Telecom Sector

ROLE OF GOVERNMENT IN TELECOM SECTOR

Digital India

Bharat Net

Delivering broadband connectivity to remote areas

Foreign Direct Investment

 CURRENT STATUS OF
TELECOMMUNICATION IN INDIA
• With a subscriber base of nearly 1,185.88million, as of Nov 2017, India
accounted for 2nd largest telecom network in the world.
• India is also the second largest country in terms of internet subscribers with
493.96million internet subscribers, as of march 2018.
• The total number of urban subscribers have reached to 705.05 million and
urban tele-density at 172.86%
FACTORS AFFECTING DEMAND OF MOBILE
PHONES

Technology

Environment

Tastes and preferences of consumers

Expenditure on advertising
JIO IMPACT
• Reliance Jio was officially launched on 5th September 2016 and it has drastically
changed the telecom sector with its free voice calls and cheap 4G services that
changed the way Indian users consumed data. Free for the first six months after
launch, the company’s 4G data services provided consumers the option to watch
more online videos and other content than ever before, something that became
apparent when India jumped ahead of the US and China to take the position of
world’s biggest consumer of mobile data.
Ways in which Telecom Industry has changed after Jio’s entry.

• Faster mobile data

• The death of 3G
• A record in user acquisition
• Improved broadband Internet availability
• Ultra-cheap data
• Increased consumption of online content
• Free voice calls
• Growth of 4G smart phones
ECONOMIC FACTOR
• Economic factors mainly include growth, interest rates, inflation and
exchange rates

• Before the entering of Jio in Indian Telecom sector the prices were high,
but in recent times prices have become nominal.

• Jobs are opening up in the telecom sector due to increase in the uses of
technologies like mobiles and internets.
Effect of Telecommunication on
GDP

• When NTP 99 was enforced, India merely had a million

subscribers. Since then, the industry has grown to
become the second largest telecommunications market
in the world that is now well beyond the billion mark.
• Roughly 2% of the GDP is directly contributed by
Telecom.
• In 2016 the mobile industry in India contributed 6.5
per cent ($140 billion) to country’s GDP, and
employed over 4 million people (direct and indirect),
is projected to grow rapidly in the coming years.

• By 2020, the industry is expected to contribute 8.2 per

cent to country’s GDP.

• With the rise of new entity coming into • The Aditya Birla group has the right to acquire
force Bharti Airtel will lose the tag of
India’s largest service provider to the new
entity which is proposed to be called as
Vodafone Idea Limited
• Vodafone will own 45.1 stake In combined
entity , while Kumar Mangalam led Aditya
Birla Group would have 26 percent and
shareholder 28 percent
Between the
lines
up to 9.5% additional stake from Vodafone
under an agreed mechanism to equalise share
holding over time.
• If Vodafone and Aditya Birla Group’s
shareholding on the combined company are not
equal after 4 years, Vodafone will sell down
shares in the combined company to equalise its
shareholding to that of Aditya Birla group over
the following 5 years
Why and how to pay?
• The Department of Telecommunication (DOT) has approved
the merger of Vodafone India Ltd after the companies paid ₹
3,900 crore in cash and ₹3,300 crore in bank guarantee s
towards one-time spectrum charges.

• While Rs3,900 crore cash is for transfer of spectrum from

Vodafone to Idea for airwaves up to 4.4 MHz, the bank
guarantee of Rs3,300 crore is for airwaves beyond 4.4 MHz.
Implications
• The transaction will cut Vodafone Group’s net debt by nearly
Rs54,522 crore as subscriber migration towards 4G post
merger will increase ARPU

• It will create country’s largest mobile phone operator worth

more than $23 Billion with 35% market share.