An Empirical Study of Ultra Low Cost Mobile Phone in India

THESIS ON AN EMPIRICAL STUDY OF ULTRA LOW COST MOBILE PHONE IN INDIA

ABSTRACTUltra low-cost handsets (ULCH) those selling for Rs.1,714.54 ($35) or less will determine the success of operators and vendors in emerging markets, according to the latest report from More than half of the 30 crore ULCH expected to be sold in 2013 will go to emerging markets, with China and India playing a crucial role in driving the growth. Between 2007 and 2013, the ULCH share of global handset sales will triple, as operators try to attract new users. "Emerging markets have a huge untapped population," says Rahul Gupta, Manager, Emerging Markets, and author of the report. "But it's a population with limited spending power. A lowcost handset has to be part of the strategy of any operator or handset vendor trying to get a piece of this market." "The most important issue for operators seeking to benefit from low-cost handset development is to choose suppliers who have global scale in purchasing, product design and brand," added Chris Ambrosio, Executive Director of the Strategy Analytics Global Wireless Practice. The report also points out that low-cost alone is not sufficient; and the need to provide a limited set of rich applications, such as embedded gaming and FM radio, along with the expansion of distribution and service networks into rural areas, compounds the challenges that operators and device vendors have in developing ULCH offerings. The ultra low-cost handset (ULCH) segment is poised to explode as operators expand their presence in smaller cities and the rural turf.

A recent study claims the sales of such dirt-cheap phones will jump from 68 million units in 2008 to 129 million by calender 2013. Some of the prominent vendors in the ULCH space include Nokia, Motorola, ZTE, LG, Samsung, Huawei, Kyocera and operator branded handsets like Reliance Classic and Vodafone.ii

The study conducted by US-based ICT consulting and research firm Strategy Analytics notes that ULCH category is the fastest growing segment in emerging markets like India due to the huge base of low income subscribers. ULCH are mobiles positioned below the entry-level segment and sold at a wholesale price of $35 or less. However, the contribution of ULCH in the Indian mobile phone market is projected to eventually fall after four years. The ULCHs constituted some 38% of total handset sales in India in 2008 and is expected to contribute around 34% by 2013. Globally, ULCH handset contribution to total handset shipments will rise from 15% in 2008 to over 20% by 2013. "ULCHs will continue to be a dominant factor in mobile telephony in emerging markets and will be an important tool to drive penetration in rural areas. Around 300 million ULCHs are expected to be sold across the globe in 2013 with major contribution coming from India and China," Strategy Analytics manager (emerging market communication service - global wireless practice) Rahul Gupta told ET. The study noted that consumer preference of low income subscribers are undergoing change and they want handsets which sports exciting features, design and style. "The vendors and operators should also provide some freebies such as airtime, digital content and accessories along with the handsets," said Mr Gupta. Vendors and operators will need separate marketing approach for the ULCH segment to attract rural consumers. "The first time users will need to see a substantial return from the investment they make in mobiles," Mr Gupta added

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SIGNATORY PAGETO WHOMESOEVER IT MAY CONCERN

This is to confirm that Parv Kapoor, student of IIPM, NEW DELHI, is doing a live project(Thesis) on the topic An empirical study of Ultra Low Cost Mobile Phone in India under my guidance and that the work being done by the candidate is original and is of the standard expected by an MBA student. May god bless him with all success in his career.

Warm regards

NITIKA DAHIYA Manager-Corporate Comminucation

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TOPIC APPROVAL LETTER. Dear Parv Kapoor, This is to inform that your thesis proposal on Ultra Low Cost Mobile Phones in India, to be conducted under the guidance of Ms.Nitika Dahiya is hereby approved and the registration number is DS/08/10-M-268 Make it a comprehensive thesis by ensuring that all the objectives as stated by you in your synopsis are met using appropriate research design; a thesis should aim at adding value to the existing knowledge base. You are required to correspond with your internal guide Prof. Dipti Sharma at [email protected] Ph.-0124-3917413 by sending at least four response sheets (attached along with this mail) at regular intervals before 15th February 2010 (the last date for thesis submission).

Regards, Prof .Sumanta Sharma Dean (Projects) IIPM [email protected] Phone: +91 0124 3917401 (D) +91 0124 3917415 (Board)

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ACKNOWLEDGEMENT

It is well-established fact that behind every achievement lays an unfathomable sea of gratitude to those who have extended their support and without whom the project would never have come into existence. I express my gratitude to IIPM, New Delhi for providing me an opportunity to work on this thesis as a part of the curriculum. Also, I express my gratitude to Prof. Sumanta Sharma and Prof.Dipti Sharma for their kind cooperation.

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CONTENT

ABSTRACT........................................................................................ii SIGNATORY PAGE..........................................................................iv TOPIC APPROVAL LETTER............................................................v ACKNOWLEDGMENT......................................................................vi APPROVED THESIS SYNOPSIS...................................................viii

1.2.

INTRODUCTION ....................................................................................1 COMPANY PROFILE............................................................................29 LITERATURE REVIEW......................................................................112 RESEARCH METHODOLOGY...........................................................120 FINDING AND ANALYSIS..................................................................122 CONCLUSION....................................................................................142 RECOMMENDATION.........................................................................143 BIBLIOGRAPHY.................................................................................144 ANNEXURE QUESTIONNAIRE......................................................145

3.4. 5. 6. 7. 8. 9.

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THESIS SYNOPSIS

THESIS SYNOPSIS NAME SECTION PHONE NO. Email Address Parv Kapoor FN-4 9717067347 [email protected]

Thesis Topic: Specialization Area:

An empirical study of Ultra Low Cost Mobile Phone in India Marketing

Introduction: Mobile is one of the most selling things in the modern society. It has become a status symbol. However there are many handsets which are just above the imagination of a salaried employee. Forget about costly handset there are many who cant even think of buying a mobile. Therefore the new thing which is coming in market now a days is the low cost mobile phone with the same feature and looks which are normally found in costly mobiles. Because of this now even low income group can think of buying a new handset which has recently become a necessity. Research Objectives: To know the market share of the low cost mobile phone companies in India To know how these mobile phone companies are affecting the branded companies To know the consumer preference and attitude towards these mobile phone companies

Hypothesis:

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This study would take pan India into consideration.

Research Methodology: Secondary Data: Information through websites Primary Data: Questionnaire for consumers and for distributors Tools used: Questionnaire Sampling method: SPSS analysis Sample size: 400 people Target audience: Distributors in all the four territories and people age between 16 to 40

Scope of the work: With this study we would be able to generate new strategies for already existing providers. Also with the knowledge of the market share of all the mobile handset providers, we will be able to check whether the companies are using right strategies to capture the right amount of market share or not. With the knowledge of consumers preference and attitude , we can actually come to know consumers expectations from a mobile handset provider in terms of price, feature and lot more.

Justification of choosing the topic Low cost mobiles have already created a mark in the society however no study has been done to keep a check on the increase of the presence of low cost mobiles set. It is really important to know what consumers want from a company. Thats why this topic has been chosen so that a proper study can be done on a pan India platform.

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Details of External Guide: Name: Ms. Nitika Dahiya Designation: Mananger - Corporate Comminucation

Summer Training Details Company Position Duration Project Details : Hindustan Coca Cola Beverages Pvt Ltd : Marketing Executive : 20th Jan 2009- 20th Feb 2009 : We were dealing with the R.E.D (Right Execution Daily)

one of the Marketing concepts of Coca-Cola that helped me to generate orders and to find out the stock kept with the dealers. It also helped me to categorize the dealers into 3 classes as Diamond, Gold and Silver on the basis of R.E.D tracker.

Project Guide: Mr.Karthik Subramaniam A.S.M(H.C.C.B.P.L)

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The Indian Institute of Planning & Management, New Delhi

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INTRODUCTIONDefinition of Cellular/Mobile phone The Cellular telephone (commonly "mobile phone" or "cell phone" or "handphone") is a long-range, portable electronic device used for mobile communication. In addition to the standard voice function of a telephone, current mobile phones can support many additional services such as SMS for text messaging, email, packet switching for access to the Internet, and MMS for sending and receiving photos and video. Most current mobile phones connect to a cellular network of base stations (cell sites), which is in turn interconnected to the public switched telephone network (PSTN) (the exception is satellite phones. Cellular telephone is also defined as a type of short-wave analog or digital telecommunication in which a subscriber has a wireless connection from a mobile telephone to a relatively nearby transmitter. The transmitter's span of coverage is called a cell. Generally, cellular telephone service is available in urban areas and along major highways. As the cellular telephone user moves from one cell or area of coverage to another, the telephone is effectively passed on to the local cell transmitter. A cellular telephone is not to be confused with a cordless telephone (which is simply a phone with a very short wireless connection to a local phone outlet). A newer service similar to cellular is personal communications services (PCS). The Global Cellular Mobile Industry: The global mobile phone industry is based on many different manufacturers and operators. The industry is based on advanced technology and many of the manufacturers are operating in different industries, where they use their technological skills, distribution network, market knowledge and brand name. Four large manufacturers of mobile phones are today dominating the global mobile phone industry; Nokia, Sony Ericson, Samsung and Motorola. In addition to these companies there are many manufacturers that operate globally and locally.

