60022580 telecom industry

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ALLIANCE UNIVERSITY, SCHOOL OF BUSINESS

ASTUDYON THE TELECOMMUNICATION INDUSTRY IN INDIA 1

A STUDY ON THE TELECOM INDUSTRY IN INDIA

Under the guidance of

Prof. SamikShome

Prepared by:

Marketing A

Group no : 12

1.AninditaSircar (10SBCM0251)

2. Amrita Jha (10SBCM0250)

3. Abhinav Sharma (10SBCM0128)

4. Jaikrishna Kumar (10SBCM0076)

5. VivekChaturvedi (10SBCM0306)





Master of Business Administration (MBA): July 2010-2012

Term ± III: Industry Analysis Report

DECLARATION

This is to declare that the report entitled ³A study on the telecomindustry in India´ has

been made for the partial fulfilment of the course Industry Analysis in Term ± III (Batch:

July 2010-2012). We the students of Group 12 of Marketing A would like to state that all

work carried out in the project is through our own diligent work. The data and information

have been collected through various articles which are recognised in the Bibliography.

Group Members Roll number Signature

ABHINAV SHARMA 10SBCM0128

ANINDITA SIRCAR 10SBCM0251

AMRITA JHA 10SBCM0250

JAIKRISHNA KUMAR 10SBCM0076

VIVEK CHATURVEDI 10SBCM0306





CERTIFICATE

I, hereby certify that this report is an original work of the students of Group 12,

Marketing A, MBA batch 2010-12, Alliance University ± School of Business,

Bangalore.

The students successfully completed their Industry Analysis Report on INDIAN

TELECOM INDUSTRY under my supervision and guidance as partial

fulfilment of their requirements as per the Master of Business Administration

course, Alliance University.

____________________

Prof. Samik Shome

Project Guide (faculty)

Alliance University- School of business

Date:__________

Place: Bangalore





TABLE OF CONTENTS

SL. NO. PARTICULARS PAGE NO.

Declaration 1

Acknowledgement 2

Executive Summary 6

Chapter 1 Introduction to Telecommunication Sector 81.1 Overview of the Industry 9

1.2 Objective of the study 12

Chapter 2 Literature Review 13

2.1 Introduction 14

2.2 TECHNOLOGY& FUTURE PROSPECTS 14

2.3 4G AND ITS VISION FROM TECHNICALPERSPECTIVE

15

2.4 MOBILE BROADBAND 15

2.5 THE COMPETITION 16

2.6 KNOWLEDGEMENT MANAGEMENT 16

2.7 CONCLUSION 17

Chapter 3 Industry Analysis 18

3.1 Market Share and Nature of Competition 19

3.1 Market Segmentation 21

3.2 PEST Analysis 24

3.3 Business Diversification 27

3.4 Consolidation ± M&A 30

3.5 Technology Intensity 33





3.6 Marketing Initiatives 37

3.7 Future Outlook 42

3.8 Comparison with US and Other Countries 45

3.9 conclusion 49

Chapter 4 Conclusion 50

References 52

FIGURE NO. TITLE PGNO.

3.1 arket share of Indian Telecom Industry as on 31.12.2010 19

3.2 Subscriber base of major players in telecom industry as onJan 2011 (in millions)

20

3.3 Market segmentation on the basis age, gender, income 21

EXECUTIVE SUMMARY





The Indian telecommunications industry is said to be one of the fastest growing in the

world. The industry has witnessedconsistent growth during the last year with the rollout

ofnewercircles by operators, successful auction of third-generation (3G) and broadband

wireless access (BWA) spectrum, network rollout in semi-rural areas and increased focus

on the value added services (VAS) market. According to the Telecom Regulatory

Authority of India (TRAI), the number of telephone subscriber base in the country reached

742.12 million as on October 31, 2010, an increase of 2.61 per cent from 723.28 million in

September 2010. With this the overall tele-density (telephones per 100 people) has

touched 62.51. The wireless subscriber base has increased to 706.69 million at the end of

October 2010 from 687.71 million in September 2010, registering a growth of 2.76 per

cent. Also, Indian Global System of Mobile Communication (GSM) telecom operators

added 17.45 million new subscribers in November 2010, taking the all-India GSM cellular

subscriber base to 526.18 million, according to the Cellular Operators Association of India

(COAI). The GSM subscriber base stood at 508.72 million at the end of October 2010.

This report contains details about the market leaders, market challenger in the Indian

telecommunication sector and also what chances the other players stand with respect to the

market share. Market share is followed by the PESTL (Political, Economic, Social,

Technological and Legal) analysis of the industry. The analysis tells us the influence of the

various factors like political social economical technological and legal on the

industry.Also this being a growing sector has many opportunities with respect to

employment, public welfare and other such activities. TRAI (Telecomm Regulatory

Authority of India) is the regulatory body for the telecom industry. This report also

explores the role of the DoT( Department of Telecom) in framing policies and regulations

for the sector.This report also takes a look at the players of the sector in terms of their

business diversification and future expansion in business if any. It also provides a clear

picture about the various mergers and acquisitions common to the sector (Tata DoCoMo,

Bharti Airtel Zain).This report then takes a look at the international exposure that this

sector has (it has already attracted players like Vodafone through the acquisition with

Hutch) along with the Indian companies that are expanding themselves internationally.It

gives an in-depth knowledge into the Research and Development part in this sector.Huge

volumes of R&D are involved in the sector and this is majorly responsible for a lot of

developments in the same. The later part of the report is about the international exposure

and the national challenges the sector faces. Proper marketing of the services is very





important in this sector to reach out to the masses and also to tap the untouched segment.

The report also comprises of the future outlook of the industry along with its comparison

to the the other countries.





CHAPTER 1

INTRODUCTION





1.1 OVERVIEW

The Indian telecommunications industry has witnessed robust growth during the last

year on the roll out of third-generation (3G) and broadband wireless access (BWA)

spectrum, network rollout in semi-rural areas and increased focus on the value added

services (VAS) market. According to the data released by Telecom Regulatory Authority

of India (TRAI), the number of telephone subscribers in the country reached 806.13

million at the end of January 2011 from 787.28 million in December 2010, thereby

registering a growth rate of 2.39 per cent. Overall tele-density (telephones per 100 people)

has touched 67.67. The wireless subscriber base has increased to 780 million at the end of

January 2011 from 752.19 million in December 2010, registering a growth of 2.52 per

cent1.

1.1.1KEY PLAYERS

With new players coming in, the competition in the industry has increased. The market

share of the telecom companies reflects the uneven nature of the industry, with as many as

14 players..There are 14 service providers in India which is categorised into incumbents

and new entrantslike :

a)BhartiAirtel Limited

BhartiAirtel is the largest telecom company in India. It has a market share of

20.70%2.The company launched its services in 1995 in New Delhi. It acquired all India

presence in year 2000 through organic as well as unorganic route. Airtel was the one to

bring the trend of managed services in India. They optimised their cost by outsourcing its

IT operations to IBM and network management to Ericsson, Nokia and Siemens in

2004.Airtel is an integrated Telecom player with presence in Broadband, NLD, ILD,

IPTV, Mobile TV and Internet and is operational in 19 countries at present.

b) BSNL

BSNL is a 100% Government owned company, made as a separate entity in the year 2000

and operational in 20 circles in addition to Delhi and Mumbai, with market share of

11.43%3.

1www.trai.com

2www.trai.com

3www.trai.com





c) Vodafone

Vodafone has a market share of 16.704%. The company has grown mostly through

inorganic mode. The company has seen multiple changes in its brand name like Max

Touch, Orange, Hutch and Vodafone. It acquired companies like Fascel, Usha Martin,

Sterling Cellular, AircelDigilink and BPL Mobile.

d) Reliance Communications

RCom launched its services in 2002 on the CDMA platform and launched GSM services

in 2008. It is operational in all 22 circles as an integrated telecom player and a dual

technology player. Its market share is16.89%.5

e) Idea Cellular

Idea started its operation in Gujarat and Maharashtra circles in 1997 and it was known as

Birla AT&T then. It merged with Tata Cellular in 2000 and the name changed to Birla

Tata AT&T. The company is operational in all 22 circles. Its market share is 10.76%

f) Tata Teleservices

Tata teleservices initiated its telecom operations in 1997 in Andhra Pradesh and started

mobile operations in 2000. In 2009 it became dual technology operator by launching GSM

operations also in association with NTT Docomo. It is credited with innovative schemes

like life time validity and one second billing. Its market share is 11.44%.

g) Aircel

Aircel started its operation in Tamil Nadu circle in 1999 and it acquired R PG cellular¶s

Chennai circle in 2003. The company is today operational in 18 circles. The market share

of Idea is 6.72%.

h) MTNL

MTNL was set up in 1986 to provide telecom services in Mumbai and Delhi. Majority of

the shares are owned by the Government and it is a publicly listed company. Its market

share is 0.76%.

i)Videocon

The company was earlier known as Datacom. Videocon launched its services in 2010. It

got licence in 22 circles. Its market share is 0.79%.While MTS,Uninor,S Tel,Loop,Etisalat

are some of the other players operating in the Telecom sector.

