INDIAN

TELECOM
SECTOR
MEGHA RANA
NEHA SAXENA
POOJA SHARMA
SHIVANGI RAWAT
SHIVAM SAHU
05/08/09 1
 OVERVIEW

• INDIAN TELECOM INDUSTRY

- AN APT EXAMPLE OF
BUSINESS
• ITS HISTORY & REGULATORY
FRAMEWORK,
• MAJOR PLAYERS AND THEIR
BUSINESS SUCCESS(present
status)
• FUTURE PROSPECTS
05/08/09 2
MOBILE A BASIC NEED FOR ALL!

05/08/09 3
INDIAN TELECOM INDUSTRY – A LUCRATIVE
OPTION
INDIAN TELECOM INDUSTRY
In re ce nt y ea rs, t he I nd ian te lec om i ndu stry h as witn essed p he nom en al
gro wth . A c on duc iv e b usi ness en viro nme nt , f avour ab le d em og ra ph ic out loo k
and th e p olitica l s ta bility enjo yed b y th e c ou ntry have c on tr ibu te d to th e
gro wth of th e in du str y. I ndia achie ved th e d is tinc tio n of h av in g t he wor ld's
lowe st call ra te s ( 2–3 U S c en ts) , the f aste st s ale o f milli on mob ile p ho ne s ( 1
we ek ), th e wo rld' s ch eap est mo bile hand set ( US D 19 ) an d the wor ld' s mo st
afford ab le c olo ur phon e ( US D 31 ).
INDIAN TELECOM INDUSTRY – FACTS
 One of the fastest growing cellular  Total telecom subscribers –
markets in the world in terms of 225.21 million (June 2007)
number of subscriber additions –
 Tele density – 19.86 percent (June
19.35 million in 3 months (April to
2007)
June 2007)
 Number of new mobile
 Expected to reach total subscriber
subscribers added every month –
base of about 500 million by 2010
7.34 million (June 2007)
(i.e., more than one phone for
every household)  ARPU for GSM – USD 6.6 per
month
 Annual growth rate of the telecom
subscribers – 47 percent (2006–  Telecom equipment market – USD
07) 17,100 million (2006–07)

 More GSM subscribers than fixed-  Handset market – USD 4,750

05/08/09 line subscribers million (2006–07) 4
 SCENARIO IN EARLY INDIA
• India, emerging as a major player
• In 1975, the
Department of Telecom (DoT) was
separated from P&T. DoT was
responsible for telecom services in
entire country until 1985 when
Mahanagar Telephone Nigam Limited
(MTNL) was carved out of DoT to
run the telecom services of Delhi
and Mumbai.
• In 1990s the telecom sector was
opened up by the Government for
private investment as a part of
05/08/09 5
TELECO M LI BERALI ZATI ON

Liberalization started in 1981 when Prime Minister

Indira Gandhi signed contracts with of France to merge
with the state owned Telecom Company (ITI), in an
effort to set up 5,000,000 lines per year.

05/08/09 6
 non-commercial basis in Delhi.

August, 1995 : GSM entered India

Historic first cell phone-call was made by

MobileNet-joint venture between Telstra
(Australia) & B.K. Modigroup.

Mobile revolution began in Kolkata.•Handset

costs-40,000 & Call tariff-17 Rs/min.

In the initial 5-6 years the average monthly

subscribers additions were around 0.05 to 0.1
million only and the total mobile subscribers base
in December 2002 stood at 10.5 millions.

CDMA
1996 :Tata Tele services was the first to launch
05/08/09 7
CDMA mobile services in India with the Andhra
 TH E BU BBLE BU RSTS (1997-
2000)
Ast ronomical growth
•High investments and huge pro fits
-In flated market caus ed b y t he hyp e between
venture capit als a nd co mpanies
-Cor rupt ed CEOs overstat ing their profit s
•Overest imat ing the market and its demands and
absurd pr ojections
-Int ernet tr affic doubling ev ery 3 mo nths!
-Level 3 digging t he earth 1 6 miles per day t o
in st all new fib er pipes!
•Lim it less expe ctations
-Over es timating users inter ests and w hat they
actually pay!
-Ir ratio nal in vest ment for unusable
infr as truct ure!
 TH E BU BBLE BU RSTS(19 99-
20 01)
Over 655 networking and t elecom c ompanies filed
bankr up tcy
-Loss of $750 billion!
Inflated stock mar ket tumbles
-T he t el eco m market declined by 96 percent!
-O ver all, the market lost $2 tr illion just in a few
years
The giant s fall one after another
-WinS tar goes ban kr upt suing Lucent for $10
billion (2001)
-WorldC om fil es t he largest bankr uptcy ever!
-Level 3’ s sha res falls from $130 in 2000 t o $ 1. 98
in 2001!
Market oversupply
-Cisco repo rted 2 billion D ol la rs of unsold router s
-H al f of the int ernet transmiss io n (sw it che s and
rout ers) capacit y was unused
-O nl y about 20 percent o f fiber pipes were led
(t oday i t is 30%)
 CONTI..
• Therefore, it became necessary to
separate the Government's policy
wing from its operations wing. The
GOI corporatised the operations
wing of DoT on October 01, 2000
and named it as
Bharat Sanchar Nigam Limited
(BSNL).
• Many private operators, such as
Reliance India Mobile, Tata
Telecom, Vodafone, BPL, Bharti,
05/08/09 10
 National Telecom Policy
•
1994
Divided into 22 Jammu &
Kashmir

