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INSTITUTE FOR INTEGRATED LEARNING IN MANAGEMENT

GRADUATE SCHOOL OF MANAGEMENT

GROWTH OF INDIAN TELECOMMUNICATION INDUSTRY

SUBMITTED BY SUBMITTED TO

ANIRUDDHA BASU Prof. SANCHITA GHOSH

KARAN KUNAL Prof. KRITI SWARUP

ARPANJALI CHAKRABORTY Dr. PRANAVA PRAKASH

KRITEEKA SHARMA

SAURAV ROY

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Table of contents

CONTENTS Page No.

Introduction 3

Literature Review 4

Research Methodology 16

Hypothesis 22

Data Analysis 23

Results and Findings 26

Recommendations 28

Conclusion 29

Annexure 30

Bibliography 57

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INTRODUCTION

OVERVIEW OF TELECOM SECTOR

The telecom services have been recognized the world-over as an important tool for

socio-economic development for a nation. It is one of the prime support services

needed for rapid growth and modernization of various sectors of the economy.

Indian telecommunication sector has undergone a major process of transformation

through significant policy reforms, particularly beginning with the announcement

of NTP 1994 and was subsequently re-emphasized and carried forward under NTP

1999.

STATUS OF TELECOM SECTOR

The Indian Telecommunications network with 851 million connections (as June

2011) is the second largest in the world.

Indian telecommunication industry is the world’s second-largest in terms of

number of subscribers, and the world's fastest growing market in terms of number

of new subscribers. India had 851.70 million mobile phone subscribers at the end

of June 2011.The country has the fourth highest number of Internet users with over

100 million as of December 2010. The primary regulator of communications in

India is the Telecom Regulatory Authority of India. It closely regulates all of the

industries mentioned below with the exception of newspapers and the Internet

service provider industry.

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Literature Review

The Indian telecommunication network is the third largest in the world and

the second largest among the emerging economies of Asia. The Indian

telecommunication sector has continued to record noteworthy success throughout

the year and has emerged as one of the key sectors that have been accountable for

resurgent growth of the Indian economy. The rapid growth of the sector has been

coupled with proactive polices and decisions taken by the Indian Government and

dynamic involvement of the private sector. The liberal policies in the

telecommunication sector have facilitated easy access to telecom companies and a

fair regulatory framework offers services to the Indian consumers at affordable

prices.

MARKET SIZE

Over 20.2 million new subscribers were added in the month of February, thereby

raising the total mobile phone subscription in the country to 791.38 million.

Moreover, the statistics for February state that the rate of growth (2.82 per cent) in

the number of rural mobile phone subscribers surpassed than those of the urban

areas (2.52 per cent) across the country. The broadband subscription in February,

2011 was 11.47 million as compared to 11.21 million in January, 2011.

The Indian telecom sector is largely dominated by private operators that control a

share of 87.9 per cent share of the entire sector. Among the top players in the

telecom sector, Bharti Airtel owns the largest share at 20.09 per cent, followed by

Reliance (16.7 per cent), Vodafone (16.54 per cent), state-owned BSNL (11.41 per

cent), Tata (11.08 per cent) and Idea (10.97 per cent). Vodafone has recorded the

fastest growth rate in the month of February, at 17.61 per cent in its subscription

base. Reliance (16.36 per cent), Bharti (15.85 per cent), Idea (12.43 per cent),

Aircel (8.26 per cent) and Tata (7.93 per cent) have also recorded decent growth

rate figures for the month of February, 2011, according to Telecom Regulatory

Authority of India (TRAI) database.

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TOP 10 TELECOM COMPANIES IN INDIA

• Bharti Airtel

• BSNL

• Vodafone Essar

• Reliance

• Idea Cellular

• Tata Communications (formerly VSNL)

• Tata Teleservices

• Aircel

• MTNL

• Videocon Mobile Services

AIRTEL

Bharti Airtel Limited formerly known as Bharti Tele-Ventures LTD (BTVL) is an

Indian company offering telecommunication services in 19 countries across Asia

and Africa. It is the largest cellular service provider in India, with more than 162.2

million subscriptions as of March 2011. It has been ranked among six best

performing technology in the world by business week. Bharti Airtel is the world's

third largest, single-country mobile operator and fifth largest telecom operator in

the world with a subscriber base of over 200 million.

It is known for being the first mobile phone company in the world to outsource

everything except marketing and sales and finance. Its network (base stations,

microwave links, etc.) is maintained by Ericsson and Nokia Siemens

Network, business support by IBM . Stakeholders are as follows-:

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Bharti Enterprises (64.76%)

Singapore Telecommunications (32%)

Vodafone (4.4%)

RELIANCE

Reliance Communications is India’s integrated telecommunications service

provider. The Company has a customer base of 105 million including over 2.5

million individual overseas retail customers. It ranks among the Top 5 Telecom

companies in the world by number of customers in a single country. Reliance

Communications corporate clientele includes 2,100 Indian and multinational

corporations, and over 800 global, regional and domestic carriers. The entire

communications covers over 24,000 towns and 600,000 villages. The stake holders

are as follows-:

Reliance (74%)

Public (26%)

BHARAT SANCHAR NAGAM LIMITED (A GOVT. OF INDIA

ENTERPRISE)

BSNL is the third largest cellular service provider, with over 66.88 million

customers as of June 2010 and the largest land line telephone provider in India.

BSNL further plans to increase its customer base to 160 Million by March, 2014.

Its headquarters are at Bharat Sanchar Bhawan, Harish Chandra Mathur

Lane, Janpath, New Delhi. It has the status of Miniratna, a status assigned to

reputed Central Public Sector Enterprise in India.

VODAFONE

Vodafone Essar, formerly known as Hutchison Essar is a cellular

operator in India that covers 23 telecom circles in India. Vodafone Essar is owned

by Vodafone 67% and Essar Group 33%. It is the second largest mobile

phone operator in terms of revenue behind Bharti Airtel, and third largest in terms

of customers.

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Despite the official name being Vodafone Essar, its products are simply

branded Vodafone. It offers both prepaid and postpaid GSM cellular

phone coverage throughout India with good presence in the metros.

Vodafone Essar provides 2.75G services based on 900 MHz and 1800 MHz digital

GSM technology, offering voice and data services in 23 of the country's 23 license

areas. It is among the top three GSM mobile operators of India.

TATA DOCOMO

It is a Tata Teleservices Limited's (TTSL) cellular service provider on the GSM

platform-arising out of the Tata Group's strategic joint venture with Japanese

telecom giant NTT Docomo in November 2008. Tata Teleservices has received a

pan-India license to operate GSM telecom services, under the brand "TATA

DOCOMO" and has also been allotted spectrum in 18 telecom Circles. TTSL has

already rolled out its services in various circles. It has become very popular with its

one second pulse especially in semi-urban and rural areas.

IDEA

Idea Cellular is a wireless telephony company operating in all the 22 telecom

circles in India based in Mumbai. In 2000, Tata Cellular was a company

providing mobile services in AP. When Birla-AT&T brought Maharashtra and

Gujarat to the table, the merger of these two entities was a reality. Thus Birla-Tata-

AT&T, popularly known as Batata, was born and was later branded as idea. Then

Idea set sights on RPG’s operations in Madhya Pradesh which was successfully

acquired, helping Batata have a million subscribers, and the license to be the fourth

operator in Delhi was clinched.

AIRCEL

Aircel is a joint venture between Maxis Communications of Malaysia and Apollo

Hospital Enterprise Ltd of India. Maxis have a 74% stake in Aircel and the

remaining 26% is with Apollo Hospitals. It is India’s fifth largest GSM mobile

service provider with a subscriber base of over 27.7 million, as of October 31,

2009. It has a market share of 12.8% among the GSM operators in the country

UNINOR

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It has received spectrum to roll out these services in 21 of the 22 telecom circles.

Uninor will be owned 67.25% by Norwegian telecom giant Telenor, and 32.75%

by UNITECH. Uninor has started mobile services in India at the end of 2009,

focusing on the GSM technology.