4www.trai.com

5www.trai.com





1.1.2.VALUE-ADDED SERVICES (VAS) MARKET

Mobile value added services (VAS) include text or SMS, menu-based services,

downloading of music or ring tones, mobile TV, videos and sophisticated m-commerce

applications. As per a report, µIndia Telecom 2010¶ released by K PMG in December 2010,

currently, the VAS market is worth US$ 2.45 billion-US$ 2.67 billion, which is around 10

per cent of the total revenue of the wireless industry. The share of VAS in wireless

revenue is likely to increase to 12-13 per cent by 2011, on the back of increased operator

focus on VAS due to continuous fall in voice tariffs, increasing penetration of feature rich

handsets, availability of vernacular content and increased user adoption of VAS

applications.

1.1.3.POLICY INITIATIVES

The government has taken many initiatives to facilitate the rapid growth of the Indian

telecom industry. In the area of telecom equipment manufacturing and provision of IT-

enabled services, 100 per cent FDI is permitted According to the Consolidated Foreign

Direct Investment (FDI) Policy document, the FDI limit in telecom services is 74 per cent

subject to the following conditions:This is applicable in case of Basic, Cellular, Unified

Access Services, National/ International Long Distance, V-Sat, Public Mobile Radio

Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS)

and other value added Services. FDI up to 49 per cent is on the automatic route andbeyond

that on the government route. FDI in the licensee company/Indian promoters/investment

companies including their holding companies shall require approval of the Foreign

Investment Promotion Board (FIPB) if it has a bearing on the overall ceiling of 74 per

cent. While approving the investment proposals, FIPB shall take note that investment is

not coming from countries of concern and/or unfriendly entities.

1.1.4. FUTURE PROSPECT

As per the 12th five year plan (2012-2017), the total number of telecom subscribers is

projected to grow from the present 780 million to 1,200 million during the five year

period. About 25 per cent (roughly 300 million) would be 3G/4G subscribers, which

would require scaling up the infrastructure. The total investment in the pan-India





broadband rollout is expected to be US$ 16.79 billion, while another US$ 9 billion will be

invested in augmenting the transmission network.

1.2.OBJECTIVE OF STUDY

Following are the objectives of the study:

1. To study the contribution of the telecom industry in the Indian economy.

2. To study the market share of various players and the nature of competition followed.

3. To identify the market segment with respect to demographics of the buyers.

4. To conduct a PEST analysis of the industry.

5. To identify the diversification in various companies.

6. To have a consolidated picture about the mergers and acquisitions.

7. To study the company¶s international exposure.

8. To study the technological intensity of the industry in terms of R&D.

9. To study the advertising, marketing expenditure involved.

10. To get an overview of the future outlook and its comparison with the U.S and the

other countries.

1.3.CONCLUSION

The study of the telecom industry gives a brief about all the recent developments in the

telecom space like 3G auctions, Value Added Services (VAS), National Broadband

Policy and National Telecom Policy. It further provides information about the different

policy adopted by TRAI and DoT over a period of time to keep the industry growing. The

section ends with a list of primary objectives which is also our purpose of study.





CHAPTER 2

LITERATURE REVIEW





2.1. INTRODUCTION

The telecom industry is dependent on constant research and development for its

functioning. But basic research involves methods to capture the market and increase its

subscriber base resulting in generating high revenues.

2.2. TECHNOLOGY& FUTURE PROSPECTS

Another study was conducted on how far the mobile number portability will release the

existing scenario competition in the country. The study highlights the history and

evolution of MNP. It also identifies and explores the potential in India. The study makes

the SWOT analysis MNP in India. Explains the changing nature of competition in the

telecommunications sector in India as a result of the introduction of MNP in India from

January 2011. The study further tries to investigate the possible changes in the strategies of

the major telecom players in India to adopt to stay in business and to grow with this

opportunity come with MNP. No analysis on the potential benefits and potholes for

players of the industry. It also highlights how MNP will change the nature of competition

in India. Also detailed that speaks to how it will be beneficial for customers. (Bhargava&

Wei, 2011).

As per a report on the Green, green trigger is all about reducing the carbon footprint of

space telecommunications. India faced with rapid growth in telecommunications, will

require a massive expansion of telecommunications infrastructure throughout India, with

particular emphasis on the rural hinterland. So India will have many towers and necessary

supporting infrastructure to be established. This will consume a significant share of our

limited resources. The Paper highlights many startling facts about the carbon footprint in

development and may, if the trend continues. It is essentially a discussion document

wherein feedbacks are expected from all interested parties such as industry players,

governmental agencies, civil society etc. It also highlights some of the alternatives for

dealing with the problem.(TRAI, 2011)

2.3.4G OR FOURTH GENERATIONAND ITS VISION FROM TECHNICAL

PERSPECTIVE

4G or Fourth Generation is future technology for mobile and wireless communications.

It will be the successor for the 3Rd Generation (3G) network technology. Currently ,





4. Companies like mobile communication service providers Nimbuzzand Fringposition their

platforms as an ³all in one´ solution. Not only do they allow access to social networking

platforms, but they also include voice and texting services.(Mobile Broadband, 2010)

2.5.THE COMPETITION

Preportrayal of a stage of development in future requires understanding of the process of

change, the dynamics that set law of motion. In attempting to do so, the author deciphers

the recent past. Process of change is often volatile and responsive to intervention and

global circumstances impacting it. In such an inherently dynamic situation it is convenient

to assume that cross-country experiences incubate the most recent seeds of change. This is

because countries at various stages of development encapsulate developmental experiences

that occur with the passage of time. The author isolates the agents of change based on

international experiences and situates India in this development continuum. The agents of

change, as observed from international perspective, have been broadly categorized into

economic structure, competition policy and technology. Economic reforms and

liberalization have driven telecom sector through several transmission channels of which

these three categories are of major significance. As it unfolds, the author has divided his

into six sections. One section gives a brief account of the era of competition that was

heralded in Indian telecom sector and the results achieved. Analysis of the results,

particularly comparison with other major countries intrigued further discussions on

economic structure, synergy between telecom and IT, competition policy and technology

are dealt with.( Bhattacharya, 2002)

2.6. KNOWLEDGEMENT MANAGEMENT

Purpose of the author is to give a clear insight of the industry to the managers of different

organizations. Knowledge management will be the key to organizational success in this

millennium quotes the author. This paper aims to analyze how the organizational culture

and organizational learning impacts knowledge management, and ultimately the

satisfaction of employees working in the firm. The design, methodology and approach

used comprises of a survey instrument inturn comprising of organisational culture ethos,

organisational learning diagnostics, KM orientation and employee satisfaction

development. Through a postal and personal survey, data were collected from the telecom





sector in India. The sample included 80 knowledge workers, project managers, team

members, consultants, researchersand designers randomly drawn from Indian telecom

companies. The findings of the survey instrument was shown to be both reliable and valid.

Statistical analytical tools such as F-test, t-test, ANOVA coefficient of correlation and

multiple regressions and other descriptive statistics scores have been used. The results of

the data analysis revealed sufficient evidence to establish a correlation between

organisational culture, organisational learning, KM and employee satisfaction. The

research limitations or implications show the accuracy of the analysis is dependent on the

accuracy of the data reported by selected organizations. The practical implications show

the results of this study would help telecom organisations to better understand the KM

discipline, to facilitate its adoption and to prioritise its practices. Academics can use the

results to build models that would further expand the KM domain. The originality or value

of the study is probably the first to systematically determine the antecedents of KM

implementation in the Telecom sector in India. It offers a beneficial source of information

to telecom organisations, which are still lagging far behind when it comes to KM

practices. (Sharma, 2007)

2.7. CONCLUSION

The study explains different aspects of the telecom sector. It also includes insights from

various research papers from the expertise in the respective fields. It speaks of mergers and

acquisitions,the various players, the market leader, the market challenger, the

technological advancements, the research and developments in the field.





CHAPTER 3

INDUSTRY ANALYSIS

3.1. INTRODUCTION

This chapter gives a deep insight about the top players in telecom sector in India and their

subscriber base. It deciphers whether the top players are on the growth path and what





reasons or initiatives have contributed to the growth. It studies the demographics of the

buyers and analyses the factors on which market is segmented.

