Indian telecom industry final-bhuvar rajsee r

::: Grand Project Report :::

A study report on Indian Telecom Industry:
“Price-War and its impact on”

Prepared By
Rajshee R. Bhuvar
Guided By
Prof. Vishal Javiya
Academic Year
2008-10
Submitted To
Smt. R D Gardi Department of Business Management,
Saurashtra University, Rajkot

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::: Declaration :::

I, undersigned Mr. Bhuvar Rajshee R. Student of Smt. R. D. Gardi Department of Business
Management, Saurashtra University, Rajkot hear by declare that the project work
presented in this report my own work and has been created by me under the
supervision of Prof. Vishal Javiya

This has not been previously submitted to any other university for any examination.

Date: - 12-4-2010
Place: - Rajkot

Signature

(Bhuvar Rajshee R.)

A study report on Indian Telecom Industry: “Price-War and its impact”
Prepared by: Rajshee R. Bhuvar

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::: Preface :::

“Preface makes man perfect not money”

MBA is a course where getting theoretical knowledge only will not serve the purpose. The
effective application of the theoretical aspects in the practical situations should be given
more importance. So as a part of academic activity the MBA students are required to
undergo research report after the end of 4th Semester. During the research study,I get the
opportunity to apply the concepts they have learned in first three semesters.

Therefore, as a student of MBA, I have taken an excellent opportunity to research on Indian
telecom industry and I really enjoyed my research study and learn many new insights that
probably I never have learned from the classroom.

Here, I tried my level best to represent all the information and I have expressed my
deliberated efforts to make my report clean & specific.


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::: Acknowledgment :::

The successful completion of a research study requires guidance & help from a number of
people. I was fortunate to have all the support from my Professors. I therefore take this
opportunity to express my profound sense of gratitude to the all those who extended their
wholehearted help and support to me in completing this grant research project.

I am sincerely thankful to Dr. Pratapsinh Chauhan (Head of Department-RDGDBM,
Saurashtra University-Rajkot) for allowing me to undertake the report and making available
all facilities for the successful completion of the report besides guiding me to pursue the
study on proper line.

I also express my deep sense of gratitude towards Mr. Vishal Javiya. (Guide, Faculty at
RDGDDBM)

No Acknowledge would suffice for the support my family members, my colleagues, some
bloggers, customer care executive & other friends who work on industry.

Lastly, I extend my thanks to all those whose name have not been mentioned way in
successfully carrying out the project report.

Date: - 12-4-2010
Place: - Rajkot.


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::: Contents :::

SR. NO Particulars Page no.

1 Executive summary 8

2 Introduction 10

 Objective 11

 Research methodologies 12

 Indian Telecom Industry at a glance 13

 Where we stand in world? 16

 Development of mobile phone 18

 History of cellular services in the India 24

 Impact of LPG on cellular service industry 27

 Regulatory Authority 31

 Various Telecom policies 33

3 Major players of the Industry 36

 Cellular Service providers’ Overview 37

 All-over Market share 39

 List of cellular operator with subscriber base 40

1. Airtel 40

2. Reliance communications 44

3. Vodafone Essar 46

4. BSNL 49

5. Idea cellular 52

6. Tata Teleservices limited 55

7. Aircel 59

8. MTNL 62


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9. MTS India 66

10. LOOP Mobile 68

11. Uninor 70

12. S-tel 72

13. HFCL Infotel 75

4 Price-war: - how it happens! 77

 Rs. 16.80 per minute to ½ paisa per second 78

 Reason behind India's lowest telecom tariffs in the world 84

5 Price-war’s impact on industry 86

 What happen after price war? 87

 Price wars impact on stock-market 87

 Price-war’s impact on ARPU 93

 Price-war’s impact on financial performances 95

 Telco’s business model 99

1. Revenue analysis 100

2. Cost analysis 102

6 Value added services- How it helpful to overcome price-war impact 103

 It’s helpful to overcome the price-war impact 104

 The Role of VAS in revenue generation 105

 Market size of VAS 106

 Revenue distribution of VAS 107

 The Road Ahead 108

7 Marketing mix of Value added services as a “Next wave for revenue growth” 110

 Why marketing mix of VAS? 111

 Product 112


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 Price 120

 Promotion 122

 Place 128

8 Opportunities and Threats analysis 133

 Opportunities 134

 Threats 136

9 Finding &suggestions 138

 Finding 139

 suggestions 141

10 Bibliography 143


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::: Executive summary :::

We undertook this project to understand the Cellular Industry as a whole. Also to get better
insight of how External Environment as well as the Competitive Environment can affect it. In
the price-war situation which types problem faced by Indian telecom industry. At present
Telecom Sector is in boom, every day there are new changes happening in the industry. This
project has taught us that how difficult it is for a company to survive in the market with the
continuous changes in terrif, whether these changes are in Technology, or in the pricing
structure or in the legal policies or in the terms of customer preferences. We also came to
know, that the telecom market is having very high Entry as well as Exit barriers, due to the
increased number of players and strong rivalry among existing players.

The government of India recognizes that the provision of a world-class telecommunications
infrastructure and information is the key to rapid economic and social development of the
country. It is critical not only for the development of the Information Technology industry,
but also has widespread ramifications on the entire economy of the country. It is also
anticipated that going forward, a major part of the GDP of the country would be contributed
by this sector.

The process of deregulation began in India in 1980s with the restructuring of Telecom
department to stimulate growth and introduce new technologies. When cellular mobile
services were first introduced, it was duopoly, under a fixed license fee regime and for a
license period of 10 years. The initial response was encouraging because of the perceived
attractiveness of the Indian market in the terms of teledensity, the high latent demand and
the increasing middle class. The Telecom Regulatory Authority of India (TRAI) was formed in
1997 with a view to provide aneffectiveregulatory framework and adequate safeguards to
ensure fair competition and protection of consumer interests. The Government is
committed to a strong and independent regulator with comprehensive powers and clear
authority to effectively perform its functions. Telecom proved to be a powerful attraction of
foreign investment. The cumulative FDI inflow into Telecom since 1993 has exceeded Rs.
43,000 Million. Within telecom, Cellular Industry has attracted most of the foreign
investment since 1993, accounting for almost 50 % of the FDI inflow in to telecom –
representing amongst the biggest investment in any one sector in India.

The concept of Cellular service had been established to target only to Business class people.
But after the revolutions happened in this industry, the technology enhanced and the
competition has made the tariffs cheaper and now it has become the status symbol, and
because of that now not only the business classes people keep it but also service class
people, school & college going students keep the cellular phone with them. It has given the
new uses to this service people keep in touch with their relatives and friends. The living
standard has also changed. The advertising is also in full fledge; this has lead the cellular
service so popular.

At present, we are using the 2.5-generation of mobile system. The 3rd generation of mobile
communication systems will soon by implement. Following on the heels of analog


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technology, the third generation will be digital mobile multimedia offering broadband
mobile communication with voice, video, and graphics, audio and other information.

Indian cellular industry is in full of its color with boom seen in Indian economy. With theentry
of major players, major up fold has been seen in cellular industry since last 8-10 years.
Government continuous intervention in this industry is major factor that has affected
positively & negatively for different technological players.

Today’s price-war situation in competitive environment in cellular industry has inspired us
to study this industry form strategic point of view. We had undertaken this project for our
learning as well as to fulfill academic guideline of Saurashtra University. Objective of our
study is “The core objective of the project is to understand the price-war situation and its
impact on Cellular industry of India.Also understand the marketing mix of VAS as a “next
wave for revenue growth”.

To achieve objective of our study we had given importance to secondary data collection and
its analysis & conclusion.

In our research secondary data collected from various magazines, newspapers, internet,
library, reports of different companies etc.


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::: Introduction :::


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::: Objective :::

Main-objective

To study the present scenario of cellular (GSM +CDMA) service industry of India and
understand the price-war and its impact on industry.

To understand the marketing mix of VAS as a “next wave for revenue growth”

Sub-objective;

 To review Indian scenario of cellular service industry.

 To review major Indian players of cellular service.

 To review of new players in cellular services industry.

 To know the subscribers growth rate of different players.

 To understand price-war.

 To find out reason behind price-war.

 To understand the ARPU (Average Revenue per User).

 To find out price-war impact on ARPU.

 To find out price-war impact on stock market performances.

 To find out price-war impact on financial performances.

 To understand V.A.S. (value added services).

 To understand V.A.S. roll in price-war situation.

 To compare V.A.S. revenue v/s calling revenue.

 To find out V.A.S. market size

 To understand V.A.S. revenue distribution.

 To find out opportunities and threats for cellular service industry.


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::: Research methodologies :::
Research is an art of scientific investigation, which helps to search for knowledge. Research
methodology considers following items:

Types of data:

There are main two types of data.

 Primary Data: -data are those, which are collected for the first time and thus happen
to be original in character.

 Secondary Data: - Secondary data, on the other hand are those, which have already
been collected by someone in the past. For this research study, secondary data is
used.

Data Source:

Secondary data are collected from the magazines, different reports, publishes, newspapers,
Internet, etc.

We have taken secondary data thatare related to prepare project. For comparison also we
taken secondary data and from that we have prepared interpretation. Other analysis we
have made from collected data only. This way, we have prepared project by using secondary
data.

Define the problem andr esearch objectives

Develop the research plan

Collect the information
Secondary Data

Analyze the information

price war and its impact VAS "next wave for revunue groth"

Present the findings

Finding suggestions


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::: Indian Telecom Industry at a glance :::
Where we stand today…

 525.15 Million Mobile Subscriber.

 In year 2015 India beat china with 'billion plus' Subscriber.

 Monthly growth rate of 3.78%.

 Avg.15million (19.20 million in Jan.) New Subscriber added every month.

 Tele-density stands at 44.73%.

 13 major players………8 old…….5 new………other 3 waiting for lunched.

 Lowest call charge in the world……….1/2(half) paisa per second.

 1 rupee, 1 sms to 1 paisa, 1 sms.

 New SIM-card in 10 Rupees with free 50 Rupees talk time + 30 sms.

 ARPU reduce 173.66 to155.60 (-10.40%) in last quarter.

Above figure told everything about Indian cellular industry!

The Indian telecommunication industry, with about 525 million mobile phone connections
(Dec 2009) , is the third largest telecommunication network in the world and the second
largest in terms of number of wireless connections. The Indian telecom industry is one of
the fastest growing in the world and is projected that India will have 'billion plus' mobile
users by 2015. Projection by several leading global consultancies is that India’s telecom
network will overtake China’s in the next 10 years. For the past decade or so,
telecommunication activities have gained momentum in India. Efforts have been made from
both governmental and non-governmental platforms to enhance the infrastructure. The
idea is to help modern telecommunication technologies to serve all segments of India’s
culturally diverse society, and to transform it into a country of technologically aware people.

The telecom services have been recognized the world-over as an important tool for socio-
economic development of a nation. Telecommunication is one of the prime support services
needed for rapid growth and modernization of various sectors of the economy. It has
become especially important in recent years because of enormous growth of information
technology and its significant potential for the impact on the rest of the economy.

Telecommunications is one of the few sectors in India, which has witnessed the most
fundamental structural and institutional reforms since1991. Considering the great potential
for the growth of telephone demand with the accelerated growth of economic activities,


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the Government of India announced the National Telecom Policy in 1994 and the New
Telecom Policy in 1999. The National Telecom Policy provides for private sector
participation to supplement the efforts of Dot in basic telephone services. The opening up of
the basic services provided a big opportunity for private & foreign investors. More policy
initiatives included Addendum to NTP-1999.

The entire sector is now open to unrestricted competition in all. The opening of the sector has
not only led to rapid growth but also helped a great deal towards maximization of consumer
benefits. The tariffs have been falling continuously across the board because of healthy and
unrestricted competition and India today has one of the lowest tariffs in the world. Besides,
because of the various measures and initiatives taken by the Government, India is now fast
emerging as one of the leading telecom nations.

The reforms process in the telecom sector is still on, aiming to remove the balance hurdles and
limitations. With a strong population of over 1.16 Billion, India has become one of the most
dynamic and promising. Telecom markets of the world. In recent times, the country has
emerged as one of the fastest growing telecom markets in the world. It has third largest
telecom network and the second largest wireless network in the world.


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::: Growth of Mobile subscriber base from 1999 to Jan-2010 (In millions) :::

SUBSCRIBERS
1200

1000
1000

800
(in Millions)

600
525.15

429.72

400
304.49

206.83
200
98.41 104.32
75.54
44.97 54.62
22.81 28.53 36.29
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2015

Note: - 2015 figure is projected by govt. agency.

Dec.2009 India have the 525.15 million subscribers, it is 22x times higher than 1999.
During this period call charges reduce 56 x times, in compare to 1999’s Rs 16.80 per minute.


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::: Where we stand in the world :::

List of countries by number of mobile lines in use
Country-wise mobile subscribers

Rank Country or region Number of mobile phones Population % of population
1 China 747,380,000 1,335,330,000 55.97
2 India 525,147,922 1,174,040,000 44.73
3 United States 276,610,580 308,505,000 89.0
4 Russia 207,900,000 141,915,979 143.2
5 Brazil 173,960,000 191,480,630 90.84
6 Indonesia 140,200,000 231,369,500 60.53
7 Japan 107,490,000 127,530,000 84.11
8 Germany 107,000,000 81,882,342 130.15
9 Pakistan 97,579,940 168,500,500 59.60
10 Italy 88,580,000 60,090,400 147.41
11 Mexico 79,400,000 109,610,000 72.44
12 United Kingdom 75,750,000 61,612,300 122.95
13 Vietnam 70,000,000 87,375,000 80.11
14 Philippines 67,900,000 92,226,600 73.62
15 Turkey 66,000,000 71,517,100 92.29
16 Nigeria 64,000,000 154,729,000 41.36
17 France 58,730,000 65,073,842 90.25
18 Ukraine 55,170,908 46,143,700 119.56
19 Thailand 51,377,000 65,000,000 79.0
20 Spain 50,890,000 45,828,172 111.05
21 Bangladesh 50,400,000 162,221,000 31.11
22 South Korea 47,000,000 48,333,000 97.24
23 Argentina 40,402,000 40,482,000 99.8
24 South Africa 42,300,000 47,850,700 82.9
25 Iran 39,400,000 71,208,000 54.2
26 Poland 36,746,000 38,115,967 96.4
27 Colombia 29,763,000 44,068,000 67.5
28 Egypt 30,065,000 75,498,000 23.8
29 Algeria 28,500,000 33,858,000 92
30 Venezuela 27,400,000 28,200,000 98.0
31 Taiwan 23,249,000 22,958,000 101.3
32 Romania 22,800,000 21,438,000 108.5
33 Peru 24,650,000 29,000,000 85.0
34 Canada 21,455,000 33,487,208 64.2
35 Morocco 20,029,000 34,343,000 58.4
36 Australia 19,760,000 21,179,211 93.3
37 Saudi Arabia 19,663,000 24,735,000 79.5
38 Malaysia 19,464,000 27,484,000 70.8
39 Netherlands 18,914,000 16,402,414 115.3


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40 Chile 15,768,000 16,598,074 95
41 Portugal 14,500,000 10,632,000 137
42 Hungary 11,732,000 10,020,000 115.1
43 Hong Kong 10,550,000 7,008,900 150.5
44 Azerbaijan 7,000,000 8,900,000 31.4
45 Singapore 4,770,000 6,400,000 134
46 New Zealand 4,245,000 4,173,460 101.7
47 Estonia 1,982,000 1,340,602 147.8

World 4,100,000,000 6,797,100,000 60.6%


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::: Development of mobile phone :::
This history of mobile phones chronicles the development of radio telephone technology
from two-way radios in vehicles to handheld cellular communicating devices.

In the beginning, two-way radios (known as mobile rigs) were used in vehicles such as
taxicabs, police cruisers, ambulances, and the like, but were not mobile phones because
they were not normally connected to the telephone network. Users could not dial phone
numbers from their vehicles. A large community of mobile radio users, known as the
mobileers, popularized the technology that would eventually give way to the mobile phone.
Originally, mobile two-way radios were permanently installed in vehicles, but later versions
such as the so-called transportable or "bag phones" were equipped with a cigarette lighter
plug so that they could also be carried, and thus could be used as either mobile or as
portable two-way radios. During the early 1940s, Motorola developed a backpacked two-
way radio, the Walkie-Talkie and later developed a large hand-held two-way radio for the US
military. This battery powered "Handy-Talkie" (HT) was about the size of a man's forearm.

In 1910Lars Magnus Ericsson installed a telephone in his car, although this was not a radio
telephone. While travelling across the country, he would stop at a place where telephone
lines were accessible and using a pair of long electric wires he could connect to the
=9781840464191 In Europe, radio telephony was first used on the first-class passenger
trains between Berlin and Hamburg in 1926. At the same time, radio telephony was
introduced on passenger airplanes for air traffic security. Later radio telephony was
introduced on a large scale in German tanks during the Second World War. After the war
German police in the British zone of occupation first used disused tank telephony
equipment to run the first radio patrol cars. In all of these cases the service was confined to
specialists that were trained to use the equipment. In the early 1950s ships on the Rhine
were among the first to use radio telephony with an untrained end customer as a user.

In 1946 soviet engineers G. Shapiro and I. Zaharchenko successfully tested their version of a
radio mobile phone mounted inside a car. The device could connect to local telephone
network with a range of up to 20 kilometers.


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::: Pioneers of the cell phone :::

Dr. Martin Cooper of Motorola, made the first US
analogue mobile phone call on a larger prototype
model in 1973.


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In December 1947, Douglas H. Ring and W. Rae Young, Bell Labs engineers, proposed
hexagonal cells for mobile phones in vehicles.[1] Philip T. Porter, also of Bell Labs, proposed
that the cell towers be at the corners of the hexagons rather than the centers and have
directional antennas that would transmit/receive in three directions (see picture at right)
into three adjacent hexagon cells. The technology did not exist then and the frequencies
had not yet been allocated. Cellular technology was undeveloped until the 1960s, when
Richard H. Frenkiel and Joel S. Engel of Bell Labs developed the electronics.

Recognizable mobile phones with direct dialing have existed at least since the 1950s. In the
1954 movie Sabrina, the businessman Linus Larrabee (played by Humphrey Bogart) makes a
call from the phone in the back of his limousine.

The first person to have a mobile phone in the United Kingdom was reputedly Prince Philip,
who had a system fitted into the trunk of his Aston Martin in 1957. The Prince could make
phone calls to the Queen while driving, which was thought to be quite amazing at the time.
The Duke of Gloucester heard about the mobile phone and tried to obtain one, but the Post
Office denied his request. They were prepared to indulge the husband of Her Majesty, but
nobody else, as the system used an entire dedicated radio frequency.

The first fully automatic mobile phone system, calledMTA (Mobile Telephone system A), was
developed by Ericsson and commercially released in Sweden in 1956. This was the first
system that did not require any kind of manual control in base stations, but had the
disadvantage of a phone weight of 40 kg (90 lb.). MTB, an upgraded version with transistors,
weighing 9 kg (20 lb.), was introduced in 1965 and used DTMF signaling. It had 150
customers in the beginning and 600 when it shut down in 1983.

In 1957 young Soviet radio engineer Leonid Kupriyanovich from Moscow created the
portable mobile phone, named after himself as LK-1 or "radiophone". This true mobile
phone consisted of a relatively small-sized handset equipped with an antenna and rotary
dial, and communicated with a base station. Kupriyanovich's "radiophone" had 3 kilogram of
total weight, could operate up to 20 or 30 kilometers, and had 20 or 30 hours of battery
lifespan. LK-1 and its layout was depicted in popular Soviet magazines as Nauka i zhizn, 8,
1957, p. 49, Yuniytechnik, 7, 1957, p. 43–44. Engineer Kupriyanovich patented his mobile
phone in the same year 1957 (author's certificate (USSR Patent) # 115494, 1.11.1957). The
base station of LK-1 (called ATR, or Automated Telephone Radio station) could connect to
local telephone network and serve several customers.

In 1958, Kupriyanovich resized his "radiophone" to "pocket" version. The weight of
improved "light" handset was about 500 grams.

In 1958 the USSR also began to deploy the "Altay" national civil mobile phone service
especially for motorists. The newly-developed mobile telephone system was based on
Soviet MRT-1327 standard. The main developers of the Altay system were the Voronezh
Science Research Institute of Communications (VNIIS) and the State Specialized Project
Institute (GSPI). In 1963 this service started in Moscow, and in 1970 the Altay service already
was deployed in 30 cities of the USSR. The last upgraded versions of the Altay system are
still in use in some places of Russia as a trunking system.


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In 1959 a private telephone company located in Brewster, Kansas, USA, the S&T Telephone
Company, (still in Business today) with the use of Motorola Radio Telephone equipment and
a private tower facility, offered to the public mobile telephone services in that local area of
NW Kansas. This system was a direct dial up service through their local switchboard, and
was installed in many private vehicles including grain combines, trucks, and automobiles.
For some as yet unknown reason, the system after being placed online and operated for a
very brief time period was shut down. The management of the company was immediately
changed, and the fully operable system and related equipment was immediately dismantled
in early 1960, not to be seen again.

In 1966, Bulgaria presented the pocket mobile automatic phone RAT- 0.5 combined with a
base station RATZ-10 (RATC-10) on Interorgtechnika-66 international exhibition. One base
station, connected to one telephone wire line, could serve up to six customers.

In 1967, each mobile phone had to stay within the cell area serviced by one base station
throughout the phone call. This did not provide continuity of automatic telephone service to
mobile phones moving through several cell areas. In 1970 Amos E. Joel, Jr., another Bell Labs
engineer invented an automatic "call handoff" system to allow mobile phones to move
through several cell areas during a single conversation without loss of conversation.

In December 1971, AT&T submitted a proposal for cellular service to the Federal
Communications Commission (FCC). After years of hearings, the FCC approved the proposal
in 1982 for Advanced Mobile Phone System (AMPS) and allocated frequencies in the 824–
894 MHz band.[6] Analog AMPS was superseded by Digital AMPS in 1990.

One of the first successful public commercial mobile phone networks was the ARP network
in Finland, launched in 1971. Posthumously, ARP is sometimes viewed as a zero generation
(0G) cellular network, being slightly above previous proprietary and limited coverage
networks.

First generation:
On April 3, 1973, Motorola employee Dr. Martin Cooper placed a call to Dr. Joel S. Engel,
head of research at AT&T's Bell Labs, while walking the streets of New York City talking on
the first Motorola DynaTAC prototype in front of reporters. Motorola has a long history of
making automotive radios, especially two-way radios for taxicabs and police cruisers.

