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A STUDY ON RELIANCECOMMUNICATIONS LTD.
An Assignment for
Business Policy and Strategy Making
Authors:
Yusra Iqba
Prateek Singh
Adeel RahmanMolla Asmare
Jahir Alam
Shahira Shahir
Kulsum Siddiqui
Zoha Fatima
DeDeDeDepartment of Businesspartment of Businesspartment of Businesspartment of Business AdministrationAdministrationAdministrationAdministration
Faculty of Management Studies And ResearchFaculty of Management Studies And ResearchFaculty of Management Studies And ResearchFaculty of Management Studies And ResearchAligarh Muslim UniversityAligarh Muslim UniversityAligarh Muslim UniversityAligarh Muslim University
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Contribution by the Authors is as FollowsContribution by the Authors is as FollowsContribution by the Authors is as FollowsContribution by the Authors is as Follows----
YYYYusra Iqbal:usra Iqbal:usra Iqbal:usra Iqbal: Introduction, Strategic Environment, GeneralIntroduction, Strategic Environment, GeneralIntroduction, Strategic Environment, GeneralIntroduction, Strategic Environment, General
Environment,Environment,Environment,Environment, Organisational Appraisal, BalanceOrganisational Appraisal, BalanceOrganisational Appraisal, BalanceOrganisational Appraisal, Balanced Score Card, andd Score Card, andd Score Card, andd Score Card, and
SWOT Analysis, Continuum of international industry, StrategicSWOT Analysis, Continuum of international industry, StrategicSWOT Analysis, Continuum of international industry, StrategicSWOT Analysis, Continuum of international industry, Strategic
Group MappingGroup MappingGroup MappingGroup Mapping
Prateek Singh:Prateek Singh:Prateek Singh:Prateek Singh: CSR, Cooperative Environment, Task Environment,CSR, Cooperative Environment, Task Environment,CSR, Cooperative Environment, Task Environment,CSR, Cooperative Environment, Task Environment,
SAP,SAP,SAP,SAP, and Competitive Strategyand Competitive Strategyand Competitive Strategyand Competitive Strategy
Adeel Rahman : Corporate GovernanceAdeel Rahman : Corporate GovernanceAdeel Rahman : Corporate GovernanceAdeel Rahman : Corporate Governance
Molla Asmare : Four linkage ModelMolla Asmare : Four linkage ModelMolla Asmare : Four linkage ModelMolla Asmare : Four linkage Model
Zaheer AlaZaheer AlaZaheer AlaZaheer Alam: Finam: Finam: Finam: Financial Ratio interpretationncial Ratio interpretationncial Ratio interpretationncial Ratio interpretation
Shahira Shahir: Competitor AnalysisShahira Shahir: Competitor AnalysisShahira Shahir: Competitor AnalysisShahira Shahir: Competitor Analysis
Kulsum Siddiqui: Competitive StrategyKulsum Siddiqui: Competitive StrategyKulsum Siddiqui: Competitive StrategyKulsum Siddiqui: Competitive Strategy
Zoha Fatima:Zoha Fatima:Zoha Fatima:Zoha Fatima: --------
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CONTENTS
Brief HistoryBrief HistoryBrief HistoryBrief History
Business DefinitionBusiness DefinitionBusiness DefinitionBusiness Definition
Vision and MissionVision and MissionVision and MissionVision and Mission
Corporate GovernanceCorporate GovernanceCorporate GovernanceCorporate Governance
Corporate Social ResponsibilityCorporate Social ResponsibilityCorporate Social ResponsibilityCorporate Social Responsibility
StrategicStrategicStrategicStrategic AuditAuditAuditAudit
Environmental AppraisalEnvironmental AppraisalEnvironmental AppraisalEnvironmental Appraisal
Organisational AppraisalOrganisational AppraisalOrganisational AppraisalOrganisational Appraisal
Competitor and CompetitiveCompetitor and CompetitiveCompetitor and CompetitiveCompetitor and Competitive SSSStrategytrategytrategytrategy
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Brief HistoryBrief HistoryBrief HistoryBrief History
Reliance Communications was set up as Reliance Infocomm in 1999 and from 2000
onwards laying of optical fibers started in Maharashtra, Gujarat and Andhra Pradesh.
Reliance Infocomm was inaugurated in 2002 and first of interconnect (POI) was
established in New Delhi in same year. Also in that year, Reliance Communications
commissioned their 1st optic fiber backbone. In 2005, this company launched global
roaming facility and CDMA services. Reliance Communications was formed in 2006
and listed in Bombay and National stock exchanges.
Business DefinitionBusiness DefinitionBusiness DefinitionBusiness Definition
Reliance Communications Limited is engaged in the business of providing
telecommunications services. The Company has five segments: Wireless segment
includes wireless operations of the Company; Broadband segment includes broadband
operations of the Company; Global segment include national long distance and
international long distance operations of the Company and the wholesale operations of
its subsidiaries; Investment segment includes investment activities of the Group
companies, and Other segment is consists of the customer care activities and direct to
home (DTH) activities. As of March 31, 2011, the Company had approximately 136
million wireless subscribers. During the fiscal year ended March 31, 2011, the Company
launched high definition (HD) set top box (STB). On December 6, 2010, the Company
acquired Reliance Mobile Commerce Limited. On January 31, 2011, the Company
acquire Reliance Communications Maharashtra Private Limited.
Reliance Communications services may be differentiated into consumer service and
enterprise service.
Consumer servicesoffered by Reliance Communications include mobile
service, wireless terminal and phone, Reliance landline, netconnect,
broadband connection, BlackBerry, and Reliance IPTV
Enterprise servicesof Reliance Communications comprise audio
conference, office centrex, video conferencing, internet data center (IDC),
BlackBerry, broadband services, and public call operator.
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VisionVisionVisionVision
We will leverage our strengths to execute complex global-scale projects to facilitate
leading-edge information and communication services affordable to all individual
consumers and businesses in India. We will offer unparalleled value to create
customer delight and enhance business productivity. We will also generate value for
our capabilities beyond Indian borders and enable millions of India's knowledge
workers to deliver their services globally.
MissionMissionMissionMission
To attain global best practices and become a world-class communication
service provider guided by its purpose to move towards greater degree of
sophistication and maturity.
To work with vigour, dedication and innovation to achieve excellence inservice quality, reliability, safety and customer care as the ultimate goal.
To consistently achieve high growth with the highest levels of productivity.
To be a technology driven, efficient and financially sound organisation.
To contribute towards community development and nation building. To be a responsible corporate citizen nurturing human values and concern
for society, the environment and above all, the people.
To promote a work culture that fosters individual growth, team spirit and
creativity to overcome challenge and attain goals.
To encourage ideas, talents and value systems.
To uphold the guiding principle of trust, integrity and transparency in all aspects
of interpretation and dealings.
Corporate GovernanceCorporate GovernanceCorporate GovernanceCorporate Governance
Organisations, like individuals, depend for their survival, sustenance and growth on
the support and goodwill of the communities of which they are an integral part, and
must pay back this generosity in every way they can.
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This ethical standpoint, derived from the vision of the founder, lies at the heart of the
CSR philosophy of the Reliance Group.
At reliance they strongly believe that their primary obligation or duty as corporate
entities is to their shareholders, they say we are just as mindful of the fact that this
imperative does not exist in isolation; it is part of a much larger compact which we
have with our entire body of stakeholders: From employees, customers and vendors
to business partners, eco-system, local communities, and society at large.
They evaluate and assess each critical business decision or choice from the point of
view of diverse stakeholder interest, driven by the need to minimize risk and to pro-
actively address long-term social, economic and environmental costs and concerns.
For Reliance, being socially responsible is not an occasional act of charity or that
one-time token financial contribution to the local school, hospital or environmental
NGO. It is an ongoing year-round commitment, which is integrated into the very core
of our business objectives and strategy.
Reliance Communications Limited has maintained the highest standards of corporate
governance principles and best practices by adopting the Reliance Group -Corporate Governance Policies and Code of Conduct as is the norm for all
constituent companies in the group. These Policies and Code prescribe a set of
systems, processes and principles, which conform to the best international standards
and are reviewed periodically to ensure their continuing relevance, effectiveness and
responsiveness to the needs of investors both local and global and all other
stakeholders.
The Companys philosophy on Corporate Governance envisages the attainment of
the highest levels of transparency, accountability and equity, in all facets of its
operations and in all interactions with its stakeholders, including shareholders,
employees, the government, lenders and the society. The Company believes that all
its operations and actions must serve the underlying goal of enhancing long-term
shareholder value. In their commitment to practice sound governance principles, they
are guided by the following core principles:
1. Transparency
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To maintain the highest standards of transparency in all aspects of interactions
and dealings.