Uninor is India's eighth nation-wide mobile operator, in a competitive landscape of

13 nation-wide or regional mobile operators

STRATEGIES ROLLED OUT BY AIRTEL

The major strategies of Bharti Airtel in the past 5 years are as under:

1. Outsourcing all major operations except Marketing, Sales and Finance:

It is known for being the first mobile phone company in the world to outsource

everything except marketing and sales and finance. Its network (base stations,

microwave links, etc.) is maintained by Ericsson and Nokia Siemens Network,

business support by IBM.

Oracle provides Bharti Airtel with real-time financial and human resources

information as well as information for the organization to churn out higher

operational efficiency, along with better visibility and enhanced management over

its financial and HR operations.

2. Bharti Airtel has a joint Venture with Alcatel-Lucent to manage the network

infrastructure for the Telemedia Business.

3. Bharti Airtel and Google announced a strategic partnership, as part of the

agreement, Airtel will bring Google search to the Airtel Live mobile WAP portal.

Google will also incorporate advertising through its Mobile Ads product on the

Airtel Live mobile portal.

This was a good move however, since the advent of faster internet connectivity this

facility has taken a beating as mobile users can now access the whole page on the

web rather than a slimmed down version of the same webpage.

4. M-Commerce

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Mobile phone now turns into a virtual wallet – a new innovation in mobile

commerce. Airtel, ICICI Bank & VISA had joined hands to launch mChq – a

revolutionary new service – a credit card on the mobile phone.

This is the first mobile-to-mobile payment option, which enables Airtel customers

and ICICI Bank Visa cardholders to pay for their purchases with their Airtel

mobile phones.

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5. Targeting 55 million farmers under its fold, Indian Farmers Fertilizer

Cooperative (IFFCO) have agreed upon a joint venture with telecom major Bharti

Airtel to provide a boost to Indian agriculture and rural economy at large.

6. Hiring the best or attracting the best (poaching or otherwise)

Airtel has a history of hiring some of the high level officials from other companies

to be an integral part of their business. This is not just the strategy used by Airtel

but also other telecom majors.

Some of the recently hired officials are Shireesh Joshi (previously in PepsiCo) as

Director Marketing head. Bharti Airtel has also recently roped in Joachim Horn,

chief technology officer (CTO), T-Mobile, to help expand its global footprint and

interface with strategic partners.

7. Expansion into Africa

Airtel made rapid strides to expand its presence in Africa first through showing

intent of acquiring MTN, which was called by The Economist as ‘marrying up’ but

as the deal went awry they moved forward by acquiring Zain Telecoms business in

15 countries in Africa.

This is an important move as Africa has a higher consumer spending, $ 1.4 trillion,

average revenue per user of $8 which is much higher than India and only 3 to 5

players in each market making it one key market where Airtel can expand. With

the infrastructure of Zain in place the market share of Airtel is already high in the

continent.

8. Digital TV, the DTH service from Airtel

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The implementation of the initially failed concept of Set Top Box led Airtel to

enter this lucrative market to television. Cable connection in India was run by local

cable operators who acted largely in form of cartels. With the crackdown from the

regulatory bodies in India this sector once again became a gold mine.

9. Joint venture deal with Wal-Mart, the US retail giant, to start a number of retail

stores across India. This is crucial for Airtel as this would mark its entry into the

new theatre of retailing. The most important facet of retailing is logistics which is a

major challenge in India for Airtel.

STRATEGIES OF VODAFONE INDIA

1. Core Competencies:

Vodafone’s primary aim is to be a world leader in mobile communication and at

the same time provide a unique experience to the customers who use their services.

By analysing the overall structure of the company, it can be understood that

reliable innovative services and the customer centric passion are the core products

of the company.

The brand image of Vodafone is very strong in the market and a continuous

recycling of their campaigns from the pug to Zoo zoo’s to the present blackberry

boys advertisements has guaranteed their brand a high recall value.

2. Market Prospects / Penetration:

Vodafone’s intention to tap the price sensitive rural market comes with its low cost

offerings such as low priced Magic Box which has a bundled low priced handset

along with prepaid card and various freebies. Products like Vodafone 150 priced at

Rs. 799 and eco-friendly solar charging handset VF 247 will help Vodafone to

penetrate the rural market in a big way.

3. Competitive Advantage:

From product innovation to technological advantage, Vodafone as a brand keeps

on improving and coming up with new plans. Vodafone adjusts according to the

changing market which gives them a competitive advantage. Vodafone has from

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time to time come with creative advertising campaign for its various plans which

has captured the imagination of millions. Vodafone’s plans like “Chota Recharge”

and number of add on plans like these has made it sure that it maintains an edge

over its competitors. Vodafone pursues a global international corporate-level

strategy and has heavily focused on acquisitions like Hutch acquisition in India.

SWOT OF TELECOM INDUSTRY IN INDIA

Strengths

• Huge Customer potential

• Tele density still being 48% and rural tele density 21%.

• The broadband subscribers grew from 0.18 million in 2005 to 6.2 million as on

30 April 2009 and about 7.98 million, at the end of the December 2009 and till

June 2011 it was about 11.41 million.

• High Growth Rate

• Wireless subscribers growing at a CAGR of 60 per cent per annum since 2006.

• Allowed FDI limit ranging from 74% to 100%

• The total FDI equity inflows in telecom sector have been US$ 2223 million

during April-November 2009-10

• The foreign direct investment in the telecom sector was Rs 5,434.48 crore during

the quarter ended June 30, 2011.

Weakness

• Poor Telecommunication Infrastructure

▫ Result: Large number of call drops.

• Late adopters of New Technology- India was amongst the last countries in the

world to get access to 3G technology.3.5G is and even 4G are there in many

countries and in India 3G is not properly available among all circles.

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• Most competitive market

Opportunities

• 3G Telecom services and 4G services

• More Quality Service

• Value added Services (VAS)

• Boost to Telecom Manufacturing Companies

• Telecom Equipment Exports

▫ The Indian telecom industry is expected to reach a size of Rs 344,921 crore by

2012 at a growth rate of over 26 per cent, and generate employment opportunities

for about 10 million people during the same period. The sector would create direct

employment for 2.8 million people and for 7 million indirectly, according to a

Frost and Sullivan report.

• Horizontal Integration

Threats

• Declining ARPU (average Revenue per user)

▫ E.g. price wars like per-second billing which is deflating revenues and making

sure the ‘survival of the fittest’

• Partiality on the part of the Govt.

▫ e.g. Allowing 3G service in a PSU (MTNL,BSNL) before auctioning to Private

Sector.

• Content Piracy

Large Market Potential

Around 30-40 million people in India join the middle class every year. The

country’s upper middle class spends 6 percent of its earnings on telecom services.

India is one of the largest consumer markets in the world. Due to rapid economic

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growth and rise in disposable income, the spending power of consumers is

increasing rapidly. It has been forecasted that 15 years down the line, Indians will

be approximately four times richer than they are today. As per this forecast,

Indians will purchase five times more cars and consume three times more crude oil

than they do today.

Low Labour Cost

CII estimates that manufactured product outsourcing accounted for US$ 10 billion

in 2007. The value will escalate to US$ 50 billion by 2015. India has one of the

lowest labour costs among the developing countries, which is the foremost factor

for attracting multinational giants in every sector.

Growth of the Sector

The phenomenal growth in the Indian mobile industry was brought about by the

wireless revolution that began in the nineties. Besides this, the following factors

also aided the growth of the industry.

Liberalization

The relaxation of telecom regulations has played a major role in the development

of the Indian telecom industry. The liberalization policies of 1991 and the

consequent influx of private players have led the industry on a high growth

trajectory and have increased the level of competition. Post-liberalization, the

telecom industry has received more investments and has implemented higher

technology.

Changing Demographic Profile

The changing demographic profile of India has also played an important role in

subscriber growth. The changed profile is characterized by a large young

population, a burgeoning middle class with growing disposable income,

urbanization, increasing literacy levels and higher adaptability to technology.

These new features have multiplied the need to be connected always and to own a

wireless phone and therefore, in present times mobiles are perceived as a utility

rather than a luxury.

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Increased Competition & Declining Tariffs

Liberalization of the telecom industry has fuelled intense competition, especially in

the cellular segment. The ever-increasing competition has led to high growth of

subscribers and has put pressure on tariffs, which have seen a sharp drop over the

years. When the cellular phones were introduced, call rates were at a peak of Rs 16

per minute and there were charges for incoming calls too. Today, however,

incoming calls are no longer charged and outgoing calls are charged at less than a

rupee per minute.

