dynamism in telecom industry
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Dynamics of Indian Telecom Industry
Research ReportBy
Jyothin Madari
2
Executive Summary Third largest telecom network in the world Fastest growing – Forecasted CAGR growth
rate of over 15.3% by the end of 2012 Monthly additions of above 8 million
subscribers Growth impetus from wireless segment with
84% wireless and 16% wired National teledensity at 22%, rural teledensity
at 7%, while urban at 57% 9 million Internet and 2.5 million broadband
subscribers Six major operators and eight minor operators
3
Future Outlook Need for massive investments in infrastructure
development – expected to require 330,000 network towers from the present 100,000
Decrease in wireline subscriber base however strong growth in mobile subscriber base
Improvements in mobile quality of service, quick service delivery, affordable pricing plans, and lower handset costs.
VAS* - Key revenue stream for mobile operators Broadband penetration is low => high growth
expected New Technologies paving the way for new services,
additional revenue streams and rural penetration
* Value added-Service
4
Market Forces/Growth Drivers
Subscribers
Infrastructure/Equipment
BurgeoningMiddleClass
BoomingKnowledge
Sector High GDPGrowth
RisingIncomeLevels
GrowingUrbanization
YoungerPopulation
Handsets
Service Providers
Growth
Macro Economic Factors
Industry Specific Factors
5
Market Size & Growth Currently valued at $100B Telephone coverage in India rose to 34.5% in
Jan ’09 from 33.23% in Dec ’08. Growth spurred by fall in tariffs and fall in
handset prices Wireless accounts for nearly 70% of the total
telephone subscriber base Total telecom subscribers growth rate during
quarter ending March 2009 – 11.68% Total wireline subscribers growth rate for
quarter ending March 2009 – 0.15%
6
Subscriber BaseTotal Telecom Subscribers (Wireline+Wireless)*
Total Subscribers 429.72 Million
% Growth QoQ 11.68%
Urban Subscribers 309.43 Million (72%)
Rural Subscribers 120.29 Million (28%)
Overall Teledensity 36.98
Urban Teledensity 88.66
Rural Teledensity 14.8
* All figures for March end 2009
7
Teledensity
20.7426.88
39.4548.52
66.39
81.06
135
7.02 8.95 12.7418.31
26.2233.23
58
1.57 1.73 1.83 5.38 9.46 13.13
25
0
20
40
60
80
100
120
140
160
2004 2005 2006 2007 2008 2008 (Dec) 2012
(%)
Urban Total Rural
8
Service TypesFixed-line
Mobile
Broadband
Internet Subscribers
9
ICT* Statistics
Fixed Telephone lines per 100 inhabitants : 3.5
Mobile subscribers per 100 inhabitants: 18.4
Internet subscribers per 100 inhabitants: 0.8
Broadband subscribers per 100 inhabitants: 0.22
* Information and Communication Technology
10
Subscriber Base (Fixed-line and Mobile)
40 39 39.42 38 37.9 37.75 37.96
100150
192.87 229 250325
462
0
100
200
300
400
500
600
2006 Jun-07 Jul-07 Dec-07 Dec-08 Jan-09 2010
Num
ber
of Subsc
riber
s (i
n m
illions)
Fixed-line Mobile
11
Subscriber Base (Broadband and Internet)
0.18
1.352.34
3.13.87
5.456.22
56
8
10.411
12.8513.54
0
2
4
6
8
10
12
14
162005
2006
2007
2007
(Dec
)
2008
(Jan
)
2008
(Dec
)
2009
(Mar
)
Num
ber
of Subsc
riber
s (i
n m
illions)
Broadband Internet
12
Fixed-line Telecom MarketTotal Wireline Subscribers 37.96 Million
% Growth QoQ 0.15%
Urban Wireline Subscribers 27.38 Million (72.13%)
Rural Wireline Subscribers 10.58 Million (27.87%)
Village Public Telephones (VPT) 5.61 Million
Public Call Office (PCO) 6.20 Million
All figures for March end 2009
13
Operator wise Market Share of Fixed-line Service
Urban+Rural Fixed-line Operators
BSNL77.30%
MTNL9.41%
Other Private
Operators13.29%
Urban Fixed-line Operators
BSNL69.00%
Other Private18.00%
MTNL13.00%
Rural Fixed-line Operators
Other Private0.35%
BSNL99.65%
14
Mobile Telecom MarketTotal Wireless Subscribers 391.76 Million
% Growth QoQ 12.93%
Urban Wireless Subscribers 282.05 Million (72%)
