Telecommunication in India

Telecommunication
in
India Prepared By
Sanjay Prasad Kedia
B.Com(Hons),LLB,FICWA

Telecom Industry OverviewMajor Players in Telecom SectorEmerging Trends in Telecom MarketGrowth AvenuesRole of Cost & Management Accountant in Telecom sectorQ & A session.

THE INDIAN MOBILE MAGIC; AFFORDABILITY HAS BEEN DRIVING THE GROWTHMobile, being extremely affordable, has permeated almost all segment of the everyday life of citizens

Telecom Industry Overview

Investments over Rs. 150,000 crores

Mobile subscriber base of ~ 584 million as of Mar 2010 Adding @ 12-15 million every month

Rural subscriber base served by private GSM operators > 130 million by Mar 2010 Growing @ around 4-5 million every month, i.e. nearly 40% of the GSM subscriber adds are from the rural areas

Lowest Mobile tariffs and one of the lowest ARPU (Average revenue Per User) in the world GSM ARPU (Dec09) of ~ Rs. 144/sub/month

One of the highest GSM MoU (Minutes of Use) globally - ~411/sub/month (Dec09)

*Ministry ofCommunicationsTelecom RegulatoryAuthority of IndiaIndependent RegulatorTelecom Dispute Settlement TribunalIndependent Dispute Settlement AuthorityDepartment ofTelecommunicationsLicensing AuthorityTelecomCommissionPolicy and Executive FunctionBSNL, TCL, Bharti, Reliance, TataBasicBSNL, MTNL, Tata, Bharti, RelianceBharti, Idea, BPL, Vodafone, Tata, RelianceTCL, Data AccessCellularDomestic Long DistanceInternational LongDistanceTelecom Overview - Regulation

*The main aim of the Telecom Regulatory Authority of India is to ensure that telecom network markets operate for the benefit of users and economies overall. Regulators should be independent from day to day politics and the industry so that their actions and decisions are completely impartial. An important aspect of the regulators role is to regulate markets which are not competitive to safeguard the interests of competitors and consumers.

Prior to liberalization in the 90s, the DoT acted as a service provider, regulator, policy maker and arbitrator in the case of disputes. However, Telecom Regulatory Authority of India Act, 1997 established Telecom Regulatory Authority of India (TRAI) in January 1997, with a view to providing an effective regulatory framework and adequate safeguards to ensure fair competition in provision of telecom services and protection of consumer interests. To achieve the objectives of the Act, TRAI was accorded powers to issue directions to service providers, make regulations, notify tariffs by Order, and adjudicate in disputes arising between the Government (in its role as service provider) and any other service provider. In 1999, the government created the Department of Telecom Services (DTS) from DOT. This was done ostensibly to separate the service provision component (DTS) from that of policy making (DoT). In October 2000, DTS was corporatised and now operates as BSNL. The DoT, is left with the functions of policy formulation, licensing, wireless spectrum management, administrative monitoring of telecom PSUs, R&D and standardization and validation of telecom equipment. Moreover, on 24 January 2000, an ordinance amended the TRAI Act, 1997 and altered its basic structure. The adjudicatory role of the TRAI has been separated and has been assigned to a Telecom Dispute Settlement and Appellate Tribunal (TDSAT), a new entity. This Tribunal has also been given the responsibility for settling disputes with respect to those arising between the licensor and licensee. Furthermore, appeals against TDSAT judgements will only be entertained in the Supreme Court.

India accounts for the highest mobile subscriber additions globally. It is the fastest growing market in the world.

37584India is worlds second largest wireless market

Mobile Tariffs in India one of the LowestUSD

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Basic Services OperatorsBSNLMTNLMajor Players in different segments of Indian telecom industryRelianceTTSLGSM Services OperatorsAirtelVodafoneIdeaRelianceTTSLBSNLCDMA Services OperatorsRelianceInternet Services OperatorsBSNLMTNLRelianceTTSLBSNLAirtelTTSL Tata Teleservices Ltd.MOBILE SERVICESBSNL Bharat Sanchar Nigam Ltd.MTNL Mahanagar Telecom Nigam Ltd. TATA DOCOMO

*Apart from the existing players in the market, new players are also comming,Etisalat,Data com telecom,MTS,STEL

CDMA vs GSMGSM (Global System for Mobile Communication)cheaper & wide variety of handsets.74% market shareFrequency is less ( 900 & 1800 mhz)CDMA (Code Division Multiple Access)Based on a spread-spectrum technologyLow acceptability & few variety of handsetsFrequency is higher as compared to GSM