Second generation:
In the 1990s, 'second generation' (2G) mobile phone systems such as GSM, IS-136
("TDMA"), iDEN and IS-95 ("CDMA") began to be introduced. In 1991 the first GSM network
(Radiolinja) opened in Finland. 2G phone systems were characterized by digital circuit
switched transmission and the introduction of advanced and fast phone-to-network
signaling. In general the frequencies used by 2G systems in Europe were higher than those
in America, though with some overlap. For example, the 900 MHz frequency range was used
for both 1G and 2G systems in Europe, so the 1G systems were rapidly closed down to make
space for the 2G systems. In America the IS-54 standard was deployed in the same band as
AMPS and displaced some of the existing analog channels.


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Coinciding with the introduction of 2G systems was a trend away from the larger "brickle"
phones toward tiny 100–200g hand-held devices, which soon became the norm. This change
was possible through technological improvements such as more advanced batteries and
more energy-efficient electronics, but also was largely related to the higher density of
cellular sites caused by increasing usage levels. This decreased the demand for high
transmission powers to reach distant towers for customers to be satisfied.

The second generation introduced a new variant to communication, as SMS text messaging
became possible, initially on GSM networks and eventually on all digital networks. The first
machine-generated SMS message was sent in the UK in 1991. The first person-to-person
SMS text message was sent in Finland in 1993. Soon SMS became the communication
method of preference for the youth. Today in many advanced markets the general public
prefers sending text messages to placing voice calls.

2G also introduced the ability to access media content on mobile phones, when Radiolinja
(now Elisa) in Finland introduced the downloadable ring tone as paid content. Finland was
also the first country where advertising appeared on the mobile phone when a free daily
news headline service on SMS text messaging was launched in 2000, sponsored by
advertising.

Third generation:
Not long after the introduction of 2G networks, projects began to develop third generation
(3G) systems. Inevitably there were many different standards with different contenders
pushing their own technologies. Quite differently from 2G systems, however, the meaning
of 3G has been standardized in the IMT-2000 standardization processing. This process did
not standardize on a technology, but rather on a set of requirements (2 Mbit/s maximum
data rate indoors, 384 Kbit/s outdoors, for example). At that point, the vision of a single
unified worldwide standard broke down and several different standards have been
introduced.

The first pre-commercial trial network with 3G was launched by NTT DoCoMo in Japan in the
Tokyo region in May 2001. NTT DoCoMo launched the first commercial 3G network on
October 1, 2001, using the WCDMA technology. In 2002 the first 3G networks on the rival
CDMA2000 1xEV-DO technology were launched by SK Telecom and KTF in South Korea, and
Monet in the USA. Monet has since gone bankrupt. By the end of 2002, the second WCDMA
network was launched in Japan by Vodafone KK (now Softbank).pooEuropean launches of
3G were in Italy and the UK by the Three/Hutchison group, on WCDMA. 2003 saw a further
8 commercial launches of 3G, six more on WCDMA and two more on the EV-DO standard.

During the development of 3G systems, 2.5G systems such as CDMA2000 1x and GPRS were
developed as extensions to existing 2G networks. These provide some of the features of 3G
without fulfilling the promised high data rates or full range of multimedia services.
CDMA2000-1X delivers theoretical maximum data speeds of up to 307 Kbit/s. Just beyond
these is the EDGEsystem which in theory covers the requirements for 3G system, but is so
narrowly above these that any practical system would be sure to fall short.


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By the end of 2009 there were 325+ Million subscribers on 3G networks worldwide, which
reflected 9% of the total worldwide subscriber base. About two thirds of these are on the
WCDMA standard and one third on the EV-DO standard. The 3G telecoms services
generated over 120 Billion dollars of revenues during 2009 and at many markets the
majority of new phones activated were 3G phones. In Japan and South Korea the market no
longer supplies phones of the second generation. Earlier in the decade there were doubts
about whether 3G might happen, and also whether 3G might become a commercial success.
By the end of 2009 it had become clear that 3G was a reality and was clearly on the path to
become a profitable venture.


P a g e | 24

::: History of cellular services in India :::

The popular meaning of telecom always involves electrical signals and nowadays people
exclude postal or any other raw telecommunication methods from its meaning. Therefore,
the history of Indian telecom can be started with the introduction of telegraph. As the
cellular service is the part of telecom.

Introduction of Telegraph:

The postal and telecom sectors had a slow and uneasy start in India. In 1850, the first
experimental electric telegraph Line was started between Kolkata and Diamond.

In 1851, it was opened for the British East India Company. The Posts and Telegraphs
department occupied a small corner of the Public Works Department at that time.
Construction of 4,000 miles (6,400 km) of telegraph lines connecting Kolkata (Calcutta) and
Peshawar in the north via Agra, Mumbai (Bombay) through Sindwa Ghats, and Chennai in
the south, as well as Ootacamund and Bangalore was started in November 1853. Dr. William
O'Shaughnessy, who pioneered telegraph and telephone in India, belonged to the Public
Works Department. He tried his level best for the development of telecom throughout this
period. A separate department was opened in 1854 when telegraph facilities were opened
to the public.

Introduction of the Telephone:

In 1880, two telephone companies namely The Oriental Telephone Company Ltd. and The
Anglo-Indian Telephone Company Ltd. approached the Government of India to establish
telephone exchanges in India. The permission was refused on the grounds that the
establishment of telephones was a Government monopoly and that the Government itself
would undertake the work. By 1881, the Government changed its earlier decision and a
licensewas granted to the Oriental Telephone Company Limited of England for opening
telephone exchanges at Kolkata, Mumbai, Chennai (Madras) and Ahmadabad. January 28,
1882, is a Red Letter Day in the history of telephone in India. On this day Major E. Baring,
Member of the Governor General of India's Council declared open the Telephone Exchange
in Kolkata, Chennai and Mumbai. The exchange at Kolkata named "Central Exchange" was
opened at third floor of the building at 7, Council House Street. The Central Telephone
Exchange had 93 subscribers. Bombay also witnessed the opening of Telephone Exchange in
1882.

Further developments:

 1902 - First wireless telegraph station established between Saugor Islands and Sand
heads.
 1907 - First Central Battery of telephones introduced in Kanpur.


P a g e | 25

 1913-1914 - First Automatic Exchange installed in Shimla.
 1927(July 23,) - Radio-telegraph system between the UK and India.
 1933 - Radiotelephone system inaugurated between the UK and India.
 1953 - 12 channel carrier system introduced.
 1960 - First subscriber trunk dialing route commissioned between Kanpur and
Lucknow.
 1975 - First PCM system commissioned between Mumbai City and Andheri
telephone exchanges.
 1976 - First digital microwave junction introduced.
 1979 - First optical fiber system for local junction commissioned at Pune.
 1980 - First satellite earth station for domestic communications established at
Secunderabad, Andhra Pradesh.
 1983 - First Analog signal Stored Program Control exchange for trunk lines
commissioned at Mumbai.
 1984 - C-DOT established for indigenous development and production of digital
exchanges.
 1985 - First mobile telephone service started on non-commercial basis in Delhi.
 1986 - Conversion of DOT into two wholly government-owned companies: theVidesh
Sanchar Nigam Limited (VSNL) for international telecommunicationsandMahanagar
Telephone Nigam Limited (MTNL) for service inMetropolitan areas.
 1994- Startinga cellular service in India.
 1997 - Telecom Regulatory Authority of India created.
 1999 - Cellular Services are launched in India. New National Telecom Policy
isadopted.
 2000 - Dot becomes a corporation, BSNL

While all the major cities and towns in the country were linked with telephones during the
British period, the total number of telephones in 1948 was only around 80,000. Even after
independence, growth was extremely slow. The number of telephones grew leisurely to
980,000 in 1971, 2.15 million in 1981 and 5.07 million in 1991.

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
Liberalization-Privatization-Globalization policy. Therefore, it became necessary to separate
the Government's policy wing from its operations wing. The Government of India
corporatized 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, Idea etc., successfully entered the high potential Indian
telecom market.


P a g e | 26

Development of cellular industry:

The telecom services have been recognized the world-over as an important tool for socio-
economic development for a nation. Telecommunication is one of the prime support
services needed for rapid growth and modernization of various sectors of the economy. It
has become especially important in recent years because of enormous growth of
information technology and its significant potential for the impact on the rest of the
economy. In the past decade or so the distinction between communications & IT has been
diminishing with emerging common infrastructures blurring the differentiation between
content & carrier methods. At the same time, as has been the case in most of the developed
world, the combination of enhanced computing power and improved telecommunications-
equated by some to the introduction of steam power in the 18th century and electricity in
the 19th, has spurred a major improvement in the productive capacities of the economies.

India is perceived to have a special comparative advantage in information technology and in
IT enabled services. The extent of advantage depends critically on high quality
telecommunication infrastructure. Telecom infrastructure is treated as a crucial factor to
realize the socio-economic objectives in India.


P a g e | 27

::: Impact of LPG on cellular service industry :::

Introduction:

Globalization, liberalization and privatization are the three most spoken words in today’s
world. These initiatives paved way for all-round reforms,

Especially in developing economies, like India. These countries realized that development
ofeffectiveand efficient means of communications and information technology is important
to push them onto the path of development. The growth of the telecom sector in India
during post- liberalization has been phenomenal. This research aims to throw light on the
factors that contributed to growth in the segment and presents an insight on the present
status of the industry.

Liberalization:

No meaningful liberalization of the telecom sector is possible unless there is aneffectiveand
strong regulatory authority. In view of the raging controversy between the TRAI and the
DOT over the powers and jurisdictions of each other, the Union Government intends
suitable amendments in the TRAI Act to create investors' confidence and a level-playing field
between public and private operators. Taking into account the convergence of telecom,
computers, television and electronics, a group of experts is being constituted to recommend
a new legislation in place of the India Telegraph Act 1885 as it has lost its relevance.

In the early 1990s was the impact of economic reforms promulgated by the Government of
India to align its economy with the world economy. Further the economic renaissance of
India catalyzed the need for the opening of Indian cellular industry. Since independence the
number of basic telecommunication services network has expanded from about 84
thousand connections to around 385.95 lakh connections as on March 31 2002. The basic
service network represents the majority of the telephone subscription, which accounts for
around 86% of the total telecommunication network in India. Post 1990s, the Government
of India did away with its old monopoly-market concept and shifted to open-market policy
regime.

In the course of liberalization, licenses were granted for providing cellular mobile service in
the metro cities of Delhi, Mumbai, Kolkata, and Chennai. To avoid overlaps, the NTP stated
that not more than two cellular providers could operate in a given telecom circle. Service
providers were now free to provide all types of mobile services including voice and non-
voice messages and data services in their service area of operation.

Bharti, a part of Bharti Enterprises, was the first to launch its cellular service on July 7, 1995.
Bharti's cellular services were launched under the brand name ‘AirTel'and was categorized
as pre-paid services and post-paid services. The postpaid service was launched under the
brand name “Airtel” whereas its prepaid services were launched under the brand name
“Magic”...


P a g e | 28

Established in 1976, Bharti Enterprises was India's leading Telecom and Healthcare
conglomerate. It had profits of $320 million and revenues of $ 1,790.776 million for the
financial year 2004. Pre-paid services are the mobile service where the user needs to
purchase a “prepaid” card that offers talk-time and other services depending on the talk-
time value of the card.

Post-paid services refer to mobile services that are billed on a monthly basis. The user needs
to pay the bills at the end of the month's usage of the service.

Privatization:

For decades, we have wanted the government to stop baking bread, running hotels,
operating airlines, offering phone services, providing insurance or running any business that
requires high standards of customer service. Also, we wanted government to stop being
both, a service provider and a regulator, or a player and a referee. And in the last five years,
the government is actually making a serious attempt to get out of several businesses
through its privatization programmed. It has also set up several independent regulators to
ensure a fair competition between service providers and to deal with the impact of changing
technology on the way businesses are run.

Privatizations and competition alone have led to big improvements in service quality in
many areas. Unfortunately, the regulatory systems seem to operate on the belief that
competition alone is enough to protect consumer interests. Take for instance the Telecom
Regulatory Authority of India (TRAI). It follows the open house route to policy making, but
does not entertain the mounting number of individual complaints. However, it is now
planning to set up a telecom ombudsman to interface with customers. Meanwhile,
subscribers across the spectrum of telephone services continue to report a variety of
complaints.

ArunSaxena, president of the International Consumer Rights Protection Council (ICRPC),
forwarded Pole’s complaint to the company. Other civic activists point out that the problem
is not restricted to Reliance. Kisan Mehta of the Save Bombay Committee points to several
problems with the Tata Indicom service. Almost all mobile companies are extremely difficult
to reach through their help lines, tardy in their billing and seldom respond to complaints or
queries sent to their email addresses. None of them allow access to senior executives if a
consumer wants to take an unresolved complaint to a higher level.

Calls to mobile phones are the most annoying form of telemarketing because they are not
only a brazen invasion of privacy but often make the victim pay long distance charges. Some
of our leading banks and finance companies have no qualms about letting telemarketers
harass their customers. My experience with a leading Indian bank and a foreign bank reveals
that we cannot get off the list until we make multiple complaints to the top management of
these institutions. We can say that most mobile phone companies are indeed protective of
their subscribers and do not parts with telephone lists, so most call centers create lists by
dialing random numbers and hoping to strike lucky. The problem is that they simply refuse
to strike out numbers even when the person emphatically asks them never to call.


P a g e | 29

The solution is obvious: Introducing a ‘do-not-call-registry’ and making the invasion of
consumer privacy punishable with a hefty fine. Even the US has experimented with such a
registry only recently and less than a week ago a federal appeals court has upheld the
government’s right to help people block unwanted telemarketing calls. In India, filing a
complaint against companies, which harass consumers through telemarketing, would again
require a long battle with a consumer court. The alternative would be consumer action in
the form of circulating the names of such companies on Internet groups and encouraging
the boycott the products of companies that invade our privacy.

Civil courts are crowded and consumer courts are slowed down by inadequate
infrastructure and often a poor understanding of consumer issues. The solution lies in
expanding the role of independent regulators and asking them to create grievance
redressed courts or ombudsmen to hear consumer complaints and grant swift justice. But
unless the judicial system makes it much too expensive for companies to ignore their
customers, the benefits of privatization will invariably taper off within a couple years after
any sector is opened up to competition.

Policy Initiatives:

India is one of the most deregulated telecom markets in the world. Private participation is
permitted in all segments of the services – international long distance, domestic long
distance, basic, cellular, internet, radio-paging, and a number of value-added services.
Private participation in international voice services has been a significant step undertaken
by the government. Private players have been allowed to provide international long
distance services since April 2002; two years ahead of schedule. The government has
announced the New Telecom Policy (NTP) 1999 to further de-regulate the sector with
respect to services like basic, international long distance (ILD), national long distance (NLD)
and Wireless in Local Loop (WLL) among others.

The government has liberalized the sector with the following objectives:

 Ensure availability of telephones on demand

 Benchmark telecom services with global standards

 India Positioning as a major manufacturing base and exporter of telecom equipment.

 Introduce all value added services available internationally

 Achieve higher telecom penetration
The government has relaxed significantly the foreign investment norms in the sector.
Presently 49 per cent equity participation is permitted in telecom services and 74 per cent in
Internet services under the automatic route. Maximum foreign equity participation for
Internet Service Providers (ISPs) is 100 per cent. Private investors, both domestic and
foreign, have already invested over US $ 2,449 million in different segments of the industry.
100 per cent FDI is allowed for manufacturing telecom equipment.


P a g e | 30

To impactively regulate the sector, facilitate growth and development, promote
transparency and ensure fair competition, the government has set up the Telecom
Regulatory Authority of India (TRAI) as an independent regulatory body and the Telecom
Dispute Settlement Appellate Tribunal as a dispute settlement body.

Globalization:

With the advent of globalization and deregulation, the dynamics of the Telecom industry is
undergoing a sea change. This is also affected by the convergence of voice, data, and video.
In order to stay ahead of competition, telecom service providers need to operate with low
delivery costs, offer efficient services to retain existing customers, and come up with new
schemes to attract new customers. Several telecom operators offer a variety of telecom
services.

In 1995, the Indian cellular industry looked very promising. With ever increasing
globalization and expanding business activities, cell phones became a necessity for business
on the move. The younger generation also began to flaunt the cell phone as a status symbol.
Soon cell phones were being used not only as a tool for communication but also as a source
of entertainment.

As per the FDI policy for the Telecom Sector, investment up to 49% is permitted in Basic,
Cellular and other value added services, which is hiked to 74%; up to 74% is permitted in
Internet, infrastructure and radio paging services and up to 100% is permitted in
manufacturing, Internet service, voice and electronic mail, based on certain conditions for
fulfillment as a part of licensing and security requirements, laid down by the Department of
Telecommunications, Government of India. Several announcements were made relating to
policy change covering change of ADC from per minute charges to revenue share, and
mobile number portability. FDI ceiling increment has led to an increase in FDI in mobile
services whereas ADC has resulted in reduction of mobile tariffs in the country. On the
policy front, per minute ADC on domestic calls was changed to revenue share regime. And
the percentage charged is 1.5% of AGR (adjusted gross revenue).


P a g e | 31

::: Regulatory Authority :::

Department of Telecom:

The Department of Telecom has been formulating developmental policies for the
accelerated growth of the telecommunication services. The Department is also responsible
for grant of licenses for various telecom services like Unified Access Service Internet and
VSAT service. The Department is also responsible for frequency management in the field of
radio communication in close coordination with the international bodies. It also enforces
wireless regulatory measures by monitoring wireless transmission of all users in India.

Telecom Commission:

The Telecom Commission was set up by the Government of India vide Notification dated
April 11, 1989 with administrative and financial powers of the Government of India to deal
with various aspects of Telecommunications. The Commission consists of a Chairman, four
full time members, who are ex-office Secretary to the Government of India in the
Department of Telecommunications and four part time members who are the Secretaries to
the Government of India of the concerned Departments. The Telecom Commission and the
Department of Telecommunications are responsible for policy formulation, licensing,
wireless spectrum management, administrative monitoring of PSUs, research and
development and standardization/validation of equipment etc. The multi-pronged strategies
followed by the Telecom Commission have not only transformed the very structure of this
sector but have motivated all the partners to contribute in accelerating the growth of the
sector.

COAI (Cellular Operators Association of India):

COAI (Cellular Operators Association of India) was set up in 1995 as a registered non-
governmental, and non-profit society. The Cellular Operators Association of India was
established with the aim that it would be dedicated to the advancement of modern
communication.
COAI encourages the advancement of communication through Services of Mobile Cellular
Telephone. The vision of COAI (Cellular Operators Association of India) is to set up and
sustain cellular infrastructure that is of world class standard and also to encourage mobile
communication services that is affordable in the country.
Cellular Operators Association of India is the official voice for the cellular industry in India
and interacts on its behalf with the licensor, the telecom industry associations, the
management spectrum agency, and the policy makers. The chairman of COAI (Cellular
Operators Association of India) is Mr. Sanjeev Aga and the vice- chairman is Mr. Naresh
Gupta. COAI (Cellular Operators Association of India) has many committees under it such as
the Executive Council Committee, Business Development Committee, Finance and
Commercial committee, Regulatory Council Committee, and Technology Committee.


P a g e | 32

COAI (Cellular Operators Association of India) objectives includes to upgrade and maintain
services such as security, speech transmission, coverage, and access in order to help in the
expansion of the cellular services in the country and to make continuous efforts to satisfy
the customers. Further the various objectives of COAI are to address the problems of the
cellular operators that relate to financial, operational, licensing, or regulatory by interacting
with the Ministry of Finance, Department of telecommunications, Financial Institutions,
Ministry of Communications & IT, Ministry of Commerce, and Telecom Regulatory Authority
of India. Also the objectives of Cellular Operators Association of India are to make efforts to
achieve the country's objectives of better rural access and increased teledensity and also
to spread information and dispense awareness among consumers and operators on issues
relating to the various kinds of services provided by the service operators to their
customers.
The various cellular companies that are members of COAI (Cellular Operators Association of
India) are;

 Loop mobile
 Reliance Telecom Ltd
 Idea Cellular Ltd
 Aircel Ltd
 Vodafone Group
 Bharti Airtel Ltd

TRAI as a regulatory authority:

Government of India had set-up telecom regulatory authority of India (TRAI) as a regulatory
authority for telecom sector. GoI has given a power to TRAI for development of telecom
sector. TRAI act as an immediate between industries and government. TRAI was formed in
Jan 1997 with a view to provide aneffectiveregulatory framework and adequate safeguard
to ensure fair competition and protection of consumer interest. The government is
committed to strong and independent regulator with comprehensive powers and player
authority to impactively perform its functions. TRAI, 1993 deals with the powers and
functions of the authority. One of the important function to be discharge by the authority is
to laid down the standard of quality of service to be provided by the service provide and for
that the prescribed quality of service is maintained by the service provides and for that
purpose one of the means adopted would be to conduct periodical survey of the such
service provided by the service provider. In pursuance of this objective the authority notify a
regulation on quality of service of basic and cellular mobile service in July, 2000. The
purpose of the regulation is to create suitable conditions for customer satisfaction by
meeting down the quality of service that the service providers are required to provide and
customer as a right to accept. Satisfaction by making known the quality of service that the
service providers are required to provide and the consumer has the right to accept. The
regulation also provides for measuring customer perception regarding telecom services
through surveys. The authority through independent agency may conduct such service. The
regulation further provides for meeting the results of the surveys public so as to improve
the quality of the service by generating healthy competition among the service providers.


P a g e | 33

::: Various Telecom policies :::
Government policy:

Policy Initiatives by Govt. of India in the Telecommunication Sector have been one of the
largest causes for the success of the telecom market in India. The national parties before the
administrative unit have lifted private telecom units based on license-fee.

The government of India has adopted a new economic policy for the telecommunication
market in India. This policy has beeneffectivefrom 1994 and the Govt. of India with the aim
to accelerate India's growth in export production and international market formulated it.
The national telecom policy as has been designed by the government of India also ensures
foreign direct investment and exhilarating domestic investiture. This national economic
policy of telecom department demands superior quality telecommunication services and
therefore the development of telecom services are to be given the utmost importance to
attain the peak of success. The national telecom policy covers the following objectives:

A number of policy changes have been made in the recent past which, if implemented, is
bound to have a significant impact on the telecom scenario. The most significant among the
changes is the announcement of a New Telecom Policy (NTP) 1999. The Policy envisages
development of telecom facilities in remote, rural and tribal areas of the country and their
availability to the masses at affordable costs.

The NPT 1999, which has come into impact from April 1, 1999, aims at making telephones
available on demand by the year 2002 and to achieve teledensity of seven per hundred
persons by the year 2005. In case of rural areas, the current teledensity is proposed to be
raised from 0.4 to 4 by the year 2010. The policy document of NPT outlines rapid growth in
the telecom sector in India with a projected teledensity of 15 by the year 2010.

