Study on Vodafone Sales and Market Penetration

8/9/2019 Study on Vodafone Sales and Market Penetration

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No. 35

ABSTRACT

This study includes study VODAFONE sales, itsadvertising study, mobile penetration in INDIA,

growth of telecom sector in INDIA.

This study has been done in response to growing

importance of telecom sector and Vodafones

contribution to it. The secondary data has been

collected from various websites.

History of Cellular Telephony in India

1992 Telecommunication sector in India liberalized to bridge the gap through governmentspending & to provide additional resources for the nations telecom target. Privatesector allowed participating

1993 The telecom industry gets an annual foreign investment Rs 20.6 million

1994 License for providing cellular mobile services granted by the government of India for

the Metropolitan cites of Delhi, Mumbai, Kolkata & Chennai. Cellular mobile service tobe duopoly (i.e. not more than two cellular mobile operators could be licensed in eachtelecom circle), under a fixed license fee regime for 10 years.

1995 19 more telecom circles get mobile licenses

1995(August) Kolkata became the first metro to have a cellular network


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1997 Telecom Regulatory Authority of India is set up

1998 Annual foreign investment in telecom stands at Rs 17,756.4 million.

1999 FDI inflow into telecom sector falls by almost 90% to Rs. 2126.7 million

1999 Tariff rebalancing exercise gets initiated

1999(March) National Telecom Policy is announced.

2000(June) FDI inflow drops further down to Rs 918 million coming

2000 (January) Amendment of TRAI Act.

Telecommunication Companies in India

The stupendous growth of the telecommunicationcompanies in India over the last fifteen years can be

attributed to the liberal government of India, economicpolicy. The economic renaissance affected in the early

1990s brought around a paradigm shift on the overallbusiness scenario of India. The telecommunicationcompanies in India went through a huge make-over duringthe implementation of the open-market policy of India.

The erstwhile closed market policy was replaced by a moreliberal form of economic policy. A whole new form of

Indian Telecommunication Policy was drafted tocompliment the change effected in the economic policy of

India. The amendment affected the newtelecommunication policy of India made huge changes

with respect to investments and entry of Foreign DirectInvestments (FDI) and Foreign Institution Investors (FII)

respectively, into the virgin Indian telecommunicationmarket. This resulted entry of private, domestic and


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foreign telecommunication companies in India.

The economic contribution made by these newly formed

telecommunication companies of India is really mentionedworthy and this industry witnessed highest growth after

the Indian Information Technology industry. The robustgrowth of Indian economy after the economic liberalization

in the 1990s induced massive change in the telecom policyand new draft was framed and implemented by the

'Telecom Regulatory Authority of India' (TRAI) and'Department of Telecommunication' (DOT), under the

Ministry of Telecommunication government of India. Themain aim of these telecommunication companies in India

is to provide basic telephony services to each and everyIndian.

With the advent of private telecommunication companies

in India, the industry witnessed introduction of mobiletelephones into the Indian market and it became popular

amongst the Indian masses in no time. Today two types ofmobile phone service providers operates in the Indian

market, like the following -

Global System for Mobile Communications (GSM)

Code Division Multiple Access (CDMA)

The main binding objective for all the telecommunicationcompanies operating in India are as follows -

To facilitate telecommunication for all

Ensuring quick availability of telephone connectivity

Achieve universal service access at affordable pricecovering all Indian villages, as early as possible


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Providing world class telecommunication services

Solving consumer complaints, resolve disputes, andspecial attention to be given to public interface

To provide widest possible range of services atreasonable prices

To emerges as a major manufacturing base and majorexporter of telecommunication equipment

To protect the defense and security interests of thecountry

Three types of service providers exist in the Indian

stelecommunication sector, like the following - State owned companies like - Bharat Sanchar Nigam

Ltd, Videsh Sanchar Nigam Ltd and Mahanagar

Telephone Nigam Ltd

Private Indian owned companies like - Reliance

Infocomm and Tata Teleservices.

Foreign invested companies like - Hutchison-Essar,

Bharti Tele-Ventures, Escotel, Idea Cellular, BPLMobile, Spice Communications etc.

