PROJECT ON TELECOM SECTOR OF INDIA

VISHWA VISHWANI INSTITUTE OF SYSTEMS & MANAGEMENT GROUP MEMBERS ARE- Basanta Kumar Padhan Satyajit Paul Shailendra Shrivastava Mukesh Kumar Bhatta

Rabi Kumar Sadija Jyoti Rajan Jena Raju.N

INTRODUCTION OF TELECOM INDUSTRY

History -India’s telecom renaissance has been remarkable. After 44 years of government monopoly, market liberalization introduced in 1991 has led to a 7-fold increase in the number of phones in just 12 years.

The mobile market recently topped 31 million customers.

India is one of the fastest growing telecom markets with an average annual growth of about 22% for basic telephony and over 100% for cellular and Internet services.

History of telecommunication

India requires investments of at least $37 billion by 2005 and $69 billion by 2010.

Year-1851 First operational land lines were laid by the government near Calcutta (seat of British power)

 Year-1881 Telephone service introduced in India Year -1923 Formation of Indian Radio Telegraph Company (IRT)  Year -1947 Nationalization of all foreign telecommunication

companies to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications

Year -1997 Telecom Regulatory Authority of India created Year -1999 Cellular Services are launched in India. New

National Telecom Policy is adopted.  Year -2000 Do not becomes a corporation, BSNL

Major Players

There are three types of players in telecom services:

• -State owned companies (BSNL and MTNL)

• -Private Indian owned companies (Reliance Infocomm, Tata Teleservices,)

• -Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures,

Escotel, Idea Cellular, BPL Mobile, Spice Communications)

Introduction of major players

BSNL BHARTI MTNL RELIANCE INFOCOMM TATA TELESERVICES VSNL HUTCH IDEA

 

MARKET SHARE OF PLAYER IN TELECOM SERVICE

Company Million Subs (Nov 2003)

% share

BSNL 40.3 58.8

Reliance 6.1 8.9

Bharti 5.7 8.3

MTNL 4.9 7.2

Hutchison 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

Hexacom 0.2 0.3

Regulatory Control

Entry of private service providers in 1992 brought the need for independent regulation.

Telecom Regulatory Authority of India(TRAI) was established from 20February 1997 to regulate telecom services & tariffs fixation.

Telecommunications Dispute Settlement and Appellate Tribunal(TDSAT) was established from 24January 2000 to settle disputes between a licensor and a licensee, service providers, service provider and a consumer.

Recent Policy Changes

Restructuring the sector. Increased the investment. Technology development and transfer Service provision.

Major Market Trends

Telecom trends in India have a great impact on the PC,internet,broadband,Cable,handset features.

An average of 4million subscribers added every month for the past 6 months.

The wireless subscriber base has increased 75percent from 2002 to 2007.

18 percent of mobile users are willing to change their handsets every year.

Mergers

Demand for new spectrum as the industry grows and the fact the spectrum allocation is done on the basis of number of subscribers will force companies to merge so as to claim large no . Of subscribers to gain more spectrum as a precursor to the launch of larger and expanded services.

EQUIPMENT MARKET

CATOGARY 2006-07RUPEES

2006-07DOLLARS

2005-06RUPEES

2005-06DOLLAR

CAREER EQUPMENT

150.1 3.3 148.1 3.3

ENTERPRISE EQUIPMENT

47.3 1.0 43.0 1.0

OTHER 84.9 2.0 66.0 1.5

TOTAL 282.3 6.3 257.1 5.8

EQUIPMENT OF TELECOM INDUSTRIES IN INDIAEQUIPMENT BUYERS MARKET SIZE ESTABLISHED

SUPPLIER

CDMA Handsets Reliance,Tata,BSNL

Rs- 5.59 billion Samgsung,LG,NokioKyocera

GSM Handsets BSNL,MTNL, Hutchison-esssar,Bharati,Ideacellular,Spice AIRCEL

Rs-17.95billon Nokia, Motorola,Panasonic, Siemens

Switching equipment

MTNL,BSNL, Reliance infocom

RS-40.37billlion Lucent technologyAlcatel,Ericsson

Transmission equipment

BSNL,Reliance,VSNL,Bharati AIRTEL,POWERGRID,Rail tail

RS-7.83 billion Motorala,ITI,HFCLSiemens, UTStarcom

Enterprises Reliance RS-40.37billion Cisco

Telecom software

BT,Ericsson,Nortel,Siemens,Telestra

Rs-55.70 billion TCS wipro,InfosysHughes software

TOP 10 INDIAN TELECOM PROVIDER IN INDIA

RANK(06-07)

