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Культура Документы
Prepared By
Bhuvar Rajshee R.
Guided By
Prof. Vishal Javiya
Academic Year
2008-10
Submitted To
Smt. R D Gardi Department of Business Management,
Saurashtra University, Rajkot
P age |2
This has not been previously submitted to any other university for any examination.
Date: - 12-4-2010
Place: - Rajkot
Signature
A study report on Indian Telecom Industry: “Price-War and its impact on industry”
Prepared by: Bhuvar Rajshee R.
P age |3
MBA is a course where getting theoretical knowledge only will not serve the purpose. The
effective application of the theoretical aspects in the practical situations should be given
more importance. So as a part of academic activity the MBA students are required to
undergo research report after the end of 4th Semester. During the research study,I get the
opportunity to apply the concepts they have learned in first three semesters.
Here, I tried my level best to represent all the information and I have expressed my
deliberated efforts to make my report clean & specific.
A study report on Indian Telecom Industry: “Price-War and its impact on industry”
Prepared by: Bhuvar Rajshee R.
P age |4
The successful completion of a research study requires guidance & help from a number of
people. I was fortunate to have all the support from my Professors. I therefore take this
opportunity to express my profound sense of gratitude to the all those who extended their
wholehearted help and support to me in completing this grant research project.
I also express my deep sense of gratitude towards Mr. Vishal Javiya. (Guide, Faculty at
RDGDDBM)
No Acknowledge would suffice for the support my family members, my colleagues, some
bloggers, customer care executive & other friends who work on industry.
Lastly, I extend my thanks to all those whose name have not been mentioned way in
successfully carrying out the project report.
Date: - 12-4-2010
Place: - Rajkot.
A study report on Indian Telecom Industry: “Price-War and its impact on industry”
Prepared by: Bhuvar Rajshee R.
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1 Executive summary 8
2 Introduction 10
Objective 11
Research methodologies 12
Regulatory Authority 31
1. Airtel 40
2. Reliance communications 44
3. Vodafone Essar 46
4. BSNL 49
5. Idea cellular 52
7. Aircel 59
8. MTNL 62
A study report on Indian Telecom Industry: “Price-War and its impact on industry”
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9. MTS India 66
11. Uninor 70
12. S-tel 72
7 Marketing mix of Value added services as a “Next wave for revenue growth” 110
Product 112
A study report on Indian Telecom Industry: “Price-War and its impact on industry”
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Price 120
Promotion 122
Place 128
Opportunities 134
Threats 136
Finding 139
suggestions 141
10 Bibliography 143
A study report on Indian Telecom Industry: “Price-War and its impact on industry”
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We undertook this project to understand the Cellular Industry as a whole. Also to get better
insight of how External Environment as well as the Competitive Environment can affect it. In
the price-war situation which types problem faced by Indian telecom industry. At present
Telecom Sector is in boom, every day there are new changes happening in the industry. This
project has taught us that how difficult it is for a company to survive in the market with the
continuous changes in terrif, whether these changes are in Technology, or in the pricing
structure or in the legal policies or in the terms of customer preferences. We also came to
know, that the telecom market is having very high Entry as well as Exit barriers, due to the
increased number of players and strong rivalry among existing players.
The process of deregulation began in India in 1980s with the restructuring of Telecom
department to stimulate growth and introduce new technologies. When cellular mobile
services were first introduced, it was duopoly, under a fixed license fee regime and for a
license period of 10 years. The initial response was encouraging because of the perceived
attractiveness of the Indian market in the terms of teledensity, the high latent demand and
the increasing middle class. The Telecom Regulatory Authority of India (TRAI) was formed in
1997 with a view to provide aneffectiveregulatory framework and adequate safeguards to
ensure fair competition and protection of consumer interests. The Government is
committed to a strong and independent regulator with comprehensive powers and clear
authority to effectively perform its functions. Telecom proved to be a powerful attraction of
foreign investment. The cumulative FDI inflow into Telecom since 1993 has exceeded Rs.
43,000 Million. Within telecom, Cellular Industry has attracted most of the foreign
investment since 1993, accounting for almost 50 % of the FDI inflow in to telecom –
representing amongst the biggest investment in any one sector in India.
The concept of Cellular service had been established to target only to Business class people.
But after the revolutions happened in this industry, the technology enhanced and the
competition has made the tariffs cheaper and now it has become the status symbol, and
because of that now not only the business classes people keep it but also service class
people, school & college going students keep the cellular phone with them. It has given the
new uses to this service people keep in touch with their relatives and friends. The living
standard has also changed. The advertising is also in full fledge; this has lead the cellular
service so popular.
The cellular operators are facing the biggest threat ever by the CDMA (Code Division
Multiple Access), i.e. Rcom and Tata Tele services. Due to cheaper rates, better technology
& latest innovations the cellular operators are coming with the new schemes and decreased
A study report on Indian Telecom Industry: “Price-War and its impact on industry”
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tariffs to retain the customers so they do not switch. Introduction of Satellite phones by
Iridium Inc. may also affect the cellular market. Even though the technological changes have
kept sweeping across the country’s telecom landscape with the introduction of GSM (Global
System for mobile Communication) and CDMA (Code Division Multiple Access) services, the
regulation is still in a flux. The issues involved are the existence of different tariffs rates
between the two services as well as the types of services two warring groups can provide.
And, with the entry of Reliance group the competition just has been increased.
At present, we are using the 2.5-generation of mobile system. The 3rd generation of mobile
communication systems will soon by implement. Following on the heels of analog
technology, the third generation will be digital mobile multimedia offering broadband
mobile communication with voice, video, and graphics, audio and other information.
Indian cellular industry is in full of its color with boom seen in Indian economy. With theentry
of major players, major up fold has been seen in cellular industry since last 8-10 years.
Government continuous intervention in this industry is major factor that has affected
positively & negatively for different technological players.
To achieve objective of our study we had given importance to secondary data collection and
its analysis & conclusion.
In our research secondary data collected from various magazines, newspapers, internet,
library, reports of different companies etc.
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A study report on Indian Telecom Industry: “Price-War and its impact on industry”
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Main-objective
To study the present scenario of cellular (GSM +CDMA) service industry of India and
understand the price-war and its impact on industry.
To understand the marketing mix of VAS as a “next wave for revenue growth”
Sub-objective;
To understand price-war.
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Types of data:
Primary Data: -data are those, which are collected for the first time and thus happen
to be original in character.
Secondary Data: - Secondary data, on the other hand are those, which have already
been collected by someone in the past. For this research study, secondary data is
used.
Data Source:
Secondary data are collected from the magazines, different reports, publishes, newspapers,
Internet, etc.
We have taken secondary data thatare related to prepare project. For comparison also we
taken secondary data and from that we have prepared interpretation. Other analysis we
have made from collected data only. This way, we have prepared project by using secondary
data.
price war and its impact VAS "next wave for revunue groth"
Finding suggestions
A study report on Indian Telecom Industry: “Price-War and its impact on industry”
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The Indian telecommunication industry, with about 525 million mobile phone connections
(Dec 2009) , is the third largest telecommunication network in the world and the second
largest in terms of number of wireless connections. The Indian telecom industry is one of
the fastest growing in the world and is projected that India will have 'billion plus' mobile
users by 2015. Projection by several leading global consultancies is that India’s telecom
network will overtake China’s in the next 10 years. For the past decade or so,
telecommunication activities have gained momentum in India. Efforts have been made from
both governmental and non-governmental platforms to enhance the infrastructure. The
idea is to help modern telecommunication technologies to serve all segments of India’s
culturally diverse society, and to transform it into a country of technologically aware people.
The telecom services have been recognized the world-over as an important tool for socio-
economic development of a nation. Telecommunication is one of the prime support services
needed for rapid growth and modernization of various sectors of the economy. It has
become especially important in recent years because of enormous growth of information
technology and its significant potential for the impact on the rest of the economy.
Telecommunications is one of the few sectors in India, which has witnessed the most
fundamental structural and institutional reforms since1991. Considering the great potential
for the growth of telephone demand with the accelerated growth of economic activities,
A study report on Indian Telecom Industry: “Price-War and its impact on industry”
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the Government of India announced the National Telecom Policy in 1994 and the New
Telecom Policy in 1999. The National Telecom Policy provides for private sector
participation to supplement the efforts of Dot in basic telephone services. The opening up of
the basic services provided a big opportunity for private & foreign investors. More policy
initiatives included Addendum to NTP-1999.
The entire sector is now open to unrestricted competition in all. The opening of the sector has
not only led to rapid growth but also helped a great deal towards maximization of consumer
benefits. The tariffs have been falling continuously across the board because of healthy and
unrestricted competition and India today has one of the lowest tariffs in the world. Besides,
because of the various measures and initiatives taken by the Government, India is now fast
emerging as one of the leading telecom nations.
The reforms process in the telecom sector is still on, aiming to remove the balance hurdles and
limitations. With a strong population of over 1.16 Billion, India has become one of the most
dynamic and promising. Telecom markets of the world. In recent times, the country has
emerged as one of the fastest growing telecom markets in the world. It has third largest
telecom network and the second largest wireless network in the world.
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::: Growth of Mobile subscriber base from 1999 to Jan-2010 (In millions) :::
SUBSCRIBERS
1200
1000
1000
800
(in Millions)
600
525.15
429.72
400
304.49
206.83
200
98.41 104.32
75.54
44.97 54.62
22.81 28.53 36.29
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2015
Dec.2009 India have the 525.15 million subscribers, it is 22x times higher than 1999.
During this period call charges reduce 56 x times, in compare to 1999’s Rs 16.80 per minute.
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In the beginning, two-way radios (known as mobile rigs) were used in vehicles such as
taxicabs, police cruisers, ambulances, and the like, but were not mobile phones because
they were not normally connected to the telephone network. Users could not dial phone
numbers from their vehicles. A large community of mobile radio users, known as the
mobileers, popularized the technology that would eventually give way to the mobile phone.
Originally, mobile two-way radios were permanently installed in vehicles, but later versions
such as the so-called transportable or "bag phones" were equipped with a cigarette lighter
plug so that they could also be carried, and thus could be used as either mobile or as
portable two-way radios. During the early 1940s, Motorola developed a backpacked two-
way radio, the Walkie-Talkie and later developed a large hand-held two-way radio for the US
military. This battery powered "Handy-Talkie" (HT) was about the size of a man's forearm.
In 1910Lars Magnus Ericsson installed a telephone in his car, although this was not a radio
telephone. While travelling across the country, he would stop at a place where telephone
lines were accessible and using a pair of long electric wires he could connect to the
=9781840464191 In Europe, radio telephony was first used on the first-class passenger
trains between Berlin and Hamburg in 1926. At the same time, radio telephony was
introduced on passenger airplanes for air traffic security. Later radio telephony was
introduced on a large scale in German tanks during the Second World War. After the war
German police in the British zone of occupation first used disused tank telephony
equipment to run the first radio patrol cars. In all of these cases the service was confined to
specialists that were trained to use the equipment. In the early 1950s ships on the Rhine
were among the first to use radio telephony with an untrained end customer as a user.
In 1946 soviet engineers G. Shapiro and I. Zaharchenko successfully tested their version of a
radio mobile phone mounted inside a car. The device could connect to local telephone
network with a range of up to 20 kilometers.
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In December 1947, Douglas H. Ring and W. Rae Young, Bell Labs engineers, proposed
hexagonal cells for mobile phones in vehicles.[1] Philip T. Porter, also of Bell Labs, proposed
that the cell towers be at the corners of the hexagons rather than the centers and have
directional antennas that would transmit/receive in three directions (see picture at right)
into three adjacent hexagon cells. The technology did not exist then and the frequencies
had not yet been allocated. Cellular technology was undeveloped until the 1960s, when
Richard H. Frenkiel and Joel S. Engel of Bell Labs developed the electronics.
Recognizable mobile phones with direct dialing have existed at least since the 1950s. In the
1954 movie Sabrina, the businessman Linus Larrabee (played by Humphrey Bogart) makes a
call from the phone in the back of his limousine.
The first person to have a mobile phone in the United Kingdom was reputedly Prince Philip,
who had a system fitted into the trunk of his Aston Martin in 1957. The Prince could make
phone calls to the Queen while driving, which was thought to be quite amazing at the time.
The Duke of Gloucester heard about the mobile phone and tried to obtain one, but the Post
Office denied his request. They were prepared to indulge the husband of Her Majesty, but
nobody else, as the system used an entire dedicated radio frequency.
The first fully automatic mobile phone system, calledMTA (Mobile Telephone system A), was
developed by Ericsson and commercially released in Sweden in 1956. This was the first
system that did not require any kind of manual control in base stations, but had the
disadvantage of a phone weight of 40 kg (90 lb.). MTB, an upgraded version with transistors,
weighing 9 kg (20 lb.), was introduced in 1965 and used DTMF signaling. It had 150
customers in the beginning and 600 when it shut down in 1983.
In 1957 young Soviet radio engineer Leonid Kupriyanovich from Moscow created the
portable mobile phone, named after himself as LK-1 or "radiophone". This true mobile
phone consisted of a relatively small-sized handset equipped with an antenna and rotary
dial, and communicated with a base station. Kupriyanovich's "radiophone" had 3 kilogram of
total weight, could operate up to 20 or 30 kilometers, and had 20 or 30 hours of battery
lifespan. LK-1 and its layout was depicted in popular Soviet magazines as Nauka i zhizn, 8,
1957, p. 49, Yuniytechnik, 7, 1957, p. 43–44. Engineer Kupriyanovich patented his mobile
phone in the same year 1957 (author's certificate (USSR Patent) # 115494, 1.11.1957). The
base station of LK-1 (called ATR, or Automated Telephone Radio station) could connect to
local telephone network and serve several customers.
In 1958 the USSR also began to deploy the "Altay" national civil mobile phone service
especially for motorists. The newly-developed mobile telephone system was based on
Soviet MRT-1327 standard. The main developers of the Altay system were the Voronezh
Science Research Institute of Communications (VNIIS) and the State Specialized Project
Institute (GSPI). In 1963 this service started in Moscow, and in 1970 the Altay service already
was deployed in 30 cities of the USSR. The last upgraded versions of the Altay system are
still in use in some places of Russia as a trunking system.
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In 1959 a private telephone company located in Brewster, Kansas, USA, the S&T Telephone
Company, (still in Business today) with the use of Motorola Radio Telephone equipment and
a private tower facility, offered to the public mobile telephone services in that local area of
NW Kansas. This system was a direct dial up service through their local switchboard, and
was installed in many private vehicles including grain combines, trucks, and automobiles.
For some as yet unknown reason, the system after being placed online and operated for a
very brief time period was shut down. The management of the company was immediately
changed, and the fully operable system and related equipment was immediately dismantled
in early 1960, not to be seen again.
In 1966, Bulgaria presented the pocket mobile automatic phone RAT- 0.5 combined with a
base station RATZ-10 (RATC-10) on Interorgtechnika-66 international exhibition. One base
station, connected to one telephone wire line, could serve up to six customers.
In 1967, each mobile phone had to stay within the cell area serviced by one base station
throughout the phone call. This did not provide continuity of automatic telephone service to
mobile phones moving through several cell areas. In 1970 Amos E. Joel, Jr., another Bell Labs
engineer invented an automatic "call handoff" system to allow mobile phones to move
through several cell areas during a single conversation without loss of conversation.
In December 1971, AT&T submitted a proposal for cellular service to the Federal
Communications Commission (FCC). After years of hearings, the FCC approved the proposal
in 1982 for Advanced Mobile Phone System (AMPS) and allocated frequencies in the 824–
894 MHz band.[6] Analog AMPS was superseded by Digital AMPS in 1990.
One of the first successful public commercial mobile phone networks was the ARP network
in Finland, launched in 1971. Posthumously, ARP is sometimes viewed as a zero generation
(0G) cellular network, being slightly above previous proprietary and limited coverage
networks.
First generation:
On April 3, 1973, Motorola employee Dr. Martin Cooper placed a call to Dr. Joel S. Engel,
head of research at AT&T's Bell Labs, while walking the streets of New York City talking on
the first Motorola DynaTAC prototype in front of reporters. Motorola has a long history of
making automotive radios, especially two-way radios for taxicabs and police cruisers.
Second generation:
In the 1990s, 'second generation' (2G) mobile phone systems such as GSM, IS-136
("TDMA"), iDEN and IS-95 ("CDMA") began to be introduced. In 1991 the first GSM network
(Radiolinja) opened in Finland. 2G phone systems were characterized by digital circuit
switched transmission and the introduction of advanced and fast phone-to-network
signaling. In general the frequencies used by 2G systems in Europe were higher than those
in America, though with some overlap. For example, the 900 MHz frequency range was used
for both 1G and 2G systems in Europe, so the 1G systems were rapidly closed down to make
space for the 2G systems. In America the IS-54 standard was deployed in the same band as
AMPS and displaced some of the existing analog channels.
