TABLE OF CONTENTS 1. Introduction
01
2. Evolution of the Telecom Sector
02
3. Telecom Policy Environment in India
04
4. Telecommunication Telecommunication Marketing – A Conceptual Framework
07
5. Objectives of Telecommunication Telecommunication Marketing
09
6. Nature of Telecom Sector in India
10
7. FDI Investment Invest ment in Telecom in India
11
8. Industry Revenue
14
9. Major Investments
16
10. Future Prospects
19
11. Challenges
20
12. Suggestions Suggestion s & Conclusion Conclusio n
21
13. Micro Analysis Analysis – Bharti Airtel Limited 13.1. Bharti Airtel – Introduction 13.2. Changes in Taglines Tagline s & Logo by Airtel Brand 13.3. Core Values Values of Airtel 13.4. Goals/Objectives 13.5. Business Units 13.6. SWOT Analysis 13.7. Analysis of Product Life Cycle 13.8. Value Chain Analysis 13.9. Conclusion Conclusion & Recommendations Recommendations
22 24 25 26 26 26 27 28 29 29
14. Report on Survey Conducted
30
15. Bibliography
31
INTRODUCTION The Telecom Industry is one of the fastest growing industries in India. India has nearly 200 million telephone lines making it the third largest network in the world after China and USA. With a growth rate of 45%, Indian telecom industry has the highest growth rate in the world. Talking of telecommunications sector in India today, we can primarily identify two segments namely Fixed Service Provider (FSPs) and Cellular Services. Some of the essential and basic telecom services forming part of Indian telecom industry include telephone, radio, television and Internet. Telecom industry in the country lays a special emphasis on some of the advanced and the latest technical innovations like GSM ( Global System for Mobile Communications), CDMA (Code Division Multiple Access), PMRTS (Public Mobile Radio Trunking Services), Fixed Line and WLL (Wireless Local Loop ). Especially, India has a flourishing market in GSM mobile service, while the number of subscribers is on rapid and dramatic increase. The Indian telecommunications industry boasts as being one among the most rapidly growing chunks on the globe. Experts around the world estimate that India holds the promise of emerging as the second largest telecom market of the World. This project focuses on the developments and innovation made in the Indian telecom sector. The main topics covered in the project are nature of telecom sector, FDI investment in telecom sector, current scenario and the challenges faced by Indian telecom sector and the future aspects in telecom sector, the market structure and the major players in Indian telecom sector. The project also depicts a detailed study on “Bharti Airtel Limited”
1
EVOLUTION OF THE TELECOM SECTOR Evol Ev oluti ution on of th the e T eleco com m Sector : Pre -1 99 1
Telegraph Act 1885 Creation of DOT1985
19 9 1 -1 9 94
MTNL & VSNL were set up-1986
Up to 1991
Cellular Cellular P hone Services were opened up to private sector-1994 National Telecom Policy-1994
1994 - 2002
1997 : T RAI was set up
Broadband policy 2004
FDI - 74% 2005
NTP 1999
TDSAT-2000
BSNL formed 2001
FDI FDI - 49 %
Up to 1994
2002 -2007
Upto 2002
Upto 2007
History of Indian Telecommunications started in 1851 when the first operational land lines were laid by the government near Calcutta (seat of British power). Telephone services were introduced in India in 1881. In 1883 telephone services were merged with the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923. After independence in 1947, all the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of Communications. Telecom sector was considered as a strategic service and the government considered it best to bring under state's control. The first wind of reforms in telecommunications sector began to flow in 1980s when the private sector was allowed in telecommunications equipment manufacturing. In 1985, Department of Telecommunications (DOT) was established. It was an exclusive provider of domestic and long- distance service that would be its own regulator (separate from the postal system). In 1986, two wholly government – owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.