SERVICEPROVIDER

REVENUE IN CRORE(RS)

GROTH IN(%)

CATOGARY

1 BSNL 40177 40135 -0.1 FIXED,CELLULAR,ISP,NLD

2 BHARATI AIRTEL

11291 17888 58.4 FIXED,CELLULAR,ISP,NLD,ILD

3 RELIANCE 10766 14468 34.4 FIXED,CELLULAR, ISP,NLD,ILD

4 HUTCH 6837 10565 54.4 CELLULAR,NLD ILD

5 VSNL 4797 8857 84.6 NLD,ILD,ISP

6 TTSL 2575 5178 101.1 FIXED,CELLULAR

7 MTNL 5561 4923 -11.5 FIXED,CELLULAR, ISP,NLD

8 IDEA 2990 4431 47.6 CELLULAR,NLD

9 AIRCEL 977 1570 52.2 CELLULAR,NLD,ILD

10 TTML 1097 1422 29.6 FIXED,CELLULAR

14

Telecom Market in India : 2002-07

66.5

41.9

15.413

33.6

52.2

98.78

171.21

0

20

40

60

80

100

120

140

160

180

2002-03 2003-04 2004-05 2005-06 2006-07

Annual Mobile Sales Mobile Subsciber Base

Mobile Phones

• Annual subscriber base growth 44%; 2007-08: subscriber expected to cross 250 mn

• 2006-07: Base Stations installed: 100,000; Annual growth: 55%

• 2006-07: Towers installed: 100,000; Annual growth: 60%

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Dept. of Telecom 1526 November 2006

Mobile Growth and effective charge per minute

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4.00

6.00

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18.00

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FixedMobile (Rs./min)Mobile Subscriber base (Millions)

NTP '99

Telecom Tariff Order

3rd & 4th cellular operator

WLL introduce

d

CPP introduced

Lowering of ADC from 30% to 10% of sector revenue

6.503.58

1.881.200.88

Dept. of Telecom 1626 November 2006

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

Key Policy initiatives (contd..) Establishment of TRAI (1997)

New Telecom Policy (NTP 99)› Transition from fixed license fee to

revenue share› Introduction of free competition› Technology neutral licenses› Tariff rebalancing

Creation of BSNL (2000) Establishment of TDSAT (2000)

Dept. of Telecom 1826 November 2006

Key Policy initiatives (contd..) Opening of National &

International long distance Launching of mobile service by

BSNL (2002) Establishment of USO Fund Broadband policy (2004)

KEY FACTOR OF TELECOM GROTH IN INDIA

Telecom industry is growing at a scorching pace in the recent years.

It is due to the following reasons 1. We have moved from an environment that was

monopolized. by state own company.2. Intense competition among several player.3. Wireless revolution is taking place in country.4. Global economics is growing.5. Another key role is implementation of customer

greater control over telecom costs. (CPP REGIME)

NEW STEPS FOR TELECOM 1. Foreign Direct Investment of up to 100 percent permitted for the following: Manufacturing of telecom equipment Internet service (not providing international gateways) Infrastructure providers (Category I) E-mail service Voice mail service Call Centers and IT enabled services

2. Foreign Direct Investment of up to 74 percent permitted for the following: Internet service (providing international gateways) Infrastructure providers (Category II) Radio paging services  3. Foreign Direct Investment of up to 49 percent permitted for the following: National long distance service Basic telephone service Cellular mobile service Other value added service   4. Additional foreign investment through holding/investment company 

NEW STEPS FOR TELECOM

 

5. Automatic approval for technology fee up to US$ 2 million, royalty up to 5 percent for domestic sales and 8 percent for exports in telecom manufacturing (higher amount through specific approvals)

  6. Full reparability of dividend income and capital invested in the

telecom sector  7. Fiscal incentives and concessions for the telecom sector: Amortization of license fee Tax holiday Rebate on subscription to shares/debentures Scope for tax exemption on financing through venture capital Import duty rates reduced for various telecom equipment 

PROJECT ON TELECOM