Growth Avenues

A managed service is another segment that is attracting telecom companies. On

account of the rapidly growing subscriber base, service providers find it difficult to

manage their infrastructure and network management operations. In such cases,

they completely or partially outsource their infrastructure or network management

operations.

To reduce their network deployment costs, many service providers are considering

infrastructure sharing offers the following advantages:

Improved service quality

Increased affordability for customers

Faster roll out of services in rural and remote areas

Increased environmental aesthetics

Lower operating costs for service providers

Value Added Services: The VAS industry was worth USD 632 million in 2006–07.

The industry is estimated to grow by 65 percent in 2011–12 and become an USD

1,011 million opportunity.

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Problems

Multiple issues plague the mobile industry growth in the country

Declining Quality and Congestion

One of the major consumer issues is increased network congestion and the

consequent Quality of Service (QoS). This problem is particularly exacerbated in

densely populated parts of cities and during peak times. The principal reason for

this problem is that the service providers have not scaled up their telecom network

infrastructure in proportion to the increased network usage. The latter is a direct

consequence of the increased number of subscribers and increased number of calls

made by these subscribers.

Increase in Number of Telecom Towers

The larger number of subscribers and service providers has led to the

mushrooming of telecom towers, especially in metros and big cities. These towers

contain mobile base station equipment, which produces 900 and 1800 MHz

pulsated waves. This has increased the electromagnetic contamination- referred to

commonly as "Electro smog" in urban centers. A number of scientific studies have

been done which warn us about danger posed by this electromagnetic

contamination to the health of humans and other living being

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RESEARCH METHODOLOGY

Introduction to Research Methodology

Research is common parlance refers to a search for knowledge. One can also

define research as a scientific and systematic search for pertinent information on a

specific topic. In fact, research is an art of investigation. According to Clifford

Woody research comprises defining and redefining problems, formulating

hypothesis or suggested solutions, collecting, organizing and evaluating data,

making deductions and reaching conclusions; and at last carefully testing the

conclusions to determine whether they fit the formulating hypothesis. Like every

subject this topic of the handloom sector has also been thoroughly researched and

the relevant information has been rightly used.

Qualitative and Quantitative Research Data Gathering:

Quantitative Data

Information that can be counted or expressed numerically is called quantitative

data. This type of data is often collected in experiments, manipulated and

statistically analyzed. Quantitative data can be represented visually in graphs and

charts.

Qualitative Data

Qualitative data is extremely varied in nature. It includes virtually any information

that can be captured that is not numerical in nature. 'Soft' data that approximates

but does not measure the attributes, characteristics, properties, of a thing or

phenomenon is called qualitative data.

There are two methods of collecting data. They are:

Primary Data

It is a term for data collected on source which has not been subjected to processing

or any other manipulation. It is the Data that has been compiled for a specific

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purpose, and has not been collated or merged with others. Primary data is always

collected from firsthand experience.

Secondary Data

Secondary data is data collected by someone other than the user. Common sources

of secondary data for social science include censuses, surveys, organizational

records and data collected through qualitative methodologies or qualitative

research. Secondary data analysis saves time that would otherwise be spent

collecting data and, particularly in the case of quantitative data, provides larger and

higher-quality databases than would be unfeasible for any individual researcher to

collect on their own.

Pilot Study

An initial Pilot study has been conducted to determine what factors influence

customers to choose a certain network over other competitors. The study found

fifteen factors which are detrimental to consumers. The factors are:

Local Call Rates

STD Call Rates

Family Members Using The Network

Free Call Services

Convenience In Paying Bills

Network Connectivity

Frequent Promotional Offers

Roaming Connectivity

Internet Access

Availability Of Recharge Coupons

Family Friend Group Services

Messaging Packs

Payment/ Recharge Kiosk

Customer Care Service

Popularity Of the Company

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Questionnaire

A questionnaire was prepared based on the above fifteen factors and a sample size

of a hundred people were taken, consisting of people from different age groups,

profession, geographic location and income.

The results obtained from the questionnaire were used for performing co-relation

and other statistical tasks.

Correlation

The word correlation is used to denote the degree of association between variables.

If two variables x and y are so related that variations in the magnitude of one

variable tend to be accompanied by variations in the magnitude of other variables,

they are said to be correlated. If y tends to increase as x increases, the variables are

said to be positively related. If y tends to decrease as x increases the variables are

negatively correlated. If the values of y are not affected by changes in the value of

x, the variables are said to be uncorrelated.

The co-relation used is to depict that call rates are inversely proportional to number

of customers using the network.

With the growth in the customer base over the years the call rates have declined.

Properties of correlation coefficient

The correlation coefficient ‘r’ is independent of the choice of both origin and scale

of observations the correlation coefficient ‘r’ is a pure number and is independent

of the units of measurement. The correlation coefficient

‘r’ lies between –1& +1.

Formulae,

We use this correlation method to correlate the mobile call rates for several years

with the total mobile subscribers of those years. We calculate the Pearson’s

correlation with the software SPSS to find out whether the value is significant or

not.

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Rank correlation

The product-moment correlation coefficient ( r ) is calculated by using ‘values’ of

the variables. But many situations arise in which either either precise

measurements are not available, or the characters cannot be measured ta all. For

example, in order to find the extent os association between ‘intelligence’ and

‘efficiency in salesmanship’ for a group of salesman. But this method is open to

many objections, and an exact measurement of the two qualities is not at all

possible.

R lies between +1 & -1

Formulae,

We have used spearman’s rank correlation to correlate the total mobile subscribers

for different operators of a particular year, i.e. 2009-2010 with the total port in’s of

subscribers to their operators. We use spearman’s rank correlation as the data was

available for only one year. We calculate the spearman’s rank correlation with the

help of a software SPSS to find its significance.

Factor Analysis

Factor Analysis is a statistical method used to describe variability among observed,

correlated variables in terms of a potentially lower number of unobserved variables

called factors. In other words, it is possible, for example, that variations in three or

four observed variables mainly reflect the variations in fewer such unobserved

variables. Factor analysis searches for such joint variations in response to

unobserved latent variables. The observed variables are modeled as linear

combinations of the potential factors, plus "error" terms. The information gained

about the interdependencies between observed variables can be used later to reduce

the set of variables in a dataset.

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Principal Component Analysis

Principal component analysis is a mathematical procedure that uses an orthogonal

transformation to convert a set of observations of possibly correlated variables into

a set of values of linearly uncorrelated variables called principal components. The

number of principal components is less than or equal to the number of original

variables. This transformation is defined in such a way that the first principal

component has the largest possible variance (that is, accounts for as much of the

variability in the data as possible), and each succeeding component in turn has the

highest variance possible under the constraint that it be orthogonal to (i.e.,

uncorrelated with) the preceding components. Principal components are guaranteed

to be independent only if the data set is jointly normally distributed. PCA is

sensitive to the relative scaling of the original variables.

Certain terminologies used in the factor analysis are: -

Varimax: An orthogonal rotation method that minimizes the number of variables

that have high loadings on each factor.

Communality Matrix: Communality matrix indicates the amount of variance in

each variable that is accounted for. The initial communalities is the estimate of the

variance in each variable accounted for by all components/factors. Extraction

communality is the estimate of the variance in each variable accounted for in the

factor solution.

The smaller value indicates that they do not fit well with the factor solution.

Total variance matrix: The total variance matrix provides us with the values which

are based on initial eigen values. The total column gives the amount of variance in

the observed variable accounted for by each component/factor.

Rotated Component Matrix: From the rotated component matrix we take the

components which is better represented and have higher position on the screen plot

i.e, these factors are highly loaded and contribute to the resultant output.

Factor Transformation Matrix: The factor transformation matrix describes the

specific rotation applied to your factor solution.

Component Plot in Rotated Space; Component plot in rotated space provides a

graphical representation of the variable in the component space.

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Bartlett's test

A method to test for the equalities of variances from a number of independent

normal samples by testing the hypothesis.

Kaiser-Meyer-Olkin (KMO) Test

The KMO test is used to determine whether the sample size is adequate or not. If

the results show less than.5 as an answer the sample size is considered inadequate.

