Indian Telecommunications Services Sector - Current Status
The telecommunications sector is one of the leading sectors in the Indian economy. India is
ranked fourth in terms of the telecom industry in Asia (after China, Japan, and South Korea),
eighth in terms of the telecom network in the whole world and second in terms of the telecom
network among the emerging economies. India also projected to become the second largest
telecom market globally by 2010.
According to a survey by Indian Ministry of communications and Information Technology,
the opportunities in the Indian telecommunication sector have been growing at an
unbelievable rate of 20 to 40 percent every year since past 3 years. India today is the greatest
rising marketplace and represents exclusive prospects to U.S. companies in the stagnant
global scenario.
Overall Performance of the Indian Telecommunications Services Sector
In 2008, India added 113.26 million new customers. In July 2009, as per records of TRAI
(Telecom Regulatory Authority of India), around 14.25 million telephone connections, were
added, including wireless and wire line, taking the total number of telecom subscriber base at
the end of July 2009 to 479.07 million from 464.82 million a month before. The subscriber
base grew to 494.07 million (August 2009), registering a growth of approximately 42.67 per
cent over last year. It grew at a CAGR of 45.21 per cent from June 2004 to June 2009. The
telecom subscriber base in India is likely to reach 500 million by 2010.
Though the current tele-density is still low as compared to the global average, it has grown
leaps and bounds in the past few years. According to the estimates given by Communication
and Information Technology Minister, Mr. Gurdas Kamat, as of 2009, the overall tele-density
in the country was 44.87 per cent, compared to the previous year's figure of 29.83 per cent.
The rural tele-density was 18.97 per cent and urban tele-density was 101.38 per cent. The
global tele-density was 78.11 per cent as on 31 December 2008.
Nokia manufacturers conducted a study in which they shows that by 2014, the
communications sector in India is likely to appear as a single leading element of the GDP of
India with 15.4 per cent.
The Indian equipment market is estimated at US$ 24 billion in financial year 09. Nokia is the
market leader, with US$ 3.4 billion revenues last fiscal, followed by Ericsson at US$ 2.11
billion.
Bharti Airtel
Company Background
Bharti Airtel is the flagship telecommunications company of Bharti Enterprises. With more
than 92 million subscribers, the company is India's largest cellular service provider as on
February 2009. In the world, by subscriber basis, the company Bharti Airtel is the 3rd largest
in-country mobile operator.
Products & Services
The structure of Bharti Airtel business has been divided into three strategic business units.
Enterprise Services: Last mile connectivity in fixed-line and mobile circles, VSATs,
ISP and international bandwidth access through the gateways and landing station.
Simply it provides end-to-end data and enterprise services to the corporate customers
through its nationwide fiber optic backbone.
Airtel Telemedia Services: Has recently launched a Direct-to-Home (DTH) service,
Airtel digital TV and offers telephone and broadband services in 95 cities.
Mobile Services: Provides fixed wireless and mobile services using GSM technology
across 23 telecom circles.
Bharti Airtel also provides Internet access over DSL and telephone services in 14 circles. It
also offers Broadband & Telephone Services, Mobile Services, and Leased Line, Long
Distance Services and Enterprise Services. It also acts as a carrier for national and
international long distance communication services.
Brand
The company offers services under the Airtel brand. Within a decade, Airtel has risen to the
pinnacle of achievement. Airtel as the leading company of India in telecommunication, the
trademark Airtel has played the role as a most important mechanism in India's development.
The company's advertising campaigns are always admired. Their idea of creating a signature
ringtone with A R Rehman was a huge success. The Express Yourself campaign was also
well executed. It showcased the ubiquitous utility of the mobile phone through different
situations and converted a purchase decision into an extension of one's voice. They chose the
country's most popular people i.e. SRK, Kareena and Sachin for their campaign & made
connection with people. Its advertisements always touch the chord of the people.
Ownership
Bharti Enterprises holds a 64.76% stake in the company, while SingTel and Vodafone hold
30.5% and 4.4%, respectively.