3.2. MARKET SHARE AND NATURE OF COMPETITION

The Indian telecom industry is the second largest after China, in terms of number of

subscribers in the world, is growing at the fastest rate (around 26%). Presently there are

806.12 million subscribers in Indiaand is expected to touch 1.159 billion by 2012

surpassing China to become the biggest global market. In terms of revenue generation it is

expected to reach a size of Rs 350000cr by 2012.

Indian telecom market is presently the most attractive telecom market in the world with a

lot of attention being shown by global players.

Fig 3.1 Market share of Indian Telecom Industry as on 31.12.2010

Source: www.trai.com

The above pie chart shows the market share of fourteen telecom companies operating in

India. We can easily observe that BhartiAirtel is the market leader with 20.70% of the

total market share followed by Reliance and Vodafone. It is evident from the chart that

97% of the total operator market is shared only by eight companies which makes it an

oligopolistic market, where few firms enjoy being at the top, entry barriers are high so it is

very difficult for a new entrant to enter. Firms are interdependent.

20.7

16.89

16.7

11.44

10.76

6.72

11.43

1.45 1.010.26

0.16 Bharti airtel

Reliance

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Tata

Idea

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ircel

BSNL

MTNL

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3.2.1HERFINDAHL INDEX:

The Herfindahl index (also known as Herfindahl±Hirschman Index, or HHI) is a

measure of the size of firms in relation to the industry and an indicator of the amount of

competition among them.

3.2.2 SUBSCRIBERS BASE OF MAJOR TELECOM PLAYERS IN INDIA

Reliance and Tata offer CDMA technology while all the other players are in the GSM

space. GSM has a 83% share of subscribers and now even Reliance and Tata have

launched nation-wide GSM services. Apart from the current players, there are several

new players like Aircel, Unitech-Telenor, Shyam-Siestema, Etisalat that have got the

license and spectrum to launch mobile services in several telecom circles. Shyam-

Siestema is the only player to launch CDMA services while all the new operators are in

the lucrative GSM space. India is predominantly prepaid market (93% of all subscribers

are on prepaid) with low AR PU6

and minutes of usage (441 min per month in the quarter

ending 2009).

The GSM AR PU is Rs 144 per month.

Fig 3.2 Subscriber base of major players in telecom industry as on Jan 2011 (in millions)

Source: Telecomindiaonline.com

6Average revenue per user

156

127.36

83.6

83.5

51.8

5.15

Bharti Airtel

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BSNL

Idea

Aircell

MTNL





BhartiAirtel has largest subscriber base of 156 million followed by Reliance and

Vodafone with total subscriber base of 132.2 million and 127.36 million respectively.

Vodafone has the largest addition of subscribers in Feb 2011 followed by BhartiAirtel.7

3.3.MARKET SEGMENTATION OF INDIAN TELECOM INDUSTRY

The market segmentation of Indian Telecom Industry is done on various parameters such

as age group , income , geographical location , revenue potential etc. Market

segmentation on the basis of above mentioned factors are explained below.

3.3.1. MARKET SEGMENTATION ON THE BASIS AGE, GENDER, INCOME

The chart is shown below :

Source: India cellular

The above segmentation is done on the basis of customer stage in life so to cater to each

customer segment.

Youth:Over the years, service providers have targeted youth as this segment has

emerged as biggest users of mobile phones. This segment values prepaid schemes with

free messages.It is further seggregated into various segments on the basis of age etc. For

eg. Youth in the age group of 19 to 23 years have many friends and easy access to

money. Company thus focus on providing them with group talks and group sms to these

segment.

7www.mobileteleco.com





Young Professionals: Customers who have entered the workforce and upgraded

themselves from being dependent to independent comprise of this group.

Small and Medium Enterprise: This segment mainly consists of people who are

switching over from landlines to mobile seeking a cost advantage.

Family:Family as a segment consists of more number of dependents. These

dependants are serviced by prepaid schemes. Geographically dispersed

families tied by the same cellular service providers may get cost advantages

in terms of lower pulse rates.

Special: The µSpecial¶ category includes a small but growing segment which requires

largely customized services sought by celebrities, politicians, CEOs . Tailor made schemes

for each segment have witnessed a positive response.

3.3.2 MARKET SEGMENTATION ON THE BASIS OF REVENUE POTENTIAL

The country was divided into 23 circles at the time of introduction of mobile phones in

1994. Separate licences were given to circles for operating in those regions. The circles

were even broadly classified as circle A, B,C and the metro circle depending upon the

revenue potential with metro and circle A expected to be the most promising potential

markets

The following table shows the current telecom circles and the corresponding

subscribers base in each of them.

All Figures in Million PopulationSubscriber Base (As

on 31st Aug¶10) Penetration





Metros

Bombay 17.95 30.30 168.8%

Delhi 18.20 32.62 179.2%

Chennai 6.99 12.04 172.4%

Kolkata 14.43 18.56 128.7%

A Circles

Gujarat 56.04 37.33 66.6%

Andhra Pradesh 83.65 51.36 61.4%

Karnataka 58.01 42.07 72.5%

Tamil Nadu 62.58 48.60 77.7%

Maharashtra & Goa 89.87 48.99 54.5%

B Circles

Punjab 27.73 23.10 83.3%Rajasthan 62.03 36.70 59.2%

MP &Chattisgarh 89.11 35.49 39.8%

Kerala + Lakshadweep 35.02 26.65 76.1%

Haryana 21.81 16.50 75.7%

Uttar Pradesh ± West (UPW) 69.17 35.85 51.8%

Uttar Pradesh ± East (UPE) 120.98 51.40 42.5%

WB& AN, Sikkim 74.56 30.06 40.3%

C Circles

Bihar & Jharkhand 120.68 42.91 35.6%

Orissa 40.40 17.91 44.3%

Assam 29.26 9.93 33.9%

North East 12.80 5.88 45.9%

Jammu & Kashmir 11.13 4.59 41.2%

Himachal Pradesh 6.67 5.80 87.0%

Total for India 1,129.09 664.63 58.9%

Source: Trai database

In circle A reliance is the one which gained maximum in the financial year ending feb

2010 from having a subscriber base of 341000 to 830000, other companies which were





able to grow were BSNL, Idea, Reliance and TATA. The only company whose number of

subscribers has come down is Airtel.

In B circle the company to gain maximum is TATA whose total number of subscriber base

has increased from 468000 to 1311000. Point to be noted here is Airtel which was loosing

its subscriber base in circle A and metro circle is gaining here.

In circle C as well we see airtel maintaining its growth, but the company important here is

aircel which has shown a sizable increase in the subscribers base.

3.2. PESTL ANALYSIS

The pest analysis should be done for environmental scanning to analyze the scope of the

telecom industry the impact of new entrants into this industry and various factors affecting

it.The factor like political, economical,technological,social,and legal. Political factor

includes government policies related to the industry, laws and regulations, tax policies,

trade restrictions and tariffs etc.

The economic factor mainly concern with the cultural aspects and include, population

growth rate health consciousness, age distribution, change in tastes and buying patterns

etc. The technological factors deal on the application of new inventions and ideas such as

R&D activity, technology incentives, automation and the rate of technological change.

Legal deals with the policies and guidelines set for the conduct of the operations.The

telecom industry is analyzed with the PESTL factors influences the useful way of

summarizing the industry as a whole.

3.2.1. POLITICAL ANALYSIS

Indian telecom Industryis the world largest telecom industry after china and also world¶s

fastest growing telecom, expectedto grow by 2012. There are some concerned authority

related to telecom industry which is responsible for formulating the developmental

policies, granting licenses for various telecom services. The department of

telecommunications (DOT) is responsible for granting licences and service provision.In1997 the TRAI (Telecom Regulatory Authority of India) was established under the

Telecom Regulatory Authority Act 1997 which was amended by TRAI amendment act

2000. One more association called as COAI(cellular operators association of India) was

registered in 1995 to the advancement of modern communication through the

establishment of a high class cellular infrastructure and to delivering the benefits of





affordable mobile communication services to the people of India. COAI core membership

includes private cellular operators like ±Aircel ltd.,BhartiAirtelltd.,Idea cellular ,Unites

wireless pvt ltd. , Videocon telecommunication ltd. , Vodafone operating across the whole

country.

