8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 1/58
STAR 2015, UWSB DELHI Page 1
Telecom
Industry
SUBMITTED TO SUBMITTED BY
P RO F. D EEPAK D AVE S UNNY T OMAR
R OHIT KR . G UPTA
D EEPAK K R . V ERMA
R AGHAV M EHTA
S AUD H ASAN W ARSI
V INOD KUMAR
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 2/58
STAR 2015, UWSB DELHI Page 2
INDEX
PRELIMENARIES
Acknowledgement ………………………………………………........4
Executive Summary ……………………………………………….….5
LITERATURE REVIEW
1.0. Title of the project ……………………………………………………..6
2.0. Objective of the project ………………………………………..........6 3.0. Overview of industry ……………………………………………..….6
4.0. Industry analysis …………………………………………………….7
5.1. Industry structure ……………………………………………………8
5.2. Porter’s analysis …………………………………………………….9
5.3. Key Drivers and success factors …………………………………11
5.4. Government regulations …………………………………………..17
5.5. Market analysis summary …………………………………………19
6.0. Players………………………………………………………………22
6.1. Competition…………………………………………………………24
6.2. Technology…………………………………………………………24
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 3/58
STAR 2015, UWSB DELHI Page 3
6.3. Shares…………………………………………………………......29
6.4. Segmentation of the Indian Telecom Consumer Market..........29
7.0. Brief profile of company selected as star ………………………..36
7.1. Financials Analysis …………………………………………………38
7.2. Customer relationships …………………………………………….44
7.3. Average Revenue per unit…………………………………………46
7.4. Corporate Social responsibility……………………………………47
8.0. Projections and Scenario Building………………………………..48
8.1. Important industry milestones till 2015 …………………………..48
8.2. Possible scenarios till 2015 and suggested growth …………… 49
Strategies for there
9.0. Conclusion………………………………………………………..57
9.1. Bibliography ………………………………………………………58
9.2. ABBREVIATIONS ………………………………………………58
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 4/58
STAR 2015, UWSB DELHI Page 4
Acknowledgement
This project work would never have been an achievable task, had
we not been under the great shelter of guidance of respected Professor Deepak Dave. Her simplified teaching technique based
on examples has helped us gain more understanding of the
subject. The very essence of the project work is the linguistic
precision which has an impact of conveying more details in least
possible words. An ample use of various reference readings has
been very frequently made while compiling data for this project.
Such rich reading has been made available at hand by the
treasure-like well-maintained library of the UWSB, Gurgaon. I am
very much under obligation to mention here, the contributions of
my batch mates who have, knowingly or unknowingly, provided
us the competitive edge which is the driving force of the whole
labor and extra labor put into the project. We would also take an
opportunity to thank all the respondents, who have taken pains
in answering the questions and filled the place of true
representatives for deciding the nature of the problem. Finally, I
feel very much gratified to the administration of UWSB, Gurgaon
for providing comfortable environment.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 5/58
STAR 2015, UWSB DELHI Page 5
EXECUTIVE SUMMARY
Market of telecom industry is growing expeditiously. Rural market is one of the main
drivers for success. Every player should manage the expectations of its customers and
provide them innovative products and services in a way which makes them loyal. ARPU is powerful and extremely useful indicator of telecom industry. Today technology is
playing a major role as we can see in wireless segment around 94% of subscribers are
involved. Airtel covers more than 25% of wireless segment. 2G and 3G are playing a
major role for service providers as market leader. The option of WI-MAX or TD-LTE to
implement will totally depend on service provider’s strategy. Value added services are
major drivers as well VAS sector is increasing 60% per year. Today, VAS market is of
15000 Cr and most expectedly its going to reach 70000 Cr by 2015 the major
challenges faced by the industry is lack of content. There are two major players Airtel &
Reliance in business enterprise sector. Today current market is of Rs. 30000 Cr and
increasing very fast in this operator providing corporate services to their customer
presently Airtel is leading the market but reliance is not far behind. The player going to
succeed in future needs to adapt technology much faster then its competitor. By
analyzing the finance part of Telecom companies industry we find that that the customer
base of Bharti Airtel, Idea and Rcom are increasing with a CAGR OF 36.11%,45.65%
and 38.15% respectively. There Revenue trend is also increasing except Rcom whose
revenue falls down because of their low pricing strategy. We also analyzed the
difference between revenue and PBDT and find that Idea and Rcom other
manufacturing cost is much more than of Bharti Airtel. In Ratio analysis we try to
analyze the profitability ratio, Liquidity, Management and investors related ratio. Where we find the Bharti Airtel having the highest Net profit ratio Margin of 26.36%, Rcom have
a good Current Ratio 1.37, we also find that every company is trying to decrease their
decrease their debt equity ratio. This shows us the strong outlook of the business. We
also find the Bharti Airtel having the highest Return on the total asset while on investor
side Idea is standing with a good price earning ratio of 28.11%. After which we had built
four scenarios on certain key variables that are expected to occur in the near future and
finally selected the company as Bharti Airtel which we proposed to be the STAR 2015.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 6/58
STAR 2015, UWSB DELHI Page 6
1.0. Title of the project:-
“Star 2015 of Telecom Industry in India”
2.0. Objective of the project:-
The objective of project is to analyze the emerging trends in
Telecom sector in India. This project is also carried out to
understand the future Outlook of the Telecom market finding
about the key players, their performance, growth potential and
also the opportunities that exist for the Indian Telecom market.
Building up the scenarios on certain variables and selecting the
Star of 2015.
3.0 Overview of industry
The telecom service is world-over as a significant tool for socio-economic developmentfor a nation. It is needed for rapid growth and modernization of various sectors of theeconomy. Driven by various policy initiatives, undergone a major process oftransformation through significant policy reforms, particularly beginning with theannouncement of NTP 1994 and was subsequently re-emphasized and carried forwardunder NTP 1999.It has achieved a phenomenal growth during the last few years and is
poised to take a big leap in the future also.
Status of Telecom Sector
The Indian Telecommunications network with 621 million connections (as on March
2010) is the 3rd largest in the world. This rapid growth is possible due to various
proactive and positive decisions of the Government and contribution of both by the
public and the private sectors. The rapid strides in the telecom sector have been
facilitated by liberal policies of the Government that provides easy market access for
telecom equipment and a fair regulatory framework for offering telecom services to the
Indian consumers at affordable prices. Presently, all the telecom services have beenopened for private participation.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 7/58
STAR 2015, UWSB DELHI Page 7
4.0. Industry analysis
What is telecommunication Industry?
The definition of telecommunications is rather broad. Telecommunication involves the
transmission of information over long distances, often, but not always, through using
electronic aids. Generally, any assisted communication in which there is a sender and a
receiver is considered telecommunication. One person can act as the receiver or a
multitude of people can act as the receiver. The mechanism by which the information is
transmitted can be any type of mechanism, including primitive transmission devices,
cables, wires, analog signals or digital signals.
Brief history
History of Indian Telecommunications started in 1851 when the first operational landlines were laid by the government near Calcutta (seat of British power). In 1883telephone services were merged with the postal system. Indian Radio TelegraphCompany (IRT) was formed in 1923. After independence in 1947, all the foreigntelecommunication companies were nationalized to form the Posts, Telephone andTelegraph (PTT), a monopoly run by the government's Ministry of Communications.Telecom sector was considered as a strategic service and the government considered itbest to bring under state's control. The first wind of reforms in telecommunications
sector began to flow in 1980s when the private sector was allowed intelecommunications equipment manufacturing. In 1985, Department ofTelecommunications (DOT) was established. It was an exclusive provider of domesticand long- distance service that would be its own regulator (separate from the postalsystem). In 1986, two wholly government-owned companies were created: VidesSanchar Nigam Limited (VSNL) for international telecommunications & Mahan agarTelephone Nigam Limited (MTNL) for service in metropolitan areas. In 1990s,telecommunications sector benefited from the general opening up of the economy.National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensiveroadmap for the Indian telecommunications sector. In 1997, Telecom RegulatoryAuthority of India (TRAI) was created. TRAI was formed to act as a regulator to facilitate
the growth of the telecom sector. New National Telecom Policy was adopted in 1999and cellular services were also launched in the same year. Indian telecom industry hasthe highest growth rate in the world. A record 5.9 Million new mobile phone subscriberswere drawn by the Telecom sector in India in the month of August 2006, according tothe COAI (Cellular Operators Association of India). India, which is seeing over 8 millionwireless subscribers being added every month (8.62 million in May 2008), is the fastestgrowing telephone market in the world. The government has reiterated the target of 500million telecom subscribers and 20 million broadband connections by 2015.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 8/58
STAR 2015, UWSB DELHI Page 8
Growth of the telecom industry
According to our new analytical study on the sector Indian Telecom Analysis (2008-2012), mobile telephony continues to fuel growth of the Indian telecom sector, withmobile subscribers projected to grow at a CAGR of around 11% between 2009-10 and2013-14. Other segments of the industry such as Internet and broadband are alsoanticipated to witness strong growth in terms of both subscriber addition and networkinfrastructure deployment over the forecast period.
Tele-density in India has improved significantly over the recent years and has reachedaround 51% in the fiscal year 2009-10, owing to improving network infrastructure. Thelaunch of advanced telecom services like 3G and IPTV will also drive the growth in
Indian telecom subscriber base over the forecast period. Furthermore, mobile handsetmarket is also expected to register a robust growth in near future. In this regard, ourreport provides rational analysis of the factors which are driving the growth of mobilehandset market in India. Also, various factors driving the overall telecom market inmarket have been thoroughly analyzed in the report.
