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Page no.

Acknowledgement 04

Executive summary 05

Introduction about Telecom Industry 06

History 07

Global Scenario 08

National Scenario 09

Demographic characteristic 10

Market size, Trends & Players 11

Telecom turn over/ Subscribers 12

Opportunities /Competitive landscape 13

Porters generic strategy 14

Progress /Acquiring Subscribers 15

Rural India 15

Government Initiatives / MVAS 16

VAS 18

Mobile VAS in Rural Market 19

Access Device /3G Handset 20

Key trends in Telecom Industry 21

Inhibitors 22

MNP Implementation Globally 24

Wimax Vs. 3G 26

Mobile virtual network operator 27

Regulation for MVN O / IPTV 28

Companies overview 29

4P’s Analysis 43

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Advertisement 44

Industry updates 46

Major challenges for Mergers 49

FDI Investment in Telecom sector 50

Outsourcing by Telecom company 51

Future Trends 53

4G Technology 56

Conclusion/ References 56

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This project work would never have been an achievable task, had we not been under the great

shelter of guidance of respected Professor Mukta Rae. Her simplified teaching technique based

on examples has helped us gain more understanding of the subject.

The very essence of the project work is the linguistic precision which has an impact of

conveying more details in least possible words. An ample use of various reference readings has

been very frequently made while compiling data for this project. Such rich reading has been

made available at hand by the treasure-like well-maintained library of the IIPM, Ahmedabad.

I am very much under obligation to mention here, the contributions of my batch mates who

have, knowingly or unknowingly, provided me the competitive edge which is the driving force of

the whole labor and extra labor put into the project. I would also take an opportunity to thank

all the respondents, who have taken pains in answering the questions and filled the place of true

representatives for deciding the nature of the problem.

Finally, I feel very much gratified to the administration of IIPM, Ahmedabad for providing

comfortable environment.

- JONTY MOHTA

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The rapid growth in Indian telecom industry has been contributing to India‟s GDP at large.

Telecom Regulatory Authority of India was established to regulate and deal with competition

among the service providers. Upcoming services like 3G and Portability will help to further

increase the growth rate. The Indian telecommunication industry is one of the fastest growing in

the world and India is expected to become the second largest telecom market in the world by

2010.

India added 113.26 million new customers in 2008, the largest globally. The country‟s cellular

base witnessed close to 50% growth in 2008, with an average 9.5 million customers added every

month. It is estimated that telecom industry will generate revenues worth US$ 43 billion in 2009-

10.

IN this we have tried to capture the most of areas of telecom industry. Like, History of Telecom

Industry, TRAI role and functions, new trends in industry and latest updates.

To find the reason of tremendous growth in Indian Telecom Industry

To study the role of TRAI

To study upcoming trends in Telecom industry

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The exactly ten years ago, Jyoti Basu in culcutta called Sukh Ram in Delhi Sukh Ram in Delhi

was the first mobile phone call in India. Brick sized cell phone used to cost Rs.45000 and each

call coasted Rs.16.50/minute. Back then, cell phones was a status symbol. Today, there are over

60 million mobile connections in India (expected to double in number in next 12 months.). A

local call costs around less then Rs.50paisa/min and a cell phone can be purchased for less

than Rs.1500.

India growth story has already got the world to sit up and take a note of the changing economic

scenario. The Indian government is doing everything that is possible to ensure that this story

remains intact. Factors, like the liberalization in the government stance and the daring

entrepreneurs of the Indian soils, have helped the sectors achieve the highs like never before.

And currently, the flavor of the month seems to be the telecom industry.

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History of Indian Telecommunications started in 1851 when the first operational land lines were

laid by the government near Calcutta (seat of British power). In 1883 telephone services were

merged with the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923.

After independence in 1947, all the foreign telecommunication companies were nationalized to

form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry

of Communications. Telecom sector was considered as a strategic service and the government

considered it best to bring under state's control.

The first wind of reforms in telecommunications sector began to flow in 1980s when the private

sector was allowed in telecommunications equipment manufacturing. In 1985, Department of

Telecommunications (DOT) was established. It was an exclusive provider of domestic and long-

distance service that would be its own regulator (separate from the postal system). In 1986, two

wholly government-owned companies were created: „Videsh Sanchar Nigam Limited‟ (VSNL)

for international telecommunications & „Mahanagar Telephone Nigam Limited‟ (MTNL) for

service in metropolitan areas.

In 1990s, telecommunications sector benefited from the general opening up of the economy.

National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensive roadmap for

the Indian telecommunications sector. In 1997, Telecom Regulatory Authority of India (TRAI)

was created. TRAI was formed to act as a regulator to facilitate the growth of the telecom sector.

New National Telecom Policy was adopted in 1999 and cellular services were also launched in

the same year.

Indian telecom industry has the highest growth rate in the world. A record 5.9 Million new

mobile phone subscribers were drawn by the Telecom sector in India in the month of August

2006, according to the COAI (Cellular Operators Association of India). India, which is seeing

over 8 million wireless subscribers being added every month (8.62 million in May 2008), is the

fastest growing telephone market in the world. The government has reiterated the target of 500

million telecom subscribers and 20 million broadband connections by 2010.

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The Indian telecom market has been displaying sustained high growth rates. Riding on

expectations of overall high economic growth and consequent rising income levels, it offers an

unprecedented opportunity for foreign investment. A combination of factors is driving growth

in the telecom market, promising rich returns on investments.

Example: TATA DOCOMO

It generated US $1.4 trillion in the year of 2009 when recession is everywhere.

India is the fourth largest telecom market in Asia after China, Japan and South Korea.

Asia pacific region: expecting highest growth in next 5years.

The Indian telecom network is the eighth largest in the world and the second largest

among emerging economies.

The Indian telecom market size of over US $ 8 billion is expected to increase three fold

by 2012. The expansion of the telecom industry in India has been fuelled by a massive growth in

mobile phone users, which has reached a level of 10 million users in December 2002, an increase

of nearly 100 per cent in 2002.

This exponential growth of mobile telephony can be attributed to the introduction of

digital cellular technology and decrease in tariffs due to competitive pressures. For the first time

in India, the growth of cellular subscriber base has exceeded the fixed line subscriber base.

However, cellular penetration is still 1 per cent as compared to world average of around 16 per

cent.

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Source: EIU (Economist Intelligence Unit)

Indian Telecom sector, like any other industrial sector in the country, has gone through many

phases of growth and diversification. Starting from telegraphic and telephonic systems in the

19th century, the field of telephonic communication has now expanded to make use of advanced

technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. Day

by day, both the Public Players and the Private Players are putting in their resources and efforts

to improve the telecommunication technology so as to give the maximum to their customers.

The Indian telecom sector can be broadly classified into Fixed Line Telephony and

mobile telephony. The major players of the telecom sector are experiencing a fierce competition

in both the segments.

The major players like BSNL, MTNL, VSNL in the fixed line and Airtel, Vodafone

(Hutch), Idea, Tata, Reliance in the mobile segment are coming up with new tariffs and discount

schemes to gain the competitive advantage.

19%

12%

7% 62%

China

India

USA

Others

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The Public Players and the Private Players share the fixed line and the mobile segments.

Currently the Public Players have more than 60% of the market share.

Internet/Broadband subscribers are 14.05m internet subscribers & 6.62m broadband

subscribers (June 2009)

Advanced Technologies – GSM, CDMA, WLL, 3G and upcoming 4G

Telecom sector Contribution of nearly 1% to India‟s GDP

Total Tele-density stood at 39.86 per cent.

Wire line Tele-density came in at mere 3.22 % whereas wireless subscription contributed

91.9 % of overall Tele-density.

Subscription in Urban Areas was at 328.55 Million and Rural subscribers increased to

136.27 Million.

According to the Vision 2020 document of the Planning Commission of India, the

country will witness continued urbanization. The urban population is expected to rise from 28

per cent to 40 per cent of total population by 2020.

Future growth is likely to be concentrated in and around 60 to 70 large cities having a

population of one million or more. This profile of concentrated urban population will

GSM

•VODAFONE

•AIRTEL

•BSNL

•IDEA

•SPICE

•AIRCELL

•RELIANCE

•TATA DOCCOMO

•TATA INDICOM

•VIDEOCON

CDMA/WLL •BSNL

•MTNL

•TATA INDICOM

•TATA DOCCOMO

•VIRGIN MOBILE

•RELIANCE

•VIDEOCON

Fixed LINE

•BSNL

•MTNL

•BHARTI

•TATA TELECOM

•VODAFONE

•RELIANCE

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facilitate customized telecom offerings from operators.

