1400 1347 1210 An overview. 1200 1120Types of Services
1000Level of Govt. participation. 800 600 Population (In
Millions)Major Competitors. GDP (US$ ) 400S.W.O.T Analysis 200 220
194 188 116 113 66 50 61.6 74 87 90Scope of Investments. 32 23
0Questions.
An Overview India is the second most populous country in the
world with the Overall GDP of $1.85 trillion (10th overall) Worlds
largest democracy system with multi party model at its core. Indian
telecom is the second largest in the world (behind china) on the
basis of telephone users (Both fixed and wireless). The Industry
grew over 30 times from 37 million users in 2001 to 960.09 million
(Both fixed and wireless) in 2012. Fixed lines stood at 31.53
million in May 2012.
An Overview Total mobile phone active were at 929.37 million in
2012. Total Wireless Teledensity were at 79.37% in 2012. Total
monthly additions were at 8.35 million by may 2012. (Both fixed and
wireless lines). Fixed line rural density is at 33 % as of May 2012
Projected Wireless Teledensity is at 84%. The Industry in India is
rapidly transforming into Next Gen Network through various
telephone exchange, mobile switching centers and media gateways
using optical fiber or microwave radios.
An Overview 1.18% of household in India have broadband access.
There were 14.31 million internet users in India as of May 2012.
Total ARPU for 2012 stood at $2.36 as compared to $46.50 in US
Lowest mobile tariffs in India due to high competition. Total
revenue generated in 2012 by telecom sector to be estimated upward
of US$50 billion.
Types of ServicesTelephone 1000 926 900Broadband 800services
700 Telephone (In 600Broadcasting millions) 500 Internet (In
millions) 400 329 Broadcasting (In millions) 300 200 99 100 19 20
44 37 0 10 0 1.1 14.3 0 1952 1991 2000 2012
Fixed Telephone
Types of Services Telephone (Fixed and Wireless). Fixed
connections: - Based on copper or optical fibers. The cost per
connections depend upon the regions with northern sectors being the
cheapest. Besides adding future connections the introduction of FDI
also adds to the demand for wired connections. Digitization in
fixed lines were recently introduced. Bulk of the population rely
on landline for their internet connections thus adding to the
future demand. Interconnectivity charges to be paid to BSNL.
Fixed Continued With 31.6 million SHARE connections in India
0.16 following are the key 0.61 BSNL 0.07 players 4.04 MTNL BSNL
4.04 MTNL 10.49 BHARTI BHARTI TATA TATA 11.07 RELIANCE RELIANCE
QUADRANT 68.86 QUADRANRT SISTEMA VODAFONE SISTEMA VODAFONE
WIRELESS
1000 WIRELESS 800Subscriber base of more than 929 600million.
(second largest in world) USERS 400 REV ($BILLIONS)Estimated ARPU
of $2.3 as compared to$46.32 in US. 200Cost per user fluctuates at
$1.7 to $2.2. 0India has 7,36,354 base transreceiverstations . 20%
of them can handle 3Gservices. 0.58% 0.34% 1.85% 0.53%India has 75
million Smartphone users. 0.17% MARKET SHARESmartphones will grow
at a CAGR of over BHARTI 4.64%30% (US$18 billion) VODAFONE
7.26%Wireless handset service grew 16.7% in 20.58% RELIANCE2012
with revenues adding up to Rupees IDEA288,882 crore or US$ 64.4
billion. BSNL 8.66% TATA AIRCEL 16.88% UNINOR 10.93% SISTEMA MTNL
VIDEOCON 12.77% LOOP 14.83% HFCL
Wireless Contd..Third highest Teledensity in world withbulk in
urban areas, marked by highprospect of growth in rural areas.3G and
broadband services were auctionedat US$19.2 billion in 2010.4G
services have been slow to roll out dueto high price, unforeseen
policies. Indiangovernment requires local operators topartner with
global giants to ease theburden of the costs.Private sector hold
88.49% of the marketshare; whereas government held agenciesaccount
for remaining 11.51%.High competition with at least 7 to
12companies in the same circle.GSM is the dominant form of
technologywith around 80% and CDMA being at 20%of total wireless
consumers base.Wireless alone generates revenue ofupwards
US$31.6billion of estimatedUS$35.6 billion.Lowest ARPU among fellow
nationsfostered by stiff competition and govt.regulation
policies.