3.2.2. ECONOMIC ANALYSIS

The telecom industry contributed nearly 2.1% in the GDP of India in 2011.earlier there

was not much competition but now it has become highly competitive market. there are

many major player in the industry like Airtel,Vodafone,Idea,Aircel,BSNL etc. The highly

competitive environment has led to low pricing of goods and services which caters to the

weaker sections of the society. The Indian Telecommunications network with 806 million

connections (as on January 2011) is the second largest in the world. The sector is growing

at a speed of 50-56% during the recent years.It is expected that ,India will continue its

robust growth telecom story with the sector¶s revenue to be more than $30 billion by

2013,according to a global information technology research and advisory firm.

Mobile market penetration is increase from 38.7% in 2009 to 63.5% in 2013,Gartner said

and this is due to three factors increased focus on the rural market ,entry of consumer

durable and electronic companies into the mobile handset segment ,and cheaper

handset.According to Gartner , the number of people who have prepaid connection

accounted fro 93% in 2008,will continue to increase to exceed 96% by 2013. Surpassing

740 million the postpaid subscriber base will exceed 29 million subscriber by

2013,growing 2.5 % from 2009.

3.2.3. SOCIAL ANALYSIS

The social cultural factor includes the cultural aspects and population, growth rate, age

distribution and emphasis on safety factor. The trend in social factor affects the demand

for a company¶s product or services and helps in analyzing how that company operates.

The telecom services have been recognized as the world over an important tool for socialeconomic development. Telecom industry plays a very vital role in social stage. It is one of

the prime support services needed for modernization and rapid growth of various sector of

the economy.Telecom offers unlimited opportunities and possibilities in the present as

well as future. The telecom sector is innovative and based on technology.

Telecommunication sector offers a variety of career option because the coming of more





and more projects, the telecom industry is going for high number of recruitment. The new

projects, setting up of new service of coverage areas, network installation, maintenance

etc. and more employment opportunities in the telecom sector. The driving forces for the

increase in smart phones in the urban market was need for real time access for information

and on demand access to application such as email, contacts, calendar and other

information. With rolling out of 3G and wi-max existing player will need another 50,000

people ,most of the new players are looking for experienced hands, so getting people in

such large numbers will be a great challenge. In present there are 1,50,000 employs,while

providing jobs to another 1.5 million with tower construction , prepaid card seller and

rental outlets .now a days mostly telecom players looking for rural market so they spend

in the rural market, the demand for manpower is expected to go up in the coming time.

One more important factor isRegional shift in populationso There has been a drastic shift

with the increasing competition faced by various companies and so they plan in such a

way that every region has a different segmentation of the customer so that their

requirements can be fulfilled timely.

3.2.4. TECHNOLOGICAL ANALYSIS

Technology plays a very important role in telecom industry because this is the field of

innovation. There are many players who came up with new technologies time by time.

This sector faced fierce challenges in the 1990s due to the development in the

technological field. In 1984 first time telegraph introduced and has diversified into

various segments such as fixed line telephone, mobile telephone, GSM, CDMA and so on.

and now it is the time for 3G technology. India has proved its dominance as a technology

solution provider. It is expected that the telecom equipment and R&D shall be doubled by

2013 from present level of 15%. Telecom service provider now also focus upon rural area

because there are lots of opportunities.3G and broadband wireless access (BWA) policies

have since been issued also to improve the R&D infrastructure in the telecom sector and

bridge the digital divide, cellular operators , top academic and the government of India

together set up the Telecommunication centers of excellence (COEs).The industry and the

government should carefully spend on the research and development so that the changing

demands of the customers can be easily met. Since there are large number of competitors

in this sector the new product, offers and services should always be introduced to sustain

itself into this competitive marketplace.





The latest innovation in telecom sector is MNP (mobile number portability) which was

introduced January 20th

, 2011 in India.

3.2.5. LEGAL ANALYSIS

DOT (Department of Telecommunication) and TRAI (telecom regulatory authority of

India) are regulator which regulates telecom industry in India.Till 2000, the DOT has the

authority in granting licenses and service provision. The various power and function of

TRAI are the authority sees that conditions and terms that it has formulated are being

followed. TRAI is responsible for rendering legal advice to authority on all regulatory

issues.

According to Unified access licensing regime (UALR) plays are offer both mobile and

fixed line service under a single license after paying an additional entry fee. This does not

take international or national long distance service or internet access service.

In 1994 the new economic policy adopted by the government to improving India¶s

competitiveness in the global market. There are following steps in the policy.

1. Access to telecommunications is of great importance for achievement of the country's

social and economic goals.

2. Encourage development of telecommunication facilities in hilly, remote, and tribal

areas of the country.

3. Establish a modern and efficient telecommunications infrastructure taking into

account the convergence of information technology, media, telecom and consumer

electronics and thereby leading India into becoming an IT superpower.

4. Achieve efficiency and transparency in spectrum management system.

5. Protect defense and security and the interests of the country.

6. To establish Indian telecom player in global market

3.3. BUSINESS DIVERSIFICATION

Business diversification is nothing but a expansion of business into different fields or distribute the investment in order to average risk of loss. Diversification can happen either

at the business unit level or at the corporate level. At the business level it is expand into a

new segment of an industry which the business is already in. and at the corporate level , it

is generally and it is also very interesting entering a promising business outside of the

scope of the existing business unit. There are two type of diversification.





1. Conglomerate

2. Standalone

Conglomerateis the type of diversification whereby a firm enters into different market

that has little or no synergy with its core business or technology.

Standalone is the type of diversification in which the corporation usually operates its

business in one industry or sector, not much diversified.

Some of leading companies in telecom industry following diversification strategy:\

3.3.1. AIRTEL- Bharti Group

BhartiAirtel is the leader of telecom industry.BhartiAirtelis part of the conglomerate type

of diversification.The company is structured into no of strategic business units such as:-

1. BhartiAirtel Ltd

2. Bharti Reality

3. Bharti Retail

4. Bharti Teletech

5. Bharti AXA Life Insurance Company

6. BhartiWalmart

3.3.2. VODAFONE- ESSAR Group

Essar Group is one of the multinational conglomerate corporation in to various sectors

headquartered in Mumbai. The Essar began as a Construction Company and diversified

into manufacturing, communications and retail. The Vodafone Essar is a joint venture of

the Essar communications Holdings Ltd and a UK based Vodafone group.The different

diversified sectors of Essar group are

1. Vodafone Essar

2. Essar Steels

3. Oil and Natural Gas

4. Shipping ports and Logistics

5. Power

3.3.3. BSNL





Bharat Sanchar Nigam Limited is standalone state owned company which is

headquartered in New Delhi. BSNL is India¶s largest cellular service providers with over

8.3million subscribers as of January 2011 and the largest landline telephone provider in

India.

3.3.4.RELIANCE

Reliance is also a conglomerate company which is headed by Anil Ambani and it is

among India¶s top 3 private sector businesses with a market capitalization of US$

81billion.the company follows the Conglomerate Business diversification

strategy.Reliance main subsidiaries are:-

1. Reliance Communications

2. Reliance Capital

3. Relianc Power

4. Reliance Infrastructure

5. Reliance Big Entertainment

6. Reliance Health

3.3.5. TATA DOCOMO ± TATA Group

Group an Indian multinational conglomerate company has its headquarter in Mumbai.The

Tata group comprises over 90 operating companies in seven business sectors. The Tata

Group consists of 114 companies and subsidiaries in eight business sectors and some 27

are publicly listed. Their subsidiaries are:-

1. Tata Telecommunications

2. Tata Steel

3. Tata Motors

4. Tata Consultancy Services

5. Tata Tea

6. Tata Chemicals

7. Titan Industries

8. Taj Hotels

3.3.6. IDEA ± ADITYA BIRLA GROUP





The Aditya Birla is a multinational conglomerate corporation having its subsidiaries that

operate over different sectors which includes:-

1. Hindalco

2.Idea cellular

3.Grasim

4. Aditya Birla Nuvo

5. Ultratech cement

3.4.MERGERS & AQUISITIONS

Telecommunications industry gets a lot of competitive benefits after going through

mergers and acquisitions. The mergers and acquisitions in Telecom Sector are regarded

as horizontal mergers simply because of the reason that the entities going for merger or

acquisition are operating in the same industry, that is telecommunications industry. In

the majority of the developed and developing countries around the world, mergers and

acquisitions in the telecommunications sector have become a necessity. This kind of

mergers creates a lot of jobs. Both transnational and domestic telecommunication

services providers are keen to try merger and acquisition options because this will helps

the company in cutting down their expence, achieve greater market share and

accomplish market control. 3.4.1. BHARTIAIRTEL, MTN IN $23 BILLION MERGER DEAL TALKS

In spite of the massive downturn in 2009, the future of M&A deals in India looks

promising. Indian telecom major BhartiAirtel is all set to merge with its South African

counterpart MTN, with a deal worth USD 23 billion. According to the agreement

BhartiAirtel would obtain 49% of stake in MTN and the South African telecom major

would acquire 36% of stake in BhartiAirtel.