circles Punjab
Himachal
Pradesh

North Eastern
Uttar
States

– 4 metros
Haryana Pradesh
W

DELHI
Rajasthan Uttar Pradesh E

– 19 circles Bihar
West
Gujarat Madhya

• Further divided
Bengal
Pradesh

Orissa KOLKATA

into A, B and C
Maharashtra

MUMBAI

category based Andhra

Pradesh

Karnataka

on economic METRO Circles

parameters and
CHENNAI
A Circles
Tamil Nadu
B Circles

revenue
Kerala

C Circles

potential
Source :COAI
• Each circle has a
05/08/09 11
REGULATORY FRAMEWORK PROVIDES LEVEL PLAYING FIELD
FOR ALL OPERATORS
The Department of telecommunications (Government of
India) is the main governing body for the industry.

Telephone Regulatory Authority of India (TRAI) assists the

Government of India (GoI) to take timely decisions and
introduce new technologies in the country.

Indian Telecom Industry Framework

Indian govt. bodies Independent body

They formulate various policies and pass laws to They undertake various research activities and monitor
regulate the telecom industry in India. the quality of service provided in the Indian telecom
industry. They also provide various recommendations to
improve the status of telecom operations in India.
Wireless Planning
and Coordination Handles spectrum allocation and
Telecom Regulatory
(WPC) management Independent regulatory body
Authority of India
(TRAI)
Department of DoT – Licensee and frequency
Telecommunications management for telecom
Telecom Disputes
Settlement and
Telecom Exclusive policy making body of Appellate Tribunal Telecom disputes settlement body
Commission DoT (TDSAT)

Handles ad hoc issues of the telecom

Group on Telecom and industry
IT (GoT-IT)

05/08/09 12
 Various important regulations and laws have been
passed in the Indian telecom industry post-
liberalisation era
Department of Telecommunication (DoT) is the main body formulating laws
and various regulations for the Indian telecom industry.

BSNL was Intra-circle

established merger
Independent ILD services
Private by DoT guidelines Number portability
regulator, was opened to Attempted
players were were to boost was proposed
TRAI, was competition Calling Party
allowed in established Rural (pending)
established Pays (CPP) was
Value Added Go-ahead to telephony
the CDMA implemented
Services technology
1994 1999 2002 2005 2007
2003 2004
2000 Internet 2006
INDIA

1992 1997 Unified Access

telephony Licensing
initiated (UASL) regime Broadband
was introduced policy 2004 Decision on 3G
National
Telecom Policy
NTP-99 led to Reduction of was services
migration from licence fees Reference formulated—
(NTP) was Interconnect (awaited)
high-cost fixed targeting 20
formulated order was
license fee to million
issued subscribers by
low-cost revenue
2010 FDI limit was
sharing regime
increased
from 49 to 74
percent

05/08/09 ILD – International Long Distance 13

 Revenues of Indian Telecom Industry:
2002–07 (USD billion)

50 43
Revenues (USD billion)

40

30
20
20 15
9 10 11
10

0
2002-03 2003-04 2004-05 2005-06 2006-07 ….. …. 2009-10

05/08/09 14
FDI AND OTHER M&A ACTIVITIES INCREASING
IN NUMBER
Major trends in the telecom sector is increasing M&A activity, de-regulation of telecom policies
and growing interest of international investors.
Recent Deals in Telecom Sector The Indian telecom industry has a 74 percent FDI limit in the
telecom services segment.

