A STUDY ON THE TELECOMMUNICATION INDUSTRY
GROUP 6ANUBHAV BANSAL
Factors Facilitating Growth of the Sector
Features of Telecom Industry
Current Market Scenario
Conduct and practices
Porters five force model
Conclusion & Future of the Telecom Industry in India
Indian telecom industry is a 165 years old industry which has acquired its present form by going through a series of
development and evolution. It is the second largest telecom
industry in the world with 300 million subscribers. The quarterly growth rate in this sector is 7.68%. FDI allowed in the network service provider segment is 74% and in the telecom equipment manufacturing segment is 100%. The major players in this sector are Bharti Airtel with market share of 25.4%, Reliance
communications with a share of 14.99%,Vodafone Essar with a
share of 19.31% and BSNL with a share of 22.99%. Various
political, social, economic and technological conditions prevailing in Indian telecom industry presents a good picture for growth. Market is highly concentrated, distribution occurs through levels and pricing is customer oriented. Airtel leads in imports of tower equipments and other equipments whereas Idea leads in export of services. BSNL and Airtel have managed to keep good leverage an working capital ratio. This industry does not suffer from threat of new entrant but is plagued by the huge bargaining power of
buyers. Its clear most of the expansion in subscribers is set to occur in rural India & India’s rural telephone density has been languishing at around 8-10%. So, if 70% of total population is rural, the scope for growth in this Industry is unprecedented
Introduction - Evolution
Indian telecom sector is more than 165 years old. Telecommunications was first introduced in India in 1851 when the first operational land lines were laid by the government near Kolkata (then Calcutta), although telephone services were formally introduced in India much later in 1881. Further, in 1883, telephone services were merged with the postal system. In 1947, after India attained independence, all foreign telecommunication companies were nationalised to form the Posts, Telephone and Telegraph (PTT), a body that was governed by the Ministry of Communication. The Indian telecom sector was entirely under government ownership until 1984, when the private sector was allowed in telecommunication equipment manufacturing only. The government concretised its earlier efforts towards developing R&D in the sector by setting up an autonomous body – Centre for Development of Telematics (C-DOT) in 1984 to develop state-of-the-art telecommunication technology to meet the growing needs of the Indian telecommunication network. The actual evolution of the industry started after the Government separated the Department of Post and Telegraph in 1985 by setting up the Department of Posts and the Department of Telecommunications (DoT).
The entire evolution of the telecom industry can be classified into three distinct phases.
Phase I- Pre-Liberalisation Era (1980-89)
Phase II- Post Liberalisation Era (1990-99)
Phase III- Post 2000
Until the late 90s the Government of India held a monopoly on all types of communications – as a result of the Telegraph Act of 1885. As mentioned earlier in the chapter, until the industry was liberalised in the early nineties, it was a heavily government-controlled and small-sized market, Government policies have played a key role in shaping the structure and size of the Telecom industry in India. As a result, the Indian telecom market is one of the most liberalised market in the world with private participation in almost all of its segments. The New Telecom Policy (NTP-99) provided the much needed impetus to the growth of this industry and...
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