3.4.2.

IDEA ±SPICE MERGER The deal is finally over with, Idea has bought the Modi¶s 40.80 stake in Spice

Communications at Rs 77.30 a share. The stake, valued at Rs 2,175 crore will see a

non-compete fee of Rs 544 crore paid to the Modi¶s. Additionally, Telekom Malaysia

will not hold more than 20% stake in the new entity according to Idea Chairman, K.M.

Birla. Idea plans to to spend Rs 10,000 crore ($2.3 billion) over two years and the





company does not plan any further acquisitions (Shah, 2008).Cerius Shah Jun 25,

2008

3.4.3. IDEA MERGER WITH TATA CELLULAR AND RPG

CELLULAR

Idea Cellular was incorporated in 1995 as Birla Communication Ltd with licenses for

providing GSM-based services in the Gujarat. In 1996, the name was changed to Birla

AT&T Communications Ltd after it became a joint venture company of Grasim

Industries and AT&T Corporation. In 2000, the company merged with Tata Cellular,

thereby acquiring the original license for the Andhra Pradesh circle. In 2001, it acquired

R PG Cellular Ltd and consequently the license for the Madhya Pradesh (including

Chattisgarh) circle and changed the name to Birla-Tata- AT&T Ltd.

3.4.4. IDEA CELLULAR TO ACQUIRE ESCOTEL

Hong Kong-based conglomerate First Pacific Co. said on Friday it plans to sell its 49 per cent stake in Indian mobile phone provider Escotel Mobile Communications Ltd. toIdea Cellular Ltd. for Rs 700 million ($15 million) in cash.Escorts Ltd., an Indian conglomerate, will also sell its controlling 51 percent stake in

New Delhi-based Escotel to Idea Cellular, First Pacific said in a legal notice. It didn¶tdisclose the price for that stake.Escotel is the seventh-biggest of 12 cellular communications providers with about 826,000 customers. It lost $13.4 million in 2002and has a negative net asset value of $324.9 million. Idea Cellular¶s main corporateoffice is in Pune. First Pacific, a property-to-telecommunications conglomerate, said it

remains committed to the telecommunications business in Asia but felt that Escotel wastoo small in the ³increasingly competitive´ Indian market. The sale of the 49 percentstake is subject to approval by its shareholders.

3.4.5. TATA TELESERVICES ACQUISITION OF HUGHES TELE.COM

Tata Teleservices Limited (TTSL) today announced the completion of the acquisition of Hughes Tele.com (Idia) Limited (HTIL).TTSL has acquired a 50.83 per cent stake inHTIL from the erstwhile promoters, and a 20 per cent stake under an 'open offer'thereafter.On June 27, 2002, Tata Teleservices Limited (TTSL) announced that it had executedagreements with Hughes Network Systems (HNS), the Ispat Group and Alltel

Corporation, the principal promoters of HTIL, to acquire 50.83 per cent of the paid-upequity capital of HTIL from the HTIL promoters. As consideration for the acquisitionof 71.43 crore equity shares of HTIL, TTSL has today issued 71.43 crore 'redeemablenon-cumulative convertible preference shares' (R PSs) of TTSL in favour of the HTIL

promoters.





3.4.6. DOCOMO ACQUISITION OF STAKE IN TATA TELESERVICES

NTT DOCOMO, INC. acquired 26 percent of the common shares of Tata TeleservicesLimited (TTSL), in accordance with the capital-alliance agreement announced by the

parties in November 2008, for approximately 127.4 billion Indian rupees (JPY 250.0 billion). The acquisition included 20% newly issued shares and 6% shares purchased

from shareholders. DOCOMO also is preparing to acquire roughly 12 percent of thecommon shares of Tata Teleservices (Maharashtra) Limited (TTML) for about 5.7

billion Indian rupees (JPY 11.0 billion) through an open offer*, as the tender offer period ended on March 12.

DOCOMO will nominate three executives to serve on TTSL's board of directors andwill work to increase the enterprise value of both TTSL and TTML while creatingsynergies with the companies through joint activities, including their Business &Technology Cooperation Committee.

3.4.7. BHARTIAIRTEL ACQUISITION OF ZAIN AFRICA

BhartiAirtel, completed the acquisition of the African operations of MobileTelecommunications Company (known as Zain), thus fulfilling the company'sambitions to expand into markets outside India.The agreement signed with Zain earlier this year covers 15 countries in Africa but not Zain's operation in Sudan, nor itsinvestments in Morocco.

BhartiAirtel had acquired Zain Africa for an enterprise value of US$10.7 billion. Theacquisition gave BhartiAirtel a total customer base of 180 million, including 131million subscribers it had in India at the end of April. A challenge for BhartiAirtel will

be to integrate the operations of Zain Africa in all 15 countries, which currently operatelargely as stand-alone units,Zain had received $7.9 billion in cash from BhartiAirtel.

Over the next six months, Zain expects to receive an additional $400 million uponcertain milestones being achieved, it said. The balance of $700 million is due one year from completion of the acquisition.(Ribeiro J,2010)

3.4.8. RELIANCE FLAG TELECOM ACQUISITION

Reliance Infocom was the first company of reliance group to make an international

acquisition of Flag Telecom for US$ 211 Billion (Roughly INR 950 Crore).Flag

telecom started in 1990. In 2001 Flag filled for a bankruptcy. In 2002 it emerged out of

bankruptcy. In Jan 2004 Reliance Infocom acquired Flag Telecom for a valuation of US$ 211 Million for a control of 100% equity of the company. Flag at its peak in stock

market had a valuation of US$ 7 million. Post merger Flag was renamed as Reliance

Globalcom and manages the Global Telecom operations of India¶s largest Integrated

Telecom Service Provider.





3.4.9. VODAFONE COMPLETES HUTCHISON ESSAR DEAL

Vodafone acquired India¶s Hutchison Essar in 2007. The deal came upto $ 10.8

billion.³India is a tremendously exciting, fast-moving market and I am confident that

the Hutch Essar business will make a major contribution to the Vodafone Group over

the coming years,´ CEO ,Vodafone , ArunSarin said.

The deal, one of the largest in Asia this year, took over two months to acquire

regulatory approval as India¶s telecom and law ministries looked into charges that the

ownership structure of Hutchison Essar violated rules that cap the foreign ownership

share of telecom companies at 74%.

3.5. TECHNOLOGY INITIATIVES IN TELECOM SECTOR

Telecom is an area where technology plays an important role in the development of the

total industry, main technological development in the Indian telecommunications

sector began after liberalization. The process of liberalization of the country started in

right earnest with the announcement of the new economic policy, in July 1991.

telecommunications equipment Manufacture was delicensed in 1991 and added value

services were declared open to the private sector in 1992.After adding a radio paging,

cellular and other mobile services value gradually opened to the private sector. This

has resulted in a large number of production units set up in the country. As a result

most of the equipment used in the telecommunications sector is manufactured within

the country. An important development was the Government's intention clear

enunciation of the liberalization of the telecommunications sector in the resolution of

the National Telecom policy 13th May 1994.

3.5.1.Technologies& Services:

1) GPRS: This is for General Packet Radio Service. It is a packet-switching

technology that allows data transfers over cellular networks. This technology has

enabled the use of the Internet, mobile telephony, MMS and other data

communications. The speed limit is 115 kbps . GPRS is also called 2.5 G.

2) GSM:This means for global system for mobile communications. Is a digital cellular

system that is widely used in Europe and other parts of the world. It uses a variant of

time-Division Multiple Access. It was first launched in 1991 in Finland. Today, more

than 690 GSM mobile networks offering services to 213 GSM countries and represents

82.4% of all global mobile connections. Since many GSM network operators have





agreements with foreign businessmen often roaming users still can use their mobile

phones when travelling in other countries.

3) CDMA:This means Code Division Multiple Access. Refers to the various protocols

used in 2 G and 3 G wireless communications. It is a form of multiplexing, which

allows numerous signals to occupy a single transmission channel, optimizing the use of

available bandwidth. It used in the ultra high frequency cellular systems in the 800

MHz and 1.. 9 GHz CDMA is a military technology first used during the Second

World War by English Allies blocked attempts to neutralize German broadcasts. The

allies decided to transmit several frequencies, rather than one, makes it difficult for the

Germans to pick up the complete signal

.

