A

Paper Presentation

On

“SWOT ANALYSIS OF INDIA TELECOM

INDUSTRY”

At

Jind Institute Of Engineering & Technology

Jind, Haryana

Author

NISHANT

Student, Department of Business Administration

Jind Institute of Engineering and Technology

Email Id:- jhon00714@gmail.com

Key Words:

 Abstract

 Telecom Sector- Introduction

 Telecom Regulatory Authority Of India

 Major Players Of Indian Telecom Industry

 SWOT Analysis Introduction

 What Is SWOT Analysis

 SWOT Analysis Of Indian Telecom Industry

 Simple Rules For Successful SWOT Analysis

 Bibliography
 Abstract
All industry is a group of firms that have similar technological structure of production
and produce similar products or services. Companies are distinctly classified to give a
clear picture about their manufacturing process and products or services. Increase in the
demand for the industry’s product becomes its strength; presence of numerous players in
the market, that competitor becomes the threat to a particular company in the respective
industry. The progress in the research and development in the particular industry is an
opportunity and entry of multinationals in the industry and cheap imports of the particular
products are threat to that industry. In this way the factors have to be arranged and
analyzed in SWOT analysis.
TELECOM INDUSTRY
 Telecom Sector- introduction

o Most vibrant sector with highest growth rate – more than 60

lakh customers are added every month

o Plethora of services

o Easier access/ availability

o Drastic reduction in tariff

o World class service

Major classes of Services

o Fixed Copper, Optical Fibre, Wireless

o Mobile GSM and CDMA based

o Narrow band Voice, Internet, Fax

o Broad band High speed Internet, Video

 Technology Trend

 Optical fiber based wireline networks

 Wireless networks GSM,CDMA based mobile

 Next Generation Networks: Voice , Data, Video convergence

 Telecom networks increasingly software intensive

Telecom Regulatory Authority of India

o Setup in 1997

o Protection of Consumer Interest

o Nurture Conditions for Growth of Telecom in India

o Major Activities

 Reduced levies on Operators.

 Reduced upper limit in tariff (Local, STD & ISD) and other Inter-
operators tariffs.

 Directives on number of network access service providers.

 Policy guidelines on new services like 3G, Wi-MAX, Internet Telephony,

Radio Paging, VSAT, etc.

 Regular monitoring of Quality of Service parameters

 Key Policy Initiatives/milestones

 New Economic Policy (1991)

 Opening up of Telecom service sector (Mobile –metros)

 National Telecom Policy 1994

 Telecom, key for development

 Inadequacy of public resource to meet demand

 Private sector to supplement Govt.

 Provide world class telecom service at affordable cost

Major players of Indian telecom industry

The Top five companies, on the basis of ‘Market Share’ as on 31st January,
2009 are:

1. Bharti Airtel Ltd.

2. Reliance Communications Ltd.

3. Vodafone Essar Ltd.

4. BSNL

5. Idea Cellular + Spice

Bottom five companies, on the basis of ‘Market Share’ as on 31st January,
2009 are:

1. Aircel Cellular Ltd. + Dishnet

2. Mahanagar Telephone Nigam Ltd. (MTNL)

3. BPL Mobile Communications Ltd.

4. HFCL Infotel Ltd.

5. Shyam Telecom Ltd.

Issues to be addressed in the Indian Scenario

 Unique Rural Scenario : low teledensity

 Need for Spectrum re-farming & re-allocation

 Lack of Content in Local Languages

 Network Security
 Indian Telecommunications Industry - SWOT
Framework Analysis

India continues to be one of the fastest growing telecom markets in the world. Reforms
introduced by successive Indian governments over the last decade have dramatically changed the
nature of telecommunications in the country. The sector ranks fifth in the world, with over 103.2
million telephone subscriptions by 2005-end.

SWOT Analysis, is a strategic planning tool used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. It involves specifying
the objective of the business venture or project and identifying the internal and external factors
that are favorable and unfavorable to achieving that objective.

The aim of any SWOT analysis is to identify the key internal and external factors that are
important to achieving the objective. SWOT analysis groups key pieces of information into two
main categories:

Internal factors - The strengths and weaknesses internal to the

organization.
External factors - The opportunities and threats presented by the
external environment.
 SWOT Analysis

Strengths – Weaknesses – Opportunities – Threats

A SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture or in any other situation
of an organization or individual requiring a decision in pursuit of an objective. It involves
monitoring the marketing environment internal and external to the organization or individual.

