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HISTORY OF TELECOMMUNICATION

INDUSTRY

The history of telecommunication industry started with the first public demonstration of

Morse’s electric telegraph, Baltimore to Washington in 1844. In 1876 Alexander Graham Bell filed his patent application and the first telephone patent was issued to him on 7th of

March.

In 1913, telegraph was popular way of communication. AT&T commits to dispose its

telegraph stocks and agreed to provide long distance connection to independence

telephone system.

In 1956, the final judgment limited the Bell System to Common Carrier Communications

and Government projects but preserving the long-standing relationships between the

manufacturing, researches and operating arms of the Bell System. In this judgment

AT&T retained bell laboratories and Western Electric Company. This final judgment

brought to a close the justice departments seven –year-old antitrust suit against AT&T

and Western Electric which sought separation of the Bell Systems Manufacturing from its

operating and research functions. AT&T was still controlling the telecommunication

industry.

In 1982 , AT&T was requested to divestiture its stock ownership in Western Electric;

termination of exclusive relationship between AT&T and Western Electric; divestiture by

Western Electric of its fifty percent interest in Bell Telephone Laboratories, AT&T ‘s

telecommunication research and development facility, is a jointly owned subsidiary in

which AT&T and Western Electric each own 50% of the stock; separation of telephone

manufacturing from provision of telephone service and the compulsory licensing of

patents owned by AT&T on a non-discriminatory basis.

It was telecommunication act of 1996 that true competition was allowed. The act of 1996opened the market to all competitors. AT&T being the first telecommunication company

paved the road for the telecommunication industry as well as set the policy and standards

for others to follow.

Beginning of telecommunication in India

1851 First operational land lines were laid by the government near Calcutta

1881 Telephone services introduced in India

1883 Merger with postal system

1923 Formation of Indian radio Telegraph Company

1932 Merger of ETC and IRT into Indian Radio and Cable Communication

Company1947 Nationalization of all foreign telecommunication companies to form the

posts, telephone and telegraph, a monopoly run by the government’s ministry of

communications

1985 Department of telecommunication established , an exclusive provider of

domestic and long-distance services that would be its own regulator

1986 Conversion of dot into two wholly government – owned companies the

VSNL for international telecommunication and MTNL for services in



metropolitan areas

1997 Telecom regulatory authority created

Telecommunication is important not only because of its role in bringing the benefits of

communication to every corner of India but also in serving the new policy objectives of

improving the global competitiveness of the Indian economy and stimulating and

attracting foreign direct investment.Indian Telecom industry is one of the fastest growing telecom markets in the world. In

telecom industry, service providers are the main drivers; whereas equipment

manufacturers are witnessing growth and decline in successive quarters as sales is

dependent on order undertaken by the companies.

TELECOM INDUSTRY SCENARIO IN INDIA

The Indian telecommunications market has been displaying sustained high growth rates. Riding

on expectations of overall high economic growth and consequent rising income levels, it offers

an unprecedented opportunity for foreign investment. A combination of factors is driving

growth in the telecom market, promising rich returns on investments.

Over the past 10 years, India has registered the fastest growth among major democracies,

having grown at over 7 per cent in four years during the 1990s. It represents the fourth largest

economy in terms of Purchasing Power Parity. According to a recent Goldman Sachs report,

over the next fifty years, Brazil, Russia, India and China - the BRIC economies- could become a

much larger force in the world economy. It reports, “India could emerge as the world’s third

largest economy and of these four countries; India has the potential to show the fastest growth

over the next 30 to 50 years”. The report also states that, “Rising incomes may also see these

economies move through the ‘sweet spot’ of growth for different kinds of products, as local

spending patterns change. This could be an important determinant of demand and pricing

patterns for a range of commodities”. The share of the services sector as a percentage of total

GDP is also predicted to rise from the current 46 per cent to about 60 per cent by 2020. The

boom in the services sector is slated to come from India, emerging as a chosen destination for

software and other IT enabled services, tourism etc. According to a Nasscom- McKinsey & Co.



Study, by 2008, the Indian IT software and services sector will account for US$ 70-80 billion in

revenues; it’ll employ 4 million people, and account for 7 per cent of India’s GDP and 30 per

cent of India’s foreign exchange inflows.

Population projections from the Planning Commission of India suggest that the share of the

working age population (15-64 years) in total population will grow from the current 59 per cent

to about 65 per cent, translating into 882 million by year 2020.According to the Vision 2020

document for the Planning Commission of India, the country will witness continued

urbanization.

The urban population is expected to rise from 28 per cent to 40 per cent of total population by

2020.Future growth is likely to be concentrated in and around 60 to 70 large cities, each having

a population of one million or more. This profile of concentrated urban population will facilitate

customized telecom offerings from operators. Over the years, spending power has steadily

increased in India. Between 1995 and 2002, nearly 100 million people became part of the

consuming and rich classes. Over the next five years, 180 million people are expected to move

into the consuming and very rich classes.

SERVICES PROVIDED BY THE TELECOM INDUSTRY

Wire line Services

1 Wire line services subscriber base stood at 37.96 million in quarter ending March 2009 as

compared to 37.90 million in quarter ending December 2008.

2 Rural Wire line Subscriber base stood at 10.58 million in quarter ending March 2009 as

compared to 10.68 million in quarter ending December 2008.

3 Number of Village Public Telephones (VPTs) have increased from 5.39 lakhs in quarter ending

December 2008 to 5.61 lakhs in quarterly ending march 2009



4 Number of Public Call Offices (PCOs) have increased from 5.98 million in quarter ending

December 2008 to 6.20 million in quarter ending March 2009.

The breakup of wire line subscriber base in India as of September 2010 is given below.

Operator Subscriber base

BSNL 28,446,969

MTNL 3,514,454

Bharti Airtel 2,928,254(7.85%)

Reliance Communications 1,152,237

Tata Teleservices 1,003,261

HFCL Infotel 165,978

Teleservices Ltd 95,181

All India 37,306,334

http://en.wikipedia.org/wiki/BSNL


http://en.wikipedia.org/wiki/MTNL

http://en.wikipedia.org/wiki/Bharti_Airtel

http://en.wikipedia.org/wiki/Reliance_Communications


http://en.wikipedia.org/wiki/Tata_Teleservices

http://en.wikipedia.org/w/index.php?title=HFCL_Infotel&action=edit&redlink=1

http://en.wikipedia.org/w/index.php?title=Teleservices_Ltd&action=edit&redlink=1











Wireless Services

1 The Wireless subscribers have reached 391.76 million as on 31st March 2009 as against

346.89 million subscribers in the previous quarter. During this quarter 44.87 million wireless

subscribers were added.

2 Technology-wise Wireless Market Share There are 297.26 million GSM subscribers (75.88%)

and 94.50 million CDMA subscribers (24.12%) at the end of March 2009.

GSM

The GSM subscriber base has reached 297.26 million in the quarter ending March 2009 as

against 258.23 million at the end of the previous quarter.

CDMA

The CDMA subscriber base has reached 94.50 million in the quarter ending March 2009 as

against 88.66 million at the end of the previous quarter

The breakup of wireless subscriber base in India as of September 2009 is given below:

Operator Subscriber base



Bharti Airtel 118,864,031

Reliance Communications 93,795,613

Vodafone Essar 91,401,959

BSNL 62,861,214

Idea Cellular 57,611,872

Tata Teleservices 57,329,449

Aircel 31,023,997

MTNL 4,875,913

MTS India 3,042,741

Loop Mobile India 2,649,730

Uninor 1,208,130

HFCL Infotel 341,862

Stel 141,411




http://en.wikipedia.org/wiki/Vodafone_Essar




http://en.wikipedia.org/wiki/Idea_Cellular


http://en.wikipedia.org/wiki/Aircel



http://en.wikipedia.org/wiki/MTS_India

http://en.wikipedia.org/wiki/Loop_Mobile_India


http://en.wikipedia.org/wiki/Uninor


http://en.wikipedia.org/wiki/Stel

http://en.wikipedia.org/wiki/Stel


http://en.wikipedia.org/wiki/Uninor


http://en.wikipedia.org/wiki/MTS_India




http://en.wikipedia.org/wiki/Idea_Cellular







All India 525,147,922



Internet Services (Including Broadband)

1) There are 13.54 million Internet subscribers at the end of March 2009 as compared to

12.85 million Internet subscribers at the end of December 2008 registering a growth of

5.30%. This growth rate is higher as compared to the growth rate of 5.01% at the end of

December 2008.

2) Besides above, there are 117.82 million wireless data subscribers at the end of March 2009(capable of accessing data services including internet through mobile handsets [GSM/

CDMA]).

3) Broadband Subscriber Growths - The number of Broadband subscribers (with a download

speed of 256 Kbps or more) was 6.22 million at the end of March 2009 as compared to 5.52

million at the end of December 2008. The growth rate of broadband subscribers in this

quarter is 12.68%.

ISP Providers In INDIA % Market Share

BSNL 54%

MTNL 16%

Bharti Airtel 8%

Reliance 7%



Sify 2%

Hathway 2%

Tata 2%

Others 8%

Total 100%

4) Broadband Subscribers Share (Technology wise) – Out of total 6.22 million broadband

subscribers, 5.364 million are DSL based; 0.474 million Cable Modem; 0.244 million

Ethernet LAN; 0.042 million Fiber; 0.072 million Wireless, 0.020 million Leased Line and

0.002 million use other technologies.

