P.E.S.T Analysis of the Indian Telecom Industry

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P.E.S.T. Analysis of the Indian Telecom Industry

This is an analysis of the Political, Economic, Social and Technological environment surrounding the Indian Telecommunication Industry.

Akshar Mehta 02
2nd January 2009

Particulars| Page|
1. Introduction 2.1 Panoramic Scene of Indian Telecom Industry 2.2 The Road Ahead| 2-323| 2. P.E.S.T. Analysis – What is it? 3.3 Meaning 3.4 Main Aspects of P.E.S.T. Analysis| 444| 3. Political Environment3.1 Policies Framed By the Government for the Telecom Industry3.2 Impact of Policies on the Industry| 5-767| 4. Economic Environment 5.5 Current Economic Scenario4.2 Mergers and Acquisitions4.3 Foreign Direct Investment (FDI)| 8-9899| 5. Social Environment| 10|

6. Technology Environment 7.6 Technology Available in India Today6.2 Technology which will be implemented later| 11-1311,1213| 7. Conclusion| 14|
8. Bibliography 9.7 Articles 9.8 Books 9.9 Internet| 15151515| -------------------------------------------------
Table of Contents

The Indian telecommunications has been zooming up the growth curve at a feverish pace, emerging as one of the key sectors responsible for India's resurgent economic growth. It is the fastest growing telecommunication market in the world, and with 281.62 million telephone connections (at the end of January 2008) is the third largest telecom market.

In fact, India has achieved its target of reaching 250 million telephone subscribers by 2007, two months before target. Simultaneously, overall tele-density has increased to 24.63 percent. The year 2007 saw India achieving significant distinctions: having the world's lowest call rates (2-3 US cents), the fastest growth in the number of subscribers (15.31 million in 4 months), the fastest sale of million mobile phones (in a week), the world's cheapest mobile handset (US$ 17.2) and the world's most affordable colour phone (US$ 27.42) and largest sale of mobile handsets (in the third quarter).

Go-ahead to the CDMA technology

Private players were allowed in Value Added Services
National Telecom Policy (NTP) was formulated


Independent regulator, TRAI, was established
NTP-99 led to migration from high-cost fixed license fee to low-cost revenue sharing regime


BSNL was established by DoT
ILD services was opened to competition
Internet telephony initiated
Reduction of licence fees

Calling Party Pays (CPP) was implemented
Unified Access Licensing (UASL) regime was introduced
Reference Interconnect order was issued

Intra-circle merger guidelines were established
Broadband policy 2004 was formulated—targeting 20 million subscribers by 2010

FDI limit was increased from 49 to 74 percent
Attempted to boost Rural telephony

Number portability was proposed (pending)
Decision on 3G services (awaited)

Department of Telecommunication (DoT) is the main body formulating laws and various regulations for the Indian telecom industry.

3G services launched by MTNL

Fig 1.0: The Gradual Growth of the Telecommunication Industry 1.1 PANORAMIC SCENE OF THE INDUSTRY TILL 2008
Wireless segment has emerged as the preferred mode of telephone service by the consumers, reflected in the rising share of mobile phone connections to total connections. The share of mobile phones has increased from 71.69 per cent at the end of March 2006 to 86.07 per cent at the end of January 2008. While total mobile subscriber base was 242.4 million, wire line subscriber base was 39.22 million.

In fact, since 1999, mobile subscriber base has been growing at a CAGR of around 85 per cent. And, while about 8 million new subscribers are being added every month in mobile segment, there has been a decline in the total number of wire line subscribers. Also, the net addition of 8.77 million...
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