2
In 1990s, telecommunications sector benefited from the general opening up of the economy. Also, examples of telecom revolution in many other countries, which resulted in better quality of service and lower tariffs, led Indian policy makers to initiate a change process finally resulting in opening up of telecom services sector for the private sector. National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensive roadmap for the Indian telecommunications sector. In 1997, Telecom Regulatory Authority of India (TRAI) was created. TRAI was formed to act as a regulator to facilitate the growth of the telecom sector. New National Telecom Policy was adopted in 1999 and cellular services were also launched in the same year. Telecommunication sector in India can be divided into two segments: Fixed Service Provider (FSPs), and Cellular Services. Fixed line services consist of basic services, national or domestic long distance and international long distance services. The state operators (BSNL and MTNL), account for almost 90 per cent of revenues from basic services. Private sector services are presently available in selective urban areas, and collectively account for less than 5 per cent of subscriptions. However, private services focus on the business/corporate sector, and offer reliable, high- end services, such as leased lines, ISDN, closed user group and videoconferencing. Cellular services can be further divided into two categories: Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sector is dominated by Airtel, Vodfone – Hutch, and Idea Cellular, while the CDMA sector is dominated by Reliance and Tata Indicom. Opening up of international and domestic long distance telephony services are the major growth drivers for cellular industry. Cellular operators get substantial revenue from these services, and compensate them for reduction in tariffs on airtime, which along with rental was the main source of revenue. The reduction in tariffs for airtime, national long distance, international long distance, and handset prices has driven demand.
3
TELECOM POLICY ENVIRONMENT IN INDIA Liberalization
The process of liberalization in the country began in the right earnest with the announcement of the New Economic Policy in July 1991. Telecom equipment manufacturing was de-licensed in 1991 and value added services were declared open to the private sector in 1992, following which radio paging, cellular mobile and other value added services were opened gradually to the private sector. This has resulted in large number of manufacturing units been set up in the country. As a result most of the equipment used in telecom area is being manufactured within the country. A major breakthrough was the clear enunciation of the government’s intention of liberalizing the telecom sector in the National Telecom Policy Resolution of 13th May 1994. National Telecom Policy, 1994
In 1994, the Government announced the National Telecom Policy which defined certain important objectives, including availability of telephone on demand, provision of world class services at reasonable prices, improving India’s competitiveness in global market and promoting exports, attractive FDI and stimulating domestic investment, ensuring India’s emergence as major manufacturing/export base of telecom equipment and universal availability of basic telecom services to all villages. It also announced a series of specific targets to be achieved by 1997. Telecom Regulatory Authority of India (TRAI)
The entry of private service providers brought with it the inevitable need for independent regulation. The Telecom Regulatory Authority of India (TRAI) was, thus, established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services, including fixation/ revision of tariffs for telecom services which were earlier vested in the Central Government. TRAI’s mission is to create and nurture conditions for growth of telecommunications in the country in manner and at a pace, which will enable India to play a leading role in emerging global information society. One of the main objectives of TRAI is to provide a fair and transparent policy environment, which promotes a level playing field and facilitates fair competition. In pursuance of above objective TRAI has issued from time to time a large number of regulations, orders and directives to deal with issues coming before it and provided the required direction to the evolution of 4
Indian telecom market from a Government owned monopoly to a multi operator multi service open competitive market. The directions, orders and regulations issued cover a wide range of subjects including tariff, interconnection and quality of service as well as governance of the Authority. The TRAI Act was amended by an ordinance, effective from 24 January 2000, establishing a Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to take over the adjudicatory and disputes functions from TRAI. TDSAT was set up to adjudicate any dispute between a licensor and a licensee, between two or more service providers, between a service provider and a group of consumers, and to hear and dispose of appeals against any direction, decision or order of TRAI. New Telecom Policy, 1999
The most important milestone and instrument of telecom reforms in India is the New Telecom Policy 1999 (NTP 99). The New Telecom Policy, 1999 (NTP-99) was approved on 26th March 1999, to become effective from 1st April 1999. NTP-99 laid down a clear roadmap for future reforms, contemplating the opening up of all the segments of the telecom sector for private sector participation. It clearly recognized the need for strengthening the regulatory regime as well as restructuring the departmental telecom services to that of a public sector corporation so as to separate the licensing and policy functions of the government from that of being an operator. It also recognized the need for resolving the prevailing problems faced by the operators so as to restore their confidence and improve the investment climate. Key features of the NTP 99 include: Strengthening of regulator National long distance services opened to private operators. International Long Distance Services opened to private sectors. Private telecom operators licensed on a revenue sharing basis, plus a one-time entry fee. Direct interconnectivity and sharing of network with other telecom operators within the service area was permitted. Department of Telecommunication Services (DTS) corporatized in 2000. Spectrum Management made transparent and more efficient.
All the commitments made under NTP 99 have been fulfilled; each one of them, in letter and spirit, some even ahead of schedule, and the reform process is now complete with all the sectors in telecommunications opened for private competition.
