TELECOM INDUSTRY

India has a total of 960.9 Million telecom subscribers, comprising of 929.37 mobile subscribers & 31.53 wire-line subscribers. The Indian teledensity now stands at 79.28%.

Rank in world in network size Tele density (per hundred populations) Telephone connections (In Million) Fixed Mobile Total

3rd 79.28

929.37 31.53 960.9

Sl. No. 1 2 3 4 5 6

Name of Company Bharti Airtel Vodafone Essar IDEA BSNL Aircel Uninor

Total Sub Figures Additions in Aug % Market Share 171,846,824 144,144,031 98,441,714 90,622,219 59,191,661 27,738,154 1,150,298 1,133,024 2,330,239 388,057 602,312 349,488 28.09% 23.56% 16.09% 14.81% 9.68% 4.53%

7
8 9 10 11 12

Videocon
MTNL Loop Mobile Stel Etisalat All India

6,382,493
5,298,081 3,181,967 3,433,988 1,477,495 611,758,627

-652,383
32,932 19,035 -67,259 52,941 5,338,684

1.04%
0.87% 0.52% 0.56% 0.24% 100.00%

Group Company Wise % Market Share (Subscribers) as of July 2012

0%
1% 1% 6%

Airtel
28%

10%

Vodafone
IDEA BSNL

14%

Aircel

Uninor
Videocon
17% 23%

MTNL
Loop

With the connections now growing at a faster pace in rural areas as compared to urban the rural teledensity will grow from the current value of 40% to 50%.

Strengths Huge Customer potential High Growth Rate Allowed FDI limit ranging from 74% to 100% Liberalization efforts by Govt. Lower capital expenditure

Weakness Poor Telecommunication Infrastructure Late adopters of New Technology A market strongly regulated by Government. Difficult to enter because of requirement of huge financial resources.

Opportunities 3G Telecom services and 4G services More Quality Service Value added Services

Threats Telecommunication Policies Declining Average Revenue Per User Partiality on the part of the Govt.

WFA/ISA - Global Advertiser Conference

Mumbai, March 5, 2008

where you go the network follows you

Vodafone Essar is a British multinational mobile network operator headquartered in Newbury, England. Vodafone is the world's largest mobile telecommunication network company. It currently has operations in 31 countries and partner networks in a further 40 countries. Based on subscribers, it is the world's second largest mobile phone operator behind China Mobile

Vodafone Essar is a one of the major player of mobile telecommunications in India. On February 11, 2007, Vodafone agreed to acquire the controlling interest of 67% and Essar Group 33%.

PRODUCT PROFILE VAS Products Worldwide Caller ring back tone Group Messaging Missed Call alert Music on Demand Short message service center SMS chat and Voice Chat

Prepaid Postpaid I-Phone 3G Magic box Handset World Calling Cards Gulf Calling Cards Vodafone PCO Vodafone Handy phone

Vodafone has given birth to the Zoozoo: a special character created specifically to convey a value added service (VAS) offering in each of the newly released commercials.

Magic Box. Phone Backup. Stock Alerts. IPL commentary. International Roaming. Cricket Alerts. Bhakti Saagar. IPL contests. Dating Tips. Chotta Credit. Voice SMS. Maps Live. Fashion Tips. Live Games. Recharge Anywhere. Musical greetings. Ringtone. Group SMS. Call Divert. Background Music. Exam Results. Beauty Tips.

Brief intro of scheme offered Talk time over>> Emergency situation>> SMS Credit>> Get Rs 10 balance>> Adjusted on next recharge. Target Market-Prepaid Low Budget customers Shows company not only after money. Cares about customers in times of need. Satisfaction and Retention of customers

Internal factors

Strengths (S) Weaknesses (W) Opportunities (O) Threats (T)

External factors

Strength 1.One of the most popular cellular service provider in India 2.One of the largest Telecom operator in the world 3.Only Indian operator, with VSNL, that has an international submarine cable 4.High brand visibility 5.Strong advertising with ZooZoo concept 6.Tieup with international sports like Formula One.