ARPU IN US$ Wireless Contd. 50 46Voice services near saturation
in urban 40 33areas; future growth possible by 30 26expanding data
services and expansionin uncharted rural areas. 20 12 ARPU IN
US$Telecom equipment requirement 10 2.3stood at 6.5% (US$14.3
billion) of the 0worlds requirement with most of itbeing
imported.2G still to be a dominant force to bereckon with. (please
see graph below). CONSUMER BASE (Millions)Mobile Equipment 1500
Break Up by 2015 1004 929 1000 5 CONSUMER BASE 2G 500 327
(Millions) 121 75 50 3G 0 45 4G LTE
BROADBAND SERVICES
No of Internet Users (In Millions) BROADBAND SERVICES 600
513Introduced in 1995.Current users at 14.82 million from 14.62 400
245 No of Internet Users (Inmillion. Increase of 1.37%
Millions)Annual growth of 16.78% 200 121 101 81The global trend of
offering internet as 0valued added services being followed in CHINA
US INDIA JAPAN BRAZILIndia.Government mandated 256Kbps as
arequirement, however India still ranks at NO OF CONNECTIONS (IN
MILLIONS)110 in Internet speed. MARKET SHARE Bulk of these users
are concentrated in 9.47urban areas, whereas rural areas have 10 N
Olimited exposition. O155 Internet service providers in India. F
19.70% 5 C Internet services are slated for explosive 1.37 1.06 O
Ngrowth in 2013with the advent of mobile 7.20% 0.68 0.37 N E NO OF
CONNECTIONS (IN MILLIONS)payment services in India. User 9.30%
63.90% 0subscription rate to go over 20 million by2015. BSNLAbout
75% of the connections are BHARTIlandline based. MTNL OTHERS
BROADCASTING SERVICES
800 723 689 BROADCASTING 600 526Launched in 1952, deregulated
in 1992. Comprises 399 355 356 NO OF TVS (INmore than 500 channels
as of 2012. 400 MILLIONS) 199 199Employs 3 million people with over
US$15 billion 186 156 VIEWERSin revenue. 200 70% of the revenues
are generated by advertising 0and rest by subscriptions. TVS being
promoted as part of the one of thevalue added services in this day
and age by localoperators. ADVERTISING REVENUE (IN MILLIONS-2005
DATA)There are 552 million viewers with 462 million onsatellite
subscription. $247.27 $236.36 $250.00With the onset of High Def
services, ad revenues $181.82 $200.00have been further increased by
6.7%. $150.00 $120.91Regional channels could be set up for
US$20million, whereas national channel could take $100.00 $54.55
ADVERTISING REVENUEUS$100 millions. $50.00 (IN MILLIONS-2005
DATAHeavily rely on revenues from Advertising $-(revenues generated
by advertising in 2012 wereUS$4.91 billion).High competition due to
large number ofoperators in various regions.
LEVEL OF GOVERNMENT PARTICIPATION
GOVERNMENTThe Government of India allowed FDI in 250 250telecom
in 90s with the launch of Comparison of subscriber base in relation
to Tariffeconomic revival program.At present 74%-100% FDI is
allowed in 3Gor less spectrums. Up to 49% is allowed in 2004G
spectrum. 200 190The formation of NTPs (National telecom
180policies)helped in better foreigninvestment flows in India.
Current NTP2012 is released for the fiscal year. 150TRAI (Telecom
Regulatory Authority ofIndia) was establish in 1997 to oversee day
TARIFFto day operations related with Telecom SUBSCRIBERSsector.
