Telecom Sector

Division 61  Telecommunications
Group 611  Wired telecommunications activities
Group 612  Wireless telecommunications activities

Deepak G  (MS09A012)
Karthik Shankar  (MS09A020)
Prakash K S  (MS09A034)
Vinay Jawale  (MS09A061)
Vinayak Gupta (MS09A062)
Vino Thomas  (MS09A063)
Agenda

• Global Overview
• Technology
• Advantage India
• Indian telecom sector analysis
• Market Segments in India
• Latest Developments
• Bharti Airtel
• Policy and Regulatory Framework
• Future Trends
• Conclusion

2
Global outlook

Industry Characteristics
• High capital investment and innovation cost
• High customer churn rate
• Economies of scale between OEM and
Contract Manufacturers
• Complex supply chain from contract
manufacturer to end Consumer
• Skilled human capital requirement
• Global nature of products for plug and play

Industry Trends
• Globalization of services – global
operations in localized environments
As on 2009 • Bundling of services
• Frequent new product, services and tariff
introductions
• Shortening of product life cycles

3
Global market growth
Global telecom revenue growth forecast

Source: 
www.ey.com/telecommunications

4
Top global telecom service providers

As of Feb 2010
Source: http://www.knowledgebase‐script.com

5
Top global telecom service providers

Source: Global 100 www.totaltele.com

6
Top global telecom equipment manufacturers

As of Feb 2010
Source http://www.hoovers.com/industry/telecommunications‐equipment

7
Top 10 business risk in telecom in 2010

Source: www.ey.com/telecommunications

8
Agenda

• Global Overview
• Technology
• Advantage India
• Indian telecom sector analysis
• Market Segments in India
• Latest Developments
• Bharti Airtel
• Policy and Regulatory Framework
• Future Trends
• Conclusion

9
Technology
Standards used

10
GSM vs CDMA

Features Global System for Mobiles(GSM) Code Division Multiple Access 

(CDMA)

TECHNOLOGY Uses EDGE  and slower transfer  Faster Data Transfer up to 2Mbps

rate up to 384kbps

INFORMATION SIM card can be changed and  Phone is programmed to carry 

replaced information

DEVICE  EDGE ready phone requirement EV‐DO ready phone required

FEATURES Used for basic phone features and  Suitable for Data transfer, web 

high end features via GPRS browsing, video calls
COVERAGE •Coverage is all around the globe. Pre‐dominant in US, Japan and 
• Mandatory in Europe. South Korea
•Suitable for international roaming

REACH More than 1 billion users Around 270 million users

11
Agenda

• Global Overview
• Technology
• Advantage India
• Indian telecom sector analysis
• Market Segments in India
• Latest Developments
• Bharti Airtel
• Policy and Regulatory Framework
• Future Trends
• Conclusion

12
Advantage ‐ India

13
Advantage ‐ India

14
Trend ‐ population and demographics

15
FDI inflows

16
Agenda

• Global Overview
• Technology
• Advantage India
• Indian telecom sector analysis
• Market Segments in India
• Latest Developments
• Bharti Airtel
• Policy and Regulatory Framework
• Future Trends
• Conclusion

17
Indian telecom sector analysis

• At the end of August 2010, tele‐density was recorded at 59.6 per

cent with a total telephone subscriber base of 706.4 million.

• By 2014, the wireless subscriber base is expected to reach

approximately 1 billion to include around 572 million urban
subscribers and 468 million rural subscribers.

• Revenues of the Indian telecom industry are projected to reach US$

45 billion by 2012, compared with US$ 33 billion in 2009.

• Key players in the Indian telecom market are Bharat Sanchar Nigam
Ltd (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), Bharti
Airtel Limited, Reliance Communication, Vodafone, Idea Cellular,
Aircel and Tata Teleservices.

