Telecom Industry

Connecting the World

SHIPRA KANSAL
Telecom in the real sense means transfer of information
between two distant points in space

Telecom is a huge and varied bastion of technologies,

companies, services and
politics that is truly global in nature
Introduction

 Telecom stands as one of the most essential elements of the

business world in terms of “Connecting the World”

 Volatile Sector
 Regulatory discord
 Cut-throat competition
 Emergence of Technologies

 Emergence of broadband & wireless technologies pose threat to

carriers relying on aging infrastructure

 To survive, telecom carriers need to consider various options

 Consolidation,
 Convergence,
 Costly Technological upgrades
Global Growth Patterns

 Emerging Markets
 Driving Volume Growth
 Low Tariffs (ARPUs)

 Developed Markets
 Low Subscriber Base
 Technological Advancements

Indian Telecom depends on the global telecom industry for technology

platforms & network management
While
Indian market size attracts telecom giants
Indian Telecom - Scenario

 India – Fastest growing market in World – 190 mn subscribers

 4th largest mobile market growing at 6 mn Sub/month
 3rd largest internet market, 4th largest by 2012
 PCOs - 4.5 mn @ CQGR of 7.22%
 Paying highest taxes and regulatory charges; Variable License fee

OPPORTUNITIES
 Data revenues – 8.5% of service revenue against world avg of 16.5%
 Content Services – Music/Video etc
 Applications – m Commerce/PVR Ticketing
 Tele-density – From 2% in 2000 to 15.44% in 2006
 TEMA target of $100 bn for equipments in next 3 yrs
 IT & ITES Industry – $35 bn with CAGR of 35%
Indian Telecom – Global Reach
Players Countries Services Subscribers Partners
Bharti
Emtel of Mauritius, (Since
34000 (March
Seychelles Fixed, FWP, cellular 1998) private investors
Telecom Seychelles 2006)
and the Gov of Seychelles

Jersey Telenet State of Jersey 2G and 3G, ILD Services from

Oct 2006
MTNL
CDMA-based WLL 45,032 (March TCIL VSNL, and NVPL
United Telecom Nepal
services 2006) Wholly
(Since 2002)

MTML (Since 2005) Mauritius CDMA-based WLL services 20000 (March owned subsidiary
2006)
Reliance
ILD services to India,
Australia, Canada,
US, UK and
France, Germany, 500,000 + -
Canada
IndiaCall services Malaysia, NZ, Singapore,
(Since 2005) and UK

VSNL (acquired South Africa Transnet/ Transtel,

license in 2005) Fixed (Services to Eskom, Nexus, Two,
commence in Aug-Sep CommuniTel
2006)

Source: Voice & Data

 Market Structure
•Divided into 22 circles
4 metros Jammu &
Kashmir

19 circles Himachal

Pradesh

Further divided into A, B

Punjab
Uttar
Haryana Prade

and C category based on sh W

DELHI

economic parameters and Rajasthan Uttar

Pradesh E
Bihar
revenue potential Gujarat Madhya
West
Bengal

•Each circle has a licenses

Pradesh

Orissa KOLKATA
Four operators per circle are Maharashtra

MUMBAI

allowed Andhra
Pradesh
Licenses are saleable Karnataka
METRO
Circles
CHENNAI
A Circles
Tamil
Nadu B Circles
Kerala

C Circles
 Teledensity Levels
20 19.7

18
16 14.3
Teledensity (%)

14 12.2
12 10.4
10
8.2
8 7.0
6.9
5.8
4.8 5.1
6 4.3
4
2.9 3.6
4 2.3
1.6 1.9 1.5
1.3 1.2 1.7
2 0.7 0.9
0.3 0.3 0.4 0.5
0
1996 1997 1998 1999 2000 2001 2002 2003 2004

Rural Urban Total

 Rural India
As per DoT
 India has a 700 million
statistics 500,000
people living in 638,000
villages have
villages
telephone access.
 per-capita income of $ However,
0.40 per day) teledensity
patterns reveal
120
102.1
135 million rural the low
Number of HH in millions

100
penetration of
80 households communication
60

40
services
17
20 10
3.9 1.9 1 0.3 0.3
The question is : Is
0 connectivity
60 180 260 360 520 840 1300 2240
HH Incom e in $ per m onth
relevant to the rural
populace of India?
 Business Model
 Entrepreneur-driven operator assisted telephone booths (STD
PCOs) introduced in India in 1987
 Today in urban areas:
 950,000 such PCOs covering every street of smallest town
 generate 25 % of total telecom income
 300 million people use these PCOs
 Lessons for Rural Connectivity
 To serve the telecom needs of rural people with incomes <
$ 1 per day, aggregate demand and allow an entrepreneur
to run it.
 Business Model
 Aggregate demand to a village internet centre to provide
voice/computer and internet services
 Allow a local village entrepreneur to run it

 Create an organization to provide the connectivity and

content linkages
 Global Trends – Connecting World
Convergence & Mobility

Public
 Mobile Devices with Safety  Mobile Police &
voice, data & video Fire personnel
 Mobile Wireless devices
Broadband  Interoperable
 Fibre to Home Communications Communications