The report provides a detailed study of the Indian telecom sector and gives an analysisof the competitive environment prevailing in the industry. The report thoroughly studiesfixed, mobile, Internet and broadband markets in terms of players and number ofsubscribers. It also presents the future outlook of the Indian telecom sector to helpclients identify the growth opportunities in the market.
5.1. Industry structure
Indian Telecom sector, like any other industrial sector in the country, has gone throughmany phases of growth and diversification. Starting from telegraphic and telephonicsystems in the 19th century, the field of telephonic communication has now expanded tomake use of advanced technologies like GSM, CDMA, and WLL to the great 3GTechnology in mobile phones. Day by day, both the Public Players and the PrivatePlayers are putting in their resources and efforts to improve the telecommunicationtechnology so as to give the maximum to their customers.
The telecom industry is broadly classified into two categories:-
1) Telecom Services2) Telecom Infrastructure
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 9/58
STAR 2015, UWSB DELHI Page 9
5.2. Porter’s analysis
Porter five force analysis of telecom industry
Threat from New Entrants
Supply Side Economies of Scale
Declining ARPU Infrastructure tenancy cost Others factors like BPO
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
Incumbent Advantages
Established brand image
Reliability of network
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 10/58
STAR 2015, UWSB DELHI Page 10
Uneven access to Distribution Channels
Not a factor
Restrictive Govt Policy
Spectrum and license allocation 3G and Number portability policy still unclear. 74% FDI cap. Minimum requirement of number of towers.
Supplier Bargaining Power
Physical Infra Supplier
Network Infrastructure -Ericsson
-Siemens Networks- Cisco
-Huawei
Information Technology -IBM
-TCS
Passive Infrastructure -Bharti Infratel
-Indus Towers
Call Center Outsourcing -IBM Daksh
-Emphasis
-Hinduja TMT
-Aegis BPO
-Nortel
Large number of suppliers.
Shared tower infrastructure.
Limited pool of skilled managers and engineers especially those well versed inthe latest technologies.
Medium cost of switching since changing their hardware would lead to additionalcost in modifying the architecture.
Overall influence on the industry – medium
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 11/58
STAR 2015, UWSB DELHI Page 11
Rivalry among Existing Competitors
High Exit Barriers
High Fixed Cost
6-7 players in each region
3 out of 4 BIG-Four present in each region
Very less time to gain advantage by an innovation (e.g. Caller tunes, life timecard)
Price wars
Threat of Substitutes
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
5.3. Key Drivers and success factors
Value added services Enterprise Services Infrastructure
Value added services (VAS)
Value Added Service is that service which is not part of the basic Voice offer and isavailed off separately by the end user. It is provided by Telecom service providers.These services are used as a tool for Differentiation and allow the mobile operators to
develop another stream of revenue. Operators still dominate the revenue sharingarrangement in VAS [Of the amount paid by end users, 60-70% is kept by operator,aggregator gets 20-25% and content app/owner gets 10-15% of the revenue. TheIndian telecom industry is one of the fastest growing in the world and India is projectedto become second largest telecom market globally by 2010. This has helped the VASIndustry in India to come out of its infancy. Even the global economic slowdown hasdone less to affect its growth. The mobile VAS market has grown by around 60% yearon year and is estimated to touch INR 251 billion in FY 2009-10. This trend is expected
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 12/58
STAR 2015, UWSB DELHI Page 12
to increase in future, as VAS services will become a major revenue source for telecomoperators in India.
The present VAS market volume is Rs. 15000 crore (more than US$3bn), likely toreach Rs. 70,000 crore by 2015 and Rs. 100,000 crore by 2020! Vas includes services
like News- e.g. Business, sports, politics etc. Finance Share market, foreign exchangeetc. Entertainment- e.g. Games, jokes, films etc. Travel- e.g. Railway, airlines etc.Download- e.g. Caller tunes, wallpapers etc, Astrology- e.g. Horoscope
Challenges:-
• Lack of content localization• Slow adoption of GPRS mobiles (Only 6.1 millions GPRS users
Compared to 200 million overall subscribers)Future trends:-• Location Based Services
• Mobile Music update will increase with better bandwidth
• Migration to 3G will result in increased ARPU
And the latest development in vas market is Airtel tie up with RBI which includes BhartiAirtel has become the first mobile operator in the country to get a license from theReserve Bank of India to start mobile payment services. This service will allow Airtelsubscribers to exchange physical cash for virtual money which can be stored on mobilephones to pay for goods and services for transaction value less than Rs 5,000. Oncethe user loads up his phone with prepaid cash he can walk into specified merchantlocations and purchase goods and services.
Infrastructure
The telecom industry is one of the prime contributors to India's GDP. The once
monopolistic market is today, highly competitive. This has necessitated the growthof India telecom infrastructure. India telecom infrastructure has wider scope of the
telecom sector to other allied ventures like mobile services, Internet, cable TV services,
E-Commerce, and other forms of Information Technology (IT). In terms of long distance
calls, India telecom infrastructure has made remarkable progress. Latest technologies,
like use of fiber-optic cables has enhanced call-clarity and reduced call-costs to a large
extent.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 13/58
STAR 2015, UWSB DELHI Page 13
Tower Sharing Market Share Distribution –TowerInfrastructure Industry
Bharti Infratel
Bharti Infratel is the one of the world‟s largest „Telecom Passive Infrastructure‟providers. In India, Infratel has over 30,000 towers, across 18 states, and 11 Telecomcircles, and still growing. In July 2007, Bharti Infratel is created as an independent towercompany to provide compelling capital saving opportunities to telecom serviceproviders. Bharti Infratel also has a 42% stake in Indus towers which was created as aJoint Venture between Bharti Infratel, Vodafone and Idea to hive off the Towers
business in 12 circles. Bharti Infratel is a combine company with Idea Cellular andVodafone Essar. This company basically works on the "Indus Tower”, the maintenancework of those radio signal towers is watching by this organization.
Indus Tower
Indus Towers, a joint venture between three top telecom companies- Airtel, Vodafoneand Idea. Bharti Airtel and Vodafone, each hold 42% stake in Indus Towers while Idea
Cellular has 16%. Indus Towers with a portfolio of more than 100,000 towers is alreadythe largest tower company of the world.
Reliance Infratel
Reliance Infratel Limited provides passive telecommunication infrastructure in India. Thecompany builds, owns, and operates telecommunication towers, optic fiber cable (OFC)network, and related assets; and provides these passive infrastructure assets on a
•Indus
Towers
•Indus
Towers
•RelianceInfratel -
for all
circles
•BhartiInfratel
•Indus
TowersBharti
AirtelRCOM
Idea
CellularVodafone
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 14/58
STAR 2015, UWSB DELHI Page 14
shared basis to wireless and other communications service providers, as well as to non-communications customers under long-term contracts. Its customers use the space onits telecommunication towers to install active communication-related equipment andoperate their wireless communications networks. As of March 31, 2010, the company‟sportfolio consisted of 56,600 telecommunication towers. It was formerly known as
Reliance Telecom Infrastructure Limited and changed its name to Reliance InfratelLimited in January 2008. The company was founded in 2001 and is based in NaviMumbai, India. Reliance Infratel Limited operates as a subsidiary of RelianceCommunications Infrastructure Limited.
Benefits of shared infrastructure
Reduced Capital Expenditure:-Telecom business is heavy on Capital ex., and as much as 40-60% of the Capital isutilized for setting up and managing the Telecom infrastructure. And Average revenueper tower (ARPT) declining over time. By sharing infrastructure, we can maintain ARPT
and optimize their Capital ex. and focus on providing new and innovative services totheir subscribers.
Reduced Operating Expenditure:-By outsourcing the day-to-day management of your Telecom infrastructure to Infratel,your Operating expenses costs are hugely reduced. The cost-savings can be used toincrease your reach, provide innovative services, and improve customer satisfactionand higher ARPUs.
Reduced Time to Market:-By leveraging existing Infrastructure that are deployed in active Telecom circles, a new
operator can drastically cut down the time taken to begin operations. The resultingsavings in Cap.exp. Can then be diverted towards Marketing and promotional activitieswhich are crucial in the initial months.
Increased Connectivity:-Bharti Infratel has deployed passive infrastructure in 18 states of India across 11Telecom circles. Our coverage includes rural and remote locations which arecharacterized by erratic power supply, poor access, difficult terrain and lack of adequatebackup. So, when you go with Bharti Infratel, not only are you saved the hassle ofoperating in such conditions, but are also able to penetrate new markets with ease.
Cost and energy efficiencies:-By making use of cleaner, greener sources of energy like solar power that is moreenergy efficient, we are able to significantly reduce operating costs, the benefits ofwhich are passed onto the customer. Our „Green Towers‟ have been at the forefront in using solar power generation, andequipment such as direct current diesel generators and fuel cells in order to lowercarbon emissions. Today, we have nearly 650 „Green Towers‟ installed across thecountry.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 15/58
STAR 2015, UWSB DELHI Page 15
Infrastructure for 3G
Reliance
Rcom has also established a 3G Innovation Lab with at Reliance ADA Group‟s
headquarters in Dhirubhai Ambani Knowledge City, near Mumbai. The Lab is based onthe concept of “Open Platforms” architecture and is expected to bring together contentdevelopers, product innovators, technology platforms enablers, device manufacturesand original equipment manufacturers from India and abroad to create 3G products andapplications.
Airtel
It has tied up with Ericsson India, Nokia Siemens Networks (NSN) and Huawei
Technologies for its 3G infrastructure. Networks in seven out of Airtel‟s 13 circles will be
managed by Ericsson India, whereas NSN and Huawei will take care of three circleseach. Each vendor will plan, design, deploy and maintain 3G-HSPA networks in its
allotted circles.
