COMPREHENSIVE STUDY ON TELECOM INDUSTRY OF INDIA

SUBMITTED BY- PREM RANJAN SINGH

JAIPURIA INSTITUTE OF MANAGEMENT,JAIPUR

History of Telecom in India- I

1851

1881

1883

1923

1932

1947

First Military Landline from Fort William to Lalbazaar (Calcutta )

by the British Govt

MERGE WITH THE POSTAL SERVICE

First Civil landline service introduced for the British Viceroy and his team

Formation of Indian Radio Telegraph Company (IRT)

Merger of ETC &IRT to form (IRCC) Indian Radio Telegraph Cable Company

Formation of Posts Telephone & Telegraphs under Ministry of Communication

History of Telecom in India- II

1985

1986

1995

1997

1999

2000

2009

DOT established separate from Postal system

DOT spilt into 3 :•MTNL (metros) •DOT (others) •VSNL (International)

•1st call on Mobile phone•Telecom Minister Sukh Ram(Delhi) to Jyoti Basu (Calcutta)

TRAI created(Telecom Regulatory Authority of India)•Cellular service launched.•New Telecom Policy(NTP) is adopted

DOT becomes a corporation = BSNL

For 3 months in a row India beats China for the maximum subs added every month

OVERVIEW OF TELECOM INDUSTRY

• Indian telecom sector, like any other industrial sector in the country, has gone through many phases of growth and diversification. Starting from telegraphic and telephonic systems in the 19th century, the field of telephonic communication has now expanded to make the use of advanced technologies like GSM, CDMA, WLL to the 3G or up to 4G technology in mobile phones. In India, day by day, both the public players and private players are putting in their resources and efforts to improve the telecommunication technology so as to give the maximum to their customers.

TODAY TELECOM INDUSTRY• India is the world’s second largest telecommunications

market, with over 1 billion subscribers as of May 2015. • The wireless segment dominates the market with 97.36% of

total telephone subscriptions.• It has also been growing at a brisk pace.• During FY 2007-2015, wireless subscriptions witnessed a

CAGR of 24.78% to 969.8 million.• It is also the second largest country in terms of internet

subscribers. • India had 267.39 million internet subscriptions as of

December 2014.

Continued…..• India’s telecommunication market is expected to experience

further growth, fulled by increased non-voice revenues and higher penetration in rural market.

• Telecom penetration in the nation’s rural market is expected to increase from 46.14% as of December 2014 to 70% by 2017.

• The emergence of an affluent middle class is triggering demand for the mobile and internet segments.

• Availability of affordable smartphones, along with a rise in the security level of mobile transactions, is expected to boost growth of transactions conducted via phones, with the overall transaction value being tripled in 2014 from last year.

• This sector can be broadly classified in two categories- a) fixed line telephony. b) mobile telephony • The major players of the telecom sectors are experiencing a

fierce competitions in both the segments. • The major players are BSNL, MTNL and VSNL in the fixed line.• Airtel, Vodafone, Idea, Reliance, Tata Docomo, Aircel, Telenor,

Videocon in the mobile segment are coming up with new tariffs and discount schemes to gain the competitive advantage.

• The public players and the private players share the fixed line and the mobile segments.

• Currently the public players have more than 70% of the market share.

•

MARKET PLAYERS

Public playersPrivate players

Private playersPublic players

FIXED-LINE TELEPHONY-PUBLIC PLAYERS- 82%PRIVATE PLAYERS- 18%

MOBILE TELEPHONY-PUBLIC PLAYERS- 22%PRIVATE PLAYERS- 78%

COMPOSITION OF TELEPHONE SUBSCRIBERS

Sales

Urban wirelessRural wirelessUrban wirelineRural wireline

UB WIRELESS- 55.76%RR WIRELESS- 41.60%UB WIRELINE- 2.12%RR WIRELINE- 0.49%

MARKET STRUCTURE• Divided into 22 circles

- 4 metros- 19 circles

* Further divided into A, B and C category based on economic parameters and revenue potential.• Each circle has a licenses - 10-12 operators are allowed in each circles - Licenses are saleable

METRO Circles

Gujarat

Rajasthan

Maharashtra Orissa

Andhra Pradesh

Karnataka

Tamil Nadu

Kerala

Madhya Pradesh

Uttar Pradesh E

Bihar

West Bengal

Punjab

Himachal Pradesh

Haryana

Jammu & Kashmir

Uttar Pradesh

W

CHENNAI

MUMBAI

DELHI

KOLKATA

C Circles

B Circles

A Circles

PLAYERS OF TELECOM INDUSTRY

MARKET SHARE OF TELECOM INDUSTRY

Sales

AIRTELVODAFONEIDEARELIANCEBSNLAIRCELTATA DOCOMOTELENORMTSVIDEOCONMTNL

TOTAL NO. OF SUBSCRIBERSNAME OF COMPANY NO. OF SUBSCRIBERS(MILLION)

AIRTEL 230.66

VODAFONE 185.38

IDEA CELLULAR 162.07

RELIANCE COMMUNICATION 134.90

AIRCEL 83.04

BSNL 77.35

TATA DOCOMO 61.57

TELENOR INDIA 48.13

VIDEOCON 7.61

MTS INDIA 8.69

MTNL 3.55

MARKET SIZE OF TELECOM SECTOR• The total mobile service market revenue in India is expected

to touch US $ 37 billion in 2017.• The compound annual growth of this sector is 5.2% between

2014 and 2017.• According to a study by GSMA, smartphones are expected to

account for two out of every three mobile connections globally by 2020 making India the fourth largest smartphone market.

