The Indian Telecommunications Industry3
Mobile Growth – Twist in the Game3
Revenue and Growth4
Beginning of Overcrowding and Price War4
Industry perspectives on Price War/ Falling Rates5
Opinions from Industry Stalwarts and Watchers7
3G on the Horizon8
Growth at Home and Abroad8
The Indian telecom sector could be going the airline way.10 Hypothesis on future trends of structure conduct and performance of Industry10 Who wins who looses?10
Exhibit 1: Indian Telecom Industry Key Milestones13
Exhibit 2: India Telecommunication Industry – Facts and Figures15 Exhibit 3: Subscriber Base in Key States15
Exhibit 4: operator wise wireless subscriber base in India16 Exhibit 5: Performance of QoS Parameters for Cellular Mobile Services17 List of References:17
This document is the result of an academic case study an attempt to analyze and understand the present dynamics of Indian Telecommunication Industry with special focus on the Price war in mobile telecom that has overwhelmed the industry. In this study we attempt to look at the causes that lead to the price war, impact thereof and also hypothesize future trends.
Methodology used for the case study is as follows. We have made a set of hypothesis and arrived at key questions which are used to gather the data around the hypothesis. We have retained hypothesis which are supported by the data and expert views and presented the hypothesis and conclusions.
The Indian Telecommunications Industry
The Indian telecommunication industry, with about 506.04 million mobile phone connections (Nov 2009), is the third largest telecommunication network in the world and the second largest in terms of number of wireless connections. The Indian telecom industry is one of the fastest growing in the world and is projected that India will have 'billion plus' mobile users by 2015. Projection by several leading global consultancies is that India’s telecom network will overtake China’s in the next 10 years.
Looking at the Industry marked milestones for last 4 to 5 years (Exhibit 1), 2 issues are obvious – Mobile Growth and completion that will lead to a shakeout sooner or later.
Mobile Growth – Twist in the Game
For the past decade or so, telecommunication activities have gained momentum in India. Efforts have been made from both governmental and non-governmental platforms to enhance the infrastructure. Telecommunication as a technology not only serve all segments of India’s culturally diverse society, would play key role transforming India a country a techno savvy one.
The historical journey and the milestones of Telecom revelation in India have been shown in the Exhibit 1 of Appendix section. Currently, India's mobile phone market is the fastest growing in the world, with companies adding some 16.67 million new customers a month.
Some of the key drivers to the exponential growth of this industry are
▪ A large population
▪ Low telephony penetration levels
▪ Rise in consumers' income and spending owing to strong economic growth
The first and largest operator is the state-owned incumbent BSNL, which is also the 7th largest telecom company in the world in terms of its number of subscribers. BSNL was created by corporatization of the erstwhile DTS (Department of Telecommunication Services), a government unit responsible for provision of telephony services.
Subsequently, after the telecommunication policies were revised to allow private operators, companies such as Bharti Airtel , Vodafone, , Tata Indicom, Idea Cellular, Aircel and Loop Mobile have entered the space. In 2008-09, rural India outpaced urban India in mobile growth rate.
The wire line segment subscriber base stood at 37.16 million with a decline of 0.13 million in Nov 2009, The Cellular Operators'...