Forecasting

Forecasting is the use of historical data to determine the future trends. It is used by

companies to determine how to allocate their budgets for an upcoming period of

time. This is typically based on demand for the goods and services it offers,

compared to the cost of producing them. Investors utilize forecasting to determine

if events affecting a company, such as sales expectations, will increase or decrease

the price of shares in that company. Forecasting also provides an important

benchmark for firms which have a long-term perspective of operations.

Linear forecasting

Linear forecasting is a mathematical operation where future values of discrete time

series are estimated as a linear function of previous samples.

I have used this method to forecast the total mobile and landline subscribers up to

the year 2014-2015. I have used Microsoft Excel to forecast the landline and

mobile subscribers for different years.

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HYPOTHESIS

H10: Mobile call rates do not significantly affect total mobile

subscriber base.

H11: Mobile call rates significantly affect total mobile subscriber

base.

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DATA ANALYSIS

Table - 1 along with the Bar Graph, depict the growth of Subscriber Base in India

at the end of each financial year during the past decade (2000 to 2010). It can be

seen that during the last year (2010) although BSNL and MTNL have registered

decline, private operators have jointly had a growth of 11.51% increasing the

connections from 5.04 million to 5.62 million.

Table - 1.1 shows the Annual Growth Rate registered by Basic and Cellular Phone

services for a period of three years ranging from 1998-99 to 2000-01. The

Histogram below clearly indicates a rapidly increasing trend in the growth rate of

Cellular Phone services.

Table - 1.2 demonstrates Growth of Cellular Phone Subscribers in different Metros

and Circles of India during the years 1997 to 2003. The bar graph along with the

table show that the number of such subscribers has consistently increased over the

years.

Table - 1.3 and its subsequent graphical representation indicate Company-wise,

the number of Mobile Telephone Connections/Subscribers in Rural and Urban

Areas of India as on 31st December, 2010. When compared individually, it can be

seen that 'Reliance Telecom + Communications Ltd’ has the maximum number

(9,85,69,506) of subscribers in urban areas while ‘Bharati Airtel’ has the maximum

number (6,08,47,715) of subscribers in rural areas. However when compared in

totality, (i.e., no. of subscribers in urban areas + rural areas),’ Bharati Airtel’

clearly dominates the other companies with a subscriber base of 15,24,95,219.

Table - 1.4 shows the Percentage Rate of Growth in Postpaid and Prepaid Mobile

Subscribers in India from the financial year 2000 to 2004. It is visible from the Pie

Charts that both Postpaid Subscribers as well as Prepaid subscribers indicate an

increasing trend.

Table - 1.5 points out Company-wise, the Market Share and Technology used by

the Subscriber Base of Mobile Operators in India as on March, 2005. The Bar

Graph represents the total number of different cellular group subscribers, Bharati

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Group having the maximum number (1,09,84,280) of subscribers. The Pie Chart

represents the approximate market share of the different cellular groups, Bharati

Group consequently having maximum market share and HFCl and Shyam Telelink

having almost no market share.

Table – 1.6 along with its Line Chart indicate Operator-wise, the number of

Subscribers who ported their numbers under Mobile Number Portability Scheme

(MNPS) in India as on 25th February, 2011. It is seen that Bharati Airtel has the

maximum number of total ports (5,30,615) in as well as total ports (3,82,400) out

followed by Vodafone (ports in-4,88,250 & ports out-2,95,489).

Table – 1.7 represents Circle-wise, the Population and Area Covered under Mobile

Telephone Services in India as on 30th June, 2010. The Pie Charts indicate that out

of the total population covered under mobile telephone services, Uttar Pradesh East

has a maximum population of 8,08,22,915. On the other hand, out of the total area

covered under mobile telephone services, Andhra Pradesh covers a maximum area

of 2,20,326 sq km. Andaman and Nicobar Islands have a minimum population of

3,16,000 and covers a minimum area of 797 sq km.

Table – 1.8 indicates the total number of Fixed (landline + Wll) and Mobile

Phones in India during the years 1999 to 2006. The Line chart shows that although

there has been a considerable rise in the number of fixed/basic phones over the

years, the number of mobile phones have immensely risen from only 1.2 million in

1999 to 92.52 million in 2006.

Table – 1.9 its Graph and Pie Charts illustrate the Subscriber Base of Mobile

(GSM and CDMA) Services in India from March 2000 to March 2009. On

examining, it is seen that apart from BPL and Sistema which have fluctuating

growth rates , all the other Service Providers have shown an increasing trend it

their growths.

Table – 1.10 demonstrates Category-wise, the Subscriber Base for Mobile (GSM)

Services in India from 1999 to 2007. The Bar Graph rightly shows that the

subscriber base of Metros, A circles, B circles and C circles have all grown

considerably over the years.

Table – 1.11 points out the Top Five Mobile Operators on the basis of Market

Share along with Subscriber Base in India as on March, 2003 and March, 2004.

The Graph represents the top five mobile operators on the basis of subscriber base

25

in India, Bharati being in the first position in 2003 and Reliance being in the first

position in 2004 and Idea being in the fifth position in both the years. The Pie

Charts indicate the top five mobile operators on the basis of their market share in

the years 2003 and 2004, Bharati having maximum percentage of market share in

2003 and Reliance having maximum in 2004.

Table – 1.12 and its subsequent graphical representation illustrate the Trends in

Revenue Earned per minute (Incoming + Outgoing) for GSM Cellular Services in

India from the year 2000 to 2004. It shows the revenue earned per minute and its

respective percentage change under Postpaid services, Prepaid services and

Blended (postpaid + prepaid) Services.

Table – 1.13 demonstrates the trend in Growth of Tele-density from March 2005

to March 2010. It is clearly visible from the Line Chart that the tele-density at the

end of March,2010 reached the mark of 52.74 as compared to 36.98 at the end of

the previous year recording an increase of nearly 15.76 .

Table-1.14 shows the forecasting of the total landline subscribers and total mobile

subscribers up to 2014-2015. It is represented by a line graph showing the growth

in the landline subscribers and mobile subscribers. The rate of growth of mobile

subscribers is more in comparison to the rate of growth of the landline subscribers

due to continuous decrease in the tariff rates of mobile.

Table-1.15 shows the operator wise growth from 1999-2000 to 2009-2010. It is

represented through a bar graph showing growth of different operators in different

years. It is seen from this graph that all the operator’s subscriber base has grown

but the highest growth is in Airtel followed by Relaince.

Table-1.16 shows the service revenue earned by the different telecom operators

from 2008-2009 to 2011-2012. It is represented by a bar graph showing growth of

different operators in different years. I have also forecasted the revenue earned by

the operators for the year 2011-2012 on the basis of previous years revenue earned.

It is seen from this graph that the maximum revenue is earned by Airtel followed

by Reliance.

Table-1.17 shows the correlation between mobile call rates and total cellular

subscribers. The correlation is -.889 at 0.01 level of significance which means both

26

are highly and negatively correlated and the data is statistically significant. It

means with decrease in cellular call rates the total cellular subscribers will rise.

Table-1.18 shows the trend in revenue earned per minute for both incoming and

outgoing for all the GSM operators. It is represented by a line graph showing the

fall in the revenue earned per minute for both postpaid and prepaid numbers for the

year 1999-2000 to 2003-2004. It is seen from the graph that the prepaid revenue

earned per minute has reduced more in comparison to postpaid revenue with the

increase in number of operators and subscriber base in the industry.

Table-1.19 shows the Spearman’s rank correlation between total subscribers of

different operators and the total port in’s for the different operators. The

Spearman’s rank correlation is .709 at 0.05 level of significance which means both

are highly and positively correlated and data is statistically significant.

RESULTS AND FINDINGS

The most important and obvious finding is that the Telecom Industry has

significantly grown over the past decade (2000-2010) with a high boom

during the period 2005-2010.

The Subscriber Base in the urban areas, especially in the Metros, has highly

risen in the last five years as compared to the Rural areas.

The rate of growth in the number of Cellular Phone subscribers has been

more rapid as compared to that of the Basic Phone subscribers.

During the last year (2010) although BSNL and MTNL have registered

decline, private operators have jointly had a growth of 11.51% increasing the

connections from 5.04 million to 5.62 million.

27

Both prepaid and postpaid subscribers have shown an increasing trend in

their growth rate.

The Tele-density at the end of March, 2010 reached the mark of 52.74 as

compared to 36.98 at the end of the previous year recording an increase of

nearly 15.76.