Rural Wireless Subscribers 109.71 Million (28%)
GSM Subscribers 297.26 Million (75.88%)
CDMA Subscribers 94.50 Million (24.12%)
All figures for March end 2009
15
Development and Penetration
3.1 5.0510.5
22
37.4
58.5
105.4
180
0.86.4 10.9
19.1
44.2
85
0
20
40
60
80
100
120
140
160
180
200
2000 2001 2002 2003 2004 2005 2006 2007
(millions)
GSM Subscriptions CDMA Subscriptions
16
Operator wise Total Market Share of Mobile Service
Bharati Airtel23.97%
Reliance18.56%
Vodafone17.55%
BSNL13.31%
Tata9.93%
Idea8.96%
Aircel4.73%
Others2.99%
17
GSM vs. CDMAStatistic* GSM CDMAShare of Prepaid 94% 0.7%Incoming Minutes of Usage per subscriber per month
249 192
Outgoing Minutes of Usage per subscriber per month
235 164
Outgoing SMS per subscriber per month
30 10
ARPU# $4 $2# Average Revenue Per User *March End 2009
18
Operator-wise Market Share of GSM
BPL0.73%
Bharati31.60%
BSNL15.71%
Idea13.08%
Spice1.39%
Vodafone23.13%
Reliance6.73%
Aircel6.22%
MTNL1.41%
19
Operator-wise Market Share of CDMA
Reliance55.72%
Tata Teleservices37.16%
HFCL0.41%
MTNL0.32%
Shyam Telelink0.63%
BSNL5.76%
20
Internet ServiceTotal Internet Subscribers (including Broadband) 13.54 Million
% Growth QoQ 5.30%
Broadband Subscribers 6.22 Million
Wireless Data Subscribers(i.e. through mobile handsets)
117.82 Million
Total International Bandwidth owned by ISPs 209 GB
Total National Bandwidth owned by ISPs 174GB
All figures for March end 2009
21
Operator wise Market Share of ISPs
MTNL15.69%
BSNL53.62%
Bharati Airtel Ltd.8.01%
Reliance Communications
Infrastructure Ltd.6.91%
Sify Technologies Ltd.2.99%
Tata Communications Internet Services Ltd.
2.72%
Hathway Cable & Datacom Pvt. Ltd.
2.50%
You Telecom Pvt. Ltd.1.47%
Data Infosys Ltd.1.83%Others
4.26%
22
Broadband Service (>= 256 Kbps) Move into high-speed broadband
Internet access has been distinctly slow Broadband penetration still remains at
only around 0.2% Most of the local loops are owned and
operated by state owned service providers, which pose a significant bottleneck for Broadband penetration
Broadband services account for only 25% of the total Internet subscriber base
23
Technology wise Market Share of Broadband Subscribers
5.364
0.4740.244 0.042 0.02 0.074
0
1
2
3
4
5
6
DSL CableModem
EthernetLAN
Fiber Leased Line Other
Subsc
riber
Bas
e (i
n m
illions)
All figures for March end 2009
24
Operator wise Market Share of Broadband Service Providers
BSNL57%
Bharati Airtel13%
You Telecom India Pvt. Ltd.
2%
Sify Limited2%
Tata Communications Internet Services Ltd.
4%
MTNL11%
Hathway Cable & Datacom Pvt. Ltd.
4%
HFCL Infotel Ltd1%
Reliance Communication
Infrastructure Ltd.2%
Others4%
25
ARPU & Pricing Trend India has one of lowest mobile tariffs in
the world resulting in low ARPU ARPU have been on the decline since
2004 due to price wars and increased competition in the mobile telecom sector
ARPUs continue to drop by 5% while tariffs decrease further by 15%
Low tariffs building margin pressure on operators
26
Mobile Pricing/TariffsMobile Tariffs in Absolute terms
0.230.22
0.190.17
0.16
0.11 0.11 0.110.09
0.05 0.05 0.040.03
0.02
0
0.05
0.1
0.15
0.2
0.25
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Pak
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USD
Lowest inIndia
27
Mobile Pricing/Tariffs
Tariff war has intensified in the past few months and competition has reached a new level
The price war has spread to the SMS segment as well, with negative impact on operator revenues
28
ARPUs are fallingEffective margin/ min 2005
1.25
0.25
1.5
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Cost perminute
Margin Effectiverate perminute
Effective Margin/ min 2006
0.87
0.08
0.95
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Cost perminute
Margin Effectiverate perminute
29
VAS (Value – added Services) More Lucrative for operators and content
providers as some VAS at 14c make more money than voice at 3c–4c.
