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CHAPTER I

Why CustomerPreference for

³Postpaid Connection´

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Industry Overview

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Telecom Industry in India

Telecom industry in India has a big market potentiality and is a fast growing sector. Government of

India is eager to reconstitute this telecom industry by enacting effective policies for more investments from

foreign companies, which results in a very competitive and deregulated market in the world.

The sector ranks second in the world, with over 509.03 million telephone subscriptions by Sep 2008

end. The fast track growth of the Indian telecom industry has made it a key contributor to India¶s progress.

India adopted a phased approach for reforming the telecom sector right from the beginning. Privatization

was gradually introduced, first in value-added services, followed by cellular and basic services. An

independent regulatory body, Telecom Regulatory Authority of India (TRAI), was established to deal with

competition in a balanced manner.

This gradual and thoughtful reform process in India has favored industry growth. Today, there are

more than 509 million telecom subscribers in India. Every month, 10-14 million new subscribers are added.

Upcoming services such as 3G and WiMax will help to further augment the growth rate. Furthermore, the

Indian economy is slated to sustain its 7-9 per cent growth rate in the near future. This is supported by the

political stability that the country is experiencing currently. India¶s demographic outlook makes it one of the

largest markets in the world.

A conducive business environment is also created by a favorable regulatory regime. There exists

enormous business potential for telecom companies on account of the country¶s low tele-density, which is

close to 19 per cent presently. Indian Telecom sector, like any other sector in the country, has gone through

many phases of growth and diversification. Starting from telegraphic and telephonic systems in the 19th

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century, the field of telephonic communication has now expanded to advanced technologies like GSM,

CDMA, and WLL to the much awaited great 3G (Third Generation) Technology in mobile phones.

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Segment Analysis

India's growth story in the telecom space shows no signs of slowdown. The country added 113.26 million new customers in 2008, the largest globally. To put this growth into perspective, the country¶s

cellular base witnessed around 48.50 per cent growth in 2008, with an average 9.5 million customers added

every month. The country had 471.7 million mobile phone users as of September 2009 compared to 346.89

million in the corresponding period a year ago and the total number of telephone connections (wireless and

wireline) is 509.03 million as of September end, taking the telecom penetration to over 36 per cent. It implies

that one out of every three Indian has a telephone connection.

The Indian telecom industry has been growing rapidly at a CAGR of 40.63 per cent from 2003 to

2008. Telecom sector contributed 3.4 per cent to India¶s gross domestic product in for the year 2008 and is

expected to contribute 5.4 per cent by 2010. There is still a big room for further growth. The growth will

primarily driven by the rise in communications demand from semi urban and rural India. The teledensity in

rural areas being a little more than 10 per cent against the national average of 33.23 per cent, there is huge

untapped potential for mobile phone penetration in rural India.

The total Broadband subscriber base has reached 7.21 million by the end of September 2009 as

compared to 6.98 million by the end of August 2009. Even there is a huge potential in broadband segment.

The growth in 2008 was led by Bharti Airtel, the country¶s largest communications provider. Bharti

had 110.51 million customers as of September end, Vodafone had 82.84 million and BSNL of about 53.35

million. In fact, Bharti has more customers than the state-owned BSNL¶s mobile and landline users

combined.

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Key points

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India is a second largest and fastest growing telecom market.India is highly price Sensitive market

and has lowest tariff rates in the world .Presence of 14 Cellular service Providers makes into a highly

competitive Market, The growth engine for Indian cellular service provider is rural market in coming years,

Which is highly price sensitive market due to vendors will continue to focus on below $25 cost handset.

Indian mobile connection market continues to be dominated by prepaid subscribers. Prepaid connections

accounted for more than 89 per cent of all mobile connections in 2007 and are expected to grow to more

than 92 per cent of the connection base by 2012.

The total services revenue for prepaid connections is expected to grow at 18.9 per cent CAGR for

the period 2008 - 2012 and the total services revenue for postpaid connections is expected to grow at 15 per

cent CAGR during the same forecast period. By 2012, the prepaid subscriber base will cross 683 million and

postpaid subscriber base will exceed 53 million subscribers. Prepaid subscribers are expected to adopt data

services faster than the post-paid segment. Data revenues for the prepaid segment are projected to grow at

29 per cent CAGR during the forecast period as compared to 22 per cent CAGR for the post paid subscribers

during the same period.

Introduction

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A mobile connection in which one uses a mobile connection with a SIM card and pay the

monthly bill at the end of the month is a Postpaid mobile connection. In this mobile connection one uses the

SIM card to pay monthly bill based on rentals, plan charges and the usage charges. In the case of a prepaid

mobile connection a person first pay by card and then uses the phone for general utility. While on the other

hand postpaid accounts are referred as use and pay type.

In a Postpaid connection one can find two types of components: The first component is the monthly

rental that the subscriber pay to the mobile service provider and the other component is the usage charges.

The uses charges generally vary from the kind of that have been used by the customer.

Competitive plans are very evenly introduced by the service providers so as to attract the maximum

number of customers. An engagement with corporate for closed user group connections allow for

subsidized calls to the other group members. For this purpose generally lower tariffs on monthly rentals and

usage fees are taken. Why people choose to have a Postpaid Plan? Generally because of the reason that the

benefits of a prepaid connection are very limited. In prepaid one pays the advance for a specific number of

minutes, once the time run-out of hands the phone is needed to be recharged for the next number of days

and the due balance is needed to be increased in amount. While in case of a postpaid plan one is needed to

pay after the end of the month. There is no time limit in case of a postpaid plan. No contract is signed for any

particular period of time and one can talk endless without giving an account to the balance remaining-due.