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Coinciding with the introduction of 2G systems was a trend away from the larger "brickle"
phones toward tiny 100–200g hand-held devices, which soon became the norm. This change
was possible through technological improvements such as more advanced batteries and
more energy-efficient electronics, but also was largely related to the higher density of
cellular sites caused by increasing usage levels. This decreased the demand for high
transmission powers to reach distant towers for customers to be satisfied.
The second generation introduced a new variant to communication, as SMS text messaging
became possible, initially on GSM networks and eventually on all digital networks. The first
machine-generated SMS message was sent in the UK in 1991. The first person-to-person
SMS text message was sent in Finland in 1993. Soon SMS became the communication
method of preference for the youth. Today in many advanced markets the general public
prefers sending text messages to placing voice calls.
2G also introduced the ability to access media content on mobile phones, when Radiolinja
(now Elisa) in Finland introduced the downloadable ring tone as paid content. Finland was
also the first country where advertising appeared on the mobile phone when a free daily
news headline service on SMS text messaging was launched in 2000, sponsored by
advertising.
Third generation:
Not long after the introduction of 2G networks, projects began to develop third generation
(3G) systems. Inevitably there were many different standards with different contenders
pushing their own technologies. Quite differently from 2G systems, however, the meaning
of 3G has been standardized in the IMT-2000 standardization processing. This process did
not standardize on a technology, but rather on a set of requirements (2 Mbit/s maximum
data rate indoors, 384 Kbit/s outdoors, for example). At that point, the vision of a single
unified worldwide standard broke down and several different standards have been
introduced.
The first pre-commercial trial network with 3G was launched by NTT DoCoMo in Japan in the
Tokyo region in May 2001. NTT DoCoMo launched the first commercial 3G network on
October 1, 2001, using the WCDMA technology. In 2002 the first 3G networks on the rival
CDMA2000 1xEV-DO technology were launched by SK Telecom and KTF in South Korea, and
Monet in the USA. Monet has since gone bankrupt. By the end of 2002, the second WCDMA
network was launched in Japan by Vodafone KK (now Softbank).pooEuropean launches of
3G were in Italy and the UK by the Three/Hutchison group, on WCDMA. 2003 saw a further
8 commercial launches of 3G, six more on WCDMA and two more on the EV-DO standard.
During the development of 3G systems, 2.5G systems such as CDMA2000 1x and GPRS were
developed as extensions to existing 2G networks. These provide some of the features of 3G
without fulfilling the promised high data rates or full range of multimedia services.
CDMA2000-1X delivers theoretical maximum data speeds of up to 307 Kbit/s. Just beyond
these is the EDGEsystem which in theory covers the requirements for 3G system, but is so
narrowly above these that any practical system would be sure to fall short.
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By the end of 2009 there were 325+ Million subscribers on 3G networks worldwide, which
reflected 9% of the total worldwide subscriber base. About two thirds of these are on the
WCDMA standard and one third on the EV-DO standard. The 3G telecoms services
generated over 120 Billion dollars of revenues during 2009 and at many markets the
majority of new phones activated were 3G phones. In Japan and South Korea the market no
longer supplies phones of the second generation. Earlier in the decade there were doubts
about whether 3G might happen, and also whether 3G might become a commercial success.
By the end of 2009 it had become clear that 3G was a reality and was clearly on the path to
become a profitable venture.
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The popular meaning of telecom always involves electrical signals and nowadays people
exclude postal or any other raw telecommunication methods from its meaning. Therefore,
the history of Indian telecom can be started with the introduction of telegraph. As the
cellular service is the part of telecom.
Introduction of Telegraph:
The postal and telecom sectors had a slow and uneasy start in India. In 1850, the first
experimental electric telegraph Line was started between Kolkata and Diamond.
In 1851, it was opened for the British East India Company. The Posts and Telegraphs
department occupied a small corner of the Public Works Department at that time.
Construction of 4,000 miles (6,400 km) of telegraph lines connecting Kolkata (Calcutta) and
Peshawar in the north via Agra, Mumbai (Bombay) through Sindwa Ghats, and Chennai in
the south, as well as Ootacamund and Bangalore was started in November 1853. Dr. William
O'Shaughnessy, who pioneered telegraph and telephone in India, belonged to the Public
Works Department. He tried his level best for the development of telecom throughout this
period. A separate department was opened in 1854 when telegraph facilities were opened
to the public.
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. By 1881, the Government changed its earlier decision and a
licensewas granted to the Oriental Telephone Company Limited of England for opening
telephone exchanges at Kolkata, Mumbai, Chennai (Madras) and Ahmadabad. January 28,
1882, is a Red Letter Day in the history of telephone in India. On this day Major E. Baring,
Member of the Governor General of India's Council declared open the Telephone Exchange
in Kolkata, Chennai and Mumbai. The exchange at Kolkata named "Central Exchange" was
opened at third floor of the building at 7, Council House Street. The Central Telephone
Exchange had 93 subscribers. Bombay also witnessed the opening of Telephone Exchange in
1882.
Further developments:
1902 - First wireless telegraph station established between Saugor Islands and Sand
heads.
1907 - First Central Battery of telephones introduced in Kanpur.
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While all the major cities and towns in the country were linked with telephones during the
British period, the total number of telephones in 1948 was only around 80,000. Even after
independence, growth was extremely slow. The number of telephones grew leisurely to
980,000 in 1971, 2.15 million in 1981 and 5.07 million in 1991.
In 1975, the Department of Telecom (DoT) was separated from P&T. DoT was responsible
for telecom services in entire country until 1985 when Mahanagar Telephone Nigam Limited
(MTNL) was carved out of DoT to run the telecom services of Delhi and Mumbai. In 1990s
the telecom sector was opened up by the Government for private investment as a part of
Liberalization-Privatization-Globalization policy. Therefore, it became necessary to separate
the Government's policy wing from its operations wing. The Government of India
corporatized the operations wing of DoT on October 01, 2000 and named it as Bharat
Sanchar Nigam Limited (BSNL). Many private operators, such as Reliance India Mobile, Tata
Telecom, Vodafone, BPL, Bharti, Idea etc., successfully entered the high potential Indian
telecom market.
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The telecom services have been recognized the world-over as an important tool for socio-
economic development for a nation. Telecommunication is one of the prime support
services needed for rapid growth and modernization of various sectors of the economy. It
has become especially important in recent years because of enormous growth of
information technology and its significant potential for the impact on the rest of the
economy. In the past decade or so the distinction between communications & IT has been
diminishing with emerging common infrastructures blurring the differentiation between
content & carrier methods. At the same time, as has been the case in most of the developed
world, the combination of enhanced computing power and improved telecommunications-
equated by some to the introduction of steam power in the 18th century and electricity in
the 19th, has spurred a major improvement in the productive capacities of the economies.
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Introduction:
Globalization, liberalization and privatization are the three most spoken words in today’s
world. These initiatives paved way for all-round reforms,
Especially in developing economies, like India. These countries realized that development
ofeffectiveand efficient means of communications and information technology is important
to push them onto the path of development. The growth of the telecom sector in India
during post- liberalization has been phenomenal. This research aims to throw light on the
factors that contributed to growth in the segment and presents an insight on the present
status of the industry.
Liberalization:
In the early 1990s was the impact of economic reforms promulgated by the Government of
India to align its economy with the world economy. Further the economic renaissance of
India catalyzed the need for the opening of Indian cellular industry. Since independence the
number of basic telecommunication services network has expanded from about 84
thousand connections to around 385.95 lakh connections as on March 31 2002. The basic
service network represents the majority of the telephone subscription, which accounts for
around 86% of the total telecommunication network in India. Post 1990s, the Government
of India did away with its old monopoly-market concept and shifted to open-market policy
regime.
In the course of liberalization, licenses were granted for providing cellular mobile service in
the metro cities of Delhi, Mumbai, Kolkata, and Chennai. To avoid overlaps, the NTP stated
that not more than two cellular providers could operate in a given telecom circle. Service
providers were now free to provide all types of mobile services including voice and non-
voice messages and data services in their service area of operation.
Bharti, a part of Bharti Enterprises, was the first to launch its cellular service on July 7, 1995.
Bharti's cellular services were launched under the brand name ‘AirTel'and was categorized
as pre-paid services and post-paid services. The postpaid service was launched under the
brand name “Airtel” whereas its prepaid services were launched under the brand name
“Magic”...
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Established in 1976, Bharti Enterprises was India's leading Telecom and Healthcare
conglomerate. It had profits of $320 million and revenues of $ 1,790.776 million for the
financial year 2004. Pre-paid services are the mobile service where the user needs to
purchase a “prepaid” card that offers talk-time and other services depending on the talk-
time value of the card.
Post-paid services refer to mobile services that are billed on a monthly basis. The user needs
to pay the bills at the end of the month's usage of the service.
Privatization:
For decades, we have wanted the government to stop baking bread, running hotels,
operating airlines, offering phone services, providing insurance or running any business that
requires high standards of customer service. Also, we wanted government to stop being
both, a service provider and a regulator, or a player and a referee. And in the last five years,
the government is actually making a serious attempt to get out of several businesses
through its privatization programmed. It has also set up several independent regulators to
ensure a fair competition between service providers and to deal with the impact of changing
technology on the way businesses are run.
Privatizations and competition alone have led to big improvements in service quality in
many areas. Unfortunately, the regulatory systems seem to operate on the belief that
competition alone is enough to protect consumer interests. Take for instance the Telecom
Regulatory Authority of India (TRAI). It follows the open house route to policy making, but
does not entertain the mounting number of individual complaints. However, it is now
planning to set up a telecom ombudsman to interface with customers. Meanwhile,
subscribers across the spectrum of telephone services continue to report a variety of
complaints.
Calls to mobile phones are the most annoying form of telemarketing because they are not
only a brazen invasion of privacy but often make the victim pay long distance charges. Some
of our leading banks and finance companies have no qualms about letting telemarketers
harass their customers. My experience with a leading Indian bank and a foreign bank reveals
that we cannot get off the list until we make multiple complaints to the top management of
these institutions. We can say that most mobile phone companies are indeed protective of
their subscribers and do not parts with telephone lists, so most call centers create lists by
dialing random numbers and hoping to strike lucky. The problem is that they simply refuse
to strike out numbers even when the person emphatically asks them never to call.
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Civil courts are crowded and consumer courts are slowed down by inadequate
infrastructure and often a poor understanding of consumer issues. The solution lies in
expanding the role of independent regulators and asking them to create grievance
redressed courts or ombudsmen to hear consumer complaints and grant swift justice. But
unless the judicial system makes it much too expensive for companies to ignore their
customers, the benefits of privatization will invariably taper off within a couple years after
any sector is opened up to competition.
Policy Initiatives:
India is one of the most deregulated telecom markets in the world. Private participation is
permitted in all segments of the services – international long distance, domestic long
distance, basic, cellular, internet, radio-paging, and a number of value-added services.
Private participation in international voice services has been a significant step undertaken
by the government. Private players have been allowed to provide international long
distance services since April 2002; two years ahead of schedule. The government has
announced the New Telecom Policy (NTP) 1999 to further de-regulate the sector with
respect to services like basic, international long distance (ILD), national long distance (NLD)
and Wireless in Local Loop (WLL) among others.
The government has liberalized the sector with the following objectives:
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Globalization:
With the advent of globalization and deregulation, the dynamics of the Telecom industry is
undergoing a sea change. This is also affected by the convergence of voice, data, and video.
In order to stay ahead of competition, telecom service providers need to operate with low
delivery costs, offer efficient services to retain existing customers, and come up with new
schemes to attract new customers. Several telecom operators offer a variety of telecom
services.
In 1995, the Indian cellular industry looked very promising. With ever increasing
globalization and expanding business activities, cell phones became a necessity for business
on the move. The younger generation also began to flaunt the cell phone as a status symbol.
Soon cell phones were being used not only as a tool for communication but also as a source
of entertainment.
As per the FDI policy for the Telecom Sector, investment up to 49% is permitted in Basic,
Cellular and other value added services, which is hiked to 74%; up to 74% is permitted in
Internet, infrastructure and radio paging services and up to 100% is permitted in
manufacturing, Internet service, voice and electronic mail, based on certain conditions for
fulfillment as a part of licensing and security requirements, laid down by the Department of
Telecommunications, Government of India. Several announcements were made relating to
policy change covering change of ADC from per minute charges to revenue share, and
mobile number portability. FDI ceiling increment has led to an increase in FDI in mobile
services whereas ADC has resulted in reduction of mobile tariffs in the country. On the
policy front, per minute ADC on domestic calls was changed to revenue share regime. And
the percentage charged is 1.5% of AGR (adjusted gross revenue).
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Department of Telecom:
The Department of Telecom has been formulating developmental policies for the
accelerated growth of the telecommunication services. The Department is also responsible
for grant of licenses for various telecom services like Unified Access Service Internet and
VSAT service. The Department is also responsible for frequency management in the field of
radio communication in close coordination with the international bodies. It also enforces
wireless regulatory measures by monitoring wireless transmission of all users in India.
Telecom Commission:
The Telecom Commission was set up by the Government of India vide Notification dated
April 11, 1989 with administrative and financial powers of the Government of India to deal
with various aspects of Telecommunications. The Commission consists of a Chairman, four
full time members, who are ex-office Secretary to the Government of India in the
Department of Telecommunications and four part time members who are the Secretaries to
the Government of India of the concerned Departments. The Telecom Commission and the
Department of Telecommunications are responsible for policy formulation, licensing,
wireless spectrum management, administrative monitoring of PSUs, research and
development and standardization/validation of equipment etc. The multi-pronged strategies
followed by the Telecom Commission have not only transformed the very structure of this
sector but have motivated all the partners to contribute in accelerating the growth of the
sector.
COAI (Cellular Operators Association of India) was set up in 1995 as a registered non-
governmental, and non-profit society. The Cellular Operators Association of India was
established with the aim that it would be dedicated to the advancement of modern
communication.
COAI encourages the advancement of communication through Services of Mobile Cellular
Telephone. The vision of COAI (Cellular Operators Association of India) is to set up and
sustain cellular infrastructure that is of world class standard and also to encourage mobile
communication services that is affordable in the country.
Cellular Operators Association of India is the official voice for the cellular industry in India
and interacts on its behalf with the licensor, the telecom industry associations, the
management spectrum agency, and the policy makers. The chairman of COAI (Cellular
Operators Association of India) is Mr. Sanjeev Aga and the vice- chairman is Mr. Naresh
Gupta. COAI (Cellular Operators Association of India) has many committees under it such as
the Executive Council Committee, Business Development Committee, Finance and
Commercial committee, Regulatory Council Committee, and Technology Committee.
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COAI (Cellular Operators Association of India) objectives includes to upgrade and maintain
services such as security, speech transmission, coverage, and access in order to help in the
expansion of the cellular services in the country and to make continuous efforts to satisfy
the customers. Further the various objectives of COAI are to address the problems of the
cellular operators that relate to financial, operational, licensing, or regulatory by interacting
with the Ministry of Finance, Department of telecommunications, Financial Institutions,
Ministry of Communications & IT, Ministry of Commerce, and Telecom Regulatory Authority
of India. Also the objectives of Cellular Operators Association of India are to make efforts to
achieve the country's objectives of better rural access and increased tele- density and also
to spread information and dispense awareness among consumers and operators on issues
relating to the various kinds of services provided by the service operators to their
customers.
The various cellular companies that are members of COAI (Cellular Operators Association of
India) are;
Loop mobile
Reliance Telecom Ltd
Idea Cellular Ltd
Aircel Ltd
Vodafone Group
Bharti Airtel Ltd
Government of India had set-up telecom regulatory authority of India (TRAI) as a regulatory
authority for telecom sector. GoI has given a power to TRAI for development of telecom
sector. TRAI act as an immediate between industries and government. TRAI was formed in
Jan 1997 with a view to provide aneffectiveregulatory framework and adequate safeguard
to ensure fair competition and protection of consumer interest. The government is
committed to strong and independent regulator with comprehensive powers and player
authority to impactively perform its functions. TRAI, 1993 deals with the powers and
functions of the authority. One of the important function to be discharge by the authority is
to laid down the standard of quality of service to be provided by the service provide and for
that the prescribed quality of service is maintained by the service provides and for that
purpose one of the means adopted would be to conduct periodical survey of the such
service provided by the service provider. In pursuance of this objective the authority notify a
regulation on quality of service of basic and cellular mobile service in July, 2000. The
purpose of the regulation is to create suitable conditions for customer satisfaction by
meeting down the quality of service that the service providers are required to provide and
customer as a right to accept. Satisfaction by making known the quality of service that the
service providers are required to provide and the consumer has the right to accept. The
regulation also provides for measuring customer perception regarding telecom services
through surveys. The authority through independent agency may conduct such service. The
regulation further provides for meeting the results of the surveys public so as to improve
the quality of the service by generating healthy competition among the service providers.
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Policy Initiatives by Govt. of India in the Telecommunication Sector have been one of the
largest causes for the success of the telecom market in India. The national parties before the
administrative unit have lifted private telecom units based on license-fee.
The government of India has adopted a new economic policy for the telecommunication
market in India. This policy has beeneffectivefrom 1994 and the Govt. of India with the aim
to accelerate India's growth in export production and international market formulated it.
