IBD2 Telecom Sector 15 Mar

8/7/2019 IBD2 Telecom Sector 15 Mar

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TelecomSector

DeepakG (MS09A012)

KarthikShankar (MS09A020)

PrakashKS (MS09A034)

VinayJawale (MS09A061)

VinayakGupta (MS09A062)

VinoThomas (MS09A063)

Division61 Telecommunications

Group611 Wiredtelecommunicationsactivities

Group612 Wirelesstelecommunicationsactivities


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Agenda

GlobalOverview

Technology

AdvantageIndia Indiantelecomsectoranalysis

MarketSegmentsinIndia

LatestDevelopments

Bharti Airtel

PolicyandRegulatoryFramework

FutureTrends

Conclusion

2


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Globaloutlook

Industry Characteristics

High capital investment and innovation cost

High customer churn rate

Economies of scale between OEM andContract Manufacturers

Complex supply chain from contract

manufacturer to end Consumer

Skilled human capital requirement

Global nature of products for plug and play

Industry Trends

Globalization of services global

operations in localized environments Bundling of services

Frequent new product, services and tariff

introductions

Shortening of product life cycles

Ason2009

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Globalmarketgrowth

Globaltelecomrevenuegrowthforecast

Source:

www.ey.com/telecommunications

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Topglobaltelecomserviceproviders

5

AsofFeb2010Source:http://www.knowledgebasescript.com


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Topglobaltelecomserviceproviders

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Source:Global100www.totaltele.com


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Topglobaltelecomequipmentmanufacturers

7

AsofFeb2010

Sourcehttp://www.hoovers.com/industry/telecommunicationsequipment


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Top10businessriskintelecomin2010

Source:www.ey.com/telecommunications

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Agenda

GlobalOverview

Technology



LatestDevelopments

Bharti Airtel


FutureTrends

Conclusion

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Technology

10

Standardsused


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Features Global SystemforMobiles(GSM) CodeDivision MultipleAccess

(CDMA)

TECHNOLOGY UsesEDGE andslowertransfer

rateupto384kbpsFaster DataTransferupto2Mbps

INFORMATION SIM cardcanbechangedand

replaced

Phone isprogrammedtocarry

information

DEVICE EDGE readyphonerequirement EVDO readyphonerequired

FEATURES Usedforbasicphone featuresand

highendfeaturesviaGPRS

SuitableforData transfer,web

browsing,videocalls

COVERAGE Coverage isallaroundtheglobe.

Mandatory

in

Europe.Suitableforinternationalroaming

PredominantinUS,Japan and

South

Korea

REACH Morethan1 billionusers Around 270millionusers

GSMvsCDMA


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Agenda

GlobalOverview

Technology



LatestDevelopments

Bharti Airtel


FutureTrends

Conclusion

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Advantage India

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Advantage India

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Trend populationanddemographics

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FDIinflows

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Agenda

GlobalOverview

Technology



LatestDevelopments

Bharti Airtel


FutureTrends

Conclusion

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Indiantelecomsectoranalysis

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At the end of August 2010, teledensity was recorded at 59.6 per

cent with a total telephone subscriber base of 706.4 million.

By 2014, the wireless subscriber base is expected to reachapproximately 1 billion to include around 572 million urban

subscribers and 468 million rural subscribers.

Revenues of the Indian telecom industry are projected to reach US$45 billion by 2012, compared with US$ 33 billion in 2009.

Key players in the Indian telecom market are Bharat Sanchar Nigam

Ltd (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), Bharti

Airtel Limited, Reliance Communication, Vodafone, Idea Cellular,

Aircel and Tata Teleservices.


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Suppliers

SubstitutesNewEntrants

Buyers

Complementors

10XForce

Highentrybarriersdueto Capitalintensivenatureofindustry

Ownershipoftelecomlicenses

Requirementofspecializedoperating

skills.

Butsizeofmarketopportunityand

accesstofinanceisencouragingserious

entrants.

There are enough vendors to dilute

bargaining power of suppliers. But

limited pool of skilled managers and

engineers, especially those well versed n

the latest technologies, placescompanies in a weak position in terms

of hiring and salaries.

TRAIandDOTareformulating

policiestoencouragethe

growthinthissector

Productsandservicesfromnon

traditionaltelecomindustriespose

serioussubstitutionthreats;e.g.,

CableTVvs.SatelliteTV

Internettelephonyvs.traditionalvoice

calls

With increased choice of telecom

products and services, the bargaining

power of buyers is rising. Buyer power

can vary somewhat between market

segments, e.g., high buyer power forbasic equipments for residential

customer and low for custommade

equipments for corporate.

2Gscam

Competitors Rushofnewentrants

Swifttechnologyobsolescencedue

tofrequentnewproduct

Introductions

Marginpressuredueto fierce

competition Highexitbarriersdueto

specializedequipmentsmakingita

riskybusiness

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Agenda

GlobalOverview

Technology



LatestDevelopments

Bharti Airtel


FutureTrends

Conclusion

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The Indian telecom industry can be primarily divided into basic, cellular and

internet services. It also has relatively segments such as radio paging services,very small aperture terminals (VSATs), public mobile radio trunked services

(PMRTS) and global mobile personal communications by satellite (GMPCS).


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Growthoftelecomnetwork

Source:DOTannualreport20091022


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Wireless&wiredsubscriberbase

Source:DOTannualreport200910

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Telecom circles in India have been classifiedinto 4 Categories viz. Metros, Category A, B

and C.

With penetration rates in metros

approaching 100 percent the market here is

nearly saturated.

However, there is still immense potential in

other circle categories particularly B and C.

TelecomcirclesinIndia

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Marketsegmentswireline

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The subscriber base of wire line services stood

at 36 million as on August 2010, with a

teledensity of 3 per cent.