The Indian promoter, Bharti Enterprises holds a 64.76% stake in the company, while SingTel
and Vodafone hold 30.5% and 4.4%, respectively.
Headed by Sunil Bharti Mittal, The Bharti Group, has a diverse business portfolio and has
created global brands in the telecommunication sector.
Strategy
The strategy of Bharti Tele-Venture is to capitalize on the growth an opportunity of the
company believes are available in the Indian telecommunications market and consolidate its
position to be the leading integrated telecommunications services provider in key markets in
India, with a focus on providing mobile services.
The company targets include:
Also, the SMS capacity is sought to be raised from the current 5,500 messages per
second to 6,500 messages per second by March 2009.
Aggressive efforts are on to provide a superior network service that is congestion-free
and to help customers get connected the first time.
Bharti Airtel plans to increase the pace of its network expansion in rural areas. It plans
to make considerable investments in Network expansion to establish presence in all
census towns and over 500,000 villages across India by 2010, thereby covering 95%
of the country's total population. The company's strategic focus will be on further
strengthening the Airtel brand through best-in-class customer service, which is backed
by wide national distribution.
After establishing itself in the domestic market, Airtel is now spreading its wings in
US by providing its mobile service under the name CALLHOME' to the NRIs.
In May 2008, there were intense negotiations for buying the MTN Group, a South Africabased telecommunications company with coverage in 21 countries in Africa and the Middle
East. The Financial Times reported that Bharti was considering offering US$45 billion for a
100% stake in MTN, which would be the largest overseas acquisition ever by an Indian firm.
However, the talks fell apart as MTN group tried to reverse the negotiations by making Bharti
almost a subsidiary of the new company. In May 2009, Bharti Airtel again confirmed that it
was in talks with MTN and companies. Talks eventually ended without agreement, some
sources stating that due to the South African government opposition
Reliance Communications
Company Background
Reliance Communications, formerly known as Reliance Infocomm (RIC), is the flagship
company of the Anil Dhirubhai Ambani Group (ADAG) of companies. Listed on the National
Stock Exchange and the Bombay Stock Exchange, Reliance Communications is the second
largest mobile operator in India with over 92 million customers.
Reliance - ADAG, an offshoot of the Reliance Group founded by Shri Dhirubhai H Ambani
(1932-2002), ranks among India's top three private sector business houses in terms of net
worth. The group has business interests that range from telecommunications (Reliance
Communications Limited) to financial services (Reliance Capital Ltd) and the generation and
distribution of power (Reliance Infrastructure Limited).
Reliance Communications is India's largest private sector Information and Communication
Company while other major group companies Reliance Capital and Reliance
Infrastructure are widely acknowledged as the market leaders in their respective areas of
operation.
Products & Services
Reliance Communications is capable of delivering a range of services spanning the entire
infocomm (information and communication) value chain, including infrastructure and
services for enterprises as well as individuals, applications, and consulting.
It has established a pan-India, high-capacity, integrated (wireless and wireline), convergent
(voice, data and video) digital network, to offer a complete range of telecom services
covering mobile telephony and data services along with an exhaustive range of value-added
services and applications:
RTL (Reliance Telecom Ltd.) is one of the oldest licensees of CMSP. Its license dates
back to 12.12.1995.
RTL launched its GSM services during October 1997 in 8 telecom circles.
Reliance Mobile (formerly Reliance India Mobile) was launched on 28 December
2002 and was among the initial initiatives of Reliance Communications.
On the 30th December 2008, Reliance Communications became the first telecom
operator in the history of Indian telecommunications to simultaneously launch its
GSM services in 17 circles and acquired a unified access license for 18 circles that
permits it to provide the full range of mobile services. It has rolled out its CDMA
mobile network and enrolled more than 6 million subscribers in one year to become
the country's largest mobile operator.
It now wants to increase its market share and has recently launched pre-paid services.
Having captured the voice market, it intends to attack the broadband market.
