This paper is an effort to present an insight into the future of the highly dynamic market. It takes into account the key drivers of mobility, such as ARPU, MoU, VAS, Data Cards, future trends in wireless internet, M-Commerce, LBS, and Video on demand etc

1. INDIAN TELECOM
INDUSTRY IN 2012
FUTURE OF INDIAN TELECOM INDUSTRY
SIDDHANT JAIN
SIDDHANT.JAIN.IND@GMAIL.COM
SIDDHANT_JAIN_IND@YAHOOMAIL.COM
http://jainsiddhant29.blogspot.com/
MOB:-9739808658

2. SCOPE
 It is estimated that the blended ARPU
The wireless industry in India has shown
for GSM and CDMA will decline to
unparalleled growth. This paper is an effort to
Rs70 and Rs60 respectively by Q1
present an insight into the future of the highly
2012.
dynamic market. It takes into account the key
drivers of mobility, such as ARPU, MoU, VAS,
Data Cards, future trends in wireless internet, 300
GSM
M-Commerce, LBS, and Video on demand etc 250
Blended
200
ARPU(In
INTRODUCTION 150
100 Rupees)
Indian Telecom Industry is one of the fastest 50 CDMA
0 Blended
growing among the world. On an average it
Mar-09
Mar-08
Mar-10
Mar-11
Mar-12
Sep-08
Sep-09
Sep-10
Sep-11
ARPU(In
adds more than 17 million subscribers every Rupees)
month. Telecom Industry contributes 2% in
India’s GDP, and is bound to Increase, due to
its huge potential of urban market and still  While MoU for GSM and CDMA will
untapped rural market. fall to 303 and 232 minutes
respectively by March 2012.
Price war among operators have ended, there
has been a move by top Telcos like Airtel, 600
Idea, Reliance, who have increased their price, 500
MoU for
so as to increase their profit. And help them 400
GSM(In
300
paying their debt. 200 Minutes)
100 MoU for
Quick Stats 0 CDMA(In
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Sep-10
Sep-08
Sep-09
Sep-11 Minutes)
 Fixed Line subscriber base will reduce to
33.56 mn in Q1 of 2012 with 3.89%
decrease over Q1 of 2011.
 The MoU levels will continue to
 Mobile subscriber base is expected to decline over the next few years
reach 1026.2 mn in Q1 of 2012 with a though the rate of decline is expected
growth of 22.88% over Q1 of 2011 with to be slow while ARPU may witness a
total subscriber base is expected to be at slight increase due to price hike by
1065.3 mn in Q1 of 2012. some operators.
1500  Urban teledensity is expected to cross
182.24% whereas rural teledensity
1000
Millions
willl be at 44.59% mn in Q1 of 2012.
500
 Overall teledensity will be around
0
84.57% in Q1 of 2012.
Wireless Fixed Line