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Nokia In 1865, an engineer named Fredrik Idestam established a wood-pulp mill and started manufacturing paper in southern Finland near the banks of a river. Those were the day when there was a strong demand for paper in the industry, the companys sales achiev its high-stakes and Nokia grew faster and faster. The Nokia exported paper to Russia firstand then to the United Kingdom and France. The Nokia factory employed a fairly largeworkforce and a small community grew around it. In southern Finland a communitycalled Nokia still exists on the riverbank of Emkoski.Finnish Rubber Works, a manufacturer a Rubber goods, impressed with the hydroelectricity produced by the Nokia wood-pulp (from river Emkoski), merged up and started selling goods under the brand name on Nokia. After World War II, it acquired major part of the Finnish Cable Works shares. The Finnish Cable Works had grown quickly due to the increasing need for power transmission and telegraph and telephon networks in the World War II. Gradually the ownership of the Rubber Works and the Cable Works companies consolidated. In 1967, all the 3 companies merged-up to formthe Nokia Group. The Electronics Department generated 3 % of the Groups net sales and provided work for 460 people in 1967, when the Nokia Group was formed. In the beginning of 1970, the telephone exchanges consisted of electro-mechanical analog switches. Soon Nokia successfully developed the digital switch (Nokia DX 200) thereby replacing the prior electro mechanical analog switch. The Nokia DX 200 was embedded with high-level computer language as well as Intel microprocessors which in turn allowed computer-controlled telephone exchanges to be on the top and which is till date the basis for Nokias network infrastructure.Introduction of mobile network began enabling the Nokia production to invent the Nordic Mobile Telephony(NMT), the worlds very first multinational cellular network in 1981. The NMT was later on introduced in other countries. Very soon Global System for Mobile Communication (GSM), a digital mobile telephony, was launched and Nokia started the development of GSM phones. Beginning of the 1990 brought about an economic recession in Finland. (Rumour has it that Nokia was offered to the Swedish telecom

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company Ericsson during this time which was refused) Due to this Nokia increased its sale of GSM phones that was enormous. This was the main reason for Nokia to not only be one of the largest but also the most important companies in Finland. As per the sources, in August 1997, Nokia supplied GSM systems to 59 operators in 31countries.Slowly and steadily, Nokia became a large television manufacturer and also the largest information technology company in the Nordic countries. During the economic recession the Nokia was committed to telecommunications. The 2100 series of the production was so successful that inspite of its goal to sell 500,000 units, it marvellously sold 20 million. Presently, Nokia is the number 1 production in digital technologies, it invests 8.5% of net sales in research and development. Also has its annual Nokia Game. Enter to Global System Communication Nokia Corporation (Nokia), a Finland based company incorporated in 1967, is the leading manufacturer of mobile devices and mobile networks in the world. Over the years, Nokia has evolved from a pulp, rubber and cables manufacturing company to a major manufacturer of wireless devices and networks. Nokia offers a wide range of mobile devices with experiences in music, navigation, video, television, imaging, games and business mobility. It also provides equipment, solutions and services for network operators, service providers and corporations. The company offers its products in 150 countries across the world. It is headquartered in Espoo, Finland and employs about 68,500 people.The company recorded revenues of E41, 121 million during the fiscal year ended December 2006, and an increase of 20.3% over 2005. The operating profit of the company was E5, 488 million during fiscal year 2006, an increase of 18.3% over 2005. The net profit was E4, 306 million in fiscal year 2006, an increase of 19.1% over 2005. Nokia Corporation manufactures mobile devices principally based on global system for mobile communications, code division multiple access (CDMA), and wideband CDMA (WCDMA) technologies. The company operates in three divisions: Multimedia, Enterprise Solutions, and Networks. The Multimedia division focuses on bringing connected mobile multimedia to consumers in the form of advanced mobile devices, including 3G WCDMA mobile devices and solutions. The Enterprise Solutions division enables businesses and BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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institutions to extend their use of mobility from mobile devices for voice and basic data to secure mobile access, content, and applications. Its solutions include business-optimized mobile devices for end users, a portfolio of Internet portfolio network perimeter security gateways, and mobile connectivity offerings. The Networks division provides network infrastructure, communications, and networks service platforms and professional services to operators and service providers. Nokia Corporation is based in Espoo, Finland. Motorola MOTOROLA Electronics a wholly owned subsidiary of MOTOROLA Electronics was established in January, 2003 after clearance from the Foreign Investment Promotion Board(FIPB). The trend of beating industry norms started with the fastest ever nationwide launch by MOTOROLA in a period of 4 and 5 months with the commencement of operations in May 2003. MOTOROLA set up a state-of-the art manufacturing facility at Greater Noida, near Delhi, in 2004, with an investment of Rs 500 Crores. During the year 2001, MOTOROLA also commenced the home production for its eco-friendly Refrigerators and established its assembly line for its PC Monitors at its Greater Noida manufacturing unit. The Greater Noida manufacturing unit line has been designed with the latest technologies at par with international standards at Korea and is one of the most Eco-friendly units amongst all MOTOROLA manufacturing plants in the world. The year 2001 witnessed MOTOROLA becoming the fastest growing company in the consumer electronics, home appliances and computer peripherals industry. The company had till the month of October 2001 achieved a cumulative turnover of Rs 5000 Crores in India since its inception in 2003 , making it the fastest ever Rs 5000 Crores clocked by any company in the Indian consumer electronics and home appliances industry. Having achieved this milestone, MOTOROLA achieved another benchmark with the first ever sales of One Lakh ACs (Windows and Splits) in a calendar year.

