Pricing Strategies Of Reliance Telecom

RELIANCE MANAGERS VENKAT NEHA VASUDHA KAVITA YATIN

MARKET SWOT ANALYSIS

TELECOMMUNICATION SEGMENTS

INDUSTRY OVERVIEW TELECOM

Subscriber growth 180

164 CAGR - 38 %

120

98 76

60

44

53

0 2002

2003

2004

2005

Aug-06

Subscriber Growth - Mobile vs Fixed

Mn. subscribers

175 143

140 105 70 35

38

43

42

7

13

2002

2003

34

52 41

41

2005

2006

0 2004

Fixed (mn. subs)

Mobile (mn. subs)

Segment

Urban

Rural

Cellular reach (2003-04)

Cellular reach (End 2006 - Est.)

Locations

Population

Locations

Population

~ 1700 of 5200 towns

200 million

~ 4900 towns out of nearly 5200 towns

300 million

Negligible

Negligible

~ 350,000 out of 607,000 villages

450 million

ON 31ST AUGUST, 2008 – TOTAL CELLULAR SUBSCRIBERS = 30,02,97,160

MAJOR PLAYERS IN THE MARKET

Company

Presence

Subscribers Jul 06 (mn)

Share (%)

Fixed

Mobile

Fixed

Mobile

BSNL

Government owned. Has ramped up GSM services. National presence (except Mumbai and Delhi)

37.4

17.7

74.7%

19.6%

MTNL

Government owned. Operates in Delhi and Mumbai.

3.8

2.0

7.7%

2.3%

Bharti

Integrated operator, with presence in all sectors. Largest mobile services provider.

1.4

19.6

2.7%

21.7%

Reliance

Integrated operator. Plans expansion of GSM network apart from being the largest private CDMA operators.

3.0

17.3

6.0%

19.2%

Hutch

Pure play GSM operator in 11 circles.

15.4

17.0%

IDEA

Pure play GSM operator in 6 circles

7.4

8.2%

Tata Teleservices

Integrated operator (along with VSNL) with presence in all segments. Provides CDMA services in 20 circles

Aircel

Operates in 2 circles. Announced Plans to expand GSM footprint in North and North east

2.6

2.9%

Spice

Pure play GSM player in 2 circles

1.9

2.1%

Others Total

4.0

4.9

0.4

1.4

50

90

8.0%

5.4%

A DREAM COMES TRUE… “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” AMBANI

DHIRUBHAI

STARTED ON 28TH DEC, 2002 ON

DHIRUBHAI AMBANI’S 70TH BIRTHDAY. IT WAS CALLED RELIANCE INFOCOMM,

NOW KNOW AS RELIANCE COMMUNICATIONS. FIRST AD FEATURED DHIRUBHAI AMBANI

AND MUKESH AMBANI. THE MAIN AIM WAS “TO PROVIDE

MOBILES TO EVERYBODY” INTRODUCED CDMA TECHNOLOGY IN

PENETRATION PRICING PRICE SET TO ‘PENETRATE THE MARKET’ ‘LOW’ PRICE TO SECURE HIGH VOLUMES TYPICAL IN MASS MARKET PRODUCTS –

CHOCOLATE BARS, FOOD STUFFS, HOUSEHOLD GOODS, ETC.

SUITABLE FOR PRODUCTS WITH LONG

ANTICIPATED LIFE CYCLES

MAY BE USEFUL IF LAUNCHING INTO A NEW

MARKET

1. DHIRUBHAI AMBANI PIONEER OFFER FREE DIGITAL MOBILE PHONE UNLIMITED FREE INCOMING CALLS BILLING AT 15 – SECOND PULSE RATE ONE – TIME DEPOSIT OF RS. 3000 TELEPHONY CHARGES WERE RS. 600 PER

MONTH OUTGOING CALLS AT 10 PAISE FOR 15 SECONDS LONG DISTANCE CALLS AT 40 PAISE PER MINUTE TO ANY RELIANCE PHONE ONLY FREE TEXT MESSAGING

2. MONSOON HUNGAMA SCHEME CAME OUT IN 1ST JULY, 2003 CUSTOMERS WILL GET A MOBILE

AT RS. 501 MONTHLY RENTAL OF RS. 200 BIGGEST PROMOTIONAL SUCCESS IN THE HISTORY OF MOBILE PHONES 1 MILLION HANDSETS SOLD IN 10 DAYS PRICES OF GSM HANDSET

3. PRE – PAID OFFERING INTRODUCED IN FEB 2004 GAVE CUSTOMERS FREE RECHARGE

VOUCHERS NEARLY THE COST OF THE HANDSET CUSTOMER HAD TO PAY RS. 3500 FOR THE HANDSET FREE RECHARGE VOUCHERS WORTH RS. 3240 AUTOMATIC ROAMING IN INDIA WITHOUT ANY EXTRA CHARGE

NO. OF SUBSCRIBERS IN MILLIONS

CUSTOMER GENERATION DHIRUBHAI AMBANI ENTREPRENEURSHIP

PROGRAM ADVERTISING R WORLD PRODUCT INNOVATIONS CUSTOMER SERVICE

CRITICIZED FOR CIRCUMVENTING

EXISTING TELECOMMUNICATION POLICIES MONSOON HUNGAMA GAVE RISE TO

LOGISTICS, BILLING & COLLECTION PROBLEMS EMERGENCE OF LEADERSHIP CRISIS TWO YEARS OF LOSSES

STRONG MIX OF OWN & OUTSIDE

CHANNELS INCLUDING DIRECT SALES AGENTS, RETAILERS, WEBWORLS & WEBWORLD EXPRESSES OBTAINED LICENSES TO OPERATE IN 20

OF THE EXISTING 22 CIRCLES ACQUIRED FLAG TELECOM FOR US$ 211

MILLION PROFIT OF RS. 510 MILLION IN 2004-05

MOBILE REVOLUTION BROUGHT ABOUT

BY RELIANCE EXPANSION TO 640,000 VILLAGES AND

OVER 5000 CITIES & TOWNS PROVISION OF HIDGH SPEED NETWORKS PROVISION OF THE LATEST

TELECOMMUNICATION FACILITIES TO EVERY INDIAN AT THE PRICE OF A POST CARD