National Telecom policy 1994:

The Government of India (Government) recognizes that provision of world class
telecommunications infrastructure and information is the key to rapid economic and social
development of the country. It is critical not only for the development of the Information
Technology industry, but also has widespread ramifications on the entire economy of the
country. It is also anticipated that going forward, a major part of the GDP of the country
would be contributed by this sector. Accordingly, it is of vital importance to the country that
there be a comprehensive and forward looking telecommunications policy which creates an
enabling framework for development of this industry.

Objectives and achievements:

In 1994, the Government announced the National Telecom Policy which defined certain
important objectives, including availability of telephone on demand, provision of world class
services at reasonable prices, ensuring India's emergence as major manufacturing / export


P a g e | 34

base of telecom equipment and universal availability of basic telecom services to all villages.
It also announced a series of specific targets to be achieved by 1997. As against the NTP
1994 target of provision of 1 PCO per 500 urban population and coverage of all 6 lac villages,
DoT has achieved an urban PCO penetration of 1 PCO per 522 and has been able to provide
telephone coverage to only 3.1 lac villages. As regards provision of total telephone lines in
the country, DoT has provided 8.73 million telephone lines against the eighth plan target of
7.5 million lines.

Need for a new telecom policy:

In addition to some of the objectives of NTP 1994 not being fulfilled, there have also been
far reaching developments in the recent past in the telecom, IT, consumer electronics and
media industries world-wide. Convergence of both markets and technologies is a reality that
is forcing realignment of the industry. At one level, telephone and broadcasting industries
are entering each other's markets, while at another level technology is blurring the
difference between different conduit systems such as wire line and wireless. As in the case
of most countries, separate licenses have been issued in our country for basic, cellular, ISP,
satellite and cable TV operators each with separate industry structure, terms of entry and
varying requirement to create infrastructure. However, this convergence now allows
operators to use their facilities to deliver some services reserved for other operators,
necessitating a relook into the existing policy framework. The new telecom policy
framework is also required to facilitate India's vision of becoming an IT superpower and
develop a world class telecom infrastructure in the country.

TRAI Act 1997:

This Act may be called the Telecom Regulatory Authority of India Act, 1997.

Introduction:

The new economic policy adopted by the Government aims at improving India's
competitiveness in the global market and rapid growth of exports. Another element of the
new economic policy is attracting foreign direct investment and stimulating domestic
investment. Telecommunication services of world class quality are necessary for the success
of this policy. It is, therefore, necessary to give the highest priority to the development of
telecom services in the country.

Changing telecom scenario:

India has registered an impressive growth in the telecom sector. Over the years the country
has developed a vast telecom network comprising over 25000 telephone exchanges and
21.5 million working connections. There is a large network of optical fibre cables, digital
microwave and satellite communication systems. A very strong industrial base has been
built in the telecom sector with a large number of national and multi-national telecom
companies.


P a g e | 35

The NPT 1999, which has come into impact from April 1, 1999, aims at making telephones
available on demand by the year 2002 and to achieve teledensity of seven per hundred
persons by the year 2005. In case of rural areas, the current teledensity is proposed to be
raised from 0.4 to 4 by the year 2010. The policy document of NPT outlines rapid growth in
the telecom sector in India with a projected teledensity of 15 by the year 2010.

This will require a massive investment of over 23 billion dollars in the next five years and 65
billion over the next 10 years in the telecom sector.

Accelerator:

Telecommunication is by itself an accelerator of economic growth. As per the calculations
made by experts even one percent increase in teledensity results in a three percent increase
in the gross national product (GNP).

The NPT 1999 has been hailed the world over as a progressive and forward-looking policy in
tune with the high technological changes of the 21st century. It addresses the various
problems affecting the telecom sector. The new policy comes as a breath of fresh air for the
beleaguered telecom industry. It is expected to encourage investments in the telecom
sector and holds the promise of boosting the entry of world class infrastructure in the
country.

Bail-out package:

The Government later came out with what came to be known as a bail-out package allowing
licensees of all telecom services including basic, cellular, paging and other value-added
services to migrate to the revenue-sharing system under the NPT 1999. According to the
Government, this was necessitated because a large number of licensees under the 1994
Telecom Policy were finding it difficult to pay the license fee and wanted to switch over to
the revenue-sharing regime under the new policy.

The Government clarified that it did not want to discriminate between the existing telecom
operators and the new licensees. Moreover, future collections under the old license fee
regime were uncertain as many cellular operating companies were likely to turn sick.

Under the bail-out package, the private telecom operators were required to pay up 30 per
cent of arrears of license fee including interest last by August 31 as provided in the license
agreement for migrating to the New Telecom Policy. Requisite bank guarantees for the
remaining amount of arrears, including interest, were to be furnished for the period till the
arrears were cleared by January 31 next year. Relief was provided to the licensees by
extending the period of their licenses from the present 10 years to 20 years from the date of
existing license agreement.


P a g e | 36

::: Major players of the Industry :::


P a g e | 37

::: Cellular Service providersOverview :::

India is the developing country and so all the industry in India are developing day by day,
but cellular service industry in India is in emerging stage. So, there are much chances of
development in this industry and chances of new players to enter into this industry. In India,
more than 45% people have mobiles and the others do not have mobiles.The mobiles are
useless without SIM card and the companies who provide the SIM card are known as cellular
service companies. In India, public companies as well as private companies are in this
business. The companies who provide cellular services are as follows.

List of cellular operator

Rank Operator Technology Frequency Subscribers Ownership
(in millions)
(As of
January
2010)

1 Airtel GSM GSM 900/1800 118.864031 Bharti
Enterprises
(64.76%)
SingTel (30.84%)
Vodafone (4.4%)

2 Reliance CDMAOne CDMA2000 1x 93.795613 Reliance - Anil
Communication GSM, DhirubhaiAmbani
Group

3 Vodafone Essar GSM GSM 900/1800 91.401959 Vodafone (67%)
Essar Group
(33%)

4 BSNL GSM, GSM 900, 62.861214 State-owned
CDMAOne, CDMA2000 1x

5 Idea Cellular GSM GSM 1800 57.611872 Aditya Birla
Group
Axiata Group
Berhad (15%)
6 Tata CDMA, CDMA2000 1x 57.329449 [Tata Indicom--
Teleservices GSM, Tata Group]
(Tata Indicom)


P a g e | 38

(Tata DoCoMo) [Tata DoCoMo--
Tata Group,
(74%) &NTT
DoCoMo, (26%)]

[Virgin Mobile
(Virgin mobile) (50%)
Tata Tele. (50%)]

7 Aircel GSM GSM 900/1800 31.023997 Maxis
Communication
(74%)
Apollo Hospital
(26%)

8 MTNL GSM, GSM 900, 4.875913 State-owned
CDMA CDMA2000 1x

9 MTS India CDMA CDMA2000 1x 3.042741 Sistema (73.71%)
Shyam Group
(23.79%)

10 Loop Mobile GSM GSM 2.649730 Essar Group
900(Mumbai)/1800

11 Uninor GSM - 1.208130 Telenor (67.25%)
Unitech Group
(32.75%)

12 HFCL Infotel CDMA - 3.41862 HFCL Group

13 S Tel GSM - 1.41411 Siva Group (51%)
Batelco (49%)


P a g e | 39

::: All over market share (as of January 2010) :::

2.64973
1.41411
3.042741

3.41862 1.20813

4.875913

31.023997
118.864031
57.329449

57.611872

93.795613

62.861214

91.401959

Airtel Reliance Communication Vodafone Essar
BSNL Idea Cellular Tata Teleservices
MTNL Aircel HFCL Infotel
MTS India Loop Mobile S Tel
Uninor


P a g e | 40

::: Bharti Airtel :::

Type Public
Founded July 07, 1995
Founder(s) Sunil Bharti Mittal
Headquarters New Delhi, India
Key people Sunil Mittal
(Chairman) & (MD)
Sanjay Kapoor
(CEO)
Industry Telecommunications
Products Wireless
Telephone
Internet
Satellite television
Revenue ▲ US$ 7.254 billion (2009)
Operating income ▲ US$ 2.043 billion (2009)
Net income ▲ US$ 1.662 billion (2009)
Total assets ▲ US$ 11.853 billion (2009)
Owner(s) BhartiEnterprises (64.76%)
SingTel (30.5%)
Vodafone (4.4%)
Website www.bharti.com
www.airtel.in

Introduction:

Bharti Airtel formerly known as Bharti Tele-Ventures LTD (BTVL) is the largest cellular service
provider in India, with more than 110 million subscribers as of 2009. With this, Bharti is now
the world’s third-largest, single-country mobile operator and sixth-largest integrated
telecom operator. It also offers fixed line services and broadband services. It offers its
TELECOM services under the Airtel brand and is headed by Sunil Bharti Mittal. The company
also provides telephone services and broadband Internet access (DSL) in top 95 cities in
India. It also acts as a carrier for national and international long distance communication
services. The company has a submarine cable landing station at Chennai, which connects
the submarine cable connecting Chennai and Singapore

The businesses at Bharti Airtelhave always been structured into three individual strategic
business units (SBU's) - Mobile Services, Airtel Telemedia Services & Enterprise Services. The
mobile business provides mobile & fixed wireless services using GSM technology across 23
telecom circles while the Airtel Telemedia Services business offers broadband & telephone


P a g e | 41

services in 95 cities and has recently launched a Direct-to-Home (DTH) service, Airtel Digital
TV. Shahrukh Khan is the brand ambassador of the mobile company and KareenaKapoor and
Saif Ali Khan are the brand ambassadors of the DTH Company. The company provides end-
to-end data and enterprise services to the corporate customers through its nationwide fiber
optic backbone, last mile connectivity in fixed-line and mobile circles, VSATs, ISP and
international bandwidth access through the gateways and landing station.

Globally, Bharti Airtel is the 3rd largest in-country mobile operator by subscriber base,
behind China Mobile and China Unicom. In India, the company has a 24.6% share of the
wireless services market, followed by 17.7% for Reliance Communications and 17.4% for
Vodafone Essar. In January 2010, company announced that ManojKohli, Joint Managing
Director and current Chief Executive Officer of Indian and South Asian operations, will
become the Chief Executive Officer of the International Business Group from 1st April 2010.
He will be overseeing Bharti's overseas business. Current Dy. CEO, Sanjay Kapoor, will
replace ManojKohli and will be the CEO witheffectivefrom 1st April, 2010.

Brand “Airtel” in sub-continent:

Airtel is a brand of telecommunication services in India, Bangladesh and in Sri Lanka owned
and operated by Bharti Airtel. It is the largest cellular service provider in India in terms of
number of subscribers. Services are offered under the brand name Airtel: Mobile Services
(using GSM Technology), Broadband & Telephone Services (Fixed line, Internet Connectivity
(DSL) and Leased Line), Long Distance Services and Enterprise Services (Telecommunications
consulting for corporate). It has presence in all 23 circles of the country and covers 71% of
the current population (as of Financial Year 2007). Airtel has also launched 16Mbps
broadband plans in India, making it the first ISP to do so.

Airtel in Sri Lanka:

In December 2008, Bharti Airtel rolled out third generation services in Sri Lanka in
association with Singapore Telecommunications. SingTel is a major player in the 3G space in
Asia. It operates third generation networks in several markets across Asia.

Airtel's operation in Sri Lanka, known as Airtel Lanka, commenced operations on the 12th of
January 2009.

Airtel in Bangladesh:

In January 2010, it was announced that the Bangladesh Telecommunications Regulatory
Commission (BTRC) of The People's Republic of Bangladesh had given Bharti Airtel the go
ahead to acquire a 70% stake in the Bangladesh business of Abu Dhabi based Warid
Telecom. The latter had till date invested a total of $600 million, with plans to bring their
Bangladesh investments to the $1 billion mark. Airtel's 70% stake in the company is said to


P a g e | 42

be at a cost of an initial $300 million. Warid will be later named Airtel and the price of the
sim will go higher and call rates will be lower....!

Touchtel:

Until September 18, 2004, Bharti provided fixed-line telephony and broadband services
under the Touchtel brand. Bharti now provides all telecom services including fixed-line
services under a common brand "Airtel".

BlackBerry:

On 19 October 2004 Airtel announced the launch of a BlackBerry Wireless Solution in India.
The launch is a result of a tie-up between Bharti Tele-Ventures Limited and Research in
Motion (RIM).

I Phone 3G:

The Apple iPhone 3G was rolled out in India on 22 August 2008 via Airtel& Vodafone.

Merger talks:

In May 2008, it emerged that Bharti Airtel was exploring the possibility of buying the MTN
Group, a South Africa-based telecommunications company with coverage in 21 countries in
Africa and the Middle East. The Financial Times reported that Bharti was considering
offering US$45 billion for a 100% stake in MTN, which would be the largest overseas
acquisition ever by an Indian firm. However, both sides emphasize the tentative nature of
the talks, while The Economist magazine noted, "If anything, Bharti would be
marrying up," as MTN has more subscribers, higher revenues and broader geographic
coverage. However, the talks fell apart as MTN group tried to reverse the negotiations by
making Bharti almost a subsidiary of the new company.

In May 2009, Bharti Airtel again confirmed that it is in Talks with MTN and companies have
now agreed discuss the potential transaction exclusively by July 31, 2009. Bharti Airtel said
in a statement “Bharti Airtel Ltd is pleased to announce that it has renewed its effort for a
significant partnership with MTN Group".

Talks eventually ended without agreement, some sources stating that due to the South
African government opposition.

Now in South Africa:
In March 2010 Airtel acquired Zainmobile.

Promotional Sponsorship:


P a g e | 43

Bharti Airtel signed a five-year deal with ESPN Star Sports to become the title sponsor of the
Champions League Twenty20 cricket tournament. The tournament itself is named "Airtel
Champions League Twenty20."

On the 9th of May, 2009 Airtel signed a major deal with Manchester United Football Club.
As a result of the deal, Airtel gets the rights to broadcast the matches played by the team to
its customers.

Subscriber base:
The Airtel subscriber base according to TRAI - Telecom Regulatory Authority of India as of
February 2009 was:

Airtel’s Subscriber

Metro/circle Dec'09 Jan-10 Monthly %Market % Growth over
Additions Share previous month

Delhi 5720165 5822208 102043
Mumbai 2971598 3003201 31603
Kolkata 2736884 2746100 9216
Chennai 2563834 2593005 29171
A.P. 12145100 12425791 280691
Karnataka 11822980 12153094 330114
T.N. 7913576 8033771 120195
Maharashtra 6460502 6518134 57632
Gujarat 5009245 5112601 103356
Punjab 4490769 4581187 90418
UP (W) 3600826 3653016 52190
Haryana 1512092 1519754 7662
M.P. 5981125 6212992 231867
Kerala 3061391 3076728 15337
H.P. 1257497 1273922 16425
Rajasthan 9608004 9925141 317137
UP (E) 8142972 8462726 319754
WB 4866606 5070213 203607
J&K 1724263 1804047 79784
Orissa 3776610 3836091 59481
Bihar 10052157 10338828 286671
Assam 2139327 2194310 54983
NE 1306508 1357383 50875
Total 118864031 121714243 30.86% 2.40%

Additions 2730140 2732025


P a g e | 44

::: Reliance communications :::

Type Public (BSE: RCOM)
Founded 2004
Headquarters Navi Mumbai, Maharashtra, India
Key people Anil Ambani
(Chairman) & (MD)
Products Wireless
Telephone
Internet
Television
Revenue US$ 4.26 billion (2008)
Net income US$ 1.35 billion (2008)
Total assets US$ 19.31 billion (2008)
Employees 33,000
Website www rcom.co.in

Introduction:

Reliance Communications, formerly known as Reliance Infocomm, along with Reliance
Telecom and Flag Telecom, is part of Reliance Communications Ventures (RCoVL). It is the
second largest mobile operator in India, based on number of subscribers. According to
National Stock Exchange data, Anil DhirubhaiAmbani controls 66.77 per cent of the
company, which accounts for more than 1.36 billion shares. It is the flagship company of the
Reliance-Anil DhirubhaiAmbani Group, comprising of power (Reliance Energy), financial
services (Reliance Capital) and telecom initiatives of the Reliance ADAG. It uses CDMA2000
1x technology for its existing CDMA mobile services, and GSM-900/GSM-1800 technology
for its existing/newly launched GSMservices.RelCom is also into Wire line Business
throughout India and has the largest optical fiber communication (OFC) backbone
architecture [roughly 110,000 km] in the country.Reliance Communications has launched its
Direct To Home (DTH) TV also, known as "Big TV". RelCom have presence across all B2C
communications channel in one of the fastest growing markets in the world.

Bid for Hutch:
In 2007, Reliance Communications had bid for 67% of Hutch but lost to Vodafone.

Reliance GSM:


P a g e | 45

On the 30th December 2008, Reliance Communications became the first telecom operator
in the history of Indian telecommunications to simultaneously launch its GSM services in 17
circles, namely Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Jammu & Kashmir,
Karnataka, Kerala, Maharashtra, Mumbai, Punjab, Rajasthan, Tamil Nadu, Uttar
Pradesh(East & West) thereby establishing itself as a pan-India operator.

It already operates GSM services in 8 circles namely Assam, Bihar & Jharkhand, Himachal
Pradesh, Kolkata, Pradesh Chhattisgarh, North Eastern states, Orissa, West Bengal But
operates under the brand Reliance Smart GSM. Reliance Smart is owned by their sister
concern Reliance Telecom. They got these licenses when they took over USHA PHONE

Subscriber base:
The Reliance subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:

Reliance’s Subscriber(GSM)

Metro/circle Dec'09 Jan-10 Monthly %Market %
Additions Share Growth
over
previous
month

Kolkata 1368432 1368432 0

M.P. 3856360 3856360 0

W.B. 2331990 2331990 0

H.P. 807290 807290 0

Bihar 3548515 3548515 0

Orissa 1756929 1756929 0

Assam 1595535 1595535 0

N.E. 492639 492639 0

Total 15757690 15757690 - 4.00% 0.00%

Additions 601289 -


P a g e | 46

::: Vodafone Essar :::

Type Limited
Founded 1994 as Hutchison Essar
Headquarters Mumbai, Maharashtra, India
Industry Mobile telecommunications
Products Mobile networks,
Telecom services, Etc.
Owner(s) Vodafone Group (67%)
Essar Group (33%)
Employees 10,000 – March 31, 2009
Website www.vodafone.in

Introduction of Vodafone:

Vodafone Essar, formally known as Hutchison Essar is a cellular operator in India that covers
23 telecom circles in India based in Mumbai. Vodafone Essar is owned by Vodafone 67% and
Essar Group 33%. It is the second largest mobile phone operator in terms of revenue behind
Bharti Airtel, and third largest in terms of customers. As of June 31, 2009 Vodafone India has
18.8% customer market share and 20.7% revenue market share.

On February 11, 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li
KaShing Holdings in Hutch-Essar for US$11.1 billion, piping Reliance Communications,
Hinduja Group, and Essar Group, which is the owner of the remaining 33%. The whole
company was valued at USD 18.8 billion. The transaction closed on May 8, 2007. Despite the
official name being Vodafone Essar, its products are simply branded Vodafone. It offers both
prepaid and postpaid GSM cellular phone coverage throughout India with good presence in
the metros.

Vodafone Essar provides 2.75G services based on 900 MHz and 1800 MHz digital GSM
technology, offering voice and data services in 23 of the country's 23 license areas. It is
among the top three GSM mobile operators of India.

Vodafone as brands:

In December 2006, Hutch Essar re-launched the "Hutch" brand nationwide, consolidating its
services under a single identity. The Company entered into an agreement with NTT DoCoMo
to launch I-mode mobile Internet service in India during 2007.


P a g e | 47

The company used to be named Hutchison Essar, reflecting the name of its previous owner,
Hutchison. However, the brand was marketed as Hutch. After getting the necessary
government approvals with regards to the acquisition of a majority by the Vodafone Group,
the company was rebranded as Vodafone Essar. The marketing brand was officially changed
to Vodafone on 20 September 2007. On September 20, 2007 Hutch became Vodafone in
one of the biggest brand transition exercises in recent times.

Vodafone Essar is spending somewhere in the region of Rs. 250 crores on this high-profile
transition being unveiled today. Along with the transition, cheap cell phones have been
launched in the Indian market under the Vodafone brand. The company also plans to launch
co-branded handsets sourced from global vendors as well.

A popular daily quoted a Vodafone Essar director as saying that "the objective is to leverage
Vodafone Group's global scale in bringing millions of low-cost handsets from across-the-
world into India."

Incidentally, China's ZTE, which is looking to set-up a manufacturing unit in the country, is
expected to provide several Vodafone handsets in India. Earlier this year, Vodafone penned
a global low-cost handset procurement deal with ZTE.

Growth of Hutchison Essar (1992-2005)

In 1992 Hutchison Whampoa and its Indian business partner established a company that in
1994 was awarded a license to provide mobile telecommunications services in Mumbai
(formerly Bombay) and launched commercial service as Hutchison Max in November 1995.
Analjit Singh of Max still holds 12% in company.

In Delhi, UP (E), Rajasthan and Haryana, ESSAR was the major partner. But later Hutch took
the majority Stake.

By the time of Hutchison Telecom's Initial Public Offering in 2004, Hutchison Whampoa had
acquired interests in six mobile telecommunications operators providing service in 13 of
India's 23 license areas and following the completion of the acquisition of BPL that number
increased to 16. In 2006, it announced the acquisition of a company (EssarSpacetel — A
subsidiary of Essar Group) that held license applications for the seven remaining license
areas.

In a country growing as fast as India, a strategic and well managed business plan is critical to
success. Initially, the company grew its business in the largest wireless markets in India — in
cities like Mumbai, Delhi and Kolkata. In these densely populated urban areas it was able to
establish a robust network, well-known brand and large distribution network -all vital to
long-term success in India. Then it also targeted business users and high-end post-paid
customers which helped Hutchison Essar to consistently generate a higher Average Revenue
per User ("ARPU") than its competitors. By adopting this focused growth plan, it was able to
establish leading positions in India's largest markets providing the resources to expand its
footprint nationwide.


P a g e | 48

In February 2007, Hutchison Telecom announced that it had entered into a binding
agreement with a subsidiary of Vodafone Group Plc to sell its 67% direct and indirect equity
and loan interests in Hutchison Essar Limited for a total cash consideration (before costs,
expenses and interests) of approximately US$11.1 billion or HK$87 billion.

