2. An Overview
India is the second most populous country in the world
with the Overall GDP of $1.85 trillion (10th overall)
World’s largest democracy system with multi party model
at its core.
Indian telecom is the second largest in the world (behind
china) on the basis of telephone users (Both fixed and
wireless).
The Industry grew over 30 times from 37 million users in
2001 to 960.09 million (Both fixed and wireless) in 2013.
Fixed lines stood at 31.53 million in May 2013.
3. An Overview
Total mobile phone active were at 929.37 million in
2012.
Total Wireless Teledensity were at 79.37% in 2012.
Total monthly additions were at 8.35 million by may
2012. (Both fixed and wireless lines).
Fixed line rural density is at 33 % as of May 2012
Projected Wireless Teledensity is at 84%.
The Industry in India is rapidly transforming into Next
Gen Network through various telephone exchange,
mobile switching centers and media gateways using
optical fiber or microwave radios.
4. An Overview
1.18% of household in India have broadband access.
There were 14.31 million internet users in India as of
May 2012.
Total ARPU for 2012 stood at $2.36 as compared to
$46.50 in US
Lowest mobile tariffs in India due to high competition.
Total revenue generated in 2012 by telecom sector to be
estimated upward of US$50 billion.
7. Types of Services
Telephone (Fixed and Wireless).
Fixed connections: - Based on copper or optical fibers.
The cost per connections depend upon the regions with
northern sectors being the cheapest.
Besides adding future connections the introduction of
FDI also adds to the demand for wired connections.
Digitization in fixed lines were recently introduced.
Bulk of the population rely on landline for their internet
connections thus adding to the future demand.
Interconnectivity charges to be paid to BSNL.
8. Fixed Continued…
With 31.6 million
connections in India
following are the key
players
SHARE
0.16
0.61
BSNL
4.04
MTNL
BSNL
0.07
MTNL
4.04
BHARTI
10.49
BHARTI
TATA
RELIANCE
QUADRANT
SISTEMA
VODAFONE
TATA
11.07
RELIANCE
68.86
QUADRANRT
SISTEMA
VODAFONE
10. 1000
800
600
400
200
0
WIRELESS
•Subscriber base of more than 929
million. (second largest in world)
•Estimated ARPU of $2.3 as compared to
$46.32 in US.
•Cost per user fluctuates at $1.7 to $2.2.
•India has 7,36,354 base transreceiver
stations . 20% of them can handle 3G
services.
•India has 75 million Smartphone users.
•Smartphone's will grow at a CAGR of over
30% (US$18 billion)
•Wireless handset service grew 16.7% in
2012 with revenues adding up to Rupees
288,882 crore or US$ 64.4 billion.
1.85%
0.58%
0.53%
USERS
REV ($BILLIONS)
0.34%
0.17%
MARKET SHARE
BHARTI
4.64%
7.26%
VODAFONE
20.58%
RELIANCE
IDEA
BSNL
8.66%
TATA
AIRCEL
16.88%
10.93%
UNINOR
SISTEMA
MTNL
VIDEOCON
12.77%
14.83%
LOOP
HFCL
11. Wireless Contd..
•Third highest Teledensity in world with
bulk in urban areas, marked by high
prospect of growth in rural areas.
•3G and broadband services were auctioned
at US$19.2 billion in 2010.
•4G services have been slow to roll out due
to high price, unforeseen policies. Indian
government requires local operators to
partner with global giants to ease the
burden of the costs.
•Private sector hold 88.49% of the market
share; whereas government held agencies
account for remaining 11.51%.
•High competition with at least 7 to 12
companies in the same circle.
•GSM is the dominant form of technology
with around 80% and CDMA being at 20%
of total wireless consumers base.
•Wireless alone generates revenue of
upwards US$31.6billion of estimated
US$35.6 billion.
•Lowest ARPU among fellow nations
fostered by stiff competition and govt.
regulation policies.
12. ARPU IN US$
Wireless Contd.
46
50
•Voice services near saturation in urban
40
areas; future growth possible by
expanding data services and expansion
in uncharted rural areas.
