Chapter 1

INTRODUCTION

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1.1 Telecommunications Industry in India

India's telecommunication network is the second largest in the world based on the total number

of telephone users. It has one of the lowest call tariffs in the world enabled by the mega

telephone networks and hyper-competition among them. It has the world's third-largest Internet

user-base. According to the Internet and Mobile Association of India, the Internet user base

in the country stood at 190 million at the end of June, 2013. Major sectors of the Indian

telecommunication industry are telephony, internet and television broadcast Industry in the

country which is in an ongoing process of transforming into next generation network, employs

an extensive system of modern network elements.

such as digital telephone exchanges, mobile switching centers, media gateways and gateways at

the core, interconnected by a wide variety of transmission systems using fibre-

optics or Microwave radio relay networks. The access network, which connects the subscriber to

the core, is highly diversified with different copper-pair, optic-fiber and wireless

technologies. DTH, a relatively new broadcasting technology has attained significant popularity

in the Television segment.

The introduction of private FM has given a fillip to the radio broadcasting in India.

Telecommunication in India has greatly been supported by the INSAT system of the country,

one of the largest domestic satellite systems in the world. India possesses a diversified

communications system, which links all parts of the country by telephone, Internet, radio,

television and satellite.

Telecommunication has supported the socioeconomic development of India and has played a

significant role to narrow down the rural-urban digital divide to some extent. It also has helped to

increase the transparency of governance with the introduction of e-governance in India. The

government has pragmatically used modern telecommunication facilities to deliver mass

education programmes for the rural folk of India.

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1.2 History of telecommunication industry

The history of Indian telecom can be started with the introduction of telegraph. The Indian postal

and telecom sectors are one of the world’s oldest. In 1850, the first experimental electric

telegraph line was started between Calcutta and Diamond Harbour. In 1851, it was opened for

the use of the British East India Company. The Posts and Telegraphs department occupied a

small corner of the Public Works Department

The construction of 4,000 miles (6,400 km) of telegraph lines connecting Kolkata and Peshawar

in the north along with Agra, Mumbai  through Sindwa Ghats, and Chennai  in the south, as well

as Ootacamund and Bangalore was started in November 1853. William O'Shaughnessy, who

pioneered the telegraph and telephone in India, belonged to the Public Works Department, and

worked towards the development of telecom throughout this period. A separate department was

opened in 1854 when telegraph facilities were opened to the public

In year 1880, two telephone companies namely The Oriental Telephone Company Ltd. and The

Anglo-Indian Telephone Company Ltd. approached the Government of India to

establish telephone exchanges in India. The permission was refused on the grounds that the

establishment of telephones was a Government monopoly and that the Government itself would

undertake the work.

In 1881, the Government later reversed its earlier decision and a license was granted to

the Oriental Telephone Company Limited of England for opening telephone exchanges

at Calcutta, Bombay, Madras and Ahmadabad and the first formal telephone service was

established in the country. On 28 January 1882, Major E. Baring, Member of the Governor

General of India's Council declared open the Telephone Exchanges in Calcutta, Bombay and

Madras. The exchange in Calcutta named the "Central Exchange" had a total of 93 subscribers in

its early stage. Later that year, Bombay also witnessed the opening of a telephone exchange.

Liberalization of Indian telecommunication industry started in 1981 when Prime Minister Indira

Gandhi signed contracts with Alcatel CIT of France to merge with the state owned Telecom

Company, in an effort to set up 5,000,000 lines per year. But soon the policy was let down

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because of political opposition. Attempts to liberalize the telecommunication industry were

continued by the following government under the prime-minister-ship of Rajiv Gandhi. He

invited Sam Pitroda, a US-based Non-resident Indian NRI and a former Rockwell

International executive to set up a Centre for Development of Telematics which manufactured

electronic telephone exchanges in India for the first time. Sam Pitroda had a significant role as a

consultant and adviser in the development of telecommunication in India.

In 1985, the Department of Telecom was separated from Indian Post & Telecommunication

Department. DoT was responsible for telecom services in entire country until 1986 when Mahan

agar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were

carved out of DoT to run the telecom services of metro cities(Delhi and Mumbai) and

international long distance operations respectively.