4) 3G and Broadband Wireless Access: 3 G means third generation. The technology

3 G is used to improve the standards of mobile telephony. It helps to carry both voice

data (a phone call) and non-voice data (such as downloading information, Exchange e-

mail and instant messaging). The labelling of 3 G video telephony.BWA technologies

provides broadband wireless data from within the business and consumer markets. The

most common example of BWA are wireless LAN but efforts continue intensively to

deliver ubiquitous broadband access network in developing an adequate radio

technologies such as MAN, 3 G and wireless LAN that can even be combined into a

single device to ensure smooth operation.

5) WiMAX:This means for Worldwide Interoperability for Microwave Access. Is an

IP-based broadband access and offers performance similar to 802.11/Wi-Fi with the

coverage and quality of services of cellular networks. It is a system of wireless digital

communications, also known as IEEE 802.16, intended for the wireless man. It can

provide up to travel fixed BWA stations and 5-15kms for mobile stations.

6) IPTV:This means for the Internet Protocol television. In IPTV, same technology is

used as the internet. In this TV channels are encoded in the format of IP and delivered

to the Television using an intelligent electronic device. Is a system through internet

delivered television services with the architecture and networking methods of internet

protocol suite over a network packet mode infrastructure.





7) EDGE:This means Enhanced Data Rates for GSM Evolution. It is a faster version

of GSM andis a high speed 3G technology based on standard GSM EDGE networks

and are designed for multimedia applications such as streaming television, audio and

video for mobile phones at speeds up to 384 kilobits per second. The standard EDGE

began in the USA in 2003.

8) Mobile Number Portability: MNP allows subscribers to retain their existing

numbers while moving from one service provider to another irrespective of the mobile

technology. This service has been introduced with the intent of creating a standard

playing field for all operators by reducing barriers to entry. It was first introduced in

Haryana in November 2010 and countrywide on 20 January 2011.TRAI has fixed

charge at Rs. 19 for users who want to switch their numbers and they just have to do a

SMS to the service provider they want to shift to and within window of 7 days there

service provider will be shifted.

9) Green Communication: Telecom companies incorporate heavy costs on energy

consumption. Besides being expensive, the resources used tax the environment

heavily. With

regard to this the ETIG Knowledge Forum in association with Global Group has

attempted to articulate the road map to green telecom in India. Constantly evolving

energy management products are leading the revolution and R&D has helped bring

costs down. For instance, in the past, to deploy 2G, 3G, 4G technology, one would

need separate base-stations. But today, a single base-station puts all the technology in

one place such that one needs to simply change the radio configuration. Companies are

on a continuous look-out for alternatives like solar panels and other types of sources of

energy and their combinations to achieve cost-effectiveness.

10) IMS: IMS stands for IP Multimedia Services is an IP multimedia and telephony

core network that is defined by 3GPP and 3GPP2 standards and organizations based on

IETF Internet protocols. IMS is access independent as it supports IP to IP session over

wireline IP, 802.11, 802.15, CDMA, packet data along with GSM/EDGE/UMTS and

other packet data applications.IMS is a standardized reference architecture that consists

of session control, connection control and an applications services framework along

with subscriber and services data.





11) HSDPA:High Speed Packet Access (HSDPA) is a technology-based package for

W-CDMA downlink data throughput rates. It has 4 to 5 times that of current-

generation 3 G networks (UMTS) and 15 times faster than GPRS. this technology

enhances downlink speeds from the current end user speed of 384 kilobits per second

(up to 2 Mbit/S in accordance with the standards) a maximum value in accordance

with the standards of 14.4 Mbps. real-life end-user rates will be in the range of 2 to 3

Mbps.

12) Mobile TV:Mobile TV is the latest technology where the TV channels are directly

streamed on the mobile or hand-held devices. This technology will be going to get

more and more prevalent over the next couple years .Till now, mobile TV is mostly

streamed over 3G networks because of ability to hold larger bandwidth and high speed

of data streaming

13) Mobile Virtual Network Operator (MVNO):It is a GSM phenomenon where an

operator which does not own a licensed spectrum and generally without own

networking infrastructure. Instead MVNOs resell wireless services under their brand

name, using regular telecom operator's network with which they have a business

arrangements. Usually they buy minutes of use from the licensed telecom operator and

then resell minutes of usage to their customers of MVNO. Currently MVNOs are

emerging in fast pace in European markets and beginning in USA also. Slowly MVNO

phenomenon catching up in Asia and other parts of the world also.

An example for MVNO is Virgin Mobile. Virgin Mobile plc is a mobile phone service provider operating in the UK, Australia and Canada, and the US. The company was the

world's first Mobile Virtual Network Operator, launched in the UK in 1999. It does not

maintain its own network, and instead has contracts to use the existing network(s) of

other providers. In the UK, Virgin Mobile uses the T-Mobile network. In the US, the

Sprint network is the carrier. In Australia, Virgin Mobile operates on the Optus

network. In Canada, it uses the Bell Mobility network. These networks use different

technology (GSM in the UK and Australia and CDMA in the US and Canada).

14) 4G: Fourth Generation is future technology for mobile and wireless

communications. It will be the successor for the 3Rd Generation (3G) network

technology. Currently 3G networks are under deployment. Approximately 4G

deployments are expected to be seen around 2010 to 2015.The evolution from 3G to

4G will be driven by services that offer better quality (e.g. multimedia, video and

sound) thanks to greater bandwidth, more sophistication in the association of a large

quantity of information, and improved personalization. Convergence with other

network (enterprise, fixed) services will come about through the high session data rate.

It will require an always-on connection and a revenue model based on a fixed monthly




AS Y E E E I A I I S Y I I IA 38

fee. The i t on net ork capacit i expected to be si nif icant. Machine-to-machine

transmission will involve two basic equi pment t pes: sensors (which measure

parameters) and tags (which are generall read/wr ite equi pment).

3.6. MARK ET INITIATIVE

Long ago eter Drucker, the father of business consulting, made a very profound

observation that has been lost in the sands of time:"Because the purpose of business is

to create a customer, the business enterpr ise has two--and only two--basic functions:

marketing and innovation. Marketing and innovation produce results; all the rest are

costs. Marketing is the distinguishing, unique function of the business." o irrespective

of the industry marketing has become has become an integral par t because marketing is

the only revenue generating process of a company rest all is cost to it.

Af ter li berali ation of telecom sector in 1995 there has been a boom in the cellular

services in India and with presence of so much competition in the sector it has become

very impor tant for all the players to develop new and innovative marketing strategies.

So we look into some of marketing strategies adopted by ma jor market players in

India.

3.6.1.Airtel

Air tel being the leader in cellular services has spent a lot on adver tising of their mobile

service. Besides pr int adver tising air tel has also tapped the out of home adver tising

option.Air tel has associated its brand with trust in order to emotionally connect the

product with their consumer and por trayed well by associating it with brand

ambassadors like Shahrukh Khan, Sachin Tendulkar and A.R R ehman.

They replaced there old logo with just the letter 'a', because it felt the need for a symbol, so

that the consumer can easily connect to their brand globally (across 19 countr ies). It also

changed its positioning to 'Dil JoChahePaasLaye' which meant - whatever one's hear t





desires, Airtel will bring it closer. In order to capture attention of the mass population

airtel has adopted different strategies. They have used electronic media to cover urban

market whereas for rural market the walls of dhabas and mobile vans went through

makeover and are rebranded with new airtel logo. T8hey also started a new campaign

µ¶The Name Game¶¶ which invites people to name their logo.

3.6.2 . VOD AF ONE

Vodafone was formed in 1982 and was launched on 1st January 1985, Vodafone name is

derived from the voice and data services over cellular telecom networks. So VO represents

voice and DA represents data. Vodafone speech mark logo was launched in 1997, where it

represents start of communication. Vodafone entered India in December 2005 and

rebranded Hutch as Vodafone.

1) Hutch¶s Pug Strategy

Initially Hutchison Essar used pug in their advertising campaign with tag line µ¶wherever

you go our network follows¶¶ depicting that there is no point on earth where you won¶t

find network of Hutch.

2) Hutch to Vodafone

In order to tell consumers about transition of brand Hutch to Vodafone they used their five

year old mascot pug and leveraged on the idea by showing pug in a garden, moving out of

a pink colored kennel and making his way into a red one (the Vodafone color). A new

version of the µYou and I¶ the trademark tune of Hutch, plays towards the end, as the

concludes with tag line, µChange is good. Hutch is now Vodafone¶.