TELECOM ENTERPRISE
IT includes mainly two players in enterprise market which are reliance and Airtel.Enterprise Services provides a broad portfolio of services to large Enterprise and Carrier customers
Airtel RELIANCE
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 16/58
STAR 2015, UWSB DELHI Page 16
Single point of contact for all telecommunication needs for Top 2500 corporate customers, providing full suite of voice, data, and managed
communications solutions
Wholesale voice and data services to over 30 domestic and 450 international telecommunications carriers
1 Operator in India in terms of Corporate Fixed Line Operator Corporate Internet Provider Corporate Mobility Provider
Segments where we lead the market-Largest share in the MPLS-VPN marketLargest share of the Centrex marketMarket leader in Data Centers – More than
50% market share
850 of top 1000 Enterprises in India10,000+ Small & Medium Businesses(SMBs)
Key customersJet airways, HUL<, coke cola etc
Key activitiesCore Banking, ATM/ Internet Banking
Large Messaging Applications
5.4. Government regulations
National Telecom Policy 1994
0
5000
10000
15000
20000
25000
2008 2009 2010
AIRTEL (Revenue)cr
AIRTEL
(Revenue)cr
0
1000
2000
3000
4000
5000
6000
7000
8000
2008 2009 2010 0
RELIANCE (Revenue)cr
RELIANCE
(Revenue)cr
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 17/58
STAR 2015, UWSB DELHI Page 17
In 1994, the Government announced the National Telecom Policy which defined certainimportant objectives, including availability of telephone on demand, provision of worldclass services at reasonable prices, improving India‟s competitiveness in global marketand promoting exports, attractive FDI and stimulating domestic investment, ensuringIndia‟s emergence as major manufacturing / export base of telecom equipment and
universal availability of basic telecom services to all villages. It also announced a seriesof specific targets to be achieved by 1997.
Telecom Regulatory Authority of India (TRAI)
The entry of private service providers brought with it the inevitable need forindependent regulation. The Telecom Regulatory Authority of India (TRAI) was, thus,established with effect from 20th February 1997 by an Act of Parliament, called theTelecom Regulatory Authority of India Act, 1997, to regulate telecom services, includingfixation/revision of tariffs for telecom services which were earlier vested in the CentralGovernment.
New Telecom Policy 1999
The most important milestone and instrument of telecom reforms in India is the NewTelecom Policy 1999 (NTP 99). The New Telecom Policy, 1999 (NTP-99) was approvedon 26th March 1999, to become effective from 1st April 1999.
Key features of the NTP 99 include
Strengthening of Regulator. National long distance services opened to private operators. International Long Distance Services opened to private sectors.
Private telecom operators licensed on a revenue sharing basis, plus a one-timeentry fee. Resolution of problems of existing operators envisaged. Direct interconnectivity and sharing of network with other telecom operators within
the service area was permitted. Department of Telecommunication Services (DTS) corporatized in 2000. Spectrum Management made transparent and more efficient.
National Long Distance
National Long Distance opened for private participation. The Government announcedon 13.08.2000 the guidelines for entry of private sector in National Long Distance
Services without any restriction on the number of operators.
International Long Distance
In the field of international telephony, India had agreed under the GATS to review itsopening up in 2004. However, open competition in this sector was allowed with effectfrom April 2002 itself. There is now no limit on the number of service providers in this
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 18/58
STAR 2015, UWSB DELHI Page 18
sector. The license for ILD service is issued initially for a period of 20 years,with automatic extension of the license by a period of 5 years.
Universal Service Obligation Fund
Another major step was to set up the Universal Service Obligation Fund with effect fromApril 1, 2002. An administrator was appointed for this purpose. Subsequently, the IndianTelegraph (Amendment) Act, 2003 giving statutory status to the Universal ServiceObligation Fund (USOF) was passed by both Houses of Parliament in December 2003.
Internet Service Providers (ISPs)
Internet service was opened for private participation in 1998 with a view to encouragegrowth of Internet and increase its penetration. The sector has seen tremendous
technological advancement for a period of time and has necessitated taking steps tofacilitate technological ingenuity and provision of various services.
Broadband Policy 2004
Recognizing the potential of ubiquitous Broadband service in growth of GDP andenhancement in quality of life through societal applications including tele-education,tele-medicine, e-governance, entertainment as well as employment generation by wayof high-speed access to information and web based communication; Government hasannounced Broadband Policy in October 2004.
Tariff Changes
The Indian Telecom Sector has witnessed major changes in the tariff structure. TheTelecommunication Tariff Order (TTO) 1999, issued by regulator (TRAI), had begun theprocess of tariff balancing with a view to bring them closer to the costs. Thissupplemented by Calling Party Pay (CPP), reduction in ADC and the increasedcompetition, has resulted in a dramatic fall in the tariffs.
Foreign Direct Investment (FDI)
FDI up to 74% (49% under automatic route) is also permitted for the following: -· Radio Paging Service. Internet Service Providers (ISP's)
FDI up to 100% permitted in respect of the following telecom services: -· Infrastructure Providers providing dark fiber (IP Category I);· Electronic Mail; and Voice Mail
5.5. Market analysis summary
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 19/58
STAR 2015, UWSB DELHI Page 19
SWOT analysis of 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 31December 2009.
• With 525.15 million wireless connections, Indian telecom has become the secondlargest 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 wirelesstelephones as on December 31, 2009 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 to6.2million as on 30 April 2009 and about 7.98 million, at the end of theDecember 2009.
• High Growth Rate
Wireless subscribers growing at a CAGR of 60 per cent per annumsince 2004.
• Allowed FDI limit ranging from 74% to 100%
The total FDI equity inflows in telecom sector have been US$ 2223million 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 now82.33% as per the latest statistics available for December 2009 asagainst a meager 5% in 1999.
• Lower capital expenditure
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 20/58
STAR 2015, UWSB DELHI Page 20
The Indian telecom market is a high density area, which means more populationper tower. This means lower capital expenditure cost.
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 to3G technology. Some estimates suggest that nearly 132 countriesacross the world already have 3G technology and mobile servicesin 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.
Opportunities
• 3G Telecom services and 4G services
• More Quality Service
Mobile Number Portability will force the Service provider to improvetheir quality to avoid losing subscribers
• Value added Services (VAS)
The mobile value added services include, text or SMS, menu basedservices, 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 increasedfrom Rs. 412700 million (2007-08) to Rs.488000 million during2008-09 and expected to increase to Rs. 575840 million during2009-10.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 21/58
STAR 2015, UWSB DELHI Page 21
• Telecom Equipment Exports
The Indian telecom industry is expected to reach a size of Rs344,921 crore by 2012 at a growth rate of over 26 per cent, andgenerate employment opportunities for about 10 million peopleduring the same period. The sector would create direct employmentfor 2.8 million people and for 7 million indirectly, according to aFrost and Sullivan report.
• Horizontal Integration
Entry Into other consumer segments leveraging the presentchannels
E.g. DTH service like Reliance BIG TV, Tata SKY, and Airtel digitalTV by telecom majors like Reliance, Tata and Airtel Respectively.
Other examples : Airtel website builder
• Providing fiber Connectivity to 2, 50, 000 village panchayat by 2012.
• More scope in content related services, since; the consumer is influencedby local culture.
Local festivals like Baisakhi, Chhath Puja, religious festivals likeDiwali, Chrismas etc., National festivals like Independence Day etc.
Threats
• Telecommunication Policies
e.g. Trai's 2G direction affecting new players most notably TataTeleservices, 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-generationtechnology, known as the ultra-broadband in 2-3 years raising fearsrendering 3G services somewhat obsolete.
• Declining ARPU (average Revenue per user)
E.g. price wars like per-second billing which is deflating revenuesand making sure the „survival of the fittest‟
• Partiality on the part of the Govt.
E.g. allowing 3G services in a PSU (MTNL, BSNL) beforeauctioning to Private Sector.
• Content Piracy
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 22/58
STAR 2015, UWSB DELHI Page 22
6.0. Players
• BSNL - Incumbent service provider and World's 7th largestTelecommunications Company providing comprehensive range of telecomservices in India
• Services include Wire line, CDMA mobile, GSM Mobile, Internet,Broadband, Carrier service, MPLS-VPN, VSAT, VoIP services, IN Servicesetc.
• MTNL - State owned operator covering the cities of Mumbai
an Delhi
• Provides both fixed and mobile services
• Bharti Airtel - Integrated operator with presence in all segments
• Leads the mobile segment in the country
• Reliance Communications - Largest player in India in the CDMA segment
• Growing in GSM network
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 23/58
STAR 2015, UWSB DELHI Page 23
• Tata Teleservices - Integrated operator (with VSNL) with presence in all
segments
• Provides CDMA services in 20 circles
• Has a 10% stake in Bharti telecom, an integrated service provider
• Represents the largest foreign investment in the telecom services sector
in India
• IDEA operates in eight telecom “circles,” or regions, in Western India, and
has received additional GSM licenses to expand its network into three
circles in Eastern India -- the first phase of a major expansion plan that itintends to fund through an IPO, according to parent company Aditya Birla
Group
6.1. Competition
AVERAGE REVENUE PER USER:
In the telecom industry, there are numerous instances when one comes across the termaverage revenue per user (ARPU). In common parlance, it is simply total revenue
divided by the total subscribers for a particular time period. It is a powerful and
extremely useful indicator of just how well a telecom company is accessing its
customers‟ revenue potential. ARPU plays a key role in an industry like telecom in
particular and any service industry that has a mass base. „Average‟ is the measure of
central tendency of data. It helps not only in understanding how the industry as a whole
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 24/58
STAR 2015, UWSB DELHI Page 24
is faring but also assists in benchmarking a particular player against others or industry
average.