The demand for telephones was ever increasing and in the 1990s Indian government was under

increasing pressure to open up the telecom sector for private investment as a part

of Liberalisation-Privatisation-Globalisation policies that the government had to accept to

overcome the severe fiscal crisis and resultant balance issue in 1991. Consequently, private

investment in the sector of Value Added Services (VAS) was allowed and cellular telecom sector

were opened up for competition from private investments.

Telecom Regulatory Authority of India (TRAI) was created in 1997. It was formed to act as a

regulator to facilitate the growth of the telecom sector. It was during this period that

the Narsimha Rao-led government introduced the National Telecommunications policy (NTP) in

1994 which brought changes in the following areas:

Ownership, service and regulation of telecommunications infrastructure. The policy introduced

the concept of telecommunication for all and its vision was to expand the telecommunication

facilities to all the villages in India. Liberalization in the basic telecom sector was also envisaged

in this policy. They were also successful in establishing joint ventures between state owned

telecom companies and international players. Foreign firms were eligible to 49% of the total

stake. The multi-nationals were just involved in technology transfer, and not policy making.

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Milestone achieve by Telecom Industry

1902 – First wireless telegraph station established

1907 – First Central Battery of telephones introduced in Kanpur

1913–1914 – First Automatic Exchange installed in Shimla

1927 – Radio-telegraph system between the UK and India

1933 – Radiotelephone system inaugurated between the UK and India.

1953 – 12 channel carrier system introduced.

1975 – First PCM system commissioned between Mumbai City and Andheri

1983 – First analogue Stored Programme Control exchange for trunk lines commission.

1995 – First mobile telephone service started on non-commercial basis on 15 August 1995.

1995 – Internet Introduced in India starting with laxmi nagar Delhi on 15 August 1999.

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1.3 Major sectors of Telecommunication Industry of India

The Indian Telecommunication industry is consisted of 4 sectors. Viz. Telephony, Internet, Data

centers and Broadcasting. The in-depth explanation of these sectors is given below.

1.3.1 Telephony

The telephony segment is dominated by private-sector and two state-run businesses. Most

companies were formed by a recent revolution and restructuring launched within a decade,

directed by ministry of communication and it.

Since then, most companies gained 2G, 3G and 4G licenses and engaged fixed-line, mobile and

internet business in India. On landlines, intra-circle calls are considered local calls while inter-

circle are considered long distance calls. Foreign Direct Investment policy which increased the

foreign ownership cap from 49% to 74%.Now it is 100%.

Currently Government is working to integrate the whole country in one telecom circle. For long

distance calls, the area code prefixed with a zero is dialed first which is then followed by the

number. For international calls, "00" must be dialed first followed by the  code, area and

local phone number. The country code for India is 91. Several international fiber-optic links

include those to Japan, South Korea, Hong Kong, Russia, and Germany. Some major telecom

operators in India include Airtel, Vodafone, Idea, Aircel, BSNL, MTNL, Reliance

Communications, TATA Teleservices, Infotel, MTS, Uninor, TATA DoComo, Videocon,

Augere, Tikona Digital.

1.3.2 Fixed Telephony

Until the New Telecom Policy announced by Government-owned BSNL and MTNL were

allowed to provide land-line phone services through copper wire in India with MTNL operating

in Delhi and Mumbai and BSNL servicing all other areas of the country. Due to the rapid growth

of the cellular phone industry in India, landlines are facing stiff competition from cellular

operators. This has forced land-line service providers to become more efficient and improve their

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quality of service. Land-line connections are now also available on demand, even in high density

urban areas. India has over 31 million main line customers.

1.3.3 Mobile telephony

In August 1995, Chief Minister of West Bengal, Shri Abhishek Yadav ushered in the cell phone

revolution in India by making the first call to Union Telecom Minister Sukhram. Sixteen years

later 4th generation services were launched in Kolkata.

With a subscriber base of more than 929 million, the Mobile telecommunications system in India

is the second largest in the world and it was thrown open to private players in the 1990s. GSM

was comfortably maintaining its position as the dominant mobile technology with 80% of the

mobile subscriber market, but CDMA seemed to have stabilised its market share at 20% for the

time being. By May 2012 the country had 929 million mobile subscribers, up from 350 million

just 40 months earlier. The mobile market was continuing to expand at an annual rate in excess

of 40% coming into 2010.