RelCom is also into Wireline Business throughout India and has the largest optical
fiber communication (OFC) backbone architecture [roughly 110,000km] in the
country.
Reliance Communications has launched its Direct To Home (DTH) TV also, known
as Big TV. RelCom have presence across all B2C communications channel in one
of the fastest growing markets in the world.
Brand
After the division between the two Ambani brothers - Mukesh Ambani and Anil Ambani,
Reliance Communications became a part of Reliance - Anil Dhirubhai Ambani Group, or
Reliance - ADAG for short. All the products are marketed under the brand name of Reliance ADAG for short. The company constantly endeavors to achieve customer delight by
enhancing the productivity of the enterprises and individuals.
Reliance has been instrumental in harnessing the true power of information and
communication, by bestowing it in the hands of the common man at affordable rates. The
company aims to expand beyond the traditional value chain by developing and deploying
complete telecom solutions for the entire spectrum of society by extending its efforts to
India's farmers, businesses, hospitals, government and public sector organizations.
Ownership
According to National Stock Exchange data, Anil Dhirubhai Ambani controls 66.77 per cent
of the company.
Reliance Communications, formerly known as Reliance Infocomm (RIC), was established in
the year 2004 as Reliance Infrastructure Developers Private Limited (RIDPL). In 2006,
Reliance Communications Ventures (RCoVL) approved merger of RIC with itself. Post
merger, RIC became a part of RCoVL, which held 100% of principal subsidiaries - Reliance
Telecom Limited (RTL), Reliance Communications Infrastructure Limited (RCIL) and FLAG
Telecom. With this, all of RCoVL's communications services businesses CDMA/GSM
wireless, wireline, long distance voice, data and broadband services came under a single
holding structure.
Strategy
Reliance Infocomm stimulated telecommunication growth in India by challenging many of
the conventional practices in product design, distribution, sales, advertising and pricing.
While the competitors focused on the top segment of the market, by charging a premium,
Reliance Infocomm sought to reduce the cost to the consumer, thus focusing on a market
driven by volume.
The Reliance Infocomm pricing system was always in line with Dhirubhai Ambani's dream
and directive of making phone calls affordable for every Indian. Reliance Infocomm
challenged the conventional cost structures with the lowest possible tariff ever in India.
According to estimates, there are around 320 million [people in] households with an annual
income of Rs 1.5 lakh (US$3,333) [and above]. Of that, half are in rural areas with similar
purchasing power. And this segment is expected to grow to 478 million by 2007 and to 602
million by 2010 commented B D Khurana, group President, Reliance Infocomm, hinting
about the market that Reliance Infocomm aimed to capture.
Reliance Industries is the largest private sector corporation in India which provided great
leverage as the company ventured into telecommunications. Reliance Infocomm shared all
Reliance resources to ensure cost effectiveness. Citing Reliance Infocomm's strategy,
Khurana said: 80 per cent of our administration and operation is centralised. Compared to
the best telecom networks in the world we have deployed only half the number of people per
1,000 lines making our human resources the highest productive resource.
For marketing channels, Reliance Infocomm created a completely new model. With the
Dhirubhai Ambani Entrepreneur Programme, Reliance Infocomm fostered a new breed of
entrepreneurs, as channel partners. It aimed to enroll 200,000 individuals who are committed
to acquiring new customers and creating a new experience for them, based on flawless
service and feelings of satisfaction. To build the customer base Reliance Infocomm went
where the customers were going - to grocery stores, gas stations, music stores, departmental
stores, street side vendors, bookshops and even hotels and restaurants. The public relations
effort gave much leverage to the advertising and gave rise to a word of mouth campagn.
The Reliance Infocomm has been successful due to the meticulous planning, out of the box'
thinking in touch with reality, and significant capital productivity achieved on the strength of
Reliance's track record in project management. Tata Teleservices
Company Background
Incorporated in 1996, Tata Teleservices Limited (TTSL) spearheads the Tata Group's
presence in the telecom sector. TTSL was formed when the Tata Group acquired Hughes
[Link] (India) Ltd in 2002 and renamed it Tata Teleservices (Maharashtra) Limited.
