Contents

Chapter 1: Telecom Sector in India .......................................................................................................... 2 1.1 A Brief on Telecom Sector in India .................................................................................................. 2 1.2 Introduction of the telephone ........................................................................................................ 2 1.3 Chronicles of Telecom Sector in India. ............................................................................................ 3 1.4 Modern growth .............................................................................................................................. 3 1.5 Introduction of Telecom Regulatory Authority of India (TRAI)......................................................... 4 1.5.1 Responsibilities ....................................................................................................................... 4 Chapter 2: Company Profile ..................................................................................................................... 6 2.1: Company Background ................................................................................................................... 6 2.1.1 Vodafone Group Plc ................................................................................................................ 6 2.1.2 VODAFONE IN INDIA................................................................................................................ 6 2.1.3 Vodafone acquires Essar's Stake .............................................................................................. 8 2.2: Current Operations ....................................................................................................................... 9 2.3 Managerial Problem..................................................................................................................... 10 Heading ................................................................................................................................................. 10

Chapter 1: Telecom Sector in India

1.1 A Brief on Telecom Sector in India
The Indian telecommunication industry is the world's fastest growing industry with 826.93 million mobile phone subscribers as of April 2011. It is also the second largest telecommunication network in the world in terms of number of wireless connections after China. As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile subscribers by 2013. Furthermore, projections by several leading global consultancies indicate that the total number of subscribers in India will exceed the total subscriber count in the China by 2013. The industry is expected to reach a size of 344,921 cr. by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly. In 2008-09 the overall telecom equipments revenue in India stood at 115,382 cr. a year before. 136,833 cr. during the fiscal, as against

1.2 Introduction of the telephone

In 1880, two telephone companies namely The Oriental Telephone Company Ltd. and The Anglo-Indian Telephone Company Ltd. approached the Government of India to establish telephone exchanges in India. The permission was refused on the grounds that the establishment of telephones was a Government monopoly and that the Government itself would undertake the work. In 1881, the Government later reversed its earlier decision and a license was granted to the Oriental Telephone Company Limited of England for opening telephone exchanges at Calcutta, Bombay, Madras and Ahmedabad and the first formal telephone service was established in the country. On the 28th January 1882, Major E. Baring, Member of the Governor General of India's Council declared open the Telephone Exchanges in Calcutta, Bombay and Madras. The exchange in Calcutta named the "Central Exchange was

opened at third floor of the building at 7, Council House Street, with a total of 93 subscribers. Later that year, Bombay also witnessed the opening of a telephone exchange.

1.3 Chronicles of Telecom Sector in India.

y y y y 1902 - First wireless telegraph station established between Sagar Islands and Sandheads. 1907 - First Central Battery of telephones introduced in Kanpur. 1913-1914 - First Automatic Exchange installed in Shimla. 1927 - Radio-telegraph system between the UK and India, with Imperial Wireless Chain beam stations at Khadki and Daund. Inaugurated by Lord Irwin on 23 July by exchanging greetings with King George V. y y y y 1933 - Radiotelephone system inaugurated between the UK and India. 1953 - 12 channel carrier system introduced. 1960 - First subscriber trunk dialing route commissioned between Lucknow and Kanpur. 1975 - First PCM system commissioned between Mumbai City and Andheri telephone exchanges. y y y 1976 - First digital microwave junction introduced. 1979 - First optical fibre system for local junction commissioned at Pune. 1980 - First satellite earth station for domestic communications established at Secunderabad, A.P.. y y y 1983 - First analog Stored Program Control exchange for trunk lines commissioned at Mumbai. 1984 - C-DOT established for indigenous development and production of digital exchanges. 1995 - First mobile telephone service started on non-commercial basis on 15 August 1995 in Delhi.

1.4 Modern growth

A large population, low telephony penetration levels, and a rise in consumer spending power have helped make India the fastest-growing telecom market in the world. The market's first operator was the state-owned Bharat Sanchar Nigam Limited (BSNL), created by corporatization of the Indian Telecommunication Service, a government unit formerly responsible for provision of telephony services. Subsequently, after the telecommunication policies were revised to allow private operators, companies such as Bharti Airtel, Reliance

Communications, Tata Indicom, Idea Cellular, Aircel and Loop Mobile have entered the market (Bharti Airtel currently being the largest telecom company in India). In the fiscal year 2008-09, rural India outpaced urban India in mobile growth rate. The total number of telephones in the country stands at 861.48 million, while the overall teledensity has increased to 72.08% as of April 30th, 2011. Mobile telephony experiences growths at rates such as 15.34 million subscribers a month, which were added in April 2011.