The prepaid mobile bills are just the formalities as voucher cards while the post-plans are bill like, where one

pays after the end of month for all the minutes which one has used. Most of the postpaid mobile plans

connection provides unlimited minutes for talking whether one is talking just on nights or only on nights and

weekends.

RESEARCH METHODOLOGY

Method of data collection

Primary data collection

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The primary data collected through well designed questionnaire. The questionnaire through which

data was gathered and collected consisted of questions which were mostly objective in nature.

Secondary data collection

The secondary data for the study got from visiting Cellular service Providers outlets and gathering

informative materials and published information. Current information regarding the subject and company

will be getting from newspapers, business magazines, customer care executives, journals, internet, and by

referring certain books on Indian Telecom Sector .

Method of sampling

Sampling technique

Sampling procedure: Probability convenience sampling method

Sample size: 200 respondents were selected for analysis.

Method of sampling

The method used for sample technique was non Probability convenience sampling method. This

method is used because it is known previously as to whether a particular person will be asked to fill thequestionnaire. Convenient sampling is used because only those people will be asked to fill the

questionnaires who were easily accessible and available to the researcher .

Frame work of Analysis

The collected data was to be analyzed by using statistical technique like Percentage Analysis. The

data was to be analyzed by using Statistical Program for Social Sciences (SPSS) software.

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Type of Study

The study conducted is a conclusive descriptive statistical study; by this study I come to the

decision which is precise and rational. The study is conclusive because after doing the study I come to aconclusion regarding the position of the mobile connections in the minds of respondents of different

groups. The study is statistical because throughout the study all the similar samples are selected and group

together. All the similar responses are taken together as one and their percentages are calculated.

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Thus, this, conclusive descriptive statistical study is the best study for this purpose as it provides

the necessary information which is utilize to arrive at a concrete decision.

Limitation of the Study

The research will be conducted in a limited area , so the respondent will be limited so cannot be

treated as a whole population and the respondent may be biased.

Test Results

Mobile Connection type in Chennai and Expense Per Month Cross tabulation

MobileConnection

typein Bareilly

Expense Per Month

Total Up to Rs.500 Rs.501-1000 Rs1001-1500 More than1500

Prepaid 90 61 17 11 179

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Postpaid 7 8 4 2 21`

Total 97 69 21 13 200

Inference: From the table it be shown that about 90 out of 97 are spending less than Rs.500 and

have Prepaid connection and just 7 out of 97 are spending less than and have Postpaid connection.

Mobile Connection type in Chennai and Network Availability Cross tabulation

MobileConnection

typein Bareilly

Network availability

Total

Very good Good Satisfied bed Very bed

Prepaid 22 62 79 11 5 179

Postpaid 1 6 10 2 2 21`

Total 23 68 89 13 7 200

Inference: From the table it be shown that about 79 out of 89 are satisfied with Network availability

and are having prepaid connection and 10 out of 89 have postpaid connection.

Mobile Connection type in Chennai and Customer Profession type Cross tabulation

MobileConnection

typein Bareilly

Customer profession type

Total

Service person

Business man Student House wife

Prepaid 100 21 52 6 179

Postpaid 11 1 9 0 21

Total 111 22 61 6 200

Inference : From the table it be shown that about 100 out of 111 are service Professional with having

prepaid connection and 11 out of 111 are having postpaid connection.

Mobile Connection type in Chennai and Rating on Call charge rate Cross tabulation

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Mobile

Connectiontype

in Bareilly

Rating on call charge rate

Total Very good Good Satisfied Bad Very Bad

Prepaid 35 41 89 10 4 179

Postpaid 3 3 13 1 1 21`

Total 38 44 102 11 5 200

Inference : From the table it be shown that about 89 out of 102 are satisfied with the charge rates

with having prepaid connection and 13 out of 102 are having postpaid connection.

Mobile Connection type in Chennai and Reason for Choosing a particular connection Cross

tabulation.

MobileConnection

typein Bareilly

Reason for choosing a particular connection

Total Usage control cost

Switchingfreedom

Cheaper call

charges

Less hassleinvolved

Prepaid 96 70 9 4 179

Postpaid 11 7 1 2 21`

Total 107 77 10 6 200

Inference : From the table it be shown that about 96 out of 107 are opting the particular connection

with having prepaid connection and 11 out of 107 are having postpaid connection.

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Findings:

It is found that Aircel is the Market Leader in Chennai with 32% market share and Lowest market

share is of BSNL with just 5% .

It is found that majority of respondents about 89.5 % using prepaid connection and just 10.5% of the

respondents is using Postpaid connection in Chennai among the respondents.

It is found that more than 50% of the respondents believe that the customer care Executives

Behavior is Warm and Helpful and just 1.5 % of the Respondent believes that they are lazy and very slow in

Responding.

It is found that about 44.5 % of the respondents are satisfied with the customer care services

provided by their Cellular Services.

More than 49 % of the respondents spend Less than 500 Rupees per month and just 6.5 % of the

respondent spends above 1500 Rupees per month.

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It is analyzed that about 44.5 % of the respondents are satisfied with the Network Availability by their

service Provider.

It is found that more than 50% of the respondents are service Professionals and second largest

respondent Group is of Students.

About 52% of the respondents are satisfied with their service providers call rates and just 3%

respondent says its very bad.

More than half of Respondents ( 53%) are using their particular connections to control cost of

mobile usage.

It is found that about 67 % of the overall respondents are satisfied with their service providers and

just 2.5% says they are not happy with their service providers.

It is found that about 69 % of the respondents prefer GSM Technology service providers.

It is found that 56% of the respondents uses their connections for 1-2 years and there are 1.5% of

the respondent uses the same number for more than 3 years.

It is found that about 40% of the respondents are satisfied with the Value added services provided

by their service providers.