The country is divided into multiple zones, called circles. Government and several private

players run local and long distance telephone services. Competition has caused prices to drop

and calls across India are one of the cheapest in the world. The rates are supposed to go down

further with new measures to be taken by the Information Ministry. In September 2004, the

number of mobile phone connexions crossed the number of fixed-line connexions and presently

dwarfs the wire line segment by a ratio of around 20:1. The mobile subscriber base has grown by

a factor of over a hundred and thirty, from 5 million subscribers in 2001 to over 929 million

subscribers as of May 2012.

India primarily follows the GSM mobile system, in the 900 MHz band. Recent operators also

operate in the 1800 MHz band. The dominant players are Airtel, Reliance

Infocomm, Vodafone, Idea cellular and BSNL/MTNL. There are many smaller players, with

operations in only a few states. International roaming agreements exist between most operators

and many foreign carriers. The government allowed Mobile number portability (MNP) which

enables mobile telephone users to retain their mobile telephone numbers when changing from

one mobile network operator to another.

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1.3.4 Internet

The history of the Internet in India started with launch of services by VSNL on 15 August 1995.

They were able to add about 10,000 Internet users within 6 months. However, for the next 10

years the Internet experience in the country remained less attractive with narrow-band

connections having speeds less than 56 kbit/s. In 2004, the government formulated its broadband

policy which defined broadband as "an always-on Internet connection with download speed of

256 kbit/s or above." From 2005 onward the growth of the broadband sector in the country

accelerated, but remained below the growth estimates of the government and related agencies

due to resource issues in last-mile access which were predominantly wired-line technologies.

This bottleneck was removed in 2010 when the government auctioned 3G spectrum followed by

an equally high profile auction of 4G spectrum that set the scene for a competitive and

invigorated wireless broadband market. Now Internet access in India is provided by both public

and private companies using a variety of technologies and media including dial-up,xDSL,

coaxial cable, Ethernet, FTTH, ISDN, HSDPA (3G), WiFi, WiMAX, etc. at a wide range of

speeds and costs. The country has the world's third largest number of Internet users with over

205 million in October, 2013.

Wireless Internet

2nd Generation Internet is the most prevalent in India. Wireless ISPs in India use

both CDMA and Edge technologies for 2G.

India's wireless Internet frequencies are

2G : GSM 900 MHz, GSM 1800 MHz

3G : UMTS 2100 MHz

4G : TD-LTE 2300 MHz

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1.3.5 Broadcasting

Television broadcasting began in India in 1959 by Doordarshan, a state run medium of

communication, and had slow expansion for more than two decades. The policy reforms of the

government in the 1990s attracted private initiatives in this sector, and since then, satellite

television has increasingly shaped popular culture and Indian society. However, still, only the

government owned Doordarshan has the license for terrestrial television broadcast. Private

companies reach the public using satellite channels; both cable television as well as DTH has

obtained a wide subscriber base in India. In 2012, India had about 148 million TV homes of

which 126 million has access to cable and satellite services.

Giving rise to several channels in regional languages, especially Hindi. The main news channels

available were CNN and BBC World. In the late 1990s, many current affairs and news channels

sprouted, becoming immensely popular because of the alternative viewpoint they offered

compared to Doordarshan.

Some of the notable ones are AajTak and STAR News, CNN-IBN, Times Now, initially run by

the NDTV group and their lead anchor, Prannoy Roy. Over the years, Doordarshan services also

have grown from a single national channel to six national and eleven regional channels.

Nonetheless, it has lost the leadership in market, though it underwent many phases of

modernization in order to contain tough competition from private channels.

On 16 November 2006, the Government of India released the radio policy which allowed

agricultural centers, educational institutions and civil society organizations to apply for

community based FM broadcasting license. Community Radio is allowed 100 watts of Effective

Radiated Power with a maximum tower height of 30 meters. The license is valid for five years

and one organization can only get one license, which is non-transferable and to be used for

community development purposes.

