master thesis final (1)

8/2/2019 Master Thesis Final (1)

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THE INDIAN INSTITUTE OF PLANNING AND MANAGEMENT,New Delhi

THESIS TOPIC

Critically analyze the customer preference and satisfactionmeasurement in Indian Telecom Industry with reference to Vodafone

SUBMITTED BY

Shailesh Kumar SinghPGP/SS/2009-2011

ALUMNI REFERENCE ID:

DS/09/11-M-023

GUIDED BY

Rajesh Bahl

Senior Manager (Operator Relation)

ValueFirst Messaging Pvt. Ltd.


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PREFACE

The customers are very important and play a crucial role in any process of marketing. Today,

customers are the kings of the market because the customer loyalty and customer preference are

built by the products and the services offered to the customers and they seek for the more benefits

and moneys worth for the amount they spend. That is where the concept of customer preference

and consumer behavior comes because the customers make the marketers to rethink about

designing the products and services. They have to think about the market segmentation, market

strategies, consumer behavior, consumers tastes, consumers lifestyle etc also. Many marketers

are smart enough to understand consumers needs, wants and demands and perform beyond their

expectations i.e. they delight them. It provides them growth, profitability and creativity.


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ACKNOWLEDGEMENT

A mammoth thesis of this nature calls for intellectual nourishment, professional help, and

encouragement from many quarters. I would like to express my gratitude to:

The pioneers in the field of marketing management who have shaped their understanding

through their rich and varied contributions.

Professors and seniors for providing the stimulus for making this thesis successful.

A number of academics and practitioners for generously sharing their insight and

experience with me.

It is my immense pleasure to work under the guidance of Rajesh Bahl (Sr Manger of ValueFirst

Messaging Pvt. Ltd), and we heartily thank them for providing me the guidance whenever needed.

I am also thankful to beloved The Dean and Vijay Boddu, who gave me guidance in each and

every matter all the time. My heuristic approach towards the project was one of the major

contributors in the outcomes that we arrived at. Id like to thank my institution, IIPM New Delhi,

for providing me this great opportunity and attempting to inculcate the traits needed to succeed.

I am also thankful to various industry experts and executives for sharing relevant information and

valuable thoughts with me and helped me in writing my thesis.


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SYNOPSIS

Name:- Shailesh Kr Singh

Section:- SF-3

Batch:- PGP/SS-2009-11

Phone Number:- 9899866563

Email address:- [email protected]

Thesis Topic:- Critically analyze the customer preference and satisfaction

Measurement in Indian telecom industry with reference to Vodafone

Specialization area Marketing/Finance

INTRODUCTION:

The Indian telecommunications industry is one of the fastest growing in the world. According to

the Telecom Regulatory Authority of India (TRAI), the number of telephone subscriber base in the

country reached 653.92 million as on May 31, 2010, an increase of 2.49 per cent from 638.05

million in April 2010. With this the overall tele-density (telephones per 100 people) has touched

55.38. The wireless subscriber base has increased to 617.53 million at the end of May 2010 from

601.22 million in April 2010, registering a growth of 2.71 per cent.
mailto:[email protected]:[email protected]


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RESEARCH OBJECTIVE:-

To understand the improvement and customer preferences in Vodafone.

Analyze service offers function and durability by Vodafone.

Analyzing different offers by the telecom companies to retain their customer

To study the customer satisfaction and understand the current market scenario in Telecom

Sector.

To find out the problems faced by the customers with Vodafone connection.

Consumer awareness of latest technology and service support.

RESEARCH METHODOLOGY:

Secondary data Books, Internet,Articles,Magazines/Project reports, Newspaper

Primary data- Interaction with customers by filling up of questionnaires.Interview with Sales or Marketing Personnel.

Tool used- Descriptive research

Sampling method-Random sampling Sample size- 100

Target Audience-Network customerSCOPE OF THE WORK:

In todays scenario, communication has become much faster day by day by telephones, internet,

media etc. One of them is a growth of telecom sector. Today many organizations provide services

for the telecom purpose. This study will help to understand customer preferences and their

satisfaction by the services provided by different organizations in this sector. It will also help to

these organizations to form various strategies and getting the results from marketing efforts.

Justification of choosing the topic:


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The study aims to analysis that with the increase in competition in telecom services, higher levels

of consumer satisfaction with affordable prices and improved quality of services achieving or not.

Wireless telephony and the Internet are expected to be the preferred means of communication as

convergence of telecommunications, broadcasting, and information technology progresses.

Details of external guide:

Mr. Rajesh Bahl- senior manager-Operator Relation (Value First)

Email address: [email protected], Phone no: - +91 9818671302

Summer Training Details:-

Company : BSNL

Position : Management trainee

Period of work : 22nd Dec 09-16 Feb10 (8 weeks)

Project Details : comparative analysis of telecom industries.

Job Profile : Sales and marketing
mailto:[email protected]:[email protected]:[email protected]


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EXECUTIVE SUMMARY

The development of the telecom sector has experienced a major process of transformation in terms

of its growth, technological content, and market structure in the last decade through policy reforms

introduced by the Government. The impetus of these changes is expected to continue, and at a

much faster pace.

The study aims to analysis that with the increase in competition in telecom services, higher levels

of consumer satisfaction with affordable prices and improved quality of services achieving or not.

Wireless telephony and the Internet are expected to be the preferred means of communication as

convergence of telecommunications, broadcasting, and information technology progresses.

The study also shows the supportive policy framework needs to be in place during this period of

rapid growth and transformation. The Government has undertaken the implementation telecom

policy with utmost earnestness, in letter and spirit to usher in competition in almost all the service

sectors. The migration package to revenue sharing in place of a fixed license fee, has led to a

virtual take off in growth of the cellular and basic service sectors. National and International data

connectivity has been opened.

Liberalization of telecom sector of the Indian economy aims at improving accessibility,

availability, reliability and connectivity through private sector participation and to bring about

much needed improvement in the Quality of Service. Through increased competition, the service

providers are expected to become more sensitive and responsive to the customers needs and

choices and endeavor to give him greater satisfaction. The Telecom Regulatory Authority of India

(TRAI) has the mandate to safeguard the customers interests and to set the standards of quality of

service. The rapid technological advances which have taken place in the telecom sector havebrought about significant improvements in the quality of service provided to customers. With the

digitization of exchanges, and up gradation of external network, the fault rate has come down.


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INDEX

PRELIMINARIES

Letter of Consent.ILetter of Approval......IIPreface. IIIAcknowledgementIVSynopsisVIExecutive Summary...VIIIList of Figures..XIIList of Tables..XIII

LITERATURE REVIEW

Chapter 1: An Introduction to Indian Telecom Sector1.1: History and reforms in Indian Telecom Sector11.2: Indian Telecom Policy......2Chapter 2: GSM vs. CDMA2.1: GSM and CDMA facts.8Chapter 3: Growth Drivers3.1: Industry growth drivers..133.2: Segmentation of Indian Telecom Market...143.3: Market factors.173.4: Success factors....18Chapter 4: Telecom operators4.1: Introduction....244.2: Mobile service providers....24Chapter 5: Different operators segment5.1: Introduction to various segments...475.2: Public vs. Private...585.3: Licensing issues in India....59Chapter 6: Rural Market6.1: Introduction60

6.2: Growth of telecom services in rural market...60Chapter 7: Foreign Direct Investments in Indian Telecom7.1: Introduction647.2: Effects of FDI in Indian Telecom..66Chapter 8: 3G Spectrums


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8.1: What is3G?................................................................................688.2: What isSpectrum?......................................................................69

8.3: Difference between 1G, 2G and 3G....698.4: 3G issues for service providers and users...708.5: Suggestions for spectrum issues.708.6: 3G auction/allocation.71Chapter 9: Value Added Services9.1: Introduction739.2: Various Value added services739.4: Challenges..759.5: Future trends..75

FEASIBILITY STUDYChapter 10: Research Methodology10.1: Research Objective...7710.2: Samples7710.3: Observations and Findings...78Chapter 11: SWOT Analysis of IndianTelecom111Chapter 12: Future of IndianTelecom...114Chapter 13: Conclusion and Recommendations

13.1: Conclusion..11713.2: Recommendations...119Bibliography124Abbreviations..126Annexures: Article and Questionnaire. 129Response Sheets..142


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LIST OF FIGURES


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LIST OF TABLES


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Chapter 1: INTRODUCTION

Industry Profile

1.1History and Reforms in Indian Telecom Sector:-

Indias telecom sector has been doing exceptionally well in past decade. Its structural and

institutional reforms have provided tremendous growth opportunity to this sector. India has nearly

200 million telephone lines making it the third largest network in the world after China and USA.