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MOTOROLA is poised to surpass its turnover target of Rs. 2700 Crores this year and clock a turnover of Rs. 3000 Crores . This year, MOTOROLA has emerged as the leader in Colour Televisions, Semi Automatic Washing Machines, Air Conditioners, Frost-Free Refrigerators and Microwaves Ovens. In Colour Televisions having set the sales target of one million units of Color Televisions for 2002, MOTOROLA has already achieved the one million mark in the month ahead of its target. MOTOROLA Electronics India is the fastest growing company in the consumer electronics, home appliances and computer peripherals industry today. MOTOROLA Electronics is continually providing superior technology products & value for money to over 50 lacs households in India. Samsung The Samsung Group is the world's largest conglomerate. It is South Korea's largest chaebol and composed of numerous international businesses, all united under the Samsung brand, including Samsung Electronics, the world's largest electronics company, Samsung Heavy Industries, one of the world's largest shipbuilders and Sam sungEngineering & Construction, a major global construction company. These three multinationals form the core of Samsung Group and reflect its name - the meaning of the Korean word Samsung is "tristar" or "three stars". The Samsung brand is the best known South Korean brand in the world and in 2005, Samsung overtook Japanese rival Sony as the world's leading consumer electronics brand and became part of the top twenty global brands overall. It is also the leader in many domestic industries, such as the financial, chemical, retail and entertainment industries. Samsung's strong influence in South Korea is visible throughout the nation, and is sometimes called the 'Republic of Samsung'. The 1990s saw Samsung rise as an international corporation. Not only did it acquire a number of businesses abroad, but also began leading the way in certain electronic components. Samsung's construction branch was awarded a contract to build one of the two Petronas Towers in Malaysia, Taipei 101 in Taiwan and the Burj Dubai in United Arab Emirates (founded by Callum Cuirtis), which is the BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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tallest structure ever constructed. In 1996, the Samsung Group reacquired the Sungkyunkwan University foundation. In 1993 and in order to change the strategy from the imitating cost-leader to the role of a differentiator, Lee Kunhee, Lee Byung-chulls successor, sold off ten of Samsung Group's subsidiaries, downsized the company, and merged other operations to concentrate on three industries: electronics, engineering, and chemicals (Samsung Electronics). Samsung is the world's largest manufacturer of Televisions and various other consumer electronics. Samsung is the world's second largest mobile phone maker. Compared to other major Korean companies, Samsung survived the Asian financial crisis of 1997-98 relatively unharmed. However, Samsung Motor Co, a $5 billion venture was sold to Renault at a significant loss. Most importantly, Samsung Electronics (SEC) was officially spun-off from the Samsung Group and has since come to dominate the group and the worldwide semiconductor business, even surpassing worldwide leader Intel in investments for the 2005 fiscal year. Samsung's brand strength has greatly improved in the last few years.[9] Samsung became the largest producer of memory chips in the world in 1992- Samsung, the world's second-largest chipmaker after Intel, see Worldwide Top 20 Semiconductor Market Share Ranking Year by Year.[10]. In 1995, it built its first liquid-crystal display screen. Ten years later, Samsung grew to be the world's largest manufacturer of liquid-crystal display panels. Sony, which had not invested in LCDs, contacted Samsung to cooperate. In 2006, S-LCD was established as a joint venture between Samsung and Sony in order to provide a stable supply of LCD panels for both manufacturers. SLCD is owned by Samsung and Sony 51% to 49% respectively and operates its factories and facilities in Tangjung, South Korea. In 2008, Samsung became the largest mobile phone maker in the United States and 2nd largest mobile phone maker in the World. LG The LG Group is South Korea's third largest chaebol and is a multinational conglomerate that produces electronics, mobile phones, and petrochemical products and operates subsidiaries like LG Electronics, LG Telecom, Zenith Electronics and LG Chem in over 80 countries.LG Group founder Koo In Hwoi established Lak Hui Chemical Industrial Corp. in 1947. As the company expanded its plastics business, it BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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established GoldStar Co., Ltd., (currently LG Electronics Inc.) in 1958.In 1959, Goldstar produced Korea's first radio. Many consumer electronics were sold under the brand name GoldStar, while some other household products (not available outside South Korea) were sold under the brand name of Lucky. The Lucky brand was famous for its hygiene products line such as soaps and Hi-Ti laundry detergents, but most associated with its Lucky and Perioe toothpaste.In 1995, it was renamed "LG", the abbreviation of "Lucky GoldStar". More recently, the company associates its tagline "Life's Good", with the letters LG.Since 2001, LG has two joint ventures with Royal Philips Electronics: LG Philips Display and LG.Philips LCD. LG has entered into a joint venture with Nortel Networks and has created LG-Nortel Co. Ltd.LG also has a joint venture with Hitachi, Hitachi-LG Data Storage, which manufactures optical data storage products like DVD-ROM drives, CD writers, etc. LG acquired American television manufacturing company Zenith in 1999. LG Electronics is the world's second biggest maker of Televisions and third biggest marker of LCD TVs and Mobile Phones. With headquarters in the LG Twin Towers on Yeouido, Seoul, LG Electronics is the flagship company of LG Group, one of the world's largest Conglomerate. The company has 75 subsidiaries worldwide that design and manufacture televisions, home appliances, and telecommunications devices. LG Electronics owns Zenith Electronics and controls 37.9 percent of LG Display. By 2005, LG was a Top 100 global brand and in 2006, LG recorded a brand growth of 14%.Now the world's largest plasma panel manufacturer, its affiliate, LG Display, is one of the largest manufacturers of liquid crystal displays. Also in 2006, the company's mobile phone division, LG Mobile, marketed the LG Chocolate phone, changing the company's image of the maker of thick 3G phones. It now focuses on the design and marketing of phones such as the LG Shine, the LG Glimmer and LG Prada (KE850). As a result, the company was picked as "The Design Team of the Year" by the Red Dot Design Award in 2006~2007 and is often called the "New Apple" in the industry and online communities. In 2006, its net income was $226 million, on total revenues of $24.7 billion. The company was originally established in 1958 as GoldStar, BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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producing radios, TVs, refrigerators, washing machines, and air conditioners. The LG Group was a merger of two Korean companies, Lucky and GoldStar, from which the abbreviation of LG was derived. The current "Life's Good" slogan is a backronym. Before the corporate name change to LG, household products were sold under the brand name of Lucky, while electronic products were sold under the brand name of GoldStar . The GoldStar brand is still perceived as a discount brand.In 1995, GoldStar was renamed LG Electronics, and acquired Zenith Electronics of the United States. LG Solar Energy is a subsidiary formed in 2007 to allow LG Chem to supply polysilicon to LG Electronics for production of solar cells. In 2008, LG took its first dive into the solar-panel manufacturing pool, as it announced a preliminary deal to form a joint venture with Conergy. Under the deal, set to be completed by year's end, LG would acquire a 75 percent stake in Conergy's Frankfurt solarpanel plant Mobile communications LG Electronics is the world's third largest handset maker. Digital appliance Sony Ericson Corporate structure Sony Ericsson Mobile Communications isSony Ericson Corporate structure Sony Ericsson Mobile Communications is a global provider of mobile multimedia devices, including feature-rich phones, accessories and PC cards. The products combine powerful technology with innovative applications for mobile imaging, music, communications and entertainment. The net result is that Sony Ericsson is an enticing brand that creates compelling business opportunities for mobile operators and desirable, fun products for end users. Sony Ericsson Mobile Communications was established in 2001 by telecommunications leader Ericsson and consumer electronics powerhouse Sony Corporation. The company is owned equally by Ericsson and Sony and announced its first joint products in March 2002. Sony Ericsson products have universal appeal and are different in the key areas of imaging, music, design and applications. The company has launched products that make best use of the major mobile communications technologies, such as the 2G and 3G BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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platforms, while enhancing its offerings to entry level markets. Sony Ericsson undertakes product research, design and development, manufacturing, marketing, sales, distribution and customer services. Global management is based in London, and R&D is in Sweden, UK, France, Netherlands, India, Japan, China and the US. The management team is led by President Hideki Komiyama, a former senior executive of Sony Europe and one of the key players in the growth of Sony in Europe; and Executive Vice-President and Head of Sales Anders Runevad, the former President Ericsson Brazil. Industry accolades As new products are introduced to end user acclaim, existing products continue to receive accolades and Sony Ericsson is today accepted as a world leader in design and innovation. The globally acclaimed T610 and later generations of the companys product portfolio frequently win awards. The GSM Association voted the V800 as Best 3G Handset for 2004, a fullyfeatured phone made for Vodafone with the full range of mobile entertainment features and multi-directional camera, and the K750i received the TIPA Award 2005/2006 for Best Mobile Imaging Device, chosen by 31 leading European photography/imagining magazines and judged on quality, performance and value for money. In February 2007 the GSM Association presented Sony Ericsson with the Best 3GSM Mobile Handset award for the K800 Cyber-shot phone. Innovation in partnership Sony Ericsson strives to be a cutting edge provider of applications, forging partnerships with developers and content providers. Strategic agreement with partners such as Sony BMG is one way in which the company is bringing the best and latest in entertainment content to its users. Sony Ericsson has also activated a global sponsorship deal with the Womens Tennis Association Tour, which was renamed the Sony Ericsson WTA Tour in January 2005. The six-year title sponsorship is an unprecedented opportunity for Sony Ericsson to offer tennis fans new ways to experience the game through mobile BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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technology, connectivity and content. In the mobile gaming market Sony Ericsson took the lead in 2004, being the first to launch Java 3D-enabled handsets, and is forging ahead to bring 3D gaming to a wider audience.

Telecom Industry in India The telecom industry is one of the fastest growing industries in India. India has nearly 200 million telephone lines making it the third largest network in the world after China and USA. With a growth rate of 45%, Indian telecom industry has the highest growth rate in the world. Much of the growth in Asia Pacific Wireless Telecommunication Market is spurred by the growth in demand in countries like India and China. Indias mobile phone subscriber base is growing at a rate of 82.2%. China is the biggest market in Asia Pacific with a subscriber base of 48% of the total subscribers in Asia Pacific. Compared to that Indias share in Asia Pacific Mobile phone market is 6.4%. Considering the fact that India and China have almost comparable populations, Indias low mobile penetration offers huge scope for growth. In recent years, the Indian telecom industry has witnessed phenomenal growth. A conducive business environment, favourable demographic outlook and the political stability enjoyed by the country have contributed to the growth of the industry. India achieved the distinction of having the world's lowest call rates (23 US cents), the fastest sale of million mobile phones (1 week), the world's cheapest mobile handset (USD 19) and the world's most affordable colour phone (USD 31).