•Telecom equipment requirement
stood at 6.5% (US$14.3 billion) of the
worlds requirement with most of it
being imported.
•2G still to be a dominant force to be
reckon with. (please see graph below).
30
Mobile Equipment
Break Up by 2015
20
33
26
10
2.3
0
CONSUMER BASE (Millions)
1500
1004
2G
5
45
50
1000
3G
500
4G LTE
ARPU IN US$
12
0
929
CONSUMER BASE
(Millions)
327
121
75
14. No of Internet Users (In Millions)
BROADBAND SERVICES
Introduced in 1995.
•Current users at 14.82 million from 14.62
million. Increase of 1.37%
•Annual growth of 16.78%
•The global trend of offering internet as
valued added services being followed in
India.
•Government mandated 256Kbps as a
requirement, however India still ranks at
110 in Internet speed.
• Bulk of these users are concentrated in
urban areas, whereas rural areas have
limited exposition.
•155 Internet service providers in India.
• Internet services are slated for explosive
growth in 2013with the advent of mobile
payment services in India. User
subscription rate to go over 20 million by
2015.
•About 75% of the connections are
landline based.
600
513
400
245
200
121
101
No of Internet Users (In
Millions)
81
0
CHINA
US
INDIA JAPAN BRAZIL
NO OF CONNECTIONS (IN MILLIONS)
MARKET SHARE
10
9.47
N
O
1.37 1.06
0.68 0.37
7.20%
9.30%
O
F
5
19.70%
0
63.90%
BSNL
BHARTI
MTNL
OTHERS
C
O
N
N
E
NO OF CONNECTIONS (IN
MILLIONS)
16. BROADCASTING
800
•Launched in 1952, deregulated in 1992. Comprises
more than 500 channels as of 2012.
•Employs 3 million people with over US$15 billion
in revenue.
• 70% of the revenues are generated by advertising
and rest by subscriptions.
• TVS being promoted as part of the one of the
value added services in this day and age by local
operators.
•There are 552 million viewers with 462 million on
satellite subscription.
•With the onset of High Def services, ad revenues
have been further increased by 6.7%.
•Regional channels could be set up for US$20
million, whereas national channel could take
US$100 millions.
•Heavily rely on revenues from Advertising
(revenues generated by advertising in 2012 were
US$4.91 billion).
•High competition due to large number of
operators in various regions.
723
689
600
400
526
399
355
200
NO OF TV'S (IN
MILLIONS)
356
199
186
199
156
VIEWERS
0
ADVERTISING REVENUE (IN MILLIONS-2005 DATA)
$250.00
$200.00
$150.00
$100.00
$50.00
$-
$247.27 $236.36
$181.82
$120.91
$54.55
ADVERTISING REVENUE
(IN MILLIONS-2005 DATA
18. GOVERNMENT
•The Government of India allowed FDI in
telecom in 90s with the launch of
economic revival program.
250
•At present 74%-100% FDI is allowed in 3G
or less spectrums. Up to 49% is allowed in
4G spectrum.
•The formation of NTP’s (National telecom
200
policies)helped in better foreign
investment flows in India. Current NTP
2012 is released for the fiscal year.
•TRAI (Telecom Regulatory Authority of
India) was establish in 1997 to oversee day 150
to day operations related with Telecom
sector.
•TDSAT (Telecom Disputes Settlement
Appellate Tribunal) was formed in the year
2000 to assist with ranging disputes among 100
operators in Telecom sector.
•With the auction of 3G services TRAI
helped Indian government earn over US$19
billion.
50
•The subscriber base exploded with the
onset of NTP 99. Please see chart for
references
250
Comparison of subscriber base in relation to Tariff
200
190
180
TARIFF
SUBSCRIBERS
70
35
16
20
16
45
40
25
20
8
5
5
4
3.5
2001
2002
2003
2004
3
2.7
2
1.7
2006
2007
2008
0
1998
1999
2000
2005
19. Government Continued..
•The current government allows operators
to provide fixed and wireless line under
one license.
