INDIAN TELECOM

INDUSTRY

Presented By:
Megha Bhardwaj (141)
Sakshi Jindal
Lovely Khurana (121)

Aditya Verma(117)
Gurcharan Singh Kohli (131)
Somya Singhal

TelecommunicationIntroduction
Telecommunicationsis a general term for a vast array of
technologies that send information over distances. Mobile
phones, land lines,satellitephones andvoice over internet
protocol are a field oftelecommunications. Radio, television
and networks are a few more examples of telecommunication.
Telecommunications was first introduced in India in 1851 when
the first operational land lines were laid by the government
near Kolkata.
The Indian telecom sector was entirely under government
ownership until 1984, when the private sector was allowed in
telecommunication equipment manufacturing only. The
government made its efforts towards developing R&D in the
sector by setting up an autonomous body Centre for
Development of Telematics (C-DOT) in 1984.

Characteristics
India's telecommunication networkis the second
largest in the world based on the total number of
telephone users.
The telecom sector in India experienced a rapid growth
over the past decade on account of regulatory
liberalisation, structural reforms and competition,
making telecom one of the major catalysts in Indias
growth story.
The Indian telecom industry is characterised with
intense competition, and continuous price wars.
Currently, there are around a dozen telecom service
providers who operate in the wired and wireless
segment.

INDUSTRY STRUCTURE
Current Structure of the Indian Telecom Industry :
Currently, both public sector players as well as the private sector players are
actively catering to the rapidly growing telecommunication needs in India.
Private participation is permitted in all segments of the telecom industry.

INDUSTRY STRUCTURE
Public Sector:
After the privatisation only two premier PSUs, MTNL
andBSNLoperate in India and provide various telecom services.
MTNL operates in Delhi and Mumbai and BSNL provides services to
the remaining country. In the post-liberalisation era, these PSUs not
only have made significant progress but also have provided stiff
competition to their private counterparts.
Private Sector:
The private sector is instrumental in providing both fixed line as
well as wireless services, it is mainly active in the wireless
segment. The fixed lines account for only about 2% of private
sector's total subscriber base. Some of the private players are
VIRGIN MOBILE and UNINOR.

SEGMENTS IN TELECOM
INDUSTRY
Broadly the Indian telecommunication industry can
be classified into the following segments:
Wireline services
Internet services
Wireless service: GSM and CDMA

Wireline Services
The wireline segment includes basic wireline
services rendered to households, commercial
units and to service providers such as public call
offices.

INDIAN TELECOM SERVICE

PROVIDERS

List of wireline service providers :

1.
2.
3.
4.
5.

BSNL
MTNL
Bharti Airtel Ltd.
Tata Teleservices Ltd.
Reliance

Wireless services
. Wireless services can be further divided into
Global System for Mobile Communications (GSM)
and Code Division Multiple Access (CDMA). The
GSM services, which account for 73% of the total
subscriber base of the wireless service, dominate
the wireless segment.

 Private sector players have played an important role

in the rapid growth of the wireless segment. The
private players account for around 86% of the total
wireless subscriber base.
The GSM sector is dominated by players such as
Airtel, Vodafone-Essar, and Idea Cellular, while the
CDMA sector is dominated by Reliance and Tata
Indicom. Bharti Airtel is the largest GSM mobile
operator in India and has a subscriber base of 93.92
million followed by Vodafone-Essar, BSNL and Idea
Cellular.
Reliance Communication is the largest CDMA mobile
operator.
Only Reliance Communication and Tata Teleservices
offer both GSM and CDMA networks.

Internet Services
Internet services in India have witnessed significant growth
in the last few years owing to increased presence of the
private players and emergence of new technologies.
A significant improvement has also been seen in the quality
of internet services given the substantial up gradation of
telecom infrastructure.
The public sector players dominate the internet market
accounting for almost 69.30% of the total internet
subscriber base. Among the public sector players, BSNL
rules the internet provision market with a market share of
around 53.61% followed by MTNL that accounted for
15.69%
Among the private players,Bharti Airtel Ltdhas the highest
internet subscriber base followed by Reliance
Communications Infrastructure Ltd.

Present Status of Indian

Telecom Industry
Indian telecom network is the second largest in the
world after China.
The country has 933.02 million telephone connections,
including 904.52 million wireless telephone connections.
Overall tele-density in the country is 75.23%.
Urban tele-density is 145.46%, whereas rural teledensity is 44.01%.
The share of wireless telephones in total telephones is
96.95%.
The share of private sector in total telephones is
87.13%.
Number of Broadband connections is 60.87 million.