Subscriber base:
The Vodafone subscriber base according to TRAI - Telecom Regulatory Authority of India as
of January 2010 was:
Vodafone’s Subscriber

over
previous
month

Mumbai 4931149 4986437 55288
Delhi 4730533 4818472 87939
Kolkata 3372057 3418307 46250
Chennai 1744951 1764103 19152
Gujarat 9759813 10028022 268209
A.P. 5308228 5464272 156044
Karnataka 4678686 4840810 162124
Punjab 2838036 2923706 85670
Haryana 2647870 2747370 99500
U.P.(E) 8847424 9157975 310551
Rajasthan 6978674 7146313 167639
UP (W) 5819801 6054407 234606
WB 6531567 6681702 150135
Maharashtra 6478362 6683781 205419
T.N. 6704337 6830799 126462
Kerala 3964795 4045074 80279
Orissa 826548 893340 66792
Assam 616994 676722 59728
North East 388120 417406 29286
MP 1329163 1478444 149281
Bihar 2598473 2768804 170331
HP 149176 159765 10589
J&K 157202 157333 131
Total 91401959 94143364 23.87% 3.00%
Additions 2794352 2741405


P a g e | 49

::: BSNL :::

Type State-owned
Founded 19th century, incorporated 2000
Headquarters Bharat Sanchar Bhawan, Harish Chandra
Mathur Lane, Janpath, New Delhi
Key people KuldeepGoyal
(Chairman) & (MD)
Products Wireless
Telephone
Internet
Television
Revenue ▼ US$ 7.03 billion (2009)
Owner(s) The Government of India
Website Bsnl.co.in

Introduction:

Bharat Sanchar Nigam Limited (known as BSNL, India Communications Corporation Limited)
is a state-ownedtelecommunication company in India. BSNL is the sixth largest cellular
service provider, with over 57.22 million customers as of December 2009 and the largest
land line telephone provider in India. Its headquarters are at Bharat Sanchar Bhawan, Harish
Chandra Mathur Lane, Janpath, and New Delhi. It has the status of Mini Ratna, a status
assigned to reputed public sector companies in India.

BSNL is India's oldest and largest Communication Service Provider (CSP).Currently has a
customer base of 90 million as of June 2008. It has footprints throughout India except for
the metropolitan cities of Mumbai and New Delhi which are managed by MTNL. As on
March 31, 2008 BSNL commanded a customer base of 31.55 million Wire line, 4.58 million
CDMA-WLL and 54.21 million GSM Mobile subscribers. BSNL's earnings for the Financial
Year ending March 31, 2009 stood at INR 397.15b (US$7.03 billion) with net profit of INR
78.06b (US$ 1.90 billion). BSNL has an estimated market value of $ 100 Billion. The company
is planning an IPO within 6 months to offload 10% to public in the Rs 300-400 range valuing
the company at over $100 billion.

Services:
BSNL provides almost every telecom service in India. Following are the main telecom
services provided by BSNL:


P a g e | 50

Universal Telecom Services: Fixed wire line services & Wireless in Local loop (WLL) using
CDMA Technology called bfone and Tarang respectively. As of December 31, 2007, BSNL has
81% market share of fixed lines.

Cellular Mobile Telephone Services: BSNL is major provider of Cellular Mobile Telephone
services using GSM platform under the brand name BSNL Mobile. As of Sep 30, 2009 BSNL
has 12.45% share of mobile telephony in the country.

Internet: BSNL provides internet services through dial-up connection (Sancharnet) as
Prepaid, (Net One) as Postpaid and ADSL broadband (BSNL Broadband). BSNL has around
50% market share in broadband in India. BSNL has planned aggressive rollout in broadband
for current financial year.

Intelligent Network (IN): BSNL provides IN services like televoting, toll free calling, premium
calling etc.

3G: BSNL offers the '3G' or the'3rd Generation' services which includes facilities like video
calling etc.

IPTV: BSNL also offers the 'Internet Protocol Television' facility which enables us to watch
television through internet.

FTTH:Fiber to The Home facility that offers a higher bandwidth for data transfer. This idea
was proposed on post-December 2009.

Present and future:
BSNL (then known as Department of Telecom) had been a near monopoly during the
socialist period of the Indian economy. During this period, BSNL was the only telecom
service provider in the country (MTNL was present only in Mumbai and New Delhi). During
this period BSNL operated as a typical state-run organization, inefficient, slow, bureaucratic,
and heavily unionized. As a result subscribers had to wait for as long as five years to get a
telephone connection. The corporation tasted competition for the first time after the
liberalization of Indian economy in 1991. Faced with stiff competition from the private
telecom service providers, BSNL has subsequently tried to increase efficiencies itself. DoT
veterans, however, put the onus for the sorry state of affairs on the Government policies,
where in all state-owned service providers were required to function as mediums for
achieving egalitarian growth across all segments of the society. The corporation (then DoT),
however, failed miserably to achieve this and India languished among the most poorly
connected countries in the world. BSNL was born in 2000 after the corporatization of DoT.
The efficiency of the company has since improved. However, the performance level is
nowhere near the private players. The corporation remains heavily unionized and is
comparatively slow in decision making and implementation. Though it offers services at
lowest tariffs, the private players continue to notch up better numbers in all areas, years
after year. BSNL has been providing connections in both urban and rural areas. Pre-
activated Mobile connections are available at many places across India. BSNL has also
unveiled cost-impactive broadband internet access plans (DataOne) targeted at homes and
small businesses. At present BSNL enjoy's around 60% of market share of ISP services.


P a g e | 51

Subscriber base:
The BSNL subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:

BSNL’s Subscriber

over
previou
s month

Kolkata 1709842 1755860 46018
Chennai 1172491 1189158 16667
Bihar 3541695 4165628 623933
TN 3883003 4020802 137799
Maharashtra 4074350 4213199 138849
Gujarat 2691970 2777067 85097
AP 3989713 4078007 88294
Karnataka 3075023 3143061 68038
Kerala 3293938 3438993 145055
Punjab 3354951 3411009 56058
Haryana 2232351 2282820 50469
UP (W) 2889815 2977858 88043
UP (E) 7033749 7180690 146941
Rajasthan 3428297 3662113 233816
MP 2835041 2979746 144705
WB and A & N 2100271 2160727 60456
HP 1126070 1156410 30340
Orissa 1997388 2083541 86153
J&K 970542 898433 -72109
North East 818719 858559 39840
Assam 1004263 1020949 16686
Total 57223482 59454630 15.08% 3.90%
Additions 2036513 2231148


P a g e | 52

::: Idea cellular :::

Type Public

Founded 1995
Headquarters Santacruz East, Mumbai, India[1]
Key people Kumar Mangalam Birla
(Chairman)
Sanjeev Aga
(MD)
RajatMukharjee
(VP Corporate Affairs)
Products Mobile
Owner(s) Aditya Birla Group (49.05%)
Axiata Group Berhad (15%)
Providence Equity (10.6%)
Website IdeaCellular.com

Introduction:

Idea Cellular is a wireless telephony company operating in all the 22 telecom circles in India
based in Mumbai. It is the 3rd largest GSM company in India, behind Airtel and Vodafone
and ahead of state run player BSNL.

In 2000, Tata Cellular was a company providing mobile services in AP. When Birla-AT&T
brought Maharashtra and Gujarat to the table, the merger of these two entities was a
reality. Thus Birla-Tata-AT&T, popularly known as Batata, was born. In 2001, the Batata
triumvirate agreed to merge its operations with the Rajeev Chandrasekhar promoted BPL
Communications. The merger could have brought in regions like Mumbai, Maharashtra,
Kerala and Tamil Nadu, which seemed to be a perfect accompaniment to what it already
had. This was critical with the bid for the fourth operator license round the corner.
However, the engagement with BPL was broken. Then Idea set sights on RPG’s operations in
Madhya Pradesh which was successfully acquired, helping Batata have a million subscribers,
and the license to be the fourth operator in Delhi was clinched. In 2004, Idea (the company
had by then been rechristened) bought over the Escorts group’s Escotel gaining Haryana,
Uttar Pradesh (West) and Kerala — and licenses for three more — UP (East), Rajasthan and
Himachal Pradesh. By the end of that year, four million Indians were on the company’s
network. In 2005, AT&T sold its investment in Idea, and the year after Tata’s also bid good
bye to pursue an independent telecom business. And Idea was left only with one promoter,


P a g e | 53

the AV Birla group when the company’s stock listed on the bourses in March 2007, its
subscriber base was 13 million with presence in 11 circles. In less than three years, the
subscriber numbers have more than quadrupled. The public issue was oversubscribed 50
times and raised Rs 2,450 crore. In June 2008, Idea Cellular bought out BK Modi’s stake in
Spice Communications for Rs 2,700 crore adding Punjab and Karnataka circles. Modi’s joint
venture partner, Telekom Malaysia, invested Rs 7,000 crore for a 14.99% stake in Idea. Just
around then, Idea’s subsidiary, Aditya Birla Telecom sold a 20% stake to US-based
Providence Equity Partners for over Rs 2,000 crore.

The company has its retail outlets under the "Idea n' U" banner. The company has also been
the first to offer flexible tariff plans for prepaid customers. It also offers GPRS services in
urban areas.

Idea Cellular won the GSM Association Award for "Best Billing and Customer Care Solution"
for 2 consecutive years.

Holding:

Initially the Birla’s, the Tata’s and AT&T Wireless each held one-third equity in the company.
But following AT&T Wireless' merger with Cingular Wireless in 2004, Cingular decided to sell
its 32.9% stake in Idea. This stake was bought by both the Tata’s and Birla’s at 16.45% each.

Tata's foray into the cellular market with its own subsidiary, Tata Indicom, a CDMA-based
mobile provider, cropped differences between the Tata’s and the Birla’s. This dual holding
by the Tata’s also became a major reason for the delay in Idea being granted a license to
operate in Mumbai. This was because as per Department of Telecommunications (DOT)
license norms, one promoter could not have more than 10% stake in two companies
operating in the same circle and Tata Indicom was already operating in Mumbai when Idea
filed for its license.

The Birla’s thus approached the DOT and sought its intervention and the Tata’s replied by
saying that they would exit Idea but only for a good price. On April 10, 2006, the Aditya Birla
Group announced its acquisition of the 48.18% stake held by the Tata’s at Rs. 40.51 a share
amounting to Rs. 44.06 billion. While 15% of the 48.14% stake was acquired by Aditya Birla
Nuvo, a company in-charge of the Birla’s' new business initiatives, the remaining stake was
acquired by Birla TMT holdings Private Ltd., an AV Birla family owned company. Currently,
Aditya Birla Group holds 49.1% of the total shares of the company. Malaysia based Axiata
controls a 14.99% stake in the company.


P a g e | 54

Subscriber base:
The Idea subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:

Idea’s Subscriber

over
previous
month

Maharashtra 8924182 9001337 77155
Gujarat 4902071 5252379 350308
A.P. 6020680 6001231 -19449
M.P. 6603298 6918727 315429
Delhi 2451843 2478120 26277
Kerala 5071417 5082126 10709
Haryana 1915261 1979687 64426
U.P.(W) 5306026 5434597 128571
UP E 3307374 3539998 232624
Rajasthan 2141326 2179942 38616
HP 230578 246510 15932
Mumbai 1261670 1332274 70604
Kolkata 201294 362802 161508
W.B. 311307 502631 191324
J&K 11684 26523 14839
Assam 42757 56574 13817
N.E. 3144 7136 3992
Bihar 2497061 2851186 354125
Orissa 460739 480561 19822
Tamilnadu 600535 671266 70731
Karnataka 2321359 2400611 79252
Punjab 3026266 3081186 54920
Total 57611872 59887404 15.19% 3.95%
Additions 1706694 2275532


P a g e | 55

::: Tata Teleservices limited :::

Type Private
Founded 2000
Headquarters Navi Mumbai, India
Key people Mr. Ratan N. Tata
(Chairman)
Anil Kumar Sardana
(MD)
Products Wireless
Telephone
Internet
Television
Employees 350,000
Parent Tata Group
Divisions Tata Indicom (CDMA)
Tata DoCoMo (GSM)
Virgin Mobile (CDMA)
Website Tatateleservices.com

Introduction:

Tata Teleservices Limited (TTSL) is a part of the Tata Group of companies based in Navi
Mumbai, an Indian conglomerate. It operates under the brand name Tata Indicom in various
telecom circles of India. In Nov 2008, Japanese telecom giant NTT Docomo picked up a 26
per cent equity stake in Tata Teleservices for about Rs 13,070 crores ($2.7 billion) or an
enterprise value of Rs 50,269 crores ($10.38 billion). In Feb 2008, TTSL announced that it
would provide CDMA mobile services targeted towards the youth, in association with the
Virgin Group on a Franchisee model basis.

Tata Teleservices Provides mobile services under 3 Brand names:

 Tata Indicom (CDMA Mobile operator)

 Tata DoCoMo (GSM Mobile operator)

 Virgin Mobile (CDMA Mobile operator)


P a g e | 56

Company background:

Tata Teleservices is part of the Tata Group. Tata Teleservices spearheads the Group’s
presence in the telecom sector. Incorporated in 1996, Tata Teleservices was the first to
launch CDMA mobile services in India with the Andhra Pradesh circle.

The company acquired Hughes Telecom (India) Limited [now renamed Tata Teleservices
(Maharashtra) Limited] in December 2002. With a total Investment of Rs 19,924 Crore, Tata
Teleservices has created a Pan India presence spread across 20 circles that include Andhra
Pradesh, Chennai, Gujarat, J & K, Karnataka, Delhi, Maharashtra, Mumbai, North East, Tamil
Nadu, Orissa, Bihar, Rajasthan, Punjab, Haryana, Himachal Pradesh, Uttar Pradesh (E), Uttar
Pradesh (W), Kerala, Kolkata, Madhya Pradesh and West Bengal.

Having pioneered the CDMA 3G1x technology platform in India, Tata Teleservices has
established 3G ready telecom infrastructure. It partnered with Motorola, Ericsson, Lucent
and ECI Telecom for the deployment of its telecom network.

The company is the market leader in the fixed wireless telephony market with a total
customer base of over 3.8 million.

Tata Teleservices’ bouquet of telephony services includes Mobile services, Wireless Desktop
Phones, Public Booth Telephony and Wire line services. Other services include value added
services like voice portal, roaming, post-paid Internet services, 3-way conferencing, group
calling, Wi-Fi Internet, USB Modem, data cards, calling card services and enterprise services.
Some of the other products launched by the company include prepaid wireless desktop
phones, public phone booths, new mobile handsets and new voice & data services such as
BREW games, Voice Portal, picture messaging, polyphonic ring tones, interactive
applications like news, cricket, astrology, etc.

Tata Indicom "Non Stop Mobile" allow pre-paid cellular customers to receive free incoming
calls.

Tata Teleservices Limited along with Tata Teleservices (Maharashtra) Limited have a
subscriber base of 57 million customers (as of Jan 2010) in more than 5,000 towns. Tata
Teleservices has also acquired GSM licenses for specific circles in India.

Tata Teleservices is an unlisted entity. Tata Group and group firms own the majority of the
company; NTT DoCoMo holds 26% while investor C. Sivasankaran holds 8%.

Market Data:

Tata Indicom in Jan 2010 crossed the 57 million subscribers mark in the wireless category
with an overall subscriber base of over 57 million.

Tata Teleservices is no. 2 slot in terms of Market Share in Delhi NCR region with a subscriber
base of 5.4 million.


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Network:
Tata Teleservices operates primarily on the CDMA network. Tata Indicom’s enterprise
solutions work on the CDMA 3G-1X technology.
The total tower strength of Tata Indicom is currently at 18,000 towers nationwide.

Business Areas:
Tata Teleservices offers multiple tariff plans in both the Post-paid and Pre-Paid category. It
also offers Mobile Value Added Services to subscribers.

Branding:
The Tata Indicom brand is endorsed by bollywoodactressKajol& cricketers IrfanPathan and
YousufPathan.

Tata Teleservices has recently launched the Virgin Mobile Brand to target the youth
segment.

Rural Telephony:
TTSL also maintains a distribution network across villages , where in people are appointed
and trained by TTSL – who visit villages on a bicycle or a two-wheeler at defined times on
defined days of the week, selling recharge vouchers and servicing equipment; each runner
covers between 200 to 300 customers.

The company joined hands with Tata Chemicals, Tata KisaanSansar network, disseminating
information through these centres and using them as local distributors.

Retail:
The company's retail business has around 3,000 outlets nationally; comprising 600 TTSL
owned stores and around 2,500 stores in the Franchisee format. Tata Indicom already
covers the top 700 towns in India in terms of population through Tata Indicom Exclusive
Stores.TataIndicom also maintains an online portal for its customers i-choose where the
customers can buy Tata Indicom post-paid connections and prepaid recharge vouchers with
an upfront commitment of activation and delivery of the handset within 72 hours.

Value Added Services:
Tata Teleservices, in October 2007 launched Tata Zone, an infotainment portal on Tata
Indicom BREW-enabled mobile phones, in Hindi. This service has applications, pricing
details, downloads and browsing instructions in Hindi. The rationale behind this was simple:-
66% of all Indians speak Hindi, while less than 5% understand English.

Under its VAS bouquet, TTSL offers services such as News, Games, Faith and Prayers,
Ringtones, Streaming TV, Fun Shows, Video Zone, Song Download Express, Cricket, Internet
Surfing, Astrology, and Mobile Office among others.

Tata Indicom plans to provide m-commerce, mobile advertising and social networking under
its VAS offerings.


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Subscriber base:

The Tata teleservicesl’s subscriber base according to TRAI - Telecom Regulatory Authority of
India as of January 2010 was:

Tata teleservices ’s Subscriber (Tata Indicom, DoCoMo, virgin)

over
previous
month

Andhra 6,075,177
Pradesh
Assam 72,196
Bihar 2,407,872
Chennai 1,246,101
Delhi 5,161,235
Gujarat 1,560,651
Himachal 143,420
Pradesh
Haryana 2,030,792
J&K 112,837
Karnataka 4,157,341
Kerala 2,045,409
Kolkata 1,992,435
Madhya 2,651,632
Pradesh
Maharashtra 6,674,368
Mumbai 3,620,828
North East 51,866
Orissa 1,583,077
Punjab 1,714,520
Rajasthan 2,719,185
Tamilnadu 2,466,343
U.P. (E) 1,805,549
U.P (W) 2,615,399
W.B. 1,084,740
Total 53,992,973 57,329,449 17.46%
Additions


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::: Aircel :::

Introduction:

Type Private
Founded 1999
Headquarters Chennai
Key people Gurdeep Singh, COO
Products Mobile
Telecommunication operator
Owner(s) Maxis Communications (74%)
Apollo Hospital
Website Aircel.com

Aircel is a mobile phone service provider in India. It offers both prepaid and postpaid GSM
cellular phone coverage throughout India. Aircel is a joint venture between Maxis
Communications of Malaysia and Apollo Hospital Enterprise Ltd of India. Maxis have a 74%
stake in Aircel and the remaining 26% is with Apollo Hospitals. It is India’s fifth largest GSM
mobile service provider with a subscriber base of over 27.7 million, as of October 31, 2009.
It has a market share of 12.8% among the GSM operators in the country. As on date, Aircel
is present in 18 of the total 23 telecom circles (including Andhra Pradesh, Assam, Bihar &
Jharkhand, Chennai, Delhi & NCR, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala,
Kolkata, Mumbai, North East, Orissa, Rest of Maharashtra & Goa, Rest of Tamil Nadu, Rest
of West Bengal, Uttar Pradesh East, Uttar Pradesh West) and with licenses secured for the
remaining 5 telecom circles, the company plans to become a pan-India operator by 2010.
Additionally, Aircel has also obtained permission from Department of Telecommunications
(DoT) to provide International Long Distance (ILD) and National Long Distance (NLD)
telephony services. It is also a category A ISP. It is also having the largest service in
Tamilnadu.

Aircel Business Solutions (ABS), part of Aircel, is an ISO 9000 certified company. ABS is a
registered member of WiMAX forum – both in the Indian and International Chapters. ABS’
product range includes enterprise solutions such as Multiprotocol Label Switching Virtual
Private Networks (MPLS VPNs), Voice over Internet Protocol (VoIP) and Managed Video
Services on wireless platform including WiMAX.

Aircel has won many awards for its services. Aircel was honored at the World Brand
Congress 2009 with three awards, Brand Leadership in Telecom, Marketing Campaign &
Marketing Professional of the Year. Aircel was honored by CMAI INFOCOM National
Telecom Award 2009 for, ‘Excellence in Marketing of New Telecom Service’. Aircel had been
selected as the best regional operator in 2008 by Tele.net. Aircel was rated as the top mid-


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size utility company in Business World’s ‘List of Best Mid-Size Companies’ in 2007. Aircel got
the highest rating for overall customer satisfaction and network quality in 2006 by Voice and
Data.

Aircel is one of the sponsors of the Indian Premier League Cricket Team Chennai Super
Kings, which is captained by Mahendra Singh Dhoni. It is also the major sponsors for
Chennai Open (the only ATP tennis tournament in India), and Professional Golf Tour of India.

In latest news, Maxis, Aircel's majority stake holder, raised RM 11.2 billion (USD 3.36
billions) for its shareholders, making it the largest IPO in Malaysia and Southeast Asia.

Aircel boat.Aircel placed an actual dinghy lifeboat to a downtown billboard. A rope with a
sign reading, “In case of emergency, cut rope”, held up the branded raft. July 15, 2009 the
monsoon arrived and so did Aircel customer service. The dinghy was cut down and
pedestrians were safely transported. What Aircel calls “Corporate Social Responsibility – A
Solution”? The company was able to generate positive publicity and show consumers that
they care.


P a g e | 61

Subscriber base:
The Aircel’s subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was

Aircel’s Subscriber

over
previous
month

Chennai 2926191 2995172 68981

TN 10573205 11092259 519054

W.B. 2000770 2034483 33713

Assam 2208292 2366416 158124

Orissa 1414870 1535259 120389

N.E. 1423543 1591334 167791

J&K 1484090 1586041 101951

Bihar 2769654 2841955 72301

HP 339961 367054 27093
Kolkata 1086809 1135045 48236
Karnataka 614756 668731 53975
Kerala 660643 792936 132293
AP 654782 713305 58523
Delhi 770353 874437 104084
UP (West) 626143 672262 46119
UP (East) 666602 758529 91927
Mumbai 668676 763209 94533
Maharashtra 134657 247480 112823
Total 31023997 33035907 8.38% 6.49%
Additions 1669627 2011910


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::: MTNL :::

Type State-ownedPublic

Founded 1986
Headquarters New Delhi, India
Key people KuldiSingh
(CMD)
AnitaSoni
(CFO)
S.M.Talwar
(ED-NewDelhi)
J.Gopal
(ED-Mumbai)
Products Wireless
Telephone
Internet
Television
Revenue ▼INR 52.895 million (2009)
Net income ▼INR 1.626 million (2009)
Owner(s) The Government of India
Website www.mtnl.net.in

Introduction:

Mahanagar Telephone Nigam Limited is an Indian Government-owned telephone service
provider in the cities of Mumbai, Thane, New Delhi, and Navi Mumbai in India. The company
was a monopoly until 1992, when the telecom sector was opened to other service
providers.

