Vodafone India

Vodafone India, is an Indian subsidiary of UK-based Vodafone Group plc, the world's
second-largest mobile phone company, is a provider of telecommunications services in India
with its operational head office in Mumbai. As of August 2016, Vodafone India has a market
share of 18.42% with approximately 200 million subscribers and is the second largest mobile
telecommunications network nationally after Airtel.
Mobile services Offered
3G
Vodafone India provides services on basis of 900 MHz and 1800 MHz digital GSM
technology. Vodafone India launched 3G services in the country in the JanuaryMarch
quarter of 2011.
On 19 May 2015, the 3G spectrum auction in India ended. Vodafone paid 11617.86 million
(the second highest amount in the auctions) for spectrum in 9 circles. The circles it will
provide 3G in are Kolkata, Gujarat, Haryana, Delhi, Maharashtra & Goa, Mumbai, Tamil
Nadu, Uttar Pradesh (East) and West Bengal.
4G
Vodafone launched its 4G services in India starting from Kochi in Kerala in December 2015
with plans to expand its network to various other cities in the country. On 8 December 2015,
Vodafone announced the roll out of its 4G network in India on 1800 MHz band, starting from
Kochi, Kerala. After that Vodafone has launched 4G services in Kolkata, Mumbai, Delhi
followed by Kerala and Karnataka. Vodafone has launched 4G services in Tamil Nadu by
2100 MHz spectrum.
M-Pesa
M-Pesa, branded as M-Paisa, was launched in India as a close partnership with HDFC bank
in November 2011. Development for the bank began as early as 2008. The service continues
to operate in a limited geographical area in India. Vodafone India had partnered with both
HDFC and ICICI, ICICI launched M-Pesa on April 18, 2013. Vodafone plans to rollout this
service throughout India. The user needs to register for this service by paying 100 Rupees and
there are charges levied per M-Pesa transaction. They can get recharge mobiles and DTH
from m-pesa and also they can transfer the money to other users and other banks also.
 Indian Telecom Industry Analysis
Present Market Structure
Market share Capitalization as of May 2017

Telecom stocks have seen a significant run-up since the announcement of Idea-
Vodafone merger, with consolidation being perceived implying a reduction in
competitive intensity. The run-up in share prices for both Airtel and Idea prices in the
consolidation gains, more so for Idea. Airtel stands to benefit more gaining both in
market share and spectrum which Idea-Vodafone merged entity would need to give up
due to M&A caps being hit. note that the impact of R Jio has not truly started
reflecting in the revenue numbers just yet given the free nature of the offer at launch
for six months.
Over the longer term, even after adding up the after effects of the merger, Indian
telecom will still be a five-player marketthree large (Airtel, Idea-Vodafone, R Jio),
one smaller (R Com combine) and one fringe (BSNL-MTNL). The three equally
strong competitors would be equally bad as fragmented competition (as at present) for
incumbents. R Jios aggressive stance (target of 50% market share) would make
market dynamics even worse in the interim before some kind of a steady state is
reached, which is still a while away.
Porters Five Factor Theory

Growth Drivers
Increase in Revenue and Income
Incomes have risen at a brisk pace in India and will Rising per capita income in India (US$)
continue rising given the countrys strong economic growth prospects.
Nominal per capita income have recorded a CAGR of 8.87 per cent over 200015
Increasing income has been a key determinant of demand growth in the telecommunication
sector in India.
The IMF estimates nominal per capita income in India to expand at a CAGR of 4.94 per cent
during FY10FY19.
Per capita income in the country is expected to grow at a CAGR of 8.1 per cent during FY15-
FY19.
Per capita income in the country is estimated at US$1,747.5 in FY16

Increase in Foreign Investments

Cumulative FDI inflows into the telecom sector over April 2000December 2016, totalled to
US$23.92 billion
During this period, FDI into the sector accounted for a share of 7 per cent of total FDI inflows
into the country, till December 2016
Between April 2014 to December 2016, Telecommunication sector attracted FDI inflows of
around US$ 9.6 billion.
 PESTLE ANALYSIS
1. POLITICAL
The Government of India plans to cut license fees by up to 33 per cent for operators.
The Government has been proactive in its efforts to transform India into a global
telecommunication hub.
Relaxed FDI (Foreign Direct Investment) Norms.
The Government recently revised the M&A ( Mergers & Acquisition) guidelines for
the telecom sector; it raised the limit on the market share of a merged entity in a
circle to 50 per cent from 35 per cent earlier.
To boost local research and manufacturing of telecom products, the government has
proposed an investment of USD32.2 billion in three phases:
i) USD9.2 billion to the Telecom Research and Development Fund,
ii) USD4.6 billion for the Telecom Entrepreneurship Promotion Fund, and
iii) USD18.4 billion to the Telecom Manufacturing Promotion Fund during the 12th
Five-Year Plan.

2. ECONOMICAl
The Indian Telecom industry has been playing an important role in the world
economy and global revenues. In 2008, there were USD 4 trillion, expected to grow at
a steep 11% p.a. CAGR over the next 2 years.
Indias telecom service revenue was USD$ 55 billion in 2012, and believed that it is
projected to almost double to USD$ 90 billion by 2015.
GDP contribution 6%.
Output per annum - 136,833 crores per annum & Increasing 20% for every month.
Increase in disposable incomes.
Falling mobile phone prices.
Falling call charges rates with more utility.

3. SOCIAL
Growing young population.
Change in Lifestyle.
Increment in services which includes digital television, voice and high-speed internet
services and various social application.
Chain of information flow.
Building awareness and connecting people.
Exploitation of young minds, too compulsive, and sometimes too much information.
Irritating and annoying due to excess amount of calls and messages.
 4. TECHNOLOGICAL
Driven by 3G and 4G services,Along with the introduction of the latest LTE
technologies, it is expected that there will be huge machine-to-machine (M2M)
growth in India in 2016-17. Theres a lot of scope for growth of M2M services in the
government's ambitious Rs. 7,000 crore (US$ 1.1 billion) 'Smart City' program.
Increasing MOU (Minutes Of Use) and Data usage.
Liberalisation of spectrum and convergence of network, services and devices.
New and upgraded devices and applications with massive features like GPS, WiFi,
etc.
SIM cards, Nano SIM cards, etc.

5. LEGAL
National Telecom Policy, aims at a One Nation-One license regime with no roaming
charges and nation wide number portability.
Telecommunications falls under the legislative competence of the Union
government and the Parliament and not the States.
In India Legal framework, covering telecom sector include various services like
Internet, voice mail, sat. communications, E-Commerce, broadcasting services etc.
The Legal Framework is provided by: 1. The Indian Telegraph Act 1885.
o 2. The Wireless Telegraphy Act 1933.
o 3. The Telegraph Wires (Unlawful Possession)
Act1950.
o 4. The Cable Television Network (Regulation) Act1996

Herfindahl-Hirschman Index (HHI)

The Herfindahl-Hirschman Index (HHI), a commonly accepted measure of market
concentration, is used to determine the extent of competition in an industry. HHI takes into
account the relative size and distribution of the firms in a market and approaches zero when a
market consists of a large number of firms of relatively equal size.

With HHI of around 0.22, Indian mobile industry is currently one of the highly competitive
markets in the world with very low concentration of market power.
Trai's recent recommendations on (a) minimum number of wireless access service providers
to be four (b) restricting the market share of merged entity in the mobile access market to
40% and (c) restricting the cross equity holding in the same circle to 20% are directly or
indirectly related to HHI and only tenuously linked to non-market shares measures of
contestability.