Both fixed line and mobile segments serve the basic needs of local calls, long distance calls and

the international calls, with the provision of broadband services in the fixed line segment and

GPRS in the mobile arena. Traditional telephones have been replaced by the codeless and the

wireless instruments.

Every month 8-10 million subscribers are adding in the market.

We have mobile 350 million subscribers, next to China

Tata Teleservices – invest an additional US $ 1 billion in TATA DoCoMo

BSNL – will put US $ 1.16 billion in WiMax Project

Vodafone Essar – invest US $ 6 billion next 3 years to increase mobile subscriber base

Bharti Airtel – US $ 126.5 million to strengthen Assam & Northeast Circles.

Mobile phone providers have also come up with GPRS enabled multimedia messaging,

Internet surfing, and mobile commerce.

The much-awaited 3G mobile technology has entered in the Indian telecom market.

The GSM, CDMA, WLL service providers are all upgrading them to provide 3G mobile

services.

Radio services have also been incorporated in the mobile handsets, along with other

applications like high storage memory, multimedia applications, multimedia games, MP3,

Players, video generators, Camera's, etc. The value added services provided by the mobile service

operators contribute more than 10% of the total revenue.

The 2009 budget has brought further relief to the customers with the reduction in the

tariffs, both local and long distance, and with slashing down the roaming rentals. This is likely to

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lead to even more people going for cellular services and more and more use of the value added

services.

However, landline telephony is likely to remain popular, too, in the foreseeable future.

MTNL, the largest landline service provider, has recently taken some bold initiatives to retain its

market share and, if possible, expand it.

:

Gross Revenue (GR) stood at Rs 39,108.33 Crore and Adjusted Gross Revenue (AGR)

of Telecom Sector came in at Rs. 29,732.52 Crores.

GR has registered a decline of 3.3% compared to previous quarter whereas AGR

increased slightly.

Average license fee as percentage of AGR was 8.43% in June-09 as against 8.4% in

previous quarter.

The less outgo in terms of licensing fees is a big positive for Telecom industry and as

such for telecom subscribers in general as this will allow further scope of reduction in telecom

tariffs.

Source: TRAI

Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09

76.53 104.22

153.42

225.01

325.79

464.82

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India offers an unprecedented opportunity for telecom service operators, infrastructure vendors,

manufacturers and associated services companies. A host of factors are contributing to enlarged

opportunities for growth and investment in telecom:

an expanding Indian economy with increased focus on the services sector

population mix moving favourably towards a younger age profile

urbanization with increasing incomes

Investors can look to capture the gains of the Indian telecom boom and diversify their

operations outside developed economies that are marked by saturated telecom markets and

lower GDP growth rates.

Demand is driven by technological innovation and by growth in business activity. The

profitability of individual companies depends on efficient operations and good marketing.

Large companies have big economies of scale in providing a highly automated service to

large numbers of customers, and have the financial resources required building and maintaining

a large network.

Smaller companies can compete effectively only in small markets or by providing

specialty services.

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Porter has identified three types of generic strategies that help a firm to cope with competitive

forces and outperform other firms in the industry. These strategies are:-

1. Overall Cost leadership strategy

2. Differentiation strategy, and

3. Focus strategy

The Overall Cost leadership strategy is aimed at gaining a competitive advantage through

lower costs.

The low cost leader in any market gains competitive advantage from being able to many

to produce at the lowest cost. Factories are built and maintained; labor is recruited and trained to

deliver the lowest possible costs of production. 'cost advantage' is the focus.

Financial considerations and budgetary constraints play a critical role here in shaping

competitive price of the products.

Besides the production effiency, brand and marketing skills plays a important role in this

kind of competition.

For example:--Some organizations, such as Toyota, are very good not only at producing high

quality autos at a low price, but have the brand and marketing skills to use a premium pricing

policy.

A firm with a differentiation strategy attempts to achieve a competitive advantage by

creating a product or service that is perceived as unique.

Differentiated goods and services satisfy the needs of customers through a sustainable

competitive advantage. This allows companies to desensitize prices and focus on value that

generates a comparatively higher price and a better margin.

The benefits of differentiation require producers to segment markets in order to target

goods and services at specific segments, generating a higher than average price.

For example, British Airways differentiates its service by providing focus on

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exceptional good quality of service rather than focusing on low price.

The differentiating organization will incur additional costs in creating their competitive

advantage. These costs must be offset by the increase in revenue generated by sales.

There is also the chance that any differentiation could be copied by competitors.

Therefore there is always an incentive to innovated and continuously improve.

The focus strategy is also known as a 'niche' strategy. Where an organization can afford

neither a wide scope cost neither leadership nor a wide scope differentiation strategy, a niche

strategy could be more suitable.

Here an organization focuses effort and resources on a narrow, defined segment of a

market. Competitive advantage is generated specifically for the niche.

A niche strategy is often used by smaller firms. A company could use either a cost focus

or a differentiation focus.--

With a cost focus a firm aims at being the lowest cost producer in that niche or segment.

With a differentiation focus a firm creates competitive advantage through differentiation

within the niche or segment.

There are potentially problems with the niche approach. Small, specialist niches could

disappear in the long term. Cost focus is unachievable with an industry depending upon

economies of scale e.g. telecommunications.

The target for the 11th Plan period (2007-12) is 600 million phone connections with an

investment of US$ 73 billion. Apart from the basic telephone service, there is an enormous

potential for various value-added services. In fact, the real potential for telecom service growth is

still lying untapped. According to the CII Ernst & Young report titled 'India 2012: Telecom

growth continues', revenue from India's telecom services industry is projected to reach US$ 54

billion in 2012, as against US$ 31 billion in 2008

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Source: COAI

The progression chart below depicts the major regulations and events driving the extra ordinary

growth of Telecom sector from year 1999 to 2008. In order to capitalize this opportunity of

meeting the consumer needs in highly competitive market the operators have reduced the tariffs

to attract consumers with low purchasing power primarily in semi urban and rural India. In fact

lucrative offers like being paid for incoming calls have transformed the scenario completely.

Through these changing regulations and events, the Industry players are aiming to achieve the

following

Acquiring new subscribers by expanding in Semi Urban and Rural India

Selling more services to existing subscribers

The recent TRAI recommendation permitting PC-to-phone calls where ISPs can offer cheaper

STD calls and even free local calls. This would result in further reduction of voice tariffs. This

would lead to increased focus on MVAS by mobile operators.

Acquiring customers have always been a great challenge for companies. Given the current level

of saturation in Metros and Urban Market and cut throat competition among operators,

increasing subscriber base in urban market would be all the more challenging. Therefore a lot of

operators with adequate support from Government are eyeing the rural market for future

growth. Big operators like Airtel have claimed that soon mobile connections and recharge

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vouchers etc will be available at all such places from where people buy match boxes. This

certainly explains the future penetration of these services in remotest of villages.

This is relatively easier as compared to acquiring new customers. Also since now the new

subscriptions will largely happen at the bottom of the pyramid therefore the new subscriptions will

further lower the average revenue per user. In such a scenario mobile VAS sector is a potential long-

term revenue stream as it will be easier to sell more to the existing customers.

Government also has supported the growth of this sector by coming out with a number of

initiatives for the low end subscribers of rural India, and Universal Service Obligation (USO)

fund was one such initiatives. The USO fund was an initiative taken up by the government to

increase rural teledensity. In recent developments, BSNL and two private operators will erect

427 towers in remote areas offering over four lakh mobile connections. All the towers are

expected to be erected and commissioned by December 2008. Under the second phase, DoT

aims at erecting 11,000 towers throughout the country to offer over 11 million mobile

connections ADC was levied by Telecom Regulatory Authority of India (TRAI) in 2003 to

provide support for BSNL's rural telephone obligation. Telecom Regulatory Authority of India

(TRAI) has recently given orders for the withdrawal of the ADC (Access Deficit Charge) and

the subsequent passing of the benefit to the consumers by the telecom operators.

Decrease in ARPU despite increase in MOU: Though the subscriber base is growing

at a rapid pace and has positively impacted industry revenues, operator margins also have shrunk

owing to competition and lower “Average Revenue per User” (ARPU) as the major growth is

coming from bottom of the pyramid. As ARPU declines and voice gets commoditized, the

challenge is to develop alternative revenue streams and retain customers by creating a basis for

differentiation in high-churn markets. Need for differentiation: There is a greater need among

the telecom operators to differentiate themselves from each other.