Products:

MTNL provides fixed line telephones, cellular connection of both GSM — Dolphin(Postpaid)
and Trump (prepaid) and WLL (CDMA) — Garuda-FW And Garuda-Mobile and internet
services through dialup and DSL — Broadband internetTriBand. MTNL has also started
Games on demand, video on demand and IPTV services in India through its Broadband
Internet service called Triband. Phone numbers belonging to MTNL start with the prefix 2
infixed line telephones andWLL& in GSM Mobile services start from 901x/


P a g e | 63

9869/9969/9868/9968. MTNL also provides other services such as VPN,Internet Telephony-
VOIP and leased lines through BSNL and VSNL.

MTNL has been actively providing connections in both Mumbai and New Delhi areas and the
efficiency of the company has drastically improved from the days when one had to wait
years to get a phone connection to now when one can get a connection in even hours. Pre-
activated Mobile connections are available at many places across both Metros. MTNL has
also unveiled very cost-impactiveBroadband Internet access plans (TriBand) targeted at
homes and small businesses. At present MTNL enjoys the largest of the market share of ISP
services in Mumbai and Delhi.

Former Indian Communications Minister ThiruDayanidhiMaran had declared year 2007 as
"Year of Broadband" in India and MTNL is gearing up to provide five million Broadband
connectivity by the end of 2007. MTNL has upgraded existing TriBand (Broadband)
connections for a speed of up to 2 MB/s without any extra cost. This 2 MB/s broadband
service is being provided by MTNL at a cost of just US$5.00 per month.

India's First 3G Mobile Service By MTNL

MTNL started 3G services in India under the name of "MTNL 3G Jadoo"
Services offered include Video call, Mobile TV and Mobile Broadband with high speed data
connectivity up to 2 Mbit/s speed from 11th December 2008, getting India on the 3G map of
the world. MTNL plans to offer 3G services across India by mid-2009. After that MTNL
Mobile users would be able to surf the internet with speeds up to 2 Mbit/s on their smart
phones. MTNL also provides data cards for surfing internet on the PC and Laptop at 3.6
Mbps. MTNL will be installing 15 lakh 3G lines in the first phase of its 3G roll-out in Mumbai
and Delhi (which currently have 40 lakh existing mobile lines).

India's First 3GBlackBerry Service By MTNL

MTNL rolled out its BlackBerry solutions on the 2G and 3G networks by launching India’s
first 3G enabled BlackBerry Bold smart phones.

Joint Venture(s) of MTNL

Mahanagar Telephone Mauritius Limited (MTML)

MTNL has set up its 100% subsidiary, Mahanagar Telephone Mauritius Limited (MTML), in
Mauritius.For providing basic, mobile and international long distance services as second
operator in Mauritius. Necessary licenses were obtained in January 2004. MTML has already
started its ILD&CDMA based basic services in Mauritius. In Mauritius, 44,312 telephone
connections are actually operational from a total switching capacity of 50,000. Moreover,


P a g e | 64

through joint ventures with local telecommunications providers, MTML plans to offer
internet access through its wireless network to its users in February 2007.

MTNL-STPI IT Services Limited:

MTNL-STPI IT Services Ltd. is a 50:50 Joint Venture between Software Technology Parks of
India (STPI) and Mahanagar Telephone Nigam Limited, (MTNL). The JV formed in 2006
combines the STPI's rich experience as an ISP and MTNL's track record of being India's
leading telecom operating company to offer niche portal services to the Indian community.
The JV was formed to realize one of the 10-point agenda of MoC&IT, which are of extreme
importance to India for bringing about an all-round economic development. The JV aims to
provide exclusive data center services, messaging services, business application services to
the identified sectors of economic activity and thereby also popularizing the .in domain in
the networked community across the world.

Millennium Telecom Limited (MTL)

MTNL has restructured Millennium Telecom Ltd. (MTL) as a Joint Venture company of MTNL
and BSNL with 51% and 49% equity participation respectively. The company will now be
entering into new business stream of international long distance operations and will be
executing a project of submarine cable system, both east and west from India.

Recent happenings:

Recently MTNL delayed the implementation of pay revision to its employees citing cash
crunch as main reason. Due to this employees went on strike but the issue is still pending, if
MTNL implements pay revision to its entire staff the operating cost will raise dramatically.

On December 11, 2008 MTNL became the First Telco in India to launch 3G mobile phone
services with roll out of Video call and Mobile TV service in New Delhi.

In July, 2006Mahanagar Telephone Nigam Ltd. (MTNL) has launched its new Garuda mobile
service from its CDMA 2000 1x network.

Mr. RSP Sinha, the CMD of MTNL resigned from the post on 12th January, 2010 in wake of
the non-extension of the period by Govt. Sh. Sinha has been facing charges of corruption
and accepting bribe from Motorola Inc. and a criminal case has been going against him in a
CBI court at Delhi.


P a g e | 65

Subscriber base:
The MTNL subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:

MTNL’s Subscriber

over
previous
month

Delhi 2164120 2189841 25721

Mumbai 2401140 2420486 19346

Total 4565260 4610327 1.17% 0.99%

Additions 57009 45067


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::: Sistema-Shyam Teleservices (MTS India) :::

Founded 2009 as SistemaShyamTeleServices Limited
Headquarters New Delhi, Delhi, India
Products CDMA
Owner(s) Sistema (73.71%)
Shyam Group (23.70%)
Website www.mtsindia.in
ntroduction:

ShyamTelelink is an Indian telecom service provider. Shyam holds the Unified Service Access
License for the Rajasthan circle and operates Basic Telephony, mobile telephony (CDMA)
and broadband services in the province. ShyamTelelink is the end-to-end service provider in
Rajasthan with more than 269,000 subscribers as on August 2008 and a strong brand -
Rainbow.

Acquisition by Sistema:

The largest public diversified corporation in Russia and the CIS - Sistema acquired a 10%
stake in ShyamTelelink for a total cash consideration of US$ 11.4 million at the end of
September 2007. In October 2007, Sistema signed a share purchase agreement for the
acquisition of an additional 41% stake in ShyamTelelink and a call option agreement, which
gives Sistema the right to increase its stake in ShyamTelelink from 51% up to a maximum of
74%. Later in December 2007, Sistema received an approval for the acquisition of the
blocking stake in ShyamTelelink from the Foreign Investment Promotion Board (FIPB) of
India. As a result of the acquisition of the additional 41% stake, the overall purchase price
totaled US$ 58.1 million.

Pan-India rollout:

Shyam Telecom along with their partner Sistema had applied for UASL license in 21 telecom
circles of India. In August 2008, they became the first new mobile operator to get a pan-
India start-up spectrum to start their mobile service operations in the country. They would
be providing mobile services based on CDMA technology under the brand name MTS.Shyam
Telecom given Project to ZTE and Huawei for network expansion.
As of Sep 30, 2009 the total subscriber base of MTS India is 1,960,532 present in 7 circles,
Just launched in Delhi.


P a g e | 67

Subscriber base:
The MTS’s subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was

Mts ’s Subscriber

over
previous
month

Andhra Pradesh
Assam
Bihar 240,432
Chennai 104,900
Delhi 175,867
Gujarat
Himachal
Pradesh
Haryana 331
J&K
Karnataka 105,948
Kerala 159,704
Kolkata 278,552
Madhya
Pradesh
Maharashtra 2
Mumbai 5,261
North East
Orissa
Punjab
Rajasthan 1,160,142
Tamilnadu 367,940
U.P. (E)
U.P (W)
W.B. 443,662
Total 3,042,741
Additions


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::: LOOP Mobile :::

Type Private
Founded 1994 as BPL Mobile
2009 as Loop Mobile
Headquarters Mumbai, Maharashtra, India
Key people CEO SandipBasu
Industry Telecom
Products Mobile
Telecommunication operator
Owner(s) Essar Group (8%)
Website www.loopmobile.in

Introduction:

Loop Mobile (Formerly BPL Mobile) is a mobile phoneservice provider in India. It offers both
prepaid and postpaidGSM cellular phone coverage in Mumbai circle

BPL Mobile Communications, the country’s oldest mobile telecom service provider, has
changed its name to Loop Mobile, following the expiry of its brand-use agreement with the
TPG Nambiar-owned BPL Group.

Loop Mobile will also have the latest NGIP (Next Generation Internet Protocol) and EDGE
(Enhanced Data rates for GSM Evolution) technology. The operator is hoping to leverage
these technologies to introduce innovative VAS, as well as micro-segmented tariffs for
subscribers.


P a g e | 69

Subscriber base:
The Loop mobile’s subscriber base according to TRAI - Telecom Regulatory Authority of
India as of January 2010 was:

Loop mobile’s Subscriber

over
previous
month

Mumbai 2649730 2701583 51853

Total 2649730 2701583 0.69% 1.96%

Additions 54276 51853


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::: Uninor :::

Founded 2009
Type Joint Venture
Headquarters Gurgaon, India
Key people Stein-ErikVellan
(CEO)
SanjayChandra
(Chairman)
Products Wireless
Telephone
Internet
Owner(s) Telenor (67.25%)
Unitech Group (32.75%)
Employees 2,000
Website Uninor. In
Introduction:

Uninor is a mobile telephony and network operator in India. The company holds a pan-India
UAS license to offer telecommunications services in each of India’s 22 circles. It has also
received spectrum to roll out these services in 21 of the 22 telecom circles. From November
2009, Uninor will be owned 67.25% by Norwegian telecom giant Telenor, and 32.75% by
India's Unitech Group. Uninor has started mobile services in India at the end of 2009,
focusing on the GSM technology.

History:

The company Unitech Wireless was until 2009 a subsidiary of Unitech Group, holding a
wireless services license for all 22 Indian telecom circles since 2008. In early 2009, Unitech
Group and Telenor agreed on a majority take-over by Telenor of Unitech's wireless business,
including Unitech Wireless' national-wide mobile license. By March, May and November,
Telenor acquired a 33%, 49% and 60% stake in Unitech Wireless, respectively. In September,
the mobile operation changed its name to Uninor. On October 19 the Indian Cabinet
Committee of Economic Affairs (CCEA) announced that it has approved Telenor's acquisition
of up to 74% in Unitech Wireless, and the shareholder's agreement sets a 67.25% Telenor
ownership in Uninor.


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Uninor's strategy:

Uninor is India's eighth nation-wide mobile operator, in a competitive landscape of 13
nation-wide or regional mobile operators. The company is targeting an 8 % pan-Indian
market share, and the opening of one million retail points and breaking even on EBITDA
within three years. It will provide mobile communication and Value Added Services.

In order to reduce time-to-market, Uninor will outsource infrastructure and back-end
services to partner organizations with established core competencies.[5] The operational
model is low-cost with a gradual network-build up, infrastructure sharing, GSM equipment
at competitive cost, full-scale IT-outsourcing and a long termcost and capex efficiency.

Uninor will organize with headquarters just outside Delhi (Gurgaon), and 11 regional hubs
covering one or more of the total of 22 telecom circles.
To quickly launch mobile services only nine months after the foundation of the new
company, Uninor has entered into network and base station service agreements with
partners. Tower sharing agreements are concluded with Wireless-TT Info Service Limited
and Quippo Telecom Infrastructure Limited. Telecommunications, network and radio
equipment is to be supplied by Alcatel-Lucent, Huawei Technologies India, Nokia Siemens
Networks and Ericsson. The company's IT services and infrastructure is to be shared with
Wipro Technologies.

Subscriber base:
The Uninor subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:

Uninor’s Subscriber

Metro/circle Dec'09 Jan-10 Monthly %Market % Growth over
Additions Share previous month

Kerala 90210 151970 61760
T.N. 202032 391708 189676
Karnataka 264141 510250 246109
A.P. 157065 440011 282946
Orissa 44071 124926 80855
Bihar 127261 307379 180118
U.P.(E) 172288 319259 146971
UP (W) 151062 292903 141841
Total 1208130 2538406 0.64% 110.11%
Additions 1208130 1330276


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::: S-tel :::

Type Limited
Founded 2009,
Headquarters NCR region of Delhi, India
Products Mobile networks,
Telecom services, Etc.
Owner(s) StelIs a joint venture between Siva Group and
Bahrain Telecommunications Company
(Batelco).
Website www.stel.com

Introduction:

S Tel Private Limited (S Tel), a new telecom operator in the lndian marketplace, is a joint
venture between Siva Group (formerly Sterling Infotech Group) and Bahrain
Telecommunications Company (Batelco).

S Tel has acquired Unified Access Services Licenses (UASL) and spectrum to operate in six
Category C circles – Orissa, Bihar, Himachal Pradesh, North East, Assam and Jammu &
Kashmir. These licenses will enable the company to provide Unified Mobile service, wireless
broadband and innovative Value Added Services (VAS) covering a population of over 226
million across these circles.

Headquartered in NCR region of Delhi, the company plans to launch its mobile telephony
service in India before close of 2009. Siva Group is a USD 3 billion group (about Rs.14, 000
Crores), with diversified business interests in verticals such as wind energy, shipping &
logistics, hospitality & realty, media, EPC, education and agro business.

Bahrain headquartered Batelco is a diversified, integrated telecommunications operator
with Mobile, fixed and wireless broadband, Datacom and fixed line services. It has
operations in 7 markets across the Middle East, North Africa and Asia.


P a g e | 73

Investors:

Batelco (Bahrain Telecommunications Company)

Established in 1981, BATELCO has evolved from a local telephone
company to become a regionally diversified, integrated
telecommunications operator with Mobile, fixed and wireless
broadband, Datacom and fixed line services.

Batelco Group, listed on the Bahrain Stock Exchange, is the leading integrated
communication provider in the Kingdom of Bahrain and a company of reference among
the region’s key telecommunications players for innovation and customer experience.

Batelco serves both the corporate and consumer markets in the most liberalized and
competitive environment in the Middle East Africa region. It delivers cutting-edge fixed
and wireless telecommunications services to its customers in Bahrain, Kuwait, Saudi
Arabia, Jordan, Yemen, Egypt and India.

The Batelco Group of companies offers end-to-end telecommunications solutions for its
residential, business and government customers in Bahrain on Next Generation, all IP
fixed and 3.5G wireless networks, MPLS based regional data solutions and, GSM mobile
and WiMax broadband services across the countries in which it operates.

Siva Group

IT’S A RARE BREED THAT KNOWS WHAT THE FUTURE HOLDS.

Foresight is a gift. And when you combine it with skill and
commercial acumen, the result is often breathtaking. That in a
nutshell is the story of the Siva Group, a future spotter, early
entrant, market maker…a story of vision, speed, consolidation
and operational excellence. Started in 1986 by Mr. C
Sivasankaran, the Group today is a US$ 3 billion conglomerate,
with operations in Realty, Telecom, Project Engineering, Shipping,
Energy, Agri exports and e-education / software.

As early as 1988, MrSivasankaran recognized the enormous potential of personal
computers. Way back then, Siva PCs went on to become the benchmark value definers
and trend setters for the nascent industry. In the following years, the group’s reputation
as a pioneer and ‘Nextpert’ grew rapidly as it went on to build leading brands in
broadband connectivity, mobile telephony and food & beverages, proving with each
venture, the core competencies of the group in terms of entrepreneurial spirit,
operational capability and unmatched skill in scaling.

The mobile brand Aircel created by the Siva Group was one of the major players in the


P a g e | 74

mobile market then, changing the rules of the game from the word go. Post its divesture
in March 2006, the Group has been making its presence felt in the fields of Realty, Project
Engineering, Shipping, Energy, Agri exports and e-education / software initiatives, both in
India and abroad.

While the Siva Group has grown to become one of the most successful business houses in
the country, it has stayed rooted to the guiding business principles and beliefs of its
founder promoter Mr. C. Sivasankaran, viz.

Subscriber base:
The Stel subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:

S-tel’sSubscriber

over
previous
month

HP 16327 94390 78063
Orissa 67675 153949 86274
Bihar 57409 257840 200431
Total 141411 506179 0.13% 257.95%
Additions 141411 364768


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::: HFCL Infotel :::

Founded 2000(with new name.2009)
Type public
Headquarters Mohali, Punjab
Key people Chairman,MahehdraNahata
Products Wireless
Telephone
Internet
Owner(s) HFCL Group
Website www.hfcl.com
Introduction:

HFCL Infotel Ltd. (Infotel) is a business venture of the HFCL Group. Infotel is a "Total
Telecom Solutions Provider" offering Fixed Line telephony (Telephone Services), Mobile
telephony, Broadband Services, Customized Data Services and Value Added Services.

Infotel provides a world class telecom experience when it comes to technology, products,
customer services, Launched in Punjab in the year 2000 under the Connect brand name.
Infotel has set up state-of-the-art networks with coverage in over 200 towns of Punjab with
extensive optical fiber network coverage of over 4,000 km. Today, Infotel is one of Punjab's
leading private sector telecommunication service providers with an aggregate customer
base of 5,10,263 as on 31st Dec 09.

Infotel Broadband network supports interactive multimedia services, and can handle high
quality content, high speed internet access and a large number of interactive applications
including B2B and B2C e-commerce.

Infotel supports a wide Public Call Office (PCO) network across the state of Punjab &
Chandigarh. Now with over 45,000 PCOs, Infotel is deemed to have the largest PCO network
in India among all private fixed line services operator in a single circle.

The Average Revenue per Line (ARPL) for Infotel is among the highest in the country. There
is a clear focus on acquiring quality subscribers through well planned rollouts and focused
revenues in marketing strategy.


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Subscriber base:
The HFCl Infotel subscriber base according to TRAI - Telecom Regulatory Authority of India
As of January 2010 was:

HFCl Infotel Subscriber

over
previous
month

Punjab 342749 341862 - - -
Total 342749 341862 - -
Additions - -


P a g e | 77

::: Price-war :::
How it happens!


P a g e | 78

::: Rs. 16.80 per minute to ½ paisa per second :::

Cellular tariffs have dropped by over 56X since May 1999 - a feat unparalleled by any other
sector or industry in India. The average a mobile tariff in Year 2010 was prevailing around½
paisa per secondas against the peak ceiling tariff of Rs. 16.80 per minute, when NTP 99 was
announced.

Mobile teriff, 1998 to 2010
18
16.8
16

14 14

12
teriff in rupees

10

8 Teriff(Rs/m)
7
6

4 4.25
3
3
2 2
1 1 1
0.6 0.5
0.3
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

'Simply Reliance'; to lead tariff war

Reliance communication is the first company who starting price-war in Indian telecom.
RCOM on October 5, 2009launched a new 'Simply Reliance' plan on its CDMA and GSM
networks, which offers a single rate of 50 paise per minute across the country with no
hidden charges. (Finally, Anil Ambani fulfilling DhirubaiAmbani’s dream to make a phone call
cheaper than a post card) The Telco will pull out all existing plans to offer only the new plan
to all pre-paid and post-paid users. The single rate of 50 paise per minute applies to all local
and STD calls as well as any mobile, landline, CDMA or GSM from anywhere in India. This is
expected to lead to an average 46% savings in consumers' monthly bills. Existing or new pre-
paid customers have to purchase a one-time special tariff voucher for Rs 48 to enjoy lifetime
validity, while post-paid users can migrate to the plan by paying a monthly subscription fee
of Rs 99.

In 2009, Japanese telecom giant NTT DOCOMO entered in Indian market with the help of
TATA teleservices strategic alliances. Tata DoCoMo is the first company who offering acall
charge in paisa.And then all the other company follows them for the surviving.


P a g e | 79

Indian telecom market might be growing fast, but surviving in this highly competitive market
is not easy for telecom companies. Here’s the list of schemes that fuelled the tariff war in
India and brought down the ARPU significantly.

Mobile scheme change the scenario of cellular services in India.

Post card or Phone call:

Reliance Infocom launched mobile services in India at 40 paise per minute (R2R, local call)
fulfilling DhirubaiAmbani’s dream to make a phone call cheaper than a post card in 2003.

Chotta Recharge:

Hutch (Vodafone now) launched the Chotta recharge voucher at Rs.10 when the lowest add-
on recharge card available was about Rs 50. What’s the message? Lowering the price by 20-
30% to the competitors won’t help much in gaining the market share. Think five times
cheaper to make an impact.

Non-stop Mobile:

So Life went good with Chotta recharge. But there was a problem in prepaid mobile. You
need to recharge regularly as the validity period is limited. With the recharge card of Rs 200,
you will get validity only for one month. So people have to spend at least Rs2000 per year
for their mobile just to receive the incoming calls. Not so long.

Tata Indicom launched Non-stop mobile, a scheme where you don’t need to recharge for 2
years but still get free incoming calls. Soon other players responded to Tata Indicom’s plan
and then come in Lifetime validity (“lifetime validity in 999” Rupees plan launched in
Nov/Dec. 2005) plan by all major telecom players in India.

Get paid for incoming:

Customers are happy with their free incoming calls. Not the new telecom players. Virgin
Mobile jumped into the competitive Indian mobile telecom market with the breakthrough-
marketing scheme, Get paid for incoming calls. 10 paisa free for every minute of incoming
call. That’s the deal.

After Simply Reliance:

RCOM on October 5, 2009 launched a new 'Simply Reliance' plan on its CDMA and GSM
networks, which offers a single rate of 50 paise per minute across the country with no hidden
charges. The Telco will pull out all existing plans to offer only the new plan to all pre-paid and
post-paid users. The single rate of 50 paise per minute applies to all local and STD calls as well


P a g e | 80

as any mobile, landline, CDMA or GSM from anywhere in India. This is expected to lead to an
average 46% savings in consumers' monthly bills. Existing or new pre-paid customers have to
purchase a one-time special tariff voucher for Rs 48 to enjoy lifetime validity, while post-
paid users can migrate to the plan by paying a monthly subscription fee of Rs 99.

this plan to significantly increase the competitive intensity in the Indian telecom sector, already
high with the launch of TTSL's GSM services, 'Tata DoCoMo' and its seconds-based pulse
and 'Re 1 per call' (talked un-limited in a call)offerings to its customers. It should be noted
that the average revenues per minute (RPMs) stand in the region of 55-60 paise for the mobile
segment. With TTSL's 1 paisa per second offer and the 'Simply Reliance' scheme, RPMs, which
are already under pressure to dip further, thus slowing down revenue growth and leading to
margin pressures and falling bottom-line growth? It should be noted that Bharti Airtel has also
responded in its own way to TTSL's '1 paisa per second' plan, launching the
'AirtelAdvantage Plan', whereby both long distance and local calls from Airtel-to-Airtel mobiles
will be charged at 50 paise per minute. Thus, this in a way reflects the fact that incumbent
operators will have to in some shape or form respond to the cut-price offerings of RCOM and
TTSL.