Bharat Sanchar NigamLimited

Videsh Sanchar NigamLimited

Mahanagar TelephoneNigam Limited

Bharti Airtel

Vodafone Essar

RelianceCommunications

Tata Teleservices Spice Telecom

Idea Cellular Sasken Network

Engineering Limited

BPL Mobile
http://business.mapsofindia.com/communications-industry/companies/bsnl.htmlhttp://business.mapsofindia.com/communications-industry/companies/bsnl.htmlhttp://business.mapsofindia.com/communications-industry/companies/videsh-sanchar.htmlhttp://business.mapsofindia.com/communications-industry/companies/videsh-sanchar.htmlhttp://business.mapsofindia.com/communications-industry/companies/mtnl.htmlhttp://business.mapsofindia.com/communications-industry/companies/mtnl.htmlhttp://business.mapsofindia.com/communications-industry/companies/airtel.htmlhttp://business.mapsofindia.com/communications-industry/companies/vodafone.htmlhttp://business.mapsofindia.com/communications-industry/companies/reliance-communications.htmlhttp://business.mapsofindia.com/communications-industry/companies/reliance-communications.htmlhttp://business.mapsofindia.com/communications-industry/companies/tata-teleservices.htmlhttp://business.mapsofindia.com/communications-industry/companies/spice-telecom.htmlhttp://business.mapsofindia.com/communications-industry/companies/idea-cellular.htmlhttp://business.mapsofindia.com/communications-industry/companies/sasken-network.htmlhttp://business.mapsofindia.com/communications-industry/companies/sasken-network.htmlhttp://business.mapsofindia.com/communications-industry/companies/bpl-mobile.htmlhttp://business.mapsofindia.com/communications-industry/companies/videsh-sanchar.htmlhttp://business.mapsofindia.com/communications-industry/companies/videsh-sanchar.htmlhttp://business.mapsofindia.com/communications-industry/companies/mtnl.htmlhttp://business.mapsofindia.com/communications-industry/companies/mtnl.htmlhttp://business.mapsofindia.com/communications-industry/companies/airtel.htmlhttp://business.mapsofindia.com/communications-industry/companies/vodafone.htmlhttp://business.mapsofindia.com/communications-industry/companies/reliance-communications.htmlhttp://business.mapsofindia.com/communications-industry/companies/reliance-communications.htmlhttp://business.mapsofindia.com/communications-industry/companies/tata-teleservices.htmlhttp://business.mapsofindia.com/communications-industry/companies/spice-telecom.htmlhttp://business.mapsofindia.com/communications-industry/companies/idea-cellular.htmlhttp://business.mapsofindia.com/communications-industry/companies/sasken-network.htmlhttp://business.mapsofindia.com/communications-industry/companies/sasken-network.htmlhttp://business.mapsofindia.com/communications-industry/companies/bpl-mobile.htmlhttp://business.mapsofindia.com/communications-industry/companies/bsnl.htmlhttp://business.mapsofindia.com/communications-industry/companies/bsnl.html


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Communications Limited

Mobile penetration of mobile in the world(% as on dec 2006)

Penetration is expected to exceed 40% by

FY2012 and exceed 50% in the longer time.

The above graph is showing mobile penetration

in some of the major countries of the world.
http://business.mapsofindia.com/communications-industry/companies/bpl-mobile.htmlhttp://business.mapsofindia.com/communications-industry/companies/bpl-mobile.html


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VODAFONE-GLOBAL REACH

The breakup of wireless subscriber base in India as of May2009[update] is given below

Operator Subscriber base
http://en.wikipedia.org/w/index.php?title=Communications_in_India&action=edithttp://en.wikipedia.org/w/index.php?title=Communications_in_India&action=edithttp://en.wikipedia.org/w/index.php?title=Communications_in_India&action=edit