TIMELINE - EVOLUTION OF INDIAN TELECOM

Mid 1980s Department of Telecommunications set up

Mar 1986 VSNL incorporated to provide international telecom services



Apr 1986 MTNL incorporated to provide fixed-line telephone services in Mumbai and New

Delhi

Dec 1991 DoT invites bids from Indian companies for cellular licenses in the four

metropolitan circles

May 1994 Government announces the National Telecom Policy, opening up the basic

service sector to private players

Sep 1994 Entry guidelines for basic services announced

Nov 1994 Licenses were issued to cellular operators in the four metros

Mar 1995 Paging services by private operators commence

Oct 1996 Licenses for 20 cellular circles issued

Jan 1997 Telecom Regulatory Authority of India established by government

Nov 1998 ISP business opened up to operators other than DoT and VSNL

Mar 1999 Government announces NTP 1999

Jul 1999 DoT announces Migration Package for existing operators' licensing costs, subject

to compliance with certain conditions

Aug 2000 Government announces guidelines for opening up domestic long distance

telephony for carrying both inter-circle and intra- circle traffic, with no restriction

on the number of players TRAI issues the first tariff order and cuts domestic and

international long distance telephone charges.

Jan 2001 The Department of Telecom opens up basic services to unlimited competition

and allows basic operators to provide WLL services on a restricted basis.

Aug 2001 Opening of National Long Distance Service to competition

Jan 2002 Bharti starts cellular to cellular long distance services with sharp cuts in tariffs



Apr 2002 ILD sector opened to competition. End of VSNL monopoly.

May 2002 Bharti offers ILD services with sharp cuts in tariffs

Sep 2002 TRAI decides to 'forbear' from regulating cellular tariffs

Mar 2006 WPC set subscriber thresholds for GSM and CDMA operators for spectrum

allocation

Mar 2007 9 distinct operators had been allocated GSM spectrum. Out of these, only Bharti

has a pan-India presence.

Aug 2007 Subscriber thresholds were revised by TRAI as operators could support more

subscribers with lower spectrum as compared to WPC allocation

Jan 2008 Govt of India allocated start-up spectrum to all prior licensees awaiting spectrum

(does not include LOIs issued in January 2008). These include Aircel (14 circles),

Idea (2 circles), RComm (14 circles) and Vodafone (6 circles).

Jun 2009 TRAI plans to introduce MNP (Mobile Number Portability) on a pan-India basis.

Apr 2010 3G Spectrum Auction



LATEST DEVELOPMENT

A WIDE LOOK ON INDIA’S 3G AUCTIONS:

India’s auction for 3G GSM Service licence ended today with bids for pan -India licence touching

Rs 16,751 crore which ensures the Government of India a revenue of Rs 67,719 crore.

The 3G auction had commenced on 9 April, 2010 and there were nine bidders in the fray for the

slots of 3G spectrum on the block. The government auctioned three slots in 17 telecom service

areas and four slots in the remaining five states of Punjab, Bihar, Orissa, Jammu and Kashmir

and Himachal Pradesh.

No single bidder bid for a pan-India 3G license so state operator BSNL would be remain the

biggest 3G operator in India. Delhi circle emerged the most valuable circle at Rs.3317 crore,

followed by Mumbai at Rs.3247 crore. Among the major bidders, Idea cellular paid nearly

Rs.5765 cr for 11 telecom circles, while India’s largest 2G Mobile service operator Bharti Airtel



paid Rs.12290 cr for 13 telecom circles, Vodafone Essar will paid Rs. 11617 crore for 9 telecom

circle while Reliance Communication paid Rs 8583 crore for 13 telecom circles.

The List of 3G Winners (Private Operators) :

Delhi & NCR: Vodafone, Bharti, Reliance Communications at Rs 3316.93 cr

Mumbai: Reliance, Vodafone, Bharti Airtel at Rs.3247.07 cr

Maharashtra & Goa: Tata Com, Idea cellular, Vodafone at Rs.1257.82 cr

Gujarat: Tata Com, Vodafone, Idea at Rs.1076.06 cr

Andhra Pradesh: Bharti Airtel, Idea, Aircel at Rs.1373.14 cr

Karnataka: Tata Telecommunication, Aircel, Bharti at Rs.1579.91 cr

Tamil Nadu: Bharti, Vodafone, Aircel at Rs.1464.94 cr

Kolkata: Vodafone, Aircel, Reliance Communications at Rs.544.26 cr

Kerala: Idea cellular, Tata Telecommunications, Aircel at Rs.312.48 cr

Punjab: Idea Cellular, Reliance Communications, Tata Telecommunications, Aircel at

Rs.322.01cr

Haryana: Idea Cellular, Tata Telecommunications, Vodafone at Rs. 222.58 cr

Madhya Pradesh & Chhattisgarh: Idea Cellular, Reliance Communications, Tata

Telecommunications at Rs.258.4 cr



Rajasthan: Reliance Communications, Bharti, Tata Telecommunications at Rs.321 cr

U.P. (West): Bharti, Idea Cellular, Tata Telecommunications at Rs. 514 cr

U.P (East): Aircel, Idea Cellular, Vodafone at Rs.364.6 cr

West Bengal:Bharti,Reliance Telecom, Vodafone, Aircel at Rs.123.36 cr

Himachal Pradesh: Bharti, STel, Idea cellular, Reliance at Rs.37.23 cr.

Bihar & Jharkhand : Stel, Bharti, Reliance, Aircel at Rs.203.46 cr

Orissa : Stel, Aircel, Reliance at Rs.96.98 cr

Assam: Reliance, Bharti, Aircel at Rs.41.48 cr

North East: Aircel, Bharti, Reliance at Rs.42.30 cr

Jammu & Kashmir : Idea, Aircel, Bharti, Reliance at Rs.30.30 cr

State telecom operator BSNL and MTNL already received 3G spectrum outside the auction

process, and launched 3G mobile services in more than 430 cities across India, but the bidding

price would be determined by the auction price.

Telecom Sector and Union Budget 2010:

The union Budget 2010-11 neglected the telecom industry's special demands. Telco’s were

looking at a rationalisation of tax and levies, uniform license fee of one per cent of the AGR.



Telco’s wanted a re-look at direct tax, tax holidays and section 81 (A), a re-look at licenses and

indirect taxes

As far as the telecom sector is concerned, Dua said that while the reduction in Corporate

Surcharge would provide a minor relief, but at the same time the increase in MAT from 15% to

18% is a major area of concern. He further added that the increase in Central excise duty from

8% to 10% is another area of concern and will lead to an increase in cost of service. The

continuation of exemption from basic, CVD and special additional duties (SAD) granted to their

parts, components and accessories of mobile phones is a welcome step and would help

towards penetration of affordable mobile service especially to rural areas. COAI welcomed the

impetus given by the Finance Minister to the use of clean/ alternate energy.

PORTERS FIVE FORCES MODEL ON TELECOM SECTOR IN INDIA

Porter’s five forces model uses concepts developed by I ndustrial Organisation economics to

derive five forces that determine the competitive intensity and therefore attractiveness of a

market.

1. COMPETITIVE RIVALRY WITHIN AN THE INDUSTRY

This describes the intensity of competition between existing firms in an industry. Highly

competitive industries generally earn low returns because the cost of competition is

high. A highly competitive market might result from:

i) Many players of about the same size; there is no dominant firm

ii) Little differentiation between competitors products and services



iii) A mature industry with very little growth; companies can only grow by stealing

customers away from competitors

There are majorly 3 types of players in the industry…

i) State owned players. (BSNL and MTNL)

ii) Private Indian players. (Reliance comm., Tata comm., Bharti Airtel)

iii) Foreign invested companies. (Vodafone, Idea cellular)

There has been a stiff competition in the telecom market over a period of time. Let us talk

about the current scenario.

At present has a subscribers base of above 6,47,44,985 with a market share of apron. 15%.

BSNL has an edge over private players as it has already started with 3G spectrum services

across India. BSNL is BSNL dedicatedly performing its work as it drives India into the next league

of telecom supremacy by providing technologically advanced services to its discerning

customers at an affordable cost

On the private side, there has been a tough competition between Bharti airtel and Vodafone

each having a market share of 30 % and 24% respectively.

Even the growth rate of both the companies for the month of April when compared with March

is around +/- 2.5% .

Both are again in the race to start with the 3G services and cater it all across India and give a

tough competition to BSNL who is already in the market.

Idea cellular, Reliance comm. and Aircel are also in the race as they lack in the infrastructure

when compared with Vodafone and Bharti Airtel

2. BARGAINING POWER OF CUSTOMERS.



This is how much pressure customers can place on a business. If one customer has a

large enough impact to affect a company's margins and volumes, then the

customer hold substantial power. Here are a few reasons that customers might have

power:

i) Small number of buyers

ii) Purchases large volumes

iii) Customers are price sensitive.

Indian telecom industry is one of the fastest growing or second largest in the world. In this

industry, service providers are the major drivers. The major booster is the wireless mobile

subscribers which have crossed 433 million. There has been a major increase in subscribers in

the month of April,2010 by a whopping 11 mn. It is expected to grow more after the 3G services

starting off from sep1,2010,

3. BARGAINING POWER OF SUPPLIERS

This is how much pressure suppliers can place on a business. If one supplier has a large

enough impact to affect a company's margins and volumes, then it holds substantial

power. Here are a few reasons that suppliers might have power:

i) There are very few suppliers of a particular product

a. There are no substitutes

ii) Switching to another (competitive) product is very costly

iii) The product is extremely important to buyers - can't do without it

iv) The supplying industry has a higher profitability than the buying industry

As far as telecom industry is concerned there are very few suppliers in the market. So

the role of suppliers is almost negligible in the industry. We are trying to analyze that

minor role.