ARPU 2007 2008 2009 2010
Bharti Airtel 482 422 374 280
Idea 167 152 151 118R Com 911 616 367 215
As we can see the Bharti Airtel is leading in ARPU as the revenue and the number of
subscribers is the highest, in the second position is the Reliance and the following is
Idea cellular. ARPU is basically compared among the peers the trend is not taken into
consideration, as the number of subscribers is going on increasing and the revenue
varies among the players.
6.2. Technology
Wireless and wire line segment:-
Wireless & wire linesubscriber base (in million).
QE,JUNE QE,SEP QE,DEC QE,MARCH QE,JUNE
2009 2009 2004 2010 2010
WIRELINE 37.5 37.31 37.06 39.96 36.18
WIRELESS 427.29 471.73 525.09 584.32 635.51
TOTAL 464.82 509.03 562.16 621.28 671.69(Source- TRAI)
Here we are seeing that the no of wire line subscriber is decreasing day by day, on the
other side the no of wireless subscriber is increasing continuously. Also the no of wire
line subscriber is much less in comparison to wireless subscriber. So we are ignoring
the wire line segment & now we will focus only wireless segment, which plays asignificant role for determining the star 2015.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 25/58
STAR 2015, UWSB DELHI Page 25
(SOURCE- TRAI)
Here, seeing above data we can say that AIRTEL has the largest subscriber base of
136.62 million and had the highest net addition of 9.00 millions subscribers, as on june-10 followed by reliance. Although the rate of growth of reliance is highest than Airtel &
idea, yet the subscriber & net addition of Airtel is higher than both reliance & idea. So
we can say that Airtel is playing a significant role in wireless segment.
Technology, which are being used in wireless segment by telecom industry.
GSM
CDMA
GSM: - Global system for mobile, is a „cellular technology‟ that is, the entire coverage
area is divided into various hexagonal shaped cells. Every cell has a corresponding
network tower .which serves the mobile phones in that cellular area.
CDMA: - Code division multiple access, there are many devices which use the same
spectrum. There is one physical channel and a special code for every device in the
coverage in the coverage network. Using this code, the signal of device is multiplied,
and the same physical channel is used to send the signal.
GROWTH IN WIRELESS SUBSCRIBERBASE(MILLIONS)
SERVICE
PROVIDERMar-10 10-Jun
NETADDITION RATE OF GROWTH
AIRTEL 127.62 136.62 9 7.10%RELIANCE 102.42 110.81 8.38 8.20%IDEA 63.82 68.89 5.06 7.90%
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 26/58
STAR 2015, UWSB DELHI Page 26
SUBSCRIBERBASE(MILLION)
9-Jun 9-Sep 9-Dec 10-Mar10-Jun
CDMA 98.46 101.13 103.51 105.64 107.88
GSM 328.83 370.59 421.58 478.68 527.62
TOTAL 427.29 471.72 525.09 584.22 635.5(SOURCE-TRAI)
Seeing above data we can say that GSM subscription continues to grow at a fastest
rate. At the end of june-10, GSM subscribers constitute 83% of the wireless segment.
So the service provider which has major market share of GSM services will play a major
role in telecom industry.
SERVICE PROVIDER WITH GSM SERVICES
Serviceprovider
March-10 June-10 NetAddition(million)
Subscriber(million)
Marketshare
Subscriber(million)
Marketshare
Bharti Airtel 127.62 26.66%
136.62 25.89%
9.00
Reliance 46.37 9.69% 54.33 10.30%
7.96
Idea 63.82 13.33%
68.89 10.30%
5.06
(SOURCE-TRAI)
From the above data, we can say that AIRTEL has a strong presence in GSM services.
It covers 1/4th of the GSM market. It plays a dominant role in GSM services. Earlier we
have talked that GSM sector will play a major role. In GSM sector AIRTEL is playing a
major role, so we can say this sector will help to AIRTEL to determine STAR 2015.
2G Mobile Technology
2G Mobile technology revolutionized the concept of mobile uses as compared to 1G. 1stgeneration used the mobile with analog system only used for the verbal communication.2G Technology mobiles are now able to do not only verbal communication but alsoable to send text. It works on some technology.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 27/58
STAR 2015, UWSB DELHI Page 27
FDMA
It works like a radio system by separating the frequency into equal spectrum butaffecting the quality of voice. FDMA is an analog system still exists in 2G mobile technology with the digital module of 2G in limited area. Instead of frequency division
now cellular based technology which divide geographical areas not frequency andimprove the service.
TDMA
2G Mobiles uses TDMA (Time Division Multiple Access) technology in some of itsmodels. It actually divides the band into three time-periods. TDMA containstechnologies GSM (Global Service Mobile Communication), which is the most commontechnology, uses widely across the world.CDMA
Unlike TDMA, CDMA works using the entire band with the help of code. CDMA is basedon a wide spectrum as many calls laid over each other identifying on the basis of uniquecode.
Advantages
The lower power emissions helped address health concerns. Going all-digital allowed for the introduction of digital data services, such as SMS
and email. Greatly reduced fraud. With analog systems it was possible to have two or more
"cloned" handsets that had the same phone number.
Enhanced privacy. A key digital advantage not often mentioned is that digitalcellular calls are much harder to eavesdrop on by use of radio scanners. Whilethe security algorithms used have proved not to be as secure as initiallyadvertised, 2G phones are immensely more private than 1G phone, which haveno protection against eavesdropping.
3G Mobile technology
3G is the third generation of wireless technologies. It comes with enhancements over
previous wireless technologies, like high-speed transmission, advanced multimedia
access and global roaming. 3G is mostly used with mobile phones and handsets as a
means to connect the phone to the Internet or other IP networks in order to make voiceand video calls, to download and upload data and to surf the net.
Advantages
Several times higher data speed; Enhanced audio and video streaming;
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 28/58
STAR 2015, UWSB DELHI Page 28
Video-conferencing support; Web and WAP browsing at higher speeds; IPTV (TV through the Internet) support
3G and Voice:
Wireless technologies are a way for mobile users to make free or cheap calls worldwide
and save a lot of money due to the latest telephony applications and services. 3G
networks have the advantage of being available on the move, unlike Wi-Fi, which is
limited to a few meters around the emitting router. So, a user with a 3G phone and a 3G
data plan is well-equipped for making free mobile calls. She will only have to download
one of the free applications and install on her mobile phone and start making calls
3G SPECTRUM ALLOCATIONS: -
BHARTI AIRTEL has paid Rs. 12,295 corers for spectrum in 13 circles, the mostamount spent by an operator in this auction – has won spectrum in: Delhi, Mumbai, Andhra Pradesh, Karnataka, Tamil Nadu, UttarPradesh (West), Rajasthan, West Bengal, Himachal Pradesh, Bihar, Assam, NorthEast, Jammu & Kashmir.
RELAINCE has paid Rs. 8585.04 Crores for spectrum in 13 circles – has won spectrum in Delhi, Mumbai, Kolkata, Punjab, Rajasthan, Madhya Pradesh,West Bengal, Himachal Pradesh, Bihar, Orissa, Assam, North East, Jammu & Kashmir
IDEA has won spectrum in 11 circles for Rs. 5768.59 crores, though it did not win in
Delhi and Mumbai – Won spectrum in 11 circles: in Maharashtra, Gujarat, AndhraPradesh, Kerala, Punjab, Haryana, Uttar Pradesh (E), Uttar Pradesh (W), MadhyaPradesh, Himachal Pradesh, and Jammu & Kashmir.
Airtel has invested in the metros circles, i.e. Delhi & Mumbai which give the highestARPU. Airtel has a lot of earning from Delhi and Mumbai.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 29/58
STAR 2015, UWSB DELHI Page 29
6.3. Shares
Source: TRAI Report March 2010
6.4. Segmentation of the Indian Telecom Consumer Market
With the proliferation of mobile phone users, several micro segments have also
emerged lately, each with their own specific needs. The Indian Mobile consumer market
has been segmented as follows:
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 30/58
STAR 2015, UWSB DELHI Page 30
The rationale behind the above segmentation is to identify customers on the basis of
their stage in life and hence to tailor-make schemes for each customer segment. The
different segments are explained as follows:
Youth:-
Over the years, service providers have started giving greater attention to this segment,
as it has emerged as one of the biggest users of mobile phones. For the youth, mobile
phones are not just a necessity, but rather an indispensable accessory. This segment
particularly values prepaid schemes with free SMS services. It is further differentiated
into various micro-segments based on age and gender. For instance, youngsters in the
age group of 19 to 23 years generally have a large circle of friends and more access to
money. Companies thus focus on providing services like group talk and group SMS to
these people. This segment is very dynamic as its needs keep changing very frequently,driven by the latest trends and fads. For instance, downloading new ring-tones is the
latest fad among the youth today. This is a huge revenue source for service providers
and so they need to keep up with the changing tastes of this segment.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 31/58
STAR 2015, UWSB DELHI Page 31
Young Professionals:-
People entering the workforce and thus moving out of the dependent bracket constitute
this market segment. They generally prefer using post paid schemes with value added
services like information about stock markets, news updates and so on.
Small and Medium Enterprise:-
This segment mainly consists of people who are switching over from landlines to mobile
phones, seeking a cost advantage. The focus here is on economy-packages rather than
value added services.
Family:-
Family as a segment consists of more number of dependents. These dependants are
serviced by prepaid schemes. Geographically dispersed families tied by the samecellular service providers may get cost advantages in terms of lower pulse rates.