Market ShareHighly competitive market place, new licenses waiting

More no of operators (12 to 14) leading to fierce & cut throat competitionMargins are decliningBreak Even period is getting delayedStringent Regulatory normsNon-roll out of services by some operators who bought the spectrumMore no of players in the industry , will lead to consolidation.DoT reviewing the current trends and relaxing norms on exit clause for the operators who bought spectrum and not able to rollout the services (Refer Economic Time 30th August 2010)

Emerging Trends in Telecom

Lot of scope for rural penetrationLow cost of handsetsDual SIM hand setValue-Added Services (VAS) Market is expected to reach 13% by 2013 from current level of 8 to 10%.Mobile commerce, Mobile TV, Stock Trading, Internet Access.3G servicesTele-medicineManufacturing of a vast range of telecom equipment

Growth avenues

Slow reform process. Low rural penetration 18% against 80% in Urban area. Huge initial cost to make inroads and delayed break-even . Limited spectrum availability interconnection charges between operators.

Bottlenecks for Indian Telecom Industry

Cost & Management Audit Resource planning and cost control using various costing tools.Strategic decision making in business operationsFinancial planning & treasury management.Project management & consultancyDeveloping system & process.Developing Management Information Systems (MIS)In Telecom: Accounts dept, Business Finance, Business planning & analyticsRevenue Assurance, Billing Team etc.

Role of Management Accountant

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Integrity & Hard Work Knowledge of the domainTechnical skills ( Computer , Excel,SAP,PPT etc.)Business AcumenCustomer focusResult orientationInitiative with speedPositive attitudeWillingness to learn

To achieve success in professional life you should have

Integrity : Every Finance guy posses integrity. Integrity means an attitude of straightforwardness, honesty, sincerity, uprightness and reliability. He should not be biased in taking decisions. As a Finance resource we always deal with money, once money goes from Company it is very difficult to get it back. Should not commit fraud (Eg. Satyam computers)

Hard work: Though initially it may not reward, in the long run every one must recognize Integrity and Hard work. Whenever you feel that situation is going beyond your control immediately escalate to your supervisor.

Accounting Knowledge (Book Keeping): Should be well versed with the Accounting Principles and Accounting Standards, should always keep update on Statutory requirements.

Finance: Cost Benefit Analysis nothing but Business Acumen

*

Thank you
Sanjay Prasad Kedia
B.Com(Hons),LLB,FICWA

mail me : skedia.hyd@gmail.com

*The main aim of the Telecom Regulatory Authority of India is to ensure that telecom network markets operate for the benefit of users and economies overall. Regulators should be independent from day to day politics and the industry so that their actions and decisions are completely impartial. An important aspect of the regulators role is to regulate markets which are not competitive to safeguard the interests of competitors and consumers.

Prior to liberalization in the 90s, the DoT acted as a service provider, regulator, policy maker and arbitrator in the case of disputes. However, Telecom Regulatory Authority of India Act, 1997 established Telecom Regulatory Authority of India (TRAI) in January 1997, with a view to providing an effective regulatory framework and adequate safeguards to ensure fair competition in provision of telecom services and protection of consumer interests. To achieve the objectives of the Act, TRAI was accorded powers to issue directions to service providers, make regulations, notify tariffs by Order, and adjudicate in disputes arising between the Government (in its role as service provider) and any other service provider. In 1999, the government created the Department of Telecom Services (DTS) from DOT. This was done ostensibly to separate the service provision component (DTS) from that of policy making (DoT). In October 2000, DTS was corporatised and now operates as BSNL. The DoT, is left with the functions of policy formulation, licensing, wireless spectrum management, administrative monitoring of telecom PSUs, R&D and standardization and validation of telecom equipment. Moreover, on 24 January 2000, an ordinance amended the TRAI Act, 1997 and altered its basic structure. The adjudicatory role of the TRAI has been separated and has been assigned to a Telecom Dispute Settlement and Appellate Tribunal (TDSAT), a new entity. This Tribunal has also been given the responsibility for settling disputes with respect to those arising between the licensor and licensee. Furthermore, appeals against TDSAT judgements will only be entertained in the Supreme Court.

*Apart from the existing players in the market, new players are also comming,Etisalat,Data com telecom,MTS,STEL

*Integrity : Every Finance guy posses integrity. Integrity means an attitude of straightforwardness, honesty, sincerity, uprightness and reliability. He should not be biased in taking decisions. As a Finance resource we always deal with money, once money goes from Company it is very difficult to get it back. Should not commit fraud (Eg. Satyam computers)

Hard work: Though initially it may not reward, in the long run every one must recognize Integrity and Hard work. Whenever you feel that situation is going beyond your control immediately escalate to your supervisor.

Accounting Knowledge (Book Keeping): Should be well versed with the Accounting Principles and Accounting Standards, should always keep update on Statutory requirements.

Finance: Cost Benefit Analysis nothing but Business Acumen

*