Public sector undertakings BSNL and MTNL

have a major share of the wire line market

covering more than 80 per cent.

MTNL is present in Delhi and Mumbai, whileBSNL covers the rest of the country.

Although private players such as Tata

Teleservices, Bharti Airtel and Reliance haveregistered significant growth, BSNL continues to

dominate the segment in terms of wire line

subscriber base.


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Marketsegmentswireless

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The wireless segment includes GSM and CDMA services

and is much larger than the wire line segment in India.

The segment is growing steadily because of the

convenience and utility it offers.

The subscriber base of wireless services stood at 670.6

million as of August 2010 with teledensity of 56.6 per

cent.

As of June 2010, the wireless market recorded 527. 6

million GSM subscribers accounting for 83 per cent of

the market and 107.9 million CDMA subscribers

accounting for the remaining 17 per cent.

Private players such as Bharti Airtel Limited, Reliance

Communication, Vodafone, Tata, BSNL, Idea Cellular and

Aircel cumulatively hold a major share of the wireless

market.


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ARPU&MOUtrends

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InIndia,growthinthesubscriberbase,whichcontributestohealthyrevenuegrowth,

mitigatesthereductioninaveragerevenueperuser(ARPU).Inaddition,highMOUs

compensatefordecliningtariffs.


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Agenda

GlobalOverview

Technology

AdvantageIndia



LatestDevelopments

Bharti Airtel


FutureTrends

Conclusion

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Latestdevelopment 3Gauctions

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SalientFacts

Startingon9Aprilit

took34days.

IndianGovernment

earnedRs.67,700crore,

doublethanthey

expectedtogetby

selling3Gairwaves.

Notasingleoperator

wonpanIndia3G

license.

3GoperationsbyBSNL

andMTNLonlyfully

availablepanIndia

Orissa

only

state

not

completelycovered.

InitiallyBSNL&MTNLtoldtomatchhighestbidpercircle.

RefundrequestbyARajaafterexpectedratesdoubled. BSNL&MTNLboundbysocialresponsibilityplan Requestrefund.

RefundRequestRejected,buttobecompensatedindirectly.

Source:Financialtimes


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Latestdevelopment 2GScam

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Agenda

GlobalOverview

Technology

AdvantageIndia



LatestDevelopments

Bharti Airtel


FutureTrends

Conclusion

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BharatiAirtel

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BhartiAirtel

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GrowthTrajectory

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CorporateHistory

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Performanceataglance

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In5years,from11mn

to137mn

FromRs3000CrtoRs

42,000Cr


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Financials&Positioning

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WirelessCustomerMarketShare

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Airtelcontinuouslyconsolidatingitsmarketleadershippositiondespiteintensecompetition

Airtelcurrentmonthlynetaddsat3.1millionvs.2.8millionayearago

Airtelranks1&2in16circlesintermsofnumberofsubscribers

Over62%ofnetaddscomingfromB&Ccircles(ruralIndia)


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Leadership&GrowthStrategy

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TransactionRationale LongTermStrategy

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India(vs)Africa

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Agenda

GlobalOverview

Technology



LatestDevelopments

Bharti Airtel


FutureTrends

Conclusion

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Policyandregulatoryframework

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Regulatoryevolution

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Source:KPMG


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Department of Telecommunications( DoT): Set up in 1989 with administrative and financial powers to deal with various

aspects of Telecommunications.

Responsible for policy formulation, licensing, wireless spectrum

management, administrative monitoring of PSUs, research and development

and standardization/validation of equipment etc

Telecom Regulatory Authority of India (TRAI)

Established in1997 to provide a fair and transparent policy environment

which promotes a level playing field and facilitates fair competition.

The directions, orders and regulations issued cover a wide range of subjectsincluding tariff, interconnection and quality of service as well as governance

of the Authority.

Telecom Disputes Settlement and Appellate Tribunal(TDSAT)

To adjudicate disputes and dispose of appeals with a view to protect the

interests of service providers and consumers of the telecom sector and to

promote and ensure orderly growth of the telecom sector


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National Telecom Policy 1999 (NTP 99): The key objectives include

Telecommunication for all and telecommunication within the reach of all

Achieving universal service across all villages,

Global standards in service quality,

Indias emergence as a major manufacturing base and a major exporter of

telecom equipment, and

The protection of the countrys security interests.

Unified Access Licensing Regime (UALR)

Established in 2003, eliminated the need for separate licenses for differentservices.

This regime allowed players to offer both mobile and fixedline services under

a single license after paying an additional entry fee

Universal Service Obligations (USO) Aimed at widening the reach of telephony services in rural India.

This system was put in place to bridge the gap between urban and rural tele

density, which is currently more than 100 per cent.


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Agenda

GlobalOverview

Technology



LatestDevelopments


BhartiAirtel

FutureTrends

Conclusion

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FutureofIndianTelecom

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RuralPenetration

Pricewars

ShiftfromVoicetoData

MobileCommerce

SpectrumManagement

3Gand4G

MNP

Broadbandevolution

MergersandAcquisitions

RegulatoryReforms

Convergence

MobileCloudComputing

d


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Agenda

GlobalOverview

Technology



LatestDevelopments PolicyandRegulatoryFramework

BhartiAirtel

FutureTrends

Conclusion

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l i


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Conclusion

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A concentrated attempt to replicate the successes achieved in

urban areas to the newer markets of rural India

Broadband connectivity is expected to improve the socio

economic conditions of the lower penetrated area

Telecom has boosted economy through inclusive growth

Mobile VAS with relevant content

Proactive regulatory environment

Role of telecom in the next spiral of growth


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Thank

You!

Documents

IBD2 Telecom Sector 15 Mar