Special:-
The „Special‟ category includes a small but growing segment which requires largely
customized services sought by celebrities, politicians, CEOs and the super-rich. Tailor
made schemes for each segment have been a great success so far. This customization,
however, has reached such a stage that every service provider has numerous schemes
being provided at the same time. Being short term schemes, they keep changing
frequently and customers thus start switching from one service provider to another
based on the attractiveness of the scheme. This has brought down customer loyalty and
hence service providers are finding it difficult to retain existing customers. It is estimated
that in the near future the plethora of schemes provided by the different service
providers will stop being a differentiating factor.
Market:
Only 21 per cent of Indians in rural areas have phone connections. There are still more
than 500 million people that do not have phone connections in the country, who are
located mainly in rural areas.
Reliance Communications announced various initiatives to increase mobile telecom and
internet penetration in rural India, with the launch of three new initiatives known as
“BharatNet” plan, “Grameen VAS” and “M2M” (Machine to Machine) solutions for rural
customers.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 32/58
STAR 2015, UWSB DELHI Page 32
BharatNet Plan:
RCOM‟s strategy to drive rural internet penetration. Today, there is an existing
addressable market base of around 4 million PC users in rural India. However these
users are faced with an inherent limitation of dial-up services on quality, speed and an
effective broadband service, which are currently available only to urban territories. To
address this clear need, RCOM is launching “BharatNet plan”, the high -speed wireless
internet service in over 20,000 rural locations across the country. This will be a high-
speed variant of its Reliance Net Connect service, but specifically designed for the rural
and sub-urban markets offering speeds of approximately 153 Kbps.
Grameen VAS:
RCOM‟s Grameen VAS services cater to the specific local needs of rural mobile
consumers in over 500,000 Indian villages. This roll-out signifies the company‟sincreased thrust into the vast potential but yet untapped Rural VAS services. The
underlying belief is that the mobile phone today is not just a tool for communication, but
a device to impart education, facilitate commerce and transactions, offer health and
travel solutions and a critical driver for community building.
Grameen VAS will be an integral part of their day-to-day lives. Grameen VAS would
cover several specialized services including Mandi Bhav, Agriculture & Animal
Husbandry Updates, Weather Forecast, Local Info, Samachar etc. all in multiple Indian
Languages. These solutions can be categorized broadly under mlearning, mHealth,
mCommerce, mUpdates and GroupSampark (Community Messaging). These servicescan be accessed via different modes i.e. Voice Portals, SMS, USSD, Data (R-World)
etc.
Machine to Machine Applications (M2M):
RCOM‟s third thrust area will be high impact machine-to-machine applications. These
are mobile applications that aid automation, surveillance, remote monitoring, and data
gathering. The company is one of the largest users of IMs (Intelligent Modems) and has
successfully used them in energy solutions in urban and semi-urban areas. RCOM sees
a major potential of machine-to-machine solutions in both rural and urban markets inIndia.
The M2M opportunity for rural market includes Automation of Agro & Irrigation services,
water level monitoring, and data gathering for milk & agri-cooperatives, fisheries,
poultry, and soil analysis. Similar such opportunities for the urban include mobile
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 33/58
STAR 2015, UWSB DELHI Page 33
ticketing, purchase@Kiosks and vending machines, and remote monitoring of office
automation products.
Bharti Airtel
To extend its reach in India's rural markets, Bharti Airtel is focusing on innovativeinitiatives, including efficient infrastructure deployments, expanding its distribution
network via partnerships, and customized content and tariffs.
• Bharti Airtel has launched micro financing agreements in collaboration with Nokia and
SKS Micro-finance. Under these partnerships, Bharti provides subsidized tariffs and
subscriber identity module (SIM) cards to rural users, Nokia provides subsidized
handsets, and SKS offers micro financing.
• To expand coverage into rural regions, Bharti Airtel is sharing passive infrastructure
services with Vodafone (42 percent ownership) and Idea (16 percent ownership)
through its joint venture, Indus Towers. Sharing the infrastructure cost and usage
between multiple operators has helped Bharti Airtel to reduce its operating and capital
expenses.
• Bharti Airtel also formed a joint venture with the Indian Farmers Fertilizer Cooperative
Limited (IFFCO). Its joint venture, IFFCO Kisan Sanchar, uses IFFCO‟s wide rural
presence (present in 80 percent of Indian villages) and appeals among the rural
agricultural community to market and distribute Bharti's products.
• IFFCO Kisan Sanchar provides subsidized handsets and connections at competitive
rates in rural areas. It also helps Bharti Airtel to identify and acquire suitable locationsfor deploying its cell sites. In addition, it offers tailored services including voice-based
updates on crop prices, farming techniques, rural health initiatives, and "help line"
services.
Idea
Offering to create superior customer value, once a company has chosen a desired
position it must take strong strips to deliver and communicate that position to target
consumers. The company entire marketing program should support the chosen
positioning strategy. Idea Cellular has differentiation its products by doing differentactivities as follows:
• Price affordability
• Hire famous personalities
• Only company offers package for ladies
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 34/58
STAR 2015, UWSB DELHI Page 34
• Roaming facilities in affordable charges
• Idea Cellular PCO.
Sarpanch: WHAT AN IDEA SIRJI
Taj Mahal Campaign Education For All
Distribution
AIRTEL
A multi-regional marketing and sales team builds both direct and indirect sales
channels. Regional organizations are responsible for the definition of the sales &
marketing strategies, and plans for their respective territories. Each region also provides
significant inputs and reviews of the corporate strategic sales, marketing and production
direction order to capitalize on the opportunities in each geographic region, Bharti Airtelhas put into place a network of on-the-ground, experienced sales and marketing
personnel. The teams there build both direct customer relationships as well as indirect
channels (through handset manufacturer, Network Solutions Provider, etc.). Company
uses second and third degree distribution network.
Second degree distribution network:
Company makes invoice of SIMs, PEFs, GSM Pay Phones, and RCVs of various
denominations chiefly Rs.10, Rs 30 and Rs. 60 to only Urban Distributors and RuralSuper Distributors. Easy balance is also transferred to only Urban Distributors (UDs)
and Rural Supers (RS).Urban distributors distribute the above items to retailers
according to the demand and transfer easy balance to retailer. Therefore, this setup of
distribution is Second Degree and it is more suitable for catering to the need of urban
areas.
Third degree distribution network:
RS distributes the above items to Rural Distributors commonly known as RDs andtransfers easy balance into Rural Distributors SIM. Rural Distributor then distributes the
above items among the retailer. According to the demand of it and transfer easy
balance to retailer through FOS SIM from easy balance of Distributor SIM. This three
level distribution is used to reach to sub urban and rural areas.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 35/58
STAR 2015, UWSB DELHI Page 35
Field officer sales (FOS):
FOS is manpower of UDs and RDs, who on behalf of them sell the SIM, RCVs, Easy
balance etc. to retailers under his assigned beat. These are only manpower of the
distributors who works in the market.
• Bharti Airtel has adopted the strategy of direct communications to market its value
proposition to rural customers. To make its services accessible, the company provides
all of its marketing content in local languages. Vans are used to cover rural areas with
staff who educate locals about mobile services and usage.
• The company has developed a shared phone service called Public Call Offices
(PCOs) in rural regions to increase awareness about its brand and services.
• Bharti Airtel Service Centers have been set up in villages to address customer queries
and complaints as well as act as sales and distribution points. These centers employ
local people and offer sales and customer services using local dialects.
• Bharti Airtel has already established over 18,000 service centers in rural India,
covering over 400 languages and local dialects. The company plans to expand this
network.
Distribution Strategy for Idea Cellular:
We will use selective distribution. It involves the use of fewer intermediaries who are
willing to carry the particular product. It can gain adequate market coverage with more
control and less cost.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 36/58
STAR 2015, UWSB DELHI Page 36
7.0. Brief profile of company selected as star
BHARTI AIRTEL
Established in 1985, Bharti has been a pioneering force in the telecom sector with many
firsts and innovations to its credit, ranging from being the first mobile service in Delhi,
first private basic telephone service provider in the country, first Indian company to
provide comprehensive telecom services outside India in Seychelles and first private
sector service provider to launch National Long Distance Services in India. Bharti Tele-
Ventures Limited was incorporated on July 7, 1995 for promoting investments in
telecommunications services. Its subsidiaries operate telecom services across India.Bharti‟s operations are broadly handled by two companies: the Mobility group, which
handles the mobile services in 16 circles out of a total 23circles across the country; and
the Infotel group, which handles the National Long Distance (NLD), International Long
Distance (ILD), fixed line, broadband, data, and satellite-based services. In mobile,
Bharti‟s footprint extends across 15 circles. Bharti has also tied up with Apple for I-
phone.
Reliance Communication
Reliance Infocomm is now known as Reliance Communications (Rcom). Reliance
Communications Limited founded by the late Shri Dhirubhai Ambani (1932-2002) is the
flagship company of the Reliance Anil Dhirubhai Ambani Group. It is also an integrated
telecom service provider with licenses for mobile, fixed, domestic long distance and
international services. Reliance Communications offers a complete range of telecom
services, covering mobile and fixed line telephony including broadband, national and
international long distance services, data services and a wide range of value added
services and applications. Reliance India Mobile, the first of Rcom‟s initiatives was
launched on December 28, 2002. Until recently, Reliance was permitted to provide only
“limited mobility” services through its basic services license. However, it has now
acquired a unified access license for 18 circles that permits it to provide the full range of
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 37/58
STAR 2015, UWSB DELHI Page 37
mobile services. It has rolled out its CDMA mobile network and enrolled more than 6
million subscribers to become the country‟s largest mobile operator. It now wants to
increase its market share and has recently launched pre-paid services. Having captured
the voice market, it intends to attack the broadband market.