Number of Licensees: With increasing number of licensees (98 UASL, and 37 cellular

licenses) in the telecom space the average numbers of operators in many circles have increased

to 5-6 operators offering more choices to the consumer. Thus the competition among the

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operators has increased tremendously. Therefore it is very important for them to differentiate

themselves from the others. Now that voice has got commoditized these operators are using

MVAS for their differentiation and marketing these services heavily for creating awareness

among the consumers.

Decreasing Call Rates: In order to attract consumers with relatively low purchasing

powers primarily from Semi Urban and Rural India the operators have drastically reduced the

call rates making it affordable to even the lower segment of society. The tariff in India is one of

the lowest at Rs.1 per minute as compared to the tariff in developed nations like USA and UK

where the call rates are Rs.13 and Rs7-8 respectively.

3G bidders who are non-operators: The arrival of new technologies will give rise to

greater competition as many non-operators are also bidding for the 3G licenses. Department of

Telecom

has planned to allow five 3G operators in each circle depending on the availability of

spectrum. Therefore there would be a greater need to differentiate oneself in order to attract

new customers and retain the existing ones.

Saturation in Metro and Urban Market: The metro/urban areas offer high level of

penetration and have significant mobile subscribers. In such a highly saturated market with the

entry of MVNO‟s the competition will get fierce. Therefore capitalizing on value added services

will give operators opportunity to increase ARPU by providing premium services.

Increasing need and demand from consumers: In addition to the above supply side

reasons the „pull effect‟ from consumers asking for more than just basic telephony is also a key

driver for MVAS services. Today most of the consumers are seeking more from their

communication device apart from just mobility and desire to stay connected. As we have seen,

Telecommunication has moved beyond providing just basic voice calls. The mobile phone has

evolved from a mere communication device to an access mode with an ability to tap a plethora

of information and services available in the ecosystem. This is the reason why it is now being

referred to as the „fourth screen‟, after Cinema halls, Television and PC.

But the fundamental question that remains is how VAS is defined. A clear MVAS definition is

not only required to clear the air among the MVAS providers but it will also have an impact on

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the dynamics of the Value chain. A detailed definition of VAS might have an impact on the

licensing issues surrounding VAS. Let‟s look at different VAS definitions floating in the market.

Value Added Service (VAS) in telecommunication industry refers to non-core services,

the core or basic services being standard voice calls and fax transmission including bearer

services. The value added services are characterized as under:-

Not a form of core or basic service but adds value in total service offering.

Stands alone in terms of profitability and also stimulates incremental demand for core or

basic services

Can sometimes be provided as standalone.

Do not cannibalize core or basic service.

Can be add-on to core or basic service and as such can be sold at premium price.

May provide operational synergy with core or basic services.

A value added service may demonstrate one or more of these characteristics and not necessarily

all of them. In some cases, the value added service becomes so closely integrated with the basic

offering that neither the user nor the provider acknowledge or realize the difference. A classic

example is of P2P SMS. Some of the operators do not consider P2P SMS as part of their VAS

revenue.

The Government of India issues licenses for the following Value Added Services:-

Public mobile trunking service Voice mail service

Closed users group domestic 64 kbps data network via INSAT satellites system

Videotex service

GMPCS

Internet

Audiotex

Unified messaging service

The next wave of Telecom growth will come from the bottom of the pyramid. For majority of

the population in the rural segment, the mobile phone is the first communication device. Rural

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should not always be interpreted as poor and therefore some categories of MVAS might apply

directly to them. But whether the statement can be extended to MVAS depends on some key

factors. One is to clearly identify the need of the rural segment, second is to communicate the

services to them i.e. generate awareness and thirdly, to provide an easy and cheap access mode

to the rural consumers. All these 3 are quite big challenges and therefore needs to be addressed

adequately for MVAS to take off in Rural India. Apart from the identification of rural consumer

needs and development of relevant content, communication of these services to the rural

population would be a bigger challenge. One way to do this is to communicate through regional

SMS for which a separate SMS gateway needs to be installed. Literacy level of the geographical

area will be another limitation. Therefore the better communication option is Voice in regional

languages. The challenge with regional voice is not only investment but also blockage of the

already scarce spectrum. Marketing the content in rural market is going to be all the more

challenging. This would require right packaging and pricing of MVAS. Providing cheap access

mode to end consumer would be another key booster to rural MVAS. Current voice MVAS

charges are expensive from a rural consumer perspective therefore that also would need to be

addressed for e.g. the „sachet model‟ could prove to be successful here. MVAS is going to

address two main needs of rural consumers- connectivity and entertainment mode. Connectivity

will provide Information VAS on Agriculture necessary for the farmer‟s livelihood e.g. mandi

rates, weather, etc. Health, finance, job opportunities etc are potential areas. Mobile also has the

potential to evolve as a key entertainment mode considering lack of other entertainment options

in rural areas. The industry has witnessed some type of content being downloaded more in small

towns of UP and Bihar rather than in metros like Delhi and Mumbai. Therefore by leveraging

on these two aspects MVAS can be a success in rural area.

GPRS Handsets

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Currently the penetration of GPRS enabled handsets are close to 26% in India as against 99% in

South Korea and 76% in Japan. Of the total mobile subscribers in India 65 million possess

GPRS-enabled handsets. Of all those who possess GPRS enabled handsets only 20-25% of

them have got the GPRS activated and only about 15% use it. Even in case of developed nations

like South Korea and Japan not more than 50% of the subscribers owning GPRS enabled

handsets use it.

Source: TRAI REPORT,E Technology

This clearly indicates that the consumer today engage more in text based services than the web

based applications. Therefore for MVAS to grow to its full potential the handset manufacturers

will have to look at ways to manufacture GPRS enabled phones which are affordable and user

friendly. Moreover they would also need to increase its awareness and educate the consumers on

how to use GPRS.

The market for 3G in the country is expected to be huge with over 65 million wireless

subscribers, who use their handsets to access data services on the Web. These subscribers are

currently using mobile handsets which are internet-enabled and are potential broadband

Population of india 1130mn

Mobile subscriber base 426Mn

GPRS Enable 65 Mn.

GPRS Activated 15-16 Mn.

GPRS USERS

9Mn

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subscribers with the deployment of advanced wireless technologies such as 3G. According to

Indian Cellular Association (ICA) about 5% of mobile users already have handsets that can work

on 3G spectrum. In addition, out of all those possessing the 3G enabled handsets the number of

people who would use 3G services would be determined by the quality of content available.

Unlike most other countries, we are looking at 3G services not only as premium services but

also as an extension of 2G. Since our broadband penetration is abysmal, 3G would provide a

much required boost to it. Given that mobile phones are much cheaper as compared to PCs, the

demand for broadband on mobile is expected to be much greater. More importantly, 3G will

solve problems more in rural India. Therefore the shift towards 3G would depend on

affordability of handsets along with the quality of content available.

One of the most frequent definitions that prevail in the telecom circles for number portability is:

"Number portability is a circuit-switch telecommunications network feature that enables end users

to retain their telephone numbers when changing service providers, service types, and or locations."

Why mobile number portability (MNP)? When fully implemented nationwide by both wire line and

wireless providers, portability will remove one of the most significant deterrents to changing

service, providing unprecedented convenience for consumers and encouraging unrestrained

competition in the telecommunications industry. In short, this is the best method to increase the

efficiency of the service provider by increasing the competition, thereby ensuring better services in

all respects. From the subscribers’ perspective, this is a deceptively simple and very welcome

change, because they can change wireless service providers without worrying about notifying

friends, family and business contacts that their wireless number is changing. In addition, being able

to ‘port’ a number from one provider to another eliminates the hassle and expenses of changing

business cards, stationery, invoices and other materials for businesses. From the wireless carrier’s

perspective the change is anything, but simple. Virtually all of wireless carriers’ systems are affected.

Especially any system that relies on mobile identity numbers (MINs) or mobile directory numbers

(MDNs) will be affected. Examples of critical systems and processes that would be affected are:

billing, customer service, order activation, call delivery, roamer registration and support, short

messages service center, directory assistance, caller ID, calling name presentation, switches,

maintenance and CSC systems, home location registers (HLRs), and visiting location registers (VLRs).

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: One of the most common barriers in MNP implementation, within any country, has

been the implementation cost. Service Providers have been constantly bargaining for time, based on

the cost factor, from their respective governments. Referring to the recent example of the US,

where each of the large carriers would need to spend $50–60 million to institute the service and an

equivalent sum to maintain it. The FCC on this plea gave wireless carriers in the US another year, i.e.,

till November 2003, for resolving implementation issues. The experience of developed countries

exhibits that local number portability for fixed wireline was introduced within two to three years of

introduction of competition to incumbent state telcos. The cost estimate for the implementation of

WNP in developed nations like the US can be very helpful for the other countries, who wish to think

on the lines of number portability. To add on increased marketing costs are to be realized as the

carriers look to lock up their current base before number portability is implemented, and then

aggressively pursue the customers of other carriers thereafter.