In SWOT, strengths and weaknesses are internal factors.

Strengths could be:

• Your specialist marketing expertise.

• A new, innovative product or service.
• Location of your business.
• Quality processes and procedures.
• Any other aspect of your business that adds value to your product or service.
A weakness could be:

• Lack of marketing expertise.

• Undifferentiated products or services (i.e. in relation to your competitors).
• Location of your business.
• Poor quality goods or services.
• Damaged reputation.

In SWOT, opportunities and threats are external factors.

An opportunity could be:

• A developing market such as the Internet.

• Mergers, joint ventures or strategic alliances.
• Moving into new market segments that offer improved profits.
• A new international market.
• A market vacated by an ineffective competitor.

A threat could be:

• A new competitor in your home market.

• Price wars with competitors.
• A competitor has a new, innovative product or service.
• Competitors have superior access to channels of distribution.
• Taxation is introduced on your product or service.

A word of caution, SWOT analysis can be very subjective. Do not rely on SWOT too
much. Two people rarely come-up with the same final version of SWOT.
SWOT ANALYSIS OF INDIAN TELECOM INDUSTRY

• Indian Telecom market is one of the fastest growing markets in the world.

• Indian telecom network has about 562.21 million connections as on 31 July 2010.

• With 525.15 million wireless connections, Indian telecom has become the second
largest wireless network in the world after China.

• About 15 million connections are being added every month.

• Wireless telephones are increasing at faster rate. The share of wireless telephones
as on July 31, 2010 is above 93% of the total phones.

• The share of private sector in total telephone is about 82.33%.

 STRENGTHS

• Huge Customer potential

▫ Teledensity still being 48% and rural tele-density 21%.

▫ The broadband subscribers grew from 0.18 million in 2005 to6.2 million
as on 30 April 2010 and about 7.98 million, at the end of the December
2009.

• High Growth Rate

▫ Wireless subscribers growing at a CAGR of 60 per cent per annum since

2004.

• Allowed FDI limit ranging from 74% to 100%

▫ The total FDI equity inflows in telecom sector have been US$ 2223
million during April-November 2009-10

• High return on Investment

▫ Easier to create economies of scale thereby increasing return on

investment

• Liberalization efforts by Govt.

▫ The share of private sector in total telephone connections is now 82.33%

as per the latest statistics available for December 2009 as against a meager
5% in 1999.

• Lower capital expenditure

▫ The Indian telecom market is a high density area, which means more
population per tower. This means lower capital expenditure cost.
 ▫ Presence in all the telecom circles

▫ Developed Infrastructure in place

▫ Strong and loyal consumer base

WEAKNESS

• Poor Telecommunication Infrastructure

▫ Result : Large number of call drops.

• Late adopters of New Technology

▫ India will be among the last countries in the world to get access to 3G
technology. Some estimates suggest that nearly 132 countries across the
world already have 3G technology and mobile services in one form or the
other.

• Most competitive market

▫ 10 to 12 companies offer mobile services in most parts of India, globally,

the average is 4.

• A market strongly regulated by Government.

• Difficult to enter because of requirement of huge financial resources.

▫ E.g Auction of 3G license has reached Rs 15814.15 crores.

▫ Presence only in GSM

▫ Weak communication in comparison of competition

▫ High attrition rates in the industry

 Opportunities

• 3G Telecom services

• More Quality Service

▫ Mobile Number Portability will force the Service provider to improve

their quality to avoid losing subscribers

• Value added Services (VAS)

▫ The mobile value added services include, text or SMS, menu based
services, downloading of music or ringtones, mobile TV, videos,
streaming, sophisticated m-commerce applications etc.

▫ Mobile banking, Mobile Ticketing etc

• Boost to Telecom Manufacturing Companies

▫ Production of telecom equipments in value terms has increased from Rs.

412700 million (2007-08) to Rs.488000 million during 2008-09 and
expected to increase to Rs. 575840 million during 2009-10.

• Telecom Equipment Exports

▫ The Indian telecom industry is expected to reach a size of Rs 344,921

crore by 2012 at a growth rate of over 26 per cent, and generate
employment opportunities for about 10 million people during the same
period.The sector would create direct employment for 2.8 million people
and for 7 million indirectly, according to a Frost and Sullivan report.