•The government launched USO
(Universal service obligation) along with
NTP 99 to widen the reach of telecom and
increase Teledensity.
• Pricing policy and execution to be
approved by TRAI and DOT.
•Interconnectivity charges among
operators are also to be approved by TRAI
and DoT.
•NTP-2012 incorporates framework for
increasing the availability of spectrum for
telecom services including triple play
services (voice, video and data) for which
broadband is the key driver.
•Through the NTP-2012, DoT is floating
tenders that requires 24 fibreOFN
(optical fiber network) of 350,000 miles;
this project will further boost the
interconnectivity between rural and urban
areas.
WPCSPECTRUM
MANAGMENT
TRAI
Independent Regulator
DoTLicense and
frequency
management
Indian Telecom
Industry Framework
TDSAT
Handles Disputes
among operators
GoT-IT
Handles AdHoc Issues
Integred Fixed Line
BSNL
MTNL
ILD Players
VSNL
Private CDMA
Reliance
TTSL
GSM Players
Bharti / Vodafone /
Idea/BSNL/Aircel
20. Per the NTP 2012, Govt of India is rapidly developing its communication
abilities and is leaving no stone unturned.
Following are the main excerpts: •Increase rural Teledensity from the current level of around 39 to 70 by the year 2017 and 100 by the
year 2020.
•Provide affordable and reliable broadband-on-demand by the year 2015 and to achieve 175 million
broadband connections by the year 2017 and 600 million by the year 2020 at minimum 2 Mbps
download speed and making available higher speeds of at least 100 Mbps on demand
•Simplify the licensing framework to further extend converged high quality services across the
nation including rural and remote areas. This will not cover content regulation.
•Reposition the mobile phone from a mere communication device to an instrument of empowerment
that combines communication with proof of identity, fully secure financial and other transaction
capability, multi-lingual services and a whole range of other capabilities that ride on them and
transcend the literacy barrier.
•Strive to create One Nation - One License across services and service areas.
•Achieve One Nation - Full Mobile Number Portability and work towards One Nation - Free
Roaming.
21. THE INDIAN TELECOM TIMELINE
10’3g Auctioned
2008 – 3G policy
announced, spectrum
auction awaited.
2006 – Number Portability was
proposed
2005- Measures to boost rural Teledensity.
FDI limit was also increased from 49 to 74%
2004 – Intra circle merger guidelines was established.
Broadband 2004 policy was formulated
2003 – Calling party pay was implemented. Unified license regime
was introduced.
2002 – CDMA services launched.
2000-BSNL was established / Reduction of license fees / ILD services opened.
1999 – NTP 99 was launched
1997 – TRAI established
1994 – NTP Formulated
1992 – PVT companies allowed in VAS
22. PRESENT TELECOM MARKET SHARE
Indian Telecom (Includes phone, broadband and broadcasting subscriptions) in 2012
12%
AIRTEL
23%
5%
IDEA
VODAFONE
15%
10%
RELIANCE
BSNL
12%
10%
TATA
OTHERS
24. •Established in 1995 by Sunil Bharti Mittal. It
generated US$14.49 billion in revenue for 2012
with overall total assets of US$31.85 billion.
Its PPS (price per share is) US$5.82.
•Currently operates in 20 countries. Offering
2G, 3G and 4G services.
•Focuses on B2C (Business to customer) and
B2B (Business to Business) segments.
•Fourth largest telecom company in the world
with 261 million subscribers worldwide and
183.6 million in India alone.
•Offers various diversified services such as
broadband, phone (fixed and wireless), TV
subscription services, Airtel money
(Ecommerce platform )
•Has a business strategy of outsourcing its
operations to IBM and Ericsson thus further
reducing its call rate to Rupees 1 or $0.02 /
minute.
$16.00
$14.20
$14.00
$12.00
$11.20
$10.00
STOCK PRICES
$8.00
TOTAL REVENUE (IN
BILLIONS)
$7.27
$6.45
$6.00
$6.24
$5.78
$4.00
$2.00
$2010
2011
2012
25. •Founded in 1995, currently head by
Kumar Mangalam Birla.