With a growth rate of 45%, Indian telecom industry has the highest growth rate in

the world.

The first reforms in Indian telecommunications sector began in 1980s when the private sector was

allowed in telecommunications equipment manufacturing. In 1985, Department of

Telecommunications (DOT) was established.

The telecommunications system in India is the 2nd largest in the world. The country is divided into

several zones, called circles (roughly along state boundaries). Government and several private

operators run local and long distance telephone services. It was thrown open to private operators in

the 1990s. Competition has caused prices to drop and calls across India are one of the cheapest in

the world. Teledensity which was 2% during 1999 has now reached 54% in 2010.

Key Milestones

1851

First operational landlines were laid between Kolkata and Diamond Harbor.

1881

Telephone service introduced in India

1882

First telephone exchange was opened in Kolkata, Chennai and Mumbai
http://www.articlesbase.com/communication-articles/indian-telecom-industry-key-milestones-3134671.htmlhttp://www.articlesbase.com/communication-articles/indian-telecom-industry-key-milestones-3134671.html


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1883

Merger telecommunication with postal system

1923

Formation of Indian Radio Telegraph Company

1947

Nationalization of all foreign telecommunication companies to form the Post,

Telephone and Telegraph under Government's Ministry of Communications.

Total number of telephone in the country was around 80000

1960

First Subscriber Trunk Dialing (STD) was commissioned between Kanpur and

Lucknow

1975

Department of Telecommunication (DOT) was established, separating from the postal

system

1985

Mobile service was commissioned in Delhi on non commercial basis

1994

Government announced National Telecom Policy in 1994

Licence issued for providing mobile phone services in 4 metros. 2 operators were givenlicense per circle for 10 years under a fixed license fee regime.

1995


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Cellular service was commercially launched in India

Mobile licenses issued for 19 more circles.

1997

Telecom Regulatory Authority was created

1999

The new telecom policy (NTP 1999) was introduced.

The Government replaced the fixed annual license fee with revenue share regime

Teledensity 2%

2000

The national long distance market (NLD) was opened up to the private sector with no

ceiling on the number of players.

BSNL was hived off to form a separate corporate entity

Wireless Planning and Coordination wing of DoT was created to review and enforce the

spectrum allocation policy.

2001

A fourth cellularoperator from the private sector was allowed in each circle to launch

mobile services

2002

A subscriber linked spectrum allotment procedure was introduced.

USO fund established to improve the telecom services in the rural sector

ILD was opened up to private sector without any ceiling on the number of players

Bharti Airtel got listed in BSE & NSE

VSNL was privatized


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2003

Access deficit charges (ADC) was introduced to compensate BSNL for losses incurred in

providing services in rural areas.

The Calling Party Pays regime was introduced where by subscribers no longer had to pay

for incoming calls.

The Unified Access License (UASL) Regime was implemented allowing subscribers to

offer fixed / mobile services using any technology.

RCom rolled out CDMA services which resulted in a tariff war.

Internet and GPRS were allowed through cellular service providers

2004

Broadband policy 2004 was unveiled

2005

The foreign direct investment limit in telecom was raised from 49% to 74%

Motorola started manufacturing mobilephone in India

Pure-play tower companies like GTL, Quippo and Essar entered the tower market.

The trend of recharge coupons with denomination values ranging from Rs 10 to Rs 200 for

low end prepaid users.

Introduction of lifetime validity schemes on prepaid.

Aircel was acquired by Maxis

2006

The Government launched Project Most' (Mobile Operators Shared Towers) to promote

passive infrastructure sharing.

Demerger of tower operations by RCom into Reliance Infratel

BSNL and MTNL launched the 'One India Tariff' whereby the calls anywhere in the

country were charged at a flat rate of Re 1.

India became the 5th country in the world to join the 100 million mobile subscribers' club.

2007


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Roaming rental was reduced to zero

Dual technology was allowed enabling service providers to offer both GSM and CDMA

under the same license subject to entry fee of 1651 cr (US $ 366 million)

Vodafone acquired 67% stake in Hutchison Essar for US $10.9 billion

Indus Towers was formed by Airtel, Vodafone and Idea.

570 applications received for telecom UASL license and spectrum allocation

DoT delinked spectrum from the telecom license and introduced first come first served

basis.

2008

DoT issued 121 letters of intent for UAS licenses.

Government awarded license to 6 new players - Datacom, Loop Telecom, Shyam Sistema,

STel, Unitech Wireless and Swan Telecom.

Active infrastructure sharing permitted, whereby the operators are allowed access to

common antenna, feeder cables, radio access network.

Teledensity reached 26%

2009

Bharti Airtel crossed 100 million subscriber mark

Mobile subscribers in India crossed 500 million mark

2010

Aircel sold its portfolio of 17500 towers to GTL

3G and BWA spectrum auctioned through a open and transparent auction process.

Government earned Rs 67719 cr (US $ 15.05 billion) for 3G spectrum and Rs 38543 cr

(US $ 8.6 billion) for BWA spectrum

Mobile subscriber numbers crossed 650 million

3G spectrum allocated to Vodafone, Tata teleservicess, Bharti Airtel, RCom, Idea, Aircel

and STel.

Indian Telecom statistics


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Telecom operators in India added 17 million subscribers during July 2010 taking the total of

mobile subscribers in the country to 652.42 million registering a growth of 2.66%. However the

total number of telephone subscribers (both mobile and landline) in India increased to 688.38

million. With this the overall tele-density in India touched 58.17% in July 2010.

The wireline base declined from 36.18 million in June 2010 to 35.96 million in July 2010. State

run telcos like BSNL and MTNL enjoy 84% of the wireline market share.

The total broadband subscriber base in India increased by 3.39% to reach 9.77 million in July

2010.

The subscriber base of various mobile operators as on 31st July 2010 is as follows.

Operator Total base July 2010 addition

Airtel 139.2 million 2.6 million

RCom 113.3 million 2.5 milllion

Vodafone 111.4 million 2.4 million

Idea 1.8 million

Aircel 1.6 million

Tatatele 74.85 million 2.3 million

BSNL 73.78 million 1.08 millionMTNL 0.05 million

Source:-http://www.articlesbase.com/communication-articles/indian-telecom-industry-key-milestones- 3134671.html

1.2-Indian Telecom Policy:-
http://www.articlesbase.com/communication-articles/indian-telecom-industry-key-milestones-%20%20%203134671.htmlhttp://www.articlesbase.com/communication-articles/indian-telecom-industry-key-milestones-%20%20%203134671.htmlhttp://www.articlesbase.com/communication-articles/indian-telecom-industry-key-milestones-%20%20%203134671.htmlhttp://www.articlesbase.com/communication-articles/indian-telecom-industry-key-milestones-%20%20%203134671.html


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After 1991s liberalization in Governments policies, the telecom sector has allowed various

private players to enter into the Indian market. Earlier, sector was operating under public sector

giants like Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited

(MTNL) and Videsh Sanchar Nigam Limited (VSNL) but after the National Telecom

Policy (NTP) by Government in 1994 many private players entered in Indian telecommunication

market.