1.5 Introduction of Telecom Regulatory Authority of India (TRAI)

The Telecom Regulatory Authority of India (TRAI), is the independent regulator established in 1997 by the Government of India to regulate the telecommunications business in India.

1.5.1 Responsibilities
As contained in the Indian Telegraph Act, 1885, the functions of the Authority shall be to: 1. make recommendations, on a request from the licensor, on the following matters, namely: i. ii. iii. iv. need and timing for introduction of new service provider; terms and conditions of license to a service provider; revocation of license for non-compliance for terms and conditions of license: Measures to facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services. v. vi. Technological improvements in the services provided by the service providers. Type of equipment to be used by the service providers after inspection of equipment used in the network. vii. measures for the development of telecommunication technology and any other matter relatable to telecommunication industry in general; viii. efficient management of available spectrum;

2. discharge the following functions, namely: i. ii. ensure compliance of terms and conditions of license; notwithstanding anything contained in the terms and conditions of the license granted before the commencement of the Telecom Regulatory Authority (Amendment) Ordinance,2000, fix the terms and conditions of inter-connectivity between the service providers; iii. Ensure technical compatibility and effective inter-connection between different service providers. iv. regulate arrangement amongst service providers of sharing their revenue derived from providing telecommunication services; v. lay down the standards of quality of service to be provided by the service providers and ensure the quality of service and conduct the periodical survey of such service provided by the service providers so as to protect interest of the consumers of telecommunication services; vi. lay down and ensure the time period for providing local and long distance circuits of telecommunication between different service providers; vii. maintain register of interconnect agreements and of all such other matters as may be provided in the regulations; viii. ensure effective compliance of universal service obligations:

3. Levy fees and other charges at such rates and in respect of such services as may be determined by regulations.

Chapter 2: Company Profile

2.1: Company Background
2.1.1 Vodafone Group Plc Vodafone Group plc is a global telecommunications company headquartered in London, United Kingdom. It is the world's largest mobile telecommunications company measured by revenues and the world's second-largest measured by subscribers (behind China Mobile), with around 341 million proportionate subscribers as of November 2010. It operates networks in over 30 countries and has partner networks in over 40 additional countries. It owns 45% of Verizon Wireless, the largest mobile telecommunications company in the United States measured by subscribers. The name Vodafone comes from voice data fone, chosen by the company to "reflect the provision of voice and data services over mobile phones". 2.1.2 VODAFONE IN INDIA Vodafone Essar, commonly referred to as Vodafone, is a cellular operator in India that covers 23 telecom circles in India. It was formerly known as Hutchison Essar. It is based in Mumbai. Vodafone Essar is the Indian subsidiary of Vodafone Group. Formerly, 33% share in the firm was owned by Essar Group. Vodafone Group bought out the 33% stake of Essar Group for $5 billion to become the sole owner of the firm. It is the second largest mobile phone operator in terms of revenue behind Bharti Airtel, and third largest in terms of customers. Vodafone had about 134.5 million customers as of February 2011. On February 11, 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li Ka Shing Holdings in Hutch-Essar for US$11.1 billion, pipping Reliance Communications, Hinduja Group, and Essar Group, which is the owner of the remaining 33%. The whole company was valued at USD 18.8 billion.[5] The transaction closed on May 8, 2007. Despite the official name being Vodafone Essar, its products are simply branded Vodafone.