: Every subscriber in a race to retain its

customer would like to offer its customers best services so as to save them from porting. It‟s like

a blessing in disguise for the customers, as they would get better service irrespective of the

carrier, albeit with the same number. Infrastructure Upgrade: To support WNP, a company

has to upgrade both its hardware and software capabilities, which will amount to some cost.

Softwares need to be upgraded to provide proper routing of calls. The carriers need to upgrade

their networks to handle portability requests. The provider, which has its portability compatible

would be expected to attract maximum customers and will emerge the winner. Cost Recovery

and Bill Reconciliation/Query Processing: When a customer plans to shift, the old service

provider (OSP) has to perform a query to identify if there are any billing amounts pending,

which they need to recover before the subscriber moves to the new service provider (NSP).

Globally, Singapore was the first country to implement MNP in 1997, followed by Hong Kong

in 1999 and Australia in 2001. Off late, many countries have adopted the MNP model to prevent

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market doldrums and putting pressure on service providers to furnish more services at a

competitive price level. However, it has not been able to produce any significant results in these

markets. While it has worked in markets like Hong Kong and Australia, it failed to bear fruit in

the UK, France, Germany, Pakistan, Ireland, Malta, among others. MNP worked in Hong Kong

due to the speedy porting process and the availability of already implemented solution (for fixed-

line services). In Australia, the regulator effectively promoted number portability and was able to

maintain the maximum porting time of just under three hours. Furthermore, in Finland, where

initially the implementation was viewed as a success due to dearth of minimal contract periods

and high migration incentives, operators failed to sustain the momentum.

The failure in most markets where MNP was implemented is attributed to factors like half-

hearted implementation, issues related to contract, lack of consumer awareness, overboard of

paperwork, technical difficulties and poor customer service.

The WiMAX vs. 3G cellular showdown is poised to become one of the next great market battles

in the telecom industry. Fortunes will be made and lost in this battle, and the user experience of

the Internet will be irreversibly changed in the process. 3G scores for voice; Wimax may lead to

increased broadband penetration. With the Department of Telecommunications gearing up for

simultaneous release of 3G and WiMax spectrum, analysts expect the two emerging wireless

technologies to battle it out for supremacy.

WiMax or Worldwide Interoperability for Microwave Access is a telecom technology that

enables wireless transmission of data. The technology is available as IEEE 802.16D (fixed) and

IEEE 802.16E (mobile). It offers downloads of up to 70 Mbps as compared to the 15 Mbps that

3G provides. Mobile WiMax offers download speeds of around 20 Mbps. In India, companies

like Tata Communications Internet Services, Intel, Bharat Sanchar Nigam Ltd, Bharti Airtel and

Reliance Communications are the proponents of WiMax. Most of the companies have had beta-

runs of the technology. According to a top official with a service provider, telecom service

providers are in various stages of WiMax implementation. Some companies have commercially

launched fixed WiMax services in certain cities.

While opponents of WiMax say currently it cannot be used for mobile applications, the first

mobile WiMax network was introduced in Italy this July. Another reason for the industry

pinning its hopes on WiMax is its ability to increase the broadband penetration. WiMax makes

huge sense for companies as it enables them to provide cheaper mobile internet and broadband

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services, in turn, increasing the internet penetration. However, this will adversely impact services

like GPRS and e-mail on mobile as users might move over to WiMax-enabled devices for data,

even though they might stick with 3G or 2G spectrum for voice. The Telecom Regulatory

Authority of India has set a target of 20 million broadband connections by 2010 from the

current 4.3 million. The industry expects WiMax to bridge the gap. According to a consultant of

Ernst & Young service providers would mainly use the technology for gaining traction with the

customers, as providing the last mile over the conventional digital subscriber lines would be

time-consuming and costly.

Operators will have to use 3G spectrum to revive voice services that are being choked by a

dearth of 2G spectrum, Patel added. The WiMax customer premise equipment (CPE) is priced at

Rs 5,000-10,000, while the CPEs for 3G would be cost Rs 10,000 and above. The industry will

know the winner in the next six months, when the spectrum allocation is complete.

Mobile Virtual Network Operator (MVNO) is a GSM phenomenon where an operator or

company which does not own a licensed spectrum and generally with out own networking

infrastructure. Instead MVNOs resell wireless services under their brand name, using regular

telecom operator's network with which they have a business arrangements. Usually they they buy

minutes of use from the licensed telecom operator and then resell minutes of usage to their

customers of MVNO. Currently MVNOs are emerging in fast pace in European markets and

beginning in USA also. Slowly MVNO phenomenon catching up in Asia and other parts of the

world also.

An example for MVNO is Virgin Mobile. Virgin Mobile plc is a mobile phone service provider

operating in the UK, Australia and Canada, and the US. The company was the world's first

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 26

Mobile Virtual Network Operator, launched in the UK in 1999. It does not maintain its own

network, and instead has contracts to use the existing network(s) of other providers. In the UK,

Virgin Mobile uses the T-Mobile network. In the US, the Sprint network is the carrier. In

Australia, Virgin Mobile operates on the Optus network. In Canada, it uses the Bell Mobility

network. These networks use different technology (GSM in the UK and Australia and CDMA in

the US and Canada). Usually MVNO's do not have their own infrastructure, some providers are

actually deploying their own Mobile Switching Centers (MSC) and even Service Control Points

(SCP) in some cases. Some MVNO's deploy their own mobile Intelligent Network (IN)

infrastructure in order to facilitate the means to offer value-added services. In this way, MNVO's

can treat incumbent infrastructure such as radio equipment as a commodity, while the MVNO

offers its own advanced and differentiated services based on exploitation of their own IN

infrastructure. The goal of offering value-added services is to differentiate versus the incumbent

mobile operator, allowing for customer acquisition and preventing the MVNO from needing to

compete on the basis of price alone. MVNO's have full control over the SIM card, branding,

marketing, billing, and customer care operations. While sometimes offering operational support

systems (OSS) and business support systems (BSS) to support the MVNO, the incumbent

mobile operators most keep their own OSS/BSS processes and procedures separate and distinct

from those of the MVNO. In the future a cell phone user may be able to subscribe to a network

operator plus multiple MVNOs for specific data services over the same phone. One MVNO

could provide sports news, another weather and traffic and still another could provide instant

messaging capabilities. In this way, each MVNO and the network operator could focus on their

own niche markets and form customized detailed services that would expand their customer

reach and brand.

So far MVNOs have not been regulated in any country. The ITU has received several requests

to study the issue, specifically to provide input on whether government intervention is necessary

to allow MVNOs to offer services and applications at a lower price to consumers. This would

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 27

help to ensure a more efficient use of the spectrum but some incumbent providers argue that the

market is already competitive and intervention is not necessary.

IPTV (Internet Protocol Television) delivers television programming to households via a

broadband connection using Internet protocols. It requires a subscription and IPTV set-top box,

and offers key advantages over existing TV cable and satellite technologies. IPTV is typically

bundled with other services like Video on Demand (VOD), voice over IP (VOIP) or digital

phone, and Web access, collectively referred to as Triple Play.

Because IPTV arrives over telephone lines, telephone companies are in a prime position to offer

IPTV services initially, but it is expected that other carriers will offer the technology in the

future. IPTV promises more efficient streaming than present technologies, and therefore

theoretically reduced prices to operators and subscribers alike. However, it also adds many

advantages that may play into market pricing. One of the advantages of IPTV is the ability for

digital video recorders (DVRs) to record multiple broadcasts at once. According to Alcatel, one

leading provider, it will also be easier to find favorite programs by using "custom view guides."

IPTV even allows for picture-in-picture viewing without the need for multiple tuners. You can

watch one show, while using picture-in-picture to channel surf! IPTV viewers will have full

control over functionality such as rewind, fast-forward, pause, and so on. Using a cell phone or

PDA, a subscriber might even utilize remote programming for IPTV. For example, if a dinner

function runs longer than expected, you don't have to miss your favorite program. Just call

home and remotely set the IPTV box to record it.

However, the real advantage of IPTV is that it uses Internet protocols to provide two-way

communication for interactive television. One application might be in game shows in which the

studio audience is asked to participate by helping a contestant choose between answers. IPTV

opens the door to real-time participation from people watching at home. Another application

would be the ability to turn on multiple angles of an event, such as a touchdown, and watch it

from dual angles simultaneously using picture-in-picture viewing.