5
Mobile Number Portability (MNP)
Mobile Number Portability (MNP) allows subscribers to retain their existing telephone number when they switch from one access service provider to another irrespective of the mobile technology or from one technology to another of the same or any other access service provider. The Government has announced the guidelines for Mobile Number Portability (MNP) Service License in the country on 1st August 2008 and has issued a separate License for MNP service w.e.f. 20.03.2009. The Department of Telecommunication (DoT) has already issued licenses to two global companies (M/s Syniverse Technologies Pvt. Ltd. and M/s MNP Interconnection Telecom Solutions India Pvt. Ltd.) for implementing the service. MNP is to be implemented in Delhi, Mumbai, Maharashtra & Gujarat service areas of Zone –1 and Kolkata, Tamil Nadu including Chennai, Andhra Pradesh & Karnataka service areas of Zone – 2 within six months of the award of the license i.e. by 20.09.2009 and in rest of the service areas within one year of the award of the license i.e. by 20.03.2010.
6
TELECOMMUNICATION MARKETING – A CONCEPTUAL FRAMEWORK Policy of Government of India : Ministry of Communication & Information Technology
Licensor Dept of Telecom
Unified License Operators Fixed Line Operators
Regulator Telecom Regulatory Authority of I ndia
N ational Long Distance Operators
Judiciary
I nternational Long Distance Operators
Telecom Dispute Settlement Appellate Tribunal FDI in telecom recently revised to 74%.
CDMA 1800 MH Z
Wireless Operators GSM
Government gets 15% of revenues from Unified Licensing
900 & 1800 MH Z
Telecommunication services play an incremental role in the multi-dimensional development activities. A well functioning telecommunication network is an essential component of economic infrastructure. The application of modern marketing principles in the telecommunication service would make ways for the generation of profits and at the same time would also make the services affordable to the users at large. Telecommunication marketing focuses our attention on marketing services professionally and this makes it a managerial process. The marketing professionals bear the responsibility of managing the services which enrich the service profile of telecom in order that the world class services are made nationally and internationally competitive.
7
In view of the above, we telecommunications marketing:
observe
the
following
facts
regarding
Telecommunications marketing is a managerial process that helps an organized development of the telecommunication services. It is an organized effort to formulate a sound marketing mix for the telecom services. It is a social process to help the individuals and institution in activating the process of social transformation. Besides, the social costs shouldered and the subsidized and concessional services to be offered to the selected segments of users are given due weightage. It is a planned development process that makes possible an optimal development of telecommunication services. It is a device to develop a new perception of services by offering innovative, competitive and profit-oriented services.
8
OBJECTIVES OF TELECOMMUNICATION MARKETING
To make possible qualitative improvements in the service profile
It is right to mention that except a few almost all the service generating organization are required to improve the quality of their service profile. The marketing professionals make a strong application of marketing principles and would activate the process of qualitative transformation. The application process would make possible innovation which would help in designing a sound product portfolio. The services would be of world class which would be efficacious in motivating the prospects and users. The marketing information system would help professionals in developing a sound information base that would let them know the changing needs and requirements of users. Thus the quality of service would be improved.
To make possible quantitative improvements
In a country like India, it is significant those communications networks are channelized to all the regions so that almost all segments of the society get an opportunity to avail the services. It is advocated that application of marketing principles would make the organization commercially viable and financially sound which would energize the process of development and expansion. We find relevance of information even to the agricultural sector of the economy. This makes it essential the telecommunication services are made available to all the regions.
The cost effectiveness is made possible
Economy in operation is considered essential to make the services affordable to the user as well as profitable to the information selling organizations. The application of modern marketing principles make possible cost effectiveness since the marketing professionals bear the responsibility of optimizing the cost of offering the services. There is no doubt that by conceptualizing marketing, the telecommunication organizations would be successful in regulating the unproductive costs & expenses in a better way thus making the process cost effective.
9
NATURE OF TELECOM SECTOR IN INDIA
Supply: Intense competition has resulted in prompt service to the subscribers.
Demand: Given the low penetration levels in the country and continuously
falling tariffs, demand will continue to remain higher in the foreseeable future across all the segments.
Barriers to entry: High capital investments, well-established players who
have a nationwide network, license fee, continuously evolving technology and falling tariffs.
Improved competitive scenario and commoditization of telecom services has led to reduced bargaining power for services providers. Bargaining power of suppliers:
Bargaining power of customers: A wide variety of choices available to
customers both in fixed as well as mobile telephony has resulted in increased bargaining power for the customers.