2. Disclosure
To ensure timely dissemination of all price sensitive information and matters of
interest to stakeholders.
3. Empowerment and accountability
To demonstrate the highest levels of personal accountability and to ensure that
employees consistently pursue excellence in everything they do.
4. Compliances
To comply with all the laws, rules and regulations applicable to the Company.
5. Ethical conduct
To conduct the affairs of the Company in an ethical manner.
6. Stakeholders interest To promote the interests of all stakeholders including
customers, shareholders, employees, lenders, vendors and the community.
Governance practices beyond regulatory requirements
Governance practices go beyond the mere letter of statutory and regulatory
requirements. With this in mind, there are a number of policy documents and
following set of governance practices:
A. Values and commitments
They have set out and adopted a policy document on values and commitments
of Reliance Communications. They believe that any business conduct can be
ethical only when it rests on the nine core values viz; honesty, integrity, respect,
fairness, purposefulness, trust, responsibility, citizenship and caring.
B. Code of ethics
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Policy document on code of ethics demands that employees conduct the
business with impeccable integrity and by excluding any consideration of
personal profit or advantage.
C. Business policies
Cover a comprehensive range of issues such as fair market practices, insider
information, financial records and accounting integrity, external communication,
work ethics, personal conduct, policy on prevention of sexual harassment,
health, safety, environment and quality.
D. Separation of the Boards supervisory role from the executive management
In line with the best global practices, they have adopted the policy of separating
the Boards supervisory role from the executive management. They have also
split the posts of Chairman and CEO.
E. Prohibition of insider trading policy
There is a policy on prohibiting trading in the equity shares of the Company,
based on insider or privileged information.
F. Policy on prevention of sexual harassment
It aims at promoting a productive work environment and protects individual
rights against sexual harassment.
G. Whistle blower policy
Whistle Blower policy encourages disclosure in good faith of any wrongful
conduct on a matter of general concern and protects the whistle blower from
any adverse personnel action.
H. Environment policy
The Company is committed to achieving excellence in environmental
performance, preservation and promotion of clean environment. These are the
fundamental concern in all business activities.
I. Risk management
Ensure that the management controls various business related risks through
means of a properly defined framework.
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J. Boardroom practices
i. Chairman
In line with the highest global standards of corporate governance, the
Board has separated the Chairmans role from that of an executive in
managing day-to-day business affairs.
ii. Board charter
The Board of Directors has adopted a comprehensive charter, which sets
out clear and transparent guidelines on matters relating to the composition
of the Board, the scope and function of various Board committees etc.
iii. Board committees
The Board constituted Audit Committee, Nomination/ Remuneration
Committee and Shareholders/ Investors Grievances Committee. The
Board rotates the Chairman of these Committees once in two years.
iv. Tenure of independent directors
Tenure of independent directors on the Board of the Company shall not
exceed nine years, subject to their re-appointment on retirement by
rotation as per statutory provisions.
v. Independent directors interaction with shareholders
Member(s) of the Shareholders / Investors Grievances Committeeinteract with shareholders on their suggestions and queries, if any, which
are forwarded to the Company Secretary.
vi. Lead independent director
Recognizing the need for a representative and spokesperson for the
independent directors, the Board has appointed an independent director
as the lead independent director. The lead independent director performs
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the following roles in addition to the role of a non-executive independent
director:
preside over all executive sessions of the Boards independent
directors;
work closely with the Chairman to finalized the information flow,
meeting agenda and meeting schedules;
liaise between the Chairman and the independent directors on the
Board.
take a lead role along with the Chairman in the Board evaluation
process.
The position of the lead independent director is rotated.
vii. Training of Board Members
The Board members are periodically given formal orientation and training
with respect to the Companys vision, strategic direction, core values
including ethics, corporate governance practices, financial matters and
business operations. The Directors are facilitated to get familiar with the
Companys functions at the operational levels. Periodic presentations are
made at the Board and Committee Meetings, on business and
performance updates of the Company, global business environment,
business strategy and risks involved. The Board members are also
provided with the necessary documents/brochures, reports and internal
policies to enable them to familiarize with the Companys procedures and
practices. Periodic updates and training programs for Board members are
also conducted on relevant statutory changes and landmark judicial
pronouncements encompassing important laws.
viii. Meeting of independent directors with operating team
The independent directors of the Company meet in executive sessions
with the various operating teams as and when they deem necessary.
These discussions may include topics such as, operating policies and
procedures, risk management strategies, measures to improve
efficiencies, performance and compensation, strategic issues for Boardconsideration, flow of
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information to directors, management progression and succession and
others as the independent directors may determine. During these
executive sessions, the independent directors have access to members of
management and other advisors, as the independent directors may
determine and deem fit.
ix. Commitment of directors
The meeting dates for the entire financial year are scheduled in the
beginning of the year and an annual calendar of meetings of the Board
and its committees is circulated to the directors. This enables the directors
to plan their commitments and facilitates attendance at the meetings of the
Board and its committees.
K. Governance practices being followed to promote the interests of our
stakeholders
Reliance communication has introduced several trend setting governance
practices to improve stakeholders satisfaction. Some of the major ones among
them are:
i. Customers
They have taken various customer caring initiatives, which give various
services to subscribers at all times. They also have captive contact centers
having one of the largest facilities accommodating approx. 9,500 personnel
on round the clock shift basis. In addition to this, there are various on line
measures on Reliance World platform which also gives ready access to the
customers. Customers can view and pay their bills online and manage their
account information online.
ii. Employees
They are committed in making Reliance Communications a Great Place to
Work and hence the pursuit has been to drive Employee Engagement
through multiple platforms, events and extensive Employee communications
involving employees and their families. This is aimed at increasing the
Happiness Quotient of employees, employee retention, employeeengagement score, thereby leading to higher productivity, better quality of
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products and services and thus creating Happy Customers. Continuous effort
has been in re-engineering Organization Design work flows and processes,
enhanced automation, enabling to evolve into an efficient, productive and
agile organization. In the hyper competitive market scenario, it is imperative
that there is not only surpassing of Annual targets, but also outperformance
of competition. They have introduced Incremental Revenue Market Share
(iRMS) as a critical measure for rewarding individual and team
achievements, thereby, institutionalizing an objective and transparent, high-
performing culture. This, in conjunction with quarterly performance
assessment and payouts, has helped to build a healthy employee stake in
the Business, align employees completely with Business goals and enable
them to get immediate rewards. They are relentlessly driving capability,
leadership and culture building and acquiring, developing and retaining
talent. The leadership development process is aligned to the Reliance DNA,
which identifies high potential talent on a periodic basis and provides
necessary learning interventions to help them take on larger responsibilities
and roles.
iii. ShareholdersThe Company recognizes the importance of two way communication with
shareholders and of giving a balanced report of results and progress and
responds to questions and issues raised in a timely and consistent manner.
To ensure this, the Companys corporate website; www.rcom.co.in has
information for institutional and retail shareholders alike. Shareholders
seeking information may contact the Company directly throughout the year.
They also have an opportunity to ask questions in person at the AnnualGeneral Meeting. Shareholders can contact RCOM via dedicated
shareholders contact points as provided in this report or through any of
Investor Service Centers of the Companys Registrars and Transfer Agents
spread in more than 84 cities across India, details of which are available on
the Companys website.
iv. Lenders
The Company has been prompt in honoring all debt obligations to its lenders.
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v. Society
The Company, in keeping with its Corporate Social Responsibility policy, focuses on
healthcare, education, and other social initiatives.
L. Role of the Company Secretary in Governance Process
The Company Secretary plays a key role in ensuring that the Board
procedures are followed and regularly reviewed. The Company Secretary
ensures that all relevant information, details and documents are made
available to the directors and senior management for effective decision
making at the meetings. The Company Secretary is primarily responsible to
ensure compliance with applicable statutory requirements and is the
interface between the management and regulatory authorities for
governance matters. All the Directors of the Company have access to the
advice and services of the Company Secretary.
Corporate Social Responsibility undertaken by
reliance communications
Trust / Foundation for CSR No
CSR Areas
1. Children
2. Education
3. Healthcare
Three main CSR activities
1. Education
2. Children
3. Healthcare
Publish Sustainability Report No
Member of Global Compact No
CSR activities in brief
Social Commitment
they have undertaken several important initiatives
and measures in the area
of education and healthcare, signifying our
continued and long-standing
commitment to social and community welfare.