Idea Cellular
Indian regional operator IDEA Cellular Ltd. has a new ownership structure and grand
designs to become a national player, but in doing so is likely to become a thorn in theside of Reliance Communications Ltd. Idea operates in eight telecom circles or regions
in Western India, and has received m additional GSM licenses to expand its network
into three circles in Eastern India. Idea took over Spice telecom 40.8% share at Rs.
2176 corers. Apart from that, Idea is going to merge with Telecom Malaysian
International (TMI) and going to give 15% share to TMI out of 20% open offer. Idea will
get $1.7 billions out of that.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 38/58
STAR 2015, UWSB DELHI Page 38
7.1. Financial Analysis Report
Trend Analysis
37
61
91
127
1424
41
63
28
46
73
102
0
20
40
60
80
100
120
140
2007 2008 2009 2010
Bharti Airtel
IDEA
R COM
Customer Base (Millions) CAGR
Bharti Airtel -36.11%
IDEA -
45.65%
R Com -
38.15%
17581
25761
34048 35609
43666719
98571185012756
14792 15086 13554
0
5000
10000
15000
2000025000
30000
35000
40000
2007 2008 2009 2010
Bharti Airtel
IDEA
R COM
Revenue (Crores) CAGRBharti Airtel
- 19.30%
IDEA- 28.35%
R Com -
-(1.51)%
Interpretation:-
By analyzing the first chart we can see that the entire three companies‟ subscriber base
is increasing at a good speed which is good for any company. Like Bharti Airtel, Idea
and R com CAGR are 36.11%, 45.65%, 38.15% respectively. This shows that idea who
is not as big as Bharti Airtel but increasing with CAGR of 45.65% which is almost 10%
more than the Airtel. But at the same time we cannot ignore the size of the customer
base Airtel is sitting with the highest Subscriber base. In second chart we can see the
Revenue is also increasing Bharti Airtel, Idea and Rcom CAGR are 19.30%, 28.35%and
-1.51% respectively. We can see that Idea customer base is not much but their growth
rate in revenue and subscriber is much more than Airtel and Rcom. It is surprising to
see that Rcom founds a negative growth rate from 2007 to 2010. But this is not the onlyfactor by which we can say that company is good or bad there are certain other factors
to be look out. We also find that while the company‟s subscriber base increases
because of fierce competition companies Churn rate also increased. One thing also we
can see that from 2009 to 2010 Bharti Airtel, Idea and Rcom customer base is
increased with a good ratio but their revenue is not increased in that pace. By this we
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 39/58
STAR 2015, UWSB DELHI Page 39
can see that customer ARPU is decreased that why there revenue is falling down as
compare to subscriber base.
7084
1037311520
14800
1163 1979 2314 2645
5288 58238224
3394
0
5000
10000
15000
20000
2007 2008 2009 2010
Bharti Airtel IDEA R COM
PBDT
0
5
10
1520
25
30
2007 2008 2009 2010
Bharti Airtel
Idea
Reliance
Eps Trend
BhartiAirtel Idea R com
Sales 35609 11850 13554
RM 278.72 0.02 50.39Power & fuel 0 942.27 144.27
Employee cost 1,401.66 561.17 672.39OtherManufacturing exp 11,882.41 5,187.63 7,850.49
Selling & adm 6,856.42 1,823.48 1,974.73
Other Exp 1,482.39 91.58 668.9
AS a % of sales
RM 0.782723 0.000169 0.371772
Power & fuel 0 7.951646 1.064409
Employee cost 3.936252 4.735612 4.960823OtherManufacturing exp 33.36912 43.77747 57.9201
Selling & adm 19.25474 15.38802 14.56935
Other Exp 4.162964 0.772827 4.935075
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 40/58
STAR 2015, UWSB DELHI Page 40
Interpretation:-
By seeing the above charts if we compare the 2010 revenue and the profit before
depreciation and tax we find that Bharti Airtel PBDT is 41% as compared to revenue
and Idea and R com PBDT is 22% and 25% respectively. This shows that Bharti Airtel is
much efficient while come to cost controlling but at the same time Idea and R com alsotrying to maintain the cost level and earn as much profit at possible. We also find out
why and where Idea and Rcom cost is high as compared to Airtel and the answer is the
Other Manufacturing Expenses is really high as we can see in the above charts.
Because the company profit is higher each year that‟s why EPS is increasing on a
continues basis.
Ratio Analysis:-
1) Profitability Ratio:-
Net Profit Margin (%) 2007 2008 2009 2010
Bharti Airtel 22.46 23.99 22.58 26.36
Idea 11.44 15.33 9.91 8.71
R Com 18.63 17.45 30.47 3.33
Interpretation: -
Every firm is most concerned with its profitability. One of the most frequently used toolsof financial ratio analysis is profitability ratios which are used to determine thecompany's bottom line. The net profit margin shows how much of each sales dollarshows up as net income after all expenses are paid. The net profit margin measuresprofitability after consideration of all expenses including taxes, interest, anddepreciation. The calculation is: Net Income/Net Sales = _____%. Both terms of theequation come from the income statement. As high is the net profit margin as good it isfor a company. We can see that Bharti Airtel continuous increase in the net profit marginwhile the Idea and R com is not able to maintain the good profit margin the one reason
is that their cost increases in other manufacturing expenses.
2) Liquidity Ratio :
Current Ratio ----- 2007 2008 2009 2010
Bharti Airtel 0.47 0.57 0.69 0.68
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 41/58
STAR 2015, UWSB DELHI Page 41
Idea 0.87 0.43 0.98 0.96
R Com 1.77 0.95 1.45 1.37
Interpretation:-
Current Ratio is a measure of a firm's ability to meet its current financial obligations. The
higher the ratio, the better. If the ratio is UNDER the value of 1.00 that means that the
company may not be able to meet its upcoming obligations (bad indication). If the ratio
is OVER the value of 1.00 that means that the company should be able to meet its
upcoming obligations (good indication). we can see that in the case of Bharti Airtel the
current ratio consistently remained less than one .So its current liability is more than the
current asset which implies that its short term liquidity requirement might be financed by
long term Sources. . The reason we find for this is that their Cash and Bank balance is
really low. Their loans and advances are also low. While their current liabilities is much
higher. The reason for continuous increase in their current ratio is that their loans and
advances have increased on a continuous basis and also their inventories and debtors
increase. While R com maintains a good current ratio the creditors are much more
reliable on R Com as compared to Airtel and Idea.
Debt-Equity Ratio
2007 2008 2009 2010
Bharti Airtel 0.47 0.33 0.28 0.14
Idea 1.95 1.84 0.67 0.57
R Com 0.71 0.82 0.60 0.48
Interpretation:-
=
Total Liabilities
Shareholders Equity Indicates what proportion of equity and debt that the company is using to finance its
assets. Sometimes investors only use long term debt instead of total liabilities for a
more stringent test. A ratio greater than one means assets are mainly financed with
debt, less than one means equity provides a majority of the financing. Here we can see
the every company trying to make their ratio as low as possible. Bharti Airtel seems to
be in a much better position as compared to Idea and Reliance. Bharti Airtel has
reduced the debt to equity ratio consistently. This is because of the company is
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 42/58
STAR 2015, UWSB DELHI Page 42
reinvesting the profits into the business. This shows the strong confidence on the future
outlook of the business.
2) Management Efficiency Ratio:-
Debtor Turnover Ratio 2007 2008 2009 2010
Bharti Airtel 14.31 12.28 12.78 15.30
Idea 35.89 38.28 37.32 31.20
Rcom 15.90 15.61 11.72 8.42
Interpretation:-
Accounts receivable turnover ratio or debtor‟s turnover ratio indicates the number of
times the debtors are turned over a year. The higher the value of debtor‟s turnover the
more efficient is the management of debtors or more liquid the debtors are. Similarly,
low debtors turnover ratio implies inefficient management of debtors or less liquid
debtors. It is the reliable measure of the time of cash flow from credit sales. There is no
rule of thumb which may be used as a norm to interpret the ratio as it may be different
from firm to firm. Idea takes a lead here with almost a very high 31.20 while the others
two are far behind.
Total Asset Turnover Ratio: 2007 2008 2009 2010
Bharti Airtel 0.75 1.03 1.00 0.88
Idea 0.62 0.61 0.74 0.62
Rcom 0.70 0.77 0.76 0.63
Interpretation: -
The total asset turnover represents the amount of revenue generated by a company
as a result of its assets on hand. This equation is a basic formula for measuring howefficiently a company is operating. Total Asset Turnover = Sales/Net Total Assets Thesales represents all the revenue generated by the company and is disclosed on acompany's income statement. The total assets represent the assets listed on thecompany's balance sheet. The higher the ratio of sales to net total assets, thebetter. This implies that a company is generating "x" number of sales for every dollar ofassets on hand. We can clearly see that Bharti Airtel is really efficient with 0.88 times
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 43/58
STAR 2015, UWSB DELHI Page 43
which is really good while the Rcom is struggling with the ration because reliancerevenue falls down but their assets increased this affects their total asset turnover ratio.
3) Overall Profitability analysis:-
Return on Total Asset (%) 2007 2008 2009 2010
Bharti Airtel 43.96 40.15 33.80 36.10
Idea 25.53 26.59 18.65 20.17
R Com 16.37 14.83 11.35 6.20
ROTA = PBIT/TOTAL ASSET*100
Interpretation: -The greater a company's earnings in proportion to its assets (and the greater the
coefficient from this calculation), the more effectively that company is said to be using
its assets. We find Bharti Airtel is the most efficient company in using its assets to
generate profits for the company and reliance is not able to recover its investments put
in assets.