Vodafone purchased stake in Hutch The GoI has permitted 100 percent FDI in manufacturing of
from Hong Kong's Hutchison Telecom telecom equipment in India.
International for USD 11.08 billion.
FDI in Telecom Sector

Reliance Communications Limited has sold a five percent 680

700
equity share capital of its subsidiary Reliance Telecom
Infrastructure Limited to international investors across the US, 521

FDI (USD million)

Europe and Asia. The deal was worth USD 337.5 million. 500

300
116 129
Telekom Malaysia acquired a 49 100
percent stake in Spice Communications 2003–04 2004–05 2005–06 2006–07
for USD 179 million.

The Indian telecom industry has always attracted

Maxis Communications acquired a 74 foreign investors. In fact, the cumulative FDI inflow,
percent stake in Aircel for USD 1.08 during the August 1991 to March 2007 period, in the
billion.
telecommunication sector amounted to USD 3,892
million. It is the third largest sector to attract FDI in
Ericsson to design, plan, deploy and India in the post-liberalisation era.
manage Bharti Airtel network and
facilitate their expansion in the rural FDI calculation takes into account radio paging, cellular
areas, under a USD 2 billion contract. mobile and basic telephone services in the
telecommunication sector.
05/08/09 15
05/08/09 16
MAJOR PLAYERS IN DIFFERENT SEGMENTS OF
INDIAN TELECOM INDUSTRY
BASIC SERVICES OPERATORS
MOBILE SERVICES GSM SERVICES
BSNL OPERATORS
Airtel
MTNL

Vodafone
Reliance

Idea
TTSL

Reliance

BSNL
INTERNET SERVICES
OPERATORS
BSNL
CDMA Services Operators

MTNL Reliance

Reliance
TTSL
TTSL
BSNL

Airtel

05/08/09 TTSL – Tata 17

Teleservices Ltd.
SERVICE PROVIDED BY THESE
PLAYERS-
• These players provide services
according to customer needs.
• The Indian telecom services can
be divided predominantly into
basic, “MOBILE AND INTERNET”
services. It also comprises
smaller segments, such as radio
paging services, Very Small
Aperture Terminals (VSATs),
Public Mobile Radio Trunked
05/08/09 18
 GSM, CDMA, 3G &
WIRELESS

05/08/09 19
 TECHNOLOGY USED IN TELECOM
SECTOR
GSM (GLOBAL SYSTEM FOR MOBILE
COMMUNICATION)

• The most popular standard for mobile phones in the

world.
• Its promoter, the gsm association, estimates that 82%
of the global mobile market uses this standard.
• Gsm is used by over 2 billion people across more than
212 countries
• Is considered a second generation (2g) mobile phone
system.

1-20
 TECHNOLOGY USED IN TELECOM
SECTOR
2.CDMA (CO DE DIVISION MULT IPLE ACCE SS )

• One of the basic concepts in data com municat ion is

the i de a o f allow ing several t ransmitt ers to send
infor mation simul taneously ov er a s ingl e
communication channel.
• This allow s several users t o sha re a bandwidth
of f requencies.
• This concept is called multiplexing.
• CD MA employs spread-spectr um t echnology an d
a special coding schem e (w her e each
tr ansm itter is as signed a code) t o allow mult ipl e
users t o b e mult iplexed ove r the same physic al
channel

1-21
 MARKET SHARE OF WIRELESS
OPERATORS
Idea
Hutch 9%
17%

Others
8% Airtel
23%

BSNL
17% Reliance
Communications
17%
TTSL
9%

05/08/09 22
 3G
3G trend MT NL/ BS NL won the bidding for
Spectr um f or 3G . O ther pl ay er s s till in the ro w.
Launched in Delhi & M umbai.
Br and n am e ‘ Jadoo”- M TNL
India expects to replicate its 2G gr ow th in 3G
services

05/08/09 23
 TO DAY’ S INTERN ET STATU S

• Emergence of new applications

– Video on demand
– New Web-based applications
– Music / Video downloading (MySpace, YouTube, iPods)
• High appetite for broadband
– 50% of adults in U.S. use broadband
– 52% of 8-18 year-olds have used MySpace!
– More and more people get their news from the Internet
and watch less TV!
• Socio-economic impact of the Internet
– Providing greater economic opportunities (E-commerce)
– Stimulating economic growth and productivity
(Telecommuting)
– The number of people using their mobile handsets to
access the web is now over four times those using a PC
that is 38 million …… still incresaing.
 Urban Rural Teledensity in
India

50

40
Teledensity (%)

30

20

10

0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
At Year Ending March
Urban Total Rural

