PUNJAB TECHNICAL

UNIVERSITY

Assignment on
SWOT Analysis
Of

“Indian Telecom
Industry”
WITH SPECIAL REFERENCE OF “RETAIL
INDUSTRY”

In partial fulfillment of the requirement of two years full time

Masters of Business Administration (MBA) Program

(2009-2011)

Of

Asian Business School, Noida

201301
UNDER THE GUIDENCE OF: SUBMITTED BY:

SUSHIL KUMAR HEERA SINGH

3rd Semester

ACKNOWLEDGEMENT

I am indebted to a multitude of persons who have provided me with

valuable help during our endeavor of research. The project would not have

seen the illumination of the day without the efforts of the many who

managed the show in the wings. I am thankful to all people who have put in

great efforts and gave me guidance for the successful completion of the

project.

I am indeed grateful to Sushil Kumar for providing me the guidance,

advice, constructive suggestions and faith in my ability inspired to perform

well who gave me a valuable opportunity of involving me in studying this

project. Preparing a project of this nature is an arduous task and I am

fortunate enough to get support from a large number of people to whom we

shall always remain grateful.

Finally, I thank all those who directly and indirectly contributed to this

project.

Heera Singh

Contents

1. INTRODUSTION OF INDUSTRY ANALYSIS

2. PROFILE OF RETAIL INDUSTRY

• Growth of Industry

• Structure of Industry

• Nature of the Product

• Nature of Competition

• Government Policies
3. SWOT ANALYSIS

• Strengths

• Weaknesses

• Opportunities

• Threats
4. CONCLUSIONS

5. BIBLIOGRAPHIES

TELECOM INDUSTRY
INDUSTRY ANALYSIS
INTRODUCTION!

All industry is a group of firms that have similar technological structure of

production and produce similar products or services. Companies are
distinctly classified to give a clear picture about their manufacturing process
and products or services.

Industries can be classified on the basis of the business cycle, that means,
according to their reactions to the different phases of the business cycle.
They are classified into growth, cycle, and defensive cyclical growth
industry.

GROWTH INDUSTRY

The growth industries have special features of high rate of earnings and
growth in expansion, independent of the business cycle. The expansion of
the industry mainly depends on the technological change.

CYCLICAL INDUSTRY

The growth and the profitability of the industry move along with the
business cycle. During the boom period they enjoy growth and during
depression they suffer a set back

DEFENSIVE INDUSTRY

Defensive industry defies the movement of the business cycle

CYCLICAL GROWTH INDUSTRY

This is a new type of industry that is cyclical and at the same time growing.

INDUSTRY LIFE CYCLE

The industry life cycle theory is generally attributed to Julius Grodensky.

The life cycle of the industry is separated into four well defined stages such
as

-Pioneering Stage

-Rapid Growth Stage

-Maturity and Stabilization Stage

-Decline Stage

POINEERING STAGE

The prospective demand for the product is promising in this stage and the
technology of the product is low. The demand for the product attracts many
producers to produce the particular product .There would be severe
competition and only fittest companies survive this stage. The producers try
to develop brand name, differentiate the product and create a product
image. This would lead to non-price competition too. The severe
competition often leads to the change of position of the firms in terms of
market shares and profit. In this situation, it is difficult to select companies
for investments because the survival rate is unknown.

RAPID GROWTH STAGE

This stage starts with the appearance of surviving firms from the pioneering
stage. The companies that have withstood the competition grow strongly in
market share and financial performance. The technology of the production
would have improved resulting in low cost of production and good quality
products. The companies have stable growth rate in this stage and they
declare dividend to the shareholders. It is advisable to invest in the shares
of other companies. In this stage growth rate is more than the industry’s
average growth rate.

MATURITY AND STABLISATION STAGE

In the stabilization stage, the growth rate tends to moderate and the rate of
growth would be more or less equal to the industrial growth rate of the
gross domestic product growth rate. Symptoms of obsolescence may
appear in the technology. To keep going technological innovations in the
production in process and products should be introduced. The investors
have to closely monitor the events that take place in the maturity stage of
industry.