Future Prospects of the Telecom

Industry
Include increase in rural tele-density to 70
per cent by the year 2017 and 100 per cent
by the year 2020
Million broadband connections by 2017 and
600 million by the year 2020
Providing minimum 2 Mbps download speed
and making available higher speeds of at
least 100 Mbps on demand
Long-term spectrum availability, spectrum
efficiency

Factors Influencing Growth of

the Industry
Libralisation
It has led the industry on a high growth and
have increased the level of competition. Postliberalisation, the telecom industry has received
more investments and has implemented higher
technology.
Increasing Affordability of Handsets
The manufacturers introduced lower-priced
handsets with add-on facilities to cater to the
increasing number of subscribers from different
strata of the society.

 Changing Demographic Profile

The changed profile is characterised by a large
young population, a middle class with growing
disposable income, urbanisation, increasing literacy
levels and higher adaptability to technology.
Increased Competition & Declining Tariffs
The ever-increasing competition has led to high
growth of subscribers and has put pressure on
tariffs, which have seen a sharp dropin the tariff like
outgoing calls are charged at less than a rupee per
minute.
An improved network coverage, advancement in
technology, and growing data services have also
driven the growth of the industry.

Challenges of the Industry

Fall in ARPU (Average Revenue Per Unit)
Intense competitive pressure and cut throat
pricing has resulted in declining ARPUs. A higherthan-expected decline in ARPU poses a risk of
reduction in margins of service providers.

Lack of Telecom Infrastructure

As many rural areas in India lack basic
infrastructure such as road and power,
developing telecom infrastructure in these areas
involve greater logistical risks and also extend
the time taken to roll out telecom services.

 Excessive Competition
The Indian wireless market is one of the worlds
most competitive markets with 6-8 competitors in
their circle. The auction of 3G licenses and the
introduction of mobile number portability (MNP) are
the reason to heat up competition in the industry.
Spectrum Allocation
Lack of adequate spectrum which is the most
integral part of the mobile telephony sector could
hamper its growth severely. Irrational bidding of the
service providers might render 3G services
financially-unviable. Further, there exists a risk of
delay in allotment of proposed spectrum to the
service providers who have successfully bid for the
3G spectrum.

 Price War Between the Service

Providers
The pricing strategy of per second billing
already has taken the price war between
telecom operators to the next level. The
intensifying price war could put significant
downward pressure on the industry
revenue growth.

New Telecom Policy 1999

The main objectives of the policy were:
To ensure telecommunication is within the reach of all,
that is, to ensure availability of telephone on demand as
early as possible
To achieve universal service covering all villages at
affordable and reasonable prices
To ensure world-class telecom services. Remove consumer
complaints, resolve disputes and encourage public
interface and provide a wide permissible range of services
to meet the demand at reasonable prices
To ensure that India emerges as a major manufacturing
base and major exporter of telecom equipment
To protect the defense and security interests of the nation.

NATIONAL TELECOM POLICY

2012
Major initiatives taken by the Government (NTP2012) to boost investment and employment
opportunities in the telecom sector are:

1. UNIFIED LICENSE
To achieve the objective of NTP-2012 to create one
nation - one license across services and service
areas, the Department of Telecom (DoT) has issued
guidelines on Unified License.
Only one Unified License is required for all telecom
services in entire country.

2. MERGER AND AMALGAMATION POLICY

This will facilitate transfer of license consequent to
merger, amalgamation and acquisition of various
companies for different services in different service
areas. The market share limit for transfer and
merger of licenses has been increased to 50% from
existing 35%
3. SPECTRUM AUCTION
NTP-2012 envisages adequate availability of
spectrum and its allocation in a transparent manner
through market related process. Auction of
spectrum in 900 MHz band and 1800 MHz band was
conducted during February, 2014.
Spectrum was put for auction in Delhi, Mumbai and
Kolkata service areas and all were sold out.

4. FOREIGN DIRECT INVESTMENT

POLICY
To attract FDI inflow and make the sector
more attractive and investor friendly,
Government raised FDI limit for the
telecom services from 74% to 100%.
It will facilitate telecom licensees to
consolidate equity and raise domestic as
well as foreign debt from the market.