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Instances of social responsibilitiesInstances of social responsibilitiesInstances of social responsibilitiesInstances of social responsibilities
Plants over 500 samplings in Bangalore University Campus aspart of its CSR initiative
Reliance Communications, Indias largest and only telecom service provider to
offer nationwide GSM and CDMA services as part of its Corporate Social
Responsibility program today launched Vriksha Abhiyan a tree planting
initiative in Bangalore. As part of this initiative, over 500 samplings were
planted in the premises of The Bangalore University Campus at Gnana
Bharathi in Kengeri. The saplings that were planted include Simarouba(Lakshmi Taru), Neem and Honge (Pongamia Pinnata)
The RCOM Vriksha Abhiyan was inaugurated by the Guest of Honour,
Rashmi the Cine Star from the popular movie Duniya. Over 200 RCOM
employees and their families participated in this program.
In a statement release to press on the occasion Mr. Rupak Agarwal,
Karnataka Circle Head Reliance communications said We are delighted to
spend quality time on a noble initiative like tree planting which is essential in
todays context. We are committed to conserving the environment in and
around us with many more such initiatives. He added
Reliance Communications as part of its CSR (Corporate Social Responsibility)
has undertaken such programs in Himachal Pradesh and Kerala. Besides this,
Harmony for Silvers is yet another significant initiative which conducts
programs such as Senior citizens run etc.
RCOM Partners With SNDT Women's University
To jointly promote education among challenged children
To create resource hub
Sponsors Tarang 2010
First ever initiative in Mumbai
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As part of its ongoing Reliance Anil Dhirubhai Group CSR initiatives, Reliance
Communications has partnered with S.N.D.T Women's University, Mumbai for
creating a resource hub aimed at promoting education among physically and
mentally challenged children. To this end, the two are jointly organizing Tarang
2010 at SNDT campus in Juhu, Mumbai on February 11, 2010. More than 30
organizations which are directly involved with the special needs of these hapless
children have been invited to this major event. This will be the first time in
Mumbai that such an event is being planned.
Taranga 2010 was a curtain raiser endeavoring to increase sensitivity of the
society toward children with special needs, promote Special Education as a
career option among the youth, sensitize teachers in normal schools about
children with special needs and accelerate the pace of inclusive education and
enhance the knowledge base about the subject among the experts and develop
viable tools and strategies to help such children. Providing the technical inputs
on the subject as well as necessary tools to create the platform for the
knowledge sharing i.e. helplines etc.We is sure that our joint efforts will benefit
thousands of physically and mentally challenged children and inspire other
organizations to contribute their best
Tarang 2010 was attended by most of the renowned special schools in Mumbai
and Navi Mumbai. Over 1500 visitors comprising parents, teachers, policy
makers, students, parents of special students, special educators, decision
makers and other important people will grace the event. Educational and therapy
equipment companies, book distributors /book publishers and pharmaceutical
companies will display their products and services.
The national education policy is laying emphasis on inclusive education
wherein children with special needs have to be integrated into the mainstream
educational system. Efforts are being made to benefit a large majority of such
children from the Tarang initiative.
There is a special fair being organized as the first of a series of events. This fair
will provide a platform where all the stake holders relating to disabilities/ Special
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Education can come together and share their opportunity/skill sets. It will also
create awareness about the scope of Special Education as a career option.
Around 450 special children from various special schools across Mumbai will be
competing in various events like singing, dancing, painting etc. This event will
give differently-enabled children an opportunity, to mingle with children with
different disabilities.
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STRATEGIC AUDITSTRATEGIC AUDITSTRATEGIC AUDITSTRATEGIC AUDIT
Environmental APPRAISAL
Strategic Environment
Market Definition and size
Today, there are more than 225 million telecom subscribers in India. Every month, 6-
7 million new subscribers are added. Upcoming services such as 3G and WiMax will
help to further augment the growth rate.
Furthermore, the Indian economy is slated to sustain its 7-9 per cent growth rate in
the near future. This is supported by the political stability that the country is
experiencing currently. Indias demographic outlook makes it one of the largest
markets in the world. A conducive business environment is also created by a
favourable regulatory regime.
There exists enormous business potential for telecom companies on account of the
countrys low teledensity, which is close to 19 per cent presently. The Indian telecom
industry is growing at the fastest pace in the world and India is projected to be the
second largest telecom market globally by 2010.
Snapshot for the Indian telecom industry for the quarter
ended March 2011:
Data as on 31st March 2011
Telecom Subscribers (Wireless +Wireline)
Total Subscribers 846.32 Million
per cent change over the previous quarter 7.50 per cent
Urban Subscribers 564.08 Million (66.65 per cent)
Rural Subscribers 282.23 Million (33.35 per cent)
Market share of Private Operators 85.11 per cent
Market share of PSU Operators 14.89 per cent
Teledensity 70.89
Urban Teledensity 157.32
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Rural Teledensity 33.79
Wireless Subscribers
Total Wireless Subscribers 811.59 Million
per cent change over the previous quarter 7.90 per cent
Urban Subscribers 538.05 Million (66.30 per cent)
Rural Subscribers 273.54 Million (33.70 per cent)
GSM Subscribers 698.37 Million (86.05 per cent)
CDMA Subscribers 113.22 Million (13.95 per cent)
Market share of Private Operators 88.01 per cent
Market share of PSU Operators 11.99 per cent
Teledensity 67.98
Urban Teledensity 150.06
Rural Teledensity 32.75
Wireline Subscribers
Total Wireline Subscribers 34.73 miillion
per cent change over the previous quarter -1.03 per cent
Urban Subscribers 26.04 Million (74.97 per cent)
Rural Subscribers 8.69 Million (25.03 per cent)
Market share of Private Operators 17.39 per cent
Market share of PSU Operators 82.61 per cent
Teledensity 2.91
Urban Teledensity 7.26
Rural Teledensity 1.04
Village Public Telephones (VPT) 0.58 Million
Public Call Office (PCO) 3.33 Million
Internet & Broadband Subscribers
Total Internet Subscribers 19.67 Million
per cent change over the previous quarter 5.29 per cent
Broadband Subscribers 11.89 Million
Telecom Financial Data (for the QE Mar-11)
Gross Revenue during the quarter US$ 9,816.68 Million
per cent change in GR over the previousquarter
6.05 per cent
Share of Public sector undertaking's inGR
18.00 per cent
Adjusted Gross Revenue (AGR) US$ 6,787.64 Million
per cent change in AGR over the previous 5.16 per cent
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quarter
ARPU for Access Services Rs 100
Market Growth
The opening of the telecom sector to the foreign investors has not only led to rapid
growth in subscriber base but also helped a great deal towards maximization of
consumer benefits, particularly in terms of price discovery following the moderate
approach in tariffs. The success of the Indian telecommunications sector has
become the cynosure of the world and has made the country a truly attractive
investment destination.Presently India has one of the lowest tariffs and one of the
fastest growing teIecom markets in the world.
Exports of telecom has also increased from US$ 2.36 billion in 2008-09 to US$ 2.89
billion during 2009-10 and is expected to increase to US$ 3 billion in 2010-11.
The number of telephone subscribers in India increased from 787.3 million
in Dec 2010 to 846.3 million at the end of March 2011, registering a
sequential growth of 7.5 per cent over the previous quarter as against 8.8
per cent during the quarter ending December 2010. This reflects year-on-
year (Y-O-Y) growth of 36.2 per cent over the same quarter of last year.
The overall Teledensity in India has reached 70.9 as on 31st March 2011.
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Subscription in urban areas grew from 527.5 million at the end of Dec-10
to 564.1 million at the end of March 2011, taking the urban teledensity from
147.9 to 157.3. Rural subscription increased from 259.8 million to 282.2
million, and the rural teledensity increased from 31.2 to 33.8. The share ofrural subscribers has increased to 33.3 per cent in total subscription from
33 per cent at the end of December 2010.
About 61.9 per cent of the total net additions have been in urban areas as
compared to 63.2 per cent in the previous quarter. Rural subscription
recorded a decline in rate of growth during the quarter. It declined from 9.9
per cent in December 2010 to 8.6 per cent in quarter ending March 2011.
Rate of growth for urban subscription also declined from 8.3 per cent in
quarter ending December 2010 to 6.9 per cent in quarter ending March
2011.
With 59.4 million net additions during the quarter, total wireless
(GSM+CDMA) subscriber base registered a growth of 7.9 per cent over the
previous quarter and increased from 752.2 million at the end of December
2010 to 811.6 million at the end of March 2011. The year-on-year (Y-O-Y)
growth over the same quarter of last year is 38.9 per cent. Wireless
teledensity increased from 63.2 to 67.9.