Competition: Competition has intensified with the entry of new cellular
players in select circles. Reducing tariffs will hurt the new entrants as they will be unable to recover their high capital investments.
10
FDI INVESTMENTS IN THE TELECOM SECTOR IN INDIA The Indian telecom industry has always allured foreign investors. In fact, the cumulative FDI inflow, from August 1991 to March 2007, in the telecommunication sector amounted to US$ 7,513.22 million. This makes telecommunication the thirdlargest sector to attract FDI in India in the post liberalization era. The investment was majorly in handset manufacturing and telecom service provider. The common perception is that FDI levels in the telecom sector are very high. It also reveals that despite the fact that FDI limits were raised from 49% to 74% five years ago; foreign investors have not utilized the higher investment ceiling. In addition, foreign telecoms have given the 3G auctions a miss. This has wiped out the possibility of a large chunk of fresh FDI inflow and also reduces the auction’s potential to generate telecom minister A Raja’s original revenue target of Rs 40,000 crores. Among the nine bidders, Vodafone accounts for the highest FDI at 70.9%, which includes Vodafone’s investments and some of Essar’s own foreign investments. The second largest FDI is in Aircel with its foreign investor — Global Communication Services Holding (GCSH) owning 64.9%. Deccan Digital, which owns 34.9%, is in turn, also held 25% by GCSH. So in that sense, the exact foreign holding in Aircel is closer to 74% through direct and indirect routes. The other two bidders with leading foreign investments are Etisalat and S Tel. Etisalat Mauritius holds 44.73% in Etisalat India with Delphi Investments holding 4.27%, totaling 49%. Bahrain-based BMIC Ltd owns 42.7% of the 49% FDI in S Tel. Bharti Airtel and Idea both have roughly 40% FDI. Pestel Ltd is Bharti’s largest foreign investor with a 15.5% holding, followed by foreign FIs, foreign companies and shareholders who own 17.9% FDI. Idea has FDI of 40.5% through TMI and P5 Asia Investments. Tatas have an FDI of 34.1%, mostly through NTT Docomo, which is the single largest foreign investor at 26.5%.The only bidder that has 100% Indian investment but barely any 2G operations is Videocon. Reliance Communications also has a very large chunk of its total investment held by Indian promoters. While foreign investments coming in after the 3G bidding is over is a possibility, the 11
lack of foreign investors’ interest in 3G bidding or even investing up to the full 74% FDI limit in 2G operations should be of concern to the government. In fact, Telenor, one of the major new foreign investors is staying away from 3G auctions altogether. FIs had made it clear in 2008 that 3G bid conditions presented huge entry barriers to new entrants in general and foreign investors in particular. Despite this, a year after the first set of guidelines were issued, the 3G entry norms were not adequately altered, resulting in nine bidders joining the race for three panIndia 3G licenses but without any new Indian or foreign investor in contention.
FDI in Telecom Sector in India :
12
13
INDUSTRY REVENUE (2002-2010) According to a Frost & Sullivan industry analyst, by 2012, fixed line revenues are expected to touch US$ 12.2 billion while mobile revenues will reach US$ 39.8 billion in India. India has become the second country in the world to have more than 100 million CDMA-based (code division multiple access) mobile phone subscribers after the US, which has 157 million CDMA users. The Indian telecommunications industry is on a growth trajectory with the GSM operators adding nearly 9 million new subscribers in April 2009, taking the total user base to 297 million, a growth of 3.11 per cent over the additions made the previous month.
Quick Facts : Next Super Power India (March, 2010 ) Name
Current Trends
Projected Trends
(In 2010)
(In 2015 )
Population of India (Approx. )
120 Crore
135 Crore
Mobile Users (Approx. )
584.32 Million
Over 1 Billion
Number of Players (Approx. )
13
5-6 Players
Market Size (Approx. )
100,000 Rs. Crore
344,921 Rs. Crore
Growth Rate (Approx. )
16 %
Over 26 %
Employment to People (Approx. )
4 Million
10 Million
TeleDensity
52.74 %
70 %
Internet Users
81 Million
120 Million
Internet Penetration
7%
18 %
Contribution to India’s GDP.