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Suggestion

It is seen that just 44.5 % of the respondents are Satisfied with the customer care services so there

is room for improvement in the customer care services for cellular services as the customer care services

are the pillars which play a very vital role in the cellular

services, the company which provide the best customer service will the winner at the

end.

It is seen that about 49% of the respondent spend less than Rs 500 on the cellular service , that is

the reason that ARPU (Average Revenue Per User ) of the Cellular service Providers are very Low now , so to

increase the ARPU , the cellular service providers needs to

bring More VAS to increase ARPU .

It is observed that about only 45% of the respondent are satisfied with the network availability by

their service provider , the network quality is one of the primary reason of the Aircel being a market leader in

Tamil Nadu , so for competing with aircel other service

providers must enhance their network quality .

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It is observed that just 40% of the respondent is satisfied with the value added services provided by

their service providers it means there is still a lot of room for the new innovative

VAS services which can increase the service providers revenue and attracting new

subscribers.

ConclusionThus, Based on the literature findings, it is possible to prepare an instrument to measure the preference

of customer in term of prepaid and postpaid connections .Customer service and Value added Service (VAS) are

Critical in Mobile services which act as a differentiator for Service Provider and help customer in deciding about

the mobile connections type ,Total cost of Ownership (TCO) is a major factor in deciding about the type of

connection and that is the Reason that Mostly customer prefer Prepaid connection as the TCO is less in prepaid

compared to Postpaid connection . With the launch of the 3G Technology the VAS will be the dominant factor in

future to decide about the type of connection that will be chosen by the customer. People Prefer Mostly the GSM

Technology because of the facility to change the SIM Frequently whereas this facility is not available in CDMA.

The high ARPU (Average Revenue per User) can be achieved only by Providing the new innovative services like

Nokia Weather service for Farmers in India which cost just Rs.2 / Per day only which they Provide with the

Collaboration of different service Providers

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Mobile Phone

Service Providers

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Mobile Phone Service Providers

1. Bharti Airtel

Bharti Airtel retained its leading position among telecom service

providers and posted a growth of five per cent to end 2009-10 fiscal with

revenues of Rs 38,800 crore (Rs 388 billion).The company is structured

into four strategic business units -- mobile, telemedia, enterprise and digital TV. The company has with

operations in 18 countries with a footprint covering 1.8 billion people. Sunil Bharti Mittal is the chairman and

managing director of the company.

In March 2011, Bharti Airtel bought the African operations of Kuwait-based Zain Telecom for $10.7

billion. Recently, it has joined a consortium of global telecom operators to announce the launch of the

EASSy cable system -- the 10,000 km undersea cable connecting Africa to Europe.

2. BSNL

Bharat Sanchar Nigam Limited saw a drop in its revenue for the

second consecutive year to post Rs 30,240 crore (Rs 302.4 billion), a

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drop of 14 per cent, even though it retained the number two position among telecom players. BSNL offers

both fixed line and mobile services with broadband connections. With over 71.68 million subscribers, BSNL

currently is the largest wire line service provider in India.

The company has reported around 6 crore (600 million) 2G connections and 9,73,378 3G

connections since February 2010. All major towns and cities are covered through BSNL network. Gopal Das

is the new chairman and managing director of BSNL.

3. Vodafone Essar

The Indian subsidiary of Vodafone Group, Vodafone Essar recorded 13.7 per cent growth to emerge

as the third largest player with revenue of Rs 23,200 crore (Rs 232 billion).The company commenced

operations in 1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai. It has

operations across the country with over 106.34 million customers. It is the world's leading international

mobile communications group with approximately 347 million proportionate customers as on 30 June 2010

and has around 40 partner networks worldwide.

Vittorio Colao is Vodafone chief executive, and Marten Pieters is managing director and CEO,

Vodafone Essar.

4. Reliance Communications

Reliance ADA Group's flagship company, Reliance Communications reported a negative growth of

3.5 per cent with revenue of Rs 22,130 crore (Rs 221.3 billion). It is India's largest private sector information

and communications company, with over 100 million subscribers.It has established a pan-India, high-

capacity, integrated (wireless and wireline), convergent (voice, data and video) digital network, to offer

services spanning the entire infocomm value chain.

Anil D Ambani is the chairman of the company

5. Idea Cellular

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Idea Cellular is part of the Aditya Birla Group and has bagged fifth position with a revenue of Rs

11,390 crore (Rs 113.9 billion).It is a leading GSM mobile services operator in India with 67 million

subscribers. Idea offers both prepaid and post paid services. It is a pan-India operator with services being

made available in all parts of the country. Idea was the first cellular service provider to launch General

Packet Radio Service (GPRS) and Enhanced Data rates for GSM Evolution (EDGE) in the country.

Kumar Mangalam Birla is the chairman of the group.

6. Tata Communications

Tata Communications reported revenue of Rs 11,000 crore (Rs 110 billion).

The company holds leadership position in emerging markets.Tata Communications leverages its

advanced solutions capabilities and domain expertise across its global and pan-India network to deliver

managed solutions to multi-national enterprises, service providers and Indian consumers. The Tata Global

Network includes one of the most advanced and largest submarine cable networks, a Tier-1 IP network, with

connectivity to more than 200 countries across 400 PoPs, and nearly 1 million square feet of data center and

collocation space worldwide.

Srinath Narasimhan is the managing director and CEO of Tata Communications.

7. Tata Teleservices

Tata Teleservices spearheads the Tata Group's presence in the telecom sector. It has posted

revenue of Rs 6,900 core (Rs 69 billion).Established in 1996, Tata Teleservices, one of the 96 companies of

Tata Group, has its network in 20 circles. It is the first company to launch CDMA mobile services in India. It

launched mobile operations in January 2005 under the brand name Tata Indicom. It enjoys a pan-India

presence through existing operations in all of India's 22 telecom circles. Tata Teleservices operates under

five different brands -- Tata Indicom (CDMA services), Tata DOCOMO (GSM services), Virgin Mobile, Tata

Wacky (which is the brand for fixed wireless phones), Tata Photon (the company's brand that provides a

variety of options for wireless mobile broadband access) and T24.