Wireline subscriber base further declined from 35.1 million at the end of
December 10 to 34.7 million at the end of March 2011, bringing down the
wireline teledensity from 2.9 at the end of December 2010 to 2.9 at the end
of March 2011.
Internet subscribers increased from 18.7 million at the end of December
2010 to 19.7 million at the end of March 2011, registering a quarterly
growth rate of 5.3 per cent. Top 10 ISPs together hold 94.8 per cent of the
total Internet subscriber base.
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Number of Broadband subscribers increased from 10.9 million at the end
of December 2010 to 11.9 million at the end of March 2011, registering a
quarterly growth of 8.2 per cent and Y-O-Y growth of 35.5 per cent.
Share of Broadband subscription in total Internet subscription increased
from 58.8 per cent in December 2010 to 60.4 per cent in March 2011. 86.1
per cent of the Broadband subscribers are using Digital Subscriber Line
(DSL) technology.
Gross Revenue (GR) and Adjusted Gross Revenue (AGR) of Telecom
Sector for the quarter ending March 2011 has been US$ 9.77 billion and
US$ 6.76 billion respectively. There has been an increase of 6.1 per cent
and 5.2 per cent in GR and AGR respectively as compared to previous
quarter. The year on year (Y-O-Y) growth in GR and ARG over the same
quarter in last year has been 13 per cent and 9.2 per cent respectively.
Pass-through charges accounted for 30.8 per cent of the GR for the
quarter ending March 2011. The quarterly and the year-on-year (Y-O-Y)
growth rates of pass-through charges for quarter ending March 2011 are
8.1 per cent and 22.8 per cent respectively.
Market Share
The market share of Reliance Communications has been seen to be declining. The
Revenue in 2009 stood at 19,234.79. In 2010 it dropped to 16009.77 crore and in
2011 a further drop made it stand at 12614.02 crore at the close of the previous
financial year.
Assessing the Dynamics of the Environment
Turbulence Level
Change-ability
Complexity 2
Familiarity of 3
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General Environment
PESTEL ANALYSIS
Political FutureThe Ambani image has taken a beating. They are known for their political
connections, but these connections have cost their reputation, brand name and
investor confidence.
Legal Future
The Comptroller and Auditor General found that the 2G spectrum allocation had
caused a loss of 01.76 lakh crore to the government. One plank of the Central
Bureau of Investigations (CBIs) criminal conspiracy charge in the 2G scam is that
Swan Telecom, was used as a front company by Reliance Telecom, a unit of
Reliance Communication Ltd, to illegally apply for telecom licences in 2007
A sum of 900 crore issued by Reliance Communications in favour of Swan Telecom
has been identified. This could spell serious trouble for the Reliance communication
Chairman and other bigwigs of the company
Sociocultural Future
The company in order to better its image has initiated ventures in a variety of social
development programmes related to education and particularly e learning of English
language by the masses.
Events
Predicti-
bility
Rapidity of
Change3
Visibility ofFutute
4
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Sincce the 11th five year plan talks about inclusive growth from every direction, the
social initiatives may benefit Reliance to a certain extent.
Reliance Group is running a programme called Tarang for the mentally challenged
children and it has been quite a success.
Also, Reliance Communication was the first company in India to issue bills in braille
for visually impaired customers.
Economic futureWeak finances, persistently high inflation and policy inertia have considerably
weakened the Indian government's position today.
India weathered the 2008 crisis well, but there are fears that this time round the
country is not even ready for a crisis of much lesser magnitude, let alone a full-blown
debt default in Europe or a possible US recession.
Morever the inflation has pushed up the intrest rates and exchange rates too are
quite high. The inflation has driven prices to the roof and in such times consumer
does not have much disposable income to spend on communication
Technological Future
The technology being employed by Reliance Communication at present is current.
The company has come in the 3G spectrum and moved into a host of other interne
related products and services like wireless, telecom infrastructure, Globalcom and
DTH and IPTV etc and other Tech services by leveraging internal IT development
capabilities.
Environment Future
Although Reliance Group has made endeavours for energy management systems
and in the field of energy use and environment conservation but as such Reliance
Communication is not involved in any environment campaigns.
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Task Environment
Porters Five Forces Model
Threat from new entrants.
Reliance Communications (RCom) President-Wireless, S P Shukla, said
existing players had the crucial time-advantage, as new entrants would take
time to build a quality network and infrastructure.
Importantly,
1.Ease in distribution and quality service-the new entrants would have to operate
on the less-efficient 1,800 MHz spectrum, compared with 900 MHz used by existing
players. This would hamper their efforts to provide quality services, while
existing players were already providing 2.5 G services using 900 MHz
spectrum, Bharti Airtel, RCom, Vodafone-Essar and state-owned BSNL and
MTNL are the existing players.
2.Brand loyaltyAs many as six new licencees, including Unitech Wireless,
Shyam Sistema, Loop Telecom, Etisalat DB Telecom India and S-Tel are
planning to launch services. Aircel, which started operations in 1999, is also
considered a new player, as it had got additional licences. so the people are
not so much aware of such companies and they would continue to stick to the
brand which they have been getting the services.
3.Strong Capital baseCDMA majors like Tata Teleservices Ltd (under the
Tata DoCoMo brand) and RCom have rolled out GSM services and existing
players like Idea Cellular are expanding operations.
4.Economies of scaleWhile competition for the new operators is tough, it
will not affect existing players, as consumers always move towards a multi-
device lifestyle, and the appetite for content and communication is growing.
And existing service providers were well placed to provide this, said Media
Tek India Technologys director, business development, Arun Gupta.
Bargaining Power of customer
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Mobile Number Portability has brought a big solution to those aiming to
change their service provider but to keeping the same no was the main issue
especially for the businessman , it isnt necessary that the same trend may
carry over to the rest of the country as some local factors could influence it,
but the numbers are worth looking at.
We have a little table which reflected the percentage of dropped calls that
subscribers faced across various operators. It stated that Reliance and Loop
faced the highest percentage of dropped calls. The latest article has actual
operator specific numbers(As of January 16th) -
Reliance GSM and CDMA combined lost over 13,500 subscribers
Bargaining Power of Suppliers
The current network expansion undertaken by Reliance is the largest wireless
network expansion undertaken by any operator across the world.Under the
agreement, Huawei will supply and provide services for CDMA & GSM base
stations, including BSC (Base Station Controller) and switches, and help to
create first class all-IP Next Generation Network infrastructure. The
technology provided by Huawei is expected to bring down Reliance
Communications' total cost of ownership (TCO) by enabling a significantly
faster and more cost-effective expansion of existing CDMA & GSM network
services. It will also enhance the company's competitive advantage in
attracting new subscribers
RCom already operates a GSM network, and though clever use of CDMA
licenses has become the country's largest CDMA operator. The company's
CDMA network has been engaged in a sharp price war with the GSM
operators, and it is presumed will seek to undercut the GSM service when its
national network is ready. According to figures from the Mobile World, RCom
had some 31.3 million CDMA subscribers at the end of September along with
5 million GSM customers.The contract will play a significant role in Reliance
Communications' planned roll out of its pan-India CDMA and GSM network
expansion, that seeks to extend its next generation, integrated (wireless and
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wire-line) convergent (voice, data and video) digital network to over 20,000
towns and 600,000 villages creating India's largest telecom network.
Competitor in themarketExtent of exit barriers- there is no way to exit, as this business requires huge
investment and reliance is one among those who has such a huge paid up
capital to take risk associated in the telecom sector where scenario is quite
versatile and company requires huge capital back up to stand against those
contingencies.
Amount of fixed cost
fixed cost is quite high and when all 9 telecom sector went for 3G auction.
All 9 telecom firms qualify for 3G auction. Though the government had fixed a
reserve prices of Rs. 3,500 crore for all-India 3G spectrum, the bid could be
much higher as the number of operators in the fray outweighs the number of
slots available.The government could garner at least about Rs. 20,000 crore, if
one takes into account only the reserve price.
Competitive structure of industry
As we move into the next round of our success journey, we shall aggressively
expand our GSM network and CDMA mobile broadband network. We shall be
having a renewed focus on customer-centric innovations and enhancing the
overall Customer Experience.