1. Mobile handset suppliers : There are many handset suppliers in the market, some of

them are Nokia, Samsung, Motorola, Sony Ericsson, Reliance Classic, Tata Indicom,

etc. Few of the new entrants are Spice, Micromax, Karbon, etc.

2. Some other suppliers in the industry are the suppliers of Optical fibre and Aluminium.

Other important parameter in this can be the software assistance, where suppliers can have

edge over. The major software providers are TCS, Infosys, Wipro, Satyam etc. Again one thing is

noticeable that big giants like Reliance and Tata have their own software solution departments

4. THREAT TO NEW ENTRANTS.

The easier it is for new companies to enter the industry, the more cutthroat

competition there will be. Factors that can limit the threat of new entrants are

known as barriers to entry. Some examples include:

i) Existing loyalty to major brands

ii) High fixed costs

iii) Scarcity of resources

iv) High costs of switching companies

v) Government restrictions or legislation

The Indian telecom sector offers unprecedented opportunities for foreign companies in various

areas such as 3G, Virtual Private Network, international long distance calls, value added

services, etc. The market is witnessing M&A like the Bharti – Zain, which are leading to

consolidations in the industry. This sector also attracts FDI which has made it the third largest

sector attracting FDI in the post liberalization era.

5. SUBSTITUTE TO PRODUCT



What is the likelihood that someone will switch to a competitive product or service? If the cost

of switching is low, then this poses a serious threat. Here are a few factors that can affect the

threat of substitutes:

I) The main issue is the similarity of substitutes. For example, if the price of coffee rises

substantially, a coffee drinker may switch over to a beverage like tea.

II) If substitutes are similar, it can be viewed in the same light as a new entrant.

There is a cut throat competition and a price war for the tariffs of the service provider. Today

the difference in the price of the of two products is marginal. Also with the availability of

additional services like GPRS, internet, video conferencing etc, the option of substitutes for the

consumer is never ending. In today’s scenario, there are consumers who are ready to change

their service providers for a reduction in the tariffs, which poses a major threat to the

companies..

SWOT ANALYSIS OF TELECOM SECTOR

STRENGTHS:



Strong mobile subscriber’s growth is continuing, with the market benefiting from healthy

degree of competition.

The mobile market plays host to a large number of strategic investors including Singapore’s

SingTel, Vodafone from U.K, Telecom Malaysia, Etisalat from UAE, Japan’s NTT DoCoMo and

Russia’s Sistema.

Demand for mobile Value Added Services is strong and expected to grow.

WEAKNESS:

Mobile market is still inclined towards prepaid users.

The dominance of prepaid services has contributed to declining mobile average revenue per

user (ARPU) levels.

Disagreement between the regulator TRAI and government ministries has led to delayed policy

implementation in a number of areas, most notably 3G licensing.

OPPURTUNITIES:

The government is currently considering recommendations made by TRAI to allow the

operations of MVNO’s (Mobile Virtual Network Operator) in the mobile market.

The government will cut license fees upto 33% for those operators whose service covers 95% of

the residential area in a calling circle.

There is an opportunity to cover the vast untapped rural market.

THREATS:



Government plans to increase spectrum usage charges for telecom companies.

Network capacity, particularly in the mobile market, could struggle to keep up with demand.

Stiff competition in the market will make service providers difficult to retain customers.

Airtel

History

Bharti Tele-Ventures was incorporated on July 7, 1995 as a company With limited

liability under the Companies Act, for promoting telecommunications services. Bharti

Tele-Ventures received certificate for commencement of business on January 18, 1996.

The Company was initially formed as a wholly-owned subsidiary of Bharti Telecom

Limited. The chronology of events since Bharti Tele-Ventures was incorporated in 1995

is as follows:

Calendar year & Events

1995

- Bharti Cellular launched cellular services'AirTel'in Delhi

1996

- STET International Netherlands NV, or STET, a company promoted by

Telecom Italia, Italy acquired a 20% equity interest in Bharti

Tele-Ventures

- Bharti Telenet launched cellular services in Himachal Pradesh

1997

- British Telecom acquired a 21.05% equity interest in Bharti

Cellular

- Bharti Telenet obtained a license for providing fixed-line

services

in Madhya Pradesh circle

- Bharti Telecom and British Telecom formed a 51% : 49% joint



venture,

Bharti BT, for providing VSAT services

1998

- Bharti Telecom and British Telecom formed a 51% : 49% jointventure,

Bharti BT Internet for providing Internet services

- First Indian private fixed-line services launched in Indore in the

Madhya Pradesh circle on June 4, 1998 by Bharti Telenet thereby

ending

fixed-line services monopoly of DoT (now BSNL)

1999

- Warburg Pincus (through its investment company Brentwood

Investment

Holdings Limited) acquired a 19.05% equity interest in Bharti

Tele-Ventures

- Bharti Tele-Ventures (by acquiring a 63.45% equity interest in SC

Cellular Holdings) acquired an effective 32.36% equity interest in

Bharti Mobile (formerly JT Mobiles), the cellular services provider

in

Karnataka and Andhra Pradesh circles

- New York Life Insurance Fund, or NYLIF, acquired a 3% equity

interest

in Bharti Cellular

2000

- Bharti Tele-Ventures acquired an effective equity interest of

40.5%

in Bharti Mobinet (formerly Skycell Communications), the cellular

services provider in Chennai

- Bharti Tele-Ventures acquired a 30.2% equity interest of Telecom

Italia in Bharti Telenet and 18.8% from Bharti Telecom thereby

making

Bharti Telenet a 100% subsidiary of Bharti Tele-Ventures

- SingTel (through its investment company Pastel Limited) acquired



STET's 15.3% equity interest in Bharti Tele-Ventures

- Bharti Tele-Ventures acquired an additional effective 41.64%

equity

interest in Bharti Mobile (by acquiring the remaining 36.55% equity

interest in SC Cellular) resulting in Bharti Tele-Ventures holdingan

effective 74% equity interest in Bharti Mobile.

2001

- Bharti Tele-Ventures acquired NYLIF's 3% equity interest in Bharti

Cellular

- Bharti Telesonic entered into a joint venture, Bharti Aquanet,

withSingTel for establishing a submarine cable landing station at

Chennai

- Bharti Tele-Ventures issued additional equity for approximately

US$

481.30 million to SingTel, Warburg Pincus, AIF group, IFC, NYLIF,

and

Seejay Cellular and Bharti Telecom

- Bharti Cellular acquired a 100% equity interest in Bharti Mobitel

(formerly Spice Cell ), the cellular services provider in Kolkata

- Bharti Tele-Ventures acquired 85% and 15% in Bharti Telespatial

from

Bharti Telecom and Intel, respectively

- Bharti Tele-Ventures acquired a 44% equity interest in Bharti

Cellular from British Telecom, thereby making Bharti Cellular its

100%

subsidiary

- Bharti Tele-Ventures acquired an additional 49% equity interest in

Bharti Mobinet from Millicom International and BellSouth

International,

thereby owning 89.5% equity interest in Bharti Mobinet, which was

further increased to 95.3% following an issuance of additional

equity

shares by way of rights issue



- Punjab license restored to Bharti Mobile by the DoT and migration

to

NTP - 1999 accepted

- Bharti Cellular entered into license agreements to providecellular

services in eight new circles following the fourth operator cellular

license bidding process

- Bharti Telenet entered into license agreements to provide

fixed-line

services in the Haryana, Delhi, Tamil Nadu and Karnataka circles

- Bharti Telesonic entered into a license agreement with the DoT to

provide national long distance services across India

- Bharti Aquanet, Bharti Telesonic and Bharti Cellular entered into

license agreements with the DoT to provide ISP services in India

- Bharti Telesonic launched national long distance services under

the

brand name of IndiaOne

- Bharti Telenet launched fixed line services in Haryana under the

brand name of TouchTel.

2002

- Comes out with issue of 18.53 crore equity shares through book

building route with a floor price of Rs 45 per share, received bid

for 18.55 crore shares. Through the issue, it becomes the first

company in India to come out with 100% book building issue

-Issue price fixed at Rs 45 per share, floor price fixed by the

company. Raises Rs 834 crore

-Shares listed on BSE, NSE and DSE, opens at 11% premium to its

issue price of Rs 45

-Enters into a 5-year agreement with Escotel and ETL of the Escorts

group to contract leased line connectivity for its cellular

operations



-Mr. Ravi Akhoury ceases to be Director of Bharti Tele

-DoT grants ILD Telephony License to Bharti Telesonic, subsidiary of

the company

-Signs MoU with Telia AB to buy out their 26% stake in Bharti Mobile

-Ties up with SSC (Secondary School Certification) Board, Hyderabad,

where Bharti will announce SSC results to its customers on their

mobile phones

-ICICI Bank ties up with Bharti for pre-paid mobile cards via ATMs

-Bharti forays into Mumbai with offers

-Alpine International Ltd. and ELM International Ltd. acquire sharesof Bharti Tele-Ventures

-Sunil Mittal, Chairman & Managing Director of the company, bags

Businessman of the year award by Business India

2003

-Airtel breaks interconnectivity with Tata Teleservices in Andhra

Pradesh Circle

-Company accorded its approval for amalgamation of its subsidiarycompanies viz: Bharti Telenet Ltd, Bharti Telesonic Ltd, Bharti

Broadband Networks Ltd and Bharti Comtel Ltd through scheme of

Amalgamation. The merged entity would be renamed as Bharti Infotel

Ltd

-Air Tel launches Local direct dialling facility in Chennai circle

-Mobilises 5 m long term foreign currency borrowings for expansion

of cellular operations

-Bharti Cellular unveils CareTouch service

-Bharti Group's cellular brand Airtel has unveiled free multimedia

messaging services (MMS) for its customers. The company has also

rolled out pan-India GPRS (General Packet Radio Services) for its

corporate subscribers



-Launches its ̀ IndiaOne MeetXpress' audio-conferencing service

-Punjab, Haryana get free incoming calls from Airtel

-AirTel provides SMS facilities to hearing impaired in Chennai

-Goa, Maharashtra gets 'voice portal' services by Bharti Cellular

-Launches free additional connection to its new subscribers in New

Delhi

-Mr Sin Hang Boon and Mr Wong Hung Khim have resigned from the Board

of Directors of Bharti Tele Ventures Ltd with effect from February

27, 2003.