Tata Teleservices Ltd, along with Tata Teleservices (Maharashtra) Ltd, serves nearly 70 million

customers in more than 450,000 towns and villages across the country.

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Anil Sardana is the managing director of Tata Teleservices.

8. Aircel

Aircel recorded the highest growth of 37.2 per cent among operators in 2009-10.The company

posted a revenue of Rs 4,700 crore (Rs 47 billion) to move to the number eight slot. It is a joint venture

between Maxis Communications Berhad of Malaysia and Sindya Securities Investments Private Limited,

whose current shareholders are the Reddy family of Apollo Hospitals Group of India. Aircel commenced

operations in 1999 and became the leading mobile operator in Tamil Nadu. It emerged a market leader in

Assam and in the North Eastern provinces within 18 months of operations.

Today, the company has a foothold in 21 circles including Chennai, Tamil Nadu, Assam, North East,

Orissa, Bihar, Jammu & Kashmir, Himachal Pradesh, West Bengal, Kolkata, Kerala, Andhra Pradesh,

Karnataka, Delhi, UP(West), UP(East), Maharashtra & Goa , Mumbai, Madhya Pradesh and Punjab.

It has over 43 million customers in the country.

MTNL

Mahanagar Telephone Nigam Limited (MTNL)'s revenue dropped nearly by a fifth highest among the

top 10 players -- to Rs 3,650 crore (Rs 36.5 billion).The company has achieved a customer base of 8.06

million in the two metro cities of Delhi and Mumbai. The government currently holds 56.25 per cent stake in

the company. Today it has more than 9,00,000 GSM mobile connections.

The company was in the forefront of technology induction by converting 100 per cent of its

telephone exchange network into the state-of-the-art digital mode.

Kuldip Singh is chairman & managing director of MTNL.

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TTML

The third Tata group company is this arena, Tata Teleservices Maharashtra Limited (TTML) is ranked

number 10, among the top ten telecom players in India, with revenues of Rs 2,300 crore (23 billion. This

helped the group's earning go past the Rs 20,000 crore (Rs 200 billion) mark. TTML leads the Tata group's

presence in the telephony sector in the telecom circles of Maharashtra and Goa, including Mumbai. TTML

commenced landline operations in 1998 and has the largest wire line base in Mumbai and Maharashtra

amongst all private operators. The company has over 600,000 subscribers.

Kishor Chaukar is the chairman of TTML.

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Telecom and IT

The vision of telecommunications in 2020 is a vision of information society built on an edifice where IT and

telecommunications merge. Rapid technological convergence has already implied a symbiotic overlap

between the development strategies of IT and telecommunications. Part of today¶s IT is µtelecom writ large¶,

it flourishes on the telecom-network and in turn permits modern day telecommunications to use

sophisticated IT-software. Hardware is a common platform for both IT and telecom.

There is a legacy vision derived from export-success of India¶s software that has given rise to

optimism regarding India¶s growing pre-eminence in global IT canvas. Such a vision builds on a much larger

vision of all round development of IT that pervades wide cross-section of Indian economy and society.

Deeper analysis shows that there is need for a comprehensive IT development strategy to ensure India¶s

durable presence in the global software market. As discussion in the subsequent paragraphs will show,

µenclave¶ type development of software with exclusive focus on export can not bring about desired benefits

if such a strategy ignores the linkages between export and the domestic market. Vision 2020, therefore, is a

much larger vision.

Competition Policy

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Countries often differed in pattern of sequencing and the speed of liberalization. Competition has been

controlled within limit by state policy through licensing of limited number of market players in certain

segments granting thereby a period of exclusivity to the operators. Heterogeneity of routes to sectoral

reforms, as seen from the examples of some of the Asian countries, classified into different combination of

policies and approaches to telecom reform, are presented below:

1. Competition in the fixed line segment with state owned incumbents: China, India and Korea.

2. Privatization of state owned incumbents but deferred competition through exclusivity granted to

private investors: Hong Kong, Indonesia, Malaysia, Pakistan and Singapore.

3. Simultaneous introduction of privatization and competition: Japan and Sri Lanka.

4. Opening up of local market to competition first: Hong Kong, India and Singapore.

5. Opening up of competition in the international services first: Korea, Malaysia and the Philippines.

Introduction of second domestic long distance carrier first: China

The sector ministry exercises regulatory functions: China, Indonesia, Japan, Korea, Malaysia,

Taiwan and Thailand.

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1. Separate regulator with the responsibility for interconnection lying with the dominant operator while

regulator is responsible for arbitration of disputes: Hong Kong, Pakistan and Philippines.

In most countries, restricting the number of licensees or imposing geographic limitations has

limited competition. In India, for instance, competition in cellular telephony was allowed in a duopoly mode.

This was gradually increased to licensing of four operators in each of the four metros and thirteen circles.

Basic service in India is still limited to one private operator competing with state owned incumbents in the

circles. Though private sector has been licensed and they are laying infrastructure, metros are still in the

grip of public sector monopoly and it will take a while before private competition takes place. Differences in

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modes of privatization have been observed in other countries. In Thailand, private entry was allowed through

Build Operate and Transfer (BOT) mode while the network was controlled by the state. In Vietnam, network

was publicly managed with foreign operators participating in provision of training, equipment and

supervision through Business Cooperation Contracts (BCCs). China did not allow private entry in the

telecom sector and limited competition between state-owned entities of the ministries. Many countries in

Asia restricted foreign equity participation. For example, China, India, Indonesia, Korea, Malaysia, the

Philippines and Thailand limited foreign equity below fifty per cent.