100TDSAT (Telecom Disputes SettlementAppellate Tribunal) was formed
in the year2000 to assist with ranging disputes among 70operators
in Telecom sector.With the auction of 3G services TRAI 50 40
45helped Indian government earn over US$19 35billion. 20 20 25 16
16The subscriber base exploded with the 8 5 5 4 3.5 3 2.7 2onset of
NTP 99. Please see chart for 1.7 0references 1998 1999 2000 2001
2002 2003 2004 2005 2006 2007 2008
Government Continued..The current government allows operatorsto
provide fixed and wireless line under WPC-one license. SPECTRUM
MANAGMENTThe government launched USO TRAI Independent
Regulator(Universal service obligation) along withNTP 99 to widen
the reach of telecom and DoT- Indian Telecom Industry
Frameworkincrease Teledensity. License and frequency Pricing policy
and execution to be management TDSATapproved by TRAI and DOT.
Handles Disputes among operatorsInterconnectivity charges among
GoT-IT Handles Ad-operators are also to be approved by TRAI Hoc
Issuesand DoT.NTP-2012 incorporates framework forincreasing the
availability of spectrum fortelecom services including triple
playservices (voice, video and data) for whichbroadband is the key
driver. Integred Fixed Line BSNL ILD Players Private CDMA Reliance
GSM Players Bharti / Vodafone / VSNLThrough the NTP-2012, DoT is
floating MTNL TTSL Idea/BSNL/Airceltenders that requires 24
fibreOFN(optical fiber network) of 350,000 miles;this project will
further boost theinterconnectivity between rural and
urbanareas.
Per the NTP 2012, Govt of India is rapidly developing its
communicationabilities and is leaving no stone unturned.Following
are the main excerpts: -Increase rural Teledensity from the current
level of around 39 to 70 by the year 2017 and 100 by theyear
2020.Provide affordable and reliable broadband-on-demand by the
year 2015 and to achieve 175 millionbroadband connections by the
year 2017 and 600 million by the year 2020 at minimum 2
Mbpsdownload speed and making available higher speeds of at least
100 Mbps on demandSimplify the licensing framework to further
extend converged high quality services across thenation including
rural and remote areas. This will not cover content
regulation.Reposition the mobile phone from a mere communication
device to an instrument of empowermentthat combines communication
with proof of identity, fully secure financial and other
transactioncapability, multi-lingual services and a whole range of
other capabilities that ride on them andtranscend the literacy
barrier.Strive to create One Nation - One License across services
and service areas.Achieve One Nation - Full Mobile Number
Portability and work towards One Nation - FreeRoaming.
10-THE INDIAN TELCOME TIMELINE 3g Auctioned 2008 3G policy
announced, spectrum auction awaited. 2006 Number Portability was
proposed 2005- Measures to boost rural Teledensity. FDI limit was
also increased from 49 to 74% 2004 Intra circle merger guidelines
was established. Broadband 2004 policy was formulated 2003 Calling
party pay was implemented. Unified license regime was introduced.
2002 CDMA services launched. 2000-BSNL was established / Reduction
of license fees / ILD services opened. 1999 NTP 99 was launched
1997 TRAI established 1994 NTP Formulated 1992 PVT companies
allowed in VAS
PRESENT TELECOM MARKET SHARE Indian Telecom (Includes phone,
broadband and broadcasting subscriptions) in 2012 12% 23% AIRTEL 5%
IDEA VODAFONE15% 10% RELIANCE BSNL 12% 10% TATA OTHERS
MAIN COMPETITION
Established in 1995 by Sunil Bharti Mittal. Itgenerated
US$14.49 billion in revenue for 2012with overall total assets of
US$31.85 billion.Its PPS (price per share is) US$5.82.Currently
operates in 20 countries. Offering2G, 3G and 4G services.Focuses on
B2C (Business to customer) and $16.00B2B (Business to Business)
segments. $14.20 $14.00Fourth largest telecom company in the
worldwith 261 million subscribers worldwide and $12.00183.6 million
in India alone. $11.20Offers various diversified services such as
$10.00 STOCK PRICESbroadband, phone (fixed and wireless),
TVsubscription services, Airtel money $8.00 TOTAL REVENUE (IN $7.27
BILLIONS)(Ecommerce platform ) $6.45 $6.24 $6.00Has a business
strategy of outsourcing its $5.78operations to IBM and Ericsson
thus further $4.00reducing its call rate to Rupees 1 or $0.02
/minute. $2.00 $- 2010 2011 2012
Founded in 1995, currently head byKumar Mangalam Birla.Had an
overall revenue of US$2.8 billion.Total Assets of US$5.34 billion
in 2011.Subscriber (Wireless) base set at 97million
subscriber.Current 3G service provider in 11 circles.Ideas ARPU
stood at US$2.2 for the year2012. P rHas a 3G subscriber base of
3.7 million i Price per share (US$) cuser. e Average share price
US$ 1.9. $2.00 p eOverall employees at 6489 in 2012 rExtensive
operational infrastructure in $1.50 sIndia. h a $1.00Involved in
PAN-India network for its 3G r edistribution to its subscribers.