The Tata Group had revenues of around US $62.5 billion in Financial Year 2007-08, and
includes over 90 companies, over 350,000 employees worldwide and more than 3.2 million
shareholders.
Today, TTSL enjoys a pan-India presence through existing operations in all of India's 22
telecom Circles. Tata Teleservices Ltd, along with Tata Teleservices (Maharashtra) Ltd,
serves around 50 million customers in more than 350,000 towns and villages across the
country.
The company's network has been rated as the Least Congested' in India for last five
consecutive quarters by the Telecom Regulatory Authority of India through independent
surveys. From October 2009 TRAI announced that TATA tele service is India's no.1 tele
service brand.
Products & Services
TTSL provides a bouquet of telephony services encompassing Mobile Services, Wireless
Desktop Phones, Public Booth Telephony and Wireline Services and enterprise solutions.
TTSL provides basic (fixed line services), using CDMA technology.
It launched mobile operations in January 2005 and the company is also the market
leader in the fixed wireless telephony market.
TTSL now also has a pan-India presence in the GSM space, through its joint venture
with NTT Docomo in 2008. Tata Docomo offers both prepaid and postpaid GSM
cellular phone services in 18 telecom circles. Tata Docomo has gained popularity with
its one second pulse, especially in semi-urban and rural areas. It has also emerged as
the first mobile operator in India to have re-introduced per second' pulse, after Loop
Mobile discontinued their pay per second' service.
Brand
Tata Teleservices Provides mobile services under 3 Brand names:
Tata Indicom - The TTSL basic telephony services.
Tata DoCoMo - The campaign aims to stand out with two key selling points: one, its
tagline Do the New'; and two, its differentiated tariff plans.
Virgin Mobile - TTSL CDMA mobile services targeted towards the youth, to be sold
under the Virgin brand name.
Ownership
TTSL is an unlisted entity. Tata Group and group firms own the majority of the company
while NTT docomo holds 26% in the jointly formed company and investor C. Sivasankaran
holds 8%. The Board of Directors for TTSL includes Tata Sons Chairman Ratan Tata, while
the company is currently headed by its Managing Director, Mr. Anil Kumar Sardana.
In November 2008, Japanese telecom giant NTT Docomo picked up a 26 per cent equity
stake in Tata Teleservices for about Rs 13,070 crore ($2.7 billion) or an enterprise value of Rs
50,269 crore ($10.38 billion).
Virgin Mobile India Limited was officially launched on March 2, 2008 as a 50:50 joint
venture between Tata Teleservices and Richard Branson's Virgin Group. TTSL announced
that it would provide CDMA mobile services targeted towards the youth, in association with
the Virgin Group on a Franchisee model basis.
Strategy
Tata Docomo arises out of the Tata Group's strategic alliance with Japanese telecom major
NTT Docomo in November 2008. Tata Docomo marks a significant milestone in the Indian
telecom landscape, as it stands to redefine the very face of telecoms in India.
Tokyo-based NTT Docomo is one of the world's leading mobile operators. In the Japanese
market, the company is the clear market leader, used by over 50 per cent of the country's
mobile phone users.
Virgin Mobile India Limited was launched on March 2, 2008 as a joint venture between Tata
Teleservices and Richard Branson's Virgin Group. Currently, the company uses Tata's CDMA
network to offer its services under the brand name Virgin Mobile, but it has also announced
plans to foray into the GSM space.
Since Mobile Virtual Network Operators (MVNO) are not permitted to operate in India due
to the current regulations, a 50:50 joint venture model was adopted by Virgin Mobile India
Limited. But the deal structure was very similar to a franchisee model. Virgin Mobile's entry
into India created panic in the existing players as they raised a question on the legality of its
entry in India. While India does not have a concept like MVNO as of now, the telecom
secretary recently expressed that the government is not averse to MVNOs.