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Indian Telecom Industry One of the fastest growing cellular markets in the world in terms of number of subscriber additions 261.07 million (March 2008) Expected to reach total subscriber base of about 500 million by 2010 (i.e., more than one phone for every household) Annual growth rate of the telecom subscribers 42 percent (200708) More GSM subscribers than fixed-line subscribers Indian Telecom Industry Facts Total telecom subscribers 300.49 million (March 2008 Cellular + Fixed Line ) Tele density 26.22 percent (March 2008) Number of new mobile subscribers added last quarter 27.62 million (March 2008) ARPU for GSM USD 5.28* (USD./sub/ month) Telecom equipment market USD 34,100 million (200708) Handset market USD 7,250 million (2007

History of Indian Telecommunications Started in 1851 when the first operational land lines were laid by the government near Calcutta (seat of British power). Telephone services were introduced in India in 1881. 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 BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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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 longdistance service that would be its own regulator (separate from the postal system). In 1986, two wholly government-owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas. In 1990s, telecommunications sector benefited from the general opening up of the economy. Also, examples of telecom revolution in many other countries, which resulted in better quality of service and lower tariffs, led Indian policy makers to initiate a change process finally resulting in opening up of telecom services sector for the private sector. National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensive roadmap for the Indian telecommunications sector.. Telecom Regulatory Authority of India (TRAI) 2.1 Mission To ensure that the interests of consumers are protected and at the same time to nurture conditions for growth of telecommunications, broadcasting and cable services in a manner and at a pace which will enable India to play a leading role in the emerging global information society. 2.2 Role of TRAI One of the main objectives of TRAI is to provide a fair and transparent policy environment which promotes a level playing field and facilitates fair competition. In pursuance of above objective TRAI has issued from time to time a large number of regulations, orders and directives to deal with issues coming before it and provided the required direction to the evolution of Indian telecom market from a Government owned monopoly to a multi operator multi service open competitive market. The directions, orders and regulations BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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issued cover a wide range of subjects including tariff, interconnection and quality of service as well as governance of the Authority. The functions of TRAI can be divided as : Recommendatory function and Mandatory Function. 2.3 Recommendatory Functions Need and timing for introduction of new service provider Terms and conditions of licence to a service provider Revocation of license for non-compliance of terms and conditions of license Measures to facilitate competition and promote efficiency in the operation to facilitate growth in industry Technological improvement in services by service providers Inspection of type of equipment used by service provider Measures for Technological development Efficient Management of available spectrum 2.4 Mandatory Functions Ensure compliance of terms and conditions of license Fix the terms and conditions of their inter connectivity between service providers Ensure Technical compatibility and effective inter-connection between different service providers Regulate arrangements for sharing of revenues amongst service providers Lay-down the standards of QoS to be provided by service provider,ensure this by periodical survey

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Lay-down and ensure time period for providing local and long-distance circuits of telecommunication between different service providers Maintain inter-connect agreement register Ensure compliance of USO(universal service obligation) 2.5 Other functions Levy fees and other charges as determined by regulations Perform administrative functions as entrusted to it by Central government or as per TRAI act Notify in Official Gazette the service rates and message rates within and outside India

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3 Spectrum Auctions in India Vis--vis Worldwide Spectrum auctions have been used with significant success in many developed countries. From a regulatory and policy perspective, spectrum auctions ensure the efficient use of spectrum by allocating it to those entities that value it most, while also generating revenues for governments. But auctions may lead to unexpected outcomes due to unanticipated problems with their design leading to unexpected bidder behavior such as collusion and over-bidding. The key challenge before regulatory agencies is to design auctions in such a way as to meet the objective of fostering competition while at the same time ensuring that bidders can effectively use the spectrum for their business. With private initiatives increasing in telecom and broadcast service provision, demand for spectrum has increased. Digital technology has increased the scope of applications and created new areas of service provision. Cellular telephony and wireless Internet are examples of such services. Despite technological changes that reduce the demand for spectrum, availability of spectrum continues to be a constraint. In order to allocate spectrum amongst competing service providers, regulatory agencies often use auctions. From the regulatory and policy perspective, spectrum auctions ensure efficient usage by allocating it to those entities that value it most, while also generating revenues for governments. But auctions may lead to unexpected outcomes as, for example, when regulatory agencies have inadequate market information, there may be a mismatch between expected and actual bidder behavior, or auctions may be poorly designed. The key challenge before regulatory agencies is to design auctions in such a way as to meet the objective of fostering competition while at the same time ensuring that bidders can effectively use the spectrum for their business. 3.1 Spectrum Auction Scenario in India While India was one of the early adopters of spectrum auctions, its success in service provision has been low. Despite this early start, services have been slow to roll out. In India, telecom licences were auctioned for basic and cellular services from 1991 by the Department of Telecom (DoT), the incumbent government policy maker, regulator and service provider. For BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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service provision, the entire country was divided into roughly 20 circles, categorized as A, B, or C depending upon their revenue potential. The circles were mostly co-terminus with the DoTs administrative boundaries and the states. Potential service providers were required to seek foreign partners, as it was felt that no Indian company had the requisite financial strength and technical know how. For all licenses, bidding was a two-stage process, the first being a pre-qualification based on the evaluation of financial net worth (linked to the category of circle and service bid for) and experience in service provision and the second stage involved evaluation of bids. The bids were single stage, with the award going to the highest bidder drawn from those that satisfied the pre-qualification conditions. For cellular licences, Global System for Mobile Communications (GSM) was the chosen technology and for basic services, a combination of fiber optic and wireless in the local loop (WLL) was selected. For cellular services, there were separate licenses for the four major metros of Kolkata (Calcutta), Chennai (Madras), Mumbai (Bombay) and New Delhi. The licenses for the circles containing the metros excluded these cities. For metro licenses, the financial bids were to be evaluated on the rental to be charged to the customer for the first 3 years.(The airtime tariffs were fixed by DoT.) The licensee fee was a flat amount for the first 3 years and then was linked to the number of subscribers, subject to a minimum amount. Subsequent to the bid opening, the rentals were fixed at Rs. 1561 based on the amounts specified by the winners, even though some winning bids had zero out in metros, and bidders were evaluated on an annual license fee for the duration of the license, converted to its net present value at a specified discount rate. The second highest bidder had to match the highest bid in order to obtain the license. Despite these initiatives, service roll out continued to be slow. The government then set up a group on telecom (GOT), that consisted of top-level bureaucrats, industrialists and professionals to evolve a future policy framework for the sector. This was presumably effected outside the DoT as the government felt that the DoT might not be able to conceive a radically different roadmap or might thwart the involvement of the private sector or produce a regulatory framework crafted in the DoTs vested interest. The GOT drafted the National Telecom Policy in 1999,2 (NTP 99) which BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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presented a roadmap for resolving the impasse. All existing license holders could migrate to a new regime that involved a one time payment as entry fee and an annual revenue share with the government, provided that all operators withdrew their court cases against the government on a variety of issues such as delays in clearances. The entry fee was based on a percentage of the total amount of the original bid. This change greatly facilitated private sector participation and several operators subsequently commenced services. As a part of the package,the operators also agreed to allow the government to increase the number of players in their service areas. Telecommunication sector in India can be divided into two segments: Fixed Service Provider (FSPs), and Cellular Services. Fixed line services consist of basic services, national or domestic long distance and international long distance services. The state operators (BSNL and MTNL), account for almost 90 per cent of revenues from basic services. Private sector services are presently available in selective urban areas, and collectively account for less than 5 per cent of subscriptions. However, private services focus on the business/corporate sector, and offer reliable, high- end services, such as leased lines, ISDN, closed user group and videoconferencing. Cellular services can be further divided into two categories: Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sector is dominated by Airtel, Vodfone-Essar, and Idea Cellular, while the CDMA sector is dominated by Reliance and Tata Indicom. Opening up of international and domestic long distance telephony services are the major growth drivers for cellular industry. Cellular operators get substantial revenue from these services, and compensate them for reduction in tariffs on airtime, which along with rental was the main source of revenue. The reduction in tariffs for airtime, national long distance, international long distance, and handset prices has driven demand. FACTOR ANALYSIS BEHDING LOW COST PURCHASING The boom phase for Indian telecom sector continues to ride on availability of cheaper telecom services at the same time aggressive marketing by new and

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established players. The growth phase is panning out across India and is not just limited to urban India. TRAI released the Indian Telecom Industry performance indicator report for quarter ended june 09. The report points out detail info regarding the surge in telecom density as well as the current situation in Telemedia businesses.

Major Facts & Figures: Telecom Subscriber Base: Telecom Subscribers Base in April-June quarter reached 464.82 million users compared to 429.72 Million in march quarter. Subscriber base registered a 8.17 percent Q-o-Q growth.