One can also receive Web service notifications while watching IPTV for things such as incoming

email and instant messages. If you IPTV is packaged with digital phone, Caller ID might pop up

on screen as your telephone rings.

IPTV is already growing in the international market, with providers in many countries including

Japan, Hong Kong, Italy, France, Spain, Ireland, and the United Kingdom. In the United States

SBC, reportedly purchased a software delivery system for IPTV services from Microsoft in 2004

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 28

for $400 million dollars. Alcatel is working with Microsoft to develop a "global solution" for

IPTV services, and Verizon has also made a deal with Microsoft for IPTV software.

Bharti Airtel is one of Asia‟s leading providers of telecommunication services with presence in

all the 22 licensed jurisdictions (also known as Telecom Circles) in India, and in Srilanka.

They served an aggregate of 105,195,762 customers as of June 30, 2009; of whom 102,367,881

subscribe to their GSM services and 2,827,881 use Telemedia Services either for voice and/or

broadband access delivered through DSL.

They also offer an integrated suite of telecom solutions to their enterprise customers, in

addition to providing long distance connectivity both nationally and internationally. They have

launched DTH and IPTV Services also. All these services are rendered under a unified brand

“Airtel”.

The company also deploys, owns and manages passive infrastructure pertaining to

telecom operations under its subsidiary Bharti Infratel Limited. Bharti Infratel owns 42% of

Indus Towers Limited.

Bharti Infratel and Indus Towers are the two top providers of passive infrastructure

services in India.

Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises.

Airtel comes to you from Bharti Airtel Limited, India‟s largest integrated and the first

private telecom services provider with a footprint in all the 23 telecom circles.

Bharti Airtel is structured into three strategic business units - Mobile services, Telemedia

services and Enterprise services.

The mobile business provides mobile & fixed wireless services using GSM technology.

Airtel was voted as the „Best Cellular Service‟ in the country for four consecutive years.

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 29

Type The Stock Exchange, Mumbai (BSE) The National Stock Exchange of India

Limited (NSE)

Founded 1985

Headquarters New Delhi, India

Key people Sunil Mittal

Industry Telecom

Products Mobile and Fixed-Line Telecommunication operator, Airtel DTH

Revenue $6 Billion

Slogan Express Yourself

Website www.airtel.in

Brand Ambassador

Shahrukh Khan, Karina Kapoor,Sachin Tendulkar,A.R.Rahman,

Saifali Khan, Madhvan,Vidhya Balan,Anandi (Avika guar) Balika vadhu.

Shares in Issue:

1,898,373,280 as at June 30, 2009

Company Vision: By 2010 Airtel will be the most admired brand in India.

Loved by more customers.

Targeted by top talent.

Benchmarked by more businesses.

Leading Competitors- VODAFONE, IDEA, BSNL, RELIANCE, TATA, AIRCEL

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 30

Vodafone is a British multinational mobile network operator headquartered in Newbury, United

Kingdom. Vodafone is the world's largest mobile telecommunication network company, based

on revenue, and has a market value of about £71.2 billion (November 2009).

Vodafone is the world's largest mobile telecommunications community, employing over 65,000

staff and with over 130 million customers. The business operates in 26 countries worldwide.

Vodafone is a public limited company with listings on the London and New York stock

exchanges.

Global recognition of the Vodafone brand is growing as the company rolls out its identity into

new markets. However, it retains local names and imagery in markets where this is essential to

maintaining the trust of customers.

To help promote its image worldwide, Vodafone uses leading sports stars from high profile

global sports, including David Beckham and Michael Schumacher. This Case Study concentrates

on how such promotion can help to keep a leading brand at the forefront of public awareness

For that reason our team decided to work on few steps which were basically to get the feed back

from the market as fallow.

Basically our objectives were to find out the behaviors of the consumers or the customers

towards the product available in the market that either consumer or the customer is after the

Quality of the product.

After the price of the product.

After the good presentation of the product which includes the servicing.

If the consumer is after or comes for particular product and why, either because

of effective advertisement on the media like television or news papers or other means of

advertisement.

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 31

LOGO:

Founded 1983 as Racal Telecom, independent 1991

Headquarters Newbury, England, UK

Key people

Arun Sarin, CEO

Sir John Bond, Chairman

John Buchanan, Deputy Chairman

Andy Halford, CFO

Industry Mobile telecommunications

Products Mobile networks, Telecom services, Etc.

Revenue ▲ £31.104 billion GBP (2007)

Net income ▼ £-1.564 billion GBP (2007)

Slogan Happy to help

Website www.vodafone.com

Main Attractions of advertisement Dog, Zoo zoos

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Idea Cellular is a wireless telephony company operating in all the 22 telecom circles in India. It

initially started in 1995 as a joint venture among the Tatas, Aditya Birla Group and AT&T by

merging "'Wings Cellular'" operating in Madhya Pradesh, Uttar Pradesh (UP) West, Rajasthan

and Tata Cellular as well as Birla AT&T Communications.

Initially having a very limited footprint in the GSM arena, the acquisition of Escotel in 2004 gave

Idea a truly pan-India presence covering Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya

Pradesh, Chhattisgarh, Uttar Pradesh (East and West), Haryana, Kerala, Rajasthan, Delhi

(inclusive of NCR) and West Bengal.

The company has its retail outlets under the "Idea n' U" banner. The company has also been the

first to offer flexible tariff plans for prepaid customers. It also offers GPRS services in urban

areas. Idea Cellular won the GSM Association Award for "Best Billing and Customer Care

Solution" for 2 consecutive years.

Type Spice: Public, Listed on BSE

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Idea: Subsidiary

Founded

Spice: 1997

Idea: 1995

Headquarters

Spice: Mohali, India

Idea: Indore, Delhi, Pune, India

Key people

Spice: Dilip Modi

Idea: Chairman: Kumar Mangalam Birla ; MD: Sanjeev Aga

Industry Telecom

Products Mobile operator

Revenue http://www.moneycontrol.com/india/news/business/idea-cellulars-

revenue479-/394751

Slogan

Spice: Spice Hai toh life hai (If there's Spice then there's Life.)

Idea: An !dea can change your life.

Website

Spice: Spice Telecom ;

Idea: www.ideacellular.com

Brand Ambassador Abhishek Bachan

RELIANCE OVERVIEW

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Reliance Communications, formerly known as Reliance Info comm, along with Reliance

Telecom and Flag Telecom, is part of Reliance Communications Ventures. It is an Indian

telecommunications company. According to National Stock Exchange data, Anil Dhirubhai

Ambani controls 66.77 per cent of the company, which accounts for more than 1.36 billion

shares.[3] It is the flagship company of the Reliance-Anil Dhirubhai Ambani Group, comprising

of power (Reliance Energy), financial services (Reliance Capital) and telecom initiatives of the

Reliance ADAG. It uses CDMA2000 1x technology for its existing CDMA mobile services, and

GSM-900/GSM-1800 technology for its existing/newly launched GSM services.

RelCom is also into Wire line Business throughout India and has the largest optical fiber

communication (OFC) backbone architecture [roughly 110,000 km] in the country.

Reliance Communications has launched its Direct To Home (DTH) TV also, known as "Big

TV". RelCom have presence across all B2C communications channel in one of the fastest

growing markets in the world.

BID FOR HUTCH: In 2007, Reliance Communications had bid for 67% of Hutch but lost to

Vodafone, which had been led by its CEO at the time Mr.PIYUSH.P.

ACQUISITIONS

In July 2007, the company announced it is buying US-based managed Ethernet and application

delivery services company Yipes Enterprise Services for a cash amount of Rs. 1200 crore rupees

(equivalent of USD 300 million). The deal was announc overseas acquisition, the Reliance group

has amalgamated the United States-based Flag Telecom for $ 211 million [roughly Rs 950 crore

(Rs 9.50 billion)].

Type Public (BSE: RCOM)

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 35

Founded 2004

Headquarters Navi Mumbai, Maharashtra, India

Key people Anil Ambani

(Chairman) & (MD)

Vice-Chairman Reliance-ADA Group

Industry Telecommunications

Products Wireless

Telephone

Internet

Television

Revenue US$ 4.26 billion (2008)

Net income US$ 1.35 billion (2008)

Total assets US$ 19.31 billion (2008)

Employees 33,000

Brand ambassador Hritik Roshan

TATA: AN OVERVIEW

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Tata Comm. is India's leading international telecom service provider. It is today part of

the Tata Group. It started as a successor to the erstwhile Overseas Communication Services, and

went on to become the premier provider of international voice and data services.