-Airtel provides SMS cricket updates

-Bharti Mobinet Ltd, the Bharti group company that provides the

AirTel mobile service in Chennai, today launched its GPRS (General

Packet Radio Service) network and an MMS (multi-media messaging) on

the GPRS platform

-AirTel unveils new ring tones for karnataka cellular market

-AirTel Subscribers exceed 3 million mark

-AirTel unveils RAD system

-Mr P M Sinha resigns from the Board of Directors of the Company with

effect from March 31, 2003.

-Bharti TeleVentures announces the completion of merger with Bharti

Mobitel

-Bharti Mobitel Ltd. merged with Bharti Cellular Ltd.

-AirTel reintroduces 'Mobile 2 Mobile' offer for Karnataka customers

-AirTel, Touchtel jointly offer freeTouchtel land line for post-paid

Airtel connection

-AirTel rolls out voice mail service for pre-paid customers

-AirTel unveils new scheme for pre-paid customers giving away free



talk time worth Rs 10 crore

-Airtel surpasses 4 lakh subscriber base in Karnataka

-Bharti announces new tariff plan AirTel 012

-Offers 0-1-2, a new cellular package for the customers, which means

zero charges on incoming calls, Re 1 on mobile-to-mobile outgoing

calls, Rs 2 on mobile-to-mobile STD calls

-Rolls out Airtel messenger service

-AirTel offers bundled handset, connection package for Rs 5715

-Airtel slashes SMS rates to 60 paise; excludes Delhi and Mumbai

-Bharti cellular, wholly owned subsidiary of Bharti Tele-Ventures,

increases its stake to 100% in Bharti Mobile

-Iinks distribution pact with Hathway Cable. With this alliance,

Bharti is said to be the first telecom firm to step into television

distribution services

-Six cell operators move over from Bharti to VSNL

-Airtel augments cellular coverage in TN by including Arcot &

Walajapet in its network

-Airtel ties up with Coke in Chennai to sell its Magic prepaid cards

-AirTel embarks on network expansion in Hyderabad

-Airtel unveils IndiaOne Long Distance Calling Card

-AirTel introduces unified tariff package in TN, Chennai

-Airtel becomes front runner in Karnataka's mobile services market

-Bharti Tele launches 'Always on' service to its subscribers

-SBI, AirTel announce EMI offer at Rs 299

-Bharti and MTV join hands to launch new SIM card



-AirTel unveils new post-paid scheme at zero rental

-AirTel launches `Happy Plan' in AP

-Airtel emerges as the highest selling pre-paid card

-Airtel join hands with Alcatel & Videocon to launch new scheme

-AirTel service provider touches 5 lakh customers in Punjab

-Airtel offers 5 new services for its customers in Mumbai

-Bharti launches first dual band network in Delhi

-Gets 14th place among top 25 Cos in India

-Bharti Mobile crosses 4 lakh mobile subscribers in AP

-Airtel holds top position in terms of dealer penetration

-Prof. V S Raju has been inducted on the Board of Directors of the

Company.

-Touchtel launches SMS service in fixed line phones in Karnal,

Panipat

-AitTel unveils special offers in Kerala

-AirTel launches InnoWest for the western region

-Bharti Tele-Ventures enters into an agreement with Telesystem

(Mauritius) Pvt. Ltd

-Airtel slashes out going sms price to 30ps

- AirTel on December 16, 2003 announced the launch of expense tracker

service, which provides customers the option of tracking theirday-to-day expenses on a daily or monthly basis. To avail of this

service, the customer should register himself by sending EXP REG Your

mail ID{gt} to 3020. This service will allow a user to track expenses,

while on the move by sending an SMS. Each SMS sent to 3020 would cost

Rs 3.

-AirTel introduces MTV Club Card in Chennai



2004

-Bharti unveils new card for Mecca piligrims

-AirTel enrolls 50,000 customers in its mobile service in 60 days

-Launches WAP enabled portal Service in Kerala

- Bharti Cellular's AirTel has extended its mobile connectivity to

Karaikkal, Nagur, Mannargudi and Kovilpalayam in Tamil Nadu circle.

-Airtel customer base touches new high of 5 lakh mark in Andhra

Pradesh

- Mobile service provider AirTel is launching its first ever MMS(Multi Media service) downloads in Tamil. The launch of this service

has been timed to coincide with Pongal.

-AirTel tie up with MAA TV

-Airtel launches Rs 50 pre-paids recharge

-AirTel launched a family pack for its post-paid customers in Chennai

on January 29. According to a press release, the family pack may have

a maximum of 10 members spread across the country. The combined basic

plan fixed charges/rental of all family members in the pack will haveto be equal to Rs 450 but less than Rs 1000 for the family 450 pack

and above Rs 1000 for the family 1000 pack. The offerings under

family pack 450 include 15 free mobile to mobile STD minutes within

the family, 50 free local calling minutes to each family member,

calls within the family in same circle at 50 paise per minute, 25

free local SMS and one subscription alert service free for 3 months.

-Bharti Tele-Ventures enters into a three year service agreement with

Ericsson

-Bharti Tele-Ventures (BTVL) has signed and received unified access

service licence to provide GSM services in five circles including

Uttar Pradesh (East), West Bengal & Andaman Nicobar, Orissa, Bihar

and Jammu & Kashmir. The licence has been granted to Bharti Cellular

Ltd (BCL), the cellular arm and subsidiary of BTVL.

-Airtel announces the signing of the first-ever bilateral roaming



-- Airtel launched two-way international roaming and GPRS for prepaid

customers in the Maharshtra and Goa circles

-India's leading cellular company Bharti Tele-Ventures has bagged the

Asian MobileNews operator of the year award in India and the

subcontinent

-Bharti Tele-Ventures Ltd has awarded a million equipment

contract to Swedish telecoms company Ericsson

-Bharti Televentures announced formation of a new strategic business

unit to offer various telecom and IT services through a single

contact

-Bharti Televentures unveiled a mobile portal featuring sports,

entertainment and news among others

-Airtel ties up with Micro Tech to set up 'Mcops' vehicle security

system

-Bharti Tele-Venture on July 19 launched ring back tone service which

is a personalized mobile music service where the caller hears songs

and other sound clips instead of the traditional switchboard

ring-ring tone

-Airtel, a private telecom services provider, has commissioned its

first 24x7 customer service centre in Andhra Pradesh

-Airtel unveils Rs 199 pre paid card

-AirTel join hands with NMIMS to offer executive MBA programme

-AirTel introduces new scheme for hearing impaired in Maharashtra &

Goa

-AirTel inks pact with JP Mobile

- Rolls out Enhanced Data Rate for Global Evolution (EDGE) network in

Pune on September 9, 2004, Ties up with Nokia for sale of Nokia 6230,

an EDGE-enabled handset.

-AirTel unveils first virtual calling cards in India

-BTVL rolls out EDGE services in Bangalore



-Airtel rolls out Full Talktime Advantage card

-Airtel rolls out wi-fi services in Mumbai

-BTVL launches new 'Airtel Broadband Friendly Offer'

-Airtel launches GPRS services for pre-paid customers

-Airtel partners with ITPO to set up Wi-Fi network in Delhi

-Airtel launches EDGE services and a new pre-paid plan for Chennai

-Airtel introduces LAS in Karnataka

2005

-Airtel launches video services for its GPRS customers on February

22, 2005

-Airtel unveils new TV ad featuring Sachin, Sharukh

-Bharti Tele-Ventures launches telecom network in Andaman & Nicobar

-BTVL unveil fixed line, broadband services

-Bharti inks 5-m deal with Nokia for rural network expansion

-Bharti Tele Ventures Ltd has announced that Airtel, ICICI Bank &

VISA have joined hands to launch mChq - a revolutionary new service -

a credit card on the mobile phone

-Bharti Tele Ventures - Airtel introduces BlackBerry Connect in

India

-Bharti Tele Ventures announces agreement with Vodafone

-Airtel unveils 'free flight' offer

-Airtel unveils starter pack

-Bharti Tele-Ventures launches under sea cable system



2006

-Airtel unveils Re 1 STD plans

-Airtel launches NetXpert.

-Airtel launches Post2Pre recharging service on April 04,2006.

-Airtel sets up customer centre

-Mobile service provider Airtel today announced the launch of `Save

My Phone Contact' service for its pre-paid and post-paid customers in

Delhi

-Bharti Tele Ventures bags 'Wireless Service Provider of the Year' &

'Competitive Service Provider of the Year' awards

-Sunil Mittal bags CEO of the Year award

-Cellebrum join hands with Airtel

-Airtel Mega unveiled in Coimbatore

-Airtel joins hand with Microsoft

-Bharti Airtel Ltd has informed that Microsoft and the Company

announced a strategic partnership that will offer a range of softwareand services for small and medium businesses (SMBs) in India.

-Bharti Airtel Ltd on Nov 8, announced a first-of-its-kind alliance

with the Adani Group for establishing an end-to-end modern

telecommunication network infrastructure for the latter's

multi-sector special economic zone (SEZ), located near Mundra Port in

Kutch district of Gujarat.