VAS include, SMS, Ring tones, Caller tones Internet Data Access Mobile Commerce On-demand Music, Videos, Animation clips Contests/Voting Gaming Enterprise products (Email, Office, etc.) New Alerts/Match Scores
30
VAS Forecast and Growth
VAS
Revenues $500 million (this includes texting)
Parties involved Media content providers, Mobile operators and aggregators
VAS
Revenues $10 Billion
Parties involved Media content providers, mobile operators, aggregators, banks, Enterprises
2006
Forecast 2009-2010
31
Leading VAS and mobile application service providers
Indiagames
OnMobile
Mobile-2-Win
IMImobile
HungamaMobile
Mauj.com
VAS
32
Telecom Administrative Framework Total of 22
circles 4 Metros 5 ‘A’ Circles 8 ‘B’ Circles 6 ‘C’ Circles
Each circle has LDCAs (Long Distance Charging Areas) and SDCAs (Short Distance Charging Areas)
33
Telecom Regulatory Bodies
Government of India
Ministry of Communications &Information Technology
TDSAT DoT TRAI
State ownedoperators
PrivateOperators
License Fees/Spectrum Charges
Timely policy and regulatory interventionhas ensured that Sector development has stayed on track.
34
Regulatory Bodies – Key Responsibilities
Agency Key Responsibilities
Department of Telecommunications (DoT)
Policy Formulation, licensing, wireless spectrum/frequency management Enforcement of wireless regulatory measurement Standardization/validation of equipment, R&D, etc.
Telecom Regulatory Authority of India (TRAI)
Mandate for Tariffs, Interconnection, Standards for quality of service Recommendatory: Licensing Timing, terms & conditions, License revocation, competition facilitation, etc.
Telecom Disputes Settlement & Appellate Tribunal (TDSAT)
Adjucation and disposal of disputes between service providers and/or a group of consumers
35
Upcoming Technologies and Growth Areas
3G WiMax Network Infrastructure Telecom Equipment Exports Handsets
36
3G
MTNL and BSNL have launched 3G services
Other Private players are yet to obtain licenses
Expensive affair for operators to upgrade to 3G
3G equipment upgrades will be high
37
WiMax
The total base station equipment market is estimated to be between $50 million and $120 million for WiMax
Projected total WiMax connections by 2012: 6.9 million
38
Network Infrastructure
The industry needs to add additional capacity to sustain growth
Continuing trend towards import of telecom equipment
Shared Wireless infrastructure like, share tower services, help reduce operator costs by 15-18%
39
Telecom Equipment Exports
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
2006 2007 2008 2012(Projected)
(in R
s. C
rore
)
Exports fueled by localTelecom equipment
manufacturers
40
Handsets – Market Share
Total (GSM+CDMA)
Others8.40%
Sony-Erricson6.80%
Samsung9.50%
Nokia53.70%
LG14.40%
Motorola7.20%
GSMOthers7.30%
Sony-Erricson8.90%
Samsung
9.00%
LG4.40%
Motorola
7.80%
Nokia62.60%
CDMAOthers11.50%
Nokia24.30%
Samsung11.20%
Motorola5.40%
LG47.60%
Feedback/Questions
42
Sources/References Capacity Building Workshop on information Society
Statistics, 2007 Future Trends in Indian Telecom, 2005 Mobile Services to Mobilize Indian Telecom Sector, 2008 Indian Telecom Sector, www.mas.net.in Indian Telecom Analysis, Report Summary, 2009 Experiences in Telecom Sector Regulation in India, 2008 Indian Broadband Wireless and WiMax Market Analysis
& Forecasts 2007-2014, 2007 Indian Telecom Statistics Forecast, 2003-2007