The national telecom policy as has been designed by the government of India also ensures
foreign direct investment and exhilarating domestic investiture. This national economic
policy of telecom department demands superior quality telecommunication services and
therefore the development of telecom services are to be given the utmost importance to
attain the peak of success. The national telecom policy covers the following objectives:
A number of policy changes have been made in the recent past which, if implemented, is
bound to have a significant impact on the telecom scenario. The most significant among the
changes is the announcement of a New Telecom Policy (NTP) 1999. The Policy envisages
development of telecom facilities in remote, rural and tribal areas of the country and their
availability to the masses at affordable costs.
The NPT 1999, which has come into impact from April 1, 1999, aims at making telephones
available on demand by the year 2002 and to achieve teledensity of seven per hundred
persons by the year 2005. In case of rural areas, the current teledensity is proposed to be
raised from 0.4 to 4 by the year 2010. The policy document of NPT outlines rapid growth in
the telecom sector in India with a projected teledensity of 15 by the year 2010.
In 1994, the Government announced the National Telecom Policy which defined certain
important objectives, including availability of telephone on demand, provision of world class
services at reasonable prices, ensuring India's emergence as major manufacturing / export
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base of telecom equipment and universal availability of basic telecom services to all villages.
It also announced a series of specific targets to be achieved by 1997. As against the NTP
1994 target of provision of 1 PCO per 500 urban population and coverage of all 6 lac villages,
DoT has achieved an urban PCO penetration of 1 PCO per 522 and has been able to provide
telephone coverage to only 3.1 lac villages. As regards provision of total telephone lines in
the country, DoT has provided 8.73 million telephone lines against the eighth plan target of
7.5 million lines.
In addition to some of the objectives of NTP 1994 not being fulfilled, there have also been
far reaching developments in the recent past in the telecom, IT, consumer electronics and
media industries world-wide. Convergence of both markets and technologies is a reality that
is forcing realignment of the industry. At one level, telephone and broadcasting industries
are entering each other's markets, while at another level technology is blurring the
difference between different conduit systems such as wire line and wireless. As in the case
of most countries, separate licenses have been issued in our country for basic, cellular, ISP,
satellite and cable TV operators each with separate industry structure, terms of entry and
varying requirement to create infrastructure. However, this convergence now allows
operators to use their facilities to deliver some services reserved for other operators,
necessitating a relook into the existing policy framework. The new telecom policy
framework is also required to facilitate India's vision of becoming an IT superpower and
develop a world class telecom infrastructure in the country.
This Act may be called the Telecom Regulatory Authority of India Act, 1997.
Introduction:
The new economic policy adopted by the Government aims at improving India's
competitiveness in the global market and rapid growth of exports. Another element of the
new economic policy is attracting foreign direct investment and stimulating domestic
investment. Telecommunication services of world class quality are necessary for the success
of this policy. It is, therefore, necessary to give the highest priority to the development of
telecom services in the country.
India has registered an impressive growth in the telecom sector. Over the years the country
has developed a vast telecom network comprising over 25000 telephone exchanges and
21.5 million working connections. There is a large network of optical fibre cables, digital
microwave and satellite communication systems. A very strong industrial base has been
built in the telecom sector with a large number of national and multi-national telecom
companies.
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The NPT 1999, which has come into impact from April 1, 1999, aims at making telephones
available on demand by the year 2002 and to achieve teledensity of seven per hundred
persons by the year 2005. In case of rural areas, the current teledensity is proposed to be
raised from 0.4 to 4 by the year 2010. The policy document of NPT outlines rapid growth in
the telecom sector in India with a projected teledensity of 15 by the year 2010.
This will require a massive investment of over 23 billion dollars in the next five years and 65
billion over the next 10 years in the telecom sector.
Accelerator:
The NPT 1999 has been hailed the world over as a progressive and forward-looking policy in
tune with the high technological changes of the 21st century. It addresses the various
problems affecting the telecom sector. The new policy comes as a breath of fresh air for the
beleaguered telecom industry. It is expected to encourage investments in the telecom
sector and holds the promise of boosting the entry of world class infrastructure in the
country.
Bail-out package:
The Government later came out with what came to be known as a bail-out package allowing
licensees of all telecom services including basic, cellular, paging and other value-added
services to migrate to the revenue-sharing system under the NPT 1999. According to the
Government, this was necessitated because a large number of licensees under the 1994
Telecom Policy were finding it difficult to pay the license fee and wanted to switch over to
the revenue-sharing regime under the new policy.
The Government clarified that it did not want to discriminate between the existing telecom
operators and the new licensees. Moreover, future collections under the old license fee
regime were uncertain as many cellular operating companies were likely to turn sick.
Under the bail-out package, the private telecom operators were required to pay up 30 per
cent of arrears of license fee including interest last by August 31 as provided in the license
agreement for migrating to the New Telecom Policy. Requisite bank guarantees for the
remaining amount of arrears, including interest, were to be furnished for the period till the
arrears were cleared by January 31 next year. Relief was provided to the licensees by
extending the period of their licenses from the present 10 years to 20 years from the date of
existing license agreement.
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India is the developing country and so all the industry in India are developing day by day,
but cellular service industry in India is in emerging stage. So, there are much chances of
development in this industry and chances of new players to enter into this industry. In India,
more than 45% people have mobiles and the others do not have mobiles.The mobiles are
useless without SIM card and the companies who provide the SIM card are known as cellular
service companies. In India, public companies as well as private companies are in this
business. The companies who provide cellular services are as follows.
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[Virgin Mobile
(Virgin mobile) (50%)
Tata Tele. (50%)]
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2.64973
1.41411
3.042741
3.41862 1.20813
4.875913
31.023997
118.864031
57.329449
57.611872
93.795613
62.861214
91.401959
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Type Public
Founded July 07, 1995
Founder(s) Sunil Bharti Mittal
Headquarters New Delhi, India
Key people Sunil Mittal
(Chairman) & (MD)
Sanjay Kapoor
(CEO)
Industry Telecommunications
Products Wireless
Telephone
Internet
Satellite television
Revenue ▲ US$ 7.254 billion (2009)
Operating income ▲ US$ 2.043 billion (2009)
Net income ▲ US$ 1.662 billion (2009)
Total assets ▲ US$ 11.853 billion (2009)
Owner(s) BhartiEnterprises (64.76%)
SingTel (30.5%)
Vodafone (4.4%)
Website www.bharti.com
www.airtel.in
Introduction:
Bharti Airtel formerly known as Bharti Tele-Ventures LTD (BTVL) is the largest cellular service
provider in India, with more than 110 million subscribers as of 2009. With this, Bharti is now
the world’s third-largest, single-country mobile operator and sixth-largest integrated
telecom operator. It also offers fixed line services and broadband services. It offers its
TELECOM services under the Airtel brand and is headed by Sunil Bharti Mittal. The company
also provides telephone services and broadband Internet access (DSL) in top 95 cities in
India. It also acts as a carrier for national and international long distance communication
services. The company has a submarine cable landing station at Chennai, which connects
the submarine cable connecting Chennai and Singapore
The businesses at Bharti Airtelhave always been structured into three individual strategic
business units (SBU's) - Mobile Services, Airtel Telemedia Services & Enterprise Services. The
mobile business provides mobile & fixed wireless services using GSM technology across 23
telecom circles while the Airtel Telemedia Services business offers broadband & telephone
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services in 95 cities and has recently launched a Direct-to-Home (DTH) service, Airtel Digital
TV. Shahrukh Khan is the brand ambassador of the mobile company and KareenaKapoor and
Saif Ali Khan are the brand ambassadors of the DTH Company. The company provides end-
to-end data and enterprise services to the corporate customers through its nationwide fiber
optic backbone, last mile connectivity in fixed-line and mobile circles, VSATs, ISP and
international bandwidth access through the gateways and landing station.
Globally, Bharti Airtel is the 3rd largest in-country mobile operator by subscriber base,
behind China Mobile and China Unicom. In India, the company has a 24.6% share of the
wireless services market, followed by 17.7% for Reliance Communications and 17.4% for
Vodafone Essar. In January 2010, company announced that ManojKohli, Joint Managing
Director and current Chief Executive Officer of Indian and South Asian operations, will
become the Chief Executive Officer of the International Business Group from 1st April 2010.
He will be overseeing Bharti's overseas business. Current Dy. CEO, Sanjay Kapoor, will
replace ManojKohli and will be the CEO witheffectivefrom 1st April, 2010.
Airtel is a brand of telecommunication services in India, Bangladesh and in Sri Lanka owned
and operated by Bharti Airtel. It is the largest cellular service provider in India in terms of
number of subscribers. Services are offered under the brand name Airtel: Mobile Services
(using GSM Technology), Broadband & Telephone Services (Fixed line, Internet Connectivity
(DSL) and Leased Line), Long Distance Services and Enterprise Services (Telecommunications
consulting for corporate). It has presence in all 23 circles of the country and covers 71% of
the current population (as of Financial Year 2007). Airtel has also launched 16Mbps
broadband plans in India, making it the first ISP to do so.
In December 2008, Bharti Airtel rolled out third generation services in Sri Lanka in
association with Singapore Telecommunications. SingTel is a major player in the 3G space in
Asia. It operates third generation networks in several markets across Asia.
Airtel's operation in Sri Lanka, known as Airtel Lanka, commenced operations on the 12th of
January 2009.
Airtel in Bangladesh:
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be at a cost of an initial $300 million. Warid will be later named Airtel and the price of the
sim will go higher and call rates will be lower....!
Touchtel:
Until September 18, 2004, Bharti provided fixed-line telephony and broadband services
under the Touchtel brand. Bharti now provides all telecom services including fixed-line
services under a common brand "Airtel".
BlackBerry:
On 19 October 2004 Airtel announced the launch of a BlackBerry Wireless Solution in India.
The launch is a result of a tie-up between Bharti Tele-Ventures Limited and Research in
Motion (RIM).
I Phone 3G:
The Apple iPhone 3G was rolled out in India on 22 August 2008 via Airtel& Vodafone.
Merger talks:
In May 2008, it emerged that Bharti Airtel was exploring the possibility of buying the MTN
Group, a South Africa-based telecommunications company with coverage in 21 countries in
Africa and the Middle East. The Financial Times reported that Bharti was considering
offering US$45 billion for a 100% stake in MTN, which would be the largest overseas
acquisition ever by an Indian firm. However, both sides emphasize the tentative nature of
the talks, while The Economist magazine noted, "If anything, Bharti would be
marrying up," as MTN has more subscribers, higher revenues and broader geographic
coverage. However, the talks fell apart as MTN group tried to reverse the negotiations by
making Bharti almost a subsidiary of the new company.
In May 2009, Bharti Airtel again confirmed that it is in Talks with MTN and companies have
now agreed discuss the potential transaction exclusively by July 31, 2009. Bharti Airtel said
in a statement “Bharti Airtel Ltd is pleased to announce that it has renewed its effort for a
significant partnership with MTN Group".
Talks eventually ended without agreement, some sources stating that due to the South
African government opposition.
Promotional Sponsorship:
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Bharti Airtel signed a five-year deal with ESPN Star Sports to become the title sponsor of the
Champions League Twenty20 cricket tournament. The tournament itself is named "Airtel
Champions League Twenty20."
On the 9th of May, 2009 Airtel signed a major deal with Manchester United Football Club.
As a result of the deal, Airtel gets the rights to broadcast the matches played by the team to
its customers.
Subscriber base:
The Airtel subscriber base according to TRAI - Telecom Regulatory Authority of India as of
February 2009 was:
Airtel’s Subscriber
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Introduction:
Reliance GSM:
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On the 30th December 2008, Reliance Communications became the first telecom operator
in the history of Indian telecommunications to simultaneously launch its GSM services in 17
circles, namely Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Jammu & Kashmir,
Karnataka, Kerala, Maharashtra, Mumbai, Punjab, Rajasthan, Tamil Nadu, Uttar
Pradesh(East & West) thereby establishing itself as a pan-India operator.
It already operates GSM services in 8 circles namely Assam, Bihar & Jharkhand, Himachal
Pradesh, Kolkata, Pradesh Chhattisgarh, North Eastern states, Orissa, West Bengal But
operates under the brand Reliance Smart GSM. Reliance Smart is owned by their sister
concern Reliance Telecom. They got these licenses when they took over USHA PHONE
Subscriber base:
The Reliance subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:
Reliance’s Subscriber(GSM)
Additions 601289 -
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Type Limited
Founded 1994 as Hutchison Essar
Headquarters Mumbai, Maharashtra, India
Industry Mobile telecommunications
Products Mobile networks,
Telecom services, Etc.
Owner(s) Vodafone Group (67%)
Essar Group (33%)
Employees 10,000 – March 31, 2009
Website www.vodafone.in
Introduction of Vodafone:
Vodafone Essar, formally known as Hutchison Essar is a cellular operator in India that covers
23 telecom circles in India based in Mumbai. Vodafone Essar is owned by Vodafone 67% and
Essar Group 33%. It is the second largest mobile phone operator in terms of revenue behind
Bharti Airtel, and third largest in terms of customers. As of June 31, 2009 Vodafone India has
18.8% customer market share and 20.7% revenue market share.
On February 11, 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li
KaShing Holdings in Hutch-Essar for US$11.1 billion, piping 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. The transaction closed on May 8, 2007. Despite the
official name being Vodafone Essar, its products are simply branded Vodafone. It offers both
prepaid and postpaid GSM cellular phone coverage throughout India with good presence in
the metros.
Vodafone Essar provides 2.75G services based on 900 MHz and 1800 MHz digital GSM
technology, offering voice and data services in 23 of the country's 23 license areas. It is
among the top three GSM mobile operators of India.
Vodafone as brands:
In December 2006, Hutch Essar re-launched the "Hutch" brand nationwide, consolidating its
services under a single identity. The Company entered into an agreement with NTT DoCoMo
to launch I-mode mobile Internet service in India during 2007.
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The company used to be named Hutchison Essar, reflecting the name of its previous owner,
Hutchison. However, the brand was marketed as Hutch. After getting the necessary
government approvals with regards to the acquisition of a majority by the Vodafone Group,
the company was rebranded as Vodafone Essar. The marketing brand was officially changed
to Vodafone on 20 September 2007. On September 20, 2007 Hutch became Vodafone in
one of the biggest brand transition exercises in recent times.
Vodafone Essar is spending somewhere in the region of Rs. 250 crores on this high-profile
transition being unveiled today. Along with the transition, cheap cell phones have been
launched in the Indian market under the Vodafone brand. The company also plans to launch
co-branded handsets sourced from global vendors as well.
A popular daily quoted a Vodafone Essar director as saying that "the objective is to leverage
Vodafone Group's global scale in bringing millions of low-cost handsets from across-the-
world into India."
Incidentally, China's ZTE, which is looking to set-up a manufacturing unit in the country, is
expected to provide several Vodafone handsets in India. Earlier this year, Vodafone penned
a global low-cost handset procurement deal with ZTE.
In 1992 Hutchison Whampoa and its Indian business partner established a company that in
1994 was awarded a license to provide mobile telecommunications services in Mumbai
(formerly Bombay) and launched commercial service as Hutchison Max in November 1995.
Analjit Singh of Max still holds 12% in company.
In Delhi, UP (E), Rajasthan and Haryana, ESSAR 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 that number
increased to 16. In 2006, it announced the acquisition of a company (EssarSpacetel — A
subsidiary of Essar Group) that held license applications for the seven remaining license
areas.
In a country growing as fast as India, a strategic and well managed business plan is critical to
success. Initially, the company grew its business in the largest wireless markets in India — in
cities like 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.
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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 US$11.1 billion or HK$87 billion.
Subscriber base:
The Vodafone subscriber base according to TRAI - Telecom Regulatory Authority of India as
of January 2010 was:
Vodafone’s Subscriber
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Type State-owned
Founded 19th century, incorporated 2000
Headquarters Bharat Sanchar Bhawan, Harish Chandra
Mathur Lane, Janpath, New Delhi
Key people KuldeepGoyal
(Chairman) & (MD)
Industry Telecommunications
Products Wireless
Telephone
Internet
Television
Revenue ▼ US$ 7.03 billion (2009)
Owner(s) The Government of India
Employees 357,000 – March 31, 2009
Website Bsnl.co.in
Introduction:
Bharat Sanchar Nigam Limited (known as BSNL, India Communications Corporation Limited)
is a state-ownedtelecommunication company in India. BSNL is the sixth largest cellular
service provider, with over 57.22 million customers as of December 2009 and the largest
land line telephone provider in India. Its headquarters are at Bharat Sanchar Bhawan, Harish
Chandra Mathur Lane, Janpath, and New Delhi. It has the status of Mini Ratna, a status
assigned to reputed public sector companies in India.