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1.4 Segments in the Telecommunication Industry

Telecommunication services in India can be divided into two broad segments, wire line services

and wireless services. While the wire line services include the fixed line telephony, wireless

services comprise mobile, WLL (F) and WLL (M). On the whole, the Indian telecom industry

has made significant progress; however, the source of emergence of this growth in terms of

wireless and wire line segments has undergone substantial change in the past few years. The wire

line segment, which accounted for a major share of the telecom industry during beginning of the

current decade, has witnessed a decline in its subscriber base in the last 2 years. The subscriber

base of the wire line segment, which reached a peak of 41.54 mn during FY06, has witnessed a

declining trend since then. The subscriber base of the wire line segment has declined to 37.96 mn

in FY09 from its peak in FY06. On the other hand, the growth in subscriber base of the wireless

segment has increased substantially over these years. The subscriber base of the wireless

segment has increased from around 6.70 mn in FY02 to as much as 391.76 mn in FY09. Over

these years, not only the number of wireless subscribers but also the pace of its growth has

increased substantially.

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Other telecommunication services such as internet services, broadband services, VSAT, also

have evolved gradually and have become an integral part of the Indian telecom industry. Thus,

broadly the Indian telecommunication industry can be classified into the following segments:

Wire line services

Wireless service: GSM and CDMA

Internet services

Public Mobile Radio Trunked Services

Global Mobile Personal Communication by Satellite (GMPCS)

Very Small Aperture Terminals (VSAT)

Mobile Value Added Services

Wire line

Market share in the wire line subscription as on February, 2012

In the basic telecom services or wire line services the incumbent — Bharat Sanchar Nigam

Limited (BSNL) has the majority share in the market. This is due to the expanse of the

infrastructure available to the incumbent, and its ability to provide basic telecom services in the

rural and remote areas. The private wire line service providers do not have the capital to invest in

building such infrastructure and there is no profit in such capital investment as well. Therefore,

the private players mainly concentrate in urban areas where they can earn more revenue.

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Wireless

Market share in the wireless subscription as on February, 2012

The pie chart clearly shows that currently the private sector dominates the cellular market.

However, this was not the case in the beginning. The changes in the market structure were due to

the changes in telecom policy in 1999. The growth rate of number of wireless subscribers from

1996-2011 in the graph below, clearly depicts the growth in wireless subscribers after the change

in policy in 1999. Currently, the three main players in the mobile services sector are Vodafone,

Reliance and Bharti

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1.5 Role in India’s Development

Contribution to GDP

According to the UNCTAD, there is a direct correlation between the growth in mobile

teledensity and the growth in GDP per capita in developing countries, which tend to have a high

percentage of rural population. The share of the telecom services industry in the total GDP has

been rising over the past few years (the telecom sector contribution in GDP went up from 2.52%

in FY05 to 2.83% in FY07).

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Employment

The Indian telecommunication industry employs over 400,000 direct employees

and about 85% of these employees are from government-owned companies. The

ratio of number of subscribers to employees, an indication of efficiency and

profitability, is much higher for private companies than for government companies.

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1.6 Current Structure of the Indian Telecom Industry

Currently, both public sector players as well as the private sector players are actively catering to

the rapidly growing telecommunication needs in India. Private participation is permitted in all

segments of the telecom industry, including ILD, DLD, basic cellular, internet, radio paging, et

al. The broad structure of the telecom industry (in terms of service providers) is depicted in the

diagram below:

Public Sector:

After the privatization of VSNL in 2002, only two premier PSUs, MTNL and BSNL operate in

India and provide various telecom services. As noted earlier, MTNL operates in Delhi and

Mumbai and BSNL provides services to the remaining country. In the post-liberalization era,

these PSUs not only have made significant progress but also have provided stiff competition to

their private counterparts.

Private Sector:

Private operators have played a very crucial role in the growth of the telecommunication

industry, primarily in the mobile services. With the liberalization of the telecom industry, the

private sector has been increasing its foothold in the telecom services space. After the

introduction of NTP-99, the contribution of private players towards telecom services has

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witnessed rapid strides. While the private sector is instrumental