But this market is regulated by Telecommunication Regulatory Authority of India (TRAI). It acts

as an independent regulator of the business of telecommunications in the country which was set up

in 1997 by the government of India. Indian telecommunications today benefits from among the

most enlightened regulation in the region, and arguably in the world. The sector, sometimes

considered the poster-boy for economic reforms, has been among the chief beneficiaries of the

post-1991 liberalization. Unlike electricity, for example, where reforms have been stalled,

telecommunications has generally been seen as removed from mass concerns, and thus less

subject to electoral calculations. Market oriented reforms have also been facilitated by lobbying

from Indias booming technology sector, whose continued success of course depends on the

quality of communications infrastructure.

(Source: TRAI Report 2007)

Despite several hiccups along the way, the Telecom Regulatory Authority of India (TRAI), the

independent regulator, has earned a reputation for transparency and competence. With the recent

resolution of a major dispute between cellular and fixed operators, Indian telecommunications


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already among the most competitive markets in the world appears set to continue growing rapidly.

While telecom liberalization is usually associated with the post-1991 era, the seeds of reform were

actually planted in the 1980s. At that time, Rajiv Gandhi proclaimed his intention of leading India

into the 21st century, and carved the Department of Telecommunications (DOT) out of the

Department of Posts and Telegraph. For a time he also even considered corporatizing the DOT,

before succumbing to union pressure. In a compromise, Gandhi created two DOT-owned

corporations: Mahanagar Telephone Nigam Limited (MTNL), to serve Delhi and Bombay, and

Videsh Sanchar Nigam Limited (VSNL), to operate international telecom services.

He also introduced private capital into the manufacturing of telecommunications equipment, which

had previously been a DOT monopoly. These and other reforms were limited by the unstable

coalition politics of the late 1980s. It was not until the early 1990s, when the political situation

stabilized, and with the general momentum for economic reforms, that telecommunications

liberalization really took off. In 1994, the government released its National Telecommunications

Policy (NTP-94), which allowed private fixed operators to take part in the Indian market for the

first time (cellular operators had been allowed into the four largest metropolitan centers in 1992).

Under the governments new policy, India was divided into 20 circles roughly corresponding to

state boundaries, each of which would contain two fixed operators (including the incumbent), and

two mobile operators.

As ground-breaking as NTP-94 was, its implementation was unfortunately marred by regulatory

uncertainty and over-bidding. A number of operators were unable to live up to their profligate bids

and, confronted with far less lucrative networks than they had supposed, pulled out of the country.

As a result, competition in Indias telecom sector did not really become a reality until 1999. At that

time the governments New Telecommunications Policy (NTP-99) switched from a fixed fee

license to a revenue sharing regime of approximately 15%. This figure has subsequently been

lowered (to 10%-12%), and is expected to be reduced even further over the coming years.

Still, India continues to derive substantial revenue from license fees ($800 million in 2001-2002);

leading some critics to suggest that the government has abrogated its responsibilities as a regulator

to those as a seller. Another, perhaps even more significant, problem with Indias initial


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an attempt to introduce competition was the lack of regulatory clarity. Private operators

complained that the licensor the DOT was also the incumbent operator. The many stringent

conditions attached to licenses were thus seen by many as the DOTs attempt to limit competition.

It was in response to such concerns that the government in 1997 set up the Telecom Regulatory

Authority of India (TRAI), the nations first independent telecom regulator. Over the years, TRAI

has earned a growing reputation for independence, transparency and an increasing level of

competence. Early on, however, the Amendment Act, that the regulatory body really came into its

own. Coming just a year after NTP-99, the act marks something of a watershed moment in the

history of India telecom liberalization.

Today, there are many private players like Vodafone, Airtel, Tata, Reliance, Idea etc. There are

basically two areas in which these players operate: Fixed and Cellular Services.

In Fixed line, MTNL and BSNL have captured major part of the market. Whereas, Cellular

Services, can be further divided into two parts: Global System for Mobile Communications (GSM)

and Code Division Multiple Access (CDMA).

Chapter 2: GSM vs. CDMA

2.1- GSM and CDMA facts:-


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GSM segment consists of players like Airtel, Vodafone, Idea, and BSNL. Whereas, CDMA

segment consists of players like Reliance, Tata etc.

(Source: - TRAI annual report 2010)

All India GSM Cellular Subscriber Base

Industry added record highest number of 122 Million GSM subscribers during 2009. India

recorded the highest monthly GSM subscriber addition of over 13 Million.


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As per Cellular Operator Association of India (COAI), India's GSM telecom service providers

added 5.92 millions new subscribers in February, taking their total customer base up to 184.67

millions. In January, they had added 6.19 millions new users. At the end of February last year, the

total GSM subscriber base stood at 115.29 million while the same was 178.41 million as at January

31, 2008. Customers in the Metro Circle rose by 38.3% from the year earlier to 29.49 million,

while in the A Circle the user base grew by 64.7% from last year's level to 67.08 millions. Growth

in the B Circle jumped by 63.6% to 67.19 million and the C Circle subscribers expanded by

71.54% to 20.9 millions. Company wise break-up shows that Bharti Airtel, leader in the GSM

space, added 2.25 millions new customers last month while Vodafone Essar saw its subscriber base

swell by 1.41 million new users. Idea Cellular added 918,871 new customers and Spice

Communications added 141,377 new users. State-run BSNL added around 0.8mn new customers

last month. At the end of February, Bharti Airtel held a market share of 32.31% with a total of

59.67 million customers, while Vodafone Essar had a market share of 23.04% at 42.55 million

subscribers. BSNL accounted for 18.72% of the GSM market at 34.57 million customers and Idea

held a market share of 12.39% at 22.87 millions. India presently follows a CPP model, whereby

calling party pays. Incoming calls were made free since April 1, 2002 and that has substantially

boosted the subscriber growth rate in India. However, making incoming calls free reduced

operators ARPU

Market Share of GSM Operators

The GSM industry continued to be on the track for growth and the GSM base as of March 2010


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was nearly 422 million with the addition of nearly 10-12 million subscribers per month. The GSM

industry in India today offers low tariffs, high Minutes of Usage (411) and low Average Revenue

per User (Rs.144). The GSM service providers are also focusing on rural areas and are extensively

rolling out services in rural and remote areas. By March 2010, private GSM operators were

providing services to over 130 million subscribers in rural areas and this number is increasing by

3-4 million additions every month. With the vision to expand GSM services to more and more

people of the country, the operators who obtained licenses in 2008 are also starting to provide

GSM services. The Industry continued to invest aggressively in the sector and the overall

investments by private GSM operators have resulted in 1,185 MSCs, 4,566 BSCs, 370,685 BTSs,

and a backbone network of more than 590,078 kms spread across the country.

Operator-wise Market Share of CDMA Wireless

(Source: TRAI Report 2009-2010)

Statistic GSM CDMA

Share of Prepaid 94% 0.7%


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Incoming Minutes of 249 192

Usage per subscriber per

Month

Outgoing Minutes of 235 164

Usage per subscriber per

Month

Outgoing SMS per 30 10

Subscriber per month

ARPU 180 90

In the wireless segment subscriber base of GSM services reached the 478.68 million subscriber

mark at the end of March 2010, as compared to 297.26 million as at the end of March 2009. It

added around 181.42 million subscribers during the year, registering an annual growth of 61.03%.

In CDMA Services, in terms of subscriber base and market share, M/s Reliance with 56.05 million

subscriber base remains the largest CDMA operator followed by M/s Tata and M/s BSNL withsubscriber base of 39.03 million, and 6.14 million respectively.