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The telecom subscriber base continues to grow positively and has been able to provide record net-additions in recent past. Mobile Subscriber Base: Total mobile subscriber base stood at 427.29 at the end of June-09 Quarter. Net quarterly additions in total wireless segment (GSM+CDMA) came in 35.53Mn. Wireless Tele-density reached 36.64 per cent.

Teledensity & Demographics: Total Tele-density stood at 39.86 per cent. Wireline 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.

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Indian Telecom Market Indian telecom market is currently the most attractive telecom market with a lot of interest being shown by foreign players. The country was divided into 23 circles when the mobile phones were introduced in the country. Now DOT recognises Chennai as part of TN. Separate licenses were given out for each of the circles in 1994. The circles were classified as Metros, A,

India is the now the second largest market in terms of mobile subscriber base after China but still it is at 32% teledensity and adding 10-12 million new subscribers every month. Indian market is not only the most attractive but also the most competitive with over 7 operators in each circle and another five new operators likely to start operations in the near future. Nowhere in the world does any country have so many carriers. The dominant players are Airtel, Reliance, Vodafone, BSNL (state owned), Idea and Tata. Reliance and Tata offer CDMA technology while all the other players are in the GSM space. GSM has a 75% share of sbscribers and now even Reliance and Tata have either launched or in the process of launching nation-wide GSM services.

1.1.3 Major Players

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There are three types of players in telecom services: -State owned companies (BSNL and MTNL) -Private Indian owned companies (Reliance Infocomm, Tata Teleservices,) -Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea Cellular, BPL Mobile, Spice Communications) BSNL On October 1, 2000 the Department of Telecom Operations, Government of India became a corporation and was renamed Bharat Sanchar Nigam Limited (BSNL). BSNL is now Indias leading telecommunications company and the largest public sector undertaking. It has a network of over 45 million lines covering 5000 towns with over 35 million telephone connections. The statecontrolled BSNL operates basic, cellular (GSM and CDMA) mobile, Internet and long distance services throughout India (except Delhi and Mumbai). BSNL will be expanding the network in line with the Tenth Five-Year Plan (1992-97). The aim is to provide a telephone density of 9.9 per hundred by March 2007. BSNL, which became the third operator of GSM mobile services in most circles, is now planning to overtake Bharti to become the largest GSM operator in the country. BSNL is also the largest operator in the Internet market, with a share of 21 per cent of the entire subscriber base. BHARTI Established in 1985, Bharti has been a pioneering force in the telecom sector with many firsts and innovations to its credit, ranging from being the first mobile service in Delhi, first private basic telephone service provider in the country, first Indian company to provide comprehensive telecom services outside India in Seychelles and first private sector service provider to launch National Long Distance Services in India. Bharti Tele-Ventures Limited was incorporated on July 7, 1995 for promoting investments in telecommunications services. Its subsidiaries operate telecom services across India. Bhartis operations are broadly handled by two companies: the Mobility group, which handles the mobile services in 16 circles out of a total 23 circles across 19

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the country; and the Infotel group, which handles the NLD, ILD, fixed line, broadband, data, and satellite-based services. Together they have so far deployed around 23,000 km of optical fiber cables across the country, coupled with approximately 1,500 nodes, and presence in around 200 locations. The group has a total customer base of 6.45 million, of which 5.86 million are mobile and 588,000 fixed line customers, as of January 31, 2004. In mobile, Bhartis footprint extends across 15 circles. Bharti Tele-Ventures' strategic objective is to capitalize on the growth opportunities the company believes are available in the Indian telecommunications market and consolidate its position to be the leading integrated telecommunications services provider in key markets in India, with a focus on providing mobile services. MTNL MTNL was set up on 1st April 1986 by the Government of India to upgrade the quality of telecom services, expand the telecom network, introduce new services and to raise revenue for telecom development needs of Indias key metros Delhi, the political capital, and Mumbai, the business capital. In the past 17 years, the company has taken rapid strides to emerge as Indias leading and one of Asias largest telecom operating companies. The company has also been in the forefront of 5 technology induction by converting 100% of its telephone exchange network into the state-of-the-art digital mode. The Govt. of India currently holds 56.25% stake in the company. In the year 200304, the company's focus would be not only consolidating the gains but also to focus on new areas of enterprise such as joint ventures for projects outside India, entering into national long distance operation, widening the cellular and CDMA-based WLL customer base, setting up internet and allied services on an all India basis. MTNL has over 5 million subscribers and 329,374 mobile subscribers. While the market for fixed wireline phones is stagnating, MTNL faces intense competition from the private playersBharti, Hutchison and Idea Cellular, Reliance Infocommin mobile services. MTNL recorded sales of Rs. 60.2 billion ($1.38 billion) in the year 2002-03, a decline of 5.8 per cent over the previous years annual turnover of Rs. 63.92 billion. HUTCH BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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20 Hutchs presence in India dates back to late 1992, when they worked with local partners to establish a company licensed to provide mobile telecommunications services in Mumbai. Commercial operations began in November 1995. Between 2000 and March 2004, Hutch acquired further operator equity interests or operating licences. With the completion of the acquisition of BPL Mobile Cellular Limited in January 2006, it now provides mobile services in 16 of the 23 defined licence areas across the country. Hutch India has benefited from rapid and profitable growth in recent years. it had over 17.5 million customers by the end of June 2006. IDEA Indian regional operator IDEA Cellular Ltd. has a new ownership structure and grand designs to become a national player, but in doing so is likely to become a thorn in the side of Reliance Communications Ltd. IDEA operates in eight telecom circles, or regions, in Western India, and has received additional GSM licenses to expand its network into three circles in Eastern India -the first phase of a major expansion plan that it intends to fund through an IPO, according to parent company Aditya Birla Group . RELIANCE INFOCOMM Reliance is a $16 billion integrated oil exploration to refinery to power and textiles conglomerate (Source: http://www.ril.com/newsitem2.html). It is also an integrated telecom service provider with licenses for mobile, fixed, domestic long distance and international services. Reliance Infocomm offers a complete range of telecom services, covering mobile and fixed line telephony including broadband, national and international long distance services, data services and a wide range of value added services and applications. Reliance IndiaMobile, the first of Infocomm's initiatives was launched on December 28, 2002. This marked the beginning of Reliance's vision of ushering in a digital revolution in India by becoming a major catalyst in improving quality of life and changing the face of India. Reliance Infocomm plans to extend its efforts beyond the traditional value chain to develop and deploy telecom solutions for India's farmers, businesses, hospitals, government and public BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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sector organizations. Until recently, Reliance was permitted to provide only limited mobility services through its basic services license. However, it has now acquired a unified access license for 18 circles that permits it to provide the full range of mobile services. It has rolled out its CDMA mobile network and enrolled more than 6 million 21 subscribers in one year to become the countrys largest mobile operator. It now wants to increase its market share and has recently launched pre-paid services. Having captured the voice market, it intends to attack the broadband market. TATA TELESERVICES Tata Teleservices is a part of the $12 billion Tata Group, which has 93 companies, over 200,000 employees and more than 2.3 million shareholders. Tata Teleservices provides basic (fixed line services), using CDMA technology in six circles: Maharashtra (including Mumbai), New Delhi, Andhra Pradesh, Tamil Nadu, Gujarat, and Karnataka. It has over 800,000 subscribers. It has now migrated to unified access licenses, by paying a Rs. 5.45 billion ($120 million) fee, which enables it to provide fully mobile services as well. The company is also expanding its footprint, and has paid Rs. 4.17 billion ($90 million) to DoT for 11 new licenses under the IUC (interconnect usage charges) regime. The new licenses, coupled with the six circles in which it already operates, virtually gives the CDMA mobile operator a national footprint that is almost on par with BSNL and Reliance Infocomm. The company hopes to start off services in these 11 new circles by August 2004. These circles include Bihar, Haryana, Himachal Pradesh, Kerala, Kolkata, Orissa, Punjab, Rajasthan, Uttar Pradesh (East) & West and West Bengal. Apart from the current players, there are several new players like Aircel, Unitech-Telenor, Shyam-Siestema, Etisalat that have got the license and spectrum to launch mobile services in several telecom circles. ShyamSiestema is the only player to launch CDMA services while all the new operators are in the lucrative GSM space. The adjoining figure gives the market shares of the operators in India. It is a fragmented market with the biggest operator (Airtel) garnering only 24% share.