Tata Teleservices Limited (TTSL) is a part of the Tata Group of companies, an Indian

conglomerate. It operates under the brand name Tata Indicom in various telecom circles of

India. In Nov 2008, Japanese telecom giant NTT Docomo picked up a 26 per cent equity stake

in Tata Teleservices for about Rs 13,070 crore ($2.7 billion) or an enterprise value of Rs 50,269

crore ($10.38 billion).[1] In Feb 2008, TTSL announced that it would provide CDMA mobile

services targeted towards the youth, in association with the Virgin Group on a Franchisee model

basis.

Tata Teleservices Provides mobile services under 3 Brand names:

Tata Indicom

Tata DoCoMo

Virgin Mobile

Tata Teleservices Limited (TTSL)

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 37

Type Private

Founded 2000

Headquarters Navi Mumbai, India

Key people

Mr. Ratan N. Tata

(Chairman)

Anil Kumar Sardana

(MD)

Industry Telecommunications

Products

Wireless

Telephone

Internet

Television

Employees 350,000

Parent Tata Group

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 38

BSNL OVERVIEW

Bharat Sanchar Nigam Limited (known as BSNL) is a public sector telecommunication

company in India. It is India's largest telecommunication company with, 24% market share as on

March 31, 2008. Its headquarters are at Bharat Sanchar Bhawan, Harish Chandra Mathur Lane,

Janpath, New Delhi. It has the status of Mini Ratna, a status assigned to reputed public sector

companies in India.

BSNL is India's oldest and largest Communication Service Provider (CSP). Currently has a

customer base of 90 million as of June 2008. It has footprints throughout India except for the

metropolitan cities of Mumbai and New Delhi which are managed by MTNL. As mon March

31, 2008 BSNL commanded a customer base of 31.55 million Wire line, 4.58 million CDMA-

WLL and 54.21 million GSM Mobile subscribers. BSNL's earnings for the Financial Year ending

March 31, 2007 stood at INR 397.15b (US$ 9.67 b) with net profit of INR 78.06b (US$ 1.90

billion). BSNL has an estimated market value of $ 100 Billion. The company is planning an IPO

within 6 months to offload 10% to public in the Rs 300-400 range valuing the company at over

$100 billion.

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 39

Founded 19th century, incorporated 2000

Headquarters Bharat Sanchar Bhawan, Harish Chandra Mathur Lane, Janpath, New Delhi

Key people Kuldeep Goyal

(CMD)

Industry Telecommunications

Products

Wireless

Telephone

Internet

Television

Revenue US$ 9.67 billion (2007)

Owner(s) The Government of India

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 40

�

Type Joint Venture

Industry Telecommunications

Founded 2009

Headquarters Gurgaon, India

Key people

Stein-Erik Vellan

(CEO)

Sanjay Chandra

(Chairman)

Products

Wireless

Telephone

Internet

Employees 2,000

Parent

Telenor (67.25%)

Unitech Group (32.75%)

Website Uninor.in

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 41

Type Public (BSE: 511389)

Industry Conglomerate

Founded 1979

Founder(s) Nandlal Madhavlal Dhoot

Headquarters Aurangabad, Maharashtra, India

Key people

Venugopal Dhoot (Chairman) K. R. Kim (CEO)

Products

Consumer Electronics Home Appliances Components Office Automation Mobile phones Wireless Internet Petroleum Satellite television Power

Revenue ▲ US$4 billion (2010)

Net income ▲ US$276 million (2010)

Employees 5,000 (2010)

Website Videocon.com

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 42

FOUR P‟S ARE:-

1) PRODUCT

2) PRICE

3) PLACE

4) PROMOTION

Product- Sim cards, Plug to surf devices, Handsets for CDMA

Price- Offers, Schemes

Promotion: Print media, Electronic media, Outdoor media, Sales promotion

Place: Every retail shop, Offices, Home, Institutions

The study shows it clearly that Vodafone have a huge market share due to its better

service and good network. But the thing that differentiate it from the competitors that it provide

the more and more number of the value added services.

Latest advertisement of Vodafone: Zoo zoos” is very attracting and it increases the

sales of the Vodafone , the marketing manager of Vodafone reveals that statement.

Study clearly shows that Vodafone is a has a brand image in the mind of public due to

their willingness to provide the best service.

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 43

Vodafone focused more and more on the value added service and marketing. Recently

Vodafone gave its whole concentration by a series of advertisements of ZOOZOO series. This

move of Vodafone proved very successful to attract the more and more number of the

customers

.

Airtel basically uses two appeal to connect to the users

Emotional

Humorous

attracting

In 2002, Airtel signed on music composer A.R.Rehman and changed its tune to "live

every moment": rah man’s signature tune for Airtel is the most downloaded ringbone in

India. But that was just part of the ongoing communication.

The following year Airtel adopted the "express yourself" positioning, which is also its

current tagline.

Youth icons like Shahrukh khan and Sachin Tendulakar were brought in as brand

ambassadors to attract youngsters

Add campaign with an eye on the rural market

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The whole advertisement and promotion is designed by taking urban youth in focus but there

are large no of youths in rural sector as well and they can be their future consumers. Taking big

stars as brand ambassador is good decision. But organizations can further use recent bronze

medallist Boxer Vijendra kumar as there endorsement. Vijendra is having good looking

personality and he belongs to rural area so in this way rural people will start associating

themselves with that brand “SABKA AIRTEL”. Airtel can also use BALIKA VADHU fame

“ANANDI” (Avika gaur) targeting rural women and rural youth

Youth to Drive Growth:--Airtel should more concentrate towards the youth. As the increasing

market share of rivalry brand Virgin, clearly shows that youth can play a major role in this

competition. Attracting the Youth:-- To attract more youth community Airtel can go for more

and more plans for youth under the same brand “SABKA AIRTEL”. In this plan Airtel can give

SMS pack (it‟s for SMS generation), cheaper call rates schemes only for school and college going

students. In this plan Airtel should go for the heavy youth promo with fast dance track and cute

guys and gals.

Mobile service providers should provide the facility of portability of number.

Mobile service providers should provide the web access at cheaper cost.

Telecom market is quite competitive so mobile service providers should provide the

services at cheaper cost.

Mobile service providers should focus on providing better network coverage Especially

BSNL.

Mobile service providers should provide various schemes for their existing customers.

BSNL have to make more attractive ads.

Add some other promotional offers.

Makes some sense full ads for Tata Doccomo

For making interactive add to connect with customers.

Consolidation in Industry.

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Telecom players are looking to tap into global funds to finance their aggressive growth plans.

This will result in partnerships joint ventures and equity sellout to foreign players. New license

holders will continue to look to sell their stake at a premium. New policies will seek to curb this

license arbitrage. Smaller players with operations in only a few circles will find in difficult to

compete with the nationwide players. The industry may see consolidation with these smaller

operators being acquired by the larger ones. “Unbundling of the corporation” will continue as

companies will seek f or economies of scale and lower startup cost by infrastructure sharing. 3G

and WiMax license will spur M&A and partnership activity.

Idea Cellular’s Acquisition of Spice Telecom

There were three transactions as part of this acquisition; acquisition of shares of Spice, a non-

compete fee and a capital infusion of about Rs 7300 crores received from TM International Bhd

(TMI). With respect to shares, Idea acquired 40.8% stake of Spice Communications at Rs 77.30

a share for Rs 2,716 crore. There was a share swap in which Spice shareholders got 49 Idea

shares for every 100 Spice shares held. An additional Rs 544 crore was paid to the promoters of

Spice group as 'non-compete fee'. The deal was strategically important for Idea Cellular as it was

looking forward to transfer itself into a pan-India telecom service provider. The spectrum

auctioned by GoI is a scarce resource nowadays and cost a premium. Also there‟s restriction by

TRAI with respect to number of operators per telecom circle. So it makes sense to acquire a

small telecom operator. Small players like Spice Telecom operating at only a few

circles(Karnataka and Punjab) will find difficult to compete with the nationwide players in the

long run. So it was a win-win deal for both companies.

VODAFONE’S ENTRY INTO INDIA

Vodafone paid a discounted price of $10.9 billion in cash for acquiring the 52% stake held by

Hutchison Telecom International (HTIL) in Indian mobile firm Hutch-Essar. HTIL declared a

special dividend of 6.75 HK dollars per share following the completion of the formalities. The

final price was a reduction of $180 million from the originally agreed price of $11.08 billion.