The top five mobile operators in India, on the basis of subscriber base and

market share, are Airtel, Reliance, BSNL, Vodafone and Idea.

Bharati Airtel has the maximum number of subscribers in the Rural areas

and Urban areas.

In totality, Bharati Airtel has the maximum percentage of share in the

market.

There has been a significant rise in the total mobile subscribers. It has

increased from 3107449 in 1999-00 to 494036000 in 2009-10, which further

will increase to 950802215 in 2014-2015.

There has been a significant rise in the total mobile subscribers. It has

increased from 3107449 in 1999-00 to 494036000 in 2009-10, which further

will increase to 950802215 in 2014-2015

There has been an increase in total landline subscribers but this is not risen

significantly and has increased at an decreasing rate.

There has been a significant decrease in average cellular call rates from Rs.5

in 1999-00 to Rs. 0.5 in 2009-10.

There has been a significant impact of total port in’s of different operators to

total mobile subscribers in the year 2009-2010 for different operators, this

affects the market share of different operators.

28

Lastly, it is seen that with the growth in the number of users in the Telecom

industry, the call rates have been subsequently declining

On examining and reviewing all the data and findings, the following

RECCOMENDATIONS could be made:

Small players and non performing like S TEL, Sistema, Loop Mobile,

Etisalat (Cheers Mobile) should merge with major players like Airtel and

Vodafone as norms related to merger and acquisition will be relaxed after

2011 telecom policy is implemented.

As India have large middle class people companies should tie up with Apple

and Blackberry to offer Handset with an effective EMI scheme with postpaid

plan as it happens in country like U.K.

Airtel should outsource its marketing operations too.

Vodafone launched I Phone 4 quite later after being launched by Airtel and

Aircel. In future Vodafone should be in line or a step ahead of its

competitors.

As the government targets to increase rural teledensity, this segment will

boost the demand for telecom services, equipment, Internet services and

other value-added services; thereby, offering great market opportunities for

telecom players.

Companies should focus on awareness and promotion campaigns in rural

areas.

Airtel can launch its own handsets as Vodafone is doing at cheaper rates.

29

CONCLUSION

The mobile service provider industry in India has experienced exponential growth

over the past few years and has been an important contributor to economic growth;

however, the cut-throat competition and intense tariff wars have had a negative

impact on the revenue of players. Despite the challenges, the Indian mobile service

provider industry will thrive because of the immense potential in terms of new

users. India is one of the most-attractive cellular markets because it is still one of

the lowest penetrated markets. Operators are on an expansion mode and are

investing heavily on telecom infrastructure. Foreign telecom companies are

acquiring considerable stakes in Indian companies. Burgeoning middle class and

increasing purchasing power, the government’s thrust on increasing rural telecom

coverage, favorable investment climate and positive reforms will ensure that

India’s high potential is indeed realized.

While preparing the above Term Paper the following shortcomings were observed.

The absence of such shortcomings would definitely assure the betterment of the

project in future.

Moreover, since only the Telecom Industry in the Indian market was

analyzed and the Global markets were not taken into account, therefore the

true position of this industry in the Global Market Sector could not be

determined. Examination of the industry on a global basis would tell us

where exactly the industry stands.

Further, the time span for preparing the project, being too short, the

intricacies of the individual companies, their reason for growth or decline

and other pros and cons etc., could not be looked into at depth.

30

The Questionnaire survey could only be performed in the confines of only

one city due to time constraints. Hence the results do depict a vague

similarity due to the people belonging to same culture, income group and

other similar factors.

FUTURE OF THE INDUSTRY

According to the analytical study of the telecom sector, the use of mobile phones is

growing day by day in the Indian telecom sector with a projected growth of CAGR

of around 6.6% increase in the subscriber base of 2011-2012 to 2014-2015. The

other segments of this industry will also record growth, like the internet are also

anticipated growth both in terms of subscriber addition and development of

infrastructure during the forecast period. Moreover, with the launch of 3G services,

the country is expected to witness rapid surge in the broadband subscribers’ base

during the coming years.

According to a Gartner report, after China, India would be fastest growing mobile

telephony market in Asia Pacific with revenues slated to increase at a CAGR of

18.4% to reach $25 billion in 2011 from current $9 billion.

Cellular penetration would increase to 38.6% in 2011 with 58% of rural population

and 95% of urban population possessing mobile phone. The market will be driven

by prepaid connections, which will account for more than 93% connections. The

voluntary churn rate is expected to reach 41% from current 30.6%.

The revenues from data services will contribute to the revenue growth; however

the bulk of the revenues will continue to come from voice services. Customers

with low disposable incomes will increase as such the Average Revenue Per User

will decline.

Large players will have an advantage as they expand their presence and take

advantage of economies of scale. But they will face tremendous challenges owing

to intensifying competition.

31

Annexure

2000 28.53

2001 36.29

2002 44.97

2003 54.62

2004 75.54

2005 98.41

2006 140.32

2007 206.83

2008 300.49

2009 429.72

2010 621.28

GROWTH OF SUBSCRIBER

BASE FROM 2000-2010

FINANCIAL

YEAR

TABLE - 1

SUBSCRIBER BASE (IN

MILLION)

Source: www.indiastat.com

32

Source: Based on the above table (author’s work

Basic Cellular

Phone Phone

1998-99 21.40% 35.96%

1999-00 23.32% 57.08%

2000-01 22.73% 89.84%

TABLE - 1.1

Annual Growth Rate Registered by Basic and Cellular Phone Services

(1998-99 to 2000-01)

Year

Growth Rate

Source: www.vision2020planningcommission.nic.in

0

100

200

300

400

500

600

700

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

28.53 36.29 44.97 54.62 75.54 98.41 140.32

206.83

300.49

429.72

621.28

SUBSCRIBER BASE (IN MILLION)

33

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

1998-99 1999-00 2000-01

Growth Rate Basic Phone

Growth Rate Cellular Phone

Source: Based on the above table (author’s work)

Subscribers As on Metros Circles Total

1997 325967 12698 338665

1998 551757 330559 882316

1999 519543 680035 1199578

2000 795931 1088380 1884311

2001 1362592 2214503 3577095

2002 2567757 3863763 6431520

2003 4439524 8248113 12687637

TABLE - 1.2

Growth of Cellular Phone Subscribers in India

(1997 to 2003)

Source: www.indiastat.com

34

0

5000000

10000000

15000000

20000000

25000000

30000000

1997 1998 1999 2000 2001 2002 2003

Total

Circles

Metros

Source: Based on the above table (author’s work)

35

Rural Urban Total

1 Aircel 17731187 32437624 501688112 Bharati Airtel 60847715 91647504 1524952193 Etisalat DB Telecom 0 264899 2648994 HFCL Infotel Ltd 8593 1606500 16150935 IDEA Mobile 40672096 41106559 817786556 Loop Mobile 0 3044579 3044579

7Reliance Telecom +

Communications Ltd27082621 98569506 125652127

8 Sistema Shyam 1935360 6498307 84336679 STEL 611031 1704493 2315524

10 TATA Teleservices Ltd. 17898628 66334770 8423339811 Uninor 5560484 12949565 1851004912 Videocon 0 7319603 731960313 Vodafone Essar 47761849 76493271 12425512014 Private Total 220109564 439977180 66008674415 BSNL 30790563 55918974 8670953716 MTNL 0 5403754 540375417 PSU Total 30790563 61322728 9211329118 India 250900127 501299908 752200035

TABLE - 1.3

Sl.

No.