It is interesting to note that competing technological standards have also limited competitions.

Countries are divided in their technical options for mobile networks. While Europe predominantly opted for

Global System for Mobile communications (GSM) technology and USA for Code Division Multiple Access

(CDMA), within Asia, China, India, Indonesia and Malaysia have opted for GSM in cellular mobile network,

whereas Hong Kong, Korea, the Philippines, Singapore and Thailand have opted for CDMA.

However, several countries are now opting for more than one standards. For example, in USA,

µCompanies like AT&T and Cingular are increasingly moving to GSM¶. µChina is going with some CDMA as

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well.¶ India is using CDMA in Wireless in Local Loop (WLL). Multiple technological standards fragment

market rendering base stations purchased from one company unworkable with switches bought from

another company potentially limiting the scope of exploitation of economies of scale that could accrue in a

multi-vendor environment.

Government Initiatives

The Government has taken the following main initiatives for the growth of the Telecom

Sector:

� All telecom services have been opened up for free competition for unprecedented

growth

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� 217 (Information Technology Agreement) ITA-I items are at zero Customs Duty. Specified capital goods and

all inputs required to manufacture ITA-I, items are at zero Customs Duty

� Availability of low cost mobile handsets

The international Long Distance Services (ILDS) opened with effect from April 2002. Calling Party Pays (CPP)

regime was implemented with effect from 1st May 2003

� Guidelines for Unified Access Service License regime were issued in November 2003, 27 licenses out of 31

Basic Service Licenses were converted to Unified Access Service Licenses

� In April 2004, license fee for Unified Access Service Providers (UAS) was reduced

by 2 per cent.

� License fee for infrastructure Provider-II reduced from 15 per cent to 6 per cent of the Adjusted Gross

Revenue and spectrum charges between 2 to 4 per cent in June 2004.

� Entry fee for NLD licenses was reduced to Rs. 2.5 Crore from Rs. 100 Crore. Entry fee for ILD reduced to Rs.

2.5 Crore from Rs. 25 Crore

� Lease line charges have been reduced to make the bandwidth available at competitive prices to facilitate

growth in IT enabled services

� One India plan i.e. single tariff of Re. 1/- per minute to anywhere in India was introduced from 1st March

2006 by the Public Sector Undertakings. This tariff was emulated by most of the private service providers

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also. This scheme has led to death of distance in telecommunication and is going to be instrumental in

promoting National Integration further

� The robust telecom network has also facilitated the expansion of BPO industry that is having 500,000

employees now and adding 400 employees per day.

� Annual license fee for National Long Distance (NLD), International Long Distance (ILD), Infrastructure

Provider-II, VSAT commercial and Internet Service Provider (ISP) with internet telephony (restricted) licenses

was reduced to 6 per cent of Adjusted Gross Revenue (AGR) with effort from Jan 2006.

� The Government¶s policy is neutral on use of technology by telecom service providers subject to

availability of scarce resources such as spectrum etc.

� License Fees 6-10 per cent of Adjusted Gross Revenue (AGR)

Foreign Direct Investment Policy

Foreign Direct Investment (FDI) was permitted in the telecom sector beginning with the telecom

manufacturing segment in 1991 - when India embarked on economic liberalisation. FDI is defined as

investment made by non-residents in the equity capital of a company. For the telecom sector, FDI includes

investment made by Non-Resident Indians (NRIs), Overseas Corporate Bodies (OCBs), foreign entities,

Foreign Institutional Investors (FIIs), American Depository Receipts (ADRs)/Global Depository Receipts

(GDRs) etc.

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Present FDI Policy for the Telecom sector:

� In Basic, Cellular Mobile, National Long Distance, International Long Distance, Value Added Services and

Global Mobile Personal Communications by Satellite, FDI is limited to 49 per cent (under automatic route)

subject to grant of licence from the Department of Telecommunications and adherence by the companies

(who are investing and the companies in which investment is being made) to the licence conditions for

foreign equity cap and lock-in period for transfer and

addition of equity and other license provisions.

� Foreign Direct Investment up to 74 per cent permitted, subject to licensing and security requirements for

the following:

- Internet Service (with gateways)

- Infrastructure Providers (Category II)

- Radio Paging Service

� FDI up to 100 per cent permitted in respect to the following telecom services:

- ISPs not providing gateways (Both for satellite and submarine cables)

- Infrastructure Providers providing dark fibre (IP Category I)

- Electronic Mail

- Voice Mail

The above is subject to the following conditions:

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- FDI up to 100 per cent is allowed subject to the condition that such companies would divest 26 per cent of

their equity in favour of Indian public within 5 years, if these companies are listed in other parts of the world.

- The above services would be subject to licensing and security requirements, wherever required.

- Proposals for FDI beyond 49 per cent shall be considered by Foreign Investment Promotion Board (FIPB)

on a case-to-case basis.

� In the manufacturing sector 100 per cent FDI is permitted under the automatic route.

� In Basic, Cellular Mobile, paging and Value Added service, and Global Mobile Personal Communications by

Satellite, FDI is permitted up to 49 per cent (under automatic route) subject to grant of license from

Department of Telecommunications

� Foreign direct investment up to 74 per cent permitted, subject to licensing and security requirements for

the Internet Service (with gateways), Infrastructure Providers (category-II),

Radio Paging Service.

� FDI up to 100 per cent permitted in respect of

- ISPs not providing gateways (both for satellite and submarine cables),

- Infrastructure Providers providing dark fibre (IP Category I);

- Electronic Mail; and

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- Voice Mail

� FDI up to 49 per cent is also permitted in an investment company, set up for making investment in the

telecom companies licensed to operate telecom services.