DECLINING STAGE

In this stage, demand for the particular product and the earnings of the
companies in the industry7 decline. The specific feature of the declining
stage is that even in the boom period; the growth of the industry would be
low and decline at a higher rate during the investment in the shares of
these types of companies leads to erosion of capital.
CONSIDERABLE FACTORS OF INDUSTRY ANALYSIS

GROWTH OF THE INDUSTRY

The historical performance of the industry in terms if growth and profitability

should be analyzed. Industry wise growth is published periodically by the

Center for Monitoring Indian Economy. The past variability in return and

growth in reaction to macro economic factors provide an insight into the

future. Even though history may not repeat in the exact manner, looking

into the past growth of the industry, the analyst can predict the future.

COST STRUCTURE AND PROFITABILITY

The cost structure, that is the fixed and variable cost, affects the cost of

production and profitability of the firm. Higher the fixed cost component,

greater sales volume is required to reach the firm’s breakeven point. Once

the breakeven point is reached and the production is on the track, the

profitability can be increased by utilizing the capacity to full. Once the

maximum capacity is reached, again capital has to be invested in the fixed

equipments. Hence, lower the fixed cost, adjustability to the changing

demand and reaching the break even points are comparatively easier.
NATURE OF THE PRODUCT

The products produced by the industries are demanded by the consumers

and other industries. The investor has to analyse the conditions of related

goods producing industry and the end user industry to find out the demand

for industrial goods.

In the case of consumer goods industry, the change in the consumers’

preference, technological innovations and substitute products affect the

demand.

NATURE OF THE COMPETITION

Nature of the competition is an essential factor that determines the demand

for the particular product, its profitability and the price of the concerned

company scrip. The supply may arise from indigenous producers and

multinationals. If too many firms are present in the organized sector, the

competition would be severe. The competition would lead to a decline in

the price of the product. The investor before investing in the scrip of a

company should analyze the market shares of the particular company’s

product and should compare is with the top five companies.

GOVERNMENT POLICY

The government policies affects the very, never of the industry and the

effects differ from industry to industry. Tax subsidies and tax holidays for

export oriented products. Government regulates the size of the production

and the pricing of certain products. When selecting an industry, the

government policy regarding the particular industry should be carefully

evaluated. Liberalization and deli censing have brought immense threat to

the existing domestic industries in the sectors.

RESEARCH AND DEVELOPMENT

For any industry to survive the competition in the national and international

markets, products and production process have to be technically

competitive. This dependent on the research and development in the

particular industry. Economies of scale and new market can be obtained

only through research and development. The percentage of expenditure

made on research and development should be studied diligently before

making an investment.
SWOT ANALYSIS

The above mentioned factors themselves would become strengths,

Weakness, opportunity and threat (swot) for the industry. Increase in the

demand for the industry’s product becomes its strength; presence of

numerous players in the market, that competitor becomes the threat to a

particular company in the respective industry. The progress in the research

and development in the particular industry is an opportunity and entry of

multinationals in the industry and cheap imports of the particular products

are threat to that industry. In this way the factors have to be arranged and

analyzed in swot analysis.

 TELECOM 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.

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.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. On an average, 30-40 million people are joining the middle class

every year, representing huge consumption spending in terms of the

demand for mobile phones, televisions, scooters, cars, credit goods and a

consumption pattern associated with rising incomes.

NATURE OF THE COMPETITION

MARKET PLAYERS:
No. Service Total sub Market Trends
Providers figures share (%)
1. BHARTI AIRTEL 58037920 25.40 Integrated Telco, with presence in all
sectors - Cellular, Basic, National Long
Distance (NLD) & International Long
Distance (ILD). Currently offering only
GSM based cellular services. No CDMA
based cellular services being offered.
2. RELIANCE 52540000 22.99 Operating GSM wireless services in 7
COMMUNICATIO circles and subsequently acquired
NS Madhya Pradesh circle from RPG.
Reliance is currently focusing on rollout
of CDMA based wireless services.
3. VODAFONE 44126243 19.31 Pure play GSM mobility player offering
ESSAR cellular services in 16 circles. Has been
working on a model of being associated
with the high ARPU subscribers
4. BSNL 34251334 14.99 Incumbent operator, virtual monopoly in
the basic services. Very strong NLD
operator; and, has been able to quickly
ramp up GSM subscribers due to
nationwide network reach. Pan country
presence in both basic (except Mumbai
and Delhi) and cellular services.