BSNL is India's oldest and largest Communication Service Provider (CSP).Currently has a
customer base of 90 million as of June 2008. It has footprints throughout India except for
the metropolitan cities of Mumbai and New Delhi which are managed by MTNL. As on
March 31, 2008 BSNL commanded a customer base of 31.55 million Wire line, 4.58 million
CDMA-WLL and 54.21 million GSM Mobile subscribers. BSNL's earnings for the Financial
Year ending March 31, 2009 stood at INR 397.15b (US$7.03 billion) with net profit of INR
78.06b (US$ 1.90 billion). BSNL has an estimated market value of $ 100 Billion. The company
is planning an IPO within 6 months to offload 10% to public in the Rs 300-400 range valuing
the company at over $100 billion.
Services:
BSNL provides almost every telecom service in India. Following are the main telecom
services provided by BSNL:
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Universal Telecom Services: Fixed wire line services & Wireless in Local loop (WLL) using
CDMA Technology called bfone and Tarang respectively. As of December 31, 2007, BSNL has
81% market share of fixed lines.
Cellular Mobile Telephone Services: BSNL is major provider of Cellular Mobile Telephone
services using GSM platform under the brand name BSNL Mobile. As of Sep 30, 2009 BSNL
has 12.45% share of mobile telephony in the country.
Intelligent Network (IN): BSNL provides IN services like televoting, toll free calling, premium
calling etc.
3G: BSNL offers the '3G' or the'3rd Generation' services which includes facilities like video
calling etc.
IPTV: BSNL also offers the 'Internet Protocol Television' facility which enables us to watch
television through internet.
FTTH:Fiber to The Home facility that offers a higher bandwidth for data transfer. This idea
was proposed on post-December 2009.
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Subscriber base:
The BSNL subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:
BSNL’s Subscriber
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Type Public
Founded 1995
Headquarters Santacruz East, Mumbai, India[1]
Key people Kumar Mangalam Birla
(Chairman)
Sanjeev Aga
(MD)
RajatMukharjee
(VP Corporate Affairs)
Industry Telecommunications
Products Mobile
Owner(s) Aditya Birla Group (49.05%)
Axiata Group Berhad (15%)
Providence Equity (10.6%)
Website IdeaCellular.com
Introduction:
Idea Cellular is a wireless telephony company operating in all the 22 telecom circles in India
based in Mumbai. It is the 3rd largest GSM company in India, behind Airtel and Vodafone
and ahead of state run player BSNL.
In 2000, Tata Cellular was a company providing mobile services in AP. When Birla-AT&T
brought Maharashtra and Gujarat to the table, the merger of these two entities was a
reality. Thus Birla-Tata-AT&T, popularly known as Batata, was born. In 2001, the Batata
triumvirate agreed to merge its operations with the Rajeev Chandrasekhar promoted BPL
Communications. The merger could have brought in regions like Mumbai, Maharashtra,
Kerala and Tamil Nadu, which seemed to be a perfect accompaniment to what it already
had. This was critical with the bid for the fourth operator license round the corner.
However, the engagement with BPL was broken. Then Idea set sights on RPG’s operations in
Madhya Pradesh which was successfully acquired, helping Batata have a million subscribers,
and the license to be the fourth operator in Delhi was clinched. In 2004, Idea (the company
had by then been rechristened) bought over the Escorts group’s Escotel gaining Haryana,
Uttar Pradesh (West) and Kerala — and licenses for three more — UP (East), Rajasthan and
Himachal Pradesh. By the end of that year, four million Indians were on the company’s
network. In 2005, AT&T sold its investment in Idea, and the year after Tata’s also bid good
bye to pursue an independent telecom business. And Idea was left only with one promoter,
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the AV Birla group when the company’s stock listed on the bourses in March 2007, its
subscriber base was 13 million with presence in 11 circles. In less than three years, the
subscriber numbers have more than quadrupled. The public issue was oversubscribed 50
times and raised Rs 2,450 crore. In June 2008, Idea Cellular bought out BK Modi’s stake in
Spice Communications for Rs 2,700 crore adding Punjab and Karnataka circles. Modi’s joint
venture partner, Telekom Malaysia, invested Rs 7,000 crore for a 14.99% stake in Idea. Just
around then, Idea’s subsidiary, Aditya Birla Telecom sold a 20% stake to US-based
Providence Equity Partners for over Rs 2,000 crore.
The company has its retail outlets under the "Idea n' U" banner. The company has also been
the first to offer flexible tariff plans for prepaid customers. It also offers GPRS services in
urban areas.
Idea Cellular won the GSM Association Award for "Best Billing and Customer Care Solution"
for 2 consecutive years.
Holding:
Initially the Birla’s, the Tata’s and AT&T Wireless each held one-third equity in the company.
But following AT&T Wireless' merger with Cingular Wireless in 2004, Cingular decided to sell
its 32.9% stake in Idea. This stake was bought by both the Tata’s and Birla’s at 16.45% each.
Tata's foray into the cellular market with its own subsidiary, Tata Indicom, a CDMA-based
mobile provider, cropped differences between the Tata’s and the Birla’s. This dual holding
by the Tata’s also became a major reason for the delay in Idea being granted a license to
operate in Mumbai. This was because as per Department of Telecommunications (DOT)
license norms, one promoter could not have more than 10% stake in two companies
operating in the same circle and Tata Indicom was already operating in Mumbai when Idea
filed for its license.
The Birla’s thus approached the DOT and sought its intervention and the Tata’s replied by
saying that they would exit Idea but only for a good price. On April 10, 2006, the Aditya Birla
Group announced its acquisition of the 48.18% stake held by the Tata’s at Rs. 40.51 a share
amounting to Rs. 44.06 billion. While 15% of the 48.14% stake was acquired by Aditya Birla
Nuvo, a company in-charge of the Birla’s' new business initiatives, the remaining stake was
acquired by Birla TMT holdings Private Ltd., an AV Birla family owned company. Currently,
Aditya Birla Group holds 49.1% of the total shares of the company. Malaysia based Axiata
controls a 14.99% stake in the company.
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Subscriber base:
The Idea subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:
Idea’s Subscriber
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Type Private
Founded 2000
Headquarters Navi Mumbai, India
Key people Mr. Ratan N. Tata
(Chairman)
Anil Kumar Sardana
(MD)
Industry Telecommunications
Products Wireless
Telephone
Internet
Television
Employees 350,000
Parent Tata Group
Divisions Tata Indicom (CDMA)
Tata DoCoMo (GSM)
Virgin Mobile (CDMA)
Website Tatateleservices.com
Introduction:
Tata Teleservices Limited (TTSL) is a part of the Tata Group of companies based in Navi
Mumbai, an Indian conglomerate. It operates under the brand name Tata Indicom in various
telecom circles of India. In Nov 2008, Japanese telecom giant NTT Docomo picked up a 26
per cent equity stake in Tata Teleservices for about Rs 13,070 crores ($2.7 billion) or an
enterprise value of Rs 50,269 crores ($10.38 billion). In Feb 2008, TTSL announced that it
would provide CDMA mobile services targeted towards the youth, in association with the
Virgin Group on a Franchisee model basis.
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Company background:
Tata Teleservices is part of the Tata Group. Tata Teleservices spearheads the Group’s
presence in the telecom sector. Incorporated in 1996, Tata Teleservices was the first to
launch CDMA mobile services in India with the Andhra Pradesh circle.
The company acquired Hughes Telecom (India) Limited [now renamed Tata Teleservices
(Maharashtra) Limited] in December 2002. With a total Investment of Rs 19,924 Crore, Tata
Teleservices has created a Pan India presence spread across 20 circles that include Andhra
Pradesh, Chennai, Gujarat, J & K, Karnataka, Delhi, Maharashtra, Mumbai, North East, Tamil
Nadu, Orissa, Bihar, Rajasthan, Punjab, Haryana, Himachal Pradesh, Uttar Pradesh (E), Uttar
Pradesh (W), Kerala, Kolkata, Madhya Pradesh and West Bengal.
Having pioneered the CDMA 3G1x technology platform in India, Tata Teleservices has
established 3G ready telecom infrastructure. It partnered with Motorola, Ericsson, Lucent
and ECI Telecom for the deployment of its telecom network.
The company is the market leader in the fixed wireless telephony market with a total
customer base of over 3.8 million.
Tata Teleservices’ bouquet of telephony services includes Mobile services, Wireless Desktop
Phones, Public Booth Telephony and Wire line services. Other services include value added
services like voice portal, roaming, post-paid Internet services, 3-way conferencing, group
calling, Wi-Fi Internet, USB Modem, data cards, calling card services and enterprise services.
Some of the other products launched by the company include prepaid wireless desktop
phones, public phone booths, new mobile handsets and new voice & data services such as
BREW games, Voice Portal, picture messaging, polyphonic ring tones, interactive
applications like news, cricket, astrology, etc.
Tata Indicom "Non Stop Mobile" allow pre-paid cellular customers to receive free incoming
calls.
Tata Teleservices Limited along with Tata Teleservices (Maharashtra) Limited have a
subscriber base of 57 million customers (as of Jan 2010) in more than 5,000 towns. Tata
Teleservices has also acquired GSM licenses for specific circles in India.
Tata Teleservices is an unlisted entity. Tata Group and group firms own the majority of the
company; NTT DoCoMo holds 26% while investor C. Sivasankaran holds 8%.
Market Data:
Tata Indicom in Jan 2010 crossed the 57 million subscribers mark in the wireless category
with an overall subscriber base of over 57 million.
Tata Teleservices is no. 2 slot in terms of Market Share in Delhi NCR region with a subscriber
base of 5.4 million.
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Network:
Tata Teleservices operates primarily on the CDMA network. Tata Indicom’s enterprise
solutions work on the CDMA 3G-1X technology.
The total tower strength of Tata Indicom is currently at 18,000 towers nationwide.
Business Areas:
Tata Teleservices offers multiple tariff plans in both the Post-paid and Pre-Paid category. It
also offers Mobile Value Added Services to subscribers.
Branding:
The Tata Indicom brand is endorsed by bollywoodactressKajol& cricketers IrfanPathan and
YousufPathan.
Tata Teleservices has recently launched the Virgin Mobile Brand to target the youth
segment.
Rural Telephony:
TTSL also maintains a distribution network across villages , where in people are appointed
and trained by TTSL – who visit villages on a bicycle or a two-wheeler at defined times on
defined days of the week, selling recharge vouchers and servicing equipment; each runner
covers between 200 to 300 customers.
The company joined hands with Tata Chemicals, Tata KisaanSansar network, disseminating
information through these centres and using them as local distributors.
Retail:
The company's retail business has around 3,000 outlets nationally; comprising 600 TTSL
owned stores and around 2,500 stores in the Franchisee format. Tata Indicom already
covers the top 700 towns in India in terms of population through Tata Indicom Exclusive
Stores.TataIndicom also maintains an online portal for its customers i-choose where the
customers can buy Tata Indicom post-paid connections and prepaid recharge vouchers with
an upfront commitment of activation and delivery of the handset within 72 hours.
Under its VAS bouquet, TTSL offers services such as News, Games, Faith and Prayers,
Ringtones, Streaming TV, Fun Shows, Video Zone, Song Download Express, Cricket, Internet
Surfing, Astrology, and Mobile Office among others.
Tata Indicom plans to provide m-commerce, mobile advertising and social networking under
its VAS offerings.
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Subscriber base:
The Tata teleservicesl’s subscriber base according to TRAI - Telecom Regulatory Authority of
India as of January 2010 was:
Andhra 6,075,177
Pradesh
Assam 72,196
Bihar 2,407,872
Chennai 1,246,101
Delhi 5,161,235
Gujarat 1,560,651
Himachal 143,420
Pradesh
Haryana 2,030,792
J&K 112,837
Karnataka 4,157,341
Kerala 2,045,409
Kolkata 1,992,435
Madhya 2,651,632
Pradesh
Maharashtra 6,674,368
Mumbai 3,620,828
North East 51,866
Orissa 1,583,077
Punjab 1,714,520
Rajasthan 2,719,185
Tamilnadu 2,466,343
U.P. (E) 1,805,549
U.P (W) 2,615,399
W.B. 1,084,740
Total 53,992,973 57,329,449 17.46%
Additions
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Introduction:
Type Private
Founded 1999
Headquarters Chennai
Key people Gurdeep Singh, COO
Industry Telecommunications
Products Mobile
Telecommunication operator
Owner(s) Maxis Communications (74%)
Apollo Hospital
Website Aircel.com
Aircel is a mobile phone service provider in India. It offers both prepaid and postpaid GSM
cellular phone coverage throughout India. Aircel is a joint venture between Maxis
Communications of Malaysia and Apollo Hospital Enterprise Ltd of India. Maxis have a 74%
stake in Aircel and the remaining 26% is with Apollo Hospitals. It is India’s fifth largest GSM
mobile service provider with a subscriber base of over 27.7 million, as of October 31, 2009.
It has a market share of 12.8% among the GSM operators in the country. As on date, Aircel
is present in 18 of the total 23 telecom circles (including Andhra Pradesh, Assam, Bihar &
Jharkhand, Chennai, Delhi & NCR, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala,
Kolkata, Mumbai, North East, Orissa, Rest of Maharashtra & Goa, Rest of Tamil Nadu, Rest
of West Bengal, Uttar Pradesh East, Uttar Pradesh West) and with licenses secured for the
remaining 5 telecom circles, the company plans to become a pan-India operator by 2010.
Additionally, Aircel has also obtained permission from Department of Telecommunications
(DoT) to provide International Long Distance (ILD) and National Long Distance (NLD)
telephony services. It is also a category A ISP. It is also having the largest service in
Tamilnadu.
Aircel Business Solutions (ABS), part of Aircel, is an ISO 9000 certified company. ABS is a
registered member of WiMAX forum – both in the Indian and International Chapters. ABS’
product range includes enterprise solutions such as Multiprotocol Label Switching Virtual
Private Networks (MPLS VPNs), Voice over Internet Protocol (VoIP) and Managed Video
Services on wireless platform including WiMAX.
Aircel has won many awards for its services. Aircel was honored at the World Brand
Congress 2009 with three awards, Brand Leadership in Telecom, Marketing Campaign &
Marketing Professional of the Year. Aircel was honored by CMAI INFOCOM National
Telecom Award 2009 for, ‘Excellence in Marketing of New Telecom Service’. Aircel had been
selected as the best regional operator in 2008 by Tele.net. Aircel was rated as the top mid-
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size utility company in Business World’s ‘List of Best Mid-Size Companies’ in 2007. Aircel got
the highest rating for overall customer satisfaction and network quality in 2006 by Voice and
Data.
Aircel is one of the sponsors of the Indian Premier League Cricket Team Chennai Super
Kings, which is captained by Mahendra Singh Dhoni. It is also the major sponsors for
Chennai Open (the only ATP tennis tournament in India), and Professional Golf Tour of India.
In latest news, Maxis, Aircel's majority stake holder, raised RM 11.2 billion (USD 3.36
billions) for its shareholders, making it the largest IPO in Malaysia and Southeast Asia.
Aircel boat.Aircel placed an actual dinghy lifeboat to a downtown billboard. A rope with a
sign reading, “In case of emergency, cut rope”, held up the branded raft. July 15, 2009 the
monsoon arrived and so did Aircel customer service. The dinghy was cut down and
pedestrians were safely transported. What Aircel calls “Corporate Social Responsibility – A
Solution”? The company was able to generate positive publicity and show consumers that
they care.
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Subscriber base:
The Aircel’s subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was
Aircel’s Subscriber
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Type State-ownedPublic
Founded 1986
Headquarters New Delhi, India
Key people KuldiSingh
(CMD)
AnitaSoni
(CFO)
S.M.Talwar
(ED-NewDelhi)
J.Gopal
(ED-Mumbai)
Industry Telecommunications
Products Wireless
Telephone
Internet
Television
Revenue ▼INR 52.895 million (2009)
Net income ▼INR 1.626 million (2009)
Owner(s) The Government of India
Website www.mtnl.net.in
Introduction:
Products:
MTNL provides fixed line telephones, cellular connection of both GSM — Dolphin(Postpaid)
and Trump (prepaid) and WLL (CDMA) — Garuda-FW And Garuda-Mobile and internet
services through dialup and DSL — Broadband internetTriBand. MTNL has also started
Games on demand, video on demand and IPTV services in India through its Broadband
Internet service called Triband. Phone numbers belonging to MTNL start with the prefix 2
infixed line telephones andWLL& in GSM Mobile services start from 901x/
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MTNL has been actively providing connections in both Mumbai and New Delhi areas and the
efficiency of the company has drastically improved from the days when one had to wait
years to get a phone connection to now when one can get a connection in even hours. Pre-
activated Mobile connections are available at many places across both Metros. MTNL has
also unveiled very cost-impactiveBroadband Internet access plans (TriBand) targeted at
homes and small businesses. At present MTNL enjoys the largest of the market share of ISP
services in Mumbai and Delhi.
MTNL rolled out its BlackBerry solutions on the 2G and 3G networks by launching India’s
first 3G enabled BlackBerry Bold smart phones.