3%
15 %
14
Total Telephone Subscriber Base
621.28 Million
Wireless Subscription (With 20.31 Million New Addition )
584.32 Million
Wireline Subscription
36.96
Overall Teledensity
52.74
Broadband Subscription
8.75
Million
Million
Market structure of India- Telecom Circles :
Metro circles (major cities*): • Mumbai • New Delhi • Kolkata
A
circles (regions that include other lar ge cities): Andhra Pradesh Gujarat Karnataka Maharashtra Tamil Nadu*
B circles (regions with smaller urban areas and towns): Haryana Punjab Rajasthan Uttar Pradesh (East) Uttar Pradesh (West) West Bengal
C circles (rura l areas):
Assam Bihar • Himachal Pradesh • Jammu & Kashmir • Northeast • Orissa • Kerala • Madhya Pradesh (* Chennai, in the southeast, was previously a separate Metro circle, but as of March 31, 2008, it was integrated into the Tamil Nadu A circle as a sin gle entity.)
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MAJOR INVESTMENTS The booming domestic telecom market has been attracting huge amounts of investment which is likely to accelerate with the entry of new players and launch of new services. Buoyed by the rapid surge in the subscriber base, huge investments are being made into this industry.
Norway-based telecom operator Telenor has bought a 60 per cent stake in Unitech Wireless for US$ 1.23 billion. Japanese telecom major NTT DoCoMo has acquired a 27.31 percent equity capital of Tata Teleservices for about US$ 2.6 billion and a 20.25 per cent stake in Tata Teleservices (Maharashtra) Ltd for about US$ 190.23 million. Singapore Telecommunications (SingTel), which has a 31 per cent stake in Bharti Airtel has received the government’s approval to offer long distance services in India, according to a communication ministry official. Mauritius-based P5 Asia Holding Investments (Mauritius) Ltd will be investing around US$ 545.13 million to hold a 20 per cent stake in Aditya Birla Telecom Ltd (ABTL). The funds will be utilized for network rollout and operations of ABTL in the Bihar circle. Bharat Sanchar Nigam Ltd (BSNL) is planning an investment of around US$ 201.5 million in the Tamil Nadu Circle for an additional 23 lakh mobile connections under both 2G and 3G technologies by 2011. The latest to join the world's second largest telecom market is Bahrain's Batelco which has signed a deal to buy 49 per cent in Chennai-based S-Tel, a GSM service provider, for $225 million. Etisalat, a Gulf-based telecommunications company has picked up a 45 per cent stake in Swan Telecom. Kavveri Telecom Products Limited is planning to set up a new subsidiary Kavveri Telecom Infrastructure Limited (KTIL) – with an investment of US$ 20.11 million over the next two years, to offer in-building telecom infrastructure to telecom service providers.
16
Juniper Networks, which is the second-largest maker of networking equipment, plans to invest US$ 400 million in India, over the next five years, with a focus on its research and development (R&D) activity. BSNL, India's leading telecom company in revenue terms, will put in about US$ 1.16 billion in its WiMax project. Bharti Airtel will be spending US$ 2.5 billion in a major expansion bid. Vodafone Essar will invest US$ 6 billion over the next three years in a bid to increase its mobile subscriber base from 40 million at present to over 100 million. Telecom service provider, Tata Teleservices Limited, has announced that the company will be investing additional US$ 6.74 million in Gujarat to set up 100 cell sites on August 2009. The company had earlier made an announcement of investing US$ 24.1 million in the state on March 2009. Telecom operator Aircel, which launched GSM mobile services in Bangalore on February 23, 2009, plans to invest US$ 220.58 million over the next year to set up base stations across the state.
3G Auction: Vodafone, Bharti win costly 3G spectrum (Economic Times)
Vodafone and Bharti paid a combined $5.1 billion for 3G mobile licenses in India, ending an epic auction that yields a bonanza for a deficit-strapped government but puts winners under pressure. Reliance Communications also won the right to provide third-generation services in an auction that lasted 34 days and will generate $14.6 billion for the government, authorities said on Wednesday, nearly twice what it had expected. "It's good news for the government, no doubt," said Arun Kejriwal, strategist at Kris Research in Mumbai. "For the operators it's a large sum of money that has to be paid out. We have to see how these services are priced and received by the subscribers and how it will impact their profitability," he said. India is the world's fastest growing mobile phone market with some 500 million subscribers. India's three biggest carriers -- Vodafone, Bharti Airtel and Reliance Communications -- each won key licenses to offer 3G services in Delhi and Mumbai. Nine private operators participated in the auction for three sets of licenses, which ended with no single carrier winning high-speed 3G spectrum in all 22 circles up for bidding.