3. 200 Upcoming of various App stores is pushing
% Teledensity 150 VAS to the upper level
100
50 MVAS revenue (in Rs billions)
0 150
2005-06
100 2006-07
2007-08
Urban Rural 50
2008-09
0
2009-10
2006-07
2009-10
2005-06
2007-08
2008-09
2010-11
2011-12 (E)
A Pill To Survive:- Consolidations
2010-11
Inner consolidation among operators has 2011-12 (E)
already been started. TATA, and Barti Airtel
have announced the consolidation of their
respective business.
Video on Demand is one such VAS which
will help operators to increase revenues.
In second phase of consolidation, operators VOD will majorly be dominated by
will be going for Intra-circle roaming. Since Entertainment, news, sports and
none of India's operators managed to secure devotional content. VOD drivers will be
3G spectrum covering all 22 circles, the
3G, high resolution Smart phones, and
concept of is likely to pick up more
real time delivery of services. Still
aggressively in the coming months. With
operators will have to overcome various
Intra-circle roaming, operator are trying to
broaden their network coverage, at the same obstacles, like high transfer rates, they
time avoid losing their potential customers to have to also work on various codecs, so
competitors that content can fit the various screen
size.
In final phase of consolidation, big palyers
like Airtel, Idea, Reliance, will buy other One major disappointing factor for VAS is
Greenfield operators, who are already the revenue split. This is usually 65-70% to
bleeding and struggling to survive. operators and rest 35-30% is shared
VAS among copyright owners, content
developers, content aggregators, and
Currently VAS accounts for 8-10% of the technology enablers.
operator’s revenue, but in near future it will
increase. But, in near future we will see customer
and VAS providers driving this segment.
We have seen, operators heavily advertising
Services like music, games, news,
3G, and subscriber opting for it.
entertainment, M-commerce etc. can
This is a positive sign for content developer directly be marketed to customers. This
and aggregators. The Indian Mobile Value will help customers to access any content
Added Services (MVAS) industry is expected of their choice from any provider. These
to register a turnover of Rs 158 billion by FY contents can be accessed independent of
2011-12 from the current Rs 122 billion.
the mobile service provider's platform,

4. through a link to any of the third-party payments for mobile games will further
content provider, through a Web browser boost popularity of mobile gaming.
on the mobile handset, by sending a SMS
M-Commerce:-
or accessing IVR.
M-Commerce is still struggling to make its
Mobile search on smartphones is growing
mark in India, because of illiterate rural
7.5% month on month. It is one field
population, its complexity and RBI
which has a huge potential to grow, we
regulations. Still Major commercial banks
will soon see functionalities like smart
have announced tie-ups with big telecom
searches and search among different
operators so as to leverage the extensive
accounts of same user.
outreach of the telecom operators to
LBS:- provide micro-finance activities through
mobile payments and mobile money-
Factors that drive LBS are, adoption of
transfer, enabled by the banking
GPS enabled smartphones, quality digital
correspondent.
maps, continued growth of mobile
advertising. Most banks in India including SBI, ICICI,
Standard Chartered, HSBC, etc. offer
Various social networking sites like
banking alerts on mobile phones via SMS
Facebook and Twitter have also enabled a
including deposits, cheque clearance and
feature where a person can update its
withdrawals. Also there are various tie-
location.
ups between Telecom operators and
Some popular LBS applications are: - m- banks, for example.
Coupon (retail discounts),
SBI and Bharti Airtel to set up a joint
Childseeker(security).
venture, to provide mobile banking
LBS will find its use majorly in four service. ICICI Bank has tied up with
categories:- marketplace-navigation, Vodafone Essar to enable their customers
emergency, security, and other with savings accounts, pre-paid
commercial services instruments, and credit products through
a mobile phone based platform. Axis
Mobile Gaming:- Bank, has signed an MoU with IDEA
Cellular, whereby Idea will act as a
There has been a positive shift in
business correspondent of Axis Bank to
consumers’ behaviour towards mobile
provide the bank's financial products and
gaming as a source of entertainment, as
services through its retail outlets.
games become one of the most
downloaded content from APP stores. We will also see services like m-wallet and
Games like Angry Birds have been very m-banking being adopted in near future.
popular. Decreasing download charges,
increasing accessibility in emerging Indian operators will definitely work to
markets and the availability of micro- replicate the success of Grameen Phone,