All major operators follow TTSL, launch 'pay per second' plans across various circles; Idea, Aircel,
SSTL, Vodafone-Essar, market leader Bharti Airtel, RCOM, PSU behemoth BSNL and Loop Mobile
all join the dogfight, no respite from competitive intensity and tariff wars
With TTSL being the first to launch a 'pay per second' tariff plan, thus throwing down the gauntlet
to other operators in a bid to garner initial subscriber traction for its recently-launched GSM
services in partnership with Japanese telecom major, NTT DoCoMo, it has not taken long for
other.

Operators to follow suit in some shape or form. Idea Cellular, Aircel and Sistema-Shyam
Teleservices. (SSTL) all launched these plans. Apart from these operators, the top-3 Telcos by
subscriber market

Bharti Airtel, RCOM and Vodafone-Essar; themselves launched per-second billing plans
in response to competition. Bharti Airtel launched the 'Freedom Plan', charging users 1 paisa
per second to make local and long distance (STD) calls within its own network (on-net calls),
while for off-net calls (calls to other operators' networks), it is charging 1.20 paise per
second. RCOM and Vodafone-Essar have also launched such plans. Vodafone-Essar is charging
users 1 paisa per second for on-net calls. RCOM on the other hand, has launched a couple of
more initiatives in addition to its 50 paise per minute scheme across India to all networks,
launched in early October 2009. The Telco is offering its users 1 paisa per second tariffs for short
duration calls and is charging just Re 1 for 3 minutes' call rate for long duration calls in
addition to the continuation of the 50 paise per minute scheme. This will further heighten
competition for minute’s market share, even as revenue market share may not improve
proportionately.

The PSU telecom behemoth, BSNL followed suit too, with plans to offer such schemes to
its post-paid subscribers also on the anvil, apart from pre-paid subscribers. The one-circle
operator,
Loop Mobile (Mumbai) has also launched a per-second pulse plan to its subscribers, taking


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the total number of operators who have launched such plans to nine. This clearly reflects the
'lack’ of freedom of choice' for operators including the market leader to respond to
competitive pressures to ensure that they do not lose minutes and revenue market share. While
the launch of these plans is likely to make it tougher for newer entrants to gain subscriber traction
and could neutralize to an extent the usage of dual SIM cards and 'price arbitrage' by
subscribers, as users are likely to stick to the network of the incumbent operator, in the interim
it is likely to hurt RPMs and slow revenue growth. We believe these competitive moves will
accentuate pressure on ARPUs and RPMs for the sector.

Bharti shifts price-war to another turf, slashes roaming charges by 60%; major operators
follow suit Bharti Airtel moved the price-wars in the telecom sector to yet another turf-
roaming-slashing roaming charges by as much as 60% in November 2009. Under the new
plan,called'AirtelTurbo', subscribers would be billed 60 paise per minute for all incoming calls on
roaming, while outgoing calls would cost 60 paise per minute for 'on-net calls' and 80 paise
per minute for 'off-net calls'. Airtel pre-paid mobile customers wishing to avail this benefit
would be charged Rs 98, which would give an incoming validity of one year, while post-paid
users can subscribe to a monthly rental plan. Bharti's move was followed by other major
operators like BSNL, TTS and Vodafone-Essar, which also slashed roaming charges for their
respective subscribers. Thus, with price-wars being witnessed on all major fronts, pressure on
RPMs is expected to intensify in the near-term for all operators.

RCOM slashes SMS rates:

RCOM is the company to take the current price-war in the Indian telecom sector to another level,
slashing SMS rates in an attempt to garner greater SMS volumes and attract more customers
from the high SMS usage customer bracket, such as the youth and young professionals. The
Telco has launched two new SMS tariff plans - one paisa per SMS, and unlimited SMS at Re 1
per day. The new SMS tariffs are add-on plans and are applicable for all RCOM customers
(CDMA and GSM) as well as pre-paid and post-paid customers. Customers can avail of the 1
paisa per SMS plan by subscribing to a Standard Tariff Voucher on a payment of a rental of Rs
11 per month. Alternatively, the unlimited SMS plan can be subscribed to by the Telco’s
customers on a daily deduction of Re 1 per day from the pre-paid balance (Rs 30 per month).
For post-paid subscribers, the unlimited SMS plan comes at a monthly rental of Rs 25. These
tariffs are applicable across local, national and roaming SMS.

As per TRAI data, the blended average revenues per user (ARPUs) per month for the GSM
segment stood at Rs 185 for 1QFY10, whereas for the CDMA segment, they stood at Rs 92.
For GSM, revenues from SMS stood at 4.2% of the total, thus translating into around Rs 8
ARPU from SMS on a monthly basis. For CDMA, SMS revenues as a percentage of ARPU stood
at 6% in 1QFY10, translating into nearly Rs 6 ARPU from SMS on a monthly basis. Thus, these
figures are a clear reflection that SMS revenues are not a very significant proportion of monthly
ARPU for the industry.

For RCOM itself, in 3QFY09, the last quarter when the Telco had given out details of the
proportion of non-voice and SMS revenue, the latter accounted for a mere 1.3% of ARPU,
translating into just Rs 3 per user/month. The plans launched by RCOM are likely to boost SMS
volumes. The rentals being charged by the Telco for the 1 paisa per SMS and unlimited


P a g e | 82

SMSpacks of Rs 11 and Rs 30 per month, respectively (Rs 25 per month for the unlimited
SMS plan for post-paid users) are expected to more-than-compensate for the cut-price cost
per SMS for subscribers. Consequently, we believe this plan is more of an effort to gain high SMS
usage customers and to aid the proportion of non-voice revenues as a percentage of total
ARPUs, even as it may not have a major impact on the telco's overall revenue profile.

Uninor, S Tel launch operations, become the first among the 'newer entrants' to do so;

Uninor, the telecom venture between Norwegian telecom major Telenor and Indian real estate
firm
Unitech launched its services across eight circles, namely Tamil Nadu, Kerala, Karnataka, Andhra
Pradesh, Uttar Pradesh (East and West), Bihar and Orissa and added an impressive 1.2 mn
subscribers in December 2009. The launch has taken place eight months after Telenor
Groupfinalized its transaction with Unitech Group and made the first investment into Uninor
on March 20.Uninorhas established 11 regional hub offices and recruited more than 1,800
employees. The Telco’s serviceswill be retailed at over 210,000 points of sale through nearly
1,000 exclusive distributors across its seven circles of operations. Uninor services will also be
available in 17 exclusive company-owned shops and 50 exclusive franchisee shops. The next
phase of its launch is expected to take place in early 2010. Thus, the telecom company was
expecting to launch towards the end of CY09, which has been achieved. Uninor is targeting 8%
market share by 2018, EBITDA break-even in 3 years and cash flow break-even in five years.

UninorsPrice Plans increase price-war:

(1) Talkmore@29paisa: This plan offers customers local calls at 29 paise per minute and STD
calls at 49 paise per minute.

(2) Callmore@29paisa: the plan offers local calls at 29 paise per minute and STD calls at 49
paisa per minute, with a daily rental of Rs 2.

The company does not plan to offer per-second billing plans, which were started by Tata
DoCoMo, the GSM arm of Tata Teleservices, followed by all major telecom operators.

On the other hand, S Tel also launched services in the telecom circles of Himachal Pradesh,
Orissa Andhra Pradesh, Uttar Pradesh (East and West), Bihar and Orissa and added an impressive
1.2 mn subscribers in December 2009.

Daily telephone allowance;

Getting paid for incoming calls is fine. But what if you don’t get incoming callsdon’t worry;
Anil Ambani is ready to help you now. Reliance Communication launched its GSM services in
Mumbai offering subscribers Rs 10 talk-time every day for the first 90 days. That’s free talk-
time worth Rs 900!


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MTS Offers Free Calls in Rajasthan for 999 Days;

Telecom price-war in India has got even fiercer with the introduction of MCard by MTS. So,
for those customers who are not that happy with free incoming calls for life, MTS has come
up with a plan, 10, 00,000 minutes free or simply lifetime free outgoing. Of course
conditions apply. Minimum of Rs 200 top-up over a period of 6 months is mandatory. And
most importantly free call limit 150 minute/day is applicable only on local calls from MTS to
MTS.

With more new players waiting to enter the Indian mobile market, it’s going to be an uphill
task for the established players like Airtel, Reliance and Vodafone to retain their subscribers.
They can’t wait and watch the new players like MTS eat into their market share with their
aggressive plans. How about launching new brands focused on niche customer segments to
tackle the competition.

South India based media giant, Sun TV Network use this strategy to the core to beat the
competition. It uses group channels Sun Music, KTV and Sun News to fight the competition
and protect the flagship channel Sun TV’s leadership in Tamil Nadu. To counter the TRP of
Star Vijay’s popular investigative reporting show at 10 pm, NadnathathuEnna, Sun News
runs a similar show – Nijamat 10 pm. Sun Music has comedy show, SiriSiriat 10:30 pm to
counter Kalaignar TV’s Comedy Clips at the same time. And then there is movie channel KTV,
to counter any new or popular films from Kalaignar or Vijay TV.

Will a similar multiple brand strategyworks in the Indian mobile industry? Well, it’s not a
new concept in India. Tata Teleservices is already doing that indirectly with its Virgin Mobile
alliance. Reliance communications also has options to differentiate as it provides both GSM
and CDMA services in the same circle. That leaves Airtel and Vodafone.

Will BhartiAirtel and Vodafone lauch new brands to fight against the new players in the
Indian mobile market and With more new players like Swan-Etisalat, Unitech-Telenor and
Datacom (subsidiary of Videocon) entering the Indian mobile market, this tariff war is not
going to end soon.


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::: Reason behind India's lowest telecom tariffs in the world :::

High Competition between 13 players is a common reason to all of us, but some other reason
that real mattered more than competition!

India today boasts of the lowest telecom tariffs in the world. If it is down to a tariff in the
range of 30 paisa per minute, which did not really happen overnight. It was the result of
continuous innovation and fine-tuning of costs that operators worked on assiduously.

What transpired was India putting in place the world’s low-cost telecom model. For its part,
the government lowered termination charges, offered spectrum at prices lower than many
other countries and setting the base for full-fledged competition. The cost benefits were
eventually passed on to the consumer.

What really happened? A combination of outsourcing non-core processes and infrastructure
sharing enabled operators to shave costs to the bone. India’s largest operator by subscribers
and revenues, Bharti Airtel set the process in motion which its competitors adopted quickly.
The company challenging paradigms like ‘high average revenue per user per month (ARPU)
is good’ or ‘post-paid is better’ or for that matter, ‘technology must be in-house’.

“All company knew to succeed in this market; all company had to address affordability
because there is a huge disparity in the country. Since there are customers who make a one-
minute call as well as a ten-minute call, we decided to concentrate on minutes and not
ARPUs. All company started building cost structures around minutes,”

In 2004, the company first outsourced the management of its IT functions to technology
giant, IBM in a $750 million contract. This was then followed by outsourcing its networks
and call Centre operations.

“All company started outsourcing all non-core processes to people who could handle them
better than us. The advantages of outsourcing come in terms of improved productivity,
scaling up and qualitative aspects,” he explains. The IBM contract was unique then and
began a debate around the rationale of outsourcing. Not much later, it became a trend-
setter, with other Telcos like Idea Cellular and Vodafone Essar following suit.

Company’s outsourcing deal with IBM helped in reducing overall costs. “With outsourcing,
the costs are predictable in percentage and absolute terms. It is a critical component of
Idea’s ability to optimize costs,”

Sharing of passive infrastructure like telecom towers, generators and shelters was the next
step in bringing down costs. “The advantages of infrastructure sharing are huge. It has an


P a g e | 85

impact on long term productivity for a capital-intensive model and helps in conserving
cash,”

The disaggregation of the industry’s value chain freed capital from the books of operators,
which facilitated the process of slashing costs. “Outsourcing allowed for conversion of
capital expenditure (capex) model into an operational expenditure model (opex). This
allowed operators to align costs on a per minute revenue model,” the decision of the
regulator in bringing down the termination charges was critical. This is paid by one operator
for terminating calls on the network of another operator. Likewise, having a fierce
competition scenario kept a lid on pricing which has still augured well for the consumer.
Quite clearly, nothing works like a healthy value for money proposition in India.


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::: Price-war’s impact on industry :::


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::: Price-wars impact on stock-market :::

What happen after price-war?

The real price-war started by two companies: Rcom and Tata DoCoMo (Tata teleservices),
thenother follow them for surviving in the market.

After price-war both company’s market price down higher than other company. Rcom
market price nearly down by 45% and Tata teleservices down by 30.6% during lastqtr.
(During last qtr. BSE Sensex gain 2%)

Price-war crash stock price:

3QFY10 performances of key telecom “Telco’s stocks v/s Sensex” - Price-wars take toll

(Rs, except for BSE Sensex) 30-Sep-09 31-Dec-09 Chg. (%)

Bharti Airtel418.6 328.8 (21.4)
Reliance Communications 308.0 172.9 (43.9)
Idea Cellular 75.4 58.2 (22.8)
MTNL 91.5 73.8 (19.4)
Tata Communications484.5 336.1 (30.6)
Tata Teleservices (Maharashtra) 36.1 26.8 (25.9)
BSESensex 17,126.8 17,464.8 2.0

During 3QFY10, telecom stocks saw a significant correction on the bourses, as the
heightened competition in the sector with the launches of newer operators led to a major
price-war, leading to fears of major pressures on average revenues per user (ARPUs),
slowing sales growth, margin pressures and falling earnings for telcos going forward. The
gauntlet was thrown down by Tata Teleservices (TTSL), which in partnership with Japanese
telecom major NTT DoCoMo launched GSM services, pricing voice calls on a per-second
basis as opposed to the per-minute pulse hitherto charged by incumbent operators. In
response, all major operators including market leader Bharti Airtel launched per-second
billing plans to prevent churn rates from increasing. Reliance Communications (RCOM)
joined the bandwagon, launching a plan charging just 50 paise per minute for all calls, local
and STD to any mobile or landline across the country, apart from also offering a seconds-
based pulse to its customers. TTSL and RCOM also cut SMS rates, while Bharti slashed
roaming charges, again to be followed by other major operators.


P a g e | 88

These price-wars consequently took their toll on telecom stocks, which significantly under-
performed the BSE Sensex during the quarter. It was the stock of RCOM that took the
maximum beating, crashing by 44%, followed by Tata Communications, which shed 31%.
Tata Teleservices (Maharashtra) on the other hand lost 26%, Idea Cellular 23%, Bharti Airtel
21% and MTNL 19%. As has been the case over the past 2 quarters as well, it was the stock
of mid-sized enterprise telecom solutions provider, Tulip Telecom that out-performed its
peers as well as the Sensex, recording gains of 3% over the quarter. During this period
Sensex grow nearly 2%.


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Tata teleservices stock price:

Tata teleservices's stock-price
40 35.9
33.25 33.9
35 31.7
25.8 27
30
25.15
25 21.7 22.8
19.7 23.75
20

15 stock-price
10

5

0

sensex
20000
17198.27 16772.56
18000 15924.23
16000 17464.81
17134.55
14000 15551.19 16356.03
15404.94
12000 14840.63
9903.46
10000 12134.75
8000 9066.7 9901.99
6000 8607.08
4000
2000
0

sensex


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Airtel’s stock price:

Airtel's stock-price
1200
1010
1000
888
stock-price (in Rs.)

800 785
633.85 656.8
600 637.15

400 328.8
stock-price
200 290.15

0

sensex
20000
17198.27 16772.56
18000 15924.23
16000 17134.55 17464.81
14000 16356.03
15551.19 15404.94
14840.63
12000
9903.46
10000 12134.75
8000 9066.7 9901.99
8607.08
6000
4000
2000
0

sensex


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Idea’s stock price:

Idae's stock-price
140 123.65
120 102.75
93.1

100
75.35 71.3 75.35
80
58.2 61.9 61.9
52.65 50.15 50.95
60
40
stock-price
20
0

sensex
20000
17198.27 16772.56
18000 15924.23
16000 17134.55 17464.81
14000 16356.03
15551.19 15404.94
14840.63
12000
9903.46
10000 12134.75
8000 9066.7 9901.99
8607.08
6000
4000
2000
0

sensex


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Rcom’s stock price:

R com's stock-price
600 564.8

500
425.15

400

300
stock-price
200 159.65
144.7 135

100

0
February 3, March 3, 2008 March 3, 2009 December 3, March 10,
2007 2009 2010

sensex
20000
17198.27 16772.56
18000 15924.23
16000 17134.55 17464.81
14000 16356.03
15551.19 15404.94
14840.63
12000
9903.46
10000 12134.75
8000 9066.7 9901.99
8607.08
6000
4000
2000
0

sensex


P a g e | 93

::: Price-war’s impact on ARPU :::
What is an ARPU?

ARPU: Average revenue per subscriber per month, or ARPU, is the amount of money that a
CMSP generates per subscriber per month. It can be obtained by dividing the total wireless
revenues by number of subscribers and then dividing the output by number of months in a
period (i.e., 3 months for a quarter and 12 months for a year's calculation of ARPU). To even
out the volatility in ARPUs, if any, it is better to arrive at the figure by averaging the wireless
revenues and subscriber base for the latest two years. However, considering the rapid pace
of subscriber addition for Indian CMSPs, ARPU calculated as dividing the trailing 12-months
wireless revenues by latest subscriber base is also an appropriate figure. For instance, if a
CMSP has earned a total of Rs 50,000 m as wireless revenues in the past 4 quarters (or
trailing 12 months) and its current subscriber base stands at 20 m, its ARPU will be Rs 208
per month (Rs 50,000 m of wireless revenues divided by 20 m subscribers divided by 12
months).

Another way to arrive at ARPU is to multiply the average number of minutes of usage
(MOU) per subscriber per month with per minute tariff. Most of the Indian CMSPs generally
disclose their MOUs and per minute tariff and as such, these can be used to determine the
ARPU. While there might be a direct correlation between change in MOU and change in
ARPU, it might not work the same in India's case as tariffs are falling at a rapid pace. As such,
even if a subscriber talks for a longer time, the CMSP's ARPU might not increase at the same
rate as per minute rate might decrease.

Price-wars to take their toll, ARPU* reduced 10.4%

o %
Name of the Company jul-sep'09 oct-dec'09 % Change over previous quarter

Aircel Limited 112.12 91.89 -18.05%
Loop Mobile 164.97 157.39 -4.59%
Idea Cellular 172.08 158.65 -7.80%
Vodafone Essar 170.54 156.84 -8.03%
Bharti Airtel Ltd 200.58 177.31 -11.60%
Reliance Telecom 97.32 92.18 -5.28%
All India 173.66 155.60 -10.40%
*Monthly; Average revenue per user


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57.41% ARPU decline in last 5 year

Average monthly ARPU
400
370.01
356.21
350
315.93
301.38
300
266.19 267.91

250
226.71 221.84
207.87
200 191.28
173.66
155.6 ARPU
150

100

50

0


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::: Price-war’s impact on financial performances :::

Price-wars to take their toll, lead to reduction in top-line on both qoq and yoy basis

Bharti Airtel, RCOM and Idea Cellular - to report a decline in top-line growth to the tune of
2.5% yoy, while on a sequential basis, a decline of nearly 5% is expected. This is the first
time ever that these companies will post a yoy decline in top-line, even as subscriber growth
has been quite decent.

Bharti Airtelis estimated to clock a 2% yoy and 4% qoq fall in consolidated net revenue, with
the key mobile services business unit expected to clock a 7% yoy and 8% qoq fall in
revenues. This is the case; even as the Telco’s mobile subscriber base grew 39% yoy and 8%
qoq to touch 118.9 mn. The fall in revenues is owing to steep pressure on realizations, with
ARPUs estimated to decline by as much as 34% yoy and 15% qoq to Rs 216 per user per
month on account of the price-wars in the sector. the telemedia business to grow by 4% yoy
and 3% qoq, while the
enterprise business is expected
to remain flat yoy and grow REVENUE (in Cr.)
marginally by 2% qoq. The 14600
14540.94
Passive Infrastructure Services 14500
Business is expected to decline
by 24% yoyon account of the 14400
14311.14
transfer of 35,066 towers to 14300
Indus wef. January 1, 2009,
14200
while sequentially, 13.2% REVENUE
14090.63
growth is expected. 14100

14000
RCOM on the other hand is
expected to clock an 8% yoy 13900
and 5% qoq decline in net 13800
revenues. The key wireless Ap-jun’09 Jul-sep’09 Oct-dec’09
business is estimated to fall by
as much as 16% and 8% qoq in
spite of the strong 53% yoy and 9% qoq growth in the mobile subscriber base of the Telco,
which is expected to hit 93.8 mn. As with Bharti, ARPUs to remain under severe pressure
and decline by a massive 45% yoy and 15% qoq to Rs 137 per user per month. As regards
the other business segments of the company, the Global Business to grow by a strong 35%
yoy (flat qoq) and the Broadband Business by 17% yoy (fall of 0.7% qoq).

Idea Cellularis expected to record a marginal 0.2% yoy decline in net revenues, while
sequentially, an 8% fall is estimated. Even as Idea's mobile subscriber base (ex-Spice) grew
53% yoy and 12% qoq to 52.3 mn, the significant pressure on ARPUs (estimated to fall 35%
yoy and 15% qoq) will lead to standalone wireless revenues falling by a marginal 0.1% yoy
and by nearly 10% qoq.


P a g e | 96

Well other players are not safe in this situation, all are facing same problem. Rcom and Tata
teleservices are so aggressively launched lower tariff scheme that hunting her revenue more
than any other, so now picture is clear more customer doesn’t helping in generate revenue.
Low tariff hunting your revenue and it’s not good for company health.