8afaqs





3) Zoo Zoo¶s

The campaign introduced new characters called Zoozoos. In order to advertise variety

VAS offered by the company for e.g. stock alert, phone back-up, beauty tips etc, each ad

used a different story which was enacted by the Zoozoos. Vodafone Essar chose the Indian

Premier League 2 (IPL-2) as a platform to launch their advertisement. In the second phase,

after the release of these ads, Vodafone promoted these characters on social media sites by

introducing Zoozoo fan clubs are there on social networking sites like Facebook,

YouTube, Orkut, Twitter, and many more, where they have a huge followings. Now

Vodafone has launched Zoozoo goodies like zoozoo toys, zoozoo mugs, zoozoo key

chains, zoozoo t-shirts, etc

3 .6.3 . IDE A

Idea cellular was awarded with Economic Times¶ Emerging Company in the year 2009. It

was a joint venture between AV Birla Group, AT&T and TATA. The company was

known as AT&T in Maharashtra and Goa, TATA Cellular in Andhra Pradesh, R PG

cellular in Madhya Pradesh and Chhattisgarh till 2002. In May 2002 it consolidated its

brand under a single umbrella called Idea Cellular. Initially they positioned themselves

with the tagline of ³An Idea Can Change Your Life´. In their annual report their

operating expenses include around 3.4% of expenditure on advertisement and business

promotion which constitutes about Rs. 4066.94 million and shows how much IDEA is

spending on their promotion activities

After that Idea started promoting its services through several innovative ads through 360

degree advertising. Idea did not hire any celebrity to promote its services till late 2007, but

when Idea expanded its geographical presence to cover vast telecom circles in India, it

hired film star AbhishekBachchan to endorse its brand in October 2007. Idea's also

changed its focus from tariff plans to using mobile telephony to solve social issues for e.g.

they made ad campaign like µ¶ Education for All and Use Mobile Save Paper¶¶

Idea also tied up with Indian Premier League (IPL) cricket team, Mumbai Indians, and

popular players like Sachin Tendulkar and Zaheer Khan were used to promote the brand.





In order to guide subscribers towards their network Idea has launched µ¶switch to Idea¶¶

campaign.

3.6.4 . A IRCEL

Aircel is a joint venture between Maxis Communication Berhad of Malaysia and Apollo

Hospital Enterprise of India. Aircel commenced its operation in 1999 and has presence in

23 circles. Aircel is India¶s seventh largest service provider with customer base of 51.83

million and has market share of 6.72%.According to Mr. Tarun Nigam ED-India North

and Pakistan Aircel wants its communication to have shock value and be differentiated and

disruptive. Aircel has focused mainly on innovation as there branding strategy like.

1) Voicemail on Facebook

Aircel has launched voicemail application on facebook which allows users to upload voice

messages in facebook rather than same old plain text status messages, with this strategy

within 10 days almost 190 users subscribed for this application and this was the first time

an Indian telecom bran launched a voicemail service on facebook. By this they were able

to target youth of the nation as social networking site like gives a vast youth base.

2) Broadcasting Launch

Aircel has integrated with Star Plus in order to reach maximum consumers, in daily sops

of Star Plus lead character of five top sops will talk about the launch of aircel on prime

time and this was aired at a high frequency during launch week.

Aircel also brought innovation while advertising on news channels like logo bug, score

bug and animated aston bands and in print medium also they deviated from regular format

by changing masthead of Times of India to µ¶MOVE ON INDIA¶¶ with brand tagline.

3) Gateway of India

In Mumbai aircel projected its logo on Gateway of India in order to project historic

structure as gateway of new consumers of aircel





4) Other Innovative strategies

Aircel put up IPL scorecard billboards on busy highway to keep track of scores thus

helping them to form brand image in consumers mind.

One of the most innovative strategy used by Aircel was on Milan subway in Mumbai just

before the floods, on billboard there was a inflated boat tied to it and billboard says µ¶in

case of emergency cut the rope¶¶

And when flood came the rope was cut and Aircel employees were there to help people

sail through the flooded streets of Mumbai.

3.7.FUTURE OUTLOOK





Telecom industry in India has undergone a tremendous revolution in the recent years. The

country is ranked second worldwide in terms of having the largest telecommunication

network, after China. With the on-going investments into infrastructure deployment, the

country is projected to see high penetration of Internet, broadband and mobile subscribers.

According to our new analytical study on the sector ³Indian Telecom Analysis (2008-

2012)´, mobile telephony continues to fuel growth of the Indian telecom sector, with

mobile subscribers projected to grow at a CAGR of around 11per cent between 2013-14.

The other segments of the industry such as Internet and broadband are also anticipated to

witness strong growth in terms of both subscriber addition and network infrastructure

deployment over the forecast period. Tele-density in India has improved significantly over

the recent years and has reached around 51per cent in the fiscal year 2009-10, owing to

improving network infrastructure. The launch of advanced telecom services like 3G and

IPTV will also drive the growth in Indian telecom subscriber base over the forecast period.

Furthermore, the mobile handset market is also expected to register a robust growth in near

future. Also, various factors driving the overall telecom market in market have been

thoroughly analysed in the report. The report provides a detailed study of the Indian

telecom sector and gives an analysis of the competitive environment prevailing in the

industry. The report thoroughly studies fixed, mobile, Internet and broadband markets in

terms of players and number of subscribers. It also presents the future outlook of the

Indian telecom sector to help clients identify the growth opportunities in the market. There

are various new technologies that have come out like the present 3G, the industry is

expected to have 4G and 5G services as well. The 3G technology transmits packet switch

data efficiently at better and increased bandwidth. It offers more advanced services to

mobile users. The spectrum efficiency of 3G is better than the 2G technology. Spectral

efficiency measures the rate of transfer of information over any communication channel.

The industry speaks of coming up with 4G technology which offers more bandwidth and

services than the 3G. It is expected to provide high quality audio/video streaming over end

to end IP. The 5G technology will be a new revolution in the market. With the coming out

of new cell phones like PDA, the 5G technology will be a new revolution in the market.

With the coming out of new cell phones like PDA, working with office on your phone

becomes easy and convenient. It will provide very high speed of connectivity. With mobile

subscribers growing at the pace of over 15 million every month, the telecom sector is

likely to witness huge investments to the tune of Rs five lakh crore . The two telecom





private sector units BSNL and MTNL are expected to make investments to the of Rs one

lakh crore during the five years to ramp up their telecom infrastructure.

Private players, on the other hand, are expected to invest Rs four lakh crore during the

same period(2012-2017) in expanding their infrastructure.This information from the

Department of Telecom says the total investment in telecom infrastructure is pegged at Rs

five lakh crore (USD 110 billion) during the 12th Plan period, starting from April

2012.The total number of telecom subscribers is projected to grow from the present 780

million to 1,200 million during the 12th Plan.According to the statistics around 25 per cent

(roughly 300 million) would be 3G/4G subscribers, which would require scaling up and

expanding the infrastructure to accommodate the rising number of users.About Rs 2.85

lakh crore is estimated to be invested in rolling out greenfield 2G, 3G/4G and WiMax

networks, while Rs 1 lakh crore would be required to set up an extra 200,000-odd telecom

towers across the country.The total investment in the pan-India broadband rollout is

expected to be Rs 75,000 crore, while another Rs 40,000 crore will be invested in

augmenting the transmission network. FromResearch shows that by March 2013 the

wireless subscribers base is expected to touch 638 million which will lead to a tele density

of 53per cent.Memorandum of understanding growth is expected to decrease slowly due to

decrease in elasticity and low usage subscribers. AR PU (Average Revenue Per User) is

projected to decrease rapidly in the next 2 years due to increase in competition and

implementation of MNP (mobile number portability). The mobile operators profit is

expected to decline over the next 2 years due to rising cost, falling AR PU and growing

competition. Entry of new players in the business is bleak, because of the relatively high

cost structure and low quality subscriber base. The 3G services are expected to attract 63

million subscribers in India till next 5 years.

3.7.1. CHALLENGES TO BE FACED

The biggest challenge which the telecom industry is facing today is that they are in

search of new and cost effective ways to establish themselves in the rural areas. They





need to choose proper and effective technology for deployment and leverage on the use

of available infrastructure to reduce cost and time to role out their services. Those service

providers who get these aspects right will emerge as winners while the others will remain

as spectators. Network connectivity and cost of bandwidth are also important to facilitate

broadband usage. Most of the content available on website today is in English and this is

seen as a big disadvantage. Communicating through local and regional language will

increase interest of the local population in broadband utilization while giving them a clear

picture about things they need to know about in the telecom sector. Emergence of new

applications and technologies is another thrilling area. There is a lot of revolution round

the corner in broadcasting and entertainment industries. The emergence of Internet

protocol TV, mobile TV will change the scenario in the coming years. Wireless

technology is the future growth driver for which spectrum is the most important input.