DoT has told to review of call termination charges to TRAI to make them on cost-based which

may fall tariff charges significantly. Termination charges are the ones paid by a telecom operator

from whose network call originates to a service provider on which call terminates. Currently the

charges for that are 0.30 which are very high. They were fixed in 2003. If the charges are reduced,

the service providers would have to forego some portion of their revenues. On the other hand, high

termination charges may smother the competition and may disturb the level playing field.

Chapter 3: GROWTH DRIVERS

3.1- Industry Growth Drivers:-

Fixed Line Segment.


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Capacity expansion of fixed line exchanges helped consumers avail quick connections.

Quick connection availability boosted number of fixed line connections during 1985

1995.

Wireless Segment.

Vast geographic expanse of India acted as a catalyst to boost mobility.

Low call costs since 2002 fueled the wireless segment.

Narrowing gap of call costs between fixed and wireless convinced customers to subscribe

to wireless connections.

Nationwide roaming facilities on GSM.

SMS facility.

Internet + Subscription bundling.

Reduced cost of handsets (affordability factor).

Customs duties have been reduced from 10% to 5%.

In remote areas where providing fixed line connections were difficult, wireless did the

magic.

CDMA fixed wireless gave customers 3 in one advantage mobility, internet and easy

access.

Many telecom service providers provide Global Calling Card (GCC) to their customers.

These cards help them to make calls from the foreign countries and it saves up to 80-90%

in international roaming.

3.2- Segmentation of the Indian Telecom Consumer Market:-


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With the proliferation of mobile phone users, several micro segments have also emerged lately,

each with their own specific needs. The Indian Mobile consumer market has been segmented as

follows:

Youth:-

Over the years, service providers have started giving greater attention to this segment, as it has

emerged as one of the biggest users of mobile phones. For the youth, mobile phones are not just a

necessity, but rather an indispensable accessory. This segment particularly values prepaid schemes

with free SMS services. It is further differentiated into various micro-segments based on age and

gender. For instance, youngsters in the age group of 19 to 23 years generally have a large circle of

friends and more access to money. Companies thus focus on providing services like group talk and

group SMS to these people. This segment is very dynamic as its needs keep changing very

frequently, driven by the latest trends and fads. For instance, downloading new ring-tones is thelatest fad among the youth today. This is a huge revenue source for service providers and so they

need to keep up with the changing tastes of this segment.

Young Professionals:-

People entering the workforce and thus moving out of the dependent bracket constitute this market

segment. They generally prefer using post paid schemes with value added services like information

about stock markets, news updates and so on.

Small and Medium Enterprise:-

This segment mainly consists of people who are switching over from landlines to mobile phones,

seeking a cost advantage. The focus here is on economy-packages rather than value added services.

Family:-

Family as a segment consists of more number of dependents. These dependants are serviced by

prepaid schemes. Geographically dispersed families tied by the same cellular service providers

may get cost advantages in terms of lower pulse rates.

Special:-

The Special category includes a small but growing segment which requires largely customized

services sought by celebrities, politicians, CEOs and the super-rich. Tailor made schemes for each


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segment have been a great success so far. This customization, however, has reached such a stage

that every service provider has numerous schemes being provided at the same time. Being short

term schemes, they keep changing frequently and customers thus start switching from one service

provider to another based on the attractiveness of the scheme. This has brought down customer

loyalty and hence service providers are finding it difficult to retain existing customers. It is

estimated that in the near future the plethora of schemes provided by the different service providers

will stop being a differentiating factor.

3.3- Market Factors:-

There are basically two market factors which are considered while segmenting the market as well

as deciding the strategic moves for the markets and competition.

1) Strategic Factors

2) Economic Factors

3.4- Success Factors:-

It is very important for any company or service provider to stay in the market for a long period

otherwise it will be out of the market and suffer a lot. To taste the success, companies have to

perform well continuously and make their customers happy all the time by proper CRM and other

techniques. Apart from that, there are two types of factors for these companies: (1) shall have and

(2) must have factors.

1) Shall Have Factors:

Social relationships:Humans are social beings. They interact constantly with each otherand social relationships are a vital part of life. The mobile phone is perfectly suited tosatisfy the need of maintaining social relationships. Services that support social

relationships are likely to be successful.

Power: One important aspect of social relations is status which is strongly related to

power. Two types of power can be distinguished: Power to access and power to execute.

The first type of power refers to the possibility to intervene in other peoples life, as for


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instance parents influencing the life of their children. But also the limitation of the power to

access can be useful. One famous example is SMS (Short Message Service). They provide

the opportunity to communicate without giving the receiver the chance to reply directly.

This way unpleasant information can be communicated.

EQM (Easier, Quicker, More): Easier means that solutions that are simpler and/or more

convenient are accepted by customers. One good example for easier is the phonebook of

cell phones (compared to typing in the complete number when you call someone).

Quicker refers to the opportunity to fulfill customer needs faster than traditional products.

One of the reasons why e-mails are common nowadays is that they are faster than

traditional letters.

More is related to the fact that humans tend to maximize their benefits.

Entertainment:There are two types of entertainment: scheduled entertainment, such asvisiting a theatre and entertainment during niche times, for example when waiting for

public transport. In such time slots a mobile phone can be the perfect entertainment or

gaming console.

Security:Security is one of the most important needs of humans. Because of security

provided by service providers, the information of users is kept confidential. Apart from

that, there cant be any manipulation done in case of post-paid bills and various services

provided as user can have an idea especially in case of pre paid customers where regular

balance can be checked.

2) Must Have Factors:

The 3 minute value: The average WAP application takes five minutes. In Japan thepopular i-mode applications last for less than one and a half minutes on average. The time a

customer uses an application may vary from country to country. However, it is quite


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evident, that a mobile application has to produce a clear, perceived value for the customer

within a short period of time. As a rule of thumb the value should be delivered within 3

minutes.

Simplicity:The services provided to the customers should be simple. It should be easy tounderstand and the customer should be able to use the services intuitionally like GPRS,

caller tunes etc. Thus the usability has to meet the customers standards.

Additional benefit: For a successful service it is essential that the customer perceives a

clear additional value. There are several types of additional values. For example fun, cost

saving, time saving or location based additional value

Customer friendly tariff structure:The willingness to pay for new technologies and newapplications is limited since the customer cannot clearly judge the additional benefit a new

application yields. This is especially true for B2C markets where the customers tend to be

more prices sensitive. For this reason a customer friendly price structure, preferably with a

price model that eases diffusion of new application, is essential.

Chapter 4: TELECOM OPERATORS

4.1- Introduction:-

There are three types of players in telecom services:

State owned companies (BSNL and MTNL)


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Private Indian owned companies (Reliance Infocomm, Tata Teleservices, and Aircel)

Foreign invested companies (Vodafone, Bharti Tele-ventures, Idea Cellular, BPL Mobile)

4.2- Mobile Service Providers:-

VODAFONE:-

Vodafone Group Plc is the world's leading mobile telecommunications company, with a significant

presence in Europe, the Middle East, Africa, Asia Pacific and the United States through the

Company's subsidiary undertakings, joint ventures, associated undertakings and investments.

The Company's ordinary shares are listed on the London Stock Exchange and the Company's

American Depositary Shares ('ADSs') are listed on the NASDAQ Stock Market. The Company had

a total market capitalization of approximately 71.2 billion at 12 November 2009.

Vodafone Group Plc is a public limited company incorporated in England under registered number

1833679. Its registered office is Vodafone House, The Connection, Newbury, and Berkshire,

RG14 2FN, England.