We rolled out CDMA mobile broadband network offering Internet speed up to
3.1Mbps in 62 cities, and will add another 63 cities within the next 100 days,
taking the total number of cities covered to 125 offering Reliance Netconnect
Broadband+ service. Our market leadership in the CDMA space combined
with our recent entry into pan-India GSM service gives us an opportunity to
aggressively pursue revenue growth. As the company move into the new
fiscal year, we continue to see some select tariff changes from the competition
in the industry. The industry continues to remain challenging with
hypercompetition, saddled with high customer acquisition costs with exuberant
trade schemes in the mobile industry, and is expected to continue for few
more quarters. A major shift seems to be happening on the use of multipleSIM phones as its popularity continues to rise rapidly. As the cult of multiple
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SIMs grows, some of the prevalent per user KPIs like ARPU, MoU/Sub etc.
are getting relatively less relevant in the industry.
Threat to new substitute
Various new schemes makes things possible for public to look for substitute
and alternatives in terms of plans and switching to other service provider.
for ex-Reliance SMART GSM service, during its relaunching in Kolkata offered
all local calls @ 35p/min for 6months and got a huge response, though after
using 6months most of subscribers are back to their previous operator.
Docomos per second pulse offer doesnt make most of my friends excited.
New GSM operators are unable to offer a robust network at first, and as
subscriber base increases, you will face more problems as seen with Aircel &
Reliance GSM!!
another instance, Online marketing Tata Docomo doing the job better than
even Virgin Mobile !! They are present on Orkut, Facebook, Bigadda, Twitter
and different telecom based forums. NO COMPETITION from other operators
in this field.so from different value added services we can see options
available to the public.
Co-operative Environment
Anil Ambani-promoted Reliance Communications (RCom), the country's
second-largest mobile phone company by customers, is in advanced talks to
ink a near $1.5-billion, multi-vendor managed services outsourcing deal with a
clutch of telecom gearmakers such as China's ZTE, Huawei and Sweden's
Ericsson, For the first time, the Anil Ambani flagship is looking to hand over
operations, planning, maintenance and management of its country-wide
CDMA and GSM networks to a cluster of vendors as opposed to a single
entity.RCom's mobile networks have for the past three years been managed
by Alcatel Lucent Managed Solutions - a 67:33 JV between Alcatel Lucent and
RCom. The contract is an annualised one and is slated to come up for renewal
shortly.
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Over the years, since RCom's networks have become more complex,
involving cross-vendor technologies and equipment, especially, after the
company won third generation, or 3G, airwaves, it is actively considering
migration to a multi-vendor, multi-year managed services execution model, an
executive directly aware of the development.
"Talks are on with some of the biggest global telecoms gear makers since the
objective is to scale up the quality of network management operations by
several notches to enhance the quality of services," said another executive,
who did not wish to be named.
Outsourcing key operational functions, a concept pioneered by Bharti Airtel,
has been the low-cost, high-volume business model employed by most mobile
phone companies in India. The networks of all leading mobile phone firms in
the country - Bharti Airtel, Vodafone, Tata Tele, reliance comm. and Idea - are
being managed by either Ericsson, Finland-based Nokia Siemens, Alcatel-
Lucent or Chinese players such as Huawei and ZTE.
Even new entrants such as Unitech Wireless (Uninor), Loop and Sistema-
Shyam have outsourced the management and maintenance of their networks
to foreign vendors.
RCom executives declined to respond to ET's specific email query on whether
Alcatel-Lucent will be compensated if the company's managed network
services contract is not renewed. They also did not Reliance Communications
ties up with Cisco to launch Business Internet Services for SMEs in Pune
Reliance Communications Bundled Offering aimed at promoting IT adoptionby Small and Medium Enterprises
Ties up with Cisco to offer single window IT solutions for SMEs and reduce
entry costs
Offerings do not require any capital expenditure
Available anywhere, everywhere in Pune City through Wireless Broadband
Network
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Reliance Communications, India's largest integrated telecom service provider and
Cisco Systems, the worldwide leader in networking have joined hands to launch
Reliance Business Internet Servicesfor Small and Medium Enterprises in Pune. The
launch of Reliance Business Internet Services, enabled by the state-of-the-art
Wireless Broadband Network recently deployed by the company, is a composite
bundled suite aimed at fuelling IT adoption by SMEs by considerably reducing the
high entry costs.
As part of an ambitious project to create an overarching digital infrastructure,
RelCom initiated development of an optic fiber network covering 116,000 km and
providing revolutionary data, video and value-added services across 640,000
villages, 2,500 towns and cities of India.
The mammoth and complex project required a highly robust supply chain. Other
concerns being faced in creating the distribution network were:
No existing System Highly scalable supply chain needed to meet the peaks in market
demandSystem to handle 2000 concurrent users across 37 Regional warehouses,
110 City Distribution Centers and over 2000 POSSerial No. Tracking of handsets
required - from OEM to end customer
Business processes not fully defined extensible system required to swiftly map
new processes Macro management & micro information requirements
extensive MIS reporting. To meet the requirement in short span of time,
eBizNET helped RelCom in developing and deploying an IT solution for the
extended supply chain from OEMs in Korea to the end customer Meeting Market
Demands with Robust Distribution Solution for Reliance CommunicationsAccelerated
Business Growth with eBizNET - WMS Solution for Alpha Comm Enterprises, Inc TM
eBizNET SOLUTION BENEFITS
BUSINESS VALUE
Leveraging domain expertise in supply chain and distribution network, eBizNET
conceptualized, developed and implemented a distribution solution within a
record time of 50 days. The highly scalable and robust solution carried
multicompany, multi-site and multi-user capability and was preferred over SAP WM
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and
other Tier 1 systems. A full functionality WMS with PDT support and ability to
handle complex reverse logistics was incorporated in the solution.
Status information was available on every handset from the time it left OEM till it
reached a customer. An Interface Manager was built to integrate with various Host
comment on whether RCom would exit the Alcatel-Lucent JV in case the company
opts for a new set of global vendors.
"RCom continually explores all options to improve its network and services, in
keeping with globally evolving technologies and standards, through our own
capacities or through partnerships with leading global vendors. Any new partnership
demonstrates this business ethic as well as our ongoing growth in the Indian market.
It is independent of our existing business partnerships," an RCom spokesman said in
a written response to ET's email query.
Though specific deal details are not available, two people familiar with the talks said
the multi-year managed services contract could be benchmarked at roughly $20
million a year, per circle. "The final size of a multi-vendor managed services deal of
this scale could exceed billion dollars by a long shot since it will involve a long-term
tenure," said one of the executives quoted above.
The latest discussions come barely three months after RCom lost two frontline
executives in charge of networks, Arun Sur and Jagbir Singh, to ZTE and Bharti
Airtel, respectively.
systems SAP, Selectica & Clarify along with standard interfaces made
available for data exchange with host systems.
Ranked among top 3 out of 22 systems being utilized at RelCom, the highly
user configurable, scalable and extensible solution covered Pre-Airport
Operations, Airport Receipt & Dispatch to Warehouse, Warehouse
Management, Reports & Performance Monitoring, Track and Trace with POD,
POS Order Management and Channel Inventory Status as part of solution
scope. As post implementation, over 250 executives were trained in a short
span of 2 weeks and a 24x7 help desk was setup for providing continued
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solution support. Global view of inventory, sales and receivables across the
distribution network enabling better access and control on the supply chain
Extensive reporting capabilities and performance monitoring
Ability to trace individual handset anywhere in the distribution networkSeamless integration of supply chain headquarter with all host systems
High operational efficiency
After the implementation of eBizNET Distribution Solution, RelCom
launched Reliance IndiaMobile Services and created history by signing up
over 1 million subscribers in just 10 weeks of launch from 111 cities thus
capturing nearly 60% of the incremental post-paid market or 25% of the total
postpaid segment.
Later, the customer base further increased to 6 million in the span of 10
months post launch. which helped reliance communication to achieve
economies of scale and to come up with tools and products in market at the
right time.
Analysing The Cooperative EnvironmentAnalysing The Cooperative EnvironmentAnalysing The Cooperative EnvironmentAnalysing The Cooperative Environment
Four Links Model
A.Formal cooperative links
Formal cooperative linkages can take many business forms but are usually
bounded together by some form of legal contract And some of those legal
forms of collaboration of RCOM with other companies are listed below.
Rcom-radio Netherlands worldwide deal: Reliance communication
(Rcom) had signed an agreement with broadcast company radio
Netherlands worldwide. Under the agreement, Rworld ,the mobile portal
from Rcom, would offer 24/7 live streaming of radio Netherlands worldwide
and will show case its RNW WAp news feed on R world, which includes
regularly updated international news.