Investment by these investment companies in a telecom service company is treated as part of domestic

equity and is not set of against the foreign equity cap.

� Manufacturing - 100 per cent FDI is permitted under automatic route.

� FDI is subject to the following conditions

FDI up to 100 per cent is allowed subject to the conditions that such companies would divest 26 per cent of

their equity in favour of Indian public in 5 years, if these companies are listed in other parts of the world.

� The above services would be subject to licensing and security requirements, wherever required.

� Proposals for FDI beyond 49 per cent shall be considered by FIPB on case to case basis.

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Major Players

There are three types of players in telecom services:

� State owned companies (BSNL and MTNL)

� Private Indian owned companies (Reliance Infocomm, Tata Teleservices,)

� Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea

Cellular, BPL Mobile, Spice Communications).

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Challenges & Opportunities

The telecom sector has been one of the fastest growing sectors in the Indian economy in the past 4

years. This has been witnessed due to strong competition that has brought down tariffs as well as

simplification of policy environment that has promoted healthy competition among various players. Due to

this reason, telecom density in the country has risen to over 12 per cent at the end of January 2006, from 3.6

per cent in March 2001.

The mobile sector alone has been growing rapidly and has emerged as the fastest growing market in

the whole worlds. Currently of a size nearing 70 million (GSM and CDMA), this sector is expected to reach a

size of nearly 200 million subscribers by financial year 2008. 5.28 million mobile subscribers additions were

registered in July 2006, compared to 4.78 million in June and 4.25 million in May. More than 200 million

subscribers addition is expected by July 2007.

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The government has eased the rules regarding inter circle and intra circle mergers. This has led to a

slew of mergers and acquisitions in the recent past. Also as the sector is moving closer to maturity, further

consolidation is a reality and this will lead to the survival of more profitable players in this segment.

In order to further promote the use of Internet in the country the government is taking proactive steps to

develop this sector with the help of the various players in this segment. For this purpose, the use of

broadband technology is being mooted and this will go a long way in improving the productivity of the

Indian economy as well as turn out to be the next big opportunity for telecom companies after the mobile

communications segment.

Non-voice services and VAS are the gold mines. The big takeoff is expected with the rollout of 3G services

in early 2007, once the spectrum issues are sorted out. Internet users base fast reaching near the English

speaking population base. Local language and content required for further growth.

Infrastructure equipment cost is down to a fraction of what prevailed just a few years ago. Operators

can plan better expansion plan now.

Increased viability for the operators to expand to semi-urban and rural markets, hence, accelerate growth

further.

It¶s not without reason that India is tipped to be the world¶s third-larges economy by 2050! No

wonder if it happens much earlier.

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Investors can look to capture the gains of the Indian telecom boom and diversify their operations outside

developed economies that are marked by saturated telecom market and lower GDP growth rates.

At a time when global telecom majors are struggling to cope with their losses and the rollout of 3G

networks, which has been a non-starter for close to a year now; India, with its telecom success story,

represents an attractive and lucrative destination for investment.

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CHAPTER II

Aircel

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Introduction to Aircel

Aircel group is a mobile phone service provider in India. It offers both prepaid and postpaid GSM

cellular phone coverage throughout India. Aircel is a joint venture between Maxis Communications of

Malaysia and Apollo Hospital Enterprise Ltd of India. UTSB has a 74% stake in Aircel and the remaining 26%

is with Apollo Hospitals. It is India¶s Seventh largest GSM mobile service provider with a subscriber base of

over 51.83 million, as of January 31, 2011. It has a market share of 6.72% among the GSM operators in the

country. As on date, Aircel is present in all 23 telecom circles (including Andhra Pradesh, Assam, Bihar &

Jharkhand, Chennai, Delhi & NCR, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka,

Kerala, Kolkata, Madhya Pradesh, Mumbai, North East, Orissa, Punjab, Rajasthan, Rest of Maharashtra &

Goa, Rest of Tamil Nadu, Rest of West Bengal, Uttar Pradesh East, Uttar Pradesh West) as per the company

plans to become a pan-India operator by 2010. Additionally, Aircel has also obtained permission from

Department of Telecommunications (DoT) to provide International Long Distance (ILD) and National Long

Distance (NLD) telephony services. It also has the largest service in Tamil Nadu.

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Aircel word

The Aircel Group is a result of alliance between Maxis Communications Berhad of Malaysia (74%

equity) and Apollo Hospital Enterprise Ltd of India (26% equity). It is a partnership of two flourishing brands,

each a leader on its own turf.

The Aircel Group, formed in 1994, offers affordable and outstanding mobile services to a vast subscriber

base in India. Aircel has a vision of delighting its customers by giving them the respect they deserve. Our

goal is to provide our customers with exemplary service and persistently look for new ways to surpass their

expectations.

Aircel commenced operations in 1999. In our first decade of operations, we concentrated on building our

foundations in the southern part of the country, and soon emerged as the regional market leaders. We

worked hard and achieved that success by remaining focused on growth opportunities. Soon after our

company began with its expansion in 2005 and has now set its sight on becoming a pan India operator. Our

project pipeline is robust, allowing for sustainable long-term growth.

In addition to our leadership position in Tamil Nadu, Aircel met with extraordinary success in the Eastern

frontier circles. We pride ourselves on customer satisfaction and managed to emerge as the market leaders

in Assam and North Eastern states within 18 months of operations. During this period, our company gained

a strong foothold in 10 circles, to provide better access to our customers. Today, Aircel operates in 18

telecommunication circles and the company is ready to embark on a dynamic expansion plan, swiftly rolling

out in new circles in the near future.

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Aircel recognizes the tremendous growth in its customer base. We have also got an authorization from the

Department of Telecommunications for ILD and NLD telephony services and are now on track to realize our

dream of becoming a nationwide player by the year 2010.