4) Market Test or Valuation Ratio
Earning Per Ratio 2007 2008 2009 2010
Bharti Airtel 10.72 17.12 20.70 24.13
Idea 1.94 3.96 3.23 3.19
R Com 11.78 12.53 23.27 2.32
Interpretation: -
We can see that the company EPS is in upward trend which good from investor point of
view and shows customers faith in the company. The portion of a company's profitallocated to each outstanding share of common stock. Earnings per share serve as an
indicator of a company's profitability. From investors point of view EPS is calculated. It
shows a very good view of the company as we see that only Bharti Airtel performed
consistently this effect of consistency can also be seen on market share price of Bharti
Airtel which is 348 as compared to R Com 141 and Idea 70.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 44/58
STAR 2015, UWSB DELHI Page 44
P/E ratio : - 2010
Bharti Airtel 14.62
Idea 28.11
R Com 9.49
Interpretation:-The P/E looks at the relationship between the stock price and the company‟s
earnings. The P/E tells you what the market thinks of a stock. It tells you whether the
market likes or dislikes the stock. Some investors read a high P/E as an “overpriced
stock” .However, it can also indicate the market has high hopes for this stock‟s future
and has bid up the price. Conversely, a low P/E may indicate a “vote of no confidence”
by the market or it could mean that the market has just overlooked the stock. Many
investors made their fortunes spotting these overlooked but fundamentally strong stocks
before the rest of the market discovered their true worth. Here Idea shows a good P/Eratio of 28.11.
Reserves and Surplus 2007 2008 2009 2010
Bharti Airtel 9515 18283 25627 34650
Idea 413 906 8176 8112
R Com 19503 23808 50658 49466
Interpretation:-
Reserves and surplus shows the strength of the company. Company maintains aReserves and Surplus for their future risks. As high is the reserves and surplus as goodit is. But not that much that company has the opportunity to earn from that money andcompany kept it without any reason. Moreover it is depend on the company policies.
7.3. Customer relationships
Like any other telecom service provider, Bharti also considers information technology a
key driver of its business. The service provider has a WAN setup. It is vital for Bharti to
manage the expectations of its customers and provide them with innovative products
and services in a manner which makes them loyal. So Bharti implemented CRM tool.
Today Bharti is using the Oracle CRM platform. Before choosing its CRM tool, Bharti
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 45/58
STAR 2015, UWSB DELHI Page 45
evaluated many options. It considered factors like proper workflow automation,
facilitation of knowledge sharing, and integration with the billing system. After a
thorough evaluation, it decided to go ahead with the Oracle CRM platform. Strategy has
also played a major role in improving customer service at Airtel. After starting its
services in Delhi, Bharti acquired lot of circles and sought new licenses in other circles;
whenever they got a new license, they implemented the CRM tool immediately. The
CRM strategy at Airtel revolves around two aspects: operational CRM and analytical
CRM. The first is about helping their call centers in the workflow part, helping them in
their day-to-day activities. The second provides staff with the required information on
customers; this is used for business development activities. Together they help Bharti
provide better services to its customers. Apart from that, now Bharti has come up with
new service i.e. if the customer has lost his mobile, still he can get back his all the data
of that mobile including video files, calendar, pictures, messages, music files, events,
tasks etc. This facility will be free of cost. But this facility can be useful in high-end
handsets only and to get the data back, a user needs to have his user id and PINnumber. Bharti has made a deal with companies of Malaysia and Indonesia for back-up
services to get the data back. This way, Bharti has come up with new innovations with
new technologies which ultimately benefit the end users and CRM increases.
Reliance This marked the beginning of Reliance's vision of ushering in a digital revolution in India
by becoming a major catalyst in improving quality of life and changing the face of India.
Reliance Infocomm plans to extend its efforts beyond the traditional value chain to
develop and deploy telecom solutions for India's farmers, businesses, hospitals,
government and public sector organizations.
Idea
Idea Cellular made its effort on small villages and some particular areas and in India
most of the people especially young generation wants new schemes and less call ratesand also new sums schemes and Idea Cellular provides all these facilities in lower cost
as compare to other one. So the penetrated market of the Idea Cellular is also large.
Status: One of the advertisement campaigns is “Aaj Se Koi Bi Apne Nam Se Nahi
Jana Jayega”. From this campaign many high level people and also politicians using
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 46/58
STAR 2015, UWSB DELHI Page 46
Idea Prepaid Simcard because of adding value in their status. So status also affect in
increasing in demand.
Customer care:
As per the survey conducted and its findings, it was concluded that Airtel is leader inmaintaining a good relations with its customers and it solves customers‟ problems
efficiently and effectively. It has got the highest preference by the customers with
73.46%, followed by Vodafone with 68.83%. The lowest preference is of BSNL. Its
customer care is not as good as the other players in the market, as per the findings. It is
preferred by only 17.92% customers.
7.4. Average Revenue per Unit
In the telecom industry, there are numerous instances when one comes across the term
average revenue per user (ARPU). In common parlance, it is simply total revenue
divided by the total subscribers for a particular time period. It is a powerful and
extremely useful indicator of just how well a telecom company is accessing itscustomers‟ revenue potential. ARPU plays a key role in an industry like telecom in
particular and any service industry that has a mass base. „Average‟ is the measure of
central tendency of data. It helps not only in understanding how the industry as a whole
is faring but also assists in benchmarking a particular player against others or industry
average.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 47/58
STAR 2015, UWSB DELHI Page 47
ARPU 2007 2008 2009 2010
Bharti Airtel 482 422 374 280
Idea 167 152 151 118R Com 911 616 367 215
7.5. Corporate Social Responsibility (CSR)
Corporate social responsibility is about how businesses align their values and behavior
with the expectations and needs of stakeholders, not just customers and investors, but
also employees, suppliers, communities, regulators, special interest groups and society
as a whole.
Here we are going to compare CSR of Bharti Airtel, Reliance Communication and Idea
cellular with the help of sales and recommended CSR.
Corporate Social Responsibility rating as per company: (in Rs. Crore)
Company Name CSR
Rating
2010
CSR
Rating
2009
Sales
2010
(in Rs.
Cr.)
Recommended
CSR
0.2% of sales
(in Rs. Cr)
Profit
before
Tax
(in
Rs.Cr)
Three CSR
Areas
Bharti Airtel 3 3 35,609.54 71.22 10,652.75 Education,
CommunityWelfare,
Environment
Reliance
Communication
1 1 13,554.60 27.11 1,883.52 Education,
Children,
Healthcare
Idea cellular 2 1 11,850.24 23.70 1,185.89 Environment,
Community
Welfare,
Education
For compare above CSR we are use some parameter which is given below:-
Necessary parameters that make a company eligible for a particular rating level:Necessary Criteria Explanation Rating
Level If undertaking any CSR Activity CSR activities that cover any kind of social,
developmental or community workLevel 1
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 48/58
STAR 2015, UWSB DELHI Page 48
If CSR is also linked to reducing thenegative impacts of company‟s ownproducts or processes
CSR activities that aim to improve processes andproducts of the company.
Level 2
If CSR initiatives are also for the localcommunity
CSR activities that are focused on those who areaffected directly by the company
Level 3
If CSR is also embedded in thebusiness operations CSR activities that form a part of the daily businessactivities of the company. Level 4
If innovative ideas and practices arealso developed for CSR
CSR activities that enable sustainable andreplicable solutions to problems faced by society.
Level 5
8.0. Projections and Scenario Building:
8.1. Important industry milestones till 2015
The telecom industry has undergone significant structural changeover the last decade; how will it evolve over the next 5 years?
With growth of wireless telephony, land line volume is declining. With increasing competition ARPU is declining. VOIP and other INTERNET
based telephony, bypass Telecom systems. New technologies in Telecom, demand higher CAPEX with no scope of matching
ROI. Price wars to somehow gain business volume; hamper income and the business
viability.
Stake holders are compelled to follow the market in pricing, in order to retainmarket share.
-How will communications evolve over the next five years?
Wimax
IP multimedia
Mobile TV
4G network
Network sharing Virtual private network
Rural Telephony
Mobile Number Portability
This is an important milestone for Indian telecom industry in showcasing LTE
performance on a live network. It is the pilot to set up a commercial network that will
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 49/58
STAR 2015, UWSB DELHI Page 49
build on a globally standardized eco-system and technology that offers immense
potential for a wide spectrum of end-user offerings
With the Indian telecom industry growing at the rate of 20 million subscribers each
month, and poised to reach 1 billion by 2015.
BWA and 3G have potential to transform the character of Internet/ broadband scenario
in India. On one hand, BWA will overcome the key hindrance of problem of „Right of
Way‟ in India; on other hand 3G has the potential to make the mobile phone, a
ubiquitous device for accessing faster internet”
3G Technology will drive the next round of sustainable growth for the Indian market
through convergence of entertainment, infotainment and voice communications into one
single device. The key drivers for the growth of 3G in India will be innovative content,
improved customer services and increased affordability of handsets. These drivers will
help ensure growth of 3G not just in urban areas but in rural areas as well.
8.2. Possible scenarios till 2015 and suggested growth strategies forthese
Variables for scenario building
There are number of potentially high-impact variables existing with outcomes that are,as yet, uncertain. From these, we have selected distinctly different scenarios for the
future. These variables are placed in context with the industry trends.
Usage:
• The future of voice: Will voice communication volumes continue to decline, substituted
by asynchronous and/or online data communications (e.g., SMS, social networking,
instant messaging, IP voice), or will drastic price cuts, superior convenience, and new
voice usage applications (e.g., human to- machine voice communications, high-
definition voice) trigger a voice “rebirth?”