Bharti Airtel’s Qoq performances

Rs. (million) 3QFY09 2QFY10 3QFY10E* Qoq (%) Yoy (%)
Net Sales 96334 98,455 94,393 (4.10) (2.00)
Operating Costs 56884 57,039 56,824 (0.40) (0.10)
EBITDA 39450 41,416 37,570 (9.30) (4.80)
EBITDA Margin (%) 41.0 42.1 39.8 (2.30) (1.20)
Other Income 239 409 409 0.0 71.1
Interest Earned (Net) (1904) (428) 322
Depreciation 12,702 14,796 15,536 5.0 22.3
Profits in Associates/JVs (451) (8) (8)
Non-Operating Expenses 3 4 4
Profit before Tax 24,629 26,589 22,753 (14.40) (7.60)
Tax 2,558 2,873 2,275 (20.80) (11.10)
Tax rate (%) 10.4 10.8 10.0 (0.80) (0.40)
Minority Interest 478 506 506 0.0 28.0
Net Profit 21,593 23310 19,971 (14.00) (7.50)

Bharti Airtel’s Yoy performances

Y/E March (million) FY2007 FY2008 FY2009 FY2010E* FY2011E*
Net Sales 185,196 270,249 369,616 383,670 406,760
EBITDA 74,499 113,715 151,679 155,856 159,124
Net Profit 42,572 67,007 84,700 85,744 75,828
Note:*estimated by KSBL Research


P a g e | 97

Reliance Communication’s Qoq performances

Net Sales 56,718 54,963 52,478 (4.50) (7.50)
Operating Costs 34,977 36,827 36,456 (1.00) 4.2
EBITDA 21,741 18,136 16,021 (11.70) (26.30)
EBITDA Margin (%) 38.3 33.0 30.5 (2.50) (7.80)
Other Income 1,784 2,063 2,063 0.0 278.9
Interest Earned (Net) (1,496) 6,551 4,551
Depreciation 10,070 7,144 7,501 5.0 (25.50)
Profits in Associates/JVs 358 0 0
Non-Operating Expenses 0 (29) 0
Tax 153 (1,739) (1,239)
Tax rate (%) 1.0 (26.90) (20.50) 6.3 (21.60)
Minority Interest 339 811 811 0.0 472.2
Net Profit 14,103 7,404 6,461 (12.70) (54.2)

Reliance Communication’s Yoy performances

Y/E March (million) FY2007 FY2008 FY2009 FY2010E* FY2011E*
Net Sales 142,625 188,274 222,505 212,872 222,691
EBITDA 55,148 79,749 86,070 72,376 72,931
Net Profit 31,676 54,011 60,449 42,875 29,662


P a g e | 98

Idea’s Qoq performances

Net Sales 27,305 29,739 27,253 (8.40) (0.20)
Operating Costs 20,336 21,644 20,449 (5.50) 0.6
EBITDA 6,968 8,095 6,803 (16.00) (2.40)
EBITDA Margin (%) 25.5 27.2 25.0 (2.30) (0.60)
Other Income 6 317 317 0.0 5,661.80
Interest Charges (Net) 874 1,057 951 (10.00) 8.9
Depreciation 3,937 4,797 4,557 (5.00) 15.7
Tax (31) 357 81 (77.40)
Tax rate (%) (1.40) 14.0 5.0 (9.00) 6.4
Net Profit 2,194 2,201 1,531 (30.40) (30.20)

Idea’s Yoy performances

Y/E March (Rs million) FY2007 FY2008 FY2009 FY2010E* FY2011E*

Net Sales 43,664 67,375 101,544 115,650 136,358
EBITDA 14,652 22,693 28,364 32,192 35,107
Net Profit 5,022 10,423 8,816 8,384 5,016


P a g e | 99

:::Telco’s business model :::

REVENUE:

I. Mobile/Cellular services:
The cellular mobile service providers (CMSPs) make available mobile telephone services
where by a customer on possession of a handset and obtaining a connection by way of SIM
(Subscriber Identification Module) card (for GSM based technology phones) is able to
connect to the network of the service provider. This is a wireless service that allows the
customer to connect with other wireless customers as also wire line customers.

A CMSP derives its revenues by way of tariff charges for outgoing calls made by subscribers
on its network. As such, revenue for a CMSP is simply a multiple of average revenue per
subscriber per month (ARPU) and number of subscribers. Let us now understand what
determines the ARPUs and subscriber base.
ARPU: Average revenue per subscriber per month, or ARPU, is the amount of money that a
CMSP generates per subscriber per month. It can be obtained by dividing the total wireless
revenues by number of subscribers and then dividing the output by number of months in a
period (i.e., 3 months for a quarter and 12 months for a year's calculation of ARPU). To even
out the volatility in ARPUs, if any, it is better to arrive at the figure by averaging the wireless
revenues and subscriber base for the latest two years. However, considering the rapid pace


P a g e | 100

of subscriber addition for
Indian CMSPs, ARPU calculated REVENUE (in Cr.Rupees)
as dividing the trailing 12-
months wireless revenues by 16000 13696.5 14090.63
latest subscriber base is also an 14000
12000 9496.56
appropriate figure. For
10000 7627.34
instance, if a CMSP has earned 8000
a total of Rs 50,000 m as 6000 4460.46
wireless revenues in the past 4 4000
quarters (or trailing 12 months) 2000
and its current subscriber base 0

jan-mar'07

july-sep'08

Ap-jun’09
Oct-dec’05
Jan-mar’06
oct-dec'06

oct-dec'07

Oct-dec’08
Jan-mar’09
July-sep’07

Oct-dec’09
Jul-sep’09
stands at 20 m, its ARPU will be
Rs 208 per month (Rs 50,000 m
of wireless revenues divided by
20 m subscribers divided by 12
months).

Another way to arrive at ARPU is to multiply the average number of minutes of usage
(MOU) per subscriber per month with per minute tariff. Most of the Indian CMSPs generally
disclose their MOUs and per minute tariff and as such, these can be used to determine the
ARPU. While there might be a direct correlation between change in MOU and change in
ARPU, it might not work the same in India's case as tariffs are falling at a rapid pace. As such,
even if a subscriber talks for a longer time, the CMSP's ARPU might not increase at the same
rate as per minute rate might decrease.

Subscribers: Growth in a CMSP's subscriber base is dependent on several factors, the key
amongst them being:

Economic growth: With growth in the economy, and the consequent increase in activity, it
requires people to be in touch even when on the move. This brings out a pressing need for
owning mobile/cellular phones. Thus, with a growth in economic activity there will be more
and more people subscribing to telecom services, thus leading to growth in subscriber base
for CMSPs.
Rising income level: As the real income levels in a society rise, more and more people are
able to afford usage of cellular phones. Also, with rising incomes, as personal consumption
expenditure (as percentage of income) reduces, the consumer does not feel the pinch of
rising telephone bill, thus having the propensity to talk more, thus leading to higher MOUs
for telecom services providers.

Affordability: While there may be a need to be in constant touch as outlined by the above
two factors, it is the increased affordability that really increases the demand for such
services. The affordability is interplay of lower tariff charges and availability of cheaper
handsets. While lower handset costs make mobile more affordable at the entry level thus
allowing more people to be a part of the 'mobile community', lower tariffs allow for an
increased usage of telecom services, while not having such an overbearing impact on
telephone bills.


P a g e | 101

II. Fixed line services:

The fixed (wire line) services are dominantly provided for by the PSUs (BSNL and MTNL) in
India. A customer can obtain a connection where by a wire line provides him with the last
mile connectivity on the national telecom network. Although this had been a dominant
mode of telecommunication in the past, it is fast being replaced with mobile telephony,
which has the advantage of connectivity on the move. The fundamental business of a fixed
line operator is almost similar to that of a CMSP, in terms of ARPU and Subscriber base.

III. Internet/Broadband:

The Internet services are provided either by telecom service providers or independent
Internet service providers (ISP) who deal exclusively in providing this service. There are two
forms of Internet that are currently popular - the dial-up connections and the broadband
connections. While both these forms are used for transmitting and receiving data, a
broadband connection (Internet access that allows minimum download speed of 256
kilobits per second from the point of presence of the service provider) allows you to
transmit data at faster rate.
The Internet business also works like a generic telecom business but for the fact that here, a
personal computer (PC) is used for data/voice transmission instead of a phone unit (mobile
or fixed line handset). Apart from the usual - economic growth and rising income levels - the
growth of the Internet business is dependent upon:

PC penetration: Internet penetration in India is currently at very low levels, as compared to
its developing peers. This is set to take off with the rise in PC penetration, which will again
be a consequence of affordability in terms of lower PC costs and reduced cost of data
transfer. The cost of data transfer depends on whether one is using a dial-up or a broadband
connection. The dial-up package entails a fixed charge for Internet access and a variable
charge for the telephone connection. On the other hand, tariffs for broadband are usually
designed on the basis of quantum of data transmission. As there is rationalization of these
tariffs going forward, Internet will become more affordable and this will drive growth, as the
recurring expenditure will reduce.

Parental encouragement: An interesting change that has come is the way parents now look
at computers. The age of a typical computer user has dropped significantly as parents
increasingly realize the growing importance of computers in education in the years to come.
So, unlike most products where children are targeted to drive sales of consumer durables, in
the case of computers, it is the parents who are going all out to ensure that their child grows
up to be a computer literate. Thus, with computers coming into homes, it will not be long
before parents will wish their children to be wired to the web owing to the rich source of
information.

IV. Enterprise services
Moving on from the individual, who is the major user of mobile, fixed line and Internet
services, let us now briefly analyses the 'Enterprise services' business of telecom companies.
These services are used by large and medium corporates for data transfer between their
offices and/or their suppliers' offices, which may be spread in a city, or a country, or even


P a g e | 102

across continents. The need of users to have a seamless connectivity with their associates is
what drives this business for telecom companies. Considering that this business takes care
of data transfer needs of corporates, who are not as 'affordability' conscious as the
individuals (who use mobile, fixed line or Internet services), telecom companies generally
earn higher margins on Enterprise services than they earn on any of the other three
business lines. IT and BPO sectors, whose business is so data dependent, are the major users
of Enterprise services.

COST ANALYSIS:

After discussing the revenue aspects of telecom service providers, let us now understand
the major cost heads for these companies. These cost heads can be broken up into
regulated and non-regulated costs. Entry fee, access deficit charge and license fee are
regulated. On the other hand, sales, general and administrative (SG&A) and employee
expenses are non-regulated in nature.

Entry fee: The companies providing national and international long distance (NLD and ILD)
services are required to pay a flat entry fee of Rs 25 m each (from earlier fees of Rs 1,000 m
and Rs 250 m respectively). These fees are to be paid to the central government for
obtaining a license for providing these services.

Access deficit charge: The government also collects from the cellular operators an access
deficit charge. The charge payable is 1.5% percent of non-rural annual gross revenue (AGR)
of the telecom service providers and the amount collected is used to subsidies the telecom
service provided by BSNL in rural areas.

License fees: Telecom companies are required to pay an annual license fee of 6% of their
AGR to the Government of India. Licenses offered to the telecom players are for a limited
period of time and these are required to be renewed on expiry.

SG&A expenses: Telecom companies incur expenditure in the form of advertisement costs
for enhancing their visibility and also to make their brand more appealing to the consumers.
Expenses are also incurred on customer acquisition and on maintenance of telecom
equipment and network.

Personnel expenditure: These are costs incurred for maintaining the staff for executing the
telecom companies' marketing strategies, for general administrative purposes, for
maintenance and repair of telecom infrastructure, and customer relationship management
in call centers.

Apart from these operating costs, telecom companies also incur cost for servicing debt and
tax payments. Telecom is an operating leverage play (indicates that each new subscriber will
come at a higher profitability than the previously added subscriber), and, as such, the
benefits of faster subscriber addition are directly seen on companies' improving operating
profitability (as fixed costs are apportioned over a larger subscriber base).


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::: Value added services :::
How It helpful to overcome the price-wars impact


P a g e | 104

::: It’s helpful to overcome the price-wars impact :::

“VAS is a most lucrative revenue segment of telecom industry and I think it is the only
segment that have ability to saves Telecom Company’s in price-war situation”

Business model of VAS is not only profitable but also workable against price-war deficit and
overcome price-war impact.

“Higher price of VAS”

“Low expenses of services”

“More used”is helped in overcome the price war loss.

Mobile value-added services (VAS) are those services that are not part of the basic voice
offer and are availed off separately by the end user. They are used as a tool for
differentiation, promotion and allow the mobile operators to develop another stream of
revenue.

The nature of value added services change over time. A VAS may become commoditized and
becomes so common place and widely used that it no longer provides meaningful
differentiation on a relative basis.

Mobile phones today have moved beyond their fundamental role of communications and
have graduated to become an extension of the persona of the user. We all are witnessing an
era when users buy mobile phones not just to be in touch, but to express themselves, their
attitude, feelings & interests.

Customers continuously want more from their phone. They use their cellular phones to play
games, read news headlines, surf the Internet, keep a tab on astrology, and listen to music,
make others listen to their music, or check their bank balance.

Thus, there exists a vast world beyond voice that needs to be explored and tapped and the
entire cellular industry is heading towards it to provide innovative options to their
customers. Spoilt by choice, the mobile phone subscribers are beginning to choose their
operators on the basis of the value added services they offer. The increased importance of
VAS has also made content developers burn the midnight oil to come up with better and
newer concepts and services.


P a g e | 105

::: The Role of VAS in revenue generation :::
Total telecom revenue in 2009 end is nearly $24 billion

 Revenue from call charge is 56%
 Revenue from VAS is more than 17%
 Revenue from other

Above figure told everything! How VAS helped in revenue generating.

The Mobile VAS in India is $5 billion at the end of 2010 and is estimated to grow at 60% to
touch $8 billion’s at the end of 2012.

This space is currently completely dominated by entertainment services and comprises
of; P2P SMS -Rs. 9000crore; Ringtones (including CRBT) - Rs.7750 crore; P2P & A2P- Rs 3375
crore; Games & Data- Rs. 1575 crore; Others - Rs 675 crore.

VAS is a most lucrative revenue segment of telecom industry and I think it is the only
segment that saves Telecom Company’s revenue in price-war situation. Profit margin in VAS
is very high in compared with call-charge margin.

Currently VAS part in revenue generating is 17% and segment growth is more than 50%. I
think after 4 to 5 year VAS revenue beat call-charge revenue, due to law call charge rate and
higher used of VAS.

This is where the (because of this reason) role of VAS (Value Added Services) comes into
focus. Operators are facing cutthroat competition and with the call rates in India being one
of the cheapest in the world, the margins are very low. Therefore they are looking at VAS as
the next wave for growth. It has become the flywheel of telecom growth and a large chunk
of revenue (nearly 20%) for operators is likely to come from VAS services in the years to
come. But it is not only effort from operators which is driving the growth of VAS.


P a g e | 106

::: Market size of VAS :::

 In the $24 billion, revenue from call charge is 56%




7% 3%

15%
40% P2P
Ringtone
P2A & A2P
game & data
35%
others


P a g e | 107

::: Revenue distribution of VAS :::
As the P2P SMS component accrues completely to the Telco’s, the remaining 60% is where
revenue sharing arrangements exist between content owners/developers &Telco’s as
follows

15%

25% operator
60%
aggregator/devloper
copyright owner

Operators typically retain the biggest chunk of revenues. Copyright fee given to content
developer/owner comes from the margin of Content Aggregator or Operator or both.
Revenue sharing arrangement is typically 60% for the operator, 25% for the aggregator and
15% for the owner. This model is significantly different from evolved market like China
where the share of operator is typically 20-30% in the entire chain and aggregators &
owners keep a much higher share.


P a g e | 108

Revenue sharing in enterprise solution services

30%

70%
operator
short-code owner

Enterprise service providers are increasingly using VAS as a marketing and customer
development tool. It is being increasingly used to connect to users through the mobility
platform. E.g. “Tracking of DHL courier through SMS- Send POD number as DHL-XYZ to
53456” The end user requests for this service by sending an SMS, this is routed through the
mobile service operator to the Short code service provider. The short code provider collects
all the information on the server and passes it to the client.

The per unit revenue accrual in this VAS is low (Rs 3/SMS) as compared to other types of
VAS, but it offers two streams of revenues as both the end-user & the enterprise service
provider pay for the VAS. We expect this to grow significantly as enterprises look beyond
mass media for solutions to reach out to their customers. It is also costeffectivefor the
enterprise as it serves both as a data base development initiative and also leads to cost
savings as queries can be handled through automated response

The Road Ahead

There are a lot of services which cannot be introduced in India because of lack of
supporting infrastructure

To avail of new and high end VAS, technologies like 3G need to be installed. However,
3Gnetworks are not mere upgrades of 2G networks; rather, entirely new networks need to
be builtand frequencies need to be assigned to mobile operators.


P a g e | 109

Another reasons for players playing safe and not investing in novel applications and content is
Because this market is greatly affected by piracy. This is acting as a barrier for companies to
Investing into content development.

One of the solutions to increase customer retention is by providing exclusive content to
them; however this is hampered by piracy. Thus piracy is hurting the operators both ways,
neither can they stop customer churn by exclusive content development nor can they go in
for investment in innovative applications to spread their demographic reach.

Currently the cost of most VAS is high. This is mainly because of the fact that VAS market is
led by Entertainment VAS which has a high perceived value. People are paying for it as they
perceive it highly but over a period of time as they get used to it, the willingness to pay high
amounts may come down.

There are high volumes of spam in the VAS market currently. Spam is an uninvited message
urging the consumer to avail of some service. Example “Bid for a Laptop by messaging your
bid amount to XXXX”

SPAM has a high nuisance value and can discourage users to avail of a genuine service as
they feel that once they have availed of a service & their number becomes a part of a
database, their inbox will be flooded with uninvited messages.

As an industry initiative there is a pressing need to take charge of as it goes against the long
term interest of the industry. Taking cognizance, some operators have already started
offering a service to their subscribers where they can choose not to receive any promotional
SMS’s.

While the mobile VAS space is all set to grow rapidly, all the stakeholders will have to work
together and create a self-sustaining ecosystem for this growth to sustain. Similarly it would
take a joint effort of all concerned to address the significant roadblocks and thus unlock the
true potential of Mobile VAS in India.

The key addressable barriers would be to ensure greater rationality in revenue sharing
between Telcos& content developers; ensure copyright protection, develop higher quality
content which goes beyond Bollywood and cricket and also to have a focused WAP strategy.

While pure entertainment service would continue to appeal to the younger consumers, the
overall focus for Mobile VAS would shift to utility based services like location information &
mobile transactions; as security concerns are addressed mobile transactions will also have a
good potential in India.


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::: Marketing mix of Value added services :::
“Next wave for revenue growth”


P a g e | 111

::: Why marketing mix of VAS :::

Marketing mix is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market. McCarthy classified these tools into four broad groups that
he called the fours Ps of marketing: product, price, place, and promotion. Marketing-mix
decisions must be made to influence the trade channels as well as the final consumers.
Typically, the firm can change its price, sales-force size, and advertising expenditures in the
short run. However, it can develop new products and modify its distribution channels only in
the long run. Thus, the firm typically makes fewer Target market

Marketing mix of VAS is little beat unique in the specific segment but the price war situation
boost-up the company to deliver VAS product in different way to the customer, good
promotional activity, value chain of product, pricing strategy of services and differentiations
in product is helping the company to overcome the price-wars financial loss.

With the help of marketing mix, company can increase the more demand of VAS throughout
promotional activity; variety in the product can attract the more customers for using
services. Good value chain helping the customer to find out best of best. Also dispute
settlement between various content owners and operator make value chain better for
customer and helping in product innovation. In old product, Bundle-price policy increases
the demand. In premium and innovative product, Skimming price strategy increases the
revenue.


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::: Product :::
VAS businesses are guided by the product, which holds that consumers favor those products
that offer the most quality, performance, or innovative features. Managers in these
organizations focus on making superior products and improving them over time, assuming
that buyers can appraise quality and performance. Product-oriented companies often
design their products with little or no customer input, trusting that their engineers can
design exceptional products. However, the product concept can lead to marketing myopia.
These VAS organizations too often are looking into a mirror when they should be looking out
of the window.

Five points someone; prevent the new product development in VAS:

 Shortage of important ideas in certain areas and copy of unique idea

 Shorter product life cycles

 Governmental constraints

 Costliness of the development process and piracy of the product

 Un-fair revenue distribution between content owner and operator




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::: Typical Product life cycle of “new movie song” :::
(Downloading of new movies songs/caller tune/ringtone/wallpaper/game)

The life cycle of VAS product is so tiny due to people interest in other new product. Market
hype of other song pursues the customer to downloading new existing song.

Tiny life cycle (less than two month) of VAS are real helped the company in attract customer
for re-purchasing.

Maturity

Growth

Introduction Decline

Launching time Promotion time At the movie After Release
Of Music of movie Release time (Hit or Flop)


P a g e | 114

Introduction (5-days):

 A period of slow sales growth as the product is introduced in the Market. Profits are
nonexistent in this stage because of the heavy expenses incurred with product
introduction

 Music launching of particular movie create an awareness of product in market.

 During this period customer try to understand the music “it’s hit or flop” and then
downloading the song.

Growth (15-days):

 A period of rapid market acceptance and substantial profit improvement.

 Movies promo on television, radio, internet and direct marketing call from operator
make them famous.

 During this period promotional activity of movie like, actress/actor interview and
market gossip, mouth publicity and new feature motivate the user for
downloading/callertune.

 Due to the market force customer experimented the song.

Maturity (week of movie release):

 A period of a slowdown in sales growth because the product has achieved acceptance
by most potential buyers. Profits stabilize or decline because of increased
competition.

 During this period music is hit or flop, depend on music quality.

 The hype of promotion also in last the stage that create the special position for song
but due to full availability of song in all media or acceptance by potential buyers
songs downloading is on slowdown.


P a g e | 115

Decline (after movie release):

 The period when sales show a downward drift and profits erode.

 Movies are hit or flop also play an important role in motivating the
customer to buy the product.

 Hit movie create the positive “Psychological” impact on rest of customer
mind these are motivate them for buying.

 Flop movie create the negative “Psychological” impact on entire market and due to
this product selling continuously reduced.

 Due to Other new song, boringness of present song reducing the customer interest
and then customer looking forward for new song.

 Other songs success automatically reduced the present song selling.

 After movie release, full song available in all media that also reduced the selling of
song.


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::: Product variety :::
VAS categorized in 4 categories, P2P, P2A, Game and data downloading and other new
existing services. 4 categories of VAS providing a various variety that make interest in
consumer. Due to limited spectrum company are not able to provide more variety in VAS
like, T.V. facility, On-line video sharing, call conferences and high-speed internet. Delay in 3G
spectrum prevents the operator to providing more facility and revenue generation.
May be end of this year, all the company can able to (after government 3G licenses)
providing more variety in VAS.

3G facility is the next wave for revenue generation. It’s helping the Telcos in more revenue
generation and also provided better quality in VAS. That attracts the more customers.