5. IDEA 24001573 10.50 A 3 way GSM mobility joint venture

between Tatas, Birlas and AT&T Wireless
offering cellular services

in 11 circles.
6. AIRCEL 6805066 2.98 Operates only in Metro(Chennai) and
Circle A(Tamil Nadu)
7. SPICE 4210669 1.84 Pure play GSM based mobility player
offering services in 2 circles – Punjab
and Karnataka.
8. MTNL 3241851 1.42 Integrated incumbent operator also
offering GSM based mobility in Delhi and
Mumbai.
9. BPL 1294762 0.57 Pure play cellular operator along with
Spice and Aircel.

the demand in the telecom industry in year 2007 is around 230 million

now we will see does the main players in the industry has the

capacity to fulfil the appetite of the demand side.

Here we are considering only the top 2 companies which almost

consist 50% of the market shares.

• Bharti Airtel
• Reliance communications

About Reliance Infocomm:-

The Late Dhirubhai Ambani dreamt of a digital India — an India where the

common man would have access to affordable means of information and

communication. Dhirubhai, who single-handedly built India’s largest private

sector company virtually from scratch, had stated as early as 1999: “Make
the tools of information and communication available to people at an

affordable cost. They will overcome the handicaps of illiteracy and lack of

mobility.” It was with this belief in mind that Reliance Communications

(formerly Reliance Infocomm) started laying 60,000 route kilometers of a

pan-India fibre optic backbone. This backbone was commissioned on 28

December 2002, the auspicious occasion of Dhirubhai’s 70th birthday,

though sadly after his unexpected demise on 6 July 2002. Reliance

Communications has a reliable, high-capacity, integrated (both wireless

and wire line) and convergent (voice, data and video) digital network. It is

capable of delivering a range of services spanning the entire Infocomm

(information and communication) value chain, including infrastructure and

services — for enterprises as well as individuals, applications, and

consulting. Today, Reliance Communications is revolutionizing the way

India communicates and networks, truly bringing about a new way of life.

Vision:-India’s leading integrated telecom company Reliance

Communications is the flagship company of the Anil Dhirubhai Ambani

Group (ADAG) of companies. Listed on the National Stock Exchange and

the Bombay Stock Exchange, it is India’s leading integrated

telecommunication company with over 60 million customers. Our business

encompasses a complete range of telecom services covering mobile and

fixed line telephony. It includes broadband, national and international long

distance services and data services along with an exhaustive range of

value-added services and applications. Our constant endeavor is to

achieve customer delight by enhancing the productivity of the enterprises

and individuals we serve. Reliance Mobile (formerly Reliance India Mobile),

launched on 28 December 2002, coinciding with the joyous occasion of the

late Dhirubhai Ambani’s 70th birthday, was among the initial initiatives of

Reliance Communications. It marked the auspicious beginning of

Dhirubhai’s dream of ushering in a digital revolution in India. Today, we can

proudly claim that we were instrumental in harnessing the true power of

information and communication, by bestowing it in the hands of the

common man at affordable rates. We endeavor to further extend our efforts

beyond the traditional value chain by developing and deploying complete

telecom solutions

Board of director:-

Shri Anil D. Ambani – Chairman

Prof. J Ramachandran

Shri S.P. Talwar

Shri Deepak Shourie

Shri A.K.Purwar

BHARTI AIRTEL
We are one of Asia’s leading providers of telecommunication services with

presence in all the 22 licensed jurisdictions (also known as Telecom

Circles) in India, and in Srilanka. We served an aggregate of 133,708,496

customers as of April 30, 2010, in India; of who 130,616,487 subscribe to

our GSM services and 3,092,009 use our Telemedia Services either for

voice and/or broadband access delivered through DSL. We are the largest

wireless service provider in the country, based on the number of customers

as of April 30, 2010. We offer an integrated suite of telecom solutions to our

enterprise customers, in addition to providing long distance connectivity

both nationally and internationally. We also offer DTH and IPTV Services.