Vodafone is the largest mobile telecommunications network company in the world. The deal

gave them access to one of the fastest growing mobile markets in the world.

Telenor-Unitech Deal

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Norwegian Telecom major Telenor is in the process of acquiring controlling stake of 67.25% in

Unitech wireless via equity infusion. The enterprise valuation of Unitech Wirelsss is about Rs

10,900 crore. As per the deal, Telenor will infuse cash in four stages and at each phase, by

increasing its stake in Unitech Wireless. In the first phase, they got 33.5% ownership in Unitech

Wireless. In the second phase they completed the acquisition for a 49 per cent stake in Unitech

Wireless by paying Rs 1,130 crore for a further 15.5 per cent stake in the company. The

acquisition is expected to be completed by end of this quarter.

TTSL – DoCoMo Deal.

Japanese carrier NTT DoCoMo acquired 26 per cent stake in Tata Teleservices (TTSL). The

Tata DoCoMo-branded GSM service has already started in Southern India and gradually will be

expanded nationwide. DoCoMo‟s international expansion plans have not always proven

successful, with the firm historically preferring to take small stakes in firms and then try to

influence their strategy. It has been less prepared to take majority stakes and impose its will, as

other leading carriers have chosen to do.

The difficulties faced by the firm in spreading its domestically successful i-mode service

internationally typify the obstacles it has faced overseas. With Tata, DoCoMo had said

“participating proactively in TTSL‟s management by providing human resources and technical

assistance to help realise improved network quality and the possible introduction of leading-

edge, value-added services.”

Bharti-MTN deal (in talks).

Recently Bharti Airtel has re-started its audacious merger bid with MTN that could create a $61-

billion transnational telecom goliath with combined revenues of $20 billion and over 200 million

subscribers across Africa, Asia and Middle East, will be among the world's 10 biggest telecom

companies. The deal could be win-win for both parties. Bharti is under pressure in its home

country due to severe competition and looking forward to spread its risk across geographies.

Meanwhile, the African telecom operator is also encountering some of the problems that its

counterpart in India is confronting. MTN may have higher ARPUs (in the range of $12-20), but

they are also falling fast.

Strategic benefits to both players

Synergies would be sought from a number of areas, including procurement, operational best

practice, R&D and international network sharing. The two companies will not overlap in each

other‟s business operations: Bharti Airtel will be the primary vehicle for Bharti and MTN to

pursue further expansion in Africa and the Middle East.

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With both Bharti and MTN operating in high-growth geographies, it would be imperative for

them to incrementally expand into untapped areas. Collaborating with each other would seem

the logical way ahead. The most important, and visible fallout of the deal, if it materializes, will

be the advantage of economies of scale for the new entity.

In recent times, companies are more amenable to mergers and acquisitions. Of late, companies

are finding it tough to obtain easy funds for expansion, which calls for more collaboration if

corporate intend to expand. Bharti would not be involved only in MTN‟s day-to-day activities,

but it would also have a say while making bigger strategic decisions, such as those pertaining to

investments in other geographies or sourcing of equipment. The high subscriber base and

financial muscle will give Bharti-MTN the desired edge while dealing with vendors. Once the

merger happens, the economies of scale of the complete outfit (Bharti-MTN) would be taken

into account. For instance, even if the company places an order worth just $1 million, the

vendor would not hesitate to lap it up, as there could be orders worth a billion dollars in other

projects. This would offset whatever concerns there may be with respect to the small population

size in countries where MTN operates.

Takeaways for Bharti

The biggest takeaway for Bharti is in the form of access to new geographies with high growth

potential. Without a partner, Bharti would have to embark on a Greenfield project, which would

be time-consuming and capital intensive.

Besides, without local knowledge (with respect to the market and government regulations),

Bharti could be on a sticky wicket. The Indian telco does not have the expertise in running

multi-country operations.

MTN has operations in 21 countries across Africa and the Middle East and is one of the largest

emerging market mobile operators globally. While Africa has one-third of the world‟s

population, its telephonic density is just 30 per cent. This offers plenty of room for expansion.

The fact that 95 percent of Africa is prepaid, which ensures all cash operations, fits perfectly into

Bharti‟s plans.

The options for Bharti were to go either the Greenfield way or with an experienced partner.

MTN‟s strong foothold in some growing markets such as South Africa, Botswana, Iran and

Nigeria ensures that when the growth in India starts to slow down, Bharti would be ready to take

off in other geographies. Besides, there is a lot of potential in Africa as three-fourths of the

continent is still untapped.

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Africa is quite like rural India and from that perspective; Bharti could learn how to roll out

infrastructure in rural India.

In addition, MTN is strong in the value-added services (VAS) and mobile commerce space. So,

as and when mobile commerce picks up in India (after RBI‟s approval), Bharti would be able to

tap this market through MTN‟s expertise.

MTN has a vast experience in running multi-country operations and overcoming regulatory

hurdles. By working with MTN, life for Bharti will get a lot of easier.

One of the major challenges would be the integration of the company on the ground. It is

tough for intercontinental companies to merge seamlessly because of cultural divide.

Alcatel-Lucent for instance is still trying to adjust to cultural divide. Although Nokia-Siemens

has bridged this divide faster, it was because both the companies were European.

The Black Empowerment Act could pose a challenge, as it is meant to safeguard the rights of

the black population. As per this Act, blacks are ensured a minimum shareholding management

seats and voting rights.

The country’s strong trade union, Congress of South African Trade Unions (COSATU), which

has influence over President Jacob Zuma, had almost wrecked the Vodafone-Vodacom deal.

The Indian telecom industry has always allured foreign investors. In fact, the cumulative

FDI inflow, from August 1991 to March 2007, in the telecommunication sector amounted to

US$ 7,513.22 million. This makes telecommunication the third-largest sector to attract FDI in

India in the post liberalization era. The investment was majorly in handset manufacturing and

telecom service provider.

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With stable macroeconomic impetus and numerous other advantages, India has the potential to

become the electronics manufacturing hub of the world. Excited by the record-breaking industry

growth, investors have outlaid US$ 1.5 billion in the past two and a half years in the Indian

telecom sector. India will receive an additional US$ 2 billion investment in the next one year.

With the world now recognizing India‟s manufacturing potential, the Indian telecom handset

manufacturing market is likely touch US$ 7 billion by 2010. An example is Nokia. The company

has already produced 25 million handsets in its Chennai facility. It will pump in an additional

US$ 150 million to this set up. The company exports around 20 per cent of its volume to South-

east Asia, the Middle East and Africa. Local manufacturing allows companies to avoid 4 per cent

countervailing duties on imported handsets, thereby further reducing the cost.

Managed service is another segment that is attracting telecom companies. On account of the

rapidly growing subscriber base, service providers find it difficult to manage their infrastructure

and network. In such cases, they completely or partially outsource their infrastructure or

network management operations.

Hutchitson Essar (now Vodafone) and Nokia Deal:

A case in point is Nokia which is managing the network for Hutchison Essar Limited in 19

circles in India. Having successfully capitalized on the business potential of managed service,

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Nokia is already earning 30 per cent of its total revenue from this segment. The company has

also shifted its first Global Network Solutions Centre (GNSC) to India. The company manages

39 cellular networks in 30 countries. Its Indian center will act as a global hub for other Nokia

operation centers.

Advantages of Managed Service

• Smooth management of technological complexity

• Opportunity to strengthen core competency

• Reduction in financial outlay

• Touching base with new processes and technologies

Another dimension of managed service is telecom, communication and network management

solutions for enterprises. Bharti Televentures and IBM, together offer telecom and IT solutions

in India. The solutions and services portfolio comprises of the remote monitoring of servers,

security operations and network operations, providing data center services (including server

hosting, server management and storage management), IT help desk services and end-to-end

connectivity and fulfilling all telecom and communication requirements. This information

technology outsourcing deal with infotech major IBM is estimated to be in the range of $700-

750 million for a ten-year period.

The deal involved outsourcing of BTVL's hardware, software and IT service requirements to

IBM. The agreement specifies that payments made to IBM India will be linked to the percentage

of revenue generation by BTVL and pre-defined service level agreements. The percentage-linked

revenue payment is modeled to decrease with BTVL's increase in revenue. The deal includes all

customer-facing IT applications like billing, customer relationship management and data

warehousing. In addition, Internet, e-mail and online collaborations are included in it. On the

infrastructure front, IBM will consolidate BTVL's data center, IT helpdesk and enhance its

disaster recovery center capabilities, he said.