The task of spectrum management in a multiuser and multi usage scenario is more

daunting and crucial than ever before. Some of the major challenges can be listed below :

1. It would be increasingly difficult for a new entrant to lure customers, as there is

nothing extra for a new player to offer.

2. Return on investment or capital employed for a late entrant would be significantly

lower.

3. Expansion has to be done with a long sighted view for profitability.

4. It will be an era where there will be stiff competition among the strong regional and

other national level players.

3.7.2.COMPARISION WITH U.S. AND OTHER COUNTRIESUNITED STATES

The comparative study is done to see how different is the Indian telecom industry from

the other countries and in what respect. The comparison is shown below :





U.S. telecom industry is the most prosperous telecommunication industry in the world,

which covers a wide range of areas and services like telephone, television, Internet, radio

and so many more. The U.S. telecom industry primarily deals with the services of

transmitting message through mediums like cables, satellites etc. There are a few

principal divisions of the U.S. telecom industry.U.S. telecom industry specifically

consists of three primary sections namely technical, regulatory and economic. These

three sectors work together to make the U.S. telecom industry what it is today. U.S.

telecom industry began with the telegraph industry and gradually the focus shifted

towards wireless andonline services.Components and services of U.S. telecommunication

industry include wireless technologies, digital technologies and mobile network

services.Wireless technology is a form of technology for data communication without

wires, which is alternatively called radio transmissions. This technology is more

affordable and easy to use. American engineers started using digital technology from the

mid-twentieth century and with the use of ISDN(Inter Services Digital Network),

information will be transmitted in a completely digital fashion. From the economic

perspective of U.S. telecom industry, it is the key force of the economy. The U.S.

telecommunication industry extends its activities in almost every sector, from education

to health care or banking and finance. U.S. telecom industry enables an overall of 75 per

cent U.S. labor productivity gains.Prime objective of U.S. telecommunication industry is

to provide employment.U.S. telecommunication industry is designed to achieve the target

of creating more than 212,000 jobs. Besides creating new job opportunities, some other

objectives of U.S. telecommunication industry include adding customer value by

providing them innovative services like VoIP (Voice over Internet Protocol), creating an

overall of $58 billion capital investment opportunities and generating $113 billion new

revenues in its telecom industry.

CHINA

Since the completion of recombination and the issue of 3G licenses, China's telecom

industry has set up a three-way struggle, and the competition of the telecom industry has

entered a new stage of development. The year of 2009 became the start of this stage. The





development of the telecom industry so far is observed to be driven by investment. Since

2010, China¶s investment in 3G reduced gradually, and the telecom industry entered a

"post-3G" era. Additionally, there was a slowdown of investment-led growth, and the

development of the telecom industry was solely dependent on consumption. It is expected

that the adjustment of market policies for China's telecom industry will enable telecom

operators to face a more relaxed, free, and pro-competitive environment, which indicates

that more incentive competition will come into being. In 2011-2012, China will accelerate

the combination of telecom network, broadcast network and Internet, and promote

interoperability, resource sharing, and the development of information and cultural

industries, by using of related policies. This interoperability is not only an opportunity but

also a challenge for the industry.

JAPAN

Japan¶s telecommunications sector is one of the most active markets in the world. Entering

2011 the country was witnessing the continued growth of VoIP and strong competition

among the mobile operators in the 3G segment of the market. Japan has also become the

fourth country to introduce LTE (Long Term Evolution) services with NTT DoCoMo

leading the charge. Especially noteworthy has been the continued strong uptake of

FttH(Fiber to the Home) services (with a corresponding move away from digital

subscriber line also called DSL) and the big strides taken in developing digital and mobile

broadcasting. The telecommunications regulatory authorities in Japan have been very

active in shaping the industry in this country.

SOUTH AFRICA

It should come as no surprise that the country that invented touchtone dialling offers

world-

class telecommunications.Telecommunications is one of the fastest growing sectors of

Africa's economy, driven by rapid growth in mobile telephony and broadband

connectivity.





It is hard to think of a day in life without the dependence on Information and

Communication Technologies (ICT) like internet or mobile phones, in a fast changing

world. The Telecommunication era began with the invention of Alexander Graham Bell¶s

invention of Telephone and Marconi¶s invention of radiograph. The Telecom Industry

Association (TIA) 2008 report revealed that the global telecom market will hit $3 trillion

by 2010 and can become an important factor for the growth in the world economy.

The telecom industry has evolved from being a simple set of wire that connected locations

with a switchboard to mobile devices in a period of 3 decades, with ³punch cards´ in the

initial days to semiconductors and silicon based chips. The evolution of semiconductors

enabled new devices to connect to the network in parallel to the revolution in information

technology (IT). This Telecom Industry in conjunction with the IT industry, developed

new products that are taking the telecom industry to the next level of invention. The UK

telecommunications industry provides communication and information services, i.e.

delivery of voice, data and media over different networks like mobile, telephone networks

and television networks. The Telecommunication in the UK was a state monopoly since

reorganization in 1969 as post office telecommunications, which later split into Post Office

and British Telecommunications corporations (BT) in 1981. BT had a duopoly

competition with Mercury Communications until 1991, after which the UK government

set to free its telecommunications network and services policy to new competitors

gradually. Today, the growth in the Economy and technological developments in the

telecom industry is clearly evident from the Office for National Statistics (ONS) survey,

estimating that total UK telecoms turnover was £62.2bn in 2008, a 22 per cent increase

from £50.8bn reported in 2003. The 2009 IHS Global Insight report reveals that the UK

Mobile Industry had tremendous growth in the last 15 years and reached a maturity stage

with the UK Mobile Market penetration rate of 121 per cent in 2008. A UK Research

groupdeclares that Telecommunications is a key input factor for the UK economic growth,

a facilitator of socio-economic advancement and a critical utility for economic

development, much like water and energy. This statement is in line with the telecom¶sgrowing share of world output and household spending. The World Bank estimates global

telecommunications spending as a share of global gross domestic product was 2.5 percent

in 1990. Analysts at Insight Research estimated that in 2006 telecom spending had grown

to 4.8 percent. The Insight Research further estimates telecom spending will grow to 5.9

percent of global GDP by 2013, despite the current recession and credit crunch. With this





numeric evidence, it is clearly evident that there is a great potential in the global and UK

telecom industry. But on a still more closer look, we find significant challenges that the

industry is currently facing that makes more of the telecom firms to rethink their strategic

decisions, both on a short term as well as on a long term.

3.8. CONCLUSION

The study explains different aspects of the telecom sector. It also includes the analysis of

telecom sector in details which covers the full explanation of market share, its segment and

also for what reason the market share increase or decrease. It also explains the different

way of advertisement and their strategy. It speaks of mergers and acquisitions, the various

players, the market leader, the market challenger, the technological advancements, the

research and developments in the field.





CHAPTER 4

CONCLUSION





4.1. CONCLUSION

India is in its way to become economic power, telecom sector is integral part of its

economy and plays a major role in its GDP. The two major reasons that have fuelled the

growth in this sector are low tariffs coupled with falling handset-prices.

Surprisingly, CDMA market has increased its market share upto 30% owing to Reliance

Communication. However, across the globe, CDMA has been losing out numbers to

popular GSM technology, contrary to the scenario in India. The other reason that has

tremendously helped the telecom Industry is the regulatory changes and reforms that have

been pushed for last 10 years by successive Indian governments. The telecom reforms

have allowed the foreign telecommunication companies like Vodafone to enter Indian

market which has got huge potential. Though fixed line market share has been dropping

consistently, the overall (fixed and mobile) subscribers have risen and reached to 806.13

million subscribers. In Telecom sector in India BhartiAirtel is the market leader with

20.70% of market share followed by Reliance and Vodafone.

Due to huge population and low handset cost as well as low tariffs mobile handset have

become handy which is very good for service providers and opens lot of scope for

development. Initiatives like Mobile Number Portability (MP N) implemented in 2011

bring changes in the mobile service without chaging the number encourages consumer

centric approach.

In addition to services like GSM,GPRS AND CDMA other services like internet, WiMax,

broadband further strengthened the telecom sector.2G, 3G and now the latest 4G has

brought drastic change in the technology.

The major mergers and acquisitions in the telecom industry was also an important factor

for the development. This also gave way for telecommunications providers to provide their

services in the urban and rural market. Reliance introduced new plans with low rates

which made it very cheap and affordable for low income groups.

Through Aggressive marketing and promotional strategies the players have increased their

services compete with each other on point to point basis which is advantageous for the

consumers.





The FDI entry and the spectrum licensing which was given by the Telecom Regulatory

Authority of India (TRAI) will bring some enormous growth in the future of the telecom

industry.

CHAPTER 5

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