A BRIEF OVERVIEW

OF TELECOM
INDUSTRY IN
INDIA
 Indian Telecom sector, like any other industrial sector in the
country, has gone through many phases of growth and
diversification

 It has started its journey from telegraphic and telephonic

systems in the 19th century

 The field of telephonic communication has now expanded to

make use of advanced technologies like GSM, CDMA, and WLL
to the great 3G Technology in mobile phones

 Day by day, both the Public Players and the Private Players
are putting in their resources and efforts to improve the
telecommunication technology so as to give the maximum to
their customers
 The Indian telecom sector can be broadly classified into Fixed
Line Telephony and mobile telephony.

 The major players of the telecom sector are experiencing a

fierce competition in both the segments. The major players
like BSNL, MTNL, VSNL in the fixed line and Airtel, Hutch,
Idea, Tata, Reliance in the mobile segment are coming up
with new tariffs and discount schemes to gain the competitive
advantage

 Traditional telephones have been replaced by the codeless

and the wireless instruments. Mobile phone providers have
also come up with GPRS-enabled multimedia messaging,
Internet surfing, and mobile-commerce.
 Along with improvement in telecom services, there is also an
improvement in manufacturing. In the beginning, there were
only the Siemens handsets in India but now a whole series of
new handsets, such as Nokia's latest N-series, Sony Ericsson's W-
series, Touch screen and advanced technological handsets are
gaining popularity.

 The value added services provided by the mobile service

operators contribute more than 10% of the total revenue.

 Bharti Airtel has the largest customer base total revenue

followed by Vodafone and Reliance
 Porter's five forces is a framework for the
industry analysis and business strategy
development formed by
Michael E. Porter of
Harvard Business School in 1979.
It draws upon
Industrial Organization (IO) econ
omics
to derive five forces that
determine the competitive intensity and
therefore attractiveness of a market.
ANALYZING THE
ENVIRONMENT - FIVE
FORCES ANALYSIS

Five Forces Analysis helps the marketer to contrast

a competitive environment. It has similarities with
other tools for environmental audit, such as PEST
analysis, but tends to focus on the single, stand
alone, business or SBU (Strategic Business Unit)
rather than a single product or range of products.
For example, Dell would analyze the market for
Business Computers i.e. one of its SBUs.
PORTER FIVE FORCES ANALYSIS
THREAT OF NEW ENTRANTS

 Economies of scale
 Product Differentiation
 Capital Requirements
 Cost Disadvantages independent of size
 Access to distribution channels
 Government channels
 INTENSITY OF RIVALRY AMONG EXISTING
COMPETITORS

Absence of switching cost

competitors of similar size ●

Price wars

●
Advertising battles

Slowdowns in industrial growth ●

New product launch

Lack of differentiation Increased customer service and warranties

●
BARGAINING POWER OF BUYERS
 When the suppliers are many and the buyers are few and
large
 When the buyers purchase in large quantities
 When the supplier’s industry depends on the buyers for a
large percentage of its total orders
 When buyers have low switching cost
 When it is economically feasible for the buyers to purchase
input from several companies at a time
 When buyers can accommodate themselves for vertical
integration to provide for their own needs
THE BARGAINING POWER OF
SUPPLIERS
 The product they sell has few substitutes
 It is important to the purchasing company
 When no single industry is a major customer
for the suppliers
 High product differentiation , no easy
substitutability
 High switching cost
 Threat of vertically integrating forward by
the suppliers
 Buyers cannot use the threat to vertically
integrating backward
THE THREAT OF SUBSTITUTE PRODUCTS
 They can match the needs of the customer in
the same way as the original product

 A close substitute is a potential threat to the

company’s product

 It limits the price which can be charged for

the original product and hence limits the
profitability of the company
PORTER’S FIVE FORCE ANALYSIS IN
TELECOMMUNICATION INDUSTRY IN INDIA
RIVALRY AMONG EXISTING COMPETITORS
MAJOR PLAYERS :
1.Bharti Airtel
2. Vodafone Essay
3. IDEA
4. BSNL
5. Aircel
6. Reliance Telecom
7. MTNL
8. Loop Mobile
9. Uninor
10. Stel
Total Users : 395.3 million
BARGAINING POWER OF CONSUMERS
1. Bharti Airtel : 121.7 million (30.86%)
2. Vodafone Essar : 94.1 million (23.87%)
3. IDEA : 59.8 million (15.19%)
4. BSNL : 59.4 million (15.08%)
5. Aircel : 33.0 million (8.38%)
6. Reliance Telecom : 15.7 million (4.0%)
7. MTNL : 4.6 million (1.17%)
8. Loop Mobile : 2.7 million (0.69%)
9. Uninor : 2.5 million (0.64%)
10. STel : 0.5 million (0.13%)
Total Users : 395.3 million
Tata Teleservices who do not report the
numbers to COAI have claimed to have reached
a total subscriber count of 60 million
 BARGAINING POWER OF SUPPLIERS
As far as telecom industry is concerned, it is service based
industry which is intangible, so in this case there are less suppliers
or we can say the role of suppliers are almost negligible
Mobile hand set suppliers:
Some other suppliers for this industry can be the Optical
fiber suppliers, Aluminum suppliers but their bargaining
power is limited:

The software assistance from companies like TCS, Infosys, Wipro ,

Reliance info etc :
THREAT TO NEW ENTRANTS
 The Indian telecom industry has always allured
foreign investors

 In fact, the cumulative FDI inflow, from August

1991 to March 2007, in the telecommunication
sector amounted to US$ 3,892.19 million

 This makes telecommunication the third-

largest sector to attract FDI in India in the post
liberalization era.
SUBSTITUTE TO PRODUCT
 Telecom sectors offers a wide range of
services in India, such as wireline, CDMA
mobile, GSM mobile, internet, broadband,
carrier, MPLS-VPN, VSAT, VoIP, IN, etc.
Internet telephone
 It is emerging as a best option in place of
because it is cheaper and video as an added
advantage
 INTERNET SERVICE MARKET SHARE ( % )
PROVIDER

BSNL 47
INTERNET SERVICE
PROVIDER
MTNL 19

BHARTI AIRTEL 5.73

RELIANCE 6.1

ISP SIFY 11.83

VSNL 6
 As we can see that use of internet in our
country is on growing rate.
 As there are many tools which can be
accessed through internet like video
conferencing other important tool is talking
through internet for Google talk, face book
etc.
 Internet is cheaper medium of
communication and one can have many
facilities by getting connected to the world
through the internet.