$0.50 (Offers wireless services as of 2012. U S $- 2010 2011 2012
Price per share (US$)
Came into existence in the year 2000 by MARKET SHARE IN
WIRELESS, BROADBAND ANDdiverging DoT (department of telecom was
WIRELESSdivererged into BSNL)Generated revenues worth US$5.08
billion in 10.932012.BSNL has the largest 3G network in
India.Additionally, BSNL 3G services usually covernot only the main
town/city but also theadjoining suburbs and rural areas as well. As
ofnow BSNL has 3G services in 826 cities across 68.89India.
WIRELESSWireless subscriber base of 97.7 million.Broadband share of
9.7 million subscription 63.89 BROADBANDFixed line share of 68.8 %
at 24.2 millionsubscribers. FIXED LINETotal operational assets are
based at US$21.41billion.Net income based at US$1.61 billion
(incurredlosses in 2012)
VODAFONE Global Coverage as of 2012Vodafone revenue for 2012 at
US$5.2 billion.Vodafone is a successor to Essar +
Hutchcollaboration.operational profit margin increased to 28.4
percent as a result of increasing operatingefficiency, based on
scale and lower customeracquisition cost.Vodafone annual ARPU at
US$3.26 in 2012.Has 141 million wireless subscribers.Vodafone India
is a subsidiary of VodafoneGlobal.Vodafone paid US$2.6 billion (the
secondhighest. Vodafone India Revenue (in US$ Billions)amount in
the auctions) for spectrum in 10circles. The circles it will
provide 3G in are 8 6.6Delhi, Kanpur, Gujarat, Haryana, Kolkata,
Maharashtra & Goa, Mumbai, Tamil Nadu, Uttar 5.3Pradesh (East)
and West Bengal. 6 4.9Vodafone also operates 3G services inKerala,
Andhra Pradesh and Uttar Pradesh Vodafone India(West) through an
agreement with Idea and in 4 Revenue (in US$Karnataka through an
agreement with Airtel. Billions)This gives Vodafone a 3G presence
in 13 out of22 circles in India 2 0 2010 2011 2012
Ranks among the top 5 telecommunicationscompanies in the world
by number ofcustomers in a single country.Headed by Anil Dhirubhai
Ambani.Generated revenues to the tune of US$2.02billion in 2012.Has
total assets worth US$14.65 billionGenerated net income of US$28.39
millionin 2012.Has 28000 employees on its payroll.The company has
established a pan-India, next-generation, integrated (wirelessand
wire line), convergent (voice, data andvideo) digital network that
is capable ofsupporting services spanning the entire $3.00
$2.91communications value chain, covering over24,000 towns and
600,000 villages. $2.02Reliance Big TV offers its 1.7 million $2.00
$1.65 $1.34 $1.49 $1.27customers DVD-quality pictures on over 200
Reliance Stock Comparisonchannels using MPEG-4 technology. $1.00
Reliance RevenueReliance Communications paid US$1.8billion for 3G
spectrum in 13 circles. $- 2010 2011 2012
STRENGTHS Global ARPU @ $29.98 Largest telecom infrastructure
in the world Annual global Wireless subscribers at 335 (US$108.98
Billion) million. 2012 Global sales pegged at US$42.56 Largest OFN
facility in the world (annual billion. production @ 400,000 miles)
Net Income in 2012 @ US$8.9 US$100.62 billion in cash flow
reservesProviding time tested Value added services Annual stock
price for 2012 at US$22.56 Extensive dealership network in over
89in 29 nations nations Global impressive brand imageGlobal
Operational costs down by 2.9% Merger /Acquisitions in over 89
nations Robust research and developmentPioneer in GPS technology
department (Annual patent fees revenue Overall global penetration @
66% in from various organizations at US$2.9 subscriber base.