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1- Bharti Airtel 99,549,208

2- Vodafone Essar 74,080,707

3- BSNL 53,598,591

4- Idea Cellular 41,243,253

5- Aircel 20,685,711

6- MTNL 4,568,269

7- BPL 2,256,862

8- Spice Telecom 4,235,023

9- Reliance Communications 77,223,264

10- HFCL Infotel 382,602

11-Sistema Shyam 936,189

12-

Tata Teleservices 36,486,763

All India 415,246,442
http://en.wikipedia.org/wiki/Bharti_Airtelhttp://en.wikipedia.org/wiki/Vodafone_Essarhttp://en.wikipedia.org/wiki/BSNLhttp://en.wikipedia.org/wiki/Idea_Cellularhttp://en.wikipedia.org/wiki/Aircelhttp://en.wikipedia.org/wiki/MTNLhttp://en.wikipedia.org/wiki/Loop_Mobile_Indiahttp://en.wikipedia.org/wiki/Spice_Telecomhttp://en.wikipedia.org/wiki/Reliance_Communicationshttp://en.wikipedia.org/wiki/MTS_Indiahttp://en.wikipedia.org/wiki/Tata_Teleserviceshttp://en.wikipedia.org/wiki/Bharti_Airtelhttp://en.wikipedia.org/wiki/Vodafone_Essarhttp://en.wikipedia.org/wiki/BSNLhttp://en.wikipedia.org/wiki/Idea_Cellularhttp://en.wikipedia.org/wiki/Aircelhttp://en.wikipedia.org/wiki/MTNLhttp://en.wikipedia.org/wiki/Loop_Mobile_Indiahttp://en.wikipedia.org/wiki/Spice_Telecomhttp://en.wikipedia.org/wiki/Reliance_Communicationshttp://en.wikipedia.org/wiki/MTS_Indiahttp://en.wikipedia.org/wiki/Tata_Teleservices


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The above pie chart is showing the subscribers base in

INDIA of different companies.

Figures of 2006

Nationwide penetration currently at 13%, and is expected to touch 50% in thelonger term

HISTORY OF VODAFONEVodafone is a Britishmobile network operatorwith itsheadquarters inNewbury, Berkshire, England, UK. It is the largestmobile telecommunications network company in the world by
http://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Mobile_network_operatorhttp://en.wikipedia.org/wiki/Newbury,_Berkshirehttp://en.wikipedia.org/wiki/Berkshirehttp://en.wikipedia.org/wiki/Englandhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Mobile_network_operatorhttp://en.wikipedia.org/wiki/Newbury,_Berkshirehttp://en.wikipedia.org/wiki/Berkshirehttp://en.wikipedia.org/wiki/Englandhttp://en.wikipedia.org/wiki/UK


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turnover and has a market value of about 75 billion (August2008). Vodafone currently has operations in 25 countries andpartner networks in a further 42 countries.

The name Vodafone comes from Voice data fone, chosen by thecompany to "reflect the provision of voice and data services overmobile phones."

As of 2009 Vodafone had an estimated 303 million customers in 25markets across 5 continents. On this measure, it is the secondlargest mobile telecom group in the world behind China Mobile.

In the United States, Vodafone owns 45% ofVerizon Wireless, the

largest American mobile telecommunications company

Vodafone Essar, previously Hutchison Essar is a cellular operatorin India that covers 23 telecom circles in India. Despite the officialname being Vodafone Essar, its products are simply brandedVodafone. It offers bothprepaid and postpaid GSMcellular phonecoverage throughout India with good presence in the metros.

Vodafone Essar provides 2.75G services based on 900 MHz and1800 MHz digital GSM technology, offering voice and data

services in 23 of the country's 23 licensed areas. It is among the top

three GSM mobile operators of India

OBJECTIVES OF STUDY

1. To study the sales in previous years.

2. To study factors influencing increase in customers base.

Data collection method
http://en.wikipedia.org/wiki/China_Mobilehttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Verizon_Wirelesshttp://en.wikipedia.org/wiki/Mobile_network_operatorhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Prepaidhttp://en.wikipedia.org/wiki/GSMhttp://en.wikipedia.org/wiki/Cellular_phonehttp://en.wikipedia.org/wiki/2.75Ghttp://en.wikipedia.org/wiki/GSMhttp://en.wikipedia.org/wiki/China_Mobilehttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Verizon_Wirelesshttp://en.wikipedia.org/wiki/Mobile_network_operatorhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Prepaidhttp://en.wikipedia.org/wiki/GSMhttp://en.wikipedia.org/wiki/Cellular_phonehttp://en.wikipedia.org/wiki/2.75Ghttp://en.wikipedia.org/wiki/GSM


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Secondary data has been used in the present study.Secondary data was collected from various newspapers andinternet.

Analysis andinterpretation

For the quarter ended June 30th 2009, Vodafone Indiahasreported an increase 23 percent in revenue at constant exchangerates, and 33 percent, taking into account exchange ratefluctuations. The revenues included a 7 percent benefit ofrevenue from their stake in Indus Towers. Data revenues forVodafone remained flat quarter on quarter, but were up 30percent year on year. Strangely enough, messaging (SMS)revenues declined quarter on quarter.
http://www.vodafone.in/http://www.medianama.com/wp-content/uploads/2009/07/q1-10-vodafone-india-snapshot2.jpghttp://www.vodafone.in/


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Looking at trends for the last couple of years, datarevenues appear to be lop sided, with Q4 registering datarevenues significantly higher than other quarters. Wevewritten to Vodafone for more color on how they account

data revenues.

