CDMA, GSM and Postpaid).

COST BUDGETING:A budget is a quantitative expression of a plan for a defined period of time. It may include
planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities
and cash flows. It expresses strategic plans of business units, organizations, activities or events in
measurable terms.
Budget types:

Sales budget an estimate of future sales, often broken down into both units and
currency. It is used to create company sales goals.

Production budget - an estimate of the number of units that must be manufactured to

meet the sales goals. The production budget also estimates the various costs involved
with manufacturing those units, including labor and material. Created by product oriented
companies.

Capital budget - used to determine whether an organization's long-term investments

such as new machinery, replacement machinery, new plants, new products, and research
development projects are worth pursuing.

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Cash flow/cash budget a prediction of future cash receipts and expenditures for a
particular time period. It usually covers a period in the short-term future. The cash flow
budget helps the business determine when income will be sufficient to cover expenses
and when the company will need to seek outside financing.

Marketing budget an estimate of the funds needed for promotion, advertising, and
public relations in order to market the product or service.

Project budget a prediction of the costs associated with a particular company project.
These costs include labor, materials, and other related expenses. The project budget is
often broken down into specific tasks, with task budgets assigned to each. A cost estimate
is used to establish a project budget.

Revenue budget consists of revenue receipts of government and the expenditure met
from these revenues. Tax revenues are made up of taxes and other duties that the
government levies.

Expenditure budget includes spending data items.

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Actual Cost: - The actual cost which is incurred.