2007

-Bharti Airtel, telecom major, has come out with a slew of

initiatives including buying out SingTel's 50 per cent stake in joint

venture under sea cable company Network i2i for 0 million.

-Bharti Airtel on Feb 11, has been awarded QCI-DL Shah National Award

on Economics of Quality.



-Bharti Airtel Ltd has announced the following changes in the

operational leadership structure and roles in the Company effective

April 01, 2007.

-Bharti Airtel Ltd on April 01, 2007, has announced the reduction in

International Long Distance Tariffs (ISD) for all its mobilecustomers in India.

-Airtel signs agreement with HTC for touch screen mobile.

2008

- Nokia Siemens Networks on Jan 3 declared that it has been awarded a

multi million euro contract from Bharti Airtel Ltd for deployment of a

single interactive voice response (IVR) platform across 23 circles.

The three-year turnkey contract comprises designing, planning,systems integration and optimisation services to raise overall

customer experience. The new IVR solution will enable Airtel to

deliver services such as voice SMS, televoting, call management

services, caller ring back tone and voice portal on a faster

time-to-market basis and, therefore, reduce OPEX costs.

- Bharti Airtel Ltd on February 13, 2008 has announced that it has

achieved the 60 million customer mark. This landmark has catapulted

Bharti Airtel into the club of top mobile operators in the world in

terms of subscriber base. The 60 million customer base covers mobile

as well as fixed line and broadband customers.

- Bharti Airtel tied up with US-based Apple Inc to bring the popular

GSM-based iPhone in the country.

- Bharti Airtel Ltd has forged a technology alliance with Infosys

Technologies Ltd to launch its Direct-to-Home (DTH) television

services. Infosys, through its digital convergence platform, will

offer a suite of products including devices, application servers and

interactive applications for Airtel's DTH services.

2009

- Bharti Airtel HAS signed a five-year managed services deal valued

at 0 million with Alcatel Lucent for its fixed-line and broadband

operations.

- Bharti Airtel launched the 'Airtel Advantage' initiative. The



initiative is aimed at offering the added advantage to Airtel

customers to be in touch with each other at an affordable rate of 50

paise per minute, be it a national long distance call (STD) or a

local call.

- In order to create products and services for the small, medium andlarge enterprises, Bharti Airtel and Cisco announced a strategic

business alliance. The alliance would combine the strengths of

Airtel's network service and Cisco' Internet Protocol (IP)

technologies.

- Bharti Airtel - Airtel and mChek announce milestone of One Million

users; introduce a broad range of new mCommerce services.

2010

- Bharti Airtel submitted its bid for 3G spectrum, the auction for

which starts from April 9.

- Bharti Airtel has partnered with US-based software maker VMware

Inc. It has done this in order to focus on the cloud-based managed

computer services market.

- Bharti Airtel, India's No.1 cellular carrier has won broadband

spectrum in four circles. Earlier, Bharti has said that it had tied

up the entire financing requirement of .3 bn for the planned buy,

through a series of banks.

Company profile

Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. The BhartiGroup has a diverse business portfolio and has created global brands in the

telecommunication sector. Airtel comes from Bharti Airtel Limited, India’s largest integrated and the first private telecom services provider with a footprint in all the 23telecom circles. Bharti Airtel since its inception has been at the forefront of technologyand has steered the course of the telecom sector in the country with its world classproducts and services. The businesses at Bharti Airtel have been structured into threeindividual strategic business units (SBU’s) - Mobile Services, Airtel Telemedia Services& Enterprise Services. The mobile business provides mobile & fixed wireless servicesusing GSM technology across 23 telecom circles while the Airtel Telemedia Services



business offers broadband & telephone services in 95 cities and has recently launchedIndia's best Direct-to-Home (DTH) service, Airtel digital TV. The Enterprise servicesprovide end-to-end telecom solutions to corporate customers and national &international long distance services to carriers. All these services are provided under theAirtel brand. The company served an aggregate of 88,270,194 customers as of

December 31, 2008; of whom 85,650,733 subscribed to GSM services and 2,619,461use the Telemedia Services either for voice and/or broadband access delivered throughDSL. Bharti Airtel is the largest wireless service provider in the country, based on thenumber of subscribers as of December 31, 2008. They also offer an integrated suite oftelecom solutions to their enterprise customers, in addition to providing long distanceconnectivity both nationally and internationally. They have recently forayed into mediaby launching their DTH and IPTV Services. All these services are rendered under aunified brand "Airtel". The company also deploys, owns and manages passiveinfrastructure pertaining to telecom operations under its subsidiary Bharti InfratelLimited. Bharti Infratel owns 42% of Indus Towers Limited. Bharti Infratel and IndusTowers are the two top providers of passive infrastructure services in India.

Company shares are listed on The Stock Exchange, Mumbai (BSE) and The NationalStock Exchange of India Limited (NSE).

Our vision & promise

By 2015 airtel will be the most loved brand, enriching the lives of millions.

" Enriching lives means putting the customer at the heart of everything we do. We will meet their needs based on

our deep understanding of their ambitions, wherever they are. By having this focus we will enrich our own lives and

those of our other key stakeholders. Only then will we be thought of as exciting, innovation, on their side and a

truly world class company."

Mission

We will meet the mobile communication needs of our customers through :

Error-free service delivery.

Innovative products and services.

Cost efficiency.



Values

We will always put our customers first. We will always trust and respect each other. We will respect our associates

as we respect each other. We will work together through a process of continuous improvement .

THE KEY PRODUCTS/SERVICES OFFERED BY BHARTI AIRTEL :-

1. TELE SERVICES

2. WIRELESS INTERNET

3. DTH SERVICES

4. ENTERPRISE SERVICES

1. TELE SERVICES :

Bharti Airtel provides Prepaid and postpaid services for both mobile phones and fixed land lines users

The company charges Nominal tariff rates to its users in all the circles where it provides service

Bharti Airtel also provides gprs services to the gprs unabled handsets

Airtel also provides Wireless solution in blackberry and iphone

As far as advertising is concerned, the company has Shah rukh khan the brand ambassador

2. WIRELESS INTERNET :

Bharti Airtel has an easy to access Airtel usb modem for an instant internet connection

It provides with a wide range of prepaid and postpaid plans available as per customer needs

The company has most widespread network in the country

Data card is available from Rs.49 to Rs.999/month (installation cost Rs.2999)



3. DTH SERVICES :

Airtel digital TV is a satellite television service

It offers additional benefit like TV recorder

Tariffs from Rs.145 to Rs.345/month (Installation Rs.1490 – Rs.4290)

Kareena Kapoor and Saif Ali Khan are the brand ambassadors which has helped a lot to the company to

generate sales and have a competitive stand in the DTH market

4. ENTERPRISE SERVICES :

1st

ISP (Internet service provider) in India

It provides end to end telecom solutions to corporate customers

National and international long distance services to ‘’carriers’’

(A company authorized by regulatory agencies to operate a telecommunication system)

SWOT ANALYSIS OF BHARTI AIRTEL

STRENGTHS

More than 130mn customers base

Business has access to knowledge and technology as it holds strategic alliance with Sony-Ericsson, Nokia and Sing

Tel

Pan India presence

Strong financials with increase in NP by 22%+ and Sales by 4.5%+ for FY Mar, 2010

WEAKNESS

Outsourcing of telecom and IT networks, IT infrastructure, last mile connectivity of broadband operations, BPO

services, Inter – city optic fibre cables

Risk associated with Zain acquisition like lower profitability, political and regulatory risks

OPPURTUNITIES



Bharti infratel can cut down cost in vast untapped rural and semi urban areas

Current tale - density is 52%, still low as compared to developed economies

Increase in subscribers base and global wide spread with Bharti – Zain acquisition

THREATS

Bharti Airtel is India – centric

Intense competition among Indian markets

Changing pace of global telecommunication industry which impacted the decision of purchase of MTN indirectly

opening doors for the rivals (Reliance comm.)

Bharti Airtel Ltd. - Research Center532454 BHARTIARTL Group (A) BSE dataView Tips Add to : Portfolio | Watchlist | Game

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Results

Quarterly

Half yearly

Annual

Statement

Balance sheet

P&L

Cash flow

More

Dividend

Share holding

Capital structures

Ratio

(Rs crore)

Balance sheet

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Sources of funds

Owner's fund

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Equity share capital 1,898.77 1,898.24 1,897.91 1,895.93 1,893.88

Share application money 186.09 116.22 57.63 30.00 12.13

Preference share capital - - - - -

Reserves & surplus 34,650.19 25,627.38 18,283.82 9,515.21 5,437.42

Loan funds

Secured loans 39.43 51.73 52.42 266.45 2,863.37

Unsecured loans 4,999.49 7,661.92 6,517.92 5,044.36 1,932.92

Total 41,773.97 35,355.48 26,809.71 16,751.95 12,139.72

Uses of funds

Fixed assets

Gross block 44,212.53 37,266.70 28,115.65 26,509.93 17,951.74

Less : revaluation reserve 2.13 2.13 2.13 2.13 2.13

Less : accumulated depreciation 16,187.56 12,253.34 9,085.00 7,204.30 4,944.86

Net block 28,022.84 25,011.23 19,028.52 19,303.51 13,004.75

Capital work-in-progress 1,594.74 2,566.67 2,751.08 2,375.82 2,341.25

Investments 15,773.32 11,777.76 10,952.85 705.82 719.70

Net current assets

Current assets, loans & advances 9,225.08 10,466.63 8,439.38 5,406.81 3,338.88

Less : current liabilities & provisions 12,842.00 14,466.89 14,362.33 11,042.67 7,272.80