Billion)
wE AK NE SE S
Our global presence and strong financials allow us to compete
with the competition in India. The key to generate profit will be
lower costs and quality service atAdvent of acquisition or merger
canlower cost of entry in Indian scenario.TRAI and DoT are
efficient telecom Wireless market in metros is saturatedregulators
as compared with agencies but rural areas is majorly untapped.in
other countries . Approx 67% of the population lives in rural
areas. This vast market has aMobile Broadband is slow to pick up;
potential of another $8.9 billion inour global pioneer position
withdiscounted value added service could value added services.
OPPORTUNITYbe beneficial factor Manufacturing telecom equipment is
our forte that India has so less to offer.The relative young
generation of the Further $6.8 billion can be generatedpopulous
also adds to the lucrative by manufacturing telecom
equipment.market of the smart phones. The introduction of FDI in
various sectors in particular Retail would boost the demand for
wire line based broadband. The potential market is estimated to be
$8.9 billion in 2013.
The presence of a coalition in the federal government structure
creates policy paralysis in the Indian scenario (important
decisions impacting economic growth and welfare are difficult to
pass due to the vested interests of various political parties and
groups) Developing own telecom infrastructure will be a challenge
as to get the laws passed will take considerable time and would be
met with opposition from the competition.Cut throat competition in
India is the biggest The 2G scam in 2008 brought out thethreat
(Reliance, Tata , BSNL have incurred vulnerability of the security
of foreignloses due to loss-$1.9 billion combined in investment in
India. The reversal order byrevenue and rising costs). Supreme
court of India incurred losses inGlobal financial scenario (India
seems to have billions of dollars on various Multi nationaldodged
the 2008 crises bullet but is telecom carriers. Although lobbying
in illegal inexperiencing slower growth in 2012). India but on the
other hand very little or nothing is accomplished without lobbying.
THREATS
INVESTMENT IN INDIA? WHY NOT!!Yes, the political situation in
India is very delicate and fragile. Lobbying is illegal and a
necessary evil. India has the lowest ARPU and cut throat
competition. But we shouldnt forget this lucrative market because
of these following reasons: - Second most populous country in the
world with overall disposable income per person at $1,326 annual.
An upcoming younger generation eager to get their hands on a
Smartphone (an estimated $18 billion dollar market in next 2 years
we pioneered with Apple and introduced I-phone to the world, a
similar wind in India could add at least give us $6 billion of that
share.) We are known leaders in the telecom equipment
manufacturing; India relies on the imports of the telecom
equipment. By setting up a production plant we can bank on to
capturing at least $4 billion of the $6.5 billion equipment market
in India. Our strong financials and global presence can help us
manage our losses for first five years as we catch on with the
competition and dig in for the long haul. (With the full nationwide
thrust we are expecting to incur $656 million in losses in the
first year with an increment of 12.8% every other year). Losses
would be generated into profits by eliminating local carriers and
capitalizing on the vast untapped rural network. Losses would also
include getting spectrum licenses in all circles thus setting up
our infrastructure (cell towers, OFN). We wouldnt have to pay hefty
interconnectivity charges to any carriers except BSNL. This would
help us on saving on operational costs. Indias growing economy
needs more faster network, we are leaders in innovation and
pioneers in establishing new technology through time place tested
measures. Our overall global assets @ $110.89 billion would come in
handy in the Indian Market.