18

Suppliers
There are enough vendors to dilute
bargaining power of suppliers. But
limited pool of skilled managers and
engineers, especially those well versed n
the latest technologies, places
companies in a weak position in terms
of hiring and salaries.
New Entrants
High entry barriers due to
• Capital intensive nature of industry
• Ownership of telecom licenses
• Requirement of specialized operating  • Cable TV vs. Satellite TV
skills.
But size of market opportunity and  calls
access to finance is encouraging serious 
entrants.
2G scam
Buyers
10X Force With increased choice of telecom
products and services, the bargaining
power of buyers is rising. Buyer power
can vary somewhat between market
Competitors segments, e.g., high buyer power for
• Rush of new entrants basic equipments for residential
• Swift technology obsolescence due  customer and low for custom‐made
to frequent new product  equipments for corporate.
Introductions
• Margin pressure due to  fierce 
competition
• High exit barriers due to  
specialized equipments making it a 
risky business
Complementors Substitutes
• TRAI and DOT are formulating  Products and services from non‐
policies to encourage the  traditional telecom industries pose 
growth in this sector serious substitution threats; e.g.,
• Internet telephony vs. traditional voice 
19
Agenda

• Global Overview
• Technology
• Advantage India
• Indian telecom sector analysis
• Market Segments in India
• Latest Developments
• Bharti Airtel
• Policy and Regulatory Framework
• Future Trends
• Conclusion

20
Market Segments in India

The Indian telecom industry can be primarily divided into basic, cellular and
internet services. It also has relatively segments such as radio paging services,
very small aperture terminals (VSATs), public mobile radio trunked services
(PMRTS) and global mobile personal communications by satellite (GMPCS).

21
Growth of telecom network

Source: DOT annual report 2009‐10
22
Wireless & wired subscriber base

Source: DOT annual report 2009‐10

23
Telecom circles in India
• Telecom circles in India have been classified
into 4 Categories viz. Metros, Category A, B
and C.

• With penetration rates in metros

approaching 100 percent the market here is
nearly saturated.

• However, there is still immense potential in

other circle categories particularly B and C.

24
Market segments —wire line

• The subscriber base of wire line services stood

at 36 million as on August 2010, with a
teledensity of 3 per cent.

• Public sector undertakings —BSNL and MTNL —

have a major share of the wire line market
covering more than 80 per cent.

• MTNL is present in Delhi and Mumbai, while

BSNL covers the rest of the country.

• Although private players such as Tata

Teleservices, Bharti Airtel and Reliance have
registered significant growth, BSNL continues to
dominate the segment in terms of wire line
subscriber base.

25
Market segments —wireless

• The wireless segment includes GSM and CDMA services

and is much larger than the wire line segment in India.
The segment is growing steadily because of the
convenience and utility it offers.

• The subscriber base of wireless services stood at 670.6

million as of August 2010 with tele‐density of 56.6 per
cent.

• As of June 2010, the wireless market recorded 527. 6

million GSM subscribers accounting for 83 per cent of
the market and 107.9 million CDMA subscribers
accounting for the remaining 17 per cent.

• Private players such as Bharti Airtel Limited, Reliance

Communication, Vodafone, Tata, BSNL, Idea Cellular and
Aircel cumulatively hold a major share of the wireless
market.

26
ARPU & MOU trends

In India, growth in the subscriber base, which contributes to healthy revenue growth, 
mitigates the reduction in average revenue per user (ARPU). In addition, high MOUs 
compensate for declining tariffs.

27
Agenda

• Global Overview
• Technology
• Advantage India
• Indian telecom sector analysis
• Market Segments in India
• Latest Developments
• Bharti Airtel
• Policy and Regulatory Framework
• Future Trends
• Conclusion

28
Latest development ‐ 3G auctions
Salient Facts

• Starting on 9 April it 
took 34 days.

• Indian Government 
earned Rs. 67,700 crore, 
double than they 
expected to get by 
selling 3G airwaves. 

• Not a single operator 
won pan‐India 3G 
license.

