Telecom Sector

Introduction

• TELECOM - Refers to the industry and hardware involved with telephones and the transmission of voice data

• Public and private telecommunications enterprises have to meet ever demanding public needs while providing services at reasonable costs

• Policy-makers, providers and regulators face the complex challenge of promoting competition

• Encouraging massive capital investments required to satisfy ever-increasing demand.

Key Players

1. Reliance Telecommunication Limited

2. Bharti Airtel limited

3. BSNL

4. MTNL

5. Hutchinson Essar

6. Ericsson

7. Nokia

8. Siemens communication

9. Tata Teleservice

10. Vodafone

Market overview

Source: www.voicendata.com, Telecom regulatory Authority of India (TRAI),

Market overview

Telecom regulatory Authority of India (TRAI

Market overview

Source Trai

GSM and CDMA subscription numbers

year GSM SUBSCRIBERS IN MN

GSM ANNUAL GROWTH

CDMA SUBSCRIBERS IN MN

CDMA ANNUAL GROWTH

2003 22 110% 6.5 600%

2004 37.1 70% 10.9 70%

2005 58.5 57% 19.1 75%

2006 105 80% 44.2 131%

2007 180 71% 85 92%

Source: http://www.naukrihub.com/india/telecom/overview/

Fast Facts

• Indian telecom revenues hit almost $27 billion Industry sees 22% growth in revenues in fiscal 2007; Mobile-phone revenues up 56%

• Principal Research Analyst at Gartner Mr Will Hahn predicted that by 2012, the service segment would have a CAGR of 4.4 per cent compared with 8.7 per cent for the equipment segment

Production / supply pattern of product of the past 5 years

• In 2005-2006, the telecom industry witnessed a growth of 21% with a total revenue of Rs. 86,720 crores, and the total investment rising to Rs. 2,00,660 crores. It is projected that the telecom industry will be enjoying over 150% growth in the next 4-6 years

• Liberalization policy and some socio-economic factors are mainly responsible for the immense growth in the sales volumes

• Budget 2007 has brought disappointment to the telecom sector. Mobile service providers have been asked to cut down their roaming rentals as well as their long distance and international call tariffs. This has led to discontent on the part of the service providers

• cheaper handsets and lesser tariffs, it is expected that by the year 2010 there will be over 500 million subscribers in the Indian telecom market

Trends in Telecom Sector World

India and World

Telecom Subscribers - Country wise December 2005China743

USA360

Ind125

Rus130

Germany134

Japan 153

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400

600

800

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Source ITU

Government Regulation

• The government has revised norms and regulations for merging & acquisition (M&A) between telecommunication companies within a same circle

• Prior approval for merger of telecommunication companies is necessary.

• It is emphasize that the total market share after merging should not exceed to more than 40% in terms of both subscriber base and revenue

• No merger would be allowed unless and until there are minimum four service providers left after such merging process

Government Regulation and Policy

New Players

• The government to allotted start-up GSM spectrum to new telecom players, including Datacom and Unitech, in four circles of Mumbai, Maharashtra, Punjab and Uttar Pradesh

• Tata Teleservices, which has got GSM licence under dual technology policy, has also been allotted spectrum in the lucrative Mumbai circle

• HFCL, a CDMA player, has got GSM spectrum in Punjab under the dual technology policy. Idea Cellular and Unitech are the other beneficiaries

• Unitech, Datacom, Swan Telecom and Tatas have been allotted the airwaves

• In the CDMA space, Shyam Telecom is the only new company that has got pan-Indian spectrum and is in the process to roll out

Price Variation of Past 5 Years

• Due to rapid advances in technology, the prices of long distance communication have fallen more dramatically and incomparably more than that of the wire line local access

• Further, competition in the long distance segment has resulted in a sharp decline in prices, almost bringing them near costs

• the decline in long distance prices may not be accompanied by cost- based local access rates. They may have been historically kept low due to political reasons

• Tariff rebalancing as a regulatory tool can ensure adequate incentives to the incumbents for the transition to a competitive environment by specifying the road map and protecting its revenues

Causes and Effects of Variation in Price on Volume of Goods Purchased

• Growth in telecom industry also result in growing compition. It results in lower tarrif rates and increase in volume of good produced

• In 2005-2006, the telecom industry witnessed a growth of 21% with a total revenue of Rs. 86,720 crores, and the total investment rising to Rs. 2,00,660 crores

• Liberalization policy and some socio-economic factors are mainly responsible for the immense growth in the sales volumes

• The lifestyle of the people has changed • With the lowering down of the tariffs the affordability of the mobile

phones has increased• The Finance sector also come up with loan on handset at 0% intrest

rate

Conclusion

• Telecom sector in the country has already adopted the latest technological advancements to cater to the demands of the growing market

• Despite the global economic slowdown and the difficulties the telecommunications industry has experienced recently the future of sector seems to be bright with lots of hope for growth in near future

• For exploring new avenues and to avoid saturation telecom industry is now targeting rural areas.