However, much like BhartiAirtel and Idea Cellular, VodafoneIndia reported a decline in ARPU, impacted by the mobiletermination rate cut.

REPRESENTATION OF VODAFONE CONNECTIONS

THROUGH LINE GRAP H SHOWING AVERAGE REVENUE

PER UNIT


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The above graph shows that there has been a

continuous decrease in the ARPU in both postpaid

and prepaid connections from 3rd quarter of2008.

The 3rd and 4th quarter of 2009 and 1st quarter of 2010has been estimated using extrapolation.

Customer base of Vodafone India in different

quarters of year 2008-2009

Of its total customer base, 93.2 percent was Pre-paid. The companys average customer base grew by
http://www.medianama.com/wp-content/uploads/2009/07/q1-10-vodafone-customer-base.jpg


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56 percent year on year, on launching in seven newcircles.

With this graph we can say that both postpaid

connections and prepaid connections sale have

increased considerably.

ANALYSIS OF TURNOVER IN DIFFERENT

YEARS

Turnover 41017.0 35478.0 31104.0 29350.0 26678.0

Representation of turnover through bar

graph

2009 2008 2007 2006 2005


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Representation of turnover through piechart

From the above we can clearly analyze that

the turnover of Vodafone has been increasing

continuously which shows the capability of the

company and its continuous innovation.

So analysis shows that there has been a

continuous and sound increase in the turnover

of Vodafone, and the telecom major is growing

at a brisk pace.


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Descriptive

Analysis of

turnover

From the above descriptive analysis that

the average sale for the last five years have

been 32725.4 millions. The total sale is 163627

millions. Sale have been taken for past 5 yearsi.e. fy2004-05,2005-06,2006-07,2007-08,2008-

09.The data is positively skewed as the

skewness is 0.762371 .

Mean32725

.4StandardError

2519.134

Median 31104Mode #N/AStandardDeviation

5632.955

SampleVariance

31730187

Kurtosis

-0.230

1

Skewness

0.762

371Range 14339Minimum 26678Maximum 41017

Sum16362

7Count 5


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Comparison of revenue with

profit

In the above

graph 1 refers

to 2009 and so

on.

Interpretation with correlation

120

0512005 1

yea

r

reve

nue

prof

it

200

9

5518

7

120

05

200

8

4817

8

124

91

200

7

4114

6

108

60

200

6

3404

3

886

6

2005

27315

6478


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The analysis shows that both profit and

revenue are positively correlated as when the

revenue is increasing profit is also increasing.

The below analysis is done using regression

taking profit revenue of Vodafone for last five

years.

SUMMARYOUTPUT

Regression Statistics

Multiple R0.9352

3413

R Square0.8746

6287

Adjusted R Square0.8328

8383

Standard Error

4516.9

1773Observations 5

revenue=28992.52+7.07(profit)se=960.71+.911(profit)

Coeffic Standar t Stat P-value


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ients d Error

Intercept1115.6

74349460.70

8002

-0.117927

151 0.9135779

X Variable 14.1705

5960.91149

2782

-4.575526741 0.0195924

RESIDUAL OUTPUT

Observation

Predict

ed Y

Residua

ls

StandardResidual

s

148951.

89376235.10

63461.593936

638

250978.

7856

-2800.78

562

-0.715990

164

344176.

60293030.60

2912

-0.774740

437

435860.

5071

-1817.50

707

-0.464625

773

525901.

21071413.78

9255

-0.361419

736

87.46%chances that when revenue

increases profit also increase.


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Results and findings

1. Revenue is increasing at a healthy rate.2. The customer base is also increasing continuously.

3. Customers are happy with the add-on services provided

by Vodafone.

4. The call rates are highly competitive due to presence of

large number of competitors.

5. The advertising strategy of Vodafone is quiet effective

which reflect on its increasing customer base, the latest

example of zoo zoo ads.6. It is highly probable that when the revenue is increasing

profit is also increasing.

CONCLUSION

The study revealed that the sale of Vodafone India is

continuously rising which is clearly reflected in its increasing

customer base.

BIBLIOGRAPHY

Wikipedia.com

Vodafone.comMoneycontrol.com

Coai.com

Commerce.wsj.com

Sharekhan.com

Vodacom.com


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Journal of IMS

Medianama.com

End of the report

Documents

Study on Vodafone Sales and Market Penetration