Company-wise Number of Mobile Telephone Connections/Subscribers in Rural and Urban Areas

of India

(As on 31.12.2010)

Mobile TelephonesCompanies

Source: TRAI Annual Report 2009-10

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Mobile Telephones Rural Mobile Telephones Urban Mobile Telephones Total

Source: Based on the above table (author’s work)

36

Financial YearGrowth rate of

postpaid subscribers

Growth rate of prepaid

subscribers 2000 NA NA 2001 40% 96% 2002 57% 157% 2003 14% 98% 2004 124% 168%

TABLE - 1.4

(2000 to 2004)Rate of Growth in Postpaid and Prepaid Mobile Subscribers in India

Source: www.trai.gov.in

200140%

200257%

200314%

2004124%

Growth rate of postpaid subscribers

200196%

2002157%2003

98%

2004168%

Growth rate of prepaid subscribers

Source: Based on the above table (author’s work)

37

Sl. No. Cellular Group Subscribers on March, 05 Market Share Technology Used

1 Bharti Grp 10,984,280 21 GSM2 Reliance Grp 10,446,053 20 GSM & CDMA3 BSNL 9,899,425 19 GSM & CDMA4 Hutchison Grp 7,797,720 14.9 GSM5 IDEA Grp 5,069,693 9.7 GSM6 BPL Grp 2,575,387 4.9 GSM7 Spice Grp 1,438,824 2.8 GSM8 Aircel Grp 1,755,350 3.4 GSM9 Tata Teleservices 1,089,500 2.1 CDMA

10 MTNL 1,078,143 2.1 GSM & CDMA11 HFCL 53,163 0.1 CDMA12 Shyam Telelink 27,663 0.1 CDMA13 Total Subscribers 52,215,201 100 GSM & CDMA

TABLE - 1.5

(March, 2005)

Company-wise Market Share and Technology Used

by Subscriber Base of Mobile Operators in India

Source Of table: www.vision2020planningcommission.nic.in

Source of Graph: Based on the above table (author’s work)

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

1 2 3 4 5 6 7 8 9 10 11 12 13

Different Cellular Group Subscribers on March, 05

Subscribers on March, 05

Bharti Grp21%

Reliance Grp20%

BSNL19%

Hutchison Grp15%

IDEA Grp10%

BPL Grp5%

Spice Grp3% Aircel Grp

3%

Tata Teleservices

2%

MTNL2%

HFCL0%

Shyam Telelink

0%

Market Share of Different Cellular Groups

38

0

100000

200000

300000

400000

500000

600000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Total Port In Total Port Out

Operators

Source of Table: www.trai.gov.in

Source of Graph: Based on the above table (author’s work)

39

Circle Population Covered Area Covered  (Sq. Km.)

Andaman & Nicobar 316000 797

Andhra Pradesh 67334977 220326

Assam 20860000 39338

Bihar 53006472 59650

Chhattisgarh 13378309 60411

Gujarat 41997127 110680

Haryana 16544108 32489

Himachal Pradesh 3624010 30113

Jammu and Kashmir 6388782 31793

Jharkhand 11603207 35285

Karnataka 37167579 101760

Kerala 30162136 35536

Madhya Pradesh 27736320 118774

Maharashtra 68843231 106563

North East-1 3333021 21772

North East-2 2519283 20046

Orissa 25278005 102912

Punjab 23304386 45933

Rajasthan 43729884 164315

Tamil Nadu 50516502 93794

Uttarakhand 5154923 35039

Uttar Pradesh East 80822915 140798

Uttar Pradesh West 25831170 44051

West Bengal 28737425 27175

Kolkatta TD 13214676 2200

Chennai TD 9975869 4913

Total 711380317 1686463

TABLE - 1.7

Circle-wise Population and Area Covered under  Mobile Telephone

Services in India (As on 30.06.2010)

Population Covered Andaman & Nicobar Andhra PradeshAssam BiharChhattisgarh GujaratHaryana Himachal PradeshJammu and Kashmir JharkhandKarnataka KeralaMadhya Pradesh MaharashtraNorth East-1 North East-2Orissa PunjabRajasthan Tamil NaduUttarakhand Uttar Pradesh EastUttar Pradesh West West BengalKolkatta TD Chennai TDTotal

Area Covered (Sq. Km.)

Source of Table: TRAI Annual Report 2009-10 Source of Graph: Based on the above table (author’s work)

40

Source: www.vision2020planningcommission.nic.in

0

10

20

30

40

50

60

70

80

90

100

1999 2000 2001 2002 2003 2004 2005 2006

No. of Telephone (in Million) Fixed (Landline+WLL)

No. of Telephone (in Million) Mobile

Source: Based on the above table (author’s work)

41

Service Providers

Mar,

00

Mar,

01

Mar,

02

Mar,

03

Mar,

04

Mar,

05

Mar,

06

Mar,

07Mar, 08 Mar, 09

%

Growth

Over

March,

2005

(One

Year)

%

Growth

Over

Financial

Year

2008

Bharti 0.36 0.69 1.35 3.07 6.5 10.98 19.58 37.14 61.98 93.92 78.32% 51.53%

BSNL 0.04 2.29 5.53 9.9 17.65 30.99 40.79 52.15 78.28% 58.70%

Reliance 0.07 0.19 0.38 0.54 7.26 10.45 17.31 28.01 45.79 72.67 65.65% 55.84%

Hutch 0.45 0.71 1.27 2.16 5.15 7.8 15.36 26.44 44.13 68.77 96.92% 27.85%

Tata 0.05 0.16 0.63 1.09 4.85 16.02 24.33 35.12 344.95% 44.35%

Idea 0.16 0.34 0.81 1.28 2.73

Escotel 0.14 0.31 0.5 0.59 0.99

Aircel - - 0.54 0.73 1.29 1.76 2.61 5.51 10.61 18.48 48.30% 74.18%

MTNL 0.02 0.22 0.35 0.46 1.08 2.05 2.94 3.53 4.48 89.81% 26.91%

Spice 0.17 0.27 0.47 0.64 1.21 1.44 1.93 2.73 4.21 4.13 34.03% -1.90%

BPL 0.34 0.64 0.9 1.13 1.88 2.58 1.34 1.07 1.29 2.16 -48.06%* 67.44%HFCL 0.01 0.03 0.03 0.05 0.06 0.15 0.3 0.6 20.00% 30.00%

Sistema 0 0.03 0.03 0.03 0.03 0.1 0.11 0.39 0% 445.45%

Total 1.9 3.58 6.54 13 33.69 52.23 90.14 165.1 261.07 391.76 72.62% 50.06%

62.03%

TABLE - 1.9Subscriber Base of Mobile (GSM and CDMA) Services in India

(March, 2000 to 2009)

(in Million)

5.07 7.37 14.01 24 38.89 45.36%

%age growth over March, 05

0

50

100

150

200

250

Mar, 09

Mar, 08

Mar, 07

Mar, 06

Mar, 05

Mar, 04

Mar, 03

Mar, 02

Mar, 01

Mar, 00

Bharti, 78.32% BSNL, 78.

28%

Reliance, 65.65%

Hutch, 96.92%

Tata, 344.95%

Idea, 45.36%

Escotel, 0.0

0%

Aircel , 48.30%

MTNL, 89.81%

Spice, 34.03%

BPL , 0 HFCL, 20.00%

Sistema, 0%

Bharti, 51.53%

BSNL, 58.70% Reliance, 55

.84% Hutch, 27.85%

Tata, 44.35%

Idea, 62.03%Escotel, 0.0

0%

Aircel , 74.18%

MTNL, 26.91%

Spice, -1.90%

BPL , 67.44%

HFCL, 30.00%

Sistema, 445.45%

%age growth over FY 2008

%age growth over March, 05

Source of Table: www.indiastat.com and Source of Graph: Based on the above table (author’s work)

42

Source: www.trai.gov.in

0

50000000

10000000

15000000

20000000

25000000

Mar, 99 Mar, 00 Mar, 01 Mar, 02 Mar, 03 Mar, 04 Mar, 05 Mar, 06 Mar, 07

Total

"C" Circles

"B" Circles

"A" Circles

Metros

Source: Based on the above table (author’s work)

43

Reliance Bharti BSNL Hutchison Idea

0.543.07 2.29 2.16 1.28

7.26

6.55.53 5.15

2.73

TOP 5 MOBILE OPERATORS' SUBSCRIBER BASE IN INIDA

Subscriber Base (in million) March '2003 Subscriber Base (in million) March '2004

Reliance4.15

Bharti23.62

BSNL17.62

Hutchison

16.62

Idea9.85

% age share on March 2003

Reliance21.55

Bharti19.29

BSNL16.41

Hutchison

15.29

Idea8.1

% age share on March 2004

Source of Table: www.indiastat.com and Source of Graph: Based on the above table (author’s work)

44

Source: www.vision2020planningsommission.nic.in

-1

0

1

2

3

4

5

6

7

8

2000 2001 2002 2003 2004

Postpaid RPM (Rs.)

