Indian Telecom Industry

Indian Telecom Industry Class of PGDM 2008-

What is Telecommunication Technical: “Telecom in the real sense means transfer of information between two distant points in space.” Managerial: “Telecom is a huge and varied bastion of technologies, companies, services and politics that is truly global in nature.” Class of PGDM 2008-

HISTORY Ø 1881

Telecom Services Introduced in India.

Ø 1947 Posts, Telegraph and Telephones(PTT) come under the aegis of the Ministry of Communication. Ø 1985 The Department of Telecommunication(DoT) comes into existence which would be a self regulator. Ø 1986 DoT converted into two wholly government-owned companies: The Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.

Class of PGDM 2008-

HISTORY Ø 1996 Cellular Services launched in India. Introducing private players in the market. Ø 1997

Telecom Regulatory Authority of India (TRAI) formed.

Ø 2000 DoT becomes a corporation, Bharat Sanchar Nigam Limited (BSNL). Ø 2005

Foreign Direct Investment(FDI) increased to 74%.

Ø 2008

India becomes 2nd largest Telecom Market in the World.

Class of PGDM 2008-

Pre-Liberalization Era Million telephones

1991-96

Class of PGDM 2008-10

Winds of Change…

Rajiv Gandhi

Sam Pitroda

Class of PGDM 2008-10

Teledensity (%)

Teledensity - Urban vs. Rural

Class of PGDM 2008-10

Major Players

Class of PGDM 2008-10

External Factors Definition: “Factors that affect an industry, which are outside its jurisdiction are called External Factors.” They Include: ØGovernment Policies ØTechnological ØCompetition/Consolidation ØForeign Direct Investment ØInfrastructure ØEntry of New Players ØOrganized Retail

Class of PGDM 2008-10

Government Policies ØTelecom Regulatory Authority of India (TRAI). ØTelecom Dispute Settlement and Appellate Tribunal (TDSAT). ØSpectrum. ØUnified Licensing Policy(ULP). ØPrivate OFC Networks (PSU). ØVested interests of communication forms.

policy

makers

in

promoting

various

Class of PGDM 2008-10

Spectrum ØSpectrum has become one of the scarcest resource today. ØPlayers buying spectrum so that they can sell it later at higher prices. ØLimited spectrum unlimited demand (same spectrum, multiple technologies). ØBureaucratic delay in release of defence allocated spectrum. ØCurrent technologies not spectrum efficient.

Class of PGDM 2008-10

Technological ØAvailability of inexpensive mobile handsets. ØData Communication, smart phones, multi-technology handsets. ØCDMA and GSM. ØWireless and emerging technologies. IPTV, mobile TV).

(GPS, DTH,

ØMobile Banking and Credit Services. Class of PGDM 2008-10

Competition and Consolidation Ø10 major, 2 minor players. ØNew licensees from real estate to electronics majors. ØIdea acquiring Spice, Vodafone

Hutch

BPL.

ØMNCs (Virgin, Verizon, AT&T, BT, Deutsche). Ø¢10, falling ARPU. Class of PGDM 2008-10

Foreign Direct Investment(FDI) ØInitially 26% then 49% and now 74%. ØFor NLD and ILD Networks 100% FDI allowed. ØIn manufacturing sector 100% FDI. ØBeing a strategic sector, the investment from dubious sources or potent threatening nations alarming. ØThreat for domestic players. Class of PGDM 2008-10

Environmental Concerns ØRadiation hazards. ØLaying cables causing damage to environment. ØHealth hazards due to overuse of mobile phones. ØE-wastes. ØEcological imbalance

Class of PGDM 2008-10

Stock Market ØListed telecom players getting good valuation, attracting lot of investors. ØReady availability of funds by share liquidation. ØGlobal PE and venture capitalists interested in Indian telecom growth story (Warburg Pincus). ØEmerging telecom players have opportunities to list overseas stock exchanges like London Stock Exchange. ØUnlocking share holders value by listing tower businesses (Reliance Infratel) Class of PGDM 2008-10

Infrastructure ØInfrastructure Sharing. ØInfrastructure acquiring. ØStand alone tower companies. ØSEZ for telecom hardware manufacturing. ØOFC and under-sea cable sharing. Class of PGDM 2008-10

Entry of New Players ØMNCs trying to get in to the Indian market with industry incoherent domestic players. ØSimilar to aviation sector, irrational competition leading to bloodbath. ØCompanies with dubious origins can hamper the telecom growth story (Swan and Cheetah). ØBuy today sell tomorrow. ØIncreased competition tending towards perfect competition thus, Second Telecom Revolution in the making. Class of PGDM 2008-10

Organized Retail ØOrganized mobile retail chains like Hotspot, Subhiksha Mobile, The Mobile Store etc. ØEvery mile PROs in urban and semi-urban areas. ØCorporate and Speciality plans for customers. ØMobile retail vans and door to door plans selling. ØEasy recharge and bill collection. Class of PGDM 2008-10

Subscribers ØEasy access to multiple customer plans. Call rates cheaper than peanuts. ØValue added services. ØMobile phones have become today’s necessity as compared to luxury of the 90’s. ØImpulsive buying due to demographic dividend. ØMulti-phone carrying trends (Using features of many SP’s together).

Class of PGDM 2008-10

Global Scenario ØDeveloped markets stagnant growth, so next move towards 3rd world countries. ØOld technologies being dumped into developing markets. ØNew technologies being researched and implemented (3G and B3G) ØITU, unification and compatibility of all technologies. ØGlobal alliances to lay inter-continental submerged cables.

Class of PGDM 2008-10

From Kashmir to Kanyakumari… Empowering and Integrating

The Indian Telecommunication