• The broadband services user-base in India is expected to grow to 250 million connections by 2017, according to GSMA.

• India saw the fastest growth in new mobile-phone connections with 18 million net additions in the third quarter of 2014, followed by China with 12 million new additions, according to a report by Swedish mobile network equipment maker Ericsson.

MARKET SIZE• International Data Corporation (IDC) predicts India to overtake

US as the second-largest smartphone market globally by 2017 and to maintain high growth rate over the next few years as people switch to smartphones and gradually upgrade to 4G.

• The Indian telecom sector is expected to generate four million direct and indirect jobs over the next five years according to estimates by Randstad India. The employment opportunities are expected to be created due to combination of government’s efforts to increase penetration in rural areas and the rapid increase in smartphone sales and rising internet usage.

FACTS RELATED TO TELECOM INDUSTRY

REVENUES Rs. 2218623757500.00

Total telephones subscribers 1022.61 million

Mobile subcribers 996.66 millions

Fixed-line subscribers 25.85 millions

Monthly telephone added per month 2.36 millions

Teledensity 80.98%

Rural teledensity 48.66%

Internet users 317 millions

Internet penetrations 24.1%- (URBAN- 63%, RURAL- 37%)

Broad-band internet users 120.88 millions

Internet service providers 161

GOVERNMENT SUPPORTIVE POLICY

• Full Licensing• Full MNP• Free Roaming

• Strong policy support from the government has been crucial to the sector’s development.

• FDI cap in the telecom sector has been increased to 100% from 74%.

• In January 2015, the Government of India recommended reduction in license fees of telecom by 6% for operators; telecom operators currently pay 8% of adjusted gross revenue as license fee.

• According to a study by GSMA, India is all set to become the fourth largest smartphone market by 2020.

GOVERNMENT INITIATIVES• With a view to encourage consolidation in the telecom sector, the

Government of India has approved the rules for spectrum trading that will allow telecom companies to buy and sell rights to unused spectrum among themselves.

• The Union Cabinet chaired by the Prime Minister, Mr Narendra Modi, gave its approval to the guidelines on spectrum sharing, aimed to improve spectral efficiency and quality of service, based on the recommendations of the Telecom Regulatory Authority of India (TRAI).

• The Central Government’s several initiatives to promote manufacturing in the country, such as ‘Make in India’ campaign appears to have had a positive impact on mobile handsets manufacturing in the country. Companies like Samsung, Micromax and Spice had been assembling handsets in the country already.

GOVERNMENT INITIATIVES• Xiaomi and Motorola, along with Lenovo have also started

assembly of smartphones in India. Firms like HTC, Asus and Gionee too have shown interest in setting up a manufacturing base in the country.

• The Government of India plans to roll out free high-speed wi-fi in 2,500 cities and towns across the country over the next three years. The program entails an investment of up to Rs 7,000 crore (US$ 1.06 billion) and will be implemented by state-owned Bharat Sanchar Nigam Ltd (BSNL).

INDIAN TELECOMMUNICATIONS INDUSTRY ANALYSIS

• Indian’s telephone subscriber base reached 1002 million in May, 2015.• The wireless segment (97.36% of total telephone subscriptions)

dominates the market, while the wireline segments account for the rest.• Urban region accounts for 55.76% of telecom subscriptions, while rural

areas constitutes the remaining.• India is currently the second largest telecommunication market.• It has third highest number of internet users in the world.• India’s telephone subscriber base expanded at a CAGR of 19.22% to

1,002 million over FY 2007-2015.• Teledensity (defined as the no. of telephone connections for every

hundred individuals) increased from 18.3 % in 2007 to 79.67% in 2015.• In May 2015, total telephone subscription stood at 1002 million

teledensity was at 79.67%

MAJOR MARKET TRENDS• The telecom trends in India will have a great impact on

everything from the humble PC, internet, broadband (both wireless and fixed), cable, handset features, talking SMS, IPTV, soft switches, and managed services to the local manufacturing and supply chain.

• This report discusses key trends in the Indian telecom industry, their drivers and major impact of such trends affecting mobile operators, infrastructure and handset vendors.

INDIAN TELECOM INVESTMENT OPPORTUNITIES

• Second largest telecom penetration, world’s highest monthly additions. 943 Mn. Subscribers

• Indian Telecom sector to witness huge investments to the tune of $ 110 Bn. during 2012-2017

• Telecom Subscribers to cross 1.5 Bn. by 2015, 5 Bn. by 2020.• About 25 per cent ( Appx. 300 million) would be 3G/4G subscribers,

which would require scaling up the infrastructure.• About $70 Bn. estimated investment for green field 2G, 3G/4G and

WiMax networks, while $ 25 Bn. would be required to set up an extra 200,000-odd telecom towers across the Country.

• The total investment in the pan-India Broadband rollout is expected to be $ 20 Bn., while another $ 20 Bn. will be invested in augmenting the transmission network.

ROAD AHEAD• India will emerge as a leading player in the virtual world by

having 700 million internet users of the 4.7 billion global users by 2025, as per a Microsoft report. With the government’s favourable regulation policies and 4G services hitting the market, the Indian telecommunication sector is expected to witness fast growth in the next few years.