In 1992, Hutchison Whampoa and its Indian business partner

Max Group, established a

company that in 1994 was awarded a license to provide mobile telecommunications services in Bombay (now Mumbai) and launched commercial services as Hutchison Max in November 1995. In Delhi, Uttar Pradesh (East), Rajasthan and Haryana, Essar Group was the major partner. But later Hutch took the majority stake. By the time of Hutchison Telecom's Initial Public Offering in 2004, Hutchison Whampoa had acquired interests in six mobile telecommunications operators providing service in 13 of India's 23 license areas and following the completion of the acquisition of BPL Mobile that number increased to 16. In 2006, it announced the acquisition of a company (Essar Spacetel subsidiary of Essar Group) that held license applications for the seven remaining license areas. Initially, the company grew its business in the largest wireless markets in India in cities like A

Mumbai, Delhi and Kolkata. In these densely populated urban areas it was able to establish a robust network, well known brand and large distribution network all vital to long-term

success in India. Then it also targeted business users and high-end post-paid customers which helped Hutchison Essar to consistently generate a higher Average Revenue Per User (ARPU) than its competitors. By adopting this focused growth plan, it was able to establish leading positions in India's largest markets providing the resources to expand its footprint nationwide. In February 2007, Hutchison Telecom announced that it had entered into a binding agreement with a subsidiary of Vodafone Group Plc to sell its 67% direct and indirect equity and loan interests in Hutchison Essar Limited for a total cash consideration (before costs, expenses and interests) of approximately $11.1 billion. Hutch was often praised for its award winning advertisements which all follow a clean, minimalist look. A recurrent theme is that its message Hello stands out visibly though it uses only white letters on red background. Another successful ad campaign in 2003 featured a pug named Cheeka following a boy around in unlikely places, with the tagline, wherever you go, our

network follows. The simple yet powerful advertisement campaigns won it many admirers. Ads featuring the pug were continued by Vodafone even after rebranding. Timeline 1992: Hutchison Whampoa and Max Group establish Hutchison Max. 2000: Acquisition of Delhi operations and entry into Calcutta (now Kolkata) and Gujarat markets through Essar acquisition 2001: Won auction for licenses to operate GSM services in Karnataka, Andhra Pradesh and Chennai. 2003: Acquired AirCel Digilink (ADIL ESSAR Subsidiary) which operated in Rajasthan, Uttar Pradesh East and Haryana telecom circles and rebranded it 'Hutch'. 2004: Launched in three additional telecom circles of India namely Punjab, Uttar Pradesh (West) and West Bengal. 2005: Acquired BPL Mobile operations in 3 circles. This left BPL with operations only in Mumbai, where it still operates under the brand 'Loop Mobile'. 2007: Vodafone acquires a 67% stake in Hutchison Essar for $10.7 billion. The company is renamed Vodafone Essar. 'Hutch' is rebranded to 'Vodafone'. 2008: Vodafone acquires the licenses in remaining 7 circles and has starts its pending operations in Madhya Pradesh circle, as well as in Orissa, Assam, North East and Bihar. 2.1.3 Vodafone acquires Essar's Stake On March 31, 2011, Vodafone Group Plc announced that it would buy an additional 33% stake in its Indian joint venture for $5 billion after partner Essar Group exercised an option to sell the holding in the mobile-phone operator. The deal will raise Vodafone s stake to 75%. Essar will exit the company after it implemented a put option over 22% of the venture. Vodafone exercised its call option to buy an 11% stake. In 2007, Vodafone granted options to Essar that would enable the conglomerate to sell its entire stake for $5bn, or to dispose of part of the 33 per cent shareholding at an independently appraised fair market value. In January 2011, Vodafone objected to Essar s plans to place part

of its 33% stake in India Securities, a small public company. Vodafone feared the move would give an inflated market value to Vodafone Essar. It had approached the market regulator SEBI and also filed a petition in the Madras High Court. The final shareholding pattern post this deal was not provided by the company as it was not clear whether Vodafone's stake would exceed the 74 per cent FDI limit. Indian laws don't allow foreign companies to own more than 74% in a local mobile-phone operator. Vodafone has assured it will comply with local rules. Vodafone will have to sell that 1% to some Indian entity, or they ll have to consider an initial public offering. Vodafone also said that final settlement is anticipated to be completed by November 2011. The completion of the deal would be subject to meeting certain conditions which include Reserve Bank of India's permission as well as valuation of the deal.

2.2: Current Operations

VODAFONE PRODUCTS AND SERVICES

PRODUCTS Vodafone Live! Vodafone Mobile Connect USB System Vodafone Connect to Friends Vodafone Passport Vodafone Freedom Packs Vodafone at Home Vodafone 710 Amobee Media Systems

SERVICES

Mobile Money Transfer Service 3G service

2.3 Managerial Problem

Heading