•Had an overall revenue of US$2.8 billion.
•Total Assets of US$5.34 billion in 2011.
•Subscriber (Wireless) base set at 97
million subscriber.
•Current 3G service provider in 11 circles.
•Idea’s ARPU stood at US$2.2 for the year
2012.
•Has a 3G subscriber base of 3.7 million
user.
• Average share price US$ 1.9.
•Overall employees at 6489 in 2012
•Extensive operational infrastructure in
India.
•Involved in PAN-India network for its 3G
distribution to its subscribers.
•Offers wireless services as of 2012.
P
r
i
c
e
Price per share (US$)
$2.00
p
e
r
$1.50
s
h
a
r
e
$1.00
$0.50
(
U
S
$-
2010
2011
2012
Price per share (US$)
26. •Came into existence in the year 2000 by
diverging DoT (department of telecom was
divererged into BSNL)
•Generated revenues worth US$5.08 billion in
2012.
•BSNL has the largest 3G network in India.
Additionally, BSNL 3G services usually cover
not only the main town/city but also the
adjoining suburbs and rural areas as well. As of
now BSNL has 3G services in 826 cities across
India.
•Wireless subscriber base of 97.7 million.
•Broadband share of 9.7 million subscription
•Fixed line share of 68.8 % at 24.2 million
subscribers.
•Total operational assets are based at US$21.41
billion.
•Net income based at –US$1.61 billion (incurred
losses in 2012)
MARKET SHARE IN WIRELESS, BROADBAND AND
WIRELESS
10.93
68.89
WIRELESS
63.89
BROADBAND
FIXED LINE
27. VODAFONE
Global Coverage as of
2012
•Vodafone revenue for 2012 at US$5.2 billion.
•Vodafone is a successor to Essar + Hutch
collaboration.
•operational profit margin increased to 28.4 per
cent as a result of increasing operating
efficiency, based on scale and lower customer
acquisition cost.
•Vodafone annual ARPU at US$3.26 in 2012.
•Has 141 million wireless subscribers.
•Vodafone India is a subsidiary of Vodafone
Global.
•Vodafone paid US$2.6 billion (the second
highest.
•amount in the auctions) for spectrum in 10
circles. The circles it will provide 3G in are
Delhi, Kanpur, Gujarat, Haryana, Kolkata, Mah
arashtra & Goa, Mumbai, Tamil Nadu, Uttar
Pradesh (East) and West Bengal.
•Vodafone also operates 3G services in
Kerala, Andhra Pradesh and Uttar Pradesh
(West) through an agreement with Idea and in
Karnataka through an agreement with Airtel.
This gives Vodafone a 3G presence in 13 out of
22 circles in India
Vodafone India Revenue (in US$ Billions)
8
6
6.6
5.3
4.9
Vodafone India
Revenue (in US$
Billions)
4
2
0
2010
2011
2012
28. •Ranks among the top 5 telecommunications
companies in the world by number of
customers in a single country.
•Headed by Anil Dhirubhai Ambani.
•Generated revenues to the tune of US$2.02
billion in 2012.
•Has total assets worth US$14.65 billion
•Generated net income of US$28.39 million
in 2012.
•Has 28000 employees on its payroll.
•The company has established a panIndia, next-generation, integrated (wireless
and wire line), convergent (voice, data and
video) digital network that is capable of
supporting services spanning the entire
communications value chain, covering over
24,000 towns and 600,000 villages.
•Reliance Big TV offers its 1.7 million
customers DVD-quality pictures on over 200
channels using MPEG-4 technology.
•Reliance Communications paid US$1.8
billion for 3G spectrum in 13 circles.
$2.91
$3.00
$2.00
$2.02
$1.65
$1.34
$1.49
$1.27
Reliance Stock Comparison
$1.00
Reliance Revenue
$2010
2011
2012
30. STRENGTHS
Global ARPU @ $29.98
Largest telecom infrastructure in the world
(US$108.98 Billion)
Annual global Wireless subscribers at 335
million.