Vodafone has some large minority stakes, which are not included in its consolidated turnover. In

order to provide additional information on the overall scale and growth trends of its business, itpublishes "proportionate turnover" figures, and these are included in the tables below. For

example, if a business in which it owns a 45% stake has turnover of 10 billion that equals 4.5

billion of proportionate turnover for Vodafone. Proportionate turnover is not an official accounting

measure, and Vodafone's proportionate turnover should be compared with other companies'

statutory turnover.

Initially, around 1995, the company services were branded Max Touch renamed to Orange in

2000. In December 2006, Hutchison Essar re-launched the "Hutch" brand nationwide,consolidating its services under a single identity.

The company used to be named Hutchison Essar, reflecting the name of its previous

owner,Hutchison. However, the brand was marketed as Hutch. After getting the necessary

government approvals with regards to the acquisition of a majority by theVodafone Group, the
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company was rebranded as Vodafone Essar. The marketing brand was officially changed

to Vodafone on 20 September 2007.

On September 20, 2007 Hutch became Vodafone in one of the biggest brand transition exercises in

recent times.

Vodafone Essar is spending somewhere in the region of Rs. 250 crores on this high-profile

transition being unveiled today. Along with the transition, cheap cell phones have been launched in

the Indian market under the Vodafone brand. The company also plans to launch co-branded

handsets sourced from global vendors as well.

A popular daily quoted a Vodafone Essar director as saying that "the objective is to leverage

Vodafone Group's global scale in bringing millions of low-cost handsets from across-the-world

into India."

Incidentally, China's ZTE, which is looking to set-up a manufacturing unit in the country, is

expected to provide several Vodafone handsets in India. Earlier this year, Vodafone penned a

global low-cost handset procurement deal with ZTE.

Vodafone Essar, usually referred to simply as VODAFONE, is a cellular operatorin 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 ofVodafone 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 KaShing Holdings in Hutch-Essar for US$11.1 billion, pipping Reliance Communications, Hinduja

Group, and Essar Group, which is the owner 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 both prepaid and

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

Vodafone Essar will launch third-generation (3G) services in the country in the January-Marchquarter of 2011 and plans to spend up to $500 million within two years on its 3G networks.

(Source: - 2010 Vodafone annual report)

BSNL:

Bharat Sanchar Nigam Ltd. formed in October, 2000, is World's 7th largest Telecommunications

Company providing comprehensive range of telecom services in India: Wireline, CDMA mobile,

GSM Mobile, Internet, Broadband, Carrier service, etc.
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BSNL has installed Quality Telecom Network in the country and now focusing on improving it,

expanding the network, introducing new telecom services with ICT applications in villages and

wining customer's confidence. Today, it has about 46 million line basic telephone capacity, 8

million WLL capacity, 52 Million GSM Capacity, more than 38302 fixed exchanges, 46565 BTS,

3895 Node B ( 3G BTS), 287 Satellite Stations, 614755 Rkm of OFC Cable, 50430 Rkm of

Microwave Network connecting 602 Districts, 7330 cities/towns and 5.6 Lakhs villages.

BSNL is the only service provider, making focused efforts and planned initiatives to bridge the

Rural-Urban Digital Divide ICT sector. In fact there is no telecom operator in the country to beat

its reach with its wide network giving services in every nook & corner or the country.

BSNL is numero uno operator of India in all services in its license area. The company offers vide

ranging & most transparent tariff schemes designed to suite every customer.

BSNL cellular service, CellOne, has 55,140,282 2G cellular customers and 88,493 3G customers

as on 30.11.2009. In basic services, BSNL is miles ahead of its rivals, with 35.1 million Basic

Phone subscribers i.e. 85 per cent share of the subscriber base.


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BSNL has more than 2.5 million WLL subscribers and 2.5 million Internet Customers who

access Internet through various modes viz. Dial-up, Leased Line, DIAS, and Account Less

Internet (CLI). BSNL has been adjudged as the NUMBER ONE ISP in the country. BSNL

has set up a world class multi-gigabit, multi-protocol convergent IP infrastructure that

provides convergent services like voice, data and video through the same Backbone and

Broadband Access Network. At present there are 0.6 million Data One broadband

customers. The company has vast experience in Planning, Installation, network integration

and Maintenance of Switching & Transmission Networks.

Scaling new heights of success, the present turnover of BSNL is more than Rs.351820

million (US $ 8 billion) with net profit to the tune of Rs.99390 million (US $ 2.26 billion)

for last financial year.


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The infrastructure asset on telephone alone is worth about Rs.630000 million (US $ 14.37

billion). The turnover, nationwide coverage, reach, comprehensive range of telecom

services and the desire to excel has made BSNL the No. 1 Telecom Company of India.

(Amount in Lakhs)

Profit before tax -219,748

Profit after tax -182,265

Earnings per share -3.65

Turnover 351,820

(Source: BSNLs balance sheet 2009-10)

BSNL is also operating in landline, WLL, mobile, internet (BSNL broadband) etc. It has been

doing very well in landline and internet connections as it is a leader in both these segments. BSNL

broadband gives following benefits:

High speed Internet Access: This is the always-on Internet access service with speed ranging

from 256 kbps to 8 Mbps.

Bandwidth on Demand: This will facilitate customer to change bandwidth as per his / her

requirement. For example a customer with256 kbps can change to 1 Mbps during the video

Conferencing session.

Multicasting: This is to provide video multicast services for application in distance education,

telemedicine etc

Dial VPN Service: This service allows remote users to access their private network securely over

the NIB-II infrastructure. For example, Virgin Mobile and TTSL. Video and Audio Conferencing

Content based Services: Like Video on Demand, Interactive Gaming, Live and time shifted TV.


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The rural wireline subscriber base is decreasing. As on 31.3.2010, the rural wireline subscriber

base stood at 9.93 million and service providers reports indicate that 26.87% of total wireline

subscribers are in rural areas. The service provider wise wireline rural subscriber base & their

market share is shown below:


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MTNL:-

MTNL was set up on 1st April 1986 by the Government of India to upgrade the quality of telecom

services, expand the telecom network, and introduce new services and to raise revenue for telecom

development needs of Indias key metros Delhi, the political capital, and Mumbai, the business

capital. In the past 17 years, the company has taken rapid strides to emerge as Indias leading and

one of Asias largest telecom operating companies. The company has also been in the forefront of

technology induction by converting 100% of its telephone exchange network into the state-of-the-

art digital mode.

MTNL is being the first company in both Metros to have been offered 3G license by GOVT. OF

INDIA and we will get a head start in offering the services which is expected next year to bring

high-speed Internet to palmtop. As we are the market leader in providing affordable services, the

3G services will also be affordable in a price-conscious market. The market and consumers

enthusiasm indicates a major increase in our revenues through 3G services in coming years.

Broadband and IPTV will also be a contributing a significant revenues in our kitty. Department of

Telecom has asked the Telecom Regulatory Authority of India to review mobile call termination

charges on priority basis. A revision can bring about a reduction in call tariffs for users. Given the


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central aim of telecom policy to provide services at affordable rates, it may be beneficial that a

review of the mobile termination charges based on present and projected cost and traffic is

undertaken by TRAI on a priority in a time bound manner. Termination charges is one of the major

components of tariff and is paid by an operator from whose network call originates, to a service

provider on whose network the call is terminated. Currently, the charges have been fixed at

Rs.0.30 a minute. The charges were fixed in 2003. While the cost of network

and services have comes down by more than 50 per cent since then, termination charges have

remained unaffected as they are independent of market flux. The cost-based termination charges

would be less than Rs.0.10 a minute. If implemented, the existing operators would have to forego a

substantial portion of their revenues, while new cellular operators would find it easy to establish

themselves. The reduction in termination charges will lead to reduction in pay-outs of the operators

thus making the tariffs more viable and sustainable in the competitive environment.