5. Bangladesh. And will help banking the seeing variety of pricing model like:- pay
unbanked. per view, daily/monthly rental etc to cater
to the different need of users. They can
According to PwC in India 66% mobile
also choose to view only one channel to
users are aware that banking transactions
limited hours over a period of time, or
can be carried out using a mobile phone.
they can choose for a bouquet of
Of these only 4% actually use this service.
channels. Inspite of all this operators have
Though 71% were aware that bank
to work on providing a good customer
account details could be checked using a
experience, in terms of audio and video
mobile phone and only 6% of them use
quality and access time to video portal The
this service. most popular content on mobile TV service
Creating awareness among subscriber is includes music videos, movie trailers,
the main hurdle that companies face. weather, sports action clips, comedy
videos, cartoons, and amateur video
Challenges that application creators will shots.
face is to create a robust, secure and easy
to use application. Unchurning the CHURN
One of the problems that operators face is of
Advantage with Indian Telecom industry
churn rate, which is losing their customer to
is that majority of the subscribers are Pre-
competitors. Reason why it is important is
paid, and have the ability to conduct because Cost of customer retention is always
thousands of crores of small value less that cost of customer acquisition.
transactions in a risk-free prepaid model.
The entire channel first pays then does And MNP has made this churn even easy for
business hence the possibility of fraud is the subscriber
very less. There are few major reasons why a customer
switches to other networks.
MOBILE TV
 Poor Network coverage
India has 840.28 mn mobile subscriptions  Poor customer care
but only around 134 mn households  Their close friends have switched to
having TV sets. This gap depicts a huge other network, as intra network call
potential for the growth of mobile TV. are cheapest.
Drivers for Mobile TV are:-availability of  Due to brand or advertisement,
smart phones at cheap prices, launch of products (this forms the least
3G services, Change in customer demand percentage of total churn)
towards content & VAS. Operators have So the Companies having superior customer
started working on mobisodes, which are service network quality, innovative and
mobile episodes, formatted for mobile differentiated products & services and a
phone users. These are relatively shorter strong brand proposition, will have an
in length i.e 3-5 minutes. Mobile TV is at a advantage over other.
very nascent stage in India. We will be

6. Indian mobile handset market
Point Of Focus
The Indian mobile handset market witnessed
a growth rate of 15% in the FY 2010-11 i.e. the Telecom operators will start focusing more on
market size has increased from 25,000 cr. to Business Intelligence, Corporate Performance
33,171 cr. The industry is expected to grow by Management and Analytic applications
9-10% in FY 2011-12. These attractive figures software. This will not only help them gaining
describe itself, why there are so many local competitive edge by helping them to cut
and International players in market. This down operational costs, reduce revenue
competition will intensify further, resulting leakages, but will also help in understanding
into a price war and a consequent squeezing consumer behaviour and offer better
of profit margins. products & services. To provide more
Handset manufacturer should segment their customised offers, we will see CRM being
customers in three broad categories:- integrated with these software’s. Operators
will start focus on more on Business
 High end Customers, Costlier handset Intelligence, and analytics as a solution for an
 Mid-range Customer, want smart phones, efficient way of processing of large data.
but price sensitive (Maximum consumer)
 Low Range handset with basic CRYSTAL GAZE
functionality for rural India.
Operators will start consolidating and
joining hand with other operators to
Smartphone shipments are forecast to grow
almost 70% a year until 2015 survive.
Operators must look at innovative and
Handset manufactures are devising new locally relevant content as a tool to
strategies to sell their handset. They have increase ARPU.
started tie-Ups with CSPs and providing In order to increase acceptance of 3G
handset at subsidised rate. They are also services, handset bundling and mobile
advertising on one button launch of internet internet related contents should be
and the applications it can support. the focus area.
As Average selling price for Handset is Regional content, mobile internet,
continuously declining, sales volume will be location based service, Video on
deciding factor for generating profits. demand, Mobile TV, Mobile Gaming
and M-commerce will emerge as
DATA CARDS applications of the future.
Enterprises will explore the VAS
This is one product, that none operator can
market to increase the stickiness of
afford to ignore. Increasing sales of Laptop,
the subscriber.
and urge of being connected anywhere,
Data cards and Smart phones will see
anytime are major driving force to this. With
increase in sales and decrease in
the launch of 3G, even GSM players have
prices
started giving their Data Cards. Estimates
QoS and Security should be prime
suggest that about 2.5 lakh data cards are sold
focus for providing any service.
every month.

7. .