Various Product category of VAS

 P2P:

Person to Person SMS, the most common form of mobile communication apart from
voice Ringtones: This is inclusive of monotones, polytunes, truetunes and CRBT
(Caller ring back tones).

 P2A & A2P:

P2A (Person to Application) SMS inclusive of messages sent by end users for contests
& for seeking other information like news & updates; (A2P)Application to Person
SMS inclusive of service push by enterprise service providers; Also include calls on
IVRS for all other services like astrology

 Games & Data:

Games include download of one play games offered by Reliance & full play games
offered by other operators; Data include download of wallpapers & logos
Others: Include MMS (Multi Media Messages) & subscription charges for WAP
services

 Other:

M-banking, ATM-recharge, Ticket booking, Bill paying and M-commerce


P a g e | 117

::: Various product of VAS :::

• news • sms
• stock quotas • voice-mail
• cricket score • mms
• jockes
• astrology
• missed call alert
P2A
& P2P
A2P

GAME &
OTHER
DATA

• e-banking • downloading
• e-recharge • Applications
• ticket booking • wallpaper
• bill paying • WAP
• e-commerces • e-mail check


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::: VAS products as a revenue generation machine :::
It is the only product that real helped the telecom company to overcome the price war
impact


 Revenue from call charge is 56%
 Revenue from other




VAS is a most lucrative revenue segment of telecom industry and I think it is the only
segment that saves Telecom Company’s revenue in price-war situation. Profit margin in VAS
is very high in compared with call-charge margin.

Currently VAS part in revenue generating is 15% to 17%+ and segment growth rate is more
than 50%. I think after 4 to 5 year VAS revenue beat call-charge revenue, due to law call
charge rate and higher used of VAS.

This is where the (because of this reason) role of VAS (Value Added Services) comes into
focus. Operators are facing cutthroat competition and with the call rates in India being one
of the cheapest in the world, the margins are very low. Therefore they are looking at VAS as
the next wave for growth. It has become the flywheel of telecom growth and a large chunk
of revenue (nearly 20%) for operators is likely to come from VAS services in the years to
come. But it is not only effort from operators which is driving the growth of VAS.

Quality:

Quality of services is the best strategy for any VAS. It’s directly helping in the selling and if
customer likes the quality of product they re-purchase from same resources and also do
mouth publicity for you.

When customer downloads a game or any other application, they not have any idea about
your product. On-behalf of your trust customer download game. So, company must be
considering the quality and win the customer. If one time customer not satisfied with your


P a g e | 119

product, in future they not used your product. Always try for quality is more worthy than
any other.

Indian companies are not provided high class quality. Some time without using any services
company can deducted the money from customers account is destroy the customers trust
on company.

Innovative product and quality of services always attract more customers. So, company can
focus on quality of services is more worthy than any other thing.

Design:

Design of Application or Design of game or any other product is directly helping the
company to attract. Good design of application is key attractiveness for customer.

Feature:

Innovative product always curiosities the customer foe purchase. Customer always want
extra feature in product.

Innovation in product directly attracts the user for experiment. VAS life cycle is very shortly,
after 2 to 3 month customer don’t like her ring-tone or application and then customer
download the extra feature ring-tone (like, Remixed of the ring-tone or new version of any
application)

Throughout new feature, customer can replace old one into new product.

Packaging:

Virus is the biggest threat when customer download from companies own downloading
center or any other web site. Make sure product is virus free and build the customer trust
on your web site.

Size:

When customer downloads any product from GPRS, size does matter.Un-limited or limited
downloading in specific time or in specific price is directly attract the internet-savvy user.
Also, Un-limited downloading or free downloading in initial stage creates a habit in
customer behavior is like a make a customer for life time.

Due to low spectrum, downloading speed in internet is low. So, make full feature product in
specific size (Size means, how much Kb used by particular application, game or song).
Company must be consider the size of application, lowest size of application or song, save
the users mobile memory and also consuming the time of user.

Company must be focus on product size and make them easiest for downloading.


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::: Price :::

Demand and supply deciding the price is the basic concept of pricing strategy but in the VAS
competition between operators deciding the price of VAS.

VAS is the premium category of revenue generation so; all the players concentrate on VAS.
Keen of attracting new customer throughout VAS promotion is create a high competition. As
usual price in competition in always list. But in some premium category price are high that
real helping the company in revenue generation.

Due to high competition SMS rate is reduce near to 1 paisa from 1 rupee in last six month,
but now people send more sms and helping the company in revenue generation.


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Least price:

 Telecom Company using a least price strategy due to high competition in market

 Least price attract more customer

 Helping the company in surviving

 In least price strategy, customer more used services that balanced the companies
account

Premium price:

 Some content of product are helping the company to charge premium price

 Company charges a premium price in Application download, e-mail check.

 For exclusive content like; IPL wallpaper, Indian idol audition pass

 Exclusive licenses for selling Blackberry, I-phone is helping the company to charge
premium


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::: Promotion :::

VAS is the only tool for promotion in telecom industry and also helped the company in
Branding.


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:: Advertising :::

Advertising can be used to build up a long-term image for a product or trigger quick sale.
Advertising can reach geographically dispersed buyers efficiently. Certain forms of
advertising (TV advertising) typically require a large budget, whereas other forms
(newspaper advertising) can be done on a small budget.

Television:

 Throughout them company can reach the more people and time to time remember
them the VAS product.

 Next target market of Telecom Company is ruler people and they are not aware
about VAS. So, television is the only media that reach in ruler area and helped the
company in VAS awareness.

Booklets:

 All the company providing a booklet, when customer purchases new sim-card.

 Booklet providing a entire information about VAS, that helping the customer in VAS
use.

Posters:

 Company’s retailer is best choice for poster display, when time to time customer
comes for recharge.

 Direct impact of poster motivates the customer to purchase existing product from
same place.

Display signs:

 All the major point of city is best option for display the board.

Web sites:

 VAS’s dominances in company’s web site.


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 Web site of company is a Tool of information

 When customer get the all types information about VAS

 Helping the customer to understand product


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::: Sales promotion :::

Sales promotion can be used for short-run effects such as dramatizing product offers and
boosting sales

Although sales-promotion tools they offer three distinctive benefits:

Communication: They gain attention and usually provide information that may lead the
consumer to the product….
(“Free sms about new scheme”)

Incentive: they incorporate some concession or inducement that gives value to the
consumer… (“Quiz of the day” or “check balances and win price”)

Invitation: they include a distinct invitation to engage in the transaction now…
(“Flash message of push and use services”)

Contests:

 Download the IPL game and win chances to participate in IPL night’s party

Games:

 Various general knowledge or cricket quiz games

Sampling:

 Free usage of internet for specific time

 Free applications downloading

 Free e-mail check

 Free Caller tune for 10 days

Demonstrations:

 Listening song before downloading

 Listening song before set as a caller tune

 Wall paper small icon on companies WAP portal


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::: Public relations and publicity :::

The appeal of public relations and publicity is based on three distinctive qualities:

High credibility: news stories and features are more authentic and credible than ads

Ability to catch buyers off guard: reach prospects that prefer to avoid salespeople and
advertisements

Dramatization: the potential for dramatizing a company or product

Press kits:

 Time to time release a press notes about new feature, that providing information
about your innovation to customer.

Community:

 Social networking is best option for making community also It is the target market of
company. so, double benefit for company

 Write in your blog about your feature product

 Make followers on twitter and time to time tweet about your product

 Free of cost

Sponsorships:

 Sponsor of players

 Sponsor of specific event like, cricket tournament or Mumbai marathon

 Sponsor of social activity like, free education or tiger saving


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::: Direct Marketing :::

In all form of direct marketing, telemarketing is best for the VAS to promote the product
due to own network and free of cost.

SMS, Voice mail or voice call:

Nonpublic type’s sms:

 The message is normally addressed to a specific person who used the same services
in past

 For special target market

Customized sms:

 the message can be prepared to appeal to the addressed individual

 Specific product

Interactive voice call:

 The message can be changed depending on the person’s response

 Call for ring tone download, when customer can find out own favorite ringtone in
various category


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::: Place :::

Supply Chain:

Whereas marketing channels connect the marketer to the target buyers, the supply chain
describes a longer channel stretching from raw materials to components to final products
that are carried to final buyers. For example, the supply chain for application download
starts with hides, tanning operations, cuts operations, manufacturing, and the
marketingchannels that bring products to customers. This supply chain represents a value
delivery system. Each company captures only a certain percentage of the total value
generated by the supply chain. When a company acquires competitors or moves upstream
or downstream, its aim is to capture a higher percentage of supply chain value.


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::: Typical Value Chain model of VAS :::

H
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::: Value “Supply” Chain of VAS :::

VAS has also resulted in the emergence of an entirely new business eco-system giving rise to
supporting industries such as content development and aggregation. There are multiple
stakeholders playing across the VAS value chain many with overlapping roles and functions.
A well demarcated value chain of VAS is yet to evolve.

The main stakeholders involved in the VAS value chain are.

 Content copyright owners: At the first level of the MVAS value chain are the content
copyright owners, which develop original copyright content. Examples include music
production houses (SaReGaMa, Sony, and T-series), Bollywood production houses
(Yash Raj Films), and media houses (Sony, Star, Zee, Espn, Times Group etc.)

 Customized content creators: Refers to companies that generate customized
content for users through their own portals. Examples include Mauj, One 97, Google,
Spice lab, Tcs and Hungama Mobile. this portal providing a song, game, Applications
downloading services to customer throughout WAP network

 Content portals/aggregators: These are individuals/ organizations that gather web
content and in some cases distribute content to suit customer needs. Examples
include Indiatimes and Hungama Mobile.

 Mobile operators: They provide transport and support mechanisms for delivery of
mobile content. Examples include Airtel, Reliance, BSNL, MTNL, Vodafone, Idea
Cellular, etc.

 Technology enablers: On the other end of the value chain are technology enablers.
These provide technology platforms that enable access to MVAS. Players include
OnMobile, Bharti Telesoft, Webaroo, etc.

 Handset manufacturers: Mobile handset manufacturers have also started playing an
important role, through their interaction with all other stakeholders across the value
chain. Their activities include embedding software links in their handsets, allowing
direct access to content portals, creating services customized to the need of certain
regions, etc. Key players in the Indian market include Nokia, LG and Samsung.


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::: Value Chain model of Enterprise VAS :::

H
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::: Enterprise VAS :::

VAS has also provided a platform to enterprises to communicate with existing and potential
customers using technology as a common denominator. In the context of VAS, enterprise
service providers arecompanies that reach out to the consumer through the
mobileplatform. Enterprises across a wide range of industries such as financial services,
retail, real estate, cargo and courier, and FMCG companies are using VAS as a marketing and
customer development tool(6). The flow of information from the enterprise to the end-user
can be either via automated alerts or user-generated requests. Though the inflow of
revenue per unit may be low in the case of Enterprise VAS (usually USD 0.07/minute or INR
3/minute), this segment is likely to drive a sizeable contribution to the total VAS market,
given that an increasing number of industry verticals that interface directly with the
consumer continue to adopt this channel as a means to communicate with their customers.

Enterprise services provider (ESP):

ESP provides the interface between the enterprise and the mobile operator. ESPs are
companies that send messages in bulk to the target end-users. Examples include One 97,
Cell next, and ACL Wireless.

Mobile operators:

Operator provide transport and support for delivery of information from enterprises to end-
users
Through the ESP. Examples include Airtel, Reliance, BSNL, MTNL, Idea Cellular, etc.

Coverage:

Anywhere, when network available.

Transport:

VAS transported throughout operators network.


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::: Opportunities and Threats analysis :::


P a g e | 134

::: Opportunities :::

 Out of 1.16 billion people, 525.15 Million people have the Mobile phone. Mean’s
for future telecom company have the 475 million new targets.

 Monthly growth rate of 3.78%

 Avg.19.20 million New Subscriber added every month

 In year 2015E India have 'billion plus' Subscriber.

 Lowest handset price

 People more love mobile phone than fixed line, so BSNL customer looking for you.

 7.9% economics growth rate

 Budget reduce tax-duty on handsets

 Dual-sim card mobile phone

 And last but not least, 3G

Highly potential market:

Cellular service is one of the fastest growing sectors in India and still has immense potential
for growth; India’s 525million cellular network is 2ndlargest in the world after china. Indian
total population is near about 1.16 billion and total telephone user is 44.73% of population,
means now a day 650 million people of India have not a mobile.

In 44.73% teledensity, Ruler areas part is just 15%. So ruler area is a biggest opportunity for
operators.

Most of Europe and American regions teledensity is higher than 100, so all big players eye
on India and they have huge amount of money invest in Indian market. In price-wars
situation investment is come from FDI, it’s good for the industry.

The government should address the situation fast. Bigger players will drive consolidation
and restructure their operations leading to a greater ability invest in the growth of the
telecom sector in India. This process should result in 3-5 large players, with a pan India
footprint and focus. Industry also expects India’s teledensity levels to touch 60 %, in 2012.

Reduction in Cellular handsets prices:


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Mobile phone prices dipped by 15-30% in the year 2009. The market is estimated to grow
20% faster than predicted earlier and would rise to 5.5 Crores units from 4.3 Crores last
year. Major mobile handsets companies have reduced price to the extent of 26% across all
segments following the reduction of basic customs duty to 5% along with abolition of 4%
SAD announced earlier. If all their other recommendation on SAD and CVD are meet too, ICA
expects industry to achieve a size of 1 billion subscribers by 2015 and legal market to grow
to 90%.This shows that cellular market is growing and no of mobile user are expected to
increase. Government has announced cut in customs duty on mobile handsets to 5% and
abolish 4% SAD (special additional duty). Bigger price differential is expected in the high-end
mobile handsets that are GPRS and MMS compatible or the camera phones. Indian cellular
association, and apex body for cellular handsets manufacturers in the country now expects
that the gray market would be destroyed completely and the legal market for handsets
would grow from the current 50% to 80%.

Growing Industry:

As per TRAI, two other associated aspects for market growth as availability of spectrum and
availability of resources for network rollout and expansion. The government is currently
looking into these two areas. The 74% hike in FDI has been cleared by the government to
ensure continuous flow of investments to expand the reach of the mobile operators. To
realize full market potential and achieve the forecasts, telecom operators have to work on a
segmented approach and focus on the five key strategies given below:

 Mobile in the hand of every urban youth (age group 15 to 24 years).
 Mobile in the hand of every executive/businessman/ skilled worker.
 Mobile in every household with income above Rs. 6000.
 Mobile penetration in every town/village, with a population of over 5,000.
 Mobile Phones affordable and available wherever mobile services available.

Having bright Future:

Despite a strong base of a billion+ people, the country has a 44.73% teledensity and 55%
people now a day not have a mobile, so for the next few years you can estimate the growth.

 The government is planning to divest its holdings in state-owned enterprises.
 The rapid and sustained growth in the telecom market in the country also provides
major investment opportunities for manufacturing and marketing telecom
equipment.


P a g e | 136

::: Threats :::
 price-war

The biggest threat to the industry is price-war in tariff. Cellular tariffs have dropped
by over 56X time since May 1999 - a feat unparalleled by any other sector or
industry in India. The average a mobile tariff in Year 2010 was prevailing around ½
paisa per second as against the peak ceiling tariff of Rs. 16.80 per minute when NTP
99 was announced.

 Competition cum rivalry more

This is a very highly competitive market. There are 13 players in the market, who are
giving tough competition to one another. So, every player has to constantly update
them to stay in the market in terms of service, innovation & call charges.

 New entry

Last year 4 new players come in industry and start the services and this year three
new player (datacom, etisalat and qualocom) possibly joining the industry

 Lowest call charge in the world

Lowest call charge in the world, mean’s your revenue (ARPU) also lowest in the
world.

Indian consumer just ½ paisa pay for a 1 second call mean’s if you like to talk 1
minute just pays 30 paisa. An Indian call charge is 5 time less in compare sub-
continent.

 Lowest ARPU

During last qtr. ARPU down 10.40%

In the year 2005 ARPU (monthly) is Rs. 370, presently it have Rs 155.
58% ARPU decline in last for month. ARPU directly affected company’s revenue and
reduce them.

 Telecoms company’s poor performances in Stock-market

After Price-war biggest threat for industry isstock-markets poor performances.

During last qtr. Rcom market price nearly 45% down,Tata communication down
30.6%, Tata teleservices down 30.6%,Bharti Airtel down 21%, MTNL down 19.4%,
idea cellular down22.8%. (During the qtr. BSE Sensex gain 2%)


P a g e | 137

Poor performances in stock market preventing the company’s future expanses plan.
After poor performances in stock market, you can’t easily borrowed money from
market.

 Manage consolidation and mergers & acquisition:

This would tie back to point of new player’s entry and a possible consolidation in the
telecom business and the tower business.

 Mobile Number portability:

Losing ownership of the client as the number one threat for old player’s. It does not
feature as a risk for Indian telecom. Reason is - India is still in the growth phase and
losing a customer is not yet on the minds of the service providers.

It might take a year but a risk nevertheless.

 High inflations and commodity price:

Company’s next target market is ruler area and they people have some specific
income-expenses budget and High commodity price already deficit her budget.
So, they not have extra money for mobile.

 Changes in government policies:
Since, government has given permission to private player to enter in to the
communication market; all big mobile players come into Indian market. But constant
changes in rules by TRAI and COAI affected these companies so there is always a
threat of government policies for mobile service providers.

 lower buying power of remaining customer

 Higher licenses fees, tax and other levy

 Foreign company’s eyes on India

 Maintaining good QoS (quality of services)

 Delay of 3g auction

 Future infrastructure and network development


P a g e | 138

::: Finding &Suggestions :::


P a g e | 139

::: Finding :::

525.15 Million Mobile Subscriber based Indian telecom industry faced a high competition
and due to this all 13 player reduce call tariff. After world’s lowest call charge all the company
faced same problem!

 New players entry

Presently 13 companies providing a cellular service in India and 3new players may be
ready for joining the competition.

 High competition

Due to new player’s entry cellular operator faced a high Competitions cum more
rivalry.

 Lowest call tariff due to Price-war

Lowest call charge is biggest problem of the industry. In the year 1999 per minute call
terrif is 16.8 rupees and it’s now a 30 paisa. Cellular tariffs have dropped by over 56X
since May 1999

 crash in stock price

During 3QFY10, telecom stocks saw a significant correction on the bourses, Airtel’s
stock price reduce by 21.4% , Rcom reduce by 43.9%, idea reduce by 22.8%, MTNL
reduce by 19.4%, Tatateleservicesreduced by 25.9% and Tata communication reduce
by 30.9%.But same quarter sensex increase by 2.0%.

 Continues reduction in ARPU

In 2005 ARPU is 370 rupees and now it is 156. Due to price wars impact last quarter
ARPU decline by 10.40%.

 Poor financial performances

All major player of industry like…Bharti Airtel, RCOM and Idea Cellular - to report a
decline in top-line growth to the tune of 2.5% yoy, while on a sequential basis, a
decline of nearly 5% is expected. This is the first time ever that these companies will
post a yoy decline in top-line, even as subscriber growth has been well-brought-up.


P a g e | 140

 High services charge and lack of innovation in VAS

VAS is most lucrative segment of the industry but they faced some problem in
innovation, piracy, revenue distribution and future infrastructure and next
generation network.

Due to high services charge and lack of awareness lot of customer are not able for
VAS used.

 Delay in 3G allocation and Mobile Number portability

Losing ownership of the client as the number one threat for old playersbut it does
not feature as a risk for Indian telecom. Reason is - India is still in the growth phase
and losing a customer is not yet on the minds of the service providers.

Due to government’s burocretic problem, 3G allocation is dely. Indian telecom
industry must be want a high spectrum, which helping them to providing more
innovative VASandovercomes the price war loss.


P a g e | 141

::: Suggestions :::

India’s 44.76% population enjoyed a world’s lowest call tariff but they don’t know how it is
possible and what happened in future!

Due to price-wars impact most of company’s revenue reducing in next few years and
because of financial loss small company is not able to run own business andshutdown its
Sutter otherwise sold out business to big player.

And then few big players enjoyed the market share and increase the call tariff in future, it is
not a prediction, same situations faced by all the developing country in the growths last
stage. Same as to other country,Indian telecom industry also faced problem but in future
how overcome from them is biggest challenges for Telecom Company.

Vas is the “next wave for revenue growth”.

More use of VAS is the only way to overcome the price-war impact!

 Reduce charges of VAS

Paying 3 rupees for a cricket score is little more for user in term of return. Due to the
high cost of vas, lot of customer not interested otherwise not able to use more vas.
So simple thing is reduce charge and attract more customers for vas used.

 Make innovation in VAS

In the services industry, business revenue depends on quality of services and
innovation of services.

More innovative services atomically attract the customer to the use and from the
new services you can earn more than old services due to its premium charge.

 Increase the awareness of VAS

Next target market of the industry is ruler area and I think they are not aware about
vas, so throughout promotional activity first you can aware them about VAS and
then generating revenue.

 Fair distribution of revenue


P a g e | 142

Revenue distribution between operator and services provider is not fair. The ratio is
35:65; less revenue stopped an innovation from the services provider side.

 Make it simple

The process of VAS activation/deactivation is confused the customer, also un-fair
system of activation, automatic renewal system and hidden charges of services
prevent the customer to use the VAS. So make them fair and simple.

 Right use of 3G technology and next generation network development is helpful in
the future.


P a g e | 143

::: Bibliography :::

Books:

 C.R. Kothari, Research Methodology, WishwaPrakashan, New Delhi

 Philip kotler, Marketing Management, Pearson Education, New Delhi

Report:

 Dot, 2009 annual report

 Airtel, 2008-2009 annual report

 Idea, 3Qtr 2009 report

 Tata teleservices, 3Qtr 2009 report

 Rcom, 2006-2007, 2007-2008 annual report

 TRAI, performances indicator report

 TRAI, 2009 annual report

 COAI industry report

 Various broking houses report

Web site:

 www.wikipedia.org

 www.trai.gov.in

 www.dot.gov.in

 www.coia.com

 www.auspi.in

 www.itu.int


P a g e | 144

 www.airtel.com

 www.reliancecommunication.com

 www.vodafone.co.in

 www.bsnl.co.in

 www.tatateleservices.com

 www.ideacellular.com

 www.aircel.com

 www.mtnl.net.in

 www.mtsindia.in

 www.loopmobile.in

 www.uninor.in

 www.stel.com

 www.hfcl.com

 www.tatadocomo.com

 www.economicetimes.com

 www.news.yahoo.com

 www.rediff.com

 www.bse-india.com

 www.karvy.com

bhuvar.rajsee@yahoo.com


Indian telecom industry final-bhuvar rajsee r

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