17
Seven different carriers, including Idea Cellular and unlisted Tata Teleservices, ended up winning spectrum. Japan's NTT DoCoMo owns 26 percent of Tata Teleservices. A fourth license will be sold separately and has been reserved for state operators. India is a late adapter of 3G and is the biggest economy not to offer such premium services on a wide scale, although the state-run telecoms firms have 3G services in some zones. Vodafone Essar, the UK giant's India unit, will pay about $2.5 billion for its India 3G mobile spectrum, according to government data, and said it planned to launch a service by year-end. Bharti, one-third owned by SingTel, is paying about $2.6 billion but India's top carrier said it fell short of its objective of securing a pan-India footprint due to high prices. "We would like to point out that the auction format and severe spectrum shortage along with ensuing policy uncertainty, drove the prices beyond reasonable levels," the company said in a statement. The auction will help the government plug a fiscal deficit that last year reached a 16-year high, and may enable it to cut back on borrowing, bringing relief to satiated bond investors. "The 3G auction results demonstrate that the government borrowing will sail through smoothly," said Paresh Nayar, head of foreign exchange and money markets at First Rand Bank in Mumbai. Finance Minister Pranab Mukherjee said the auction proceeds will give "elbow room" to the government.
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FUTURE PROSPECTS With 300 million telephone subscribers today, India now boasts of having the second largest telecom network in the world after China. The country is adding some 8.5 million to 10 million new mobile subscribers to the network every month to also emerge as one of the fastest growing telecom markets in the world. The telecom industry also saw an estimated $8.5 billion in investment flow in during 2006-07 alone, of which $550 million was in the form of foreign direct investment. All major telecom handsets manufacturers - including Nokia, Samsung, Motorola and LG - have their presence in India, so do leading global service companies and infrastructure majors, such as Vodafone, Singapore Telecom, AT&T, Ericsson, Alcatel and Siemens. The next phase of growth, experts believe, will be in the country’s vast rural areas - a development that, they say, would be more important than the Green Revolution in India’s farm sector in the 1970s, when the country emerged as a self-sufficient economy in food production, driven by the introduction of hybrid seed varieties and new irrigation techniques. Also, with a tele-density of just eight percent in rural India, as opposed to 50 percent in urban centers, the hinterland offers good scope for expansion. While the tele-density in the urban areas is over 50 percent, in rural areas it is around eight percent only. Clearly, the future lies in the rural areas. Telecommunication access to rural India is going to be the most important development since the Green Revolution. Research analysts feel that mobile voice is overwhelmingly the engine of growth followed by Next Generation Network (NGN), broadband and data. Norway based Telecom, world’s 7th largest telecom company is planning a foray in the Indian market. Telenor has a subscriber base of 143 million and holds majority stake in Bangladesh’s Grameenphone and operates in 12 countries.
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CHALLENGES The challenge of the day is to search for new cost-effective ways to roll out telecom services in rural areas. It means one has to choose proper and effective technology for deployment and leverage on the use of available infrastructure to reduce cost and time of role out of services. Those service providers who create the right business would emerge winners and the rest would remain spectators. Connectivity of networks and cost of bandwidth are also important to facilitate broadband usage. Availability of local application and content is another area of concern. Most of the content available on website as of today is in English. The content in local and regional language will increase interest of the local population in broadband utilization. The convergence of technologies and emergence of new applications is another thrilling area. Lot of revolution is round the corner in broadcasting and entertainment industries. The emergence of Internet protocol TV, mobile TV will all change the scenario in the coming years. Wireless technology is the future growth driver for which spectrum is the most important input. The task of spectrum management in a multi user and multi usage scenario is more daunting and crucial than ever before. In summary, if the last few years in telecom were exciting, it will be even more exciting in the coming years. What are the main challenges facing the sector as we go forward?
“The challenge of the day is to search for new cost effective ways to roll out telecom services in rural areas. It means one has to choose proper and effective technology for deployment and leverage on the use of available infrastructure to reduce cost and time of role out of services. Those service providers who create the right business would emerge winners and the rest would remain spectators.” Lack of infrastructure in semi-rural and rural areas, which makes it difficult to make inroads into this market segment as service providers have to incur a huge initial fixed cost. But notwithstanding these constraints, telecom sector has undergone a revolution in the past decade and has played a major part in bridging the rural-urban divide.