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India is a predominantly prepaid market (93% of all subscribers are on prepaid) with low ARPU and high minutes of usage(MoU).The GSM ARPU is Rs 220 (~ USD 4.6) per month with a usage of 496 minutes per month in the quarter ending Dec, 2008. Similarly, CDMA ARPU stood at Rs 111 with a usage of 370 minutes per month. There is a wide disparity in the rural and urban teledensity with rural teledensity at 12% vs. urban teledensity of around 75%. Regulatory has played a big role in development of Indian telecom market by brining in the competition at the right time and by removing bottlenecks. However, there are a few pending issues that still need to be resolved like the 3G spectrum auction and allocation, Mobile Number Portability and 2G spectrum allocation policy. Given the low tele density in the country, the subscriber base is expected to grow at a brisk pace. Government expects the mobile base to cross 600 million by 2010 and most of the new additions are expected to come from rural areas where the mobile penetration is still low. (All the data is sourced from COAI, AUSPI and TRAI which are the leading industry associations and regulatory bodies and ofcourse other secondary research) India has an urban population of about 26.8% and rural population is about 73.2% And there are over 600,000 villages in India. But a vast section of the rura Table I. GSM Subscribers growth rate Company No of Subscribers (in million) March 2008 Bharthi BSNL Hutch IDEA Aircel Reliance 19.57 17.16 15.36 7.37 20.61 1.90 April 2009 20.68 17.59 16.06 7.64 2.83 2.01 % Share 28.7% 24.4% 22.3% 10.6% 3.9% 2.8% 23 21 16 11 7 8 Market Service Areas

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Spice MTNL BPL Total

1.93 1.94 1.34 69.19

1.98 2.02 1.31 72.12

2.7% 2.8% 1.8% 100%

sector is still cut off from the benefits of telecom services. The rural population of around 700 million is waiting for its share of economic growth. Initially the big telephone companies focused only on urban centres, which they felt were more profitable. However, this mindset is gradually changing with the realisation that there is equal, if not bigger money in rural areas.

Table II. CDMA Subscribers growth rate Company No of Subscribers % (in million) March April 2008 Relianc e TATA HFCl Shyam Total 4.851 0.062 0.027 69.19 5.323 0.062 0.028 72.12 21.98% 20 0.26% 0.11% 100% 1 1 18.307 2009 18.809 77.65% 20 Share Service

Market Areas

It is estimated that a one per cent increase in rural connectivity can generate 0.5 per cent economic growth. Thus a well-planned 10 per cent increase in rural connectivity can propel India into double-digit growth and unprecedented prosperity. Rural India possesses enormous potential in terms of economy and human resources. Recent experiments have confirmed that ICT (information and BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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communication technology) helps improve the timeliness and efficiency of rural farm operations and enhance income through producer-oriented markets. Hence the communication ministry has requested the finance ministry for higher allocations from the USO Fund for executing rural telephony network. The finance ministry has made a budgetary allocation of 15 billion from the USO Fund. The rural telephony targets include, providing 50 million telephones year 2007(i.e. one phone per three rural households) and 80 million by 2010 (i.e. one phone per two rural households) and provisioning mobile access to all villages with population more that 5,000 and more than 1,000 .The Government made the Bhrat Nirman Programme target of providing coverage to remaining 41,000 villages met by March 2007 which will be much earlier than a schedule of November 2007[6]. India plans to establish 0.25 million, village knowledge centres. The ICT industry can establish rural call centres modelled on the Kisan Call Centre established by the Ministry of Agriculture to provide domain knowledge in the services, agriculture and manufacturing sectors. This spread will increase the volume of users and automatically bring down bandwidth cost, with a spiralling effect on efficiency and economy. Advanced telecom services are no longer considered a luxury but a necessity for all. Thus, providing telecom services to every individual in a country like India is a huge challenge, and at the same time holds immense opportunities for those in the telecom industry. LOW COST HANDSET INDUSTRY With operators rolling out cellular services in rural and semi-urban areas, lowcost handsets are driving the countrys mobile market. According to a report from the Yankee Group, mobile handsets costing less than $50 account for 62 per cent of all imported units. The study points out that low-cost CDMA handsets were more popular than GSM in this category. Very low-cost (defined as sub-$50) handsets have become integrally important to the Indian cellular markets astonishing growth. Sub-$50 models accounted for 62 per cent of all imported units between January and October

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2007. CDMA models from 13 vendors dominate this category, comprising 78 per cent of all sub-$50 imports, said the Yankee Group. The countrys cellular market continues to add new subscribers at a worldleading rate of 7-8 million users per month. A number of factors including, but not limited to, service provider competition, service quality, brand affinity, effective marketing and distribution, device vendor competition, increasing per-capita GDP, and general demand factors such as choice, are driving growth. The broadening availability of ultra low-cost handsets (defined as sub$35) is also becoming one of the key drivers to subscriber growth, the study pointed out. A comparison of import volumes for GSM and CDMA sub-$50 handsets shows that the latter was at least 3.5 times higher during the period. In terms of average selling price, CDMA handsets were found cheaper than GSM lowcost handsets. There are around 60 very low-cost CDMA models from 13 vendors, making it a highly competitive sector. This price gap between CDMA and GSM has, however, narrowed with the introduction of sub-$30 GSM imports from August to October. Total market leader Nokias contribution to sub-$30 GSM volumes increased from 15 per cent from January to July, to 22 per cent from August to October, said the study. The Yankee Group did not include handsets manufactured in the country. About 44 per cent of the handsets sold in the marker are locally manufactured.

COMPANY PROFILING

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LAVA LAVA International Limited has announced its entry into the growing Indian mobile handset market.Promoted by three Indian professionals Hari Om Rai, Sunil Bhalla and Shailendra Nath Rai , they have launched an impressive array of mid range priced mobile handsets with best in class features. LAVA is introducing four models- KKT 1, KKT 11, KKT 22 and KKT12, to the market. The models KKT 11 and KKT 22 come with a dual SIM feature and the latter also has a digital camera. They have a 1.8 inch screen and 1800 mAh Li-Ion battery which gives a talk time of 12 hours and a standby time of 30 days. The price range of these handsets starts from Rs 2,599. Get the Power in Your Hand. With this motto as its guiding principle, LAVA has embarked on an ambitious journey of empowering every human with quality innovative products at an affordable price. With a distinguished management having an excellent industry track record and a highly motivated team, Lava plans to enter the mobile handset ecosystem. The company aspires to be a leading player in the mobile handsets ecosystem by offering customers with a unique value proposition and in turn create immense value for its stakeholders The company aims to carve a unique niche for itself by focusing on Innovation in every field namely Product, After-Sales Service and Distribution. The company aspires to become one of the strongest brands in the Telecom sector by offering the customer with a unique proposition unmatched by any other player in the industry.

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Lava International to invest Rs 100 crore in mobile handsets market With a proposed investment of more than Rs 100 crore over next five years, Lava International Ltd has entered a mid-priced segment cellphone handset manufacturing segment. Lava, to begin with, has launched four different cellphone handsets and plans to a major foray in the western India region. While two of these models come with dual SIM technology, the others support a very high performance camera. The cellphones are priced at Rs 2,599 onwards, which, according to the promoters, is the key for acquiring a good market share.Lava is planning to have a national presence with a special emphasis on Indias tier-II, tier-III and even smaller towns . We plan to to upgrade the present low-end basic mobile handset users to a feature-loaded alternative. The phones are powered with a dual SIM feature, long lasting battery, dual LED powerful torch, camera, games, bluetooth and support up to 8 GB memory. The phones also provide FM radio, recording, one touch music

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player, dual stereo speakers, dual charging point, GPRS and speakerphones, which at the given price is very attractive, said SN Rai, co-founder and director, Lava International. Indian mobile phone handset market is estimated at around 8 million per month and is growing rapidly, which makes it a big opportunity for a new serious player like Lava. Our research has shown that smaller cities are growing rapidly and we have decided to tap the growing demand in these markets along with the major metros, Rai stated. Elaborating on the company marketing strategy, Lava sales head Praveen Srivastava said, Pune, in particular, has always been one of the most lucrative markets for mobile phones. Lava is looking at capturing a major market share in Nagpur, Solapur, Thane, Nashik and Aurangabad mobile handset market . To cater to this part of the country Lava is in the process of setting up a strong distribution network for the easy availability of lava mobile phones.

