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INDIAN TELECOMMUNICATION INDUSTRY

The INDIAN TELECOMMUNICATION INDUSTRY is the world's fastest growing industry with 885.99 million mobile phone subscribers as of 30 June 2011. It is also the second largest telecommunication network in the world in terms of number of wireless connections after China. The overall tele-density is 73.97% as of June 30, 2011 with rural tele-density at about 25% as compared to urban tele-density of 100%, the next wave of growth will come from rural areas. The market's first operator was the state-owned Bharat Sanchar Nigam Limited (BSNL), created by corporatization of the Indian Telecommunication Service, a government unit formerly responsible for provision of telephony services. The Department of Telecommunications, separated from Indian Post & Telecommunication Accounts and Finance Service in 1975, is part of the Ministry of Communications and Information Technology in the executive branch of the Government of India. It was responsible for telecom services in entire country. In 1994, the government formed the National Telecom Policy (NTP) which helped to attract Foreign direct investments and domestic investments the entry of private and international players resulted in need of independent regulatory body. As a result, The Telecom Regulatory Authority of India was established on 20 February 1997 by an act of parliament called "Telecom Regulatory Authority of India Act 1997". After the telecommunication policies were revised to allow private operators, companies such as Bharti Airtel, Reliance Communications, Tata Teleservices, Idea Cellular, Aircel and Loop Mobile have entered the market. Bharti Airtel currently being the largest telecom company in India with over 169.18 million subscribers as of June 2011 . Airtel is also the fifth largest telecom operator in the world with over 207.8 million subscribers across 19 countries at the end of 2010. Other segments of the industry, like Internet are also anticipated to witness strong growth. Moreover, with the launch of 3G services, the country is expected to witness rapid surge in the broadband subscribers base during the coming years. According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly. As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile subscribers by 2013. Telecom industry in India has a big market potentiality and is a fast growing sector. Government of India is eager to reconstitute this telecom industry by enacting effective policies for more investments from foreign companies, which results in a very competitive and deregulated market in the world.

Telecom Industry Analysis Features and Basic Condition of Telecom Industry Environment of Telecom Industry Structure of Telecom Industry Attractiveness of Telecom Industry Performance of Telecom Industry Practices in Telecom Industry Emerging Trends and Future of Telecom Industry

PORTERS FIVE FORCE ANALYSIS THREAT OF SUBSTITUTE PRODUCTS OR SERVICES THE BARGANING POWER OF CUSTOMERS (BUYERS) THE BARGANING POWER OF SUPPLIERS RIVALRY AMONG EXISTING COMPANIES THREAT OF NEW ENTRANTS

THE BARGANING POWER OF CUSTOMERS (BUYERS) The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. Buyer concentration to firm concentration ratio Degree of dependency upon existing channels of distribution Bargaining leverage, particularly in industries with high fixed costs Buyer volume Buyer switching costs relative to firm switching costs Buyer information availability Ability to backward integrate Availability of existing substitute products Buyer price sensitivity Differential advantage (uniqueness) of industry products RFM Analysis

THE BARGANING POWER OF SUPPLIERS

Large number of suppliers. Shared tower infrastructure. Limited pool of skilled managers and engineers especially those well versed in the latest technologies. Medium cost of switching since changing their hardware would lead to additional cost in modifying the architecture. Overall influence on the industry medium RIVALRY AMONG EXISTING COMPANIES High Exit Barriers High Fixed Cost 6-7 players in each region 3 out of 4... THREAT OF NEW ENTRANTS Telecom Sector being a profitable markets that yield high returns, is sure to attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. The most attractive feature is that entry barriers are high and exit barriers are low. Few new firms can enter and nonperforming firms can exit easily.

Restrictive Govt Policy Spectrum and license allocation. 74% FDI cap. Minimum requirement of number of towers. Capital Requirement Extremely high infrastructure setup costs Spectrum License cost Customer Switching Costs Cost of new connection low Proposed number portability Incumbent Advantages Established brand image Reliability of network Supply Side Economies Of Scale Declining Average Revenue Per User (ARPU) Infrastructure Tenancy costs Other FC like BPO Demand Side Benefits Brand pull exists to some extent for brands like Airtel /Idea/Vodafone

Supply Side Economies Of Scale Declining Average Revenue Per User (ARPU) Infrastructure Tenancy costs Other FC like BPO Demand Side Benefits Brand pull exists to some extent for brands like Airtel /Idea/Vodafone Customer Switching Costs Cost of new connection low Proposed number portability Incumbent Advantages Established brand image Reliability of network