Weakness 1.Price competition from BSNL and MTNL 2.Untapped Rural Market 3.No Network in Rural Areas 4.Low R&D

Opportunities 1. Fast expanding cellular market 2. Latest and low cost technology 3. Untapped rural market 4. Majority stake in Hutchison Essar in India 5. Research and development of new mobile technologies 6. Good Tarrif packages

Threats 1.Highly competitive market 2.New entrant's low price offering 3. Saturation point in Basic telephony service 4.Mobile Number Portability.

Competitors in Market

 Concentration Market Share and Structure

Financial Analysis Past, Present, Future

Global Presence and Marketing Network

Future Prospects Overall Analysis

Concentration Market Share More than 15 players in the market. Airtel, Vodafone, Idea and RCOM itself captures more than 75%

Market Structure (2012) Average revenue per user for big players is around Rs. 110 Rs. 120 Reliance has lesser ARPU because major of its subscribers are low end customers

Revenue Market share

AIRTEL Reliance 29.1% 8.2 %

Consumer Market share

19.8% 16.7%

ARPU
114.2 45.2

IDEA

15%

12.3%

114.9

Market leader AIRTEL Market Challenger Reliance, Vodafone, BSNL Maket Follower TATA, IDEA

Competitors Analysis
Concentration Market Share and Structure Revenue Growth Analysis Telecom operator

AIRTEL

Increased mobility revenue(9% CAGR) due to increasing traffic(7.9% CAGR) at stable ARPM; Bhartis revenue will also be helped by African revenues expected to grow at 30.9% CAGR
RCOM, which has been struggling with the KPIs and subscriber quality, is expected to grow at 4.5% CAGR over FY11 to FY14E driven by a 5.9% CAGR in traffic to 445.4 billion minutes and a stable ARPM of ~ 45 paisa. Increased mobility revenue(18.5% CAGR) due to increasing traffic(17.7% CAGR) at stable ARPM

RCOM

IDEA

Competitors Analysis
OPERATOR Financials Past, Present, Future AIRTEL EBITDA margin analysis For Bharti Airtel, African operations are expected to see a significant margin expansion from 25.0% to 30.9% due to various cost saving initiatives like BPO, IT and network management outsourcing, passive infrastructure sharing, etc. undertaken by the company EBITDA margin for Reliance Communication to improve to 31.9% in FY14 from 29.5% in FY11 on account of reduced network rollout costs. For Idea Cellular, EBITDA margins are expected to improve to 24.1% in FY14 from 27.7% in FY11, primarily on the back of higher network utilization.

RELIANCE

IDEA

Global Presence and Marketing Network Existing telecom companies are coming up with continuous growth strategy due to high competition. AIRTEL RCOM Mobile and fixed wireless services (GSM) 23 telecom circles Reliance Communications has IP-enabled connectivity infrastructure comprising over 150,000 kilometers of fiber optic cable systems in India, the US, Europe, Middle East, and the Asia Pacific region

IDEA

Has a customer base of over 17 million, IDEA Cellular has operations in Delhi, Maharashtra,Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chattisgarh, Uttaranchal, Haryana, UP West, Himachal Pradesh and Kerala.

Future Prospects AIRTEL Airtel plans to set up 3000 more towers to enhance their rural coverage and will now focus on rural and semi-urban areas Peak investment phase is over. RCOM continues to be free cash flow positive and this trend to continue in succeeding years. RCOM not only reliant on wireless business and also vying the massive opportunity with DTH and expansion of Enterprise/IDC Idea also plans to enter rural and neglected circles as a strategy to gain subscribers. It also plans for smaller base transmission stations that will mean lesser infrastructure requirements and expenses and independent tower operation. Along with its plan to go for a national long distance license, it will also look at international long distance in the near future.

RCOM

IDEA

Overall Analysis Telecom sector is one of the fastest growing sectors. This is due to strong competition that has brought down tariffs and simplification of policy environment that has promoted healthy competition amongst various players The government has eased the rules regarding inter circle and intra circle mergers. This has led to a slew of mergers and acquisitions in the recent past As the sector is moving closer to maturity, further consolidation is a reality and this will lead to the survival of more profitable players in this segment Infrastructure equipment cost is down to a fraction of what prevailed just a few years ago operators can plan better expansion plan now Increased viability for the operators to expand to semi-urban and rural markets. Hence, competition in this market would increase.

