Final Presentation Frm My Side ( m.v)

8/8/2019 Final Presentation Frm My Side ( m.v)

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http://mumbai.mtnl.net.in/ataglance/achievement3.html 1979 - First optical fibre system for local junction commissioned at Pune. 1985 - First mobile telephone service started on non-commercial basis in

Delhi. 1985 - First mobile telephone service started on non-commercial basis in

Delhi. While country were linked with telephones during the British period, the

total number of telephones in 1948 was only around 80,000. Even after independence, growth was extremely slow. The number of telephones grew leisurely to 980,000 in 1971, 2.15 million

in 1981 and 5.07 million in 1991. While innovative steps are taken like introduction of the telex service in

Mumbai in 1953 and commissioning of the first [subscriber trunk dialing]route between Delhi and Kanpur in 1960.
http://mumbai.mtnl.net.in/ataglance/achievement3.htmlhttp://mumbai.mtnl.net.in/ataglance/achievement3.html


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Industry capacity

The real transformation in scenario came with the announcement of the

National Telecom Policy in 1994. Conservative estimates put a tag of a 3% increase in the growth of GDP for

every 1% rise in the tele-density in the nation. Emergence as a major player In 1975, the Department of Telecom (DoT) was separated from P&T. In 1990s the telecom sector was opened up by the Government for private

investment as a part ofLiberalisation-Privatization-Globalization policy. The Government of India corporatized the operations wing of DoT on 01

October 2000 and named it as Bharat Sanchar Nigam Limited (BSNL). Many private operators, such as Reliance India Mobile, Tata Telecom,

Vodafone, BPL,Bharti, Idea etc., successfully entered the high potential Indiantelecom market.


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OverviewFacts

Total broadband subscriber base: 6.80 million; Monthly broadband growth rate: 2.7%; Urban region teledensity: 88%; Rural region teledensity: 16.54% (by May 2009); Expected mobile subscriber base by 2012: 690 to

700 million;

ARPU per month: INR 205 (by Mar 2009)

Source: trai


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OverviewFacts

Divided into 23circles 4 metros

19 circles

Further dividedinto A, B and Ccategory basedon economicparameters andrevenuepotential

Each circle haslicenses

Licenses are

METRO Circles

Gujarat

Rajasthan

MaharashtraOrissa

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


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Success story

The subscriber base grew to464.82 millions on June 2009,registering a growth of

approximately 43% over last year.

On Jun 09, Indian teledensitystood at 41.08% as comparedto 28.33% last year .

Source: trai

P di Shif i T l


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Paradigm Shift in Telecomscenario

Traditionally, a government owned monopoly : BSNLincumbent monopoly operator till 1992

Characteristics of monopoly: A single seller

Unique product Blockaded entry and exit Price makers instead of takers

Duopoly existed with bharti and BSNL being the two

players.


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Contd

Bharti: cellular service BSNL: fixed line service NTP 94 allowed one private service provider to compete in basic

services with DoT . It allowed duopoly in cellular mobile services ineach circle.

Oligopoly -> Open competition Majors players include BSNL, MTNL, bharti, vodafone, reliance, Tata

indicom, Idea. Handful of competitors sheltered by significant barriers to entry Price/output relationship of firms are interrelated Sellers have homogenous or unique products.


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Tariffs

U

S D

Local call charges decreased from Rs. 18 in 1999to Rs. 0.5 now.

National call charges decreased from Rs. 35 pm toRs 1.5.


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Market share

Currently 12 major players. Bharti occupies approx. 24% of the total wireless market.

Source: trai


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Internet Services

India currently has only 13.54 million Internet subscribers, which includesbroadband.

There were 13.54 million Internet subscribers at the end of March 2009 ascompared to 12.85 million Internet subscribers at the end of December 2008registering a growth of 5.30%.

The number of Broadband subscribers (with a download speed of 256 Kbps or

more) was 6.22 million at the end of March 2009 .

Source: trai


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Regulating Bodies and policies


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Regulating Bodies

Indian TelecomIndustryFramework

Dept. of

Telecom(DoT)

TelecomRegulatoryAuthority of India (TRAI)

Telecom DisputesSettlement and

Appellate Tribunal

(TDSAT)

Licensing andFrequencyManagement

Regulates the sectorand fix tariffs

Adjudicates overdisputes in telecomsector


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Regulatory Framework Policy

New Telecom Policy 1999 Strengthening of Regulator; Strengthen research and development efforts in the country and

provide an impetus to build world-class manufacturingcapabilities;

Encourage development of telecommunication facilities inremote, hilly and tribal areas of the country;

Enable Indian Telecom Companies to become truly globalplayers;

Achieve efficiency and transparency in spectrum management; Provide Internet access to all district headquarters by 2000; Protect defence and security interests of the country.


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Regulatory Framework Policy

Universal Services Obligation implemented along with NTP 99 to widen the reach of telephony

services in rural India. All telecom operators are bound to contribute five per cent of their

revenues to this fund.

Bridge the wide gap between urban and rural teledensity.

Unified Access Licensing Regime (UALR 2003) Eliminated the need for separate licences for different services; Allows players to offer both mobile and fixed-line services under a

single licence after paying an additional entry fee; does not take into account the national and international

long-distance services and Internet access services.