Postpaid % Change

Prepaid RPM (Rs.)

Prepaid % Change

Blended RPM (Rs.)

Blended % Change

Source of Graph: Based on the above table (author’s work)

45

Table 1.13

2005 9.08

2006 12.86

2007 18.23

2008 26.22

2009 36.98

2010 52.74

GROWTH OF TELE-DENSITY

FROM 2005-2010

YEARGROWTH OF

TELEDENSITY

Source: TRAI Annual Report 2009-10

9.0812.86

18.23

26.22

36.98

52.74

0

10

20

30

40

50

60

2005 2006 2007 2008 2009 2010

GROWTH OF TELE-DENSITY

GROWTH OF TELEDENSITY

Source: Based on the above table (author’s work)

46

Table1.14 FORECASTING THE TOTAL LANDLINE SUBSCRBERS AND TOTAL MOBILE SUBCRIBERS UPTO 2014-2015

YEAR TOTAL LANDLINE SUBSCRIBERS

TOTAL MOBILE SUBSCRIBERS

1999-2000 4450956 3107449

2000-2001 5927282 5478932

2001-2002 7802196 10480430

2002-2003 9598174 21991743

2003-2004 12784986 37378807

2004-2005 22491031 58503224

2005-2006 30684519 105425183

2006-2007 40753412 172219135

2007-2008 58044671 258235642

2008-2009 79315081 380447562

2009-2010 106197268 494036000

2010-2011 114419076 553685876

2011-2012 135196481 660238164

2012-2013 155809740 763813825

2013-2014 174632855 861100772

2014-2015 192215452 950802215

Source: www.trai.gov.in

Source: Based on the above table (author’s work)

47

Table 1.15 OPERATOR WISE GROWTH OF TELECOM SECTORS IN SUBBSCRIBER BASE ( IN MILLIONS).

OPERA-TORS

1999-2000

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

BHARTI AIRTEL

0.36 0.69 1.35 3.07 6.5 10.98 19.58 37.14 61.98 93.92 107.204

IDEA 0.16 0.34 0.81 1.28 2.73 5.07 7.37 14.01 24 38.89 43.149

RELIANCE

0.07 0.19 0.38 0.54 7.26 10.45 17.31 28.01 45.79 72.67 80.722

VODAFONE (HUTCH)

0.45 0.71 1.27 2.16 5.15 7.8 15.36 26.44 44.13 68.77 77.713

SPICE 0.17 0.27 0.47 0.64 1.21 1.44 1.93 2.73 4.21 4.13 5.186

Source: www.indiastat.com

Source: Based on the above table (author’s work)

48

Table1.16 SERVICE REVENUE OF INDIAN TELECOM OPERATORS (Rs./Crore).

TELECOM OPERATORS

2008-2009 2009-2010 2010-2011 2011-2012

BHARTI AIRTEL

37352 41847 59476 65060

RELIANCE 22250 22132 23107 31468

IDEA 10154 12447 15503 16963

MTNL 4587 3751 4380 4380

HCFL 139 204 204 204

Source: Reliance Communications Ltd.

Source: Based on the above table (author’s work)

49

Table 1.17 CORRELATION BETWEEN MOBILE CALL RATES AND TOTAL MOBILE

SUBSCRIBERS.

YEAR APPROXIMATE MOBILE CALL RATES (AVERAGE

OF ALL THE OPERATORS ACROSS ALL THE OPERATOS)

TOTAL MOBILE SUBSCRIBERS

1999-2000 5 3107449

2000-2001 5 5478932

2001-2002 4.28 10480430

2002-2003 3.96 21991743

2003-2004 3.37 37378807

2004-2005 3.19 58503224

2005-2006 2.25 105425183

2006-2007 1.19 172219135

2007-2008 1.76 258235642

2008-2009 0.94 380447562

2009-2010 0.50 494036000

Source: www.trai.gov.in

Correlations

VAR00002 VAR00003

VAR00002 Pearson Correlation 1 -.889**

Sig. (2-tailed) .000

N 11 11

VAR00003 Pearson Correlation -.889** 1

Sig. (2-tailed) .000

N 11 11

**. Correlation is significant at the 0.01 level (2-tailed).

VAR00002: MOBILE CALL RATES VAR00003: TOTAL SUBSCRIBERS Source: Based on the above table (author’s work)

50

Table 1.18 TREND IN REVENUE EARNED PER MINUTE (INCOMING + OUTGOING) FOR ALL GSM OPERATORS.

YEAR POSTPAID PREPAID

1999-2000 6.55 7.32

2000-2001 4.82 5.65

2001-2002 3.67 5.43

2002-2003 2.55 3.49

2003-2004 1.79 1.39

Source: www.indiastat.com

Source: Based on the above table (author’s work)

51

Table 1.19 Factor Analysis

Correlation Matrix

1.000 .143 .105 .240 -.222 .203 -.123 .157 .159 .010 .045 .227 .038 .033 .101

.143 1.000 .027 .033 .107 .166 .106 .424 .229 -.283 .057 -.039 -.159 .074 .122

.105 .027 1.000 .271 .016 .345 .153 .103 .131 .312 .491 .116 .225 .250 .098

.240 .033 .271 1.000 .132 .288 .190 .344 .058 .249 .380 .216 .134 .319 .109

-.222 .107 .016 .132 1.000 .046 .021 .125 .060 -.201 .121 -.004 .128 .189 .020

.203 .166 .345 .288 .046 1.000 -.014 .364 .210 .044 .383 .174 .289 .444 .298

-.123 .106 .153 .190 .021 -.014 1.000 .195 .088 .272 .147 .244 .105 .067 .180

.157 .424 .103 .344 .125 .364 .195 1.000 .470 -.218 .197 .044 -.067 .338 .083

.159 .229 .131 .058 .060 .210 .088 .470 1.000 -.113 .072 .035 -.046 .104 -.003

.010 -.283 .312 .249 -.201 .044 .272 -.218 -.113 1.000 .148 .318 .215 .105 .129

.045 .057 .491 .380 .121 .383 .147 .197 .072 .148 1.000 .295 .220 .399 .319

.227 -.039 .116 .216 -.004 .174 .244 .044 .035 .318 .295 1.000 .229 .267 .444

.038 -.159 .225 .134 .128 .289 .105 -.067 -.046 .215 .220 .229 1.000 .383 .107

.033 .074 .250 .319 .189 .444 .067 .338 .104 .105 .399 .267 .383 1.000 .175

.101 .122 .098 .109 .020 .298 .180 .083 -.003 .129 .319 .444 .107 .175 1.000

Local Call Rate

STD Call Rate

Family Member Using

The Network

Free Call Serv ice

Convenience In Pay ing

Bills

Connectiv ity

Promotional Of f ers

Roaming connectiv ity

Internet Access

Recharge Coupon

Availability

Friend Family Group

Messaging Pack

Pay ment/ Recharge Kiosk

Customer Care

Popularity Of the

Company

Correlation

Local Call

RateSTD Call Rate

Family

Member

Using The

Network

Free Call

Serv ice

Convenience

In Pay ing BillsConnectiv ity

Promotional

Of f ers

Roaming

connectiv ity

Internet

Access

Recharge

Coupon

Availability

Friend Family

Group

Messaging

Pack

Pay ment/

Recharge

Kiosk

Customer

Care

Popularity Of

the Company

KMO and Bartlett's Test

.664

343.678

105

.000

Kaiser-Meyer-Olkin Measure of Sampling

Adequacy.

Approx. Chi-Square

df

Sig.

Bart let t's Test of

Sphericity

The KMO value being above .500 denotes that the sample size was adequate.

The Significance being .000 denotes that there was no fraudulent data.

52

Communalities

1.000 .706

1.000 .557

1.000 .578

1.000 .451

1.000 .627

1.000 .619

1.000 .775

1.000 .744

1.000 .467

1.000 .723

1.000 .524

1.000 .680

1.000 .505

1.000 .594

1.000 .724

Local Call Rate

STD Call Rate

Family Member Using

The Network

Free Call Serv ice

Convenience In Pay ing

Bills

Connectiv ity

Promotional Of fers

Roaming connect iv ity

Internet Access

Recharge Coupon

Av ailability

Friend Family Group

Messaging Pack

Pay ment/ Recharge Kiosk

Customer Care

Popularity Of the

Company

Initial Extraction

Extraction Method: Principal Component Analy sis.