(Source: Business Standard Date: 18.02.2011 Edition: New Delhi Page No. :
02)
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Reliance Communications signs strategic alliance with GetJar to
create Indias largest and free mobile Apps Store; MUMBAI, INDIA
APRIL 27, 2010 Reliance Communications (BSE: RCOM), Indias largest
and only telecom operator offering nationwide CDMA and GSM mobile
services, and GetJar, the worlds second largest app store announced today
a strategic alliance between the two companies. According to this alliance,
GetJar will offer Reliance Communications its extensive catalog of over
65,000 free mobile applications. Reliance Communications over 100 million
subscribers will gain immediate access to GetJars massive library of
applications via a GetJar apps store through RCOMs VAS platform R-
World. GetJar will also enable RCOM to offer its Apps Store to a large
bandwidth of mobile handsets across multiple brands and not remain
restricted to a few high-end smartphones. Reliance Communications will
offer the GetJar Apps Store across GSM and CDMA networks.
As the worlds largest independent app store, GetJar is the most cost
effective, easy and scalable distribution channel RCOM will be able to
leverage in order to generate traffic to its network. With over 300% growth
year-on-year, GetJar averages nearly two million downloads per dayglobally. In India where mobile phones have become an important part of
everyones livelihood the country is adding more mobile phone subscribers
each month than any other.
We wanted to partner with the largest, most experienced, open application
catalog provider to address virtually any device being used by our
customers, said Mr. Anil Pande, Head VAS, Reliance Communications,
Our partnership with GetJar means that all Reliance Communications
customers will instantly have access to thousands of applications ranging
from games, shopping and lifestyle applications to sports, entertainment and
productivity applications.
Our agreement with Reliance Communications allows it to immediately
connect its customers with over 65,000 free applications with very little
effort, said Ilja Laurs, founder and CEO of GetJar. It made a great deal ofsense to partner with Indias largest integrated communication service
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provider as GetJar is also the fourth most visited mobile site in India. We are
very excited to offer our catalog of free applications through Reliance
Communications R-World platform.
Reliance Communications customers will have access to thousands of
applications ranging from games, social networking, sports, entertainment
and productivity applications. Popular apps such as Facebook Mobile,
Yahoo!, Fandango and eBuddy can be easily downloaded to over 2300
handsets across all major platforms. RCOM will offer the service at 50 paise
per MB of usage. The application download and use by itself will be free of
cost.
The GetJar alliance is part of RCOMs strategy to offer a comprehensive
Apps Store service that will include its white-field Apps store RWorld2.0 and
GetJars third party service offering over 65,000 mobile applications in all.
RCOM application store strategy is directly linked to increase in data traffic,
increase in data plan adoption and sale of other services through the use of
free applications. The enabler of enhanced data usage is possible when a
key element is given away for free. The free applications in RCOMs Apps
Store strategy will help achieve mass mobile data plan adoption and mobile
internet use. This will be the immediate upside to its strategic alliance with
GetJar.
Following the alliance with GetJar, Reliance Communications joins a list of
leading global companies using GetJars flexible, open app store approach
including Sprint, Sony Ericsson, 3UK, The Carphone Warehouse and VirginMobile France.
RCOM & Nokia join hands for a first-of-its-kind multi-faceted
business partnership: Reliance communications Indias largest integrated
telecom operator and Nokia India today jointly announced a first-of-its-kind multi-
faceted business alliance. The RCOM Nokia alliance will aim to foster greater use
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of mobile services, giving consumers an opportunity to get richer experiences and
do more with their phones.
The RCOMNokia partnership is structured on a one-of-its-kind blue-print to
engage with the Indian consumes to offer an array of unmatched & innovative
mobile, data and services offerings in India.
The business partnership with Nokia is in line with the multitude of innovations
lined-up by the two companies to take mobility to the next level. The alliance covers
1. Making available Ovi Life Tools services targeted at the rural and semi-urban segments for
Reliance customers
2. Exclusive offers on Ovi Music Unlimited (OMU) devices including Nokia 5530, Nokia
5800, Nokia X6 16 GB, Nokia X6 8 GB and Nokia 5235 for faster music downloads
* An exclusive offer on Reliance Netconnect Broadband + USB Datacards on the purchase of
NokiaOMUenablephones
3. Special data packages for Nokia GPRS phones (other than OMU-enabled devices).
Ovi Life Tools, a range of innovative and personalized services covering
Agriculture, Education and Entertainment targeted at both urban and rural
consumers will be an integral component of this RCOM & Nokia alliance. The two
companies will jointly create an enabling environment to address the information
gaps in rural & semi-urban India by making available Ovi Life Tools for Reliance
users.
Reliance will offer Ovi Life Tools services in two versions, Subscription and Pay
per Use. While the Subscription Service for education and entertainment services
will be offered at Rs.30/Month and the agriculture service at Rs.60/Month. The Pay-
per-Use will be priced at Rs.3/Request.
Mobile Music has become increasingly popular among the Indian consumers.
According to some estimates close to 40% young people prefer to listen to music on
their mobile phones. To make it easier for consumers, RCOM GSM customers can
download music upto 12GB data usage (approximately 2400 songs) from Nokias
breakthrough music service Ovi Music Unlimited (OMU) using Nokias OMU-
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enabled phones including Nokia 5530, Nokia 5800, Nokia X6 16 GB, Nokia X6 8
GB and Nokia 5235. Consumers can also purchase Reliance Netconnect
Broadband+ Datacards at an exclusive price of Rs. 1999/- along with the purchase
of Nokia OMU-enabled devices.
As part of this alliance, RCOM is also offering mobile data bundle of 1.2GB on
Nokia GPRS enabled handsets (other than the OMU-enabled phones). In addition,
RCOM is offering up to 1800 free on-net minutes bundled with Nokia 1800. These
free voice minutes and mobile data bundles has a validity of six months.
B.Collaboration link with complementors
Reliance Communications and Polycom Forge Partnership To Jointly Drive
Market Opportunities in India: Mumbai - March 17, 2010: Reliance
Communications (BSE: RCOM), Indias largest and only telecom operator offering
nationwide CDMA and GSM mobile services, has forged a partnership with Polycom
Inc. (Nasdaq: PLCM), the global leader in tele-presence, video and voice solutions,
to introduce world's first wireless, high-resolution video conferencing service. The
service will be marketed through Reliance ADA Group's retail arm, RelianceWebstore Limited.
Bundling the easy-to-use Polycom QDX 6000 video conferencing system with
dedicated VPN connectivity through the Reliance Netconnect Broadband+ wireless
broadband data card, the service significantly lowers the price barrier to adopting
video conferencing and is expected to be a mass enabler of video conferencing
usage across multiple industry verticals inIndia.
The jointly developed offering will extend affordable, plug-and-play video
conferencing to organizations of all sizes, enabling them to realize immediate
productivity and efficiency benefits from real-time, face-to-face visual communication.
Besides small and medium enterprises (SMEs), education, event management,
media & entertainment, and hospitality are among the sectors likely to take
advantage of the flexible and affordable video conferencing service developed by
Reliance and Polycom.
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Reliance Webstore Limited already offers wired video conferencing services to over
1500 corporate clients through its network of over 200 video conference suites at
Reliance World stores across the country.
Commenting on its partnership with Polycom, Mr Sarup Chowdhary, Director & CEO,
Reliance Webstore Limited said, Reliance World operates the world's largest
network of video conferencing suites. Through our alliance with Polycom, we are
making video conferencing a simple plug-and-play operation that can be deployed
and used virtually anytime, anywhere.
The Polycom QDX 6000 video conferencing system delivers high-resolution video
and CD-quality audio, along with simple-to-use content sharing capabilities even at
a bandwidth of 256 kbps. Customers of the wireless video conferencing service will
be able to connect to any industry standards-based video conferencing system,
anywhere in the world. The wireless nature of the service also makes it suitable for
out-of-office events. Using this service, even family events like weddings, parties and
ceremonies can be webcast live by event managers on a pay-per-use basis.
Mr Hansjoerg Wagner, Vice President and Managing Director, Polycom Asia Pacific,
said, The wireless video conferencing solution jointly developed by Polycom and
Reliance is truly a unique innovation on a global scale. Although mobile broadband
exists in many markets, India is the first country in the world to deliver a wireless
video conferencing service. Through our partnership with Reliance Communications,
and our relationships with other leading vendors in the Unified Communications
ecosystem, Polycom sees that visual communications will be ubiquitous within two to
three years.