Total net current assets -3,616.92 -4,000.26 -5,922.95 -5,635.86 -3,933.92

Miscellaneous expenses not written - 0.09 0.20 2.66 7.94




Total 41,773.97 35,355.48 26,809.71 16,751.95 12,139.72

Notes:

Book value of unquoted investments 11,619.95 9,898.56 9,379.62 580.43 476.52

Market value of quoted investments 4,216.67 1,887.76 1,574.29 125.85 243.99

Contingent liabilities 3,921.50 4,104.25 7,140.59 7,615.04 4,740.34

Number of equity sharesoutstanding (Lacs) 37975.30 18982.40 18979.07 18959.34 18938.79

Profit loss account


Income

Operating income 35,609.54 34,048.32 25,761.11 17,851.61 11,259.12

Expenses

Material consumed 313.63 281.65 33.85 22.08 67.40

Manufacturing expenses 11,882.41 8,627.13 7,339.01 5,017.27 3,299.73

Personnel expenses 1,401.66 1,397.54 1,297.88 1,076.95 734.20

Selling expenses 2,404.91 2,210.43 1,842.51 1,126.34 804.15

Adminstrative expenses 5,982.64 8,608.03 4,588.53 3,351.31 2,315.91

Expenses capitalised -293.31 -269.25 - - -

Cost of sales 21,691.93 20,855.54 15,101.78 10,593.96 7,221.40

Operating profit 13,917.61 13,192.78 10,659.34 7,257.65 4,037.72

Other recurring income 148.98 235.99 266.91 101.70 40.75




Adjusted PBDIT 14,066.60 13,428.77 10,926.24 7,359.35 4,078.47

Financial expenses 283.35 434.16 393.43 282.07 236.81

Depreciation 3,890.08 3,206.28 3,166.58 2,353.30 1,432.34

Other write offs 207.84 178.82 266.07 137.80 127.39

Adjusted PBT 9,685.32 9,609.50 7,100.16 4,586.17 2,281.93

Tax charges 1,177.87 321.78 632.43 566.79 273.68

Adjusted PAT 8,507.45 9,287.72 6,467.73 4,019.39 2,008.25

Non recurring items 969.48 -1,497.74 -162.87 3.92 -13.81

Other non cash adjustments -50.78 -46.15 -60.67 9.92 17.64

Reported net profit 9,426.15 7,743.84 6,244.19 4,033.23 2,012.08

Earnigs before appropriation 27,928.98 19,541.05 11,778.12 5,489.61 1,225.65

Equity dividend 379.79 379.65 - - -

Preference dividend - - - - -

Dividend tax 64.54 64.52 - - -

Retained earnings 27,484.65 19,096.89 11,778.12 5,489.61 1,225.65

Cash flowMar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Profit before tax 10,699.25 8,161.54 6,972.54 4,601.37 2,285.80

Net cashflow-operating activity 12,692.63 11,853.15 10,459.85 8,107.95 4,547.20

Net cash used in investing activity -10,601.66 -10,894.38 -11,648.41 -7,975.05 -5,000.26

Netcash used in fin. activity -2,539.32 -672.00 898.03 340.13 376.35




Net inc/dec in cash and equivlnt -448.35 286.77 -290.53 473.03 -76.71

Cash and equivalnt begin of year 789.88 503.31 793.47 307.43 384.14

Cash and equivalnt end of year 341.53 790.08 502.94 780.46 307.43

Ratios


Per share ratios

Adjusted EPS (Rs) 22.40 48.93 34.08 21.20 10.60

Adjusted cash EPS (Rs) 33.19 66.76 52.16 34.34 18.84

Reported EPS (Rs) 24.82 40.79 32.90 21.27 10.62

Reported cash EPS (Rs) 35.61 58.63 50.99 34.41 18.86

Dividend per share 1.00 2.00 - - -

Operating profit per share (Rs) 36.65 69.50 56.16 38.28 21.32

Book value (excl rev res) per share (Rs) 96.24 145.01 106.34 60.17 7.76

Book value (incl rev res) per share (Rs.) 96.25 145.02 106.35 60.18 7.77

Net operating income per share (Rs) 93.77 179.37 135.73 94.16 59.45

Free reserves per share (Rs) 84.64 121.78 83.18 49.88 28.11

Profitability ratios

Operating margin (%) 39.08 38.74 41.37 40.65 35.86

Gross profit margin (%) 28.15 29.33 29.08 27.47 23.14

Net profit margin (%) 26.36 22.58 23.99 22.46 17.80

Adjusted cash margin (%) 35.25 36.96 38.03 36.26 31.57




Adjusted return on net worth (%) 23.27 33.74 32.04 35.23 27.42

Reported return on net worth (%) 25.79 28.13 30.94 35.35 27.47

Return on long term funds (%) 24.36 29.01 28.52 29.83 21.28

Leverage ratios

Long term debt / Equity 0.11 0.25 0.30 0.43 0.61

Total debt/equity 0.13 0.28 0.32 0.46 0.65

Owners fund as % of total source 87.88 78.11 75.43 68.24 60.45

Fixed assets turnover ratio 0.87 0.99 1.03 0.74 0.72

Liquidity ratios

Current ratio 0.71 0.72 0.58 0.48 0.45

Current ratio (inc. st loans) 0.68 0.69 0.56 0.47 0.44

Quick ratio 0.71 0.64 0.55 0.47 0.44

Inventory turnover ratio 1,307.05 547.83 453.06 373.35 634.52

Payout ratios

Dividend payout ratio (net profit) 4.71 5.73 - - -

Dividend payout ratio (cash profit) 3.28 3.99 - - -

Earning retention ratio 94.78 95.22 100.00 100.00 100.00

Cash earnings retention ratio 96.48 96.50 100.00 100.00 100.00

Coverage ratios

Adjusted cash flow time total debt 0.39 0.60 0.66 0.81 1.34

Financial charges coverage ratio 49.64 30.93 27.77 26.09 17.22




Fin. charges cov.ratio (post tax) 48.73 26.63 25.60 24.13 16.08

Component ratios

Material cost component (% earnings) 0.78 0.84 0.16 0.29 0.47

Selling cost Component 6.75 6.49 7.15 6.30 7.14

Exports as percent of total sales 5.03 5.31 6.00 8.82 11.33

Import comp. in raw mat. consumed - - - - -

Long term assets / total Assets 0.81 0.77 0.77 0.78 0.80

Bonus component in equity capital (%) 82.49 82.51 82.53 82.61 82.70

Vodafone

History

Vodafone Essar, usually referred to simply as Vodafone, is a cellular operator in India that covers 23 telecom circles

in India. It was formerly known as Hutchison Essar. It is based in Mumbai. Vodafone Essar is the Indian subsidiary

of Vodafone Group 67% and Essar Group 33%. It is the second largest mobile phone operator in terms of revenue

behind Bharti Airtel, and third largest in terms of customers. The company now has operations across the country

with over 113.77 million customers.

On February 11, 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li Ka Shing Holdings in

Hutch-Essar for US$11.1 billion, pipping Reliance Communications, Hinduja Group, and Essar Group, which is theowner of the remaining 33%. The whole company was valued at USD 18.8 billion. The transaction closed on May 8,

2007. Despite the official name being Vodafone Essar, its products are simply branded Vodafone. It offers

bothprepaid and postpaid GSM cellular phone coverage throughout India with good presence in the metros.

Vodafone Essar provides 2.75G services based on 900 MHz and 1800 MHz digital GSM technology, offering voice

and data services in 23 of the country's 23 licence areas. It is among the top three GSM mobile operators of India.

http://en.wikipedia.org/wiki/Mobile_network_operator

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Mumbai

http://en.wikipedia.org/wiki/Vodafone_Group

http://en.wikipedia.org/wiki/Essar_Group

http://en.wikipedia.org/wiki/Mobile_phone


http://en.wikipedia.org/wiki/List_of_mobile_network_operators_of_the_Asia_Pacific_region#India

http://en.wikipedia.org/wiki/Vodafone

http://en.wikipedia.org/wiki/Li_Ka_Shing


http://en.wikipedia.org/wiki/USD

http://en.wikipedia.org/wiki/Prepaid

http://en.wikipedia.org/wiki/GSM

http://en.wikipedia.org/wiki/Cellular_phone

http://en.wikipedia.org/wiki/2.75G



http://en.wikipedia.org/wiki/2.75G

http://en.wikipedia.org/wiki/Cellular_phone


http://en.wikipedia.org/wiki/Prepaid

http://en.wikipedia.org/wiki/USD


http://en.wikipedia.org/wiki/Li_Ka_Shing

http://en.wikipedia.org/wiki/Vodafone

http://en.wikipedia.org/wiki/List_of_mobile_network_operators_of_the_Asia_Pacific_region#India


http://en.wikipedia.org/wiki/Mobile_phone

http://en.wikipedia.org/wiki/Essar_Group

http://en.wikipedia.org/wiki/Vodafone_Group

http://en.wikipedia.org/wiki/Mumbai

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Mobile_network_operator



Vodafone Essar will launch third-generation (3G) services in the country in the January-March quarter of 2011 and

plans to spend up to $500 million within two years on its 3G networks.