MTNL has set up its 100% subsidiary, Mahanagar Telephone Mauritius Limited (MTML), in
Mauritius.For providing basic, mobile and international long distance services as second
operator in Mauritius. Necessary licenses were obtained in January 2004. MTML has already
started its ILD&CDMA based basic services in Mauritius. In Mauritius, 44,312 telephone
connections are actually operational from a total switching capacity of 50,000. Moreover,
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through joint ventures with local telecommunications providers, MTML plans to offer
internet access through its wireless network to its users in February 2007.
MTNL-STPI IT Services Ltd. is a 50:50 Joint Venture between Software Technology Parks of
India (STPI) and Mahanagar Telephone Nigam Limited, (MTNL). The JV formed in 2006
combines the STPI's rich experience as an ISP and MTNL's track record of being India's
leading telecom operating company to offer niche portal services to the Indian community.
The JV was formed to realize one of the 10-point agenda of MoC&IT, which are of extreme
importance to India for bringing about an all-round economic development. The JV aims to
provide exclusive data center services, messaging services, business application services to
the identified sectors of economic activity and thereby also popularizing the .in domain in
the networked community across the world.
MTNL has restructured Millennium Telecom Ltd. (MTL) as a Joint Venture company of MTNL
and BSNL with 51% and 49% equity participation respectively. The company will now be
entering into new business stream of international long distance operations and will be
executing a project of submarine cable system, both east and west from India.
Recent happenings:
Recently MTNL delayed the implementation of pay revision to its employees citing cash
crunch as main reason. Due to this employees went on strike but the issue is still pending, if
MTNL implements pay revision to its entire staff the operating cost will raise dramatically.
On December 11, 2008 MTNL became the First Telco in India to launch 3G mobile phone
services with roll out of Video call and Mobile TV service in New Delhi.
In July, 2006Mahanagar Telephone Nigam Ltd. (MTNL) has launched its new Garuda mobile
service from its CDMA 2000 1x network.
Mr. RSP Sinha, the CMD of MTNL resigned from the post on 12th January, 2010 in wake of
the non-extension of the period by Govt. Sh. Sinha has been facing charges of corruption
and accepting bribe from Motorola Inc. and a criminal case has been going against him in a
CBI court at Delhi.
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Subscriber base:
The MTNL subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:
MTNL’s Subscriber
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ShyamTelelink is an Indian telecom service provider. Shyam holds the Unified Service Access
License for the Rajasthan circle and operates Basic Telephony, mobile telephony (CDMA)
and broadband services in the province. ShyamTelelink is the end-to-end service provider in
Rajasthan with more than 269,000 subscribers as on August 2008 and a strong brand -
Rainbow.
Acquisition by Sistema:
The largest public diversified corporation in Russia and the CIS - Sistema acquired a 10%
stake in ShyamTelelink for a total cash consideration of US$ 11.4 million at the end of
September 2007. In October 2007, Sistema signed a share purchase agreement for the
acquisition of an additional 41% stake in ShyamTelelink and a call option agreement, which
gives Sistema the right to increase its stake in ShyamTelelink from 51% up to a maximum of
74%. Later in December 2007, Sistema received an approval for the acquisition of the
blocking stake in ShyamTelelink from the Foreign Investment Promotion Board (FIPB) of
India. As a result of the acquisition of the additional 41% stake, the overall purchase price
totaled US$ 58.1 million.
Pan-India rollout:
Shyam Telecom along with their partner Sistema had applied for UASL license in 21 telecom
circles of India. In August 2008, they became the first new mobile operator to get a pan-
India start-up spectrum to start their mobile service operations in the country. They would
be providing mobile services based on CDMA technology under the brand name MTS.Shyam
Telecom given Project to ZTE and Huawei for network expansion.
As of Sep 30, 2009 the total subscriber base of MTS India is 1,960,532 present in 7 circles,
Just launched in Delhi.
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Subscriber base:
The MTS’s subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was
Mts ’s Subscriber
Andhra Pradesh
Assam
Bihar 240,432
Chennai 104,900
Delhi 175,867
Gujarat
Himachal
Pradesh
Haryana 331
J&K
Karnataka 105,948
Kerala 159,704
Kolkata 278,552
Madhya
Pradesh
Maharashtra 2
Mumbai 5,261
North East
Orissa
Punjab
Rajasthan 1,160,142
Tamilnadu 367,940
U.P. (E)
U.P (W)
W.B. 443,662
Total 3,042,741
Additions
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Type Private
Founded 1994 as BPL Mobile
2009 as Loop Mobile
Headquarters Mumbai, Maharashtra, India
Key people CEO SandipBasu
Industry Telecom
Products Mobile
Telecommunication operator
Owner(s) Essar Group (8%)
Website www.loopmobile.in
Introduction:
Loop Mobile (Formerly BPL Mobile) is a mobile phoneservice provider in India. It offers both
prepaid and postpaidGSM cellular phone coverage in Mumbai circle
BPL Mobile Communications, the country’s oldest mobile telecom service provider, has
changed its name to Loop Mobile, following the expiry of its brand-use agreement with the
TPG Nambiar-owned BPL Group.
Loop Mobile will also have the latest NGIP (Next Generation Internet Protocol) and EDGE
(Enhanced Data rates for GSM Evolution) technology. The operator is hoping to leverage
these technologies to introduce innovative VAS, as well as micro-segmented tariffs for
subscribers.
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Subscriber base:
The Loop mobile’s subscriber base according to TRAI - Telecom Regulatory Authority of
India as of January 2010 was:
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Founded 2009
Type Joint Venture
Headquarters Gurgaon, India
Key people Stein-ErikVellan
(CEO)
SanjayChandra
(Chairman)
Industry Telecommunications
Products Wireless
Telephone
Internet
Owner(s) Telenor (67.25%)
Unitech Group (32.75%)
Employees 2,000
Website Uninor. In
Introduction:
Uninor is a mobile telephony and network operator in India. The company holds a pan-India
UAS license to offer telecommunications services in each of India’s 22 circles. It has also
received spectrum to roll out these services in 21 of the 22 telecom circles. From November
2009, Uninor will be owned 67.25% by Norwegian telecom giant Telenor, and 32.75% by
India's Unitech Group. Uninor has started mobile services in India at the end of 2009,
focusing on the GSM technology.
History:
The company Unitech Wireless was until 2009 a subsidiary of Unitech Group, holding a
wireless services license for all 22 Indian telecom circles since 2008. In early 2009, Unitech
Group and Telenor agreed on a majority take-over by Telenor of Unitech's wireless business,
including Unitech Wireless' national-wide mobile license. By March, May and November,
Telenor acquired a 33%, 49% and 60% stake in Unitech Wireless, respectively. In September,
the mobile operation changed its name to Uninor. On October 19 the Indian Cabinet
Committee of Economic Affairs (CCEA) announced that it has approved Telenor's acquisition
of up to 74% in Unitech Wireless, and the shareholder's agreement sets a 67.25% Telenor
ownership in Uninor.
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Uninor's strategy:
Uninor will organize with headquarters just outside Delhi (Gurgaon), and 11 regional hubs
covering one or more of the total of 22 telecom circles.
To quickly launch mobile services only nine months after the foundation of the new
company, Uninor has entered into network and base station service agreements with
partners. Tower sharing agreements are concluded with Wireless-TT Info Service Limited
and Quippo Telecom Infrastructure Limited. Telecommunications, network and radio
equipment is to be supplied by Alcatel-Lucent, Huawei Technologies India, Nokia Siemens
Networks and Ericsson. The company's IT services and infrastructure is to be shared with
Wipro Technologies.
Subscriber base:
The Uninor subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:
Uninor’s Subscriber
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Type Limited
Founded 2009,
Headquarters NCR region of Delhi, India
Industry Mobile telecommunications
Products Mobile networks,
Telecom services, Etc.
Owner(s) StelIs a joint venture between Siva Group and
Bahrain Telecommunications Company
(Batelco).
Employees 10,000 – March 31, 2009
Website www.stel.com
Introduction:
S Tel Private Limited (S Tel), a new telecom operator in the lndian marketplace, is a joint
venture between Siva Group (formerly Sterling Infotech Group) and Bahrain
Telecommunications Company (Batelco).
S Tel has acquired Unified Access Services Licenses (UASL) and spectrum to operate in six
Category C circles – Orissa, Bihar, Himachal Pradesh, North East, Assam and Jammu &
Kashmir. These licenses will enable the company to provide Unified Mobile service, wireless
broadband and innovative Value Added Services (VAS) covering a population of over 226
million across these circles.
Headquartered in NCR region of Delhi, the company plans to launch its mobile telephony
service in India before close of 2009. Siva Group is a USD 3 billion group (about Rs.14, 000
Crores), with diversified business interests in verticals such as wind energy, shipping &
logistics, hospitality & realty, media, EPC, education and agro business.
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Investors:
Batelco Group, listed on the Bahrain Stock Exchange, is the leading integrated
communication provider in the Kingdom of Bahrain and a company of reference among
the region’s key telecommunications players for innovation and customer experience.
Batelco serves both the corporate and consumer markets in the most liberalized and
competitive environment in the Middle East Africa region. It delivers cutting-edge fixed
and wireless telecommunications services to its customers in Bahrain, Kuwait, Saudi
Arabia, Jordan, Yemen, Egypt and India.
The Batelco Group of companies offers end-to-end telecommunications solutions for its
residential, business and government customers in Bahrain on Next Generation, all IP
fixed and 3.5G wireless networks, MPLS based regional data solutions and, GSM mobile
and WiMax broadband services across the countries in which it operates.
Siva Group
The mobile brand Aircel created by the Siva Group was one of the major players in the
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mobile market then, changing the rules of the game from the word go. Post its divesture
in March 2006, the Group has been making its presence felt in the fields of Realty, Project
Engineering, Shipping, Energy, Agri exports and e-education / software initiatives, both in
India and abroad.
While the Siva Group has grown to become one of the most successful business houses in
the country, it has stayed rooted to the guiding business principles and beliefs of its
founder promoter Mr. C. Sivasankaran, viz.
Subscriber base:
The Stel subscriber base according to TRAI - Telecom Regulatory Authority of India as of
January 2010 was:
S-tel’sSubscriber
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HFCL Infotel Ltd. (Infotel) is a business venture of the HFCL Group. Infotel is a "Total
Telecom Solutions Provider" offering Fixed Line telephony (Telephone Services), Mobile
telephony, Broadband Services, Customized Data Services and Value Added Services.
Infotel provides a world class telecom experience when it comes to technology, products,
customer services, Launched in Punjab in the year 2000 under the Connect brand name.
Infotel has set up state-of-the-art networks with coverage in over 200 towns of Punjab with
extensive optical fiber network coverage of over 4,000 km. Today, Infotel is one of Punjab's
leading private sector telecommunication service providers with an aggregate customer
base of 5,10,263 as on 31st Dec 09.
Infotel Broadband network supports interactive multimedia services, and can handle high
quality content, high speed internet access and a large number of interactive applications
including B2B and B2C e-commerce.
Infotel supports a wide Public Call Office (PCO) network across the state of Punjab &
Chandigarh. Now with over 45,000 PCOs, Infotel is deemed to have the largest PCO network
in India among all private fixed line services operator in a single circle.
The Average Revenue per Line (ARPL) for Infotel is among the highest in the country. There
is a clear focus on acquiring quality subscribers through well planned rollouts and focused
revenues in marketing strategy.
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Subscriber base:
The HFCl Infotel subscriber base according to TRAI - Telecom Regulatory Authority of India
As of January 2010 was:
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Cellular tariffs have dropped by over 56X since May 1999 - a feat unparalleled by any other
sector or industry in India. The average a mobile tariff in Year 2010 was prevailing around½
paisa per secondas against the peak ceiling tariff of Rs. 16.80 per minute, when NTP 99 was
announced.
14 14
12
teriff in rupees
10
8 Teriff(Rs/m)
7
6
4 4.25
3
3
2 2
1 1 1
0.6 0.5
0.3
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Reliance communication is the first company who starting price-war in Indian telecom.
RCOM on October 5, 2009launched a new 'Simply Reliance' plan on its CDMA and GSM
networks, which offers a single rate of 50 paise per minute across the country with no
hidden charges. (Finally, Anil Ambani fulfilling DhirubaiAmbani’s dream to make a phone call
cheaper than a post card) The Telco will pull out all existing plans to offer only the new plan
to all pre-paid and post-paid users. The single rate of 50 paise per minute applies to all local
and STD calls as well as any mobile, landline, CDMA or GSM from anywhere in India. This is
expected to lead to an average 46% savings in consumers' monthly bills. Existing or new pre-
paid customers have to purchase a one-time special tariff voucher for Rs 48 to enjoy lifetime
validity, while post-paid users can migrate to the plan by paying a monthly subscription fee
of Rs 99.
In 2009, Japanese telecom giant NTT DOCOMO entered in Indian market with the help of
TATA teleservices strategic alliances. Tata DoCoMo is the first company who offering acall
charge in paisa.And then all the other company follows them for the surviving.
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Indian telecom market might be growing fast, but surviving in this highly competitive market
is not easy for telecom companies. Here’s the list of schemes that fuelled the tariff war in
India and brought down the ARPU significantly.
Reliance Infocom launched mobile services in India at 40 paise per minute (R2R, local call)
fulfilling DhirubaiAmbani’s dream to make a phone call cheaper than a post card in 2003.
Chotta Recharge:
Hutch (Vodafone now) launched the Chotta recharge voucher at Rs.10 when the lowest add-
on recharge card available was about Rs 50. What’s the message? Lowering the price by 20-
30% to the competitors won’t help much in gaining the market share. Think five times
cheaper to make an impact.
Non-stop Mobile:
So Life went good with Chotta recharge. But there was a problem in prepaid mobile. You
need to recharge regularly as the validity period is limited. With the recharge card of Rs 200,
you will get validity only for one month. So people have to spend at least Rs2000 per year
for their mobile just to receive the incoming calls. Not so long.
Tata Indicom launched Non-stop mobile, a scheme where you don’t need to recharge for 2
years but still get free incoming calls. Soon other players responded to Tata Indicom’s plan
and then come in Lifetime validity (“lifetime validity in 999” Rupees plan launched in
Nov/Dec. 2005) plan by all major telecom players in India.
Customers are happy with their free incoming calls. Not the new telecom players. Virgin
Mobile jumped into the competitive Indian mobile telecom market with the breakthrough-
marketing scheme, Get paid for incoming calls. 10 paisa free for every minute of incoming
call. That’s the deal.
RCOM on October 5, 2009 launched a new 'Simply Reliance' plan on its CDMA and GSM
networks, which offers a single rate of 50 paise per minute across the country with no hidden
charges. The Telco will pull out all existing plans to offer only the new plan to all pre-paid and
post-paid users. The single rate of 50 paise per minute applies to all local and STD calls as well
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as any mobile, landline, CDMA or GSM from anywhere in India. This is expected to lead to an
average 46% savings in consumers' monthly bills. Existing or new pre-paid customers have to
purchase a one-time special tariff voucher for Rs 48 to enjoy lifetime validity, while post-
paid users can migrate to the plan by paying a monthly subscription fee of Rs 99.
this plan to significantly increase the competitive intensity in the Indian telecom sector, already
high with the launch of TTSL's GSM services, 'Tata DoCoMo' and its seconds-based pulse
and 'Re 1 per call' (talked un-limited in a call)offerings to its customers. It should be noted
that the average revenues per minute (RPMs) stand in the region of 55-60 paise for the mobile
segment. With TTSL's 1 paisa per second offer and the 'Simply Reliance' scheme, RPMs, which
are already under pressure to dip further, thus slowing down revenue growth and leading to
margin pressures and falling bottom-line growth? It should be noted that Bharti Airtel has also
responded in its own way to TTSL's '1 paisa per second' plan, launching the
'AirtelAdvantage Plan', whereby both long distance and local calls from Airtel-to-Airtel mobiles
will be charged at 50 paise per minute. Thus, this in a way reflects the fact that incumbent
operators will have to in some shape or form respond to the cut-price offerings of RCOM and
TTSL.
All major operators follow TTSL, launch 'pay per second' plans across various circles; Idea, Aircel,
SSTL, Vodafone-Essar, market leader Bharti Airtel, RCOM, PSU behemoth BSNL and Loop Mobile
all join the dogfight, no respite from competitive intensity and tariff wars
With TTSL being the first to launch a 'pay per second' tariff plan, thus throwing down the gauntlet
to other operators in a bid to garner initial subscriber traction for its recently-launched GSM
services in partnership with Japanese telecom major, NTT DoCoMo, it has not taken long for
other.
Operators to follow suit in some shape or form. Idea Cellular, Aircel and Sistema-Shyam
Teleservices. (SSTL) all launched these plans. Apart from these operators, the top-3 Telcos by
subscriber market
Bharti Airtel, RCOM and Vodafone-Essar; themselves launched per-second billing plans
in response to competition. Bharti Airtel launched the 'Freedom Plan', charging users 1 paisa
per second to make local and long distance (STD) calls within its own network (on-net calls),
while for off-net calls (calls to other operators' networks), it is charging 1.20 paise per
second. RCOM and Vodafone-Essar have also launched such plans. Vodafone-Essar is charging
users 1 paisa per second for on-net calls. RCOM on the other hand, has launched a couple of
more initiatives in addition to its 50 paise per minute scheme across India to all networks,
launched in early October 2009. The Telco is offering its users 1 paisa per second tariffs for short
duration calls and is charging just Re 1 for 3 minutes' call rate for long duration calls in
addition to the continuation of the 50 paise per minute scheme. This will further heighten
competition for minute’s market share, even as revenue market share may not improve
proportionately.
