1.

INDIAN TELECOM SECTOR - THE JOURNEY SO FAR

Indian telecom sector add 170 million phone connections to take the total subscriber base to 550 million. T R Dua, Deputy Director General of Cellular Operators Association of India (COAI), said, It is indeed a matter of great satisfaction that the Indian telecom industry continued to grow even when most other sectors grappled with a demand slowdown. Studies have shown that in India, the telecom sector has been a major enabler of economic growth. An Indian Council for Research on International Economic Relations (ICRIER) study has shown that states with higher mobile penetration are forecast to grow faster. At present, the Indian telecom market is the fastest growing in the world with the lowest tariffs and currently market leaders in the Indian telecom sector are launching plans to compete with new operators. The year 2009 saw telecom players shift from per minute billing to per second billing.

The Indian Telecom Analysis (2008-2012) report by RNCOS Industry Research Solutions shows that mobile telecom segment has surpassed all other segments in the Indian telecom sector. (The mobile telecom market is forecast to grow at a compound annual growth rate of around 15 per cent between 2009-10 and 2013-14.) The report also indicates that the advance of services such as Internet Protocol television (IPTV) and 3G are fuelling the growth of the Indian telecom sector. Additionally, with 3G auctions scheduled for February 13, 2010 is expected to set in motion the quick adoption of 3G-enabled handsets.

Meanwhile, Bangladesh's telecom regulator granted approval to Indian telecom operator, Bharti Airtels US$ 300 million proposed investment for a 70 per cent stake in the Abu Dhabi

Group's Warid Telecom of Bangladesh. This approval makes the company the first Indian operator from the Indian telecom sector to foray into Bangladesh's mobile market.

Indian telecom companies are following the trend of global telecom companies such as France Telecom, AT&T and Vodafone to capitalise on the excitement in the mobile applications spacemobile service provider Aircel has partnered Infosys Technologies to launch the first mobile application sector in the Indian telecom sector. Also, Airtel is considering partnering software company IBM to launch app stores in 2010. This signals the increasing recognition among operators in the Indian telecom sector that the way ahead for mobile technology lies with independent developers.

In another development in the Indian telecom sector, Tata Teleservices Ltd (TTSL) has partnered Novatium Solutions Ltd to launch what is said to be the countrys first cloud computing service over wireless broadband , Nova Navigator'. The Navigator is being described as a zero maintenance' access device with features such as 3G support and plug and play printer support and multimedia support.

In a development that will provide fundamental benefits to services offered by the Indian telecom sector, Tata Communications and China Telecom Corp are to jointly build a 500-km optical fibre cable network between the two countries in 2010. Along with the investments of Tata Communications in other subsea cable investments, the India-China Terrestrial Cable will provide high-speed connectivity between Asia and Europe. This project report is aimed at analyzing the Marketing strategies of the Indian Telecom Sector.

1.1 Mobile telephones

With a subscriber base of more than 680 million, the Mobile telecommunications system in India is the second largest in the world and it was thrown open to private players in the 1990s. The country is divided into multiple zones, called circles (roughly along state boundaries). Government and several private players run local and long distance telephone services. Competition has caused prices to drop and calls across India are one of the cheapest in the world. The rates are supposed to go down further with new measures to be taken by the Information Ministry. In September 2004, the number of mobile phone connections crossed the number of fixed-line connections and presently dwarfs the wire line segment by a ratio of around 20:1. The mobile subscriber base has grown by a factor of over a hundred and thirty, from 5 million subscribers in 2001 to over 680 million subscribers as of Sep 2010 (a period of less than 9 years) . India primarily follows the GSM mobile system, in the 900 MHz band. Recent operators also operate in the 1800 MHz band. The dominant players are Airtel, Reliance Info comm, Vodafone, Idea cellular and BSNL/MTNL. There are many smaller players, with operations in only a few states. International roaming agreements exist between most operators and many foreign carriers.

1.2 Preliminary investigation

The telecom industry is one of the fastest growing industries in India. India has nearly 200 million telephone lines making it the third largest network in the world after China and USA. With a growth rate of 45%, Indian telecom industry has the highest growth rate in the world.

History of Indian Telecommunications started in 1851 when the first operational land lines were laid by the government near Calcutta (seat of British power). Telephone services were introduced in India in 1881. In 1883 telephone services were merged with the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923. After independence in 1947, all the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications. Telecom sector was considered as a strategic service and the government considered it best 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 in telecommunications equipment manufacturing. In 1985, Department of Telecommunications (DOT) was established. It was an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system). In 1986, two wholly government-owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.

In 1990s, telecommunications sector benefited from the general opening up of the economy. Also, examples of telecom revolution in many other countries, which resulted in better

quality of service and lower tariffs, led Indian policy makers to initiate a change process finally resulting in opening up of telecom services sector for the private sector. National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensive roadmap for the Indian telecommunications sector. In 1997, Telecom Regulatory Authority 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 1999 and cellular services were also launched in the same year.

1.3 Mobile telephones in India

With a subscriber base of more than 680 million, the Mobile telecommunications system in India is the second largest in the world and it was thrown open to private players in the 1990s. The country is divided into multiple zones, called circles (roughly along state boundaries). Government and several private players run local and long distance telephone services. Competition has caused prices to drop and calls across India are one of the cheapest in the world. The rates are supposed to go down further with new measures to be taken by the Information Ministry. In September 2004, the number of mobile phone connections crossed the number of fixed-line connections and presently dwarfs the wire line segment by a ratio of around 20:1. The mobile subscriber base has grown by a factor of over a hundred and thirty, from 5 million subscribers in 2001 to over 680 million subscribers as of Sep 2010 (a period of less than 9 years). India primarily follows the GSM mobile system, in the 900 MHz band. Recent operators also operate in the 1800 MHz band. The dominant players

are Airtel, Reliance Info comm, Vodafone, Idea cellular and BSNL/MTNL. There are many smaller players, with operations in only a few states. International roaming agreements exist between most operators and many foreign carriers.

1.4 MAJOR PLAYERS

Operator Bharti Airtel MTNL BSNL Reliance Communications Aircel Sistema Loop Unitech Idea Etisalat Videocon Stel Tata Teleservices HFCL Infotel Vodafone All India Subscriber base 146,293,078 5,342,039 80,739,935 119,351,438 47,519,629 7,121,765 3,009,445 13,748,300 76,023,551 70,829 5,616,152 1,867,060 80,817,298 1,132,477 118,038,438 706,691,164 Market Share 21.34% 0.81% 11.31% 17.37% 6.64% 0.86% 0.45% 1.05% 10.84% 0.005% 0.43% 0.22% 11.47% 0.13% 17.08% 100%