Leveraging Reliance Webstore's extensive retail reach, the service is being
commercially rolled out in over 40 Indian cities. The service will be expanded to more
cities in a phased manner. The Wireless Video Conferencing service will ride on
Reliance Communications telecom infrastructure backbone. Reliance
Communications extensive pan-India, next generation, integrated, convergent digital
network spans over 190,000 route kilometers of fibre optic cable systems. Thisnetwork is capable of supporting best-of-class services spanning the entire
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communications value chain.
Universal music has got in to an exclusive partnership agreement with reliance
communication: to provide its catalogue of music on the operators plat form and
develop other music related properties. While the deal let universal make money by
sharing its digital library Rcom will get share of the revenue as subscriber use the
offerings.
Rcom said investment would be made by both the parties to offer 360
degree music experience to customer across all plat form including voice,
WAp, web, ivr ,blog and through on ground events. Subscriber of the service
will access to music down loads, video streaming, live concerts and ring
tone on 3g mobile phones when this services will fully operated in the
country.
universal has catalogues of 300000 tracks and it will be offered to the
customers called simply. Additionally we will have music concerts in India
and with 3g rollout users will have access to this live concert said ROB
WELL, senior vice president digital universal music group international.
( source : Business Standard Date : 05.08.2010 Edition: Mumbai Page No. :
03).
Intel collaborates with Asus and RCom for affordable computing:
While broadband Internet has spread far and wide in our country, theres a
sizable population, which is still in the dark. In order to reduce that, Intel has
teamed up with Reliance Communications (RCom) and Asus to accelerate
broadband penetration. They hope to accomplish this by offering affordable
computing devices, which is where the Asus X101 Meego powered netbook
comes in.
C. Informal cooperative linkages
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These are cooperative links and network occasions which Rcom link for a mutual
or common purpose without legally binding contractual relationship and some of
the following are among from those relationships
RCOM Partners With SNDT Women's University
To jointly promote education among challenged children
To create resource hub
Sponsors Tarang 2010
First ever initiative in Mumbai
Mumbai, February 11, 2010 : As part of its ongoing Reliance Anil Dhirubhai
Group CSR initiatives, Reliance Communications has partnered with
S.N.D.T Women's University, Mumbai for creating a resource hub aimed at
promoting education among physically and mentally challenged children. To
this end, the two are jointly organizing Tarang 2010 at SNDT campus in
Juhu, Mumbai on February 11, 2010. More than 30 organizations which are
directly involved with the special needs of these hapless children have been
invited to this major event. This will be the first time in Mumbai that such an
event is being planned.
Taranga 2010 is a curtain raiser endeavoring to increase sensitivity of the
society toward children with special needs, promote Special Education as a
career option among the youth, sensitize teachers in normal schools about
children with special needs and accelerate the pace of inclusive education
and enhance the knowledge base about the subject among the experts and
develop viable tools and strategies to help such children.
Speaking on the occasion, Krishnan S Kumar, Sr. Vice President,
Reliance ADA Group CSR remarked, We are glad to partner with SNDT
Womens University in this noble cause. We shall be providing the technical
inputs on the subject as well as necessary tools to create the platform for the
knowledge sharing i.e. helplines etc.We is sure that our joint efforts will
benefit thousands of physically and mentally challenged children and inspire
other organizations to contribute their best.
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Tarang 2010 will be attended by most of the renowned special schools in
Mumbai and Navi Mumbai. Over 1500 visitors comprising parents, teachers,
policy makers, students, parents of special students, special educators,
decision makers and other important people will grace the event.
Educational and therapy equipment companies, book distributors /book
publishers and pharmaceutical companies will display their products and
services.
The national education policy is laying emphasis on inclusive education
wherein children with special needs have to be integrated into the
mainstream educational system. Efforts are being made to benefit a large
majority of such children from the Tarang initiative.
There is a special fair being organized as the first of a series of events. This
fair will provide a platform where all the stake holders relating to disabilities/
Special Education can come together and share their opportunity/skill sets. It
will also create awareness about the scope of Special Education as a career
option.
D. Cooperation link with government
The Department of Information Technology (DIT), Government of India
proposes to facilitate the establishment of a net work of more than 100,000
internet enabled Information and Communication Technology (ICT) access
points termed as Common Services Centres (CSC). The CSCs are meant to
provide high quality and cost effective video, voice and data content, in the
areas of E-Governance, Education, Health, Tele-medicine, Entertainmentand other government and private services.
The goal of the CSC Project is to empower the rural community and to bring
about social change through modern technologies. With a large and
heterogeneous geographical area, the private and civil society sectors are
expected to play an active role in development and implementation of the
CSC Project in supplementing the Governments' efforts to realize its vision
for the project.
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Continuum of International Industry
Mapping Strategic GroupsMapping Strategic GroupsMapping Strategic GroupsMapping Strategic Groups
Idea, Vodafone, Airtel
Price
BSNL, MTNL Tata docomo,
Reliance Comm
Product Line Breath
STRATEGIC ADVANTAGE PROFILE (SAP)(SAP)(SAP)(SAP)
A picture of the more critical areas which can have a relationship of the strategic
posture of the firm in the future.
CapabilityCapabilityCapabilityCapability
FactorFactorFactorFactorssss
DirectionDirectionDirectionDirection Competitive strengths / WeaknessCompetitive strengths / WeaknessCompetitive strengths / WeaknessCompetitive strengths / Weakness
Finance High cost of capital, reserves & surplus required
and high initial cost, capable of makingeconomies of scale.
Marketing Fierce competition, company position insecure,
low acceptance of products and temporary usageso long as the scheme continues. Late market
entry for GSM mobile services.
Operational quality of service is poor, excellent -parts &
components available.
Personnel Quality of management & personnel not par withcompetition, customer grievances and high load
on personnel to work in this extensive selling
scenario
Global
Multi Domestic
Reliance Comm.
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General HighQuality experienced
top management
take reactive stance instead of proactiveapproach.
SWOT Analysis of Reliance Communication Ltd.
Strength
1.Low Entry Cost 2. Commission Structure
3.Fast Activation Process 4.Network
5.Data GPRS
Weakness
1.Branding Image 2. Distribution problem 3.Lack
of Competitive Strengt 4. Entry in GSM market
5.Quality of service
Opportunity
1.New Specialist Application 2.Rural
elephony 3.New Market
.Vertical& Horizontal Integration
5.Competitors` Vulnerabilities
Threat
1.New Entrants 2. IT Development 3.Market
Demand 4.Number Portability Service
PROBLEM BEING FACED
Lack of communication between retailers and distributor
Consumer switching to other networkseasily with the help of Number
Portability services
Lack of improper distribution channel
All retailers are not aware of new scheme of RCOM
Lack of effective sales promotion and advertisement
Retailer doesnt get claim at proper time
No visit of TSM or any other person to the retailers shop
WHAT DOES COMPANY EXPECT TO DO BY SOLVING THE PROBLEM
Customer Satisfaction
Retailer Satisfaction
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Increase in Sale
Sales Promotion
Proper Distribution Channel
Also entry into the GSM market meant that now consumers can switch
network provider if they are dissatisfied as was not the case with CDMA where
the switching cost for subscriber was high because of the network providers
handset that they had to buy.
With consistently poor quality of service delivery, the subscribers which it
acquired with GSM because of low pricing, were now at liberty to shift to other
networks as was not the case with CDMA where subscriber had to stick with
Reliance Communication despite unsatisfactory services.
ORGANISATIONAL APPRAISAL
A. INTERNAL ANALYSIS
(1) Value chain Analysis
Step 1 Activity Analysis
Reliance Communications has established a pan-India, next
generation, integrated (wireless and wireline), convergent (voice, data
and video) digital network that is capable of supporting best-of-class
services spanning the entire communications value chain, covering
over 24,000 towns and 600,000 villages.
Reliance Communications owns and operates the worlds largest next
generation IP enabled connectivity infrastructure, comprising over
2,77,000 kilometers of fibre optic cable systems in India, USA,Europe, Middle East and the Asia Pacific region.
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Step 2 Value Analysis
Continuous service- users report that the network has deterioratedover time
Ease of Payment Online payment facility available. Hubs opened
everywhere along with retail shops catering to the rural areas.
Step 3- Evaluate Changes and Plan for Action.