Computers
& IT

 Entertainment  Laptops & Handheld

becomes Digital PCs
 Mobile Personal Consumer  Entertainment major
Digital Devices Electronics PC driver
prevail  IP to & in the Home
 VoIP handsets
 Major Players
There are three types of players in telecom
services:
• -State owned companies (BSNL and MTNL)
• -Private Indian owned companies (Reliance
Infocomm, Bharti Tele-Ventures,Tata
Teleservices,)
• -Foreign invested companies (Hutchison-
Essar(VODAFONE), Escotel, Idea Cellular, BPL
Mobile, Spice Communications)
Bharat Sanchar Nigam Limited (known as BSNL, India
Communications Corporation Limited) is a public sector
telecommunication company in India. It is India's largest
telecommunication company with, 24% market share.
Telecommunication
•Type
service provider
Indiawide except Delhi
•Availability
and Mumbai
19th century,
•Founded incorporated 2000

•Slogan Connecting India

•Revenue US$ 9.67 billion (2007)
The
•Owner
Government of India
•Key people Kuldeep Goyal (CMD)
Website
www.bsnl.in, www.bsnl.co.in
 Mahanagar Telephone
Nigam Limited
 Mahanagar Telephone Nigam Limited (NYSE: MTE) is
an Indian Government-owned telephone service provider
in the cities of Mumbai, Thane, New Delhi, and
Navi Mumbai in India. The company was a monopoly until
2000, when the telecom sector was opened to other
service providers.
 MTNL provides fixed line telephones, cellular connection of
both GSM — Dolphin(Postpaid) and Trump (prepaid) and
WLL (CDMA) — Garuda-FW And Garuda-Mobile and
internet services through dialup and DSL —
Broadband internet TriBand. MTNL has also started
Games on demand, video on demand and IPTV services in
India through its Broadband Internet service called
Triband.
 Bharti Airtel founded by Sunil Mittal in 1985. The
businesses at Bharti Airtel have been structured into three
individual strategic business units (SBU’s) - Mobile
Services, Airtel Telemedia Services & Enterprise Services.
The mobile business provides mobile & fixed wireless
services using GSM technology across 23 telecom circles
while the Airtel Telemedia Services business offers
broadband & telephone services in 95 cities and has
recently launched a Direct-to-Home (DTH) service, Airtel
digital TV. The company provides end-to-end data and
enterprise services to the corporate customers through its
nationwide fiber optic backbone, last mile connectivity in
fixed-line and mobile circles, VSATs, ISP and international
bandwidth access through the gateways and landing
station.
 Globally, Bharti Airtel is the 3rd largest in-country mobile
operator by subscriber base, behind China Mobile and
China Unicom. In India, the company has a 24.6% share
of the wireless services market, followed by 17.7% for
Reliance Communications and 17.4% for Vodafone Essar.
 Airtel: Airtel is a brand of telecommunication services in
India and Sri Lanka owned and operated by Bharti Airtel.
It is the largest cellular service provider in India in terms
of number of subscribers. Services are offered under the
brand name Airtel: Mobile Services (using GSM
Technology), Broadband & Telephone Services (Fixed line,
Internet Connectivity(DSL) and Leased Line), Long
Distance Services and Enterprise Services
(Telecommunications Consulting for corporates). It has
presence in all 23 circles of the country and covers 71% of
the current population.
COMPANY MARKET SHARES
Company Million % share
Subscribers

BSNL 40.3 58.8

Reliance 6.1 8.9
Bharti 5.7 8.3
MTNL 4.9 7.2
Vodafone 2.9 4.2
Idea Cellular 2.1 3.0
BPL 1.4 2.1
Tata Teleservices 1.3 1.9
Spice 1.0 1.4
Escotel 0.8 1.1
Fascel 0.8 1.1
Aircel 0.9 1.4
MAJOR MARKET TRENDS
 The telecoms trends in India will have a great impact
on everything from the humble PC, internet,
broadband (both wireless and fixed), cable, handset
features, talking SMS, IPTV, soft switches, and
managed services to the local manufacturing and
supply chain. This report discusses key trends in the
Indian telecom industry, their drivers and the major
impacts of such trends affecting mobile operators,
infrastructure and handset vendors.
 Indian Telecom – Way Forward to being Global
 Transparent and truly technology-neutral Government policies
 Allow full range of private & Public Sector telco's to compete fairly and fully

 Adequate spectrum in useable frequency bands advocated by the ITU to

wireless service providers

 Low regulatory restrictions over new services such as Push-to-talk, IP-

enabled services, particularly Voice-Over IP (VoIP)
 Ensure level playing field and “No” worse-off position for existing license holders

 Duties on imported telecommunications and related equipment must be

reduced to zero
 To promote competition in IPLC

 “Put in Right Policies” for technology multinationals to build business in

consumer end user device segments like mobile, handset, PC’s and
networking product manufacturing

 Acquisitions with “Strategic” intent

 Constraints:
 Slow pace of the reform process .
 It would be difficult to make in-roads into the semi-rural and
rural areas because of the lack of infrastructure. The service
providers have to incur a huge initial fixed cost to make
inroads into this market. Achieving break-even under these
circumstances may prove to be difficult.
 The sector requires players with huge financial resources due
to the above mentioned constraint. Upfront entry fees and
bank guarantees represent a sizeable share of initial
investments. While the criteria are important, it tends to
support the existing big and older players. Financing these
requirements require a little more liberal approach from the
policy side.
 Problem of limited spectrum availability and the issue of
interconnection charges between the private and state
operators.
Thank You