Indian Telecom Industry Analysis

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Telecommunications Industry in India

Industry Background
The telecom sector in India is a booming market now. India is the world’s second largest mobile phone user with a total subscriber base of 894 million as of December 2011, and the third largest internet user with a subscriber base of 121 million as of December 2011. The total market values according to experts are $75.88 billion with a y-o-y growth rate of 26% and generate employment for about 10 million people. The services sector generates revenue of about $62.31 billion (FY 2010-2011) and the equipment sector generates about $25.75 billion. Factsheet as of Dec, 2011:

Particulars| Wireless| Wired| Total|
Total Subscribers (million)| 893.84| 32.69| 926.53|
Total net addition (million)| 9.47| -0.28| 9.19|
% of monthly growth (%)| 1.07| -0.84| 1|
Urban Subscribers (million)| 586.26| 24.94| 611.19|
Net addition (million)| 4.93| -0.2| 4.73|
% of monthly growth (%)| 0.85| -0.8| 0.78|
Rural Subscribers (million)| 307.59| 7.75| 315.33|
Net addition (million)| 4.54| -0.07| 4.47|
% of monthly growth (%)| 1.5| -0.94| 1.44|
Overall Tele-density| 74.15| 2.71| 76.86|
Urban Tele-density| 161.01| 6.85| 167.85|
Rural Tele-density| 36.56| 0.92| 37.84|
Share of Urban subscribers| 65.59%| 76.30%| 65.97%|
Share of Rural subscribers| 34.41%| 23.70%| 34.03%|

Industry in the pre-independence era:
The industry was born in 1850 under the British East India Company with the setting up of the first electric telegraph line between Kolkata and Diamond harbour. The Posts and Telegraphs department was created as a part of the Public Works Department (PWD). Subsequent years saw a growth in the telegraph works. 6400 km of telegraph lines were laid out connecting Calcutta, Peshawar, Agra, Bombay, Madras and Bangalore. In 1881 the government gave license to Oriental Telephone Company Ltd. of England to operate telephone exchanges at Calcutta, Bombay, Madras and Ahmedabad with a total of 93 subscribers. The first wireless telegraph was established in 1902 between Sagar Islands and Sandheads. In 1927 the first international radio-telegraph system was introduced in India between the UK and the Indian Dominion. In 1933 radio-telephone link was established between India and UK. Industry in the post-independence era:

The industry saw a slow but steady growth in telephone as it was still seen by most of the people as a luxury item. The growth figures below stakes the claim

Major milestones in telecom industry post-independence are shown below: * 1953 – 12 channel carrier system introduced.
* 1960 – First STD line commissioned between Lucknow and Kanpur. * 1975 – PCM introduced between Bombay and Andheri.
* 1976 – Digital microwave junction introduced.
* 1979 – Optical fibre commissioned in Pune.
* 1980 – First satellite communication earth station established at Sikandrabad (UP). * 1983 – First analog Stored Program Control exchange for trunk lines est. at Mumbai. * 1984 – C DOT est. for indigenous development and production of digital exchanges. * 1995 – First mobile telephone service started on non-commercial basis on 15 August 1995 in Delhi. Internet services were introduced in Delhi, Bombay, Calcutta, Madras and Pune. Industry Analysis

The telecom industry comprises of complex network services like telephones, mobile phones and internet. In this report we have used two methods to analyse the telecom industry environment and understand its dynamics. The two methods are 1) SWOT analysis and 2) Porter’s 5 forces analysis. SWOT analysis

In the traditional SWOT analysis the Strengths, Weaknesses, Opportunities and Threats are analysed to arrive at a conclusion whether the industry is profitable/will be profitable in future or not. Strengths:

High Customer Potential: The total population of India is 1205 million (July 2012 estimate). The overall teledensity as per factsheet...
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