Communication network needs to be upgraded to deal with an increased traffic so
that service level does not go down
(2) Quantitative analysis
Financial- Ratio Analysis
Key Financial Ratios of Reliance Communications Ltd.Mar '11 Mar '10 Mar '09
Investment Valuation Ratios
Face Value 5.00 5.00 5.00
Dividend Per Share 0.50 0.85 0.80
Operating Profit Per Share (Rs) 2.04 10.63 25.34
Net Operating Profit Per Share (Rs) 58.77 65.67 73.09
Free Reserves Per Share (Rs) -- 233.03 239.16
Bonus in Equity Capital -- -- --
Profitability Ratios
Operating Profit Margin(%) 12.85 16.18 34.66
Profit Before Interest And Tax
Margin(%)0.82 4.75 20.91
Gross Profit Margin(%) 0.87 5.03 21.84
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Cash Profit Margin(%) 2.74 2.32 20.70
Adjusted Cash Margin(%) 5.77 2.32 20.70
Net Profit Margin(%) -6.00 3.33 30.47
Adjusted Net Profit Margin(%) -5.40 3.33 30.47
Return On Capital Employed(%) 1.03 1.97 4.80
Return On Net Worth(%) -1.57 0.94 9.29
Adjusted Return on Net Worth(%) -4.41 -2.33 2.57
Return on Assets Excluding Revaluations 233.26 244.66 250.43
Return on Assets Including Revaluations 233.26 244.66 250.43
Return on Long Term Funds (%) -2.44 2.12 5.34
Liquidity And Solvency Ratios
Current Ratio 1.84 1.37 1.45
Quick Ratio 1.81 2.14 2.70
Debt Equity Ratio 0.65 0.48 0.60
Long Term Debt Equity Ratio 0.46 0.38 0.44
Debt Coverage Ratios
Interest Cover 1.16 1.36 4.12
Total Debt to Owners Fund 0.65 0.48 0.60
Financial Charges Coverage Ratio 5.09 2.39 5.12
Financial Charges Coverage Ratio Post
Tax12.78 2.59 6.84
Management Efficiency Ratios
Debtors Turnover Ratio 7.18 8.42 11.72
Investments Turnover Ratio 39.63 41.20 --
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The operating profit for the year is 421.89crores.
Where as the reported net profit is (-757.99) crores means loss of 757.99
crores. This difference is because of amount of depreciation charged which
is 2,855.62crores. The profit and loss account shows decreasing trend
from the year 2008-09 till date.
The current ratio of the company has improved it is 1.84 and ideally it
should be 2.
Fixed Assets Turnover Ratio -- -- --
Total Assets Turnover Ratio 0.15 0.16 --
Asset Turnover Ratio 0.30 0.63 0.76
Number of Days In Working Capital 259.59 286.38 386.03
Profit & Loss Account Ratios
Material Cost Composition 0.53 0.37 0.19
Imported Composition of Raw Materials
Consumed-- -- --
Selling Distribution Cost Composition -- 4.89 5.12
Expenses as Composition of Total Sales 7.68 6.26 9.23
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit -- 42.71 4.02
Dividend Payout Ratio Cash Profit 5.73 10.27 2.86
Earning Retention Ratio -- 117.36 85.48
Cash Earning Retention Ratio 83.48 38.57 94.08
AdjustedCash Flow Times 43.20 73.51 9.47
Earnings Per Share -3.67 2.32 23.27
Book Value 233.26 244.66 250.43
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Quick ratio is 1.81 which good and also it is very close to current ratio
which means that its assets are highly liquid in nature.
Debt-equity ratio of the company is 0.65 which means that against each
rupee of an equity there is a debt of 65 paisa.
The book value of the share is 233.26 Rs.
Total equity dividend paid in current year is 103.20 crores which is less
than what was paid last year (175.44) crores.
Total expenditure is same as compared to ladt year but the income has
declined.
Sales turnover shows about 10% decrease from the last year so as the netsale also
The income from other sources has decreased from 2,455.17 crores to
484.25 crores.
Non financial qualitative analysis
Market RankingThe Forbes Global 2000 companies.
Reliance Communications 742
So we see that Reliance Communications ranks 742nd
out of 2000 of the worlds best
companies.
According to the companys Annual report 2010-11, The company ranks among the Top 4
Telecom companies in the world by number of customers in a single country. Reliance Communications
corporate clientele includes 2,100 Indian and multinational corporations, and over 800 global, regional
and domestic carriers.
(3) Qualitative Analysis
Corporate cultureCorporate cultureCorporate cultureCorporate culture They put customer first at all times, and built long term relationship with
them.
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They believe in interpretation and keep every commitment that they make.
They strive to operate with honesty and integrity interpretation all their
dealings.
They seek to treat every individual with dignity and respect. They try to approach every endeavour with zeal & an attitude towards
excellence
B. COMPARITIVE ANALYSIS
(1) Benchmarking
NameLast
Price
Market Cap.
(Rs. cr.)
Sales
Turnover
(Rs. Cr.)
Net Profit
(in Cr)
Total
Assets(in Cr.)
Bharti Airtel 395.25 150,097.38 38,015.80 1400 56,009.10
Vodafone 297.00 145,625.8 37,067.90 797 24239.80
Tata Comm 187.20 5,335.20 3,409.00 162.56 9,222.46
Idea Cellular 94.70 31,310.77 15,389.00 154.1 22,888.18
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TataTeleservice 17.05 3,234.72 3,128.24 80.23 4,036.17
Reliance
Communications
83.70 17,275.90 11,989.19 (-757.99) 79,597.22
MTNL 30.30 1,908.90 3,841.21 (-1099.5) 14,102.17
(2) Historical Analysis
The graphs show a decreasing trend in terms of Revenue, Net worth and Net Profit to such an extent
that the company has had huge losses in the previous financial year ie 2010-11. The increase in
subscribers can be attributed to the expansion in the companys market because of the introductionof a host of new internet based services.
(C) COMPREHENSIVE ANALYSIS
Balanced Score CardBalanced Score CardBalanced Score CardBalanced Score Card
0
50
100
150
Year
'09
Year
'10
Year
'11
Subscibers(in Mn)
Subscibers(in
Mn)46,000
48,000
50,000
52,000
Year
'09
Year
'10
Year
'11
Net Worth (in Cr)
Net Worth (in
Mn)
05,000
10,00015,00020,00025,000
Year
'09
Year '
10
Year
'11
Revenue (Rs. Mn)
Revenue (Rs.
Mn)
-2000
0
2000
4000
6000
Year '09 Year '10 Year '11
Net Profit (in Cr)
Net Profit
(in Cr)
Perspec
tive
Objectives Measures
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Financial
Perspective
Increase market share and size extensively Expansion in scope of services provided
Customer
Perspective
Retain and attract new customers
Penetration of every segment of all markets
related to communication
Providing low cost and establishing a nation-
wide, high capacity, integrated (wireless and
wire-line) and convergent (Voice, data and
video) digital network, to offer services thatspan the entire communication value chain
infrastructure, services for enterprises and
individuals, applications and consulting.
Internal
Process
Perspective
Corporate citizenship
Social measures
Integration of work force
Social benefit programs for education etc
Learning
and Growth
Perspective
HUMAN
CAPITALhiring world-class talent and
supporting them with an
enabling organisational
framework.Continuing personal
development is the constant
obligation of all employees and
constant responsibility of all
Executives, Managers and
Supervisors.
Invested in 50,000 person training days and
state-of-the-art e-learning facilities. We are
introducing several progressive and
employee friendly HR practices in e-HR,Employee Self Service, Performance
Management System, 360 Feedback and
Leadership Development initiatives.
Learning
and Growth
Perspective
INFORMA
TIONAL
CAPITAL
Organisational Expansion Increasing the scope of services
Employee data tracking
Crafting marketing Strategy
Developing cross functional linkages
Learningand Growth
Perspective
ORGANISATIONAL
CAPITAL
LEADERSHIP & CORPORATECULTURE
respect for the development of
the employee
acquiring skills to solve specific
problems but also expanding
minds to address problems and
opportunities which have not
become apparent
building a non-hierarchical and
open work environment work
culture marked by positiveenergy, team work and
performance
Customer centricity
Developing initiative and
attitude of ownership
Entrepreneur &Stretch
selfhelp and guidance to foster commonpurpose and cohesion
Promoting result-driven meritocracy.
invigorating physical work settings
challenging assignments and career
opportunities
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Competitors and Competitive Strategy
Competitor analysis in strategic management is an assessment of the strengths and
weaknesses of current and potential competitors. This analysis provides both an offensive and
defensive strategic context to identify opportunities and threats. Profiling coalesces all of the
relevant sources of competitor analysis into one framework in the support of efficient and
effective strategy formulation, implementation, monitoring and adjustment.
In this project we analysis the competitor of Reliance Communication to identify their
strengths and weaknesse