Company profile

Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commencedoperations in 1994 when its predecessor Hutchison Telecom acquired the cellularlicensefor Mumbai. Vodafone Essar now has operations in 22 circles with over 65.92 millioncustomers**. The company is a joint venture of Essar Communication Holdings Ltd andthe UK-based Vodafone Group. Vodafone has partnered with the Essar Group as theirprincipal joint venture partner for the Indian market. They are in the business of cellulartelephony. Over the years, Vodafone Essar, under the Hutch brand, has been named

the‘Most Respected Telecom Company’, the ‘Best Mobile Service in the country’ and the ‘Most Creative and Most Effective Advertiser of the Year’. Vodafone is the world’s leading international mobile communications company. It currently has equity interests in 27 countries across 5 continents and 40 partnernetworkswith over 289 million proportionate customers worldwide. Vodafone has partnered withthe Essar Group as its principal joint venture partner for the Indian market.Essar Global Limited (EGL) is a diversified business group spanning the manufacturingand services sectors of Steel, Energy, Power, Communications, Shipping & Logistics,and Projects. The group has operations and investments in India, Canada, USA, Africa,

the Middle East, the Caribbean and South East Asia and employs 30,000 peopleworldwide.Vodafone Essar Ltd provides services like 2G, which are based on 1800 Mhz and900Mhz GSM digital technology. They offers voice and data services. In addition, theyoffers postpaid connections activation, prepaid SIM cards and recharge coupons sale,service activation/deactivation, postpaid tariff plan change, customer query resolution,prepaid/postpaid SIM card replacement and upgradation, mobile number change, andinformation on and subscription of value added services through stores.

Vision:Our Vision is to be the world’s mobile communication leader – enriching customers’ lives, helping

individuals, businesses and communities be more connected in a mobile world.



Mission: “The Vodafone mission is to be the communications leader in an increasingly connected world –

enriching customers’ lives, helping individuals, businesses and communities is more connected by delivering their

total communication needs.”

SWOT ANALYSIS

Strengths

Strong international presence and brand recognition

Well-defined cost reduction initiatives, managed outsourcing

Stable operating profit

The India operations is backed by its huge expertise and diversified geographical portfolio.

Sharing of network infrastructure

Leading presence in India

Brand value built by delivering a superior, consistent and differentiated customer experience.

Vodafone’s customer strategy endeavors to ensure that customers’ needs are at the core of all products and

services.

Weakness

Benefits of investment in technology are not realized

Little penetration in rural market

Have not entered broadband services, smart phones segment

Advertising campaigns do not have the emotional connect to the lower income classes and rural customers

Perception of customers in lower segment that Vodafone is a costly brand

Opportunities

Focus on capturing rural sector through cost reductions improving returns

Research and development of new mobile technologies

Mobile Broadband

Improve accessibility to wide range of customers



Vodafone can offer voice, messaging, data and fixed broadband services through multiple solutions and

supporting technologies to deliver on its total communications strategy.

The advancements in 3G networks and download speeds, handset capabilities and the mobilisation of

internet services, could contribute to an acceleration of data services usage growth.

Threats

Existing competitive market

Entry of many new players in immediate future

Government regulations

Change in technology

Change in consumer preference

Adverse macroeconomic conditions like recession and economic slow down

PRODUCTS AND SERVICES

PRODUCTS

• Post-paid Services

• Pre-paid Services

• Magic Box Handsets

• World Calling Cards

World Calling Card from Vodafone is a Pre-paid long distance calling card that one can use with their Vodafone

Prepaid and Post-paid mobile phones to make ISD & STD calls.

• Home Calling Cards

Vodafone Home Calling Card is a Pre-paid calling card that allows one to make calls from landlines, PCOs &

mobile phones from over 100 countries. And helps save up to 90% as compared to International Roaming charges.

So talk more, spend less and always stay connected.

• Handy phone

Vodafone Handy phone is a landline that’s loaded with all the features of a cell phone - including low call rates.

And Vodafone Handy phone isn’t that expensive either. One can make it theirs for Rs 1999.

SERVICES



• Tunes & downloads

• Entertainment

• Devotional

• Sports

• News & Updates

• Call Management Services

• Astrology

• Finance

• Travel

• Mail, messaging & more

• Dial in Services

• Bill Info

RE-BRANDING STRATEGIES – Hutch to Vodafone

REVIEW OF LITERATURE

Girija (1998), in its article “Socioeconomic Implications of Telecommunications

Liberalization: India in the International Context” says that Telecommunications

restructuring have evolved differently in Asia and Latin America. While Asian

governments have moved cautiously in bringing changes to the sector, Latin American

nations have implemented radical ownership and market transformations. The Indian

telecommunications reform falls in between these two general regional trends. The

choice of a high component of competition, increased private participation, and no

privatization of the national carrier set conditions that will trigger unique socioeconomic

effects. This article identifies and highlights the likely implications of the Indian reform

on key economic and social issues, such as the cost of services, cross-subsidies, network

interconnection, private investments, universal services, employment, and the possible

rise of an information-intensive economy. It does so by comparing and contrasting the



Indian experience with dominant reform strategies elsewhere in the developing world.

T.H. Chowdary (1999) discusses how Telecom reform, or demonopolization, in India

has been bungled. Shaped by legislation dating back to the colonial era and post Second

World War socialist policies, by the mid-1980s India realized that its poor

telecommunications infrastructure and service needed reform. At the heart of the problem

lay the monopoly by the government’s Department of Telecommunications (DOT) in equipment, networks and services. The National Telecom Policy 1994 spelt out decent

objectives for reform but tragically its implementation was entrusted to the DOT. This

created an untenable situation in which the DOT became policymaker, licenser, regulator,

operator and also arbitrator in disputes between itself and licensed competitors. He

discusses the question: ‘Why did India get it so wrong? and What India should do now?

Anand (1999), in his article named “India's economic policy reforms” says that India

was embarked on economic reforms in July 1991, in the wake of a balance of

payments crisis. In this article, an attempt is made to review two books and a set of

World Bank reports concerning the progress of these reforms. Issues concerning

economic policy, impact of the reforms on poverty, sectoral issues relating to agriculture,

industry and infrastructure are briefly discussed. As reforms enter a more difficult phase,

several challenges remain. Some of this fall under the “economic agenda'' of measures

needed to maintain economic growth; others can be termed the “development agenda'' -

of improving human development. Progress with regard to the former is not sufficient to

produce results concerning the latter.

Bhattacharya (2000) constructs a vision of the Indian telecommunication sector for the

year 2020. The paper aims at isolating agents of change based on international

experiences and situates India in the development continuum. The agents of change have

been broadly categorized into economic structure, competition policy and technology.

Das (2000), in her paper described the Liberalisation of the Indian telecommunications

services which started in mid nineties with no change in the existing public monopolystructure, entirely controlled by Department of Telecommunications (DoT). In order to

evaluate any proposed industry structure, it is essential to analyse the production

technology of DoT so as to determine the rationale of liberalisation and sustainability of

competition. Accordingly, the researcher estimates a frontier multi-product cost function

for DoT, where the cost function has been duly modified to account for the production

technology of a public monopoly. The study finds that although DoT displays high

allocation inefficiency, it is still a natural monopoly with very high degree of sub

additively of cost of production. This study implies that the choice of any reform policy

should consider the trade-off between the loss of scale and scope economies and cost

saving from the reduction in inefficiency of the incumbent monopoly in the event of competition.

Rao (2000), in her article named “Internet service providers in India”, provides a broad

view of the role of an Internet service provider (ISP) and the factors to be considered

before entering the ISP market. Describes the Internet/ISP scene within India and

discusses the configuration of local, regional and national level ISPs, and the supporting

infrastructure. She also identifies the various success factors. The global Internet scenario

is discussed regarding the phases of the Internet in India, i.e. pre and post



commercialization. The main players are described: ERNET, NICNET, STPI, VSNL,

MTNL, Satyam Infoway and Bharti-BT. The financial and legal implications are

highlighted in the Indian context. Many companies entered the nascent ISP business in

India due to deregulation. Building local content, foreknowledge of new Internet

technologies, connecting issues, competitiveness, etc. would help in their sustainability.

She concludes that though many companies entered the nascent ISP businesses in Indiadue to deregulation, many of them are unlikely to survive in the longer term.

Vrmani (2000) estimates the contribution of telecommunication (or telecom) services to

aggregate economic growth in India. Estimated contribution is distinguished between

public and private sectors to highlight the impact of telecom privatization on economic

growth. Knowledge of policy determinants of demand of telecom services is shown to be

essential to enhance growth contribution of telecom services. Using a recent sample

survey data from Karnataka State in South India, price and income determinants of

demand for telecom services are estimated by capacity of telephone exchanges

Estimation results offer evidence for significant negative own price elasticity and positive

income elasticity of demand for telecom services.

Narinder (2004), in his article “Enhancing Developmental Opportunities by Promoting

ICT Use: Vision for Rural India” talks about the foremost benefits of Information and

Communication Technologies (ICTs) in developing countries that can be helpful in

improving governance including public safety and eradication of illiteracy. The benefits

of ICTs have not reached the masses in India due to lack of ICT infrastructure,

particularly in rural areas, where two-third of the population of the country lives. Even in

cities and suburban areas, use of ICTs is not popular due to lack of awareness to its use,

computer illiteracy, and absence of practical applications. India is the largest country in

South Asia, with a population of over one billion people and its telecom sector is

presently experiencing fast growth phases. However telephony penetration in villages is

less than two percent of the rural population and about 15 percent of the villages are stillwithout any telephony service. Universal access to ICTs in rural areas has been planned

and is being implemented through Public Tele Info Centers having voice data and video,

as majority of villagers in India cannot afford a separate home connection. Illiteracy in

rural areas is as high as 40 percent and in some tribal belts hardly about 20 percent

people are literate. There are 35 million children in age group of 6 –11 years, who are out

of school and one out of four drops out during primary classes. Education and training,

therefore, must be given the top priority if advantages of ICTs are to be harnessed. Indian

economy is agriculture based and employs maximum workforce. Improvement in

agriculture productivity can help in reducing rural poverty. Adoption of ICT in

agriculture will play an increasingly important role in crop production and naturalresource management. The other critical factor is technological challenges for universal

access to ICTs to bring down the network access cost.