The PSU telecom behemoth, BSNL followed suit too, with plans to offer such schemes to
its post-paid subscribers also on the anvil, apart from pre-paid subscribers. The one-circle
operator,
Loop Mobile (Mumbai) has also launched a per-second pulse plan to its subscribers, taking
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the total number of operators who have launched such plans to nine. This clearly reflects the
'lack’ of freedom of choice' for operators including the market leader to respond to
competitive pressures to ensure that they do not lose minutes and revenue market share. While
the launch of these plans is likely to make it tougher for newer entrants to gain subscriber traction
and could neutralize to an extent the usage of dual SIM cards and 'price arbitrage' by
subscribers, as users are likely to stick to the network of the incumbent operator, in the interim
it is likely to hurt RPMs and slow revenue growth. We believe these competitive moves will
accentuate pressure on ARPUs and RPMs for the sector.
Bharti shifts price-war to another turf, slashes roaming charges by 60%; major operators
follow suit Bharti Airtel moved the price-wars in the telecom sector to yet another turf-
roaming-slashing roaming charges by as much as 60% in November 2009. Under the new
plan,called'AirtelTurbo', subscribers would be billed 60 paise per minute for all incoming calls on
roaming, while outgoing calls would cost 60 paise per minute for 'on-net calls' and 80 paise
per minute for 'off-net calls'. Airtel pre-paid mobile customers wishing to avail this benefit
would be charged Rs 98, which would give an incoming validity of one year, while post-paid
users can subscribe to a monthly rental plan. Bharti's move was followed by other major
operators like BSNL, TTS and Vodafone-Essar, which also slashed roaming charges for their
respective subscribers. Thus, with price-wars being witnessed on all major fronts, pressure on
RPMs is expected to intensify in the near-term for all operators.
RCOM is the company to take the current price-war in the Indian telecom sector to another level,
slashing SMS rates in an attempt to garner greater SMS volumes and attract more customers
from the high SMS usage customer bracket, such as the youth and young professionals. The
Telco has launched two new SMS tariff plans - one paisa per SMS, and unlimited SMS at Re 1
per day. The new SMS tariffs are add-on plans and are applicable for all RCOM customers
(CDMA and GSM) as well as pre-paid and post-paid customers. Customers can avail of the 1
paisa per SMS plan by subscribing to a Standard Tariff Voucher on a payment of a rental of Rs
11 per month. Alternatively, the unlimited SMS plan can be subscribed to by the Telco’s
customers on a daily deduction of Re 1 per day from the pre-paid balance (Rs 30 per month).
For post-paid subscribers, the unlimited SMS plan comes at a monthly rental of Rs 25. These
tariffs are applicable across local, national and roaming SMS.
As per TRAI data, the blended average revenues per user (ARPUs) per month for the GSM
segment stood at Rs 185 for 1QFY10, whereas for the CDMA segment, they stood at Rs 92.
For GSM, revenues from SMS stood at 4.2% of the total, thus translating into around Rs 8
ARPU from SMS on a monthly basis. For CDMA, SMS revenues as a percentage of ARPU stood
at 6% in 1QFY10, translating into nearly Rs 6 ARPU from SMS on a monthly basis. Thus, these
figures are a clear reflection that SMS revenues are not a very significant proportion of monthly
ARPU for the industry.
For RCOM itself, in 3QFY09, the last quarter when the Telco had given out details of the
proportion of non-voice and SMS revenue, the latter accounted for a mere 1.3% of ARPU,
translating into just Rs 3 per user/month. The plans launched by RCOM are likely to boost SMS
volumes. The rentals being charged by the Telco for the 1 paisa per SMS and unlimited
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SMSpacks of Rs 11 and Rs 30 per month, respectively (Rs 25 per month for the unlimited
SMS plan for post-paid users) are expected to more-than-compensate for the cut-price cost
per SMS for subscribers. Consequently, we believe this plan is more of an effort to gain high SMS
usage customers and to aid the proportion of non-voice revenues as a percentage of total
ARPUs, even as it may not have a major impact on the telco's overall revenue profile.
Uninor, S Tel launch operations, become the first among the 'newer entrants' to do so;
Uninor, the telecom venture between Norwegian telecom major Telenor and Indian real estate
firm
Unitech launched its services across eight circles, namely Tamil Nadu, Kerala, Karnataka, Andhra
Pradesh, Uttar Pradesh (East and West), Bihar and Orissa and added an impressive 1.2 mn
subscribers in December 2009. The launch has taken place eight months after Telenor
Groupfinalized its transaction with Unitech Group and made the first investment into Uninor
on March 20.Uninorhas established 11 regional hub offices and recruited more than 1,800
employees. The Telco’s serviceswill be retailed at over 210,000 points of sale through nearly
1,000 exclusive distributors across its seven circles of operations. Uninor services will also be
available in 17 exclusive company-owned shops and 50 exclusive franchisee shops. The next
phase of its launch is expected to take place in early 2010. Thus, the telecom company was
expecting to launch towards the end of CY09, which has been achieved. Uninor is targeting 8%
market share by 2018, EBITDA break-even in 3 years and cash flow break-even in five years.
(1) Talkmore@29paisa: This plan offers customers local calls at 29 paise per minute and STD
calls at 49 paise per minute.
(2) Callmore@29paisa: the plan offers local calls at 29 paise per minute and STD calls at 49
paisa per minute, with a daily rental of Rs 2.
The company does not plan to offer per-second billing plans, which were started by Tata
DoCoMo, the GSM arm of Tata Teleservices, followed by all major telecom operators.
On the other hand, S Tel also launched services in the telecom circles of Himachal Pradesh,
Orissa Andhra Pradesh, Uttar Pradesh (East and West), Bihar and Orissa and added an impressive
1.2 mn subscribers in December 2009.
Getting paid for incoming calls is fine. But what if you don’t get incoming callsdon’t worry;
Anil Ambani is ready to help you now. Reliance Communication launched its GSM services in
Mumbai offering subscribers Rs 10 talk-time every day for the first 90 days. That’s free talk-
time worth Rs 900!
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Telecom price-war in India has got even fiercer with the introduction of MCard by MTS. So,
for those customers who are not that happy with free incoming calls for life, MTS has come
up with a plan, 10, 00,000 minutes free or simply lifetime free outgoing. Of course
conditions apply. Minimum of Rs 200 top-up over a period of 6 months is mandatory. And
most importantly free call limit 150 minute/day is applicable only on local calls from MTS to
MTS.
With more new players waiting to enter the Indian mobile market, it’s going to be an uphill
task for the established players like Airtel, Reliance and Vodafone to retain their subscribers.
They can’t wait and watch the new players like MTS eat into their market share with their
aggressive plans. How about launching new brands focused on niche customer segments to
tackle the competition.
South India based media giant, Sun TV Network use this strategy to the core to beat the
competition. It uses group channels Sun Music, KTV and Sun News to fight the competition
and protect the flagship channel Sun TV’s leadership in Tamil Nadu. To counter the TRP of
Star Vijay’s popular investigative reporting show at 10 pm, NadnathathuEnna, Sun News
runs a similar show – Nijamat 10 pm. Sun Music has comedy show, SiriSiriat 10:30 pm to
counter Kalaignar TV’s Comedy Clips at the same time. And then there is movie channel KTV,
to counter any new or popular films from Kalaignar or Vijay TV.
Will a similar multiple brand strategyworks in the Indian mobile industry? Well, it’s not a
new concept in India. Tata Teleservices is already doing that indirectly with its Virgin Mobile
alliance. Reliance communications also has options to differentiate as it provides both GSM
and CDMA services in the same circle. That leaves Airtel and Vodafone.
Will BhartiAirtel and Vodafone lauch new brands to fight against the new players in the
Indian mobile market and With more new players like Swan-Etisalat, Unitech-Telenor and
Datacom (subsidiary of Videocon) entering the Indian mobile market, this tariff war is not
going to end soon.
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::: Reason behind India's lowest telecom tariffs in the world :::
High Competition between 13 players is a common reason to all of us, but some other reason
that real mattered more than competition!
India today boasts of the lowest telecom tariffs in the world. If it is down to a tariff in the
range of 30 paisa per minute, which did not really happen overnight. It was the result of
continuous innovation and fine-tuning of costs that operators worked on assiduously.
What transpired was India putting in place the world’s low-cost telecom model. For its part,
the government lowered termination charges, offered spectrum at prices lower than many
other countries and setting the base for full-fledged competition. The cost benefits were
eventually passed on to the consumer.
“All company knew to succeed in this market; all company had to address affordability
because there is a huge disparity in the country. Since there are customers who make a one-
minute call as well as a ten-minute call, we decided to concentrate on minutes and not
ARPUs. All company started building cost structures around minutes,”
In 2004, the company first outsourced the management of its IT functions to technology
giant, IBM in a $750 million contract. This was then followed by outsourcing its networks
and call Centre operations.
“All company started outsourcing all non-core processes to people who could handle them
better than us. The advantages of outsourcing come in terms of improved productivity,
scaling up and qualitative aspects,” he explains. The IBM contract was unique then and
began a debate around the rationale of outsourcing. Not much later, it became a trend-
setter, with other Telcos like Idea Cellular and Vodafone Essar following suit.
Company’s outsourcing deal with IBM helped in reducing overall costs. “With outsourcing,
the costs are predictable in percentage and absolute terms. It is a critical component of
Idea’s ability to optimize costs,”
Sharing of passive infrastructure like telecom towers, generators and shelters was the next
step in bringing down costs. “The advantages of infrastructure sharing are huge. It has an
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impact on long term productivity for a capital-intensive model and helps in conserving
cash,”
The disaggregation of the industry’s value chain freed capital from the books of operators,
which facilitated the process of slashing costs. “Outsourcing allowed for conversion of
capital expenditure (capex) model into an operational expenditure model (opex). This
allowed operators to align costs on a per minute revenue model,” the decision of the
regulator in bringing down the termination charges was critical. This is paid by one operator
for terminating calls on the network of another operator. Likewise, having a fierce
competition scenario kept a lid on pricing which has still augured well for the consumer.
Quite clearly, nothing works like a healthy value for money proposition in India.
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The real price-war started by two companies: Rcom and Tata DoCoMo (Tata teleservices),
thenother follow them for surviving in the market.
After price-war both company’s market price down higher than other company. Rcom
market price nearly down by 45% and Tata teleservices down by 30.6% during lastqtr.
(During last qtr. BSE Sensex gain 2%)
3QFY10 performances of key telecom “Telco’s stocks v/s Sensex” - Price-wars take toll
During 3QFY10, telecom stocks saw a significant correction on the bourses, as the
heightened competition in the sector with the launches of newer operators led to a major
price-war, leading to fears of major pressures on average revenues per user (ARPUs),
slowing sales growth, margin pressures and falling earnings for telcos going forward. The
gauntlet was thrown down by Tata Teleservices (TTSL), which in partnership with Japanese
telecom major NTT DoCoMo launched GSM services, pricing voice calls on a per-second
basis as opposed to the per-minute pulse hitherto charged by incumbent operators. In
response, all major operators including market leader Bharti Airtel launched per-second
billing plans to prevent churn rates from increasing. Reliance Communications (RCOM)
joined the bandwagon, launching a plan charging just 50 paise per minute for all calls, local
and STD to any mobile or landline across the country, apart from also offering a seconds-
based pulse to its customers. TTSL and RCOM also cut SMS rates, while Bharti slashed
roaming charges, again to be followed by other major operators.
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These price-wars consequently took their toll on telecom stocks, which significantly under-
performed the BSE Sensex during the quarter. It was the stock of RCOM that took the
maximum beating, crashing by 44%, followed by Tata Communications, which shed 31%.
Tata Teleservices (Maharashtra) on the other hand lost 26%, Idea Cellular 23%, Bharti Airtel
21% and MTNL 19%. As has been the case over the past 2 quarters as well, it was the stock
of mid-sized enterprise telecom solutions provider, Tulip Telecom that out-performed its
peers as well as the Sensex, recording gains of 3% over the quarter. During this period
Sensex grow nearly 2%.
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15 stock-price
10
sensex
20000
17198.27 16772.56
18000 15924.23
16000 17464.81
17134.55
14000 15551.19 16356.03
15404.94
12000 14840.63
9903.46
10000 12134.75
8000 9066.7 9901.99
6000 8607.08
4000
2000
0
sensex
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Airtel's stock-price
1200
1010
1000
888
stock-price (in Rs.)
800 785
633.85 656.8
600 637.15
400 328.8
stock-price
200 290.15
sensex
20000
17198.27 16772.56
18000 15924.23
16000 17134.55 17464.81
14000 16356.03
15551.19 15404.94
14840.63
12000
9903.46
10000 12134.75
8000 9066.7 9901.99
8607.08
6000
4000
2000
0
sensex
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Idae's stock-price
140 123.65
120 102.75
93.1
stock-price (in Rs.)
100
75.35 71.3 75.35
80
58.2 61.9 61.9
52.65 50.15 50.95
60
40
stock-price
20
0
sensex
20000
17198.27 16772.56
18000 15924.23
16000 17134.55 17464.81
14000 16356.03
15551.19 15404.94
14840.63
12000
9903.46
10000 12134.75
8000 9066.7 9901.99
8607.08
6000
4000
2000
0
sensex
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R com's stock-price
600 564.8
500
425.15
stock-price (in Rs.)
400
300
stock-price
200 159.65
144.7 135
100
0
February 3, March 3, 2008 March 3, 2009 December 3, March 10,
2007 2009 2010
sensex
20000
17198.27 16772.56
18000 15924.23
16000 17134.55 17464.81
14000 16356.03
15551.19 15404.94
14840.63
12000
9903.46
10000 12134.75
8000 9066.7 9901.99
8607.08
6000
4000
2000
0
sensex
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ARPU: Average revenue per subscriber per month, or ARPU, is the amount of money that a
CMSP generates per subscriber per month. It can be obtained by dividing the total wireless
revenues by number of subscribers and then dividing the output by number of months in a
period (i.e., 3 months for a quarter and 12 months for a year's calculation of ARPU). To even
out the volatility in ARPUs, if any, it is better to arrive at the figure by averaging the wireless
revenues and subscriber base for the latest two years. However, considering the rapid pace
of subscriber addition for Indian CMSPs, ARPU calculated as dividing the trailing 12-months
wireless revenues by latest subscriber base is also an appropriate figure. For instance, if a
CMSP has earned a total of Rs 50,000 m as wireless revenues in the past 4 quarters (or
trailing 12 months) and its current subscriber base stands at 20 m, its ARPU will be Rs 208
per month (Rs 50,000 m of wireless revenues divided by 20 m subscribers divided by 12
months).
Another way to arrive at ARPU is to multiply the average number of minutes of usage
(MOU) per subscriber per month with per minute tariff. Most of the Indian CMSPs generally
disclose their MOUs and per minute tariff and as such, these can be used to determine the
ARPU. While there might be a direct correlation between change in MOU and change in
ARPU, it might not work the same in India's case as tariffs are falling at a rapid pace. As such,
even if a subscriber talks for a longer time, the CMSP's ARPU might not increase at the same
rate as per minute rate might decrease.
o %
Name of the Company jul-sep'09 oct-dec'09 % Change over previous quarter
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250
226.71 221.84
207.87
200 191.28
173.66
155.6 ARPU
150
100
50
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Price-wars to take their toll, lead to reduction in top-line on both qoq and yoy basis
Bharti Airtel, RCOM and Idea Cellular - to report a decline in top-line growth to the tune of
2.5% yoy, while on a sequential basis, a decline of nearly 5% is expected. This is the first
time ever that these companies will post a yoy decline in top-line, even as subscriber growth
has been quite decent.
Bharti Airtelis estimated to clock a 2% yoy and 4% qoq fall in consolidated net revenue, with
the key mobile services business unit expected to clock a 7% yoy and 8% qoq fall in
revenues. This is the case; even as the Telco’s mobile subscriber base grew 39% yoy and 8%
qoq to touch 118.9 mn. The fall in revenues is owing to steep pressure on realizations, with
ARPUs estimated to decline by as much as 34% yoy and 15% qoq to Rs 216 per user per
month on account of the price-wars in the sector. the telemedia business to grow by 4% yoy
and 3% qoq, while the
enterprise business is expected
to remain flat yoy and grow REVENUE (in Cr.)
marginally by 2% qoq. The 14600
14540.94
Passive Infrastructure Services 14500
Business is expected to decline
by 24% yoyon account of the 14400
14311.14
transfer of 35,066 towers to 14300
Indus wef. January 1, 2009,
14200
while sequentially, 13.2% REVENUE
14090.63
growth is expected. 14100
14000
RCOM on the other hand is
expected to clock an 8% yoy 13900
and 5% qoq decline in net 13800
revenues. The key wireless Ap-jun’09 Jul-sep’09 Oct-dec’09
business is estimated to fall by
as much as 16% and 8% qoq in
spite of the strong 53% yoy and 9% qoq growth in the mobile subscriber base of the Telco,
which is expected to hit 93.8 mn. As with Bharti, ARPUs to remain under severe pressure
and decline by a massive 45% yoy and 15% qoq to Rs 137 per user per month. As regards
the other business segments of the company, the Global Business to grow by a strong 35%
yoy (flat qoq) and the Broadband Business by 17% yoy (fall of 0.7% qoq).