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Integrated Operators


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Integrated Operators

Provide services in all categories i.e. local calling, nationalcalling, international calling, broadband as well as landline.

Example: Airtel, Reliance, BSNL etc. The typical services of an integrated operator like Reliance would

include:

Reliance mobile

Reliance global call- between 4 continents Reliance passport- U.K , U.S.A and Canada Reliance PCO Reliance Netconnect broadband

Reliance Hello landline service Reliance international calling


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Example..

Advantages :

Better, cost effective services;

Improves market share through presence in all areas;

High costumer retention through integrating his alltelecom related requirements;

Enjoy internal economies of scale


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Competition

D f C i i


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Degree of Competition

Indian mobile market much more competitive than many othercountries.

HHI Index for few countries (for fiscal year ending mar 2009):

Particulars China India

Fiscal Year 2004 2004-05 2005-06

HHI Index in basic services 0.58 0.67 0.58

HHI Index in mobile services 0.40 0.16 0.15

Country HHI Index

India 1620

Pakistan 2300

USA 2588.77China 5900

HHI A l i


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HHI Analysis

HHI Value Concentration< 1000 Low

1000 - 1800 Moderate

> 1800 High

HHI in mergers: Example: Airtel + Vodafone(Combined market share 39%)

Initial HHI: 1620 (Mod. Conc.)

New HHI: 2356 (High Conc.)

Change in HHI: 736

This greatly reduces competition.


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Investment andOpportunities

FDI


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FDI

The Indian government allows FDI of up to 74 per cent, subject tolicensing and security requirements, in the following categories:

Basic and cellular services National/international long distance Internet services (providing service gateway) Infrastructure providers (Category-II)

The Indian government allows FDI of up to 100 per cent in thefollowing categories:

Manufacturing of telecom equipment Internet services (not providing international gateways) Infrastructure providers providing dark fibre, right of way, duct

space, tower (IP Category-I) Voice Mail

O t iti f G th


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Opportunities for Growth

3G Major investment Opportunity; Expected to attract US $810 billion during 2008-11; International and foreign players can enter this segment through joint-

ventures with Indian companies with a stake of not more than 74 percent;

20 million 3G-based broadband subscribers by 2014 (ASSOCHAM).

Worldwide Interoperability for Microwave Access (WiMax) India is the largest single-country WiMAX opportunity in the world; network access in inaccessible areas at a speed of more than 4 Mbps, increased use of telecom services, Internet and value added services; 60 million WiMax users by 2014 (ASSOCHAM).


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Current Scenario

3G


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3G

BSNL and MTNL were given the 3G spectrum last year ahead of auction;

BSNL launched 3G services on 27 th Feb, 2009 in 12 cities;

3G Auction

Base price of 3G spectrum auction increased to INR 35 billion fromthe earlier decided INR 20.20 billion;

Govt expect to raise INR 250 billion through auction of 3G and WiMax services;

Govt aims to sell four 3G licenses and three broadbandwireless access licenses in 20 of the 22 zones.


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4G


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4G

US Motorola is planning to next level that is the 4G inIndia;

Motorola is all set to start trial services of technologycalled Long Term Evolution(LTE) that can offer speeds upto 70Mbps;

Motorola and other telecom vendors are planning to meetDoT for trial spectrum;


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Number Portability


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Number Portability

Local number portability (LNP) for Fixedlines,

Full mobile number portability (FMNP) formobile phone lines,

refers to the ability to transfer either an existingfixed-line or mobile telephone number assignedby a local exchange carrier (LEC) and reassign itto another carrier .

Facts about MNP


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Facts about MNP

United Kingdom is yet to switch to centralized solution ( as of Jan2008).

The time taken to port a subscriber between the service providersshould not be greater than the time taken to activate a new subscriber.

It takes only 3 minutes in Australia to port a subscriber successfully.

The first MNP implementation was made in 1990 Singapore.

Free of charge in countries and chargeable in some countries.

MNP


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MNP

Mobile Number Portability Details : Delhi, Mumbai, Maharashtra and Gujarat Service comprise Zone I MNP to

be implemented by Sep 20, 2009. Kolkata, Tamil Nadu, Chennai, Andhra and Karnataka comprise Zone 2 and

details will be finalized by Sep, 2009. Rest of the country by March 20, 2010.

Syniverse Technologies (Zone 1) and MNP Interconnection (Zone 2) are thetwo companies who have been licensed by the DoT to carry out the MNPexercise.

The charges are likely to be less than Rs. 300/ and operators willtake maximum 2 days to change the provider.

Analysis: Switching cost more than the avg. monthly rent. No change in already low churn rate.


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80:20 Rule


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80% of the total revenue comes from 20% of the totalcustomer base.

Usage Rate (bimonthly) Percentage of subscribers Contribution In Revenue

More than 10,000 2.7% 46.1%

5,001-10,000 2.5% 9.8%

2,001-5,000 7.9% 13.4%

1,001-2,000 14% 11.6%

501-1,000 21.3% 10%0-500 51.7% 8.1%


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Thank You

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