• 3G operations by BSNL 
and MTNL only fully 
Source: Financial times
available pan India
• Initially BSNL & MTNL told to match highest bid per circle.
• Refund request by A Raja after expected rates doubled. • Orissa only state not 
• BSNL & MTNL bound by social responsibility plan – Request refund. completely covered.
• Refund Request Rejected, but to be compensated indirectly.
29
Latest development ‐ 2G Scam

30
Agenda

• Global Overview
• Technology
• Advantage India
• Indian telecom sector analysis
• Market Segments in India
• Latest Developments
• Bharti Airtel
• Policy and Regulatory Framework
• Future Trends
• Conclusion

31
Bharati Airtel

32
Bharti Airtel

33
Growth Trajectory

34
Corporate History

35
Performance at a glance

In 5 years, from 11 mn  From Rs 3000 Cr to Rs 
to 137 mn 42,000 Cr

36
Financials & Positioning

37
Wireless Customer Market Share
•Airtel continuously 
consolidating its 
market leadership 
position despite 
intense competition

•Airtel current 
monthly net adds at 
3.1 million vs. 2.8 
million a year ago

•Airtel ranks 1& 2 in 
16 circles in terms of 
number of 
subscribers

•Over 62% of net adds 
coming from B&C 
circles (rural India)

38
Leadership & Growth Strategy

39
Transaction Rationale – Long Term Strategy

40
India (vs) Africa

41
Agenda

• Global Overview
• Technology
• Advantage India
• Indian telecom sector analysis
• Market Segments in India
• Latest Developments
• Bharti Airtel
• Policy and Regulatory Framework
• Future Trends
• Conclusion

42
Policy and regulatory framework

43
Regulatory evolution

Source: KPMG

44
Policy and regulatory framework
Department of Telecommunications( DoT):
• Set up in 1989 with administrative and financial powers to deal with various
aspects of Telecommunications.
• Responsible for policy formulation, licensing, wireless spectrum
management, administrative monitoring of PSUs, research and development
and standardization/validation of equipment etc

Telecom Regulatory Authority of India (TRAI)

• Established in1997 to provide a fair and transparent policy environment
which promotes a level playing field and facilitates fair competition.
• The directions, orders and regulations issued cover a wide range of subjects
including tariff, interconnection and quality of service as well as governance
of the Authority.

Telecom Disputes Settlement and Appellate Tribunal(TDSAT)

• To adjudicate disputes and dispose of appeals with a view to protect the
interests of service providers and consumers of the telecom sector and to
promote and ensure orderly growth of the telecom sector

45
Policy and regulatory framework
National Telecom Policy 1999 (NTP 99): The key objectives include‐
• Telecommunication for all and telecommunication within the reach of all
• Achieving universal service across all villages,
• Global standards in service quality,
• India’s emergence as a major manufacturing base and a major exporter of
telecom equipment, and
• The protection of the country’s security interests.

Unified Access Licensing Regime (UALR)

• Established in 2003, eliminated the need for separate licenses for different
services.
• This regime allowed players to offer both mobile and fixed‐line services under
a single license after paying an additional entry fee

Universal Service Obligations (USO)

• Aimed at widening the reach of telephony services in rural India.
• This system was put in place to bridge the gap between urban and rural tele‐
density, which is currently more than 100 per cent.

46
Agenda

• Global Overview
• Technology
• Advantage India
• Indian telecom sector analysis
• Market Segments in India
• Latest Developments
• Policy and Regulatory Framework
• Bharti Airtel
• Future Trends
• Conclusion

47
Future of Indian Telecom

• Rural Penetration • Regulatory Reforms

• Price wars • Convergence

• Shift from Voice to Data • Mobile Cloud Computing

• Mobile Commerce

• Spectrum Management

• 3G and 4G

• MNP

• Broadband evolution

• Mergers and Acquisitions

48
Agenda

• Global Overview
• Technology
• Advantage India
• Indian telecom sector analysis
• Market Segments in India
• Latest Developments
• Policy and Regulatory Framework
• Bharti Airtel
• Future Trends
• Conclusion

49
Conclusion

• A concentrated attempt to replicate the successes achieved in

urban areas to the newer markets of rural India

• Broadband connectivity is expected to improve the socio‐

economic conditions of the lower penetrated area

• Telecom has boosted economy through inclusive growth

• Mobile VAS with relevant content

• Proactive regulatory environment

• Role of telecom in the next spiral of growth

50
Thank You!
51