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SUGGESTIONS & CONCLUSION Indian Telecom – A Growing Consumer Need
The Indian telecom industry has experienced significant growth in the recent years and constitutes about 3 percent of the national GDP. The Indian telecom market is vibrant, price-sensitive and with high-growth potential. According to a recent study by Gartner, the total cellular services revenue in India Is projected to grow at a Compound Annual Growth Rate (CAGR) of 18 percent from 2008-2012 toexceedUSD37billion, with more than 737 million mobile connections by 2012, growing at a CAGR of 21percent in the same period. India along with other BRIC (Brazil, Russia, India and China) countries is likely to become homeforover1.7 billion mobile users by 2012. As per the study by Gartner 4, in the next 4 years, cellular market penetration in India would increase to 60.7 percent from 19.8percent last year. Indian market ripe for 3G spectrum
India has a large potential 3G user base in the almost 70-million wireless subscribers, who use their handsets to access data services on the Web. With such a large captive audience for 3G data applications, the scenario is different from that of other 3G markets like Europe, where operators first rolled out high- bandwidth applications and then tried to rope in subscribers to use them. According to the TRAI, India had about 58 million subscribers who accessed the internet on their handsets at the end of December 2007, compared with about 46.4 million at the end of October. Industry estimates place the figure for such wireless internet users at about 70 million by the end of March 2008, considering the country added over 30 million mobile users during the first three months of 2008. The Indian Telecom Service provider industry is gearing for a revolution. The customer is driving this revolution and will see more unique and sophisticated offerings coming his way. The 3G which will pave the way for 3.5G, 3.75G and the next big thing-4G and the VAS services will keep the customer asking for more. The rural areas which have remained untapped will see an insurgence of services. Also the easing of the regulations by TRAI, the ease of spectrum licensing, the FDI influx will make the telecom space in India a must watch in the coming years.
21
ANALYSIS OF BHARTI AIRTEL LIMITED
Different Players of Indian Telecom Industry : There are three types of players in telecom services: • State owned companies (BSNL and MTNL) • Private Indian owned companies (Reliance Communication, Tata Teleservices) • Foreign invested companies (Vodafone Essar, Bharti Airtel, Idea )
I WANT ONLY 1 SIM CARD
22
Market Share: Bharti Airtel Market Leader With 21.84 % Market Share in India :
Overall Indian Telecom Industry Market Share : TRAI REPORT : MARCH 2010
All India GSM Cell Subscribers- March 2010 (COAI Report) : Sl. No.
Name of Company
Total Sub Figures
% Market Share
1
Bharti Airtel
127619314
30.25%
2
Vodafone Essar
100858358
23.91%
3
IDEA
63824688
15.13%
4
BSNL
63486339
15.05%
5
Aircel
36861174
8.74%
6
Reliance Telecom
16311206
3.87%
8
MTNL
4784453
1.13%
9
Uninor
4264036
1.01%
10
Loop Mobile
2844583
0.67%
11
Stel
1006827
0.24%
421860978
100.00%
All India
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BHARTI AIRTEL An Introduction
Airtel comes to you from Bharti Airtel Limited, one of Asia’s leading integrated telecom services providers with operations in 18 countries across Asia and Africa. Bharti Airtel since its inception has been at the forefront of technology and has pioneered several innovations in the telecom sector. Airtel is one of Asia’s leading providers of telecommunication services with presence in all the 22 Telecom Circles in India, and in Sri Lanka. It served an aggregate of 130,686,172 customers as of March 31, 2010, in India; of whom 127,619,314 subscribe to GSM services and 3,066,858 use Telemedia Services either for voice and/or broadband access delivered through DSL . The company is structured into four strategic business units - Mobile, Telemedia, Enterprise and Digital TV. The mobile business offers services in India, Sri Lanka and Bangladesh. The Telemedia business provides Broadband, IPTV and telephone services in 89 Indian cities. The Digital TV business provides Direct-to-Home TV services across India. The Enterprise business provides end-to-end telecom solutions to corporate customers and national and international long distance services to telecoms.
Largest Private Integrated Telecom Company in India.
3rd Largest Wireless Operator in the World.
Largest & Fastest Growing Wireless Operator in India.
Largest Telecom Company listed on Indian Stock Exchange.