POLITICAL : Governmental and legal issues affecting how the company operates: Regulation Infrastructure Banning of phone use in certain circumstances Health issues

ECONOMIC :
Factors affecting the purchasing power of the

customers and the companys cost of capital

Cost of 3G license

Cost of calls being driven down

Worldwide recession Third world countries

SOCIAL :
Demographic and cultural aspects of environment which influence customer need and market size. Health issues Demographic

Social trends
Picture phone Mobile etiquette Saturation point

TECHNOLOGICAL :
3G

UMTS(2.5G)
GPRS/WAP

SMS / MMS

SEGMENTATION :

income
Age

Service usage
Life of service Geographical condition Nature of customer

Vodafone is adopting multi-segment approach .they are offering a series of differentiated products to their respective markets.

Home calling cards for the families of those

professional who use to work abroad.

Rs. 10 recharge for small user.

Cheap SMS facility for youth Facilities for circle users.

 where you go the network follows you Hutch , as a brand, always tried to connect with consumers in simple, honest and real manner, while Vodafone is more young and fun brand. So consumer will see a shift reflecting a more vibrant brand. The pug and actor Irfan Khan will be retained for the brand position. They are talking about the exclusivity of the network and the service they are offering to the customer.

Our strategic objective is :- Innovate and deliver on customers total communications needs:Vodafone too, needed to educate consumers about cellular telephony:-Can I call std? -Can I use my phone in a lift? -what is airtime?

Rebranding -Stores -Mass media coverage Innovative distribution to reach the customer -Exclusive shops -Hub and spoke -Associate distributions Customer service -Shops and call centers -Vans -Help desks

PRODUCT: A product with many different features provides customers with opportunities to

chat, play games, send and receive pictures, change ring tones, receive information about travel and sporting events, obtain billing information and soon view video clips and send video messages.

Vodafone live! provides on-the-move information services.

PLACE: Vodafone UK operates over 300 of its own stores. It also sells through independent retailers e.g. Car phone Warehouse. Customers are able to see and handle products they are considering buying. People are on hand to ensure customers needs are matched with the right product and to explain the different options available.

PRICE:
Vodafone wants to make its services accessible to as many people as possible: from the young, through apprentices and high powered business executives, to the more mature users. It offers various pricing structures to suit different customer groups. Monthly price plans are available as well as prepay options. Phone users can top up their phone on line. Vodafone UK gives NECTAR reward points for every 1 spent on calls, text messages, picture messages and ring tones.

PROMOTION:Vodafone works with icons such as Zoozoos & Pug to communicate its brand values. ABOVE THE LINE Advertising on TV, on billboards, in magazines and in other media outlets reaches large audiences and spreads the brand image and the message very effectively. This is known as above the line promotion. BELOW THE LINE Stores have special offers, promotions and point of sale posters to attract those inside the stores to buy. Vodafone's stores, its products and its staff all project the brand image. Vodafone actively develops good public relations by sending press releases to national newspapers and magazines to explain new products and ideas.

5 Forces of competition
HIGH HIGH

HIGH

LOW

VERY HIGH

Restrictive Govt Policy : Spectrum and license allocation 74% FDI cap. Minimum requirement of number of towers. 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

Capital Requirement : Extremely high infrastructure setup costs Spectrum License cost

 Lack of differentiation among the service provider Cut throat competition Customer is price sensitive Low switching costs Number portability to have negative impact

 Large number of suppliers. Shared tower infrastructure.

Physical Infra
Network Infrastructure

Supplier
-Ericsson -Siemens Networks -Cisco -Huawei -IBM -TCS -Bharti Infratel -Indus Towers -IBM Daksh -Mphasis -Hinduja TMT -Aegis BPO -Nortel

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.

Information Technology Passive Infrastructure Call Center Outsourcing

Overall influence on the industry - medium

 High High 6-7 3

Exit Barriers Fixed Cost

players in each region

out of 4 BIG-Four present in each region less time to gain advantage by an innovation

Very

(Eg. Caller tunes, life time card)

Price

wars

Some Substitutes:
VOIP (Skype, Messenger etc.) Online Chat

Email
Satellite phones

None of the above a major threat in current scenario.

Price-Performance trade-off very high.

Issues of mobility and penetration with the substitutes.