Aircel offers its customers, services and products that are easy to understand and use. All offerings are

stimulating and at the same time extremely unique as Aircel continues to re-invent itself constantly to deliver

the best and most up-to-date services. The brand instils a felling of pride, confidence and reliance among all

stakeholders by anticipating their desires and fulfilling the same efficiently.

With our foundations deeply set on our brand vales of simplicity, creativity, trust and excitement, we will

continue to deliver superior services to our customers and will do our best to live up to their high

expectations.

The Aircel Group is a result of alliance between Maxis Communications Berhad of Malaysia (74% equity) and

Apollo Hospital Enterprise Ltd of India (26% equity). It is a partnership of two flourishing brands, each a

leader on its own turf.

The Aircel Group, formed in 1994, offers affordable and outstanding mobile services to a vast subscriber

base in India. Aircel has a vision of delighting its customers by giving them the respect they deserve. Our

goal is to provide our customers with exemplary service and persistently look for new ways to surpass their

expectations.

Aircel commenced operations in 1999. In our first decade of operations, we concentrated on building our

foundations in the southern part of the country, and soon emerged as the regional market leaders. We

worked hard and achieved that success by remaining focused on growth opportunities. Soon after our

company began with its expansion in 2005 and has now set its sight on becoming a pan India operator. Our

project pipeline is robust, allowing for sustainable long-term growth.

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In addition to our leadership position in Tamil Nadu, Aircel met with extraordinary success in the Eastern

frontier circles. We pride ourselves on customer satisfaction and managed to emerge as the market leaders

in Assam and North Eastern states within 18 months of operations. During this period, our company gained

a strong foothold in 10 circles, to provide better access to our customers. Today, Aircel operates in 18

telecommunication circles and the company is ready to embark on a dynamic expansion plan, swiftly rolling

out in new circles in the near future.

Aircel recognizes the tremendous growth in its customer base. We have also got an authorization from the

Department of Telecommunications for ILD and NLD telephony services and are now on track to realize our

dream of becoming a nationwide player by the year 2010.

Aircel offers its customers, services and products that are easy to understand and use. All offerings are

stimulating and at the same time extremely unique as Aircel continues to re-invent itself constantly to deliver

the best and most up-to-date services. The brand instils a felling of pride, confidence and reliance among all

stakeholders by anticipating their desires and fulfilling the same efficiently.

With our foundations deeply set on our brand vales of simplicity, creativity, trust and excitement, we will

continue to deliver superior services to our customers and will do our best to live up to their high

expectations.

Business solution

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Technology related business solutions are an indispensable part of trade and commerce in today¶s

marketplace. These business solutions aim at generating value for consumers by effectively utilizing

technology to advance their day to day processes.

Today every company needs unique technology related solutions specific to their individual environment.

Keeping the same in mind, Aircel offers a comprehensive range of business related applications to empower

every aspect of your business. Our business enhancement solutions are aimed at generating profitable

results for your enterprise. Our products ranging from premium internet services, E-Conferencing, MPLS

VPN and Smart Stream provide a gamut of services that will support your needs.

Let us assist you in implementing innovative business solutions customized to your needs and make your

day to day business processes more efficient by simplifying your busy world.

Aircel Services

My aircel.

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Pocket Internet

Dialer Tunes

Missed call Alert

Music on demand

Face book voice update

Pocket learing

Movie partner

Voice station

MMS

Blyk on aircel

Doctor on call

Job alert

Live astrology

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Chapter III

Competitive Study between Aircel &

Vodafone

And Data Analysis

After the data collection, it was compiled, classified and tabulated manually and with help of computer.

Then the task of drawing inferences was accomplished with the help of percentage and graphic method. Different

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suggestions given by me to the Company after analyzing the views of every respondent are also given in the

report.

Keeping in mind the objectives of the study, the survey was being done and following interpretation was being drawn.

DEMOGARPHIC FEATURES OF REPONDENTS

1. Sex ratio of the respondents

S.NO. PARTICULARS NUMBER %AGE

A MALE 39 78%

B FEMALE 11 22%

INTERPRETATION: The graphical representation of the table shows that out of 50 respondents 39

were male and 11 were female

2. AGE GROUP OF RESPONDENTS

Male

Femal

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

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A 15-25 21 42%

B 25-35 18 36%

C 35-45 6 12%

D Above 45 5 10%

INTERPRETATION: The graphical representation of the table shows that out of total

respondents 42% were of age 15-25, 36% 25-35, 12% 35-45, and rest were above 45.

3. LITERACY RATE AMONG THE RESPONDENTS


A Matriculate 8 16

B Intermediate 17 34

C Graduation 19 38

D Post-Graduation 56 12

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INTERPRETATION: The graphical representation of the table shows that out of total

respondents 8 were matriculate,17 were intermediate,19graduateand rest 6 were

postgraduate.

4.Who is your current service provider?


A Aircel 14 28

B Vodafone 25 50

C Other 11 22

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INTERPRETATION The 14 person were used Air Tel and 25 person were used vodaphone and 11 were

used other.

5. For how long you are using this mobile connection?

Aircel


A Less than 6 month 2 14%

B 6 to 12 months 3 21%

C Above 12 months 9 65%

Aircel

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Interpretation Two person were used since six month and three were used since twelve

months and nine were used since two year.

Vodafone





INTERPRETATION The one person were used since six months and three were used since one year and

twenty were used since two year

Other





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INTERPRETATION The one person were used since six months and two were used since one year and

eight were used since two year.

6. What was the reason for choosing this mobile connection?

Aircel


A Recommended byfriend and relative 5 36%

B Recommended byretailer

2 14%

C Brand image 1 7%

D Advertisement 6 43%

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INTREPRETATION: Five were recommended by friends and relative and two were by retailer

and one was by brand image and six were by advertisement.