MARKET RISKS

The telecommunications market in the cities of Delhi and Mumbai are among the most competitive

markets. MTNL faces intense competition from the other mobile operators and the basic service

operators. This has led to an increased pressure on margins due to reducing tariffs and also on the

customer retention and acquisition. The Average revenue per user is also going down. With new

operators coming in Delhi and Mumbai, such competitive pressures are likely to increase further,

putting a further strain on the margins. Recently DOT has issued LOIs to a number of new players

which will lead to increased competition to market share. MTNL is confirmed only in two cities

i.e. Delhi and Mumbai, therefore MTNL is not able to expand its telecom services beyond its area

of jurisdiction.

POLICY AND REGULATORY RISKS

The telecommunications sector in India is one of the highest taxed sectors. The high level of

license fee is a big strain on the finances of the company. This is paid over and above all other

taxes and duties which are levied on all other businesses. Regulatory policies cannot be foretold

and may at time, be such as to affect the financials of the company.


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MANPOWER RISKS

There is a huge workforce and approximately 32% of revenue is spent on staff. In comparison of

the staff costs of other operators, it is about 7% of the revenues. This is a major risk which thecompany faces, as it has little flexibility in the matter and may have to continue to carry the cost. It

may in fact become even higher as wage negotiations are now due as per the earlier wage

agreement which was for 10 years. Considering the tremendous growth of private sector and

opportunities that have become available and availability of employment in telecom & IT sectors,

retention of suitable manpower is a big challenge. There is 20% attrition rate among the young

executives recruited for specialized jobs.

OUTSTANDING DUES

Over the years, the amount owned to MTNL by its customers had been increasing and accumulated

significantly. Realizations of dues from customers has become even more difficult in the

increasingly competitive telecom market as the customers can close the connection and take

services of other operators. Efforts are being made to reduce the outstanding and some success has

been achieved in bringing down total outstanding in a multi operator environment, this risk

remains.

HUMAN RESOURCE DEVELOPMENT

The Company attachs the highest priority to the quality of intellectual capital at its disposal and

believes that knowledge and skill level of its employees are the key to achievements of its

corporate mission. MTNL has a sound recruitment policy and comprehensive training system.

During the past one year, your Company has laid greater emphasis on Human Resources

Development. We have been devoting substantial resources on building a skilled workforce that

has an innate capability to counter threats posed by ever changing business environment and to

take advantages of opportunities presented to serve ever increasing customer base.


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Services2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2010-11

FY FY FY FY FY FY Q1 Q2

Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Jun-10 Sep-10

Basic Wire line 5,999,181 5,688,602 5,653,642 5,670,980 5,670,980 5,496,716 5,491,556 5,491,55

- Delhi 3,114,641 2,844,689 2,809,729 2,810,129 2,810,129 2,771,995 2,771,995 2,771,99

- Mumbai 2,884,540 2,843,913 2,843,913 2,860,851 2,860,851 2,724,721 2,719,561 2,719,55WLL-M & F 261,500 998,230 1,098,230 1,098,230 1,098,230 1,092,230 1,092,230 1,092,23

- Delhi 150,000 550,000 550,000 550,000 550,000 550,000 550,000 550,00

- Mumbai 111,500 448,230 548,230 548,230 548,230 542,230 542,230 542,23

GSM - MTNL 1,250,000 1,750,000 2,350,000 3,100,000 4,100,000 5,350,000 5,850,000 6,350,00

- Delhi 625,000 825,000 1,025,000 1,775,000 1,775,000 2,525,000 3,025,000 3,025,00

- Mumbai 625,000 925,000 1,325,000 1,325,000 2,325,000 2,825,000 2,825,000 3,325,00

Broadband MTNL 85,768 458,380 523,568 601,496 984,646 1,429,786 1,545,084 1,627,23

- Delhi 45,016 241,968 257,384 259,400 515,910 709,254 736,520 796,49

- Mumbai 40,752 216,412 266,184 342,096 468,736 720,532 808,564 830,74

(Source: - MTNL annual report 2010-2011)

An amount of Rs.3020.00 million is accounted for by MTNL towards wet lease for infrastructure

and other services provided by MTNL in respect of Commonwealth Games and out of this,


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Rs.2420.00 million is accounted for as income proportionately in the first half year (including

Rs.606.70 million booked in the first quarter) of FY 2010-11. Balance of Rs.600.00 million will be

accounted for in the third quarter. Subject to ultimate installation of the project, the capital

expenditure is accounted under WIP and final accounting will be done on completion of the

project.

AIRTEL:-

Bharti Airtel Limited usually referred to simply as "Airtel", is an

Indian telecommunications company that operates in 19 countries across South Asia, Africa and

the Channel Islands. It operates a GSM networkin all countries, providing 2G or3G services

depending upon the country of operation. Airtel is the fifth largest telecom operator in the

world with over 207.8 million subscribers across 19 countries at the end of 2010. It is the largest

cellular service provider in India, with over 152.5 million subscribers at the end of 2010. Airtel is

the 3rd largest in-country mobile operator by subscriber base, behind China Mobile and China

Unicom.

Airtel also offers fixed line services and broadband services. It offers its telecom services under

the Airtel brand and is headed by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom

service provider to achieve this Cisco Gold Certification. To earn Gold Certification, Bharti Airtelhad to meet rigorous standards for networking competency, service, support and customer

satisfaction set forth by Cisco. The company also provides land-line telephone services and

broadband Internet access (DSL) in over 96 cities in India. It also acts as a carrier for national and

international long distance communication services. The company has a submarine cable landing

station at Chennai, which connects the submarine cable connecting Chennai and Singapore. It is
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known for being the first mobile phone company in the world to outsource everything except

marketing and sales and finance. Its network (base stations, microwave links, etc.) is maintained

by Ericsson,Nokia Siemens Networkand Hawaii., business support by IBM and transmission

towers by another company (Bharti Infratel Ltd. in India). Ericsson agreed for the first time, to be

paid by the minute for installation and maintenance of their equipment rather than being paid up

front. This enabled the company to provide pan-India phone call rates of Rs. 1/minute

(U$0.02/minute). Call rates have come down much further. During the last financial year [2009-

10], Bharti has roped in a strategic partnerAlcatel-Lucent to manage the network infrastructure for

the Telemedia Business. The company is structured into four strategic business units - Mobile,

Telemedia, Enterprise and Digital TV. The Telemedia business provides broadband, IPTV and

telephone services in 89 Indian cities. The Digital TV business provides Direct-to-Home TV

services across India. The Enterprise business provides end-to-end telecom solutions to corporate

customers and national and international long distance services to telcos.

Bharti Airtel received several awards and recognitions during the year. Some of them were:

Rated as the Strongest Brand in the Economic Times- Brand Finance Brand Power

Rating. Airtel was the only corporate brand to be awarded the AAA rating. It improved its

rating from the previous AA+. Airtel was also rated as the 7th Most Valuable Brand in

India with a brand value of USD 2.5 bn and Bharti Airtel was the only telecom player to

feature amongst the top 10 most valuable brands.

Featured in Forbes Asias "Fabulous 50" companies of Asia Pacific. The coveted list

includes Asia Pacific's biggest listed companies with revenues or market capitalization of at

least USD 3 bn and picked by Forbess editors on the basis of the best aggregate scores for

long-term profitability, sales and earnings growth as well as projected earnings and

Stock-price gains.

Bagged top honors in the Voice & Data 100 survey, winning five of the Voice & Data

Telecom Awards 2009. Bharti Airtel was named the Top Telecom Services Provider of the

Year 2009. Manoj Kohli, CEO & Joint Managing Director was named the Voice & Data

Telecom Person of the Year 2009. The awards also named Bharti Airtel as the Top VSAT

Player 2009, Top NLD Player 2009 and Top Cellular Services Provider 2009.
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Selected amongst the top 10 winners of the IDC Enterprise Innovation IT Awards 2009

across APAC region for the BSS Transformation Project which integrates 15 major

applications and automates over 200 processes. These awards are presented to companies

that demonstrate best practices, use IT in innovative ways to deliver competitive

advantages to the organization and enable growth.