Bharti’s Outsourcing to Alcatel-Lucent:

Telecom major Bharti Airtel has a $500-million deal to Alcatel-Lucent for outsourcing the

management and servicing of its broadband and fixed line network for five years. The deal

involves the creation of a joint venture with Alcatel-Lucent holding 76 per cent of the equity,

and Bharti having the remainder 24 percent. The joint venture will help accelerate performance

as Bharti migrates to the next generation networks for the broadband and telephone customers.

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Bharti Outsourcing Deal with Nokia & Ericsson

Bharti Airtel awarded a $400m contract to Nokia for expanding its managed GSM networks in

eight circles. This also marks Bharti‟s third major deal with Nokia in the last two years. Bharti

would have 100% ownership of the networks supplied by Nokia, with the actual payment being

linked to utilization of capacity and fulfillment of agreed quality of service parameters. This

comes close on the heels of Bharti‟s recent signing of a $1bn three-year service contract with

Ericsson towards design, planning, supply, installation, commissioning and upgrading of its

network in 15 telecom circles. This emphasizes Bharti‟s policy towards outsourcing all

operational activities, including customer services to global majors. This has enabled Bharti to

focus on its core areas: product innovation, value added services, marketing, branding and

pricing. It has enabled Bharti to concentrate on customers, finances and regulation. As per the

three-year contract, Nokia will provide managed services and expand Airtel‟s

GSM/GPRS/EDGE networks in eight circles of Mumbai, Maharashtra & Goa, Gujarat, Bihar,

Orissa, Kolkata, West Bengal and Madhya Pradesh. The network monitoring operations will be

carried out from Nokia‟s state-of-the-art Global Network Services Center in Chennai. The deal

also envisages Nokia to deploy its WAP solution across Bharti‟s national network to enhance its

mobile packet core network capabilities. This will make usage of data services easy, thereby

increasing the consumption of content on the Bharti network.

Future Technology Trends

In this section we have listed down the future technologies which are in roadmap and are

speculated to make an impact on current business model of telcos.

IP Multimedia Subsystem (IMS)

IP Multimedia Subsystem (IMS) is a generic architecture for offering multimedia and voice over

IP services, defined by 3rd Generation Partnership Project (3GPP). IMS is access independant

as it supports multiple access types including GSM, WCDMA, CDMA2000, WLAN, Wireline

broadband and other packet data applications. IMS will make Internet technologies, such as web

browsing, e-mail, instant messaging and video conferencing available to everyone from any

location. It is also intended to allow operators to introduce new services, such as web browsing,

WAP and MMS, at the top level of their packet-switched networks. IP Multimedia Subsystem is

standardized reference architecture. IMS consists of session control, connection control and an

applications services framework along with subscriber and services data. It enables new

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converged voice and data services, while allowing for the interoperability of these converged

services between internet and cellular subscribers. IMS uses open standard IP protocols, defined

by the IETF. So users will be able to execute all their services when roaming as well as from

their home networks. So, a multimedia session between two IMS users, between an IMS user

and a user on the Internet, and between two users on the Internet is established using exactly the

same protocol. Moreover, the interfaces for service developers are also based on IP protocols.

Some of the possible applications where IMS can be used are:

Presence services

Full Duplex Video Telephony

Instant messaging

Unified messaging

Multimedia advertising

Multiparty gaming

Video streaming

Web/Audio/Video Conferencing

Push-to services, such as push-to-talk, push-to-view, push-to-video

Effectively, IMS provides a unified architecture that supports a wide range of IP-based services

over both packet- and circuit-switched networks, employing a range of different wireless and

fixed access

technologies. A user could, for example, pay for and download a video clip to a chosen mobile

or fixed device and subsequently use some of this material to create a multimedia message for

delivery to friends on many different networks. A single IMS presence-and-availability engine

could track a user's presence and availability across mobile, fixed, and broadband networks, or a

user could maintain a single integrated contact list for all types of communications. A key point

of IMS is that it is intended as an open-systems architecture: Services are created and delivered

by a wide range of highly distributed systems (real-time and non-real-time, possibly owned by

different parties) cooperating with each other. It is a different approach to the more traditional

telco architecture of a set of specific network elements implemented as a single telco-controlled

infrastructure.

High Speed Downlink Packet Access (HSDPA)

High Speed Downlink Packet Access (HSDPA) is a packet based technology for W-CDMA

downlink with data transmission rates of 4 to 5 times that of current generation 3G networks

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(UMTS) and 15 times faster than GPRS. The latest release boosts downlink speeds from the

current end-user rate of 384 kbps (up to 2 Mbps according to standards) to a maximum value

according to standards of 14.4 Mbps. Real life end-user speeds will be in the range of 2 to 3

Mbps.

HSDPA provides a smooth evolutionary path for Universal Mobile Telecommunications System

(UMTS) networks to higher data rates and higher capacities, in the same way as Enhanced Data

rates for GSM Evolution (EDGE) does in the Global System for Mobile communication (GSM)

world. The introduction of shared channels for different users will guarantee that channel

resources are used efficiently in the packet domain, and will be less expensive for users than

dedicated channels.

4G or Fourth Generation Networks

4G or Fourth Generation is future technology for mobile and wireless comunications. It will be

the successor for the 3Rd Generation (3G) network technology. Currently 3G networks are

under deployement. Approximatly 4G deployments are expected to be seen around 2010 to

2015. The basic voice was the driver for second-generation mobile and has been a considerable

success. Currently , video and TV services are driving forward third generation (3G)

deployment. And in the future, low cost, high speed data will drive forward the fourth

generation (4G) as short-range communication emerges. Service and application ubiquity, with a

high degree of personalization and synchronization between various user appliances, will be

another driver. At the same time, it is probable that the radio access network will evolve from a

centralized architecture to a distributed one.

The evolution from 3G to 4G will be driven by services that offer better quality (e.g. multimedia,

video and sound) thanks to greater bandwidth, more sophistication in the association of a large

quantity of information, and improved personalization. Convergence with other network

(enterprise, fixed) services will come about through the high session data rate. It will require an

always-on connection and a revenue model based on a fixed monthly fee. The impact on

network capacity is expected to be significant. Machine-to-machine transmission will involve

two basic equipment types: sensors (which measure parameters) and tags (which are generally

read/write equipment). It is expected that users will require high data rates, similar to those on

fixed networks, for data and streaming applications. Mobile terminal usage (laptops, Personal

digital assistants, handhelds) is expected to grow rapidly as they become more user friendly.

Fluid high quality video and network reactivity are important user requirements. Key

infrastructure design requirements include: fast response, high session rate, high capacity, low

user charges, rapid return on investment for operators, investment that is in line with the growth

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in demand, and simple autonomous terminals. The infrastructure will be much more distributed

than in current deployments, facilitating the introduction of a new source of local traffic:

machine-to-machine.

The Indian Telecom Service provider industry is gearing for a revolution. The customer is

driving this revolution and will see more unique and sophisticated offerings coming his way. The

3G which will pave the way for 3.5G, 3.75G and the next big thing-4G and the VAS services

will keep the customer asking for more. The rural areas which have remained untapped will see

an insurgence of services. Also the easing of the regulations by TRAI ,the ease of spectrum

licensing, the FDI influx will make the telecom space in India a must watch in the coming years.

REFERENCES

[1} IBEF report 2007-08/08-09 : Telecommunication - MARKET & OPPORTUNITIES.

[2] Cellular Statistics – Cellular Operator Association of India

[3] IAMAI & eTechnology Group@IMRB: MOBILE VALUE ADDED SERVICES IN INDIA- A Report.

[4] Telenor Entering India: Investment Update

[5] Voice and Data(May 2009): Mobile Number Portability - Poaching with Portability.

[6] Business India : Telecom Takeover, Bharti-MTN deal

[7] Moneycontrol.com: Idea Spice deal

[8] Business Standard: Vodafone Hutch deal

*9+ IntoMobile: India’s 3G License Plans Updated.

[10] World Bank Report: Spectrum auctions in India: lessons from experience

WEBSITES USED:

http://www.airtel.in

http://en.wikipedia.org/wiki/Idea_Cellular

http://en.wikipedia.org/wiki/Spice_Telecom

http://www.pluggd.in/indian-telecom-industry/idea-tmi-acquires-spice-telecom-1805/

IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 55

http://www.adityabirlanuvo.com/media/features/features.aspx?ID=1d95UDdxCdM

http://www.mobiles.in/mobile-service-providers.htm

http://www.bsnl.co.in/about.htm

www.vodafone.co.in

www.ideacellular.com

www.google.com

MAGAZINES USED:

4PS

Business Economics

Times of India

Industrial Handbook 2009

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