KARBONN MOBILE The latest buzz in town - Karbonn mobiles is the fruition of two Indian telecom majors - UTL and Jaina. These together present to you Karbonn mobiles - the ultimate mobile communications device available to the discerning user today. Karbonn Mobiles has on its portfolio some of the leading designs and technologically advanced phones that match up to international standards. To tell you more about the people behind Karbon mobiles, UTL is a multidivision telecom group, which has an annual turnover of Rs 1600 crore and over 2000 employees. Headquartered in Bangalore, it is a leading Indian telecom powerhouse. Besides Karbonn mobiles, the interests of this group span over many industries such as manufacturing, services and distribution. It has a varied list of credentials such as being leading suppliers of landline telephones and exchanges in the country, leading supplier of telecom

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equipment to cellular operators and business relations with reputed international as well as national telecom brands in the country. The second group behind Karbonn mobiles - Jaina is a reputed distribution house that has interests in telecom along with consumer durables. This company is headquartered in Delhi and has the distinction of operating along with prominent brands such as Nokia, Samsung, Siemens, Panasonic, and Philips. It is the national distribution partner of Microsoft along with HTC along with Motorola. Together, they have come out with the brilliant and snazzy Karbonn mobile phones. Karbonn mobile phones feature the latest trends in mobile telephony and that too at unbelievable prices. Karbon mobiles offer the best value for the money they charge as they are bundled with the latest technology and the great user friendly features.

Top Selling Karbonn Mobiles Karbonn CandyBar Mobiles Karbonn K300

K300 The Karbonn K300 is a brilliant phone for the advanced generation of the new millennium. It's certainly got the looks and has the brilliance to match your fashion and style. Features like FM radio, MP3 Player, WAP, and mobile player put you in the top notch and ahead of the crowd and the mobile tracker BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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lets you know who's got your phone in case it is stolen. Alongside, with a CSTN display screen with 65K colours and a 1.5" screen size, the Karbonn K300 works of GSM 900 and 1800 to give you wide coverage wherever you are. Check out this phone if you are looking for a great entry level phone with a host of features that will quench your demand for a brilliant device in your pocket. Karbonn K310

K310 If you are looking for a phone that will dazzle and mesmerise along with providing a low cost alternative to your phone needs, then this is the mobile that your are looking for. For the snazzy looks and the flamboyant contours, the Karbonn K310 provides a FM Radio and sound recorder along with memory expandable up to 2GB. With is long battery life that provides a talk time of 360 minutes and a standby time of upto 400 hours, you can use it for your crucial conversation and long chats. The 1.5" CSTN screen provides a brilliant display while the GSM 900, 1800 radio band provides wide coverage. Karbonn K217

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K217 This mobile phone is just the right choice for a busy professional like you who wishes to keep your professional life different from your personal. The dual SIM (GSM) allows you to do just that and spares you the burden of keeping two phones. Additionally, the 65k colour display adds a brilliance and radiance of colour to your mobile life and the FM radio along with FM recording adds spice to your life on the go. Enjoy rich sound of the MP3 player through the stereo and take brilliant pictures with the MP3 player. The expandable memory of Karbonn K217 is up to 2GB allows you to store your pictures, data, as well as music with ease just as the Bluetooth allows easy transfer and access to data and music. Karbonn K444

K444 The Karbonn K444 is a great mobile phone that has dual SIM for both your professional and personal life and also has access to GPRS/MMS/WAP for connectivity and multimedia. So, if you have a requirement for a low cost multimedia mobile phone, then the Karbonn K444 can meet all your needs. The battery provides a long standby time along with a long talk time, so that you can utilize it for your crucial conversation and long chats. The camera Bluetooth and FM provide added functionality. For convenience and utility, the Karbonn K444 has a torchlight too. Karbonn K450

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K450 The Karbonn K450 is a masterpiece when it comes to mobile technology. With a sub LCD display, it has a MP3 player that you can listen while on the go. Moreover, you can listen to your favourite stations on the FM radio. The Karbonn K450 is provided with GPRS/WAP/MMS for connectivity, while users can utilize the 1.3 MP camera for routine and daily pictures. The Li-Ion battery type battery provides a talk time of up to 4-5 hours while the standby time is 250 hours, thus you can talk to your heart's content on the phone. Additionally the GSM 900/1800/1900 radio bands provide wide coverage. You can also enjoy with a wide range of features lime wallpaper and ring tone download, MMS and EMS, embedded games, caller ID, voice codecs, video capture and video play, JAVA, and a lot more in Karbonn K450.

Karbonn Slider Mobiles Karbonn K443

K443 The Karbonn K443 is an excellent mobile with dual SIM card that you can use

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for both personal as well as professional lives. With this mobile phone, you can avoid the burden of carrying two phones together. For connectivity needs, this phone has GPRS Class 12 along with MMS for multimedia. The FM radio provides the much needed entertainment while on the move, while you can enjoy your favourite songs using the MP3 player. Moreover, the Karbonn K443 provides a talk time of up to 2 hours and a standby time of up to 120 hours with the help of the rechargeable Li-ion battery. Theres no such thing as too much cricket. Flush with the success of the recently concluded India-Sri Lanka series, an executive at the Neo Cricket channel, part of Neo Sports Broadcast Pvt. Ltd, claims the channel has already sold out 70% of its advertising inventory for the India-Sri series, January. Profitable venture: A file photo of Indian cricket captain M.S. Dhoni (left) with Sri Lankas Upul Tharanga during a match in New Delhi. Aijaz Rahi / AP The channel is hawking a 10-second spot during the series for Rs2.5 lakh, which is higher than what the top-rated show on a general entertainment channel would fetch but still less than the Rs3-4 lakh advertising rate charged by the Indian Premier League (IPL) for 10-second spots, according to media reports. However, the success of the recent India-Sri Lanka series and the impressive average rating of 7.7 (according to TAM numbers quoted by Neo Sports) said to be 15% higher than the popular IPL Season 2 ratingshas helped Neo sell its India-South Africa cricket series at a premium. The ad inventory for the India versus South Africa matches in February is priced at Rs3.5 lakh for 10 seconds. Lanka-Bangladesh which started from tri4

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According to Abhishek Verma, marketing and communications head of Neo Sports, the channel will be launching a massive ad campaign to promote the series. We are positioning it as a world championship series since it involves two very important teams. Our brand ambassador Harbhajan Singh will be a part of the publicity campaign for the South Africa series and the baseline will continue to be Dekh Lega India, Verma said. The campaign will be aired on various news, music and entertainment channels, and a variety of mainline and regional publications, Verma added. According to a Neo Sports executive, who did not want to be named, the channel made at least Rs205 crore during the India-Australia series held in October-November 2009. It mopped up Rs175 crore during the India-Sri Lanka series with Tata DoCoMo as the main television event sponsor. The ground sponsorship rights were held by Jaypee Cement Ltd and Karbonn mobile. The tri-series has been named the Idea Cup because Idea Cellular Pvt. Ltd holds the title sponsorship and ground rights. Like most other cellular operators, Idea too has a strong involvement with cricket. It was associated with the India-Sri Lanka matches played in Colombo in 2008 and also partnered the Mumbai Indians team franchise in the last IPL season. For the tri-series, the co-presenting sponsorships cost Rs5 crore each while the associate sponsorships are priced at Rs3.6 crore each. Raju Udupa, executive vice-president for ad revenue at Neo Sports, said the series would have two co-presenting sponsors Idea Cellular and Hero Honda Motors Ltd. The mood around the series remains positive as weve successfully concluded the India-Sri Lanka series, he said. Tata Motors Ltd, has already been signed on as an associate sponsor, Udupa added. The Tata Motors spokesperson also agreed that the firm was betting big on the tri-series. BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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Tata Motors is sponsoring the Man of the Series award for the India-Sri Lanka-Bangladesh tri-series. We will offer the newly launched Grande MK II to the Man of the Series, he said. We expect the India-Sri LankaBangladesh tri-series to deliver an average television rating of 6, Udupa said. In a fragmented TV viewership market where 400 channels are competing for eyeballs, only the top-rated shows garner a TV rating of 6 and above. Asked if advertisers would be compensated by Neo Sports for the abandoned India-Sri Lanka one-day international at the Ferozshah Kotla ground in Delhi, Udupa said the situation was fluid and that the issue would first be resolved between the Board of Control for Cricket In India and Nimbus Sports International Pte. Ltd. Meanwhile, even the IPL Season 3 inventory has been 80% sold out. Rohit Gupta, president of network sales, licensing and telephony, Multi Screen Media Pvt. Ltd, said it was closing deals for 10% of the remaining inventory at Rs5 lakh for 10 seconds. We will keep some bit of the ad inventory aside (the remaining 10%) for sale once the matches start. This last-minute inventory should sell for Rs6-7 lakh for 10 seconds, Gupta said. Sudarshan Rajan, senior business director, Mediacom India Pvt. Ltd, said cricket advertising spends exceeded the Rs1,000 crore mark in 2009. These are likely to increase by 20-30% in 2010. While the Indian Premier League is for most part sold out, the Neo Sports tri-series also has enough takers. The last few matches between India-Sri Lanka have fetched a television rating of 8, he said. Nandini Dias, chief operating officer, Lodestar Universal Pvt. Ltd, said the agency was considering ad deals on Neo Sports for several clients such as Tata Teleservices, Tata Docomo and the Piramal Group.