Total Variance Explained

3.414 22.763 22.763 3.414 22.763 22.763 2.779 18.525 18.525

2.079 13.857 36.620 2.079 13.857 36.620 2.129 14.193 32.718

1.393 9.288 45.908 1.393 9.288 45.908 1.567 10.448 43.166

1.245 8.298 54.206 1.245 8.298 54.206 1.430 9.534 52.700

1.144 7.625 61.831 1.144 7.625 61.831 1.370 9.131 61.831

.917 6.111 67.942

.882 5.881 73.822

.736 4.907 78.729

.699 4.663 83.392

.561 3.741 87.133

.533 3.557 90.690

.406 2.709 93.399

.384 2.560 95.959

.326 2.172 98.131

.280 1.869 100.000

Component

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Total % of Variance Cumulat iv e % Total % of Variance Cumulat iv e % Total % of Variance Cumulat iv e %

Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings

Extraction Method: Principal Component Analy sis.

53

Component Matrixa

.273 .141 .644 -.434 -.094

.202 .658 .136 .225 -.120

.570 -.173 -.052 -.172 .437

.606 -.015 .031 -.029 .287

.157 .220 -.696 .205 -.166

.676 .166 -.040 -.341 -.126

.327 -.130 .081 .754 .276

.494 .678 .049 .124 .150

.288 .540 .164 .039 .253

.295 -.686 .211 .118 .327

.698 -.109 -.155 -.027 .024

.523 -.333 .299 .235 -.388

.428 -.371 -.338 -.230 -.129

.664 .025 -.337 -.162 -.113

.469 -.135 .222 .287 -.595

Local Call Rate

STD Call Rate

Family Member Using

The Network

Free Call Serv ice

Convenience In Pay ing

Bills

Connect iv ity

Promotional Of fers

Roaming connectiv ity

Internet Access

Recharge Coupon

Av ailability

Friend Family Group

Messaging Pack

Pay ment/ Recharge Kiosk

Customer Care

Popularity Of the

Company

1 2 3 4 5

Component

Extraction Method: Principal Component Analy sis.

5 components extracted.a.

Component Transformation Matrix

.833 .307 .396 .229 .052

-.138 .900 -.191 -.349 -.112

-.311 .191 .291 .177 .867

-.407 .218 .357 .675 -.452

.156 .108 -.771 .583 .172

Component

1

2

3

4

5

1 2 3 4 5

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

54

From the above Rotated Factor Analysis we have come out with new factors which

are the bases for selecting a network:

Factor 1-Free call services within family or a groups.

Factor 2- STD facilities and Internet Services being provided.

Factor 3- The popularity of the company.

Factor 4- Recharge booths should be located close by.

Factor 5- Local call rates should be low and payment process should be easy.

From the table of total variance explained we see the cumulative importance of

each of the above five factors. The total cumulative importances of these five

factors are 61.831%.

The individual importances of each of the factors are:

Factor 1- 18.525 %

Factor 2- 14.193%

Factor 3- 10.448%

Fator 4- 9.534%

Factor 5- 9.131%

These factors together make up the five most important factors of the analysis.

The rotated component matrix converges after 10 rotations to signify that none of

the factors are similar in nature and that the sample size is adequate.

55

BIBLIOGRAPHY 1. India Today

2. Economic Times 3. Telecom Regulatory Authority Of India (TRAI) Annual report 2009-2010

4. www.ibef.org/industry/telecommunications.aspx

5. Vision2020planningcommission.nic.in/reports/genrep/bkpap2020/1_bg2020.doc

6. http://www.indiastat.com/telecommunication/data.htm

7. http://www.currentanalysis.com/markets/telecomindustry/?gclid=COX74bLX7KsCFcka6

wodnywLPA

8. http://www.trai.gov.in 9. EIS in our college library

10. en.wikipedia.org/wiki/Communications_in_India

11. economictimes.indiatimes.com/Market

12. www.cci.in/pdf/surveys_reports/indias_telecom_sector.pdf

13. http://www.dot.gov.in/osp/Brochure/Brochure.htm 14. http://www.pppinindia.com/pdf/ppp_position_paper_telecom_122k9.pdf

15. Company Sites www.vodafone.in and www.airtel.in exim.indiamart.com › Indian

Budget › Budget 2009-2010

16. http://www.articlesbase.com/communication-articles/indian-telecom-industry-key-

milestones-3134671.html

17. http://www.sibm.edu.in/Final_Pre_Budget_Analysis_2010.pdf

18. http://www.telecomindiaonline.com/cmai-budget-recendations-for-fy-2010-11.html

56

19. http://www.telecomindiaonline.com/telecom-reports-on-telecom-kiosk-at-telecom-india-

daily.html

20. www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp

21. www.tradechakra.com › ... › Industries

22. www.indialawoffices.com/pdf/telecommunication.pdf

23. business.mapsofindia.com › Communications Industry

24. planningcommission.nic.in/reports/genrep/.../1_bg2020.doc

25. siteresources.worldbank.org/INTRANETTRADE/.../Singh.pdf –

26. www.cci.in/pdf/surveys_reports/indias_telecom_sector.pdf

27. http://telecomtalk.info/india-officially-scaled-the-500-million-telecom-subscriber-

base/11971/

28. http://www.trai.gov.in/WriteReadData/trai/upload/PressReleases/706/pr4nov09no73.pdf

29. http://www.coai.com/docs/ARPU Revenue Analysis - Oct-Dec 09-FINAL.xls

30. http://www.siliconindia.com/shownews/Network_congestion_increases_in_major_cities-

nid-29716.html

31. http://www.msnbc.msn.com/id/34509513/ & Electricsense.com article, 2010,

32. Das, N.G., Statistical Methods Volume 1, Tata Mcgraw Hill Publications, New Delhi,

Pages: 27-36, 287-398.

33. http://www.investopedia.com/terms/f/forecasting.asp

34. http://en.wikipedia.org/wiki/Linear_prediction

57

QUESTIONAIRE

NAME:

AGE:

OCCUPATION:

CONTACT NUMBER:

INCOME: <10000 10000-25000 >25000 (PER MONTH)

GEOGRAPHIC LOCATION:

MONTHLY EXPENDITURE:

PREPAID POSTPAID

The Grading system followed below is as follows:

1. Not Important at All

2. Not So Important

3. Important

4. Very Important

5. Extremely important

58

WHILE SELECTING A CONNECTION HOW MUCH IMPORTANCE WOULD YOU GIVE TO THE FOLLOWING

FACTORS

FACTORS 1 2 3 4 5

LOCAL CALL RATES

STD CALL RATES

FAMILY MEMBERS USING A NETWORK

FREE CALL SERVICE WIYHIN THE SAME NETWORK AND OUTSIDE THE NETWORK

CONVENIENCE IN PAYING BILLS

STRENGHT OF CONNECTIVITY(NETWORK)

FREQUENT PROMOTIONAL OFFERS

ROAMING CONNECTIVITY

INTERNET CONNECTIVITY

AVAILABILITY OF RECHARGE COUPONS

FAMILY/FRIEND GROUPS

MESSAGING PACKS

CLOSENESS OF PAYMENT/RECHARGE KIOSK

NATURE AND EFFICIENCY OF CUSTOMER CARE

POPULARITY OF THE COMPANY

59

HOW WOULD YOU RATE THE FOLLOWING FACTORS OF THE NETWORK YOU ARE CURRENTLY ON :

FACTORS 1 2 3 4 5

LOCAL CALL RATES

STD CALL RATES

FAMILY MEMBERS USING A NETWORK

FREE CALL SERVICE WIYHIN THE SAME NETWORK AND OUTSIDE THE NETWORK

CONVENIENCE IN PAYING BILLS

STRENGHT OF CONNECTIVITY(NETWORK)

FREQUENT PROMOTIONAL OFFERS

ROAMING CONNECTIVITY

INTERNET CONNECTIVITY

AVAILABILITY OF RECHARGE COUPONS

FAMILY/FRIEND GROUPS

MESSAGING PACKS

CLOSENESS OF PAYMENT/RECHARGE KIOSK

NATURE AND EFFICIENCY OF CUSTOMER CARE

POPULARITY OF THE COMPANY