All these services are rendered under a unified brand “Airtel”.

The company also deploys, owns and manages passive infrastructure

pertaining to telecom operations under its subsidiary Bharti Infratel Limited.

Bharti Infratel owns 42% of Indus Towers Limited. Bharti Infratel and Indus

Towers are the two top providers of passive infrastructure services in India.

Partners
 Mobile Services Nokia Siemens, Ericsson, Huawei
Network
Equipment Telemedia & Long Nokia Siemens, Juniper, Cisco,
Distance Services Alcatel Lucent, ECI, Tellabs
Information Technology IBM
IBM Daksh, Hinduja TMT,
Call Centre Operations Teleperformance,
Mphasis, Firstsource & Aegis
Equity Partner {Strategic} Singtel

SUNIL MITTAL…..

SWOT Analysis
Strengths

• Strong mobile growth(around 10%) , with latest technology being

offered at faster pace

 • An attractive business environment witnessed by number of foreign

players entering Indian market

• A vast untapped rural population which needs telecom services at

their fingertips

Weaknesses

• Wireless business segment is growing faster than wire line and more

demand is coming for pre-paid services

• The falling SIM card, lower tariff plan led to lower APRU

• Delayed implementation of key policies because of dispute among

TRAI, telecom ministry

Opportunities

• All of the providers are keen to provide more content which provides

great opportunity for content providers

• Regulator has recommended that foreign player can participate

without any local partner

• The government will cut the license fee by 33% for those operators

which has over 95% residential coverage

Threats
• 3 G spectrum charges are more and which will have negative impact

on demand for licenses

• Due to price war , APRU is falling and further deterioration will lead to

significant decline

in top line growth

• Capacity constraint may hamper the expected growth in Mobile

segment

• MNP will become reality in 2010, it will add further pressure to

operator to retain the

Existing customer

CONCLUSION
In our opinion, instead of taking a short-term view of paying capacity, the

telecom companies should focus on a long-term game. There is one word

that telecom companies are hearing a lot these days-“Volumes”. They need

volumes to sustain the network and the large employee base they have

enrolled. In this regard, companies like Reliance and Tata’s have been

aggressive over the final rollout of connections to PCO owners. Reliance is

giving upto 30% commission on each call. How they market and distribute

these connections is a tough battle indeed. If and when the carrier access

codes are introduced, there could be a tough fight among these outlets, as

far as prices are concerned. Yet, prices can go down further by almost 40%

of the present structure. Part of the price cuts could be because of tax

exemptions, if and when these companies can lobby for the same. The

other part could be earning through volumes.

New players like Virgin Mobile, which already has an international presence

in close to 17 countries are entering India. It is doing so in collaboration

with Tata Teleservices. The target market for Virgin Mobile is the youth,

which in India is around 54% of its population.

There are challenges like porting time, allocation of capital and operational

porting costs among participants and other interconnect issues. Yet, the
atmosphere around the MNP issue looks positive and will be set once the

committee submits its final report on the same.

The telecom sector is attracting significant domestic and global investment.

The capital investment made by the telecom service industry during 2006-

07 was around $8.5 billion, out of which $550 million was foreign direct

investment. The margins and profits of almost all the telecom companies

have been increasing. In fact there are cases where a significant portion of

profit of international telecom companies has been from their operations in

India.India is well prepared for the introduction of NGN (Next-Generation

Networking). Being a late starter in the telecom scenario, India has the

advantage of using the latest technology and so it is in a better position

when compared to many other countries as far as introduction of NGN is

concerned. Besides, the TRAI has identified introduction of NGN as a

priority area. It has been noted that mobile telephony is growing at an

annual rate of over 90 percent. Besides the basic telephone service, there

is a huge potential for different Value Added Services (VAS). In fact, the

real potential for telecom service growth is still lying untapped.

 BIBLIOGRAPHY

• www.trai.gov.in

• www.scribd.com

• www.dot.gov.in

• Google search engine

• PriceWaterHOuse Coopers

• Motilal Oswal Securities Ltd.