Vodafone


A Recommended by

friend and relative

6 24%


2 8%

C Brand image 8 28%


INTREPRETATION: Six were recommended by friends and relative and two were by retailer

and seven were by brand image and ten were by advertisement.

Other


A Recommended byfriend and relative

2 18%


2 18%

C Brand image 6 55%


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INTREPRETATION: Two were recommended by friends and relative and two were by

retailer and six were by brand image and one was by advertisement

7. While purchasing a connection does advertisement plays any role?


A Yes 42 84%

B No 8 16%

INTERPRETATION: The forty two people were saying yes and e ight were says no.


A Television 31 62%

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B Radio 0 0%

C Newspaper 11 22%

D Magazine 8 16%

8. From where you watch the advertisement most?

INTERPRETATION: The mostly people sees advertisement in the television.

9. Which telecommunication has good a dvertisements?


A Aircel 21 42%

B Vodafone 24 48%

C Any other 5 10%

INTERPRETATION: mostly Vodafone have good advertisement

10. How well advertisements of the Aircel catch your attention?

Aircel

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A Very well 22 44%

B Somewhat well 12 24%

C Undecided 6 12%

D Not at all 10 20%

INTERPRETATION: The 22 person says very well and 12 person says some what well and 6

were undecided and 10 were says no.

11. How well did the advertisement of Vodafone catch y our attention?

S.NO. PARTICUL

ARS NU

MBER %AGE

A Very well 26 52%

B Some what well 10 20%

C Undicided 6 12%

D Not at all 8 16%

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INTERPRETATION: The 26 person says very well and 10 person says some what well and 6

were undecided and 8 were says no.

12. Do you think that advertisement made by company informs you about these

new products?


A Yes 34 68%

B No 12 24%

C Undecided 4 8%

INTERPRETATION: The 34 person says yes and 12 person says no and 4 person were no

response.

13. Based on advertisements made by company, would you like to go for more

connection for you or your family in future?

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A Yes 38 76%

B No 7 14%

C Undecided 5 10%

INTERPRETATION: The 38 person says yes and 7 people says no and 5 person were no

response.

14. Do you collect any information search before ma king purchase?


A Yes 42 84%

B No 8 16%

INTERPRETATION: The forty two person were saying yes and eight were says no

15. If yes, which sources are used?

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A Operator Reference 5 10%

B Dealer 8 16%

C Advertisement 25 50%

D Magazine 4 8%

E Reference from friendsand relative

6 12%

F Any other 2 4%

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LIMITATIONS

No project is without limitations and it becomes essential to figure out the various

constraints that we underwent during the study. The following points in this direction would add to

our total deliberations:-

1. During the study, on many occasions the respondent groups gave us a cold holder.

2. The respondents from whom primary data was gathered any times displayed complete

ignorance about the complete branded range, which was being studied.

3. Lack of time is the basic limitation in the project.

4. Some retailers/whole sellers refuse to cooperate with the queries.

5. Some retailers/wholesalers gave biased or incomplete information regarding the study.

6. Lack of proper information and experience due to short period of time.

7. Some retailers did not answer all the questions or do not have time to answer.

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CONCLUSIONS

1. People like to watch advertisement on television mostly.

2. Respondents like to purchase new mobile connection based on advertisements.

3. Maximum respondents were in favor of that, Vodafone¶s advertising is better than other

companies.

4. Maximum number of respondents were in favor of that, they would like to purchase more

connection of the company with good advertisement policy.

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BIBLIOGRAPHY

In this project report, while finalizing and for analyzing quality problem in details the

following Books, Magazines/Journals and Web Sites have been referred. All the material detailed

below provides effective help and a guiding layout while designing this text report.

Books:

Principles of Marketing ±Philip Kotler & Kevin Keller edi.12

Market Research ± D.D. Sharma

Research Methodology ± C.R. Kothari

Websites:

www.Aircelworld.com

www.google.com

www.india.com

www.Vodafone.in

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Q UESTIONNAIRE

Dear Sir/MadamI am the student of MBA-4th Semester at Northern India Engineering College doing a project ³THE IMPACT OF ADVERTISING ON BUYER BEHAVIOUR: - A

STU DY ON AI RC EL V/ S V ODA FO NE´ Please co-operates to fill this questionnaire.1. Name_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

2. Sex:(a) Male (b) Female

3. Age:(a) 15-25 (b) 25-35

(c) 35-45 (d) Above 45

4. Education:

(a) Matriculate (b) Intermediate

(C) Graduation (d) Postgraduate5. Who is your current service provider?

a) Aircel

b) Vodafone

c) Any other

6. For how long you are using this mobile connection?

a) Less than 6 months.b) 6 to 12 months.c) Above 12 months

7. What were the reasons for choosing this mobile connection?

a) Recommended by friends or relatives.b) Recommended by retailers.c) Brand imaged) Advertisement 8. While purchasing a connection advertising plays any role

a) Yes

b) No

9. from where you watch the advertisement most a) Television

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b) Radioc) Newspaper d) Magazines

10. Which telecommunication has creative advertising? a) Air Tel

b) Vodafonec) Any other

11. How well did advertisement of the Aircel catch your attention? a) Very well b) Somewhat well C) Undecided d) Not at all.

12. How well did the advertisement of the Vodafone catch your attention? a) Very well b) Somewhat well C) undecided d) Not at all 13. Do you think that advertisement made by company informs you about there products? .a) Yesb) NoC) Undecided 14. Do you collect any information search before making purchase? YesNo

15. If yes, which sources are used?

a) Magazines

b) Dealersc) Operators referencesd) Advertisement e) Reference from friends and relativesf) Any other

³Thanks for your valuable time and co-operation´

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