05/08/09 25
 TELEDENSITY IN INDIA
DELHI HAS TELEDENSITY OF 109!!
250 24
18.3 19.9 20
200

Teledensity (in percent)

Subscribers (in million)

12.8 16
150
9.1 12
225.21
100 7.0
206 8
5.1 140.3
50 98.4 4
53 76
0 0
2002–03 2003–04 2004–05 2005–06 2006–07 2007–08
(As of June
2007)
Telecom Subscriber Base Teledensity

05/08/09 26
 FACTS………………
• Delhi has teledensity of 109
• Other state like Bihar, MP, Rajasthan with
25%Teledensity.
• Requierd teledensity of 75%.

05/08/09 27
 VENTURE OUTSIDE INDIA
• BHARTI AIRTEL in SRI LANKA has 2G 3G service since
2006.
• TATA communications has a stake of 53% with
NEOTEL S. Africa.
• MTNL is working with Nepal communications.
• “ business outside land serves in sharing risk and
increasing market asset”

05/08/09 28
 FUTURE TRENDS

05/08/09 29
 EMERGING TREND “4G”
One standard known as IEEE 802.16e (belonging to the
Mobile WiMax family) is now commercially available and is

30
a precursor to 4G.
Comprehensive IP SOLUTION on “Anytime Anywhere”
basis.
BSNL has license in India.
To make India a leader in t elecom technology
TeNet c reated CeWiT (C entre o f E xcel lence in
Wi reless T echno logy ) to do resear ch in 4G.

05/08/09
WORLDWIDE INTEROPERABILITY FOR MICROWAVE
ACCESS.

“Wireless at maximum”
WiMAX can provide broadband wireless access (BWA) up
to 30 miles (50 km). 
It is estimated that India will have 19 million WiMAX
subscribers by 2012 (TRAI).

05/08/09 31
 Conti…

 Aircel is the pioneer in WiMAX technology in India.

 The state-owned player, BSNL, aims to connect 74,000
villages through WiMAX.
 Bharti, Reliance and VSNL(now TATA)have acquired
licenses in the 3.3GHz range to utilise the
opportunities.
 Tata Teleservices Ltd has announced a major WiMAX
deployment, including a Rs.1,968.26 crore ($500
million) investment over the next five years. The new
network will cover more than 130 cities, intensifying
competition across India
05/08/09 32
•Internet Protocol TV
•Also called Triple play.
• Currently available in Jaipur , Delhi, Mumbai Jodhpur!

05/08/09 33
 ACQUIRING INDIVIDUAL
SPECTRUM

• Individual microwave spectrum for company.

• It will decrease the time for spectrum use &
regulation.
• Will lead to freely lay down network cables.
• Fast services, broad band service in rural India.

05/08/09 34
VALUE-ADDED SERVICES AND RURAL
TELEPHONY HOLDS LARGE MARKET
POTENTIAL IN INDIA

VAS

RURAL
TELEPHONY

05/08/09 35
VALUE-ADDED SERVICES IN INDIA
(2006–07)

Person to
Application & Game & Data, 7%
Application to
Person SMS, Others (MMS
15% etc.), 3%

Ringtone
Dow nload, 35%

Person to Person
SMS, 40%

05/08/09 36
 VAS

• The VA S indus try was wort h US D 63 2

million in 2006– 07. The in du st ry is
estimat ed to gr ow by 60% in futur e and
become an USD 1,011 m il lio n opp ortunit y.

•The VAS industr y is cur rently focussing on

the ent ert ainm ent sector , such as th e
Indian f ilm industr y and cricket; however,
ther e is s cop e for growth in o ther avenues as
util ity-bas ed ser vice s, such as location
infor mat ion and mobile tr an sact ions .
05/08/09 37
 Future servi ces for customers

• With the Department of Telecommunications approving

the sale of ‘calling cards’ by telecom companies,
international and domestic tariffs are set to drop
further.

05/08/09 38
 RURAL
TELEP HO NY

• As the go ver nm ent tar gets to incr ease

rur al teledensity fr om the cur rent 2
per cent to 25 per cent by 2012, rur al
tel eph on y will requir e ma jor
investments. T his segmen t w ill boos t
the de mand f or telecom services,
equipment, I nternet services and ot her
value-added services; ther eby , off ering
gre at market opp or tunit ies for t ele co m
players .

05/08/09 39
 ANY QUESTIONS????

05/08/09 40
 TH ANK YOU!!

05/08/09 41