Bharti Airtel was declared as the Service Provider of the Year and Wireless Service

Provider of the Year by Frost & Sullivan Asia Pacific ICT Awards for its outstanding

performance in the South Asian region

Financial result and results of operations:-

Financial Highlights of Consolidated Statement of Operations of the Company.

Financial Highlights of Standalone Statement of Operations of the Company (Legal entity)


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Mobile services segment is the dominant contributor to the Companys revenues and customer

base. The Company expanded its operations to 5,091 census towns and 438,933 non census towns

and villages in India during the year, covering 84.2% of the total population. In India, the customer

base increased to 127.62 mn customers as on March 31, 2010 from 93.92 mn customers a year ago.

In Sri Lanka, Companys subscriber base crossed one million customers during the year. Operating

across 16 administrative districts of Sri Lanka, the Company launched 3.5G services in major

towns. Companys distribution strength has gone up with a widened network of 23 distributors and

over 15,000 retailers across the country.

The revenues from Telemedia services for the financial year were Rs 34,194 mn, representing a

growth of 2% over the revenues in the previous financial year.

Revenues from mobile services for the financial year were Rs 325,717 mn, representing a growth

of 7% over the revenues in the previous financial year. Mobile services contributed 78% to the

consolidated revenues. The growth in revenues was despite of the growing competition with the

entry of new players, coupled with significant reduction in tariffs during financial year 2008-09.


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Under Telemedia services, Bharti Airtel provides broadband, data and fixed line telephone services

across 89 cities of India. The focus in recent years has been on customized telecom/IT solutions for

small and medium sized businesses. The Company strategically continues to focus on cities with

high revenue potential. Total customer base for Telemedia services reached 3.07 mn, recording an

increase of 12% over 2.72 mn customers at the end of financial year 2008-09. Of this, 1.30 mn

customers were subscribing to broadband services. Percentage of customers subscribing to

broadband services has increased from 39.3% as at end of financial year 2008-09 to 42.3% as at

end of financial year 2009-10. The Company is committed to provide superior internet browsing

experience to all its customers through high speed plans. The Company has introduced 4 mbps

speed plans and has upgraded all its existing customers to a minimum of 512 Kbps speed at no

extra cost.

RELIANCE COMMUNICATION:-

Reliance Communications (NSE: RCOM, BSE: 532712), formerly known as Reliance Infocomm,

along with Reliance Telecom and Flag Telecom, is part of Reliance Communications Ventures

(RCoVL). Reliance Communications Limited, founded by Dhirubhai H Ambani (19322002), is

the flagship company of the Reliance Anil Dhirubhai Ambani Group. The Reliance Anil Dhirubhai

Ambani Group currently has a net worth in excess of 64,000 crore (US$13.6 billion), cash flowsof 13,000 crore ($2.8 billion), and a net profit of 8,400 crore ($1.8 billion). The Equity Shares of

RCOM are listed on Bombay Stock Exchange Limited andNational Stock Exchange Limited.

The Global Depository Receipts and Foreign Currency Convertible Bonds are listed

on Luxembourg Stock Exchange and Singapore Stock Exchange respectively.

It ranks among the top 5 telecommunications companies in the world by number of customers in a

single country. Reliance Communications corporate clientele includes 2,100 Indian

and multinational corporations, and over 800 global, regional and domestic carriers. The company

has established a pan-India, next-generation, integrated (wireless and wireline), convergent (voice,

data and video) digital networkthat is capable of supporting services spanning the entire

communications value chain, covering over 24,000 towns and 600,000 villages. Reliance

Communications owns and operates the next-generation IP-enabled connectivity
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infrastructure, comprising over 190,000 kilometers offiber optic cable systems in India, USA,

Europe, Middle East and the Asia Pacific region.

In July 2007, the company announced it was buying US-based managed Ethernet and application

delivery services company Yipes Enterprise Services for a cash amount of 1200 crore (the

equivalent of US$300 million). The deal was announced of the overseas acquisition, the Reliance

group has amalgamated the United States-based Flag Telecom for $210 million (roughly 950

crore). RTL operates in Madhya Pradesh, West Bengal, Himachal Pradesh, Orissa, Bihar, Assam,

Kolkata and Northeast, offering GSM services.

RGL owns the worlds largest private undersea cable system, spanning 65,000 km seamlessly

integrated with Reliance Communications. Over 110,000 km of domestic optic fiber provides a

robust Global Service Delivery Platform, connecting 40 key business markets in India, the Middle

East, Asia, Europe, and the U.S.

RITLs business is to build, own and operate telecommunication towers, optic fiber cable assets

and related assets at designated sites, and to provide these passive telecommunication

infrastructure assets on a shared basis to wireless service providers and other communications

service providers under long-term contracts.
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During the year under review, Company has earned income of Rs.12,511.72 crore against

Rs.13,694.66 crore in the previous year. The Company earned Profit after tax of Rs. 478.93 crore

compared to Rs. 4,802.67 crore in the previous year.

The demand for telecom infrastructure in India is driven both by the robust growth in the mobile

industry as a whole and by the growth in usage in the new semi-urban and rural markets. The

industry landscape has changed with the Government issuing over 120 licenses to new operators

and the number of players going up from 5-6 per circle to 9-10 in most circles. These new

operators have been allotted spectrum in about 18 to 20 circles and some of them have now got

joint venture tie-ups with large global players thereby getting the necessary impetus to roll out their

services. The roll-out of mobile services by these new players further increases the demand for

telecom infrastructure. The telecom infrastructure industry will witness a further significant upside

from the 3G /BWA auctions and the network rollout plans of the successful bidders.

The Industry now has about 300,000 towers, with ample opportunities for existing infrastructure

providers to offer tower tenancies to new domestic and multinational operators.

Rural opportunity: The overall tele-density in India has reached around 52.74 per cent. While the

urban tele-density has crossed the 100 per cent mark, the rural tele-density is pegged at 22.17 per

cent and steadily growing. Indeed, it is the latter which is driving telecom growth in the second

phase. Our nationwide network combined with the national distribution framework gives us a

unique advantage in tapping this large opportunity.

Passive Infrastructure: The expected technology rollouts this year were driven by 2G, 3G and

BWA needs of the new and existing mobile operators as well as of the ISP operators. This

translates into the current demand of nearly 500,000 slots slated to go up to 700,000 in the next

couple of years- for passive infrastructure as well as other services. Our next generation

infrastructure is favorably positioned to capture this opportunity. At RCOM, we approach the

market in the telecom infrastructure business with a unified and comprehensive approach covering

the entire value chain of telecom infrastructure services, including active and passive

infrastructure.


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Global: With RCOMs ownership of Reliance WiMax World (eWave), a pioneer in the global

WiMax space, Reliance Globalcom has the capability to launch 4G services in over 50 countries.

The acquisition of Vanco Group enables the company to provide managed services to over 230

countries and territories across the globe.

TATA COMMUNICATION:-

Tata Communications is a leading global provider of a new world of communications. With a

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 colocation space worldwide.

Tata Communications' depth and breadth of reach in emerging markets includes leadership in

Indian enterprise data services, leadership in global international voice, and strategic investments

in operators in South Africa (Neotel), Sri Lanka (Tata Communications Lanka Limited), Nepal

(United Telecom Limited).