• Horizontal Integration

▫ Entry Into other consumer segments leveraging the present channels

▫ E.g. DTH service like Reliance BIG TV, Tata SKY, Airtel digital TV by
telecom majors like Reliance, Tata and Airtel Respectively.
 ▫ Other examples : Airtel website builder

• Providing fibre Connectivity to 2,50,000 village panchayat by 2012.

• More scope in content related services, since, the consumer is influenced by local
culture.

• Market on a rise

• Favorable Govt. Policies

• Leverage form existing Infrastructure

• Rapidly turning into an entertainment media

 THREATS

• Telecommunication Policies

▫ e.g. Trai's 2G direction affecting new players most notably Tata

Teleservices, Norway’s Telenor and Essar-owned Loop Telecom

▫ Renewal of 2G license on the basis of market rates of 3G auctions

▫ TRAI intentions of rolling out 4G or the fourth-generation technology,

known as the ultra-broadband in 2-3 years raising fears rendering 3G
services somewhat obsolete.

• Declining ARPU (average Revenue per user)

▫ E.g. price wars like per-second billing which is deflating revenues and
making sure the ‘survival of the fittest’

• Partiality on the part of the Govt.

▫ E.g.Allowing 3G service in a PSU (MTNL,BSNL) before auctioning to

Private Sector .

▫ Entrance of global players

▫ Risk of Technology obsoletion and continuous need of up gradation

▫ No distinction between new entrants and incumbents

 Simple Rules for Successful SWOT Analysis

• Be realistic about the strengths and weaknesses of your organization when

conducting SWOT analysis.
• SWOT analysis should distinguish between where your organization is today, and
where it could be in the future.
• SWOT should always be specific. Avoid grey areas.
• Always apply SWOT in relation to your competition i.e. better than or worse than
your competition.
• Keep your SWOT short and simple. Avoid complexity and over analysis
• SWOT is subjective.

Once key issues have been identified with your SWOT analysis, they feed into marketing
objectives.
 CONCLUSION

In our opinion, instead of taking a short-term view of paying capacity, the telecom
companies should focus on a long-term game. There is one word that telecom companies
are hearing a lot these days-“Volumes”. They need volumes to sustain the network and
the large employee base they have enrolled. In this regard, companies like Reliance and
Tata’s have been aggressive over the final rollout of connections to PCO owners.
Reliance is giving upto 30% commission on each call. How they market and distribute
these connections is a tough battle indeed. If and when the carrier access codes are
introduced, there could be a tough fight among these outlets, as far as prices are
concerned. Yet, prices can go down further by almost 40% of the present structure. Part
of the price cuts could be because of tax exemptions, if and when these companies can
lobby for the same. The other part could be earning through volumes.

New players like Virgin Mobile, which already has an international presence in close to
17 countries are entering India. It is doing so in collaboration with Tata Teleservices. The
target market for Virgin Mobile is the youth, which in India is around 54% of its
population.

There are challenges like porting time, allocation of capital and operational porting costs
among participants and other interconnect issues. Yet, the atmosphere around the MNP
issue looks positive and will be set once the committee submits its final report on the
same.

The telecom sector is attracting significant domestic and global investment. The capital
investment made by the telecom service industry during 2006-07 was around $8.5 billion,
out of which $550 million was foreign direct investment. The margins and profits of
almost all the telecom companies have been increasing. In fact there are cases where a
significant portion of profit of international telecom companies has been from their
operations in India.India is well prepared for the introduction of NGN (Next-Generation
Networking). Being a late starter in the telecom scenario, India has the advantage of
using the latest technology and so it is in a better position when compared to many other
countries as far as introduction of NGN is concerned. Besides, the TRAI has identified
introduction of NGN as a priority area. It has been noted that mobile telephony is
growing at an annual rate of over 90 percent. Besides the basic telephone service, there is
a huge potential for different Value Added Services (VAS). In fact, the real potential for
telecom service growth is still lying untapped.
 BIBLOGRAPHY

 http://www.slideshare.net/Timothy212/swot-analysis-
3916518/download

 http://www.slideshare.net/rahulkalra0001/swot-analysis-indian-
telecom-industry-ppt

 www.scribd.com

 www.trai.gov.in

 Google search engine