Idea Cellularis expected to record a marginal 0.2% yoy decline in net revenues, while
sequentially, an 8% fall is estimated. Even as Idea's mobile subscriber base (ex-Spice) grew
53% yoy and 12% qoq to 52.3 mn, the significant pressure on ARPUs (estimated to fall 35%
yoy and 15% qoq) will lead to standalone wireless revenues falling by a marginal 0.1% yoy
and by nearly 10% qoq.
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Well other players are not safe in this situation, all are facing same problem. Rcom and Tata
teleservices are so aggressively launched lower tariff scheme that hunting her revenue more
than any other, so now picture is clear more customer doesn’t helping in generate revenue.
Low tariff hunting your revenue and it’s not good for company health.
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REVENUE:
I. Mobile/Cellular services:
The cellular mobile service providers (CMSPs) make available mobile telephone services
where by a customer on possession of a handset and obtaining a connection by way of SIM
(Subscriber Identification Module) card (for GSM based technology phones) is able to
connect to the network of the service provider. This is a wireless service that allows the
customer to connect with other wireless customers as also wire line customers.
A CMSP derives its revenues by way of tariff charges for outgoing calls made by subscribers
on its network. As such, revenue for a CMSP is simply a multiple of average revenue per
subscriber per month (ARPU) and number of subscribers. Let us now understand what
determines the ARPUs and subscriber base.
ARPU: Average revenue per subscriber per month, or ARPU, is the amount of money that a
CMSP generates per subscriber per month. It can be obtained by dividing the total wireless
revenues by number of subscribers and then dividing the output by number of months in a
period (i.e., 3 months for a quarter and 12 months for a year's calculation of ARPU). To even
out the volatility in ARPUs, if any, it is better to arrive at the figure by averaging the wireless
revenues and subscriber base for the latest two years. However, considering the rapid pace
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jan-mar'07
july-sep'08
Ap-jun’09
Oct-dec’05
Jan-mar’06
oct-dec'06
oct-dec'07
Oct-dec’08
Jan-mar’09
July-sep’07
Oct-dec’09
Jul-sep’09
stands at 20 m, its ARPU will be
Rs 208 per month (Rs 50,000 m
of wireless revenues divided by
20 m subscribers divided by 12
months).
Another way to arrive at ARPU is to multiply the average number of minutes of usage
(MOU) per subscriber per month with per minute tariff. Most of the Indian CMSPs generally
disclose their MOUs and per minute tariff and as such, these can be used to determine the
ARPU. While there might be a direct correlation between change in MOU and change in
ARPU, it might not work the same in India's case as tariffs are falling at a rapid pace. As such,
even if a subscriber talks for a longer time, the CMSP's ARPU might not increase at the same
rate as per minute rate might decrease.
Subscribers: Growth in a CMSP's subscriber base is dependent on several factors, the key
amongst them being:
Economic growth: With growth in the economy, and the consequent increase in activity, it
requires people to be in touch even when on the move. This brings out a pressing need for
owning mobile/cellular phones. Thus, with a growth in economic activity there will be more
and more people subscribing to telecom services, thus leading to growth in subscriber base
for CMSPs.
Rising income level: As the real income levels in a society rise, more and more people are
able to afford usage of cellular phones. Also, with rising incomes, as personal consumption
expenditure (as percentage of income) reduces, the consumer does not feel the pinch of
rising telephone bill, thus having the propensity to talk more, thus leading to higher MOUs
for telecom services providers.
Affordability: While there may be a need to be in constant touch as outlined by the above
two factors, it is the increased affordability that really increases the demand for such
services. The affordability is interplay of lower tariff charges and availability of cheaper
handsets. While lower handset costs make mobile more affordable at the entry level thus
allowing more people to be a part of the 'mobile community', lower tariffs allow for an
increased usage of telecom services, while not having such an overbearing impact on
telephone bills.
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The fixed (wire line) services are dominantly provided for by the PSUs (BSNL and MTNL) in
India. A customer can obtain a connection where by a wire line provides him with the last
mile connectivity on the national telecom network. Although this had been a dominant
mode of telecommunication in the past, it is fast being replaced with mobile telephony,
which has the advantage of connectivity on the move. The fundamental business of a fixed
line operator is almost similar to that of a CMSP, in terms of ARPU and Subscriber base.
III. Internet/Broadband:
The Internet services are provided either by telecom service providers or independent
Internet service providers (ISP) who deal exclusively in providing this service. There are two
forms of Internet that are currently popular - the dial-up connections and the broadband
connections. While both these forms are used for transmitting and receiving data, a
broadband connection (Internet access that allows minimum download speed of 256
kilobits per second from the point of presence of the service provider) allows you to
transmit data at faster rate.
The Internet business also works like a generic telecom business but for the fact that here, a
personal computer (PC) is used for data/voice transmission instead of a phone unit (mobile
or fixed line handset). Apart from the usual - economic growth and rising income levels - the
growth of the Internet business is dependent upon:
Parental encouragement: An interesting change that has come is the way parents now look
at computers. The age of a typical computer user has dropped significantly as parents
increasingly realize the growing importance of computers in education in the years to come.
So, unlike most products where children are targeted to drive sales of consumer durables, in
the case of computers, it is the parents who are going all out to ensure that their child grows
up to be a computer literate. Thus, with computers coming into homes, it will not be long
before parents will wish their children to be wired to the web owing to the rich source of
information.
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across continents. The need of users to have a seamless connectivity with their associates is
what drives this business for telecom companies. Considering that this business takes care
of data transfer needs of corporates, who are not as 'affordability' conscious as the
individuals (who use mobile, fixed line or Internet services), telecom companies generally
earn higher margins on Enterprise services than they earn on any of the other three
business lines. IT and BPO sectors, whose business is so data dependent, are the major users
of Enterprise services.
COST ANALYSIS:
After discussing the revenue aspects of telecom service providers, let us now understand
the major cost heads for these companies. These cost heads can be broken up into
regulated and non-regulated costs. Entry fee, access deficit charge and license fee are
regulated. On the other hand, sales, general and administrative (SG&A) and employee
expenses are non-regulated in nature.
Entry fee: The companies providing national and international long distance (NLD and ILD)
services are required to pay a flat entry fee of Rs 25 m each (from earlier fees of Rs 1,000 m
and Rs 250 m respectively). These fees are to be paid to the central government for
obtaining a license for providing these services.
Access deficit charge: The government also collects from the cellular operators an access
deficit charge. The charge payable is 1.5% percent of non-rural annual gross revenue (AGR)
of the telecom service providers and the amount collected is used to subsidies the telecom
service provided by BSNL in rural areas.
License fees: Telecom companies are required to pay an annual license fee of 6% of their
AGR to the Government of India. Licenses offered to the telecom players are for a limited
period of time and these are required to be renewed on expiry.
SG&A expenses: Telecom companies incur expenditure in the form of advertisement costs
for enhancing their visibility and also to make their brand more appealing to the consumers.
Expenses are also incurred on customer acquisition and on maintenance of telecom
equipment and network.
Personnel expenditure: These are costs incurred for maintaining the staff for executing the
telecom companies' marketing strategies, for general administrative purposes, for
maintenance and repair of telecom infrastructure, and customer relationship management
in call centers.
Apart from these operating costs, telecom companies also incur cost for servicing debt and
tax payments. Telecom is an operating leverage play (indicates that each new subscriber will
come at a higher profitability than the previously added subscriber), and, as such, the
benefits of faster subscriber addition are directly seen on companies' improving operating
profitability (as fixed costs are apportioned over a larger subscriber base).
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“VAS is a most lucrative revenue segment of telecom industry and I think it is the only
segment that have ability to saves Telecom Company’s in price-war situation”
Business model of VAS is not only profitable but also workable against price-war deficit and
overcome price-war impact.
Mobile value-added services (VAS) are those services that are not part of the basic voice
offer and are availed off separately by the end user. They are used as a tool for
differentiation, promotion and allow the mobile operators to develop another stream of
revenue.
The nature of value added services change over time. A VAS may become commoditized and
becomes so common place and widely used that it no longer provides meaningful
differentiation on a relative basis.
Mobile phones today have moved beyond their fundamental role of communications and
have graduated to become an extension of the persona of the user. We all are witnessing an
era when users buy mobile phones not just to be in touch, but to express themselves, their
attitude, feelings & interests.
Customers continuously want more from their phone. They use their cellular phones to play
games, read news headlines, surf the Internet, keep a tab on astrology, and listen to music,
make others listen to their music, or check their bank balance.
Thus, there exists a vast world beyond voice that needs to be explored and tapped and the
entire cellular industry is heading towards it to provide innovative options to their
customers. Spoilt by choice, the mobile phone subscribers are beginning to choose their
operators on the basis of the value added services they offer. The increased importance of
VAS has also made content developers burn the midnight oil to come up with better and
newer concepts and services.
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The Mobile VAS in India is $5 billion at the end of 2010 and is estimated to grow at 60% to
touch $8 billion’s at the end of 2012.
VAS is a most lucrative revenue segment of telecom industry and I think it is the only
segment that saves Telecom Company’s revenue in price-war situation. Profit margin in VAS
is very high in compared with call-charge margin.
Currently VAS part in revenue generating is 17% and segment growth is more than 50%. I
think after 4 to 5 year VAS revenue beat call-charge revenue, due to law call charge rate and
higher used of VAS.
This is where the (because of this reason) role of VAS (Value Added Services) comes into
focus. Operators are facing cutthroat competition and with the call rates in India being one
of the cheapest in the world, the margins are very low. Therefore they are looking at VAS as
the next wave for growth. It has become the flywheel of telecom growth and a large chunk
of revenue (nearly 20%) for operators is likely to come from VAS services in the years to
come. But it is not only effort from operators which is driving the growth of VAS.
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The Mobile VAS in India is $5 billion at the end of 2010 and is estimated to grow at 60% to
touch $8 billion’s at the end of 2012.
7% 3%
15%
40% P2P
Ringtone
P2A & A2P
game & data
35%
others
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15%
25% operator
60%
aggregator/devloper
copyright owner
Operators typically retain the biggest chunk of revenues. Copyright fee given to content
developer/owner comes from the margin of Content Aggregator or Operator or both.
Revenue sharing arrangement is typically 60% for the operator, 25% for the aggregator and
15% for the owner. This model is significantly different from evolved market like China
where the share of operator is typically 20-30% in the entire chain and aggregators &
owners keep a much higher share.
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30%
70%
operator
short-code owner
Enterprise service providers are increasingly using VAS as a marketing and customer
development tool. It is being increasingly used to connect to users through the mobility
platform. E.g. “Tracking of DHL courier through SMS- Send POD number as DHL-XYZ to
53456” The end user requests for this service by sending an SMS, this is routed through the
mobile service operator to the Short code service provider. The short code provider collects
all the information on the server and passes it to the client.
The per unit revenue accrual in this VAS is low (Rs 3/SMS) as compared to other types of
VAS, but it offers two streams of revenues as both the end-user & the enterprise service
provider pay for the VAS. We expect this to grow significantly as enterprises look beyond
mass media for solutions to reach out to their customers. It is also costeffectivefor the
enterprise as it serves both as a data base development initiative and also leads to cost
savings as queries can be handled through automated response
There are a lot of services which cannot be introduced in India because of lack of
supporting infrastructure
To avail of new and high end VAS, technologies like 3G need to be installed. However,
3Gnetworks are not mere upgrades of 2G networks; rather, entirely new networks need to
be builtand frequencies need to be assigned to mobile operators.
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Another reasons for players playing safe and not investing in novel applications and content is
Because this market is greatly affected by piracy. This is acting as a barrier for companies to
Investing into content development.
Currently the cost of most VAS is high. This is mainly because of the fact that VAS market is
led by Entertainment VAS which has a high perceived value. People are paying for it as they
perceive it highly but over a period of time as they get used to it, the willingness to pay high
amounts may come down.
There are high volumes of spam in the VAS market currently. Spam is an uninvited message
urging the consumer to avail of some service. Example “Bid for a Laptop by messaging your
bid amount to XXXX”
SPAM has a high nuisance value and can discourage users to avail of a genuine service as
they feel that once they have availed of a service & their number becomes a part of a
database, their inbox will be flooded with uninvited messages.
As an industry initiative there is a pressing need to take charge of as it goes against the long
term interest of the industry. Taking cognizance, some operators have already started
offering a service to their subscribers where they can choose not to receive any promotional
SMS’s.
While the mobile VAS space is all set to grow rapidly, all the stakeholders will have to work
together and create a self-sustaining ecosystem for this growth to sustain. Similarly it would
take a joint effort of all concerned to address the significant roadblocks and thus unlock the
true potential of Mobile VAS in India.
The key addressable barriers would be to ensure greater rationality in revenue sharing
between Telcos& content developers; ensure copyright protection, develop higher quality
content which goes beyond Bollywood and cricket and also to have a focused WAP strategy.
While pure entertainment service would continue to appeal to the younger consumers, the
overall focus for Mobile VAS would shift to utility based services like location information &
mobile transactions; as security concerns are addressed mobile transactions will also have a
good potential in India.
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Marketing mix is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market. McCarthy classified these tools into four broad groups that
he called the fours Ps of marketing: product, price, place, and promotion. Marketing-mix
decisions must be made to influence the trade channels as well as the final consumers.
Typically, the firm can change its price, sales-force size, and advertising expenditures in the
short run. However, it can develop new products and modify its distribution channels only in
the long run. Thus, the firm typically makes fewer Target market
Marketing mix of VAS is little beat unique in the specific segment but the price war situation
boost-up the company to deliver VAS product in different way to the customer, good
promotional activity, value chain of product, pricing strategy of services and differentiations
in product is helping the company to overcome the price-wars financial loss.
With the help of marketing mix, company can increase the more demand of VAS throughout
promotional activity; variety in the product can attract the more customers for using
services. Good value chain helping the customer to find out best of best. Also dispute
settlement between various content owners and operator make value chain better for
customer and helping in product innovation. In old product, Bundle-price policy increases
the demand. In premium and innovative product, Skimming price strategy increases the
revenue.
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Governmental constraints
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The life cycle of VAS product is so tiny due to people interest in other new product. Market
hype of other song pursues the customer to downloading new existing song.
Tiny life cycle (less than two month) of VAS are real helped the company in attract customer
for re-purchasing.
Maturity
Growth
Introduction Decline
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Introduction (5-days):
A period of slow sales growth as the product is introduced in the Market. Profits are
nonexistent in this stage because of the heavy expenses incurred with product
introduction
During this period customer try to understand the music “it’s hit or flop” and then
downloading the song.
Growth (15-days):
Movies promo on television, radio, internet and direct marketing call from operator
make them famous.
During this period promotional activity of movie like, actress/actor interview and
market gossip, mouth publicity and new feature motivate the user for
downloading/callertune.
A period of a slowdown in sales growth because the product has achieved acceptance
by most potential buyers. Profits stabilize or decline because of increased
competition.
The hype of promotion also in last the stage that create the special position for song
but due to full availability of song in all media or acceptance by potential buyers
songs downloading is on slowdown.
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The period when sales show a downward drift and profits erode.
Movies are hit or flop also play an important role in motivating the
customer to buy the product.
Flop movie create the negative “Psychological” impact on entire market and due to
this product selling continuously reduced.
Due to Other new song, boringness of present song reducing the customer interest
and then customer looking forward for new song.
After movie release, full song available in all media that also reduced the selling of
song.
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3G facility is the next wave for revenue generation. It’s helping the Telcos in more revenue
generation and also provided better quality in VAS. That attracts the more customers.
P2P:
Person to Person SMS, the most common form of mobile communication apart from
voice Ringtones: This is inclusive of monotones, polytunes, truetunes and CRBT
(Caller ring back tones).
P2A (Person to Application) SMS inclusive of messages sent by end users for contests
& for seeking other information like news & updates; (A2P)Application to Person
SMS inclusive of service push by enterprise service providers; Also include calls on
IVRS for all other services like astrology
Games include download of one play games offered by Reliance & full play games
offered by other operators; Data include download of wallpapers & logos
Others: Include MMS (Multi Media Messages) & subscription charges for WAP
services
Other:
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• news • sms
• stock quotas • voice-mail
• cricket score • mms
• jockes
• astrology
• missed call alert
P2A
& P2P
A2P
GAME &
OTHER
DATA
• e-banking • downloading
• e-recharge • Applications
• ticket booking • wallpaper
• bill paying • WAP
• e-commerces • e-mail check
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The Mobile VAS in India is $5 billion at the end of 2010 and is estimated to grow at 60% to
touch $8 billion’s at the end of 2012.