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Changes in Taglines & Logos by Airtel Brand
Airtel Brand : Taglines :
Airtel Brand Logo :
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Core Values of Airtel
Empowering People - to do their best Being Flexible - to adapt to the changing environment and evolving customer needs Making It Happen - by striving to change the status quo, innovate and energize new ideas with a strong passion and entrepreneurial spirit Openness & Transparency – with an innate desire to do good Creating Positive Impact – with a desire to create a meaningful difference in society.
Goals/Objectives
To undertake transformational projects that have a positive impact on the society and contribute to the nation building process. To diversify into new businesses in agriculture, financial services and retail business with world-class partners. To lay the foundation for building a conglomerate of future. Strategic intent is to create a conglomerate of the future by bringing about “Big Transformations” through brave actions.
Business Units
Four Strategic Business Units : 1) Mobile
2 ) Telemedia
The mobile business offers services in India, Sri Lanka and Bangladesh.
The Telemedia business provides broadband, IPTV and telephone services in 89 Ind ian cities.
3 ) Enterprise
4 ) Digital TV
The Enterprise business provides end-to-end telecom solutions to corporate customers and national and international long distance services to telcos.
The Digital TV business provides Direct-to-Home TV services across India.
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SWOT Analysis of Bharti Airtel
Strengths Valuable Business Partners – Techno & Financial Strong Brand Image First Mover Advantage Single Private Leading Indian Telecom Company Enthusiastic & Innovative Business Development team Marketing Driven Low Cost Model Blessed with Directional Visionary - S.N. Mittal Massive Economies of scale from large subscriber base • • • • • • • •
Weaknesses •
Outsourcing of Core Systems
•
Lagging behind in exploring market investment opportunity
Opportunities
•
Tele-Density – 30.6% Low among Developing Countries Low Broadband Penetration Untapped Rural Market Bharti Infratel – Cutting Down cost in Rural area Growing Globally First Indian Sponsor to signed Manchester United
Threats • • • • •
Falling ARPU Intense Competition From Nearest Competitor Shortage of Bandwidth New Players Entering Indian telecom sector Uncertain Economic Condition
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Analysis of Product Life Cycle
TELECOMMUNICATION INDUSTRY LIFE CYCLE AIRTEL
Telecom
Industry is in its mature growth stage.
Significant
In
achievements have happened in this sector.
2009 February, there was a rise in subscriber base by 13.25 million.
Total
This
subscriber base was 37 5 million in 2009. A hike by 50%.
shows the changes in the consumption pattern among the middle class.
TELECOMMUNICATION
INDUSTRY LIFE CYCLE
AIR IRTEL
Johnson , Scholes & Whittington : Pg. 68, 2008
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Value Chain Analysis
Value Chain A nalysis – Conclusions & Recomm endations •wide network coverage as they own their network infrastructure Inbound Logistics
• M-commerce Operations
• Aero mobile, MATE, GPS tracking device for B2B Output
Android platform based HTC mobile unique marketing strategy, low STD rates – Trend setters
Marketing & Planning Value Chai n
Bill payments and Indian rail tickets using m commerce
Post Sale
Outcome - 37 % PM
Conclusion & Recommendations
“Refine your processes; strive for dominance and build a brand” – Mr. Sunil Bharti Mittal Airtel have done a good job by improving their core competencies. Being the market leader & especially in building a brand, I would recommend Bharti Airtel to continue with their good work and concentrate more on mobile services which is Bharti’s cash cow, in its process of huge diversification.
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REPORT ON THE SURVEY CONDUCTED Telecom service is one such sector which has tremendously grown over the years and is still expanding. Through this project I was able to study the evolution of telecom sector and got an insight of different services available and the popularity of each service. To determine which of the different cellular services available is the best, I conducted a survey among different consumers who are using the cellular services. I asked them several questions based on the following parameters, which are as under:
Network coverage Network connectivity Complaint/Problem resolution Promptness in the activation of the service Accessibility of call centers Response time to the customer for the assistance Bill delivery Bill payment experience Customer service representative’s interaction
On the basis of survey conducted, among all the cellular services like Vodafone, Airtel, Aircel, Idea, Reliance and others. Airtel stood apart in most of the categories and was favoured by almost 80% of the total using cellular services. This gave me the opportunity to further my study on Airtel and by studying in detail I have come to the conclusion that Airtel has a major impact on its users and people like its schemes very much. It has created a very good image on the mind of the consumers by providing quality service to its users. Airtel is successful in capturing the highest market share by adopting celebrity market strategy and thus is one of the leading cellular services in India.
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