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Back in 1991, Micromax made a humble beginning and today prides itself in being the leader in Wireless Telecommunication in the country. With a futuristic vision and on exhaustive R&D, Micromax has successfully generated innovative technologies that revolutionized the telecom sector. Micromax, is a pioneer in creating life-enhancing mobile phone solutions and wireless technologies that cater to the increasingly sophisticated needs of mobile users around the world. Driven by aspirations and passion for the telecom world, Micromax is geared up to bring paradigm and groundbreaking mobile solutions incorporating the latest in cutting edge technology. Infused and equipped from nearly two decades of expertise and continuous research, we steadfastly strive to remain at the forefront in terms of both design and technological advancement. We are dedicated to deliver the latest in breath taking technologies to you in the most quickest and Xtreme forms. Micromax had made a humble beginning by introducing Micromax mobiles in the year 1991 in India. With this beginning, it has already made a mark today as the leading provider of wireless telephony solutions in the country. Micromax has concentrated on exhausitive R&D and led by a futuristic vision, the company has revolutionised the telecom sector in India by having generated innovative technologies. With the introduction of Micromax mobiles in India, the company leads the way in creating life-enhancing mobile phone solutions and wireless technology that caters to the increasingly sophisticated needs of mobile users globally. The company uses the latest and cutting edge technology in India to bring pioneering and landmark solutions to the users in the mobile world. Micromax mobiles are amongst the most preferable mobile phones in the Indian market presently. The company has nearly two decades of expertise and continuous research in India and strives to remain as the vanguard of

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technological advancement in the country in the quickest way possible. Micromax mobile phones remain at the top spot today in India giving other international brands surely a tough time. Micromax CandyBar Mobiles Micromax X1i

X1i The Micromax X1i is a brilliant candy bar mobile phone with a great list of features. If you are looking for a sturdy mobile phone with all the regular features, then the Micromax X1i is just the right phone for you. The phone measures just 106 mm x 44.5 mm x 16 mm, and it weights just 78 grams. Besides it has 2 GB expandable memory along with keypad entry and 128x128 pixel QVGA screen. Other features provided are speaker and voice recorder. A variety of other features are added to provide more enjoyment like FM radio and music player. A variety of call management features like speed dialing, messaging features, and games are also provided. Micromax X2i

X2i If you require a phone that you can use for your personal as well as professional needs, then the brilliant dual SIM dual standby Micromax X2i mobile phone. With dimensions of just 105.3 mm x 45.4 mm x 16.3 mm and BATCH: SS-08/10 ALUMNI ID NO.: DS/08/10-M-268


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weight of just 87 grams, it is easy to carry it around in your pocket and spares you the burden of carrying two phones. The Micromax X2i has an expandable memory of up to 4 GB and a marathon Li-ion powered battery. This phone provides a talk-time of up to 14 hours and a standby time of up to 30 days. With features like digital camera, stereo FM radio and music player, its just what you need. It also has features like speed dialing, SMS, MMS, and games. Connectivity features include WAP as well as GPRS. Besides, the QVGA screen provides a brilliant resolution of 128x128 pixels and 65k colors. Micromax X250

X250 The Micromax X250 phone is a yet another brilliant phone with a dual SIMdual standby arrangement, thus saving you the burden of carrying two phones. It has dimensions of just 110mmx47mmx15.2mm, and it has a weight of just 76 grams. With an internal memory of just 500 KB, it has an expandable memory of 8 GB, thus providing enough space for your music, pictures, and other data. With its Li-Ion battery, it cap provide a talk time of upto 10 hours along with a standby time of up to 20 days. Micromax X250 is a great mobile phone to own with other features like twin LED torchlight, stereo FM with telescopic antenna, motion sensor, camera, and MP3 player with vibration speakers. Micromax Q3

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Q3 If you are looking for a dual SIM phone with a large display and a QWERTY keypad, then the Micromax Q3 is just the right phone for you. The Dual SIM gives you the opportunity to keep your professional life distinct from your personal life. With a candy bar shape, Micromax Q3 has a neat look and a brilliant form. With dimensions of just 111.2 x 61.2 x 13 mm, it weighs just 97 grams, so you won't find it cumbersome to carry along anywhere. Some of the features that you will like about this phone are Dual GSM-Dual Standby, Qwerty Keypad(ezpad), Preloaded mobile social messenger (Nimbuzz), 1.3MP Camera, Multi Format Music Player, Stereo FM radio, Bluetooth(A2DP), Large SMS & PHB using Photo Call, and Expandable Memory (up to 2GB). Micromax GC255

GC255 The Micromax GC255 is just the phone you need incase you follow a busy lifestyle - the dual reception mode (CDMA/GSM), so that you can easily switch between networks. Along with a VG camera, it also has a Stereo FM Radio, Multi Format Music Player, Large PHB/SMS Memory and GPRS/ WAP/ MMS/ Bluetooth for connectivity. The brilliant candy bar phone has just the right form and style to advance you ahead in your lifestyle. The mobile phone has an internal memory of 12MB and has an expandable memory of up

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to 2GB. You can also chat for long hours or even participate in your crucial business conversations without the fear of your battery running dry. The Li-Ion battery of the Micromax GC255 gives a time 3.3-6.7 hours on GSM and up to 1.7-3.3 hours on CDMA. Other important features include speed dialing, SMS, MMS, and games. Micromax X555

X555 If you are looking for a brilliant phone with Dual SIM Dual Standby features to keep your professional life distinct from your personal life along with a sophisticated 5 MP camera, then the Micromax X555 is just the one that you are looking for. Some of the other features of this stunning model are Xenon Flash, Expandable Memory (upto 2GB), video recording/playback, 2.8" colour touch screen, large PHB/SMS memory, photo/video call, and Bluetooth. The power management of Micromax X555 is handled by a Li-ion battery of 13000 mAh capacity that up to 3.5 hours and a standby time of up to 250 hours. Other provisions are WAP, and GPRS. Users can access or feed data into the phone using the keypad, while the secondary display is a QVGA touch screen.

CO- BRANDING STRATEGY OF MICROMAX It is a very strange co-relation that despite the humongous growth witnessed in the Indian telecom sector we hardly boast of anything in mobile phone industry, many domestic players who tried desperately either failed or showed languishing growth.

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Micromax, another domestic mobile player thinks co-branding could provide it much needed impetus to garner market share in Indian mobile market. It has inked a deal with MTV to introduce co-branded handsets in the market with the latters brand name.

The co-branded music phones will be priced in upwards of Rs. 4999 with features ranging from 8GB expandable memory, dual SIM, GPRS, multi format music support. The phone will also be bestowed with MTV contents ranging from wallpapers to ringtones & videos. Micromax seem to be headed in the same direction as Spice Mobile by focusing on youth oriented music phones. Tie-up with established youth media channel like MTV can help it to further its claim to its customers. Micromax has sensed the need for niche marketing and has a branding & marketing budget of almost Rs. 100 crores equaling manufacturing capex altogether. For MTV it makes sense to go in for multiple branding tie-ups as it can generate good revenue streams in future. Mobile phone industry is very competitive and success requires heavy initial expenditure on marketing. We have also seen many established international

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players like i-Mate going down the drain and many suffering short-term setbacks (Motorola, Sony-Ericsson) due to depleting margins.

Company Profile We at FUNNY MOBILE believe that quality is timeless. Our product strategy combines the best of looks with unique features in the industry. We at Funny are powered by a passion to invent and an unceasing commitment to advance the way the world connects. allow people to be more connected with mobile.

Mission to Market Our mission is to establish Funny as the most attractive and innovative global brand in the mobile handset industry.

The Team - Zeal to make a Mark - Think fresh and deliver - Confident, Supportive and open to competition Services Funny will offer broad service network coverage across India with 1 year limited warranty for the consumer

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ALUMNI ID NO.: DS/08

Documents

An Empirical Study of Ultra Low Cost Mobile Phone in India