2012 Global sales pegged at US$42.56
billion.
Largest OFN facility in the world (annual
production @ 400,000 miles)
Net Income in 2012 @ US$8.9
US$100.62 billion in cash flow reserves
Providing time tested Value added services
in 29 nations
Global Operational costs down by 2.9%
Pioneer in GPS technology
Annual stock price for 2012 at US$22.56
Global impressive brand image
Robust research and development
department (Annual patent fees revenue
from various organizations at US$2.9
Billion)
Extensive dealership network in over 89
nations
Merger /Acquisitions in over 89 nations
Overall global penetration @ 66% in
subscriber base.
32. Our global presence
and strong financials
allow us to compete
with the competition
in India. The key to
generate profit will be
lower costs and quality
service at
Advent of acquisition or merger can
lower cost of entry in Indian scenario.
Wireless market in metros is saturated
but rural areas is majorly untapped.
Approx 67% of the population lives in
rural areas. This vast market has a
potential of another $8.9 billion in
value added services.
TRAI and DoT are efficient telecom
regulators as compared with agencies
in other countries .
Mobile Broadband is slow to pick up;
our global pioneer position with
discounted value added service could
be beneficial factor
Manufacturing telecom equipment is
our forte that India has so less to offer.
Further $6.8 billion can be generated
by manufacturing telecom equipment.
The relative young generation of the
populous also adds to the lucrative
market of the smart phones.
The introduction of
FDI in various sectors
in particular Retail
would
boost
the
demand for wire line
based broadband. The
potential market is
estimated to be $8.9
billion in 2013.
OPPORTUNITY
33. The presence of a coalition in the federal
government structure creates policy paralysis
in the Indian scenario (important decisions
impacting economic growth and welfare are
difficult to pass due to the vested interests of
various political parties and groups)
Developing own telecom infrastructure will be a
challenge as to get the laws passed will take
considerable time and would be met with
opposition from the competition.
Cut throat competition in India is the biggest
threat (Reliance, Tata , BSNL have incurred
loses due to loss-$1.9 billion combined in
revenue and rising costs).
The 2G scam in 2008 brought out the
vulnerability of the security of foreign
investment in India. The reversal order by
Supreme court of India incurred losses in
billions of dollars on various Multi national
telecom carriers. Although lobbying in illegal in
India but on the other hand very little or
nothing is accomplished without lobbying.
Global financial scenario (India seems to have
dodged the 2008 crises bullet but is
experiencing slower growth in 2012).
THREATS
34. INVESTMENT IN INDIA? WHY NOT!!
Yes, the political situation in India is very delicate and fragile. Lobbying is illegal and a necessary evil. India has the lowest
ARPU and cut throat competition. But we shouldn’t forget this lucrative market because of these following reasons: Second most populous country in the world with overall disposable income per person at $1,326 annual.
An upcoming younger generation eager to get their hands on a Smartphone (an estimated $18 billion dollar market in
next 2 years – we pioneered with Apple and introduced I-phone to the world, a similar wind in India could add at least
give us $6 billion of that share.)
We are known leaders in the telecom equipment manufacturing; India relies on the imports of the telecom equipment.
By setting up a production plant we can bank on to capturing at least $4 billion of the $6.5 billion equipment market in
India.
Our strong financials and global presence can help us manage our losses for first five years as we catch on with the
competition and dig in for the long haul. (With the full nationwide thrust we are expecting to incur $656 million in
losses in the first year with an increment of 12.8% every other year).
Losses would be generated into profits by eliminating local carriers and capitalizing on the vast untapped rural
network.
Losses would also include getting spectrum licenses in all circles thus setting up our infrastructure (cell towers, OFN).
We wouldn’t have to pay hefty interconnectivity charges to any carriers except BSNL. This would help us on saving on
operational costs.
India’s growing economy needs more faster network, we are leaders in innovation and pioneers in establishing new
technology through time – place tested measures. Our overall global assets @ $110.89 billion would come in handy in
the Indian Market.