During the year under review, your Company earned total revenue of Rs. 39.84 billion (previous

year Rs. 34.6 billion) an increase of 14.97 percent. Profit before tax for the year was Rs. 7.13

billion, (previous year Rs.4.50 billion) an increase of 58.56 percent. Profit after tax was Rs. 5.16

billion (previous year Rs. 3.04 billion) an increase of 69.46 percent. On a consolidated basis, for

2008-09, the Companys total income was Rs. 102.23 billion (previous year 85.38 billion), an


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increase of 19.74 percent EBIDTA was Rs. 13.50 billion (previous year 8.80 billion), an increase

of 53.43 percent. Consolidated profit before tax after exceptional items was Rs. 4.23 billion

(previous year 1.49 billion), an increase of 183.88 percent whereas profit before tax before

exceptional items was Rs. 1.56 billion (previous year 1.60 billion), a decrease of 2.40 percent. The

audited annual accounts for the year 2008-09 have been drawn up taking into account the court

order approving the amalgamation of VSNL Broadband Limited, a 100% subsidiary in the nature

of merger into the Company with effect from 1 March 2007.

Over the last few years, your Company has built on its strategy to provide a range of

communications services to customers in the wholesale, enterprise and retail segments. It has

invested considerably in network infrastructure and service delivery capability in and out of India.

Last year, the Company launched its new brand identity Tata Communications integrating the

various other brands under which it had been going to market previously and this has been very

well received. The Companys focused strategy has enabled it to be one of the leading players

worldwide in its major business segments, with operations in more than 50 countries. Tata

Communications remains one of the top three providers of international wholesale voice services

and wholesale Voice over Internet Protocol (VoIP) services and one of the largest owners and

providers of submarine cable capacity in the world. The Company is a global Tier-1 Internet

During the year under review, the business of the Company grew with enterprises demanding more

global connectivity and services, increasing broadband penetration worldwide and rich media,

interactive digital content becoming more and more popular globally. The global demand for

bandwidth and Internet connectivity continues to surge, giving Tata Communications the

opportunity to leverage its Tata Global Network (TGN) of optical fiber undersea cables and

Internet Protocol (IP) network. Your Company expects to commission additional submarine cable

systems in the year 2009-10 connecting emerging markets in Asia, the Middle East and Africa to

each other and onwards to Europe to meet the demands of consumer broadband, enterprise and

wholesale customers over the next five to eight years.

During the year, your Company issued secured redeemable non-convertible debentures aggregating

to Rs. 12.50 billion on a private placement basis. Out of this amount, debentures worth Rs.10.00

billion were subscribed to by one investor on a five year term. The balance debentures worth Rs.


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Currently,Aditya Birla Group holds 49.1% of the total shares of the company.

The market positioning of Idea reflects the strength of its brand considering the fact that Ideaadded 14 out of its total 22 service areas in the past four years. Today it is a pan-India player withcommercial operations in all 22 service areas. Its subscriber base has grown multifold from 7.37

million in March 2006 to 63.82 million in March 2010.

Idea has been a leader in the introduction of value-added services, and there are many firsts to itscredit, including a voice portal 'Say Idea', Idea TV, voice chat and instant messenger. Tariff planshave been customer-friendly, catering to the unique needs of different customer segments, forinstance the 'Women's Card' caters to the special needs of women on the move, and 'Youth Card'covers the emerging youth segment.

Idea has won numerous awards and is the only Indian GSM operator to win the prestigious GSMAssociation Award consecutively in the best mobile technology category for the Best Billing andCustomer Care Solution both in 2006 and in 2007, even in the face of international competition.

Telecom network equipment-maker Ericsson has partnered with Aditya Birla Group firm IdeaCellular for the latters online applications store.Under the contract, Ericsson would be responsiblefor complete end-to-end service management of the online applications store, including technicaloperations, content eco-system partner management and testing and usability, besides businessoperations.

The highlights of Ideas remarkable journey:

2010

:: Ultratech's 'Concern for Health' project awarded the Asian Corporate Social ResponsibilityAward by the Asian Institute of Management Centre for Corporate Social Responsibility.

:: Hindalco ranked ninth across industries on Forbes Asia's Fab 50 companies list of Asia's 50most valued companies.

:: Mrs. Rajashree Birla, Chairperson, Aditya Birla Centre for Community Initiatives and RuralDevelopment receives 'Hello Hall of Fame' award for 'Exemplary Philanthropist of the year'from Worldwide Media Goup's 'Hello' celebrity journal.

:: Indian Rayon, Veraval (a division of Aditya Birla Nuvo) is awarded The Rajiv GandhiEnvironment Award for Clean Technologies by The Ministry of Environment and Forests,Government of India.

:: Mr. Kumar Mangalam Birla, Chairman of the Group, presented the All India ManagementAssociation (AIMA) Managing India Award 2010 for ' Business Leader of the Year'. AIMAconfers these awards to persons who are exemplary leaders who have made a fundamentaldifference.
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:: Mrs. Rajashree Birla, Chairperson, Aditya Birla Centre for Community Initiatives and RuralDevelopment, awarded the Global Golden Peacock Life Time Achievement Award forCommunity Development for the year 2010 for "Outstanding Contribution TowardsCommunity Development and Social Welfare".

:: Hindalco and Birla White declared winners in the Golden Peacock Awards for Corporate

Social Responsibility 2010 by an eminent international jury, headed by Justice P.M. Bhagwati,the erstwhile Chief Justice of India.

:: The Aditya Birla Centre for Community Initiatives and Rural Development team up withColumbia University's research centre, the Columbia Global Centers' Earth Institute inMumbai, to become its principal partner. The Earth Institute's goal is to help achievesustainable development primarily by expanding people's understanding of the earth as oneintegrated system.

:: Hindalco wins Amity International Business Schools, Amity Corporate Excellence Awardfor Corporate Social Responsibility

TRAI data reveals that the overall wireless industry revenues grew 3.3% qoq in 4Q after remainingflat in the previous 3 quarters. At the end of FY 2010 [March-10], Bharti Airtel still leads theRevenue Market share in Wireless segment with a Pan India share of 32% down from 32.8% ayear ago and a a peak of 33.9% in June-09. This is how Wireless Operators rank w.r.t RevenueMarket Share at the end of March-2010.

Bharti Airtel 32% Vodafone 20.8% [Consistent] Idea Cellular 12.7% [Moderate Growth, but commendable] Reliance Communications -11.7% [ Losing to competition ] BSNL 9.3% [ Loser] Tata Tele [ Gaining on the back of DoCoMos innovative strategies Aircel 4%

The following Chart shows how Wireless Operators Revenue Market Share varied in the Past 1Year.
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Particulars

Total RevenueOperating ExpensesProfit / (Loss) beforeDepreciation and TaxDepreciationProfit / (Loss) before TaxTaxesProfit/ (Loss) after TaxBalance brought forwardfrom previous year

Balance carried forward

2009-10

368,281367,665

6161,055(439)(215)(224)

(1,860)

(2,085)

2008-09

239,173235,281

3,8918413,0502,939111

(1,972)

(1,860)

AIRCEL

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. Their 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 their first decade of operations, they concentrated

on building our foundations in the southern part of the country, and soon emerged as the

regional market leaders. They worked hard and achieved that success by remaining focusedon growth opportunities. Soon after their company began with its expansion in 2005 and

has now set its sight on becoming a pan India operator. Their project pipeline is robust,

allowing for sustainable long-term growth.

In addition to their leadership position in Tamil Nadu, Aircel met with extraordinary

success in the Eastern frontier circles. They pride themselves 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, their company gained a strong foothold in 10

circles, to provide better access to our customers. Today, Aircel operates in all 23

telecommunication circles and the company is ready to embark on a dynamic expansion

plan in the near future.

Aircel recognizes the tremendous growth in its customer base. They have also got an

authorization from the Department of Telecommunications for ILD and NLD telephony

services and are now on track to realize their dream of becoming a nationwide player by

the year 2010.

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