• OTT versus network -optimized content: How will the battle be waged with over-the-top
providers? Can telecom providers deliver and monetize unrivalled user experiences
through network-optimized features (e.g., multi-sensorial, 3-D, immersive reality) to
derive value alongside over-the-top.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 50/58
STAR 2015, UWSB DELHI Page 50
• Siloed versus unified communications: Will consumers finally make the leap to
embrace unified communications across fixed, mobile and online, or will shared
capabilities across stand-alone fragmented communication tools be a sufficient trade-off
between simplicity and freedom of choice?
Services
• New verticals: What is the opportunity for telecom in industry verticals such as
healthcare, smart grids and financial services beyond basic connectivity? What form is
this likely to take, and can Telcos beneficially enhance the vision of an increasingly
instrumented, interconnected and intelligent world to create value?
• Premium connectivity: What is the opportunity for premium connectivity features (e.g.,
guaranteed low latency, security, or a more robust content delivery network)? Will
increased available bandwidth to third-party solution providers reduce the need for
premium features?Access
• Ultra-fast broadband availability: Deployment of ultra-fast broadband networks
requires high levels of investment. Taking into account their commercial viability and the
regulatory environment, how much coverage can be effectively achieved over the next
five to ten years?
• Open versus closed devices: Will providers continue to subsidize handsets, or will
unlocked and open devices prevail? Will a standard open device platform emerge, or
will the industry continue to support competing device platforms, including Apple,Symbian, Google Android, Windows and Palm OS.
Business model
• User -funded versus third-party funded: Will user-funded (subscription) revenues
continue to dominate, or will Telco be able to gain significant revenues from third
parties, such as advertisers, in a two-sided business model? Can providers adequately
and legally monetize subscriber information (e.g., socio-demographic, presence,
preferences)?
• Service pricing models – voice and connectivity: What will be the predominant servicepricing models? Single-service metered? Monolithic bundles structured for key
subscriber segments? Abundant (all-you-can-eat) pricing for connectivity and voice?
Differentiated tiered pricing based on quality/speed? Will providers be able to generate
premium prices for ultra-fast broadband (FTTH and LTE) compared to current
broadband services?
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 51/58
STAR 2015, UWSB DELHI Page 51
Machine-to-machine (M2M): Will provider revenues continue to be based primarily on
maintaining high ARPU across a finite number of accesses, or on ramping up M2M
services based on an infinite number of connected objects?
Industry structure and regulation
• ServCo/NetCo versus vertical integration: Will the industry be organized by separate
service companies and network companies, or will vertically integrated providers prove
to be the only viable model to generate sufficient shareholder value?
• Network sharing versus outsourcing: Will passive infrastructure sharing become the
norm? Will providers go beyond passive infrastructure sharing and share the active
network, too? Will network outsourcing become the norm?
• Regulation: What will be regulators‟ goals over the next five-to-ten years, and how will
they impact the industry‟s business models? After two decades of liberalization of
telecom markets around the world, are competition self-sustaining, making ex-anteprovisions dispensable? Or will new networks, market consolidation and new business
models require the (re-)introduction of a number of ex-ante remedies. What is the future
of net neutrality? The industry appears divided over its long-term future. Nearly half of
our respondents expect regulators to sustain the commitment to neutrality over the next
five-to-ten years. But over 40 percent anticipate the commitment will be abandoned or
relaxed to stimulate investment that improves customer experience/quality of service.
Four Future scenarios for Telco, 2015
1) Standstill
2) Progressive
3) Surprise Free
4) Disruptive
Standstill:- (Today‟s standings) Reduced consumer spending leads to revenue
stagnation and falling ARPU continues .Companies have not significantly changed their
voice communications/closed connectivity service portfolio and failed to expand
horizontally or into new verticals. Investors‟ loss of confidence in the
telecommunications sector produces a cash crisis and elicits industry consolidation.
Small players not able to recover there investments and have to sold there businesses
to large players.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 52/58
STAR 2015, UWSB DELHI Page 52
In this scenario, the variable which drives the scenario is as follows:-
Usage: connectivity usage similar to today – personal, download etc. Services: Packaged connectivity and communication services prevail. Revenue model: Start war of tariff packages, emphasis on cost control.
Industry Structure: declining of small players Access: Less access to rural market. Regulation: will be strict.
Progressive: - (Same continuation with some additional new Value added services +
3G) India growth rate is 9% which means India per capita income rising, increase in per
capita leads to high saving and high investment. Consumers ready to spend on new
services. But for that customer will require superior connectivity and regulation in this
scenario exists the same as it is today. In this scenario, the variable which drives the
scenario is as follows:-
Usage: Usage Will be high in this case Services: Customer require premium connectivity Revenue model: Wholesale driven with premium connectivity a key feature for
revenue generation Carriers are able to generate premium prices for ultrabroadband.
Access: Android and low cost phones drive this scenario Industry Structure: Passive Infrastructure sharing Regulation: will be strict.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 53/58
STAR 2015, UWSB DELHI Page 53
TRIGGER / REALIZATION PATH FOR SCENARIO
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 54/58
STAR 2015, UWSB DELHI Page 54
Critical success attribute in this scenario:-
Surprise free: - (Consolidation + Competition for 4G + Additional new services like M-
wallet etc.) In this scenario, Telcos develop a portfolio of premium network services and
better integrated digital content capabilities to deliver new experiences. Infrastructure
providers integrate horizontally to form a limited number of network co-operatives that
provide pervasive affordable and unrestricted open connectivity to any person, device or
object, including a rapidly expanding class of innovative asset-light service providers.
More sharing of spectrum is also seen in this scenario. In this scenario, the variablewhich drives the scenario is as follows:-
Usage: Usage Will be high in this case Services: Increased customer adoption digital lifestyle services Revenue model: Low because of immense competition.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 55/58
STAR 2015, UWSB DELHI Page 55
Access: High access required specially in rural areas Industry Structure: Some emerging market providers expand globally. Regulation: Liberal policies.
Critical success attribute in this scenario:-
Critical Success AttributesSURPRISE FREE
INFRASTRUCTURE
3G
RURAL MARKET
VALUE ADDEDSERVICES
NUMBER PORTABILITY
Potential capability
Airtel Vodafone Idea
Good Good Medium
Medium(13)
Good
Medium(11)
GoodGoodExcellent
SecondFirstThird
Weak Medium
Good(9)
RECOMMENDATIONS
Shared infrastructure with reducedCapex and increased connectivity.
INFRASTRUSTURE
Collaboration with good Ruralretailers.
Generate more alternatives forconsumers .
Improve Quality Service.
Disruptive :- ( Deregulation of telecom industry) in this scenario, deregulation of
telecom leads to more foreign players coming India, mergers and acquisitions
increases. Also VOIP comes into action because till now it is not legal.
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 56/58
STAR 2015, UWSB DELHI Page 56
In this scenario, the variable which drives the scenario is as follows:-
Usage: Demand will be high Services: Laissez-faire Revenue model: Typically lowering price (Skype).
Access: High value services to customers Industry Structure: More rivals are entering leading to competition Regulation: Deregulation.
Our modeling of the four scenarios suggests Surprise free as the most attractive
outcome in terms of revenue, profitability and cash flow projections.
9.0. CONCLUSION
By analyzing and observing whole scenario we can say that telecom market will enjoy
growth substantially. So far as subscriber growth has been impressive and stood at
584.32(wireless) in 2010, it will cross over 1 Billion by 2015 and thus represents a huge
revenue potential for existing players. Looking at the competition trend, it seems that
soon in future, rural schools will be having broadband and internet facilities as their part
of studies as well as routine lives. There is availability of internet facility in many
villages. But soon it will be taught in secondary and higher secondary schools in all
villages and various technologies like 3G and various VAS have made the market more
competitive and made easy for the users. Implementation of number portability and 3G
technologies have solved many problems and made easy and comfortable for thecustomers. Lower tariff has already impacted profit growth of key telecom firms and
resulted in negative growth in ARPU. Indian telecom industry will enter into
consolidation phase which should result in lower number of players in the market. But
before that consumers will continue using their buying power to choose service provider
and enjoy services at lowest possible tariff plan.
Unique business model
Market share
Brand value
Customer preferenceRural availability
Network infrastructure
Scenarios
Future projects
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 57/58
STAR 2015, UWSB DELHI Page 57
We conclude Bharti Airtel as our star 2015. By our research on different companies in
the telecom sector we find Bharti Airtel fitting on all scenarios and ready for all kind of
structural changes also.
9.1. Bibliography
Magazine:
1. Business Economics 3G
Reports:
1. DOT Report 2009-2010
2. TRAI Report 2009-2010
3. TRAI Report 2009-2010
4. COAI Report 2009-2010
5. Investors Report
6. IBM Report
Newspaper
1. Economic Times
2. Press Releases by the companies
Websites
1. www.trai.gov.in
2. www.dot.gov.in
3. www.efytimes.com
4. www.karmayog.org
5. www.ivrsworld.com6. www.Bhartiairtel.in
7. www.Rcom.in
8. www.idea.in
9.2. ABBREVIATIONS
VAS - Value Added Services
DOT - Department Of Telecom
TRAI -Telecom Regularity Authority of India
EPS - Earning Per Share Rcom - Reliance Communication
GSM - Global System for mobile communication
CDMA - Code Davison Multiple Access
COAI - Cellular Operators Association of India
GPRS - General Packet Radio Device
WIMAX - Worldwide Interpretability for Microwave Access
8/3/2019 Stage 3 Report
http://slidepdf.com/reader/full/stage-3-report 58/58
Top Related