Nikam, Ganesh, Tamizhchelvan (2004), analyses that changing face of India in

bridging the digital device. He reiterated - “India lives in villages” said the Father of the

Nation, Mahatma Gandhi. With 1,000 million people and 180 million households, India

is one of the biggest growing economies in the world. With the advent of the Information,

Communication and Technology (ICT) revolution, India and its villages are slowly but



steadily getting connected to the cities of the nation and the world beyond. Owing to the

late Rajiv Gandhi, India is now a powerful knowledge economy, and though India may

have been slow to start, it certainly has caught up with the West and is ahead in important

respects. The Government, the corporate sector, NGOs and educational institutions have

supported rural development by encouraging digital libraries, e-business, e-learning and

e-governance. The aim of this paper is to touch upon and highlight some of the areaswhere, by using ICT, the masses have been reached in this way. A follow-up paper will

outline collections of significant cultural material which, once national IT strategies are

fully achieved, could form part of a digitally preserved national heritage collection.

Dey (2004), in her article talks about the discussions between the Federal

Communications Commission (FCC) and communications policy makers and regulators

in other countries and how they have gleaned several clusters of issues where further

research would directly benefit them. Recently, there have been two notable shifts. First,

as the acceptance of the competition model over the monopoly model for

telecommunications markets takes deep effect in regulators all over the world, questions

regarding process and procedure for regulation are becoming ever more urgent. This

paper discusses current questions regarding decision making, enforcement, and

understanding consumer issues that arise often in the FCC's discussions with other

regulators. Second, technological change is potentially shifting market definitions. In the

FCC's discussion with other regulators over the last two years, the overlap of wireline

telecom, wireless telecom and cable television has become more pronounced.

Singh (2005), in his article “The role of technology in the emergence of the information

society in India” describes the role that information and communication technologies are

playing for Indian society to educate them formally or informally which is ultimately

helping India to emerge as an information society. Though India has a huge population,

the illiteracy rate is also huge in this country. The paper has taken an approach to find the

historical situation and present the prevailing scenario as well as the change that aretaking place with the application of ICT to the advantage of the society in different areas

including daily life. India is making all out efforts to be counted among the developed

nations of the world. The article also describes the considerable attention India is taking

for application of technology, development of infrastructure and human resource for

meeting national needs. Basically India is building an information society. Technology

has helped society to cut across the traditional boundaries for getting converted into an

emerging information society. The study concludes that The Indian software and services

industry has significantly helped to boost the Indian economy. In IT-enabled services too,

India has been clearly perceived to be the dominant hub. The Indian software sector is

being recognized as the single largest contributor to incremental market capitalization inIndia but the sector is still small in terms of contribution to GDP, especially when

compared to other large sectors in the economy like agriculture and manufacturing.

Similarly, the telecommunication sector has contributed a lot but still has a considerable

way to go. The paper also enforces that comparisons of India’s telecommunication

statistics with those of developed and other emerging economies show that the country is

still far behind its contemporaries.

Mr. Banka (2006) gives an overview of the mergers and acquisitions in the



telecommunication industry. According to him Governments decision to raise the foreign

investment limit to 74% is expected to spur fresh rounds of mergers and takeovers in

India. He foresees a sector that represents humongous opportunity waiting to be tapped

by Indian and foreign conglomerates.

Thomas (2007), in his article describes the contribution made by telecommunications in

India by the state and civil society to public service, this article aims to identify thestate’s initial reluctance to recognize telecommunications provision as a basic need as

against the robust tradition of public service aligned to the postal services and finds hope

in the renewal of public service telecommunications via the Right to Information

movement. The article follows the methodology of studying the history of

telecommunications approach that is conversant with the political economy tradition. It

uses archival sources, personal correspondence, and published information as its research

material. The findings of the paper suggests that public service in telecommunication is a

relatively ‘‘new’’ concept in the annals of Indian telecommunications and that a deregulated

environment along with the Right to Information movement holds significant

hope for making public service telecommunications a real alternative. The article

provides a reflexive, critical account of public service telecommunications in India and

suggests that it can be strengthened by learning gained from the continual renewal of

public service ideals and action by the postal services and a people-based demand model

linked to the Right to Information Movement. All studies done by the researcher suggests

that the right to information movement has contributed to the revitalisation of

participatory democracy in India and to a strengthening of public service

telecommunications.

Cygnus Business Consulting & Research Pvt. Ltd. (2008), in its “Quarterly

Performance Analysis of Companies (April-June 2008)” has analysed the Indian telecom

industry in the awake of recent global recession and its overall impact on the Indian

economy. The analysis is done in the background of wake of global recession and risinginflation. Cygnus estimates, the Indian telecom industry is expected to maintain the

growth trajectory in the next quarter as well. With almost 5-6m subscribers are being

added every month, and the country is witnessing wild momentum in the telecom

industry.

Maheshwari (July-September 2008), in her report analysed the Indian telecom industry

and ascertain that Indian telecommunications has been zooming up the growth curve at

an mounting pace, and India is has surpassed US to become the second largest wireless

network in the world. This growing subscriber base is basically created by tapping into

rural India, which is an emerging market for the industry. The estimate for the next five

to ten years is that the rural market will form 40 % of the subscriber base. The study hasanalysed the human resource management process of the industry, and specially the latest

trends of recruitment of this massively growing industry.

Anderson (2008), in his single executive interview titled “Developing a route to market

strategy for mobile communications in rural India An interview with Gurdeep Singh,

Operations Director, Uttar Pradesh, Hutch India” suggests that managers need to go

beyond traditional approaches to serving the poor, and innovate by taking into account

the unique institutional context of developing markets. His practical implication says that



the experience of Hutchison Essar in India provides some important lessons for mobile

network operators (MNOs) and other firms in other developing markets who are hoping

to serve the rural poor: Hutchison has recognized the value of corporate and noncorporate

partners. The company has proactively established relationships with

individual entrepreneurs, and has provided has provided development support to other

partners such as distributors. The company has recognized the value of leveragingexisting local institutions, and has seen gaps in local infrastructure or missing services as

potential opportunities rather than barriers to growth. The company has seen the rural

market as an opportunity – not just an obligation to be served because of universal

service obligations. Also this article demonstrates that MNOs can deliver availability and

affordability to achieve increased individual or household penetration through business

model innovation.

Mani (2008) addresses a number of issues arising from the growth of telecom services in

India since the mid-1990s. It also discusses a number of spillover effects for the rest of

the economy and one of the more important effects is the potential to develop a major

manufacturing hub in the country for telecom equipment and for downstream industries

such as semiconductor devices. The telecom industry in India could slowly become an

example of the service sector acting as a fillip to the growth of the manufacturing sector.

A beginning towards this has been made. The formation of a Telecom Equipment Export

Forum and the announcement of the Indian Semiconductor Policy 2007 are steps in this

direction. Success crucially depends on the response of the private sector to these

incentives. Given the importance that a regulatory agency can play in this crafting, no

effort should be lost in strengthening the powers of the TRAI. The benefits to the Indian

economy from having both a strong services and manufacturing segments in the telecom

sector cannot be undermined.

Narayana (2008) estimates the contribution of telecommunication (or telecom) services

to aggregate economic growth in India. Estimated contribution is distinguished betweenpublic and private sectors to highlight the impact of telecom privatization on economic

growth. Knowledge of policy determinants of demand of telecom services is shown to be

essential to enhance growth contribution of telecom services. Using a recent sample

survey data from Karnataka State in South India, price and income determinants of

demand for telecom services are estimated by capacity of telephone exchanges.

Estimation results offer evidence for significant negative own price elasticity and positive

income elasticity of demand for telecom services.

Sharma (2009) deals with the major challenges faced by India’s telecom equipment

manufacturing sector, which lags behind telecom services. Only 35% of the total demand

for telecom equipment in the country is met by domestic production. This is notfavourable to long-term sustained growth of the telecom sector. The country is also far

behind in R&D spending when compared to other leading countries. India needs to see an

increase in R&D investment, industry-academia-government partnership, better quality

doctoral education and incentives to entrepreneurs for start-ups in telecom equipment

manufacturing. In 2006-07, 65% of the total consumption of equipment was met through

imports. This trend has far-reaching implications for the economy and should not be

allowed to continue for long. In a country like India which has a problem of massive



unemployment, the manufacturing sector should be promoted to create more employment

opportunities.

Shah (February, 2009), has analysed Indian telecom industry and studied the sector

keeping in mind three companies; namely Bharti, R.Comm and idea in the background of

recent global meltdown. The study suggests that though there is no sign of slowdown in

this sector, but surely a strong turmoil is going on in the industry. The study states thatthe sector is fairly immune from the current economic downturn & does provide a good

defensive bet in medium term. With the help of newer technologies, wireless penetration

is expected to increase in the near future, which is basically fuelling the growth of the

sector. While the 3G / Broadband adoption would ensure long term growth momentum,

the article has thoroughly investigated about the intense competitive scenario, pricing

pressure, high capital intensity & substantial regulatory uncertainties currently faced by

the industry. The article has also described the cause of being relatively safe of this

industry. The causes described by Shah are increasing rural coverage, rising affordability,

declining handset/subscription costs, substantially low tariffs & established

brand/distribution. However, the study also cautions the telecom industry that a steeper

economic slowdown could start impacting the subscriber usage patterns as well as

operator capital investments & thereby could substantially restrict revenue growth rates

going forward.

final industry report

Documents