VAS is a most lucrative revenue segment of telecom industry and I think it is the only
segment that saves Telecom Company’s revenue in price-war situation. Profit margin in VAS
is very high in compared with call-charge margin.
Currently VAS part in revenue generating is 15% to 17%+ and segment growth rate is more
than 50%. I think after 4 to 5 year VAS revenue beat call-charge revenue, due to law call
charge rate and higher used of VAS.
This is where the (because of this reason) role of VAS (Value Added Services) comes into
focus. Operators are facing cutthroat competition and with the call rates in India being one
of the cheapest in the world, the margins are very low. Therefore they are looking at VAS as
the next wave for growth. It has become the flywheel of telecom growth and a large chunk
of revenue (nearly 20%) for operators is likely to come from VAS services in the years to
come. But it is not only effort from operators which is driving the growth of VAS.
Quality:
Quality of services is the best strategy for any VAS. It’s directly helping in the selling and if
customer likes the quality of product they re-purchase from same resources and also do
mouth publicity for you.
When customer downloads a game or any other application, they not have any idea about
your product. On-behalf of your trust customer download game. So, company must be
considering the quality and win the customer. If one time customer not satisfied with your
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product, in future they not used your product. Always try for quality is more worthy than
any other.
Indian companies are not provided high class quality. Some time without using any services
company can deducted the money from customers account is destroy the customers trust
on company.
Innovative product and quality of services always attract more customers. So, company can
focus on quality of services is more worthy than any other thing.
Design:
Design of Application or Design of game or any other product is directly helping the
company to attract. Good design of application is key attractiveness for customer.
Feature:
Innovative product always curiosities the customer foe purchase. Customer always want
extra feature in product.
Innovation in product directly attracts the user for experiment. VAS life cycle is very shortly,
after 2 to 3 month customer don’t like her ring-tone or application and then customer
download the extra feature ring-tone (like, Remixed of the ring-tone or new version of any
application)
Throughout new feature, customer can replace old one into new product.
Packaging:
Virus is the biggest threat when customer download from companies own downloading
center or any other web site. Make sure product is virus free and build the customer trust
on your web site.
Size:
When customer downloads any product from GPRS, size does matter.Un-limited or limited
downloading in specific time or in specific price is directly attract the internet-savvy user.
Also, Un-limited downloading or free downloading in initial stage creates a habit in
customer behavior is like a make a customer for life time.
Due to low spectrum, downloading speed in internet is low. So, make full feature product in
specific size (Size means, how much Kb used by particular application, game or song).
Company must be consider the size of application, lowest size of application or song, save
the users mobile memory and also consuming the time of user.
Company must be focus on product size and make them easiest for downloading.
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Demand and supply deciding the price is the basic concept of pricing strategy but in the VAS
competition between operators deciding the price of VAS.
VAS is the premium category of revenue generation so; all the players concentrate on VAS.
Keen of attracting new customer throughout VAS promotion is create a high competition. As
usual price in competition in always list. But in some premium category price are high that
real helping the company in revenue generation.
Due to high competition SMS rate is reduce near to 1 paisa from 1 rupee in last six month,
but now people send more sms and helping the company in revenue generation.
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Least price:
Telecom Company using a least price strategy due to high competition in market
In least price strategy, customer more used services that balanced the companies
account
Premium price:
Some content of product are helping the company to charge premium price
For exclusive content like; IPL wallpaper, Indian idol audition pass
Exclusive licenses for selling Blackberry, I-phone is helping the company to charge
premium
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VAS is the only tool for promotion in telecom industry and also helped the company in
Branding.
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:: Advertising :::
Advertising can be used to build up a long-term image for a product or trigger quick sale.
Advertising can reach geographically dispersed buyers efficiently. Certain forms of
advertising (TV advertising) typically require a large budget, whereas other forms
(newspaper advertising) can be done on a small budget.
Television:
Throughout them company can reach the more people and time to time remember
them the VAS product.
Next target market of Telecom Company is ruler people and they are not aware
about VAS. So, television is the only media that reach in ruler area and helped the
company in VAS awareness.
Booklets:
All the company providing a booklet, when customer purchases new sim-card.
Booklet providing a entire information about VAS, that helping the customer in VAS
use.
Posters:
Company’s retailer is best choice for poster display, when time to time customer
comes for recharge.
Direct impact of poster motivates the customer to purchase existing product from
same place.
Display signs:
All the major point of city is best option for display the board.
Web sites:
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Sales promotion can be used for short-run effects such as dramatizing product offers and
boosting sales
Communication: They gain attention and usually provide information that may lead the
consumer to the product….
(“Free sms about new scheme”)
Incentive: they incorporate some concession or inducement that gives value to the
consumer… (“Quiz of the day” or “check balances and win price”)
Contests:
Download the IPL game and win chances to participate in IPL night’s party
Games:
Sampling:
Demonstrations:
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The appeal of public relations and publicity is based on three distinctive qualities:
High credibility: news stories and features are more authentic and credible than ads
Ability to catch buyers off guard: reach prospects that prefer to avoid salespeople and
advertisements
Press kits:
Time to time release a press notes about new feature, that providing information
about your innovation to customer.
Community:
Social networking is best option for making community also It is the target market of
company. so, double benefit for company
Make followers on twitter and time to time tweet about your product
Free of cost
Sponsorships:
Sponsor of players
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In all form of direct marketing, telemarketing is best for the VAS to promote the product
due to own network and free of cost.
The message is normally addressed to a specific person who used the same services
in past
Customized sms:
Specific product
Call for ring tone download, when customer can find out own favorite ringtone in
various category
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Supply Chain:
Whereas marketing channels connect the marketer to the target buyers, the supply chain
describes a longer channel stretching from raw materials to components to final products
that are carried to final buyers. For example, the supply chain for application download
starts with hides, tanning operations, cuts operations, manufacturing, and the
marketingchannels that bring products to customers. This supply chain represents a value
delivery system. Each company captures only a certain percentage of the total value
generated by the supply chain. When a company acquires competitors or moves upstream
or downstream, its aim is to capture a higher percentage of supply chain value.
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VAS has also resulted in the emergence of an entirely new business eco-system giving rise to
supporting industries such as content development and aggregation. There are multiple
stakeholders playing across the VAS value chain many with overlapping roles and functions.
A well demarcated value chain of VAS is yet to evolve.
Content copyright owners: At the first level of the MVAS value chain are the content
copyright owners, which develop original copyright content. Examples include music
production houses (SaReGaMa, Sony, and T-series), Bollywood production houses
(Yash Raj Films), and media houses (Sony, Star, Zee, Espn, Times Group etc.)
Mobile operators: They provide transport and support mechanisms for delivery of
mobile content. Examples include Airtel, Reliance, BSNL, MTNL, Vodafone, Idea
Cellular, etc.
Technology enablers: On the other end of the value chain are technology enablers.
These provide technology platforms that enable access to MVAS. Players include
OnMobile, Bharti Telesoft, Webaroo, etc.
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VAS has also provided a platform to enterprises to communicate with existing and potential
customers using technology as a common denominator. In the context of VAS, enterprise
service providers arecompanies that reach out to the consumer through the
mobileplatform. Enterprises across a wide range of industries such as financial services,
retail, real estate, cargo and courier, and FMCG companies are using VAS as a marketing and
customer development tool(6). The flow of information from the enterprise to the end-user
can be either via automated alerts or user-generated requests. Though the inflow of
revenue per unit may be low in the case of Enterprise VAS (usually USD 0.07/minute or INR
3/minute), this segment is likely to drive a sizeable contribution to the total VAS market,
given that an increasing number of industry verticals that interface directly with the
consumer continue to adopt this channel as a means to communicate with their customers.
ESP provides the interface between the enterprise and the mobile operator. ESPs are
companies that send messages in bulk to the target end-users. Examples include One 97,
Cell next, and ACL Wireless.
Mobile operators:
Operator provide transport and support for delivery of information from enterprises to end-
users
Through the ESP. Examples include Airtel, Reliance, BSNL, MTNL, Idea Cellular, etc.
Coverage:
Transport:
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Out of 1.16 billion people, 525.15 Million people have the Mobile phone. Mean’s
for future telecom company have the 475 million new targets.
People more love mobile phone than fixed line, so BSNL customer looking for you.
Cellular service is one of the fastest growing sectors in India and still has immense potential
for growth; India’s 525million cellular network is 2ndlargest in the world after china. Indian
total population is near about 1.16 billion and total telephone user is 44.73% of population,
means now a day 650 million people of India have not a mobile.
In 44.73% teledensity, Ruler areas part is just 15%. So ruler area is a biggest opportunity for
operators.
Most of Europe and American regions teledensity is higher than 100, so all big players eye
on India and they have huge amount of money invest in Indian market. In price-wars
situation investment is come from FDI, it’s good for the industry.
The government should address the situation fast. Bigger players will drive consolidation
and restructure their operations leading to a greater ability invest in the growth of the
telecom sector in India. This process should result in 3-5 large players, with a pan India
footprint and focus. Industry also expects India’s teledensity levels to touch 60 %, in 2012.
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Mobile phone prices dipped by 15-30% in the year 2009. The market is estimated to grow
20% faster than predicted earlier and would rise to 5.5 Crores units from 4.3 Crores last
year. Major mobile handsets companies have reduced price to the extent of 26% across all
segments following the reduction of basic customs duty to 5% along with abolition of 4%
SAD announced earlier. If all their other recommendation on SAD and CVD are meet too, ICA
expects industry to achieve a size of 1 billion subscribers by 2015 and legal market to grow
to 90%.This shows that cellular market is growing and no of mobile user are expected to
increase. Government has announced cut in customs duty on mobile handsets to 5% and
abolish 4% SAD (special additional duty). Bigger price differential is expected in the high-end
mobile handsets that are GPRS and MMS compatible or the camera phones. Indian cellular
association, and apex body for cellular handsets manufacturers in the country now expects
that the gray market would be destroyed completely and the legal market for handsets
would grow from the current 50% to 80%.
Growing Industry:
As per TRAI, two other associated aspects for market growth as availability of spectrum and
availability of resources for network rollout and expansion. The government is currently
looking into these two areas. The 74% hike in FDI has been cleared by the government to
ensure continuous flow of investments to expand the reach of the mobile operators. To
realize full market potential and achieve the forecasts, telecom operators have to work on a
segmented approach and focus on the five key strategies given below:
Despite a strong base of a billion+ people, the country has a 44.73% teledensity and 55%
people now a day not have a mobile, so for the next few years you can estimate the growth.
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The biggest threat to the industry is price-war in tariff. Cellular tariffs have dropped
by over 56X time since May 1999 - a feat unparalleled by any other sector or
industry in India. The average a mobile tariff in Year 2010 was prevailing around ½
paisa per second as against the peak ceiling tariff of Rs. 16.80 per minute when NTP
99 was announced.
This is a very highly competitive market. There are 13 players in the market, who are
giving tough competition to one another. So, every player has to constantly update
them to stay in the market in terms of service, innovation & call charges.
New entry
Last year 4 new players come in industry and start the services and this year three
new player (datacom, etisalat and qualocom) possibly joining the industry
Lowest call charge in the world, mean’s your revenue (ARPU) also lowest in the
world.
Indian consumer just ½ paisa pay for a 1 second call mean’s if you like to talk 1
minute just pays 30 paisa. An Indian call charge is 5 time less in compare sub-
continent.
Lowest ARPU
In the year 2005 ARPU (monthly) is Rs. 370, presently it have Rs 155.
58% ARPU decline in last for month. ARPU directly affected company’s revenue and
reduce them.
During last qtr. Rcom market price nearly 45% down,Tata communication down
30.6%, Tata teleservices down 30.6%,Bharti Airtel down 21%, MTNL down 19.4%,
idea cellular down22.8%. (During the qtr. BSE Sensex gain 2%)
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Poor performances in stock market preventing the company’s future expanses plan.
After poor performances in stock market, you can’t easily borrowed money from
market.
This would tie back to point of new player’s entry and a possible consolidation in the
telecom business and the tower business.
Losing ownership of the client as the number one threat for old player’s. It does not
feature as a risk for Indian telecom. Reason is - India is still in the growth phase and
losing a customer is not yet on the minds of the service providers.
Company’s next target market is ruler area and they people have some specific
income-expenses budget and High commodity price already deficit her budget.
So, they not have extra money for mobile.
Delay of 3g auction
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525.15 Million Mobile Subscriber based Indian telecom industry faced a high competition
and due to this all 13 player reduce call tariff. After world’s lowest call charge all the company
faced same problem!
Presently 13 companies providing a cellular service in India and 3new players may be
ready for joining the competition.
High competition
Due to new player’s entry cellular operator faced a high Competitions cum more
rivalry.
Lowest call charge is biggest problem of the industry. In the year 1999 per minute call
terrif is 16.8 rupees and it’s now a 30 paisa. Cellular tariffs have dropped by over 56X
since May 1999
During 3QFY10, telecom stocks saw a significant correction on the bourses, Airtel’s
stock price reduce by 21.4% , Rcom reduce by 43.9%, idea reduce by 22.8%, MTNL
reduce by 19.4%, Tatateleservicesreduced by 25.9% and Tata communication reduce
by 30.9%.But same quarter sensex increase by 2.0%.
In 2005 ARPU is 370 rupees and now it is 156. Due to price wars impact last quarter
ARPU decline by 10.40%.
All major player of industry like…Bharti Airtel, RCOM and Idea Cellular - to report a
decline in top-line growth to the tune of 2.5% yoy, while on a sequential basis, a
decline of nearly 5% is expected. This is the first time ever that these companies will
post a yoy decline in top-line, even as subscriber growth has been well-brought-up.
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VAS is most lucrative segment of the industry but they faced some problem in
innovation, piracy, revenue distribution and future infrastructure and next
generation network.
Due to high services charge and lack of awareness lot of customer are not able for
VAS used.
Losing ownership of the client as the number one threat for old playersbut it does
not feature as a risk for Indian telecom. Reason is - India is still in the growth phase
and losing a customer is not yet on the minds of the service providers.
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India’s 44.76% population enjoyed a world’s lowest call tariff but they don’t know how it is
possible and what happened in future!
Due to price-wars impact most of company’s revenue reducing in next few years and
because of financial loss small company is not able to run own business andshutdown its
Sutter otherwise sold out business to big player.
And then few big players enjoyed the market share and increase the call tariff in future, it is
not a prediction, same situations faced by all the developing country in the growths last
stage. Same as to other country,Indian telecom industry also faced problem but in future
how overcome from them is biggest challenges for Telecom Company.
More use of VAS is the only way to overcome the price-war impact!
Paying 3 rupees for a cricket score is little more for user in term of return. Due to the
high cost of vas, lot of customer not interested otherwise not able to use more vas.
So simple thing is reduce charge and attract more customers for vas used.
More innovative services atomically attract the customer to the use and from the
new services you can earn more than old services due to its premium charge.
Next target market of the industry is ruler area and I think they are not aware about
vas, so throughout promotional activity first you can aware them about VAS and
then generating revenue.
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Revenue distribution between operator and services provider is not fair. The ratio is
35:65; less revenue stopped an innovation from the services provider side.
Make it simple
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Books:
Report:
Web site:
www.wikipedia.org
www.trai.gov.in
www.dot.gov.in
www.coia.com
www.auspi.in
www.itu.int
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www.airtel.com
www.reliancecommunication.com
www.vodafone.co.in
www.bsnl.co.in
www.tatateleservices.com
www.ideacellular.com
www.aircel.com
www.mtnl.net.in
www.mtsindia.in
www.loopmobile.in
www.uninor.in
www.stel.com
www.hfcl.com
www.tatadocomo.com
www.economicetimes.com
www.news.yahoo.com
www.rediff.com
www.bse-india.com
www.karvy.com
bhuvar.rajsee@yahoo.com
About Author
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Bhuvar Rajshee R.
(MBA in dual specialization - Major Marketing/Minor Finance)
Mobile: - +91 9904729435 E-Mail: - bhuvar.rajsee@yahoo.com
Address: - Opp. Bhadar river, Nr. Dilip dying, above. Dhora, JETPUR (GUJ.) – 360370
Career Objective
To excel in corporate area with sincere efforts and look for a suitable position in reputed
company that will use my creativity and other skills, which will help to enhance these
skills further and provide me ample opportunity to prove myself and scope for upward
movement.
Educational Qualifications
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Projects Undertaken
1 Grand Project
Title: - Indian telecom industry; “Price-war and its impact on industry”.
Objective: - To understands the price-wars impact on telecom industry and creating
marketing mix of VAS as a “next wave for revenue growth” in price-war situation.
Duration: - 6 week
2 Summer Project
Title: - “Organizational Study” of BAN LABS LTD.
Computing Skills
Other Activities
Experience
Fresher
Personal Profile
Gender : Male
Nationality : Indian
A study report on Indian Telecom Industry: “Price-War and its impact on industry”
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