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Presentation Plan
6 Growth Avenues
Presentation Plan
6 Growth Avenues
Introduction to Indian Telecom Industry
One of the fastest growing cellular markets Total telecom subscribers – 300.49 million
in the world in terms of number of subscriber (March 2008 Cellular + Fixed Line )
additions – 261.07 million (March 2008)
Tele density – 26.22 percent (March 2008)
Expected to reach total subscriber base of
Number of new mobile subscribers added
about 500 million by 2010 (i.e., more than
last quarter – 27.62 million (March 2008)
one phone for every household)
ARPU for GSM – USD 5.28* (USD./sub/
Annual growth rate of the telecom
month)
subscribers – 42 percent (2007–08)
Telecom equipment market – USD 34,100
More GSM subscribers than fixed-line
million (2007–08)
subscribers
Handset market – USD 7,250 million (2007–
08)
The Indian telecom market generated revenues of approximately USD 32 billion in 2007–08. It registered a CAGR of
approximately 32 percent from 2002–03 to 2007–08. The CAGR from 2008–08 to 2011–12 is expected to stabilise at 21
percent. Apart from mobile telephony services, other value-added services are also gaining importance.
Mobile Services
Basicces Int
er
Servi ne
t
Telecom Services – India
Raagin
P
S
dio g
RT
PM
GMPC
S VSATs
The Indian telecom services can be divided predominantly into basic, mobile and Internet services. It also comprises smaller segments,
such as radio paging services, Very Small Aperture Terminals (VSATs), Public Mobile Radio Trunked Services (PMRTS) and Global
Mobile Personal Communications by Satellite (GMPCS).
The growth witnessed in the mobile services and Internet services segments was much higher as compared to other services, such as
basic services and radio paging services which are nominal in terms of numbers.
Private players account for highest subscriber base growth in the basic
telephony services segment (Fixed Lines)
WLL (F)
17%
Basic Services
Basic services include fixed wireline and
wireless in local loop (WLL-fixed). In 2007– Fixed
08, basic services subscribers exceeded 60 83%
million.
Fixed wireline services hold a major market
share of 83 percent in basic services.
BSNL and MTNL are market leaders in this Market Share* of Basic Service Operators in India
segment. (2007–08)
Although the government-owned BSNL
dominates the segment in terms of
subscriber base and market share, private
players have registered a notable growth.
Orissa KOLKATA
Maharashtra
MUMBAI
Andhra
Pradesh
Karnataka
METRO Circles
CHENNAI
A Circles
Tamil Nadu
B Circles
Kerala
C Circles
Mobile services have led to a spectacular growth in the Indian telecom industry. Currently, 12 players are active in this segment. The total
number of wireless subscribers escalated to 261.07 million at the end of March 2008, with a monthly addition of more than 6 million wireless
subscribers. Despite the decreasing ARPU*, the minutes of usage is on a rise, which provides impetus to the mobile services growth in India.
China 303
Russia 88
250 24
The state-owned BSNL was the second largest service provider after Bharti
Airtel (23 percent) in the Indian wireless telecom market with a market share of
approximately 19 percent for the year ending March 2008.
CDMA, 27%
GSM, 73%
Bharti Airtel dominates the GSM segment with a
market share of approximately 32 percent for the
Reliance Communications and TTSL
year ending March 2008, followed by Vodafone
dominates the Indian CDMA mobile services
with a share of approximately 23 percent
segment.
subscribers.
* In terms of Subscriber Base
Various other services emerged by leveraging the telecom
services industry
Radio Paging
PMRTS have not grown to their expected potential GMPCS services were launched in India
in India. The high licence fee leaves a very thin in 1999. These services allow a
margin for services providers; thereby, inhibiting its subscriber to communicate from any
growth. About 31,000 subscribers are currently Other Telecom point on earth through a handheld
availing this service in India from 12 different Services terminal. Moreover, the telephone
operators. number remains unchanged,
irrespective of the subscriber’s location.
The emergence of private players and new technologies have provided a strong
impetus to the growth of Internet and broadband services. The quality and
penetration of these services have undergone changes, with significant
improvement in the telecom infrastructure. The Internet subscriber base
registered a CAGR of 60 percent for the period 1997–98 to 2007–08.
BSNL and MTNL caters to more than two-thirds of Internet subscribers in India.
Private players are catching up fast due to increased penetration of Internet and
broadband services in India.
The telecom market will experience high penetration of Internet services with
the support from government policies and introduction of novel technologies in
India.
Presentation Plan
6 Growth Avenues
Indian telecom handset market booming along with mobile
services industry
The Indian handset market grew at a phenomenal rate in 2006 Mobile Handsets Market in India: 2004–07
with the sale of approximately 30–35 million handsets. It is 4,750
5,000
estimated that by 2011, sales of mobile handsets will reach
150 million units. 4,000
3,231
USD Million
Competitive pricing has triggered the growth of coloured 3,000
1,966
handsets, which accounted for 75 percent of the market in 2,000 1,610
2006; whereas, the share of monochrome handsets has 1,000
declined to 25 percent.
0
Mobile phones are available at prices as low as USD 19–31. 2003–04 2004–05 2005–06 2006–07
Sony Ericsson
6% Nokia
53%
LG dominates in the CDMA handsets market with a
LG
11%
market share of 60 percent.
Motorola
11%
Presentation Plan
6 Growth Avenues
India: An Ideal Destination for Investments in Telecom Sector
6 Growth Avenues
Regulatory Framework provides level playing field for all operators
They formulate various policies and pass laws to They undertake various research activities and monitor
regulate the telecom industry in India. the quality of service provided in the Indian telecom
industry. They also provide various recommendations to
improve the status of telecom operations in India.
Licensor
Dept of Telecom Unified License Operators
INDIA
3G Spectrum
Was Auctioned.
In April Airtel
ILD services was launched 3G
BSNL was Number portability
Independent opened to Intra-circle merger Service and
established was proposed
Private players regulator, TRAI, competition guidelines were MTNL in
by DoT Calling Party Pays
were allowed in was established (CPP) was
established Attempted to (pending) December 11
Value Added Go-ahead to implemented boost Rural
Services the CDMA telephony
technology
1994 1999 2002 2005 2007
2003 2004
Number of Subscribers
Lowering of ADC 120
12 UASL, ADC makes it mandatory for a service provider at the caller’s
Telecom Tariff CPP end to share a percent of the revenue earned with the service
(millions)
90
Order
8 provider at the receiver’s end in long-distance telephony. This
NTP 99 WLL 60
subsidises the infrastructure costs of the service provider
4
30 enabling access at receiver’s end, especially because rental
for fixed-line services is low. Revision in the ADC regime is
0 0
expected to be followed by further tariff reduction in telecom
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
services. In a move to bring down telecom tariffs drastically,
Cellular Tariff Total Cellular Subscribers
TRAI has phased out access deficit charges from this year.
6 Growth Avenues
FDI and other M&A activities increasing in number
Major trends in the telecom sector is increasing M&A activity, de-regulation of telecom policies and growing
interest of international investors.
Recent Deals in Telecom Sector The Indian telecom industry has a 74 percent FDI limit in the
telecom services segment.
6 Growth Avenues
Major Players in different segments of Indian telecom industry
Vodafone
Reliance
Idea
TTSL
Reliance
BSNL
Internet Services Operators
BSNL
CDMA Services Operators
MTNL Reliance
Reliance
TTSL
TTSL
BSNL
Airtel
6 Growth Avenues
Market SWOT Analysis
Strengths Weaknesses
• Lowest call tariffs in the world
• Huge wireless subscriber potential • Market strongly regulated by Govrenment body –
• Fastest growing mobile market in the world Governing both ISP and Telecom sectors
• Consumers are ready to pay for cutting edge • Too many authorities ruling the sector
services • Huge potential for low end and cheap handsets
• • Wide scale Consumer churn in Telecom and ISP
Government proposes to hike FDI limit in
Telecom to 74% • Wide spread VAS deployment is restricted due to
language and literacy problems
• Unified license regime • Primarily a voice based market
Opportunities Threats
• To offer value added services on GSM, CDMA and IP • Low cost service providers – no possibility of breaking
• Language independent services even in short term
• Mobile Marketing concepts • Weak IPR protection
• Content influenced by local culture and Global • Software and digital content Piracy
success stories • Political instability
• M-Commerce • Regulatory interference
• Unified messaging platforms
• Foreign investment in form of equity or technology
India presents a host of opportunities for telecom companies
Infrastructure
Rural Sharing Managed
Telephony Services
Value-Added
Growth Virtual Private
Services
Avenues Network
WiMax
Enterprise
Telecom
3G Services
To reduce their network deployment costs, many service providers are considering
infrastructure sharing offers the following advantages:
Virtual Private Network is a private data network Improved service quality
that provides connectivity within closed user groups via Increased affordability for customers
public telecommunication infrastructure. Competition is Faster roll out of services in rural and remote areas
likely to heat up in the VPN segment as DoT has Significant reduction in initial set up costs
relaxed the norms for private players. Increased environmental aesthetics
Lower operating costs for service providers
The Indian government had auctioned the spectrum for 3G services by inviting bids from
domestic as well as foreign players, and creating a competitive environment that offers better
services to consumers in January 2008. Therefore, the 3G spectrum is among the major
investment opportunities and growth drivers of the telecom industry.
The immense potential for 3G is reflected by the 30–40 percent annual growth in Value-
Added Services.
Cell phone manufacturers are striving to develop USD 100 priced 3G handsets for the Indian
market.
India expects to replicate its 2G growth in 3G services.
MTNL has soft launched its 3G service and calls it MTNL 3G Jadoo.
WiMAX has been one of the most significant developments in wireless communication in the recent
past. Since this mode of communication provides network access in inaccessible locations at a speed
of more than 4 Mbps, it is expected to be a major factor in driving telecom services in India, especially
wireless services. Thus, it will lead to the increased use of telecom services, Internet, value-added
services and enterprise services. WiMAX is expected to accelerate economic growth and assist in
providing better education, healthcare and entertainment services.
It is estimated that India will have 13 million WiMAX subscribers by 2012.
Aircel is the pioneer in WiMAX technology in India.
The state-owned player, BSNL, aims to connect 74,000 villages through WiMAX.
Bharti, Reliance and VSNL have acquired licenses in the 3.3GHz range to utilise the opportunities
offered by this domain.
Value-Added Services and Rural Telephony holds large market
potential in India
Value-Added Services in India (2007–08)
The VAS industry was worth USD 632 million in
Person to
Application & Game & Data, 7% 2007–08. The industry is estimated to grow by 60
Application to
Person SMS, Others (MMS percent in 2008–09 and become an USD 1,011
15% etc.), 3% million opportunity.
Ringtone
Dow nload, 35%
Person to Person
SMS, 40%
The VAS industry is currently focussing on the entertainment sector, such as the Indian film
industry and cricket; however, there is scope for growth in other avenues as utility-based
services, such as location information and mobile transactions.
Teledensity (%)
30
telephony will require major investments. This
segment will boost the demand for telecom services, 20
equipment, Internet services and other value-added
10
services; thereby, offering great market opportunities
for telecom players. 0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
At Year Ending March
Urban Total Rural
Composition Of Net Service Revenues
Revenues from SMS
1 Government executive, legislative and general Enable mobility to e-Governance Update status, alerts, notification via
government, justice, public (National e-Governance plan) SMS based on which users can get
order and safety, public finance, taxation, into the e-Governance portal for
monetary policy, administration of HR, more details
environmental
quality, housing, economic programs,
national security and international
affairs, and all other
Central, international and local
government.
2 Agriculture Harvesting, Marketing, pest control, crop Online advice, transactions, Alerts, Advice, transactions can be
rotation information retrieval handled by SMS based
applications or via thin client
mobile browser based interfaces
3 Health Care Hospitals, clinics, doctors, nursing, Data sharing, Expert advice, SMS based applications for
dentists, medical and dental registration for public health information/alerts and
laboratories, service, appointment, alerts, transactions based on
And other health services. notification Wi Fi / GPRS connectivity at home
and hospitals for real time heavy
data uploads / downloads
Mobile technologies for data services in various segments in India
Sl. No. Industry Segment details Access / Information Applicability for Mobile
segment requirement Internet
5 Retail Trade, General retailers, specialty Interactive communication / SMS / WAP based
Trading retailers, grocery, Financial transactions / M- applications. Thin client
restaurants and hotels. commerce mobile browser based
Online store can leverage the interfaces. J2ME based
mobile channel to deliver thick client apps for
instant information to providing online/offline
users, assisting them to information access
make informed buying
decisions, while helping
the retailers to understand
and evaluate consumers'
preferences.
Auctions is another attractive
application area
Mobile technologies for data services in various segments in India
Sl. No. Industry segment Segment details Access / Information Applicability for Mobile
requirement Internet
6 Utilities Electric, gas, oil, nuclear Real time Meter reading SMS based applications
power and sanitary updates WiFi / GPRS for heavy data
services Bill payments uploads
Real time info sharing
7 Communications Wire line, Wireless, Cable, Mobile Content Delivery SMS based applications,
Television, Radio News, Alerts, Content (Music, Streaming with GPRS / 3G
broadcasting Video clips), Gaming / 4G network services
(XoIP, IPTV etc)
8 Manufacturing automotive, industrial, Mobile Field Force , real time SMS based applications as
electrical and updates, low cost supply well thick client based
commercial equipment, chain management – info models for storing
medical equipment and access information for offline
supplies, computer and access. Real time data
high-technology, updates with WiFi and
electronics, GPRS networks.
transportation
Equipment and all other
discrete manufacturing.
9 Transportation water, rail and air Fleet Management (real time SMS based applications for
transportation, urban updates), M Ticketing, updates, m ticketing,
passenger transit, motor Schedule updates schedule updates, status
freight check
Transit, pipelines,
warehousing, couriers,
and transportation
support services.
Mobile technologies for data services in various segments in India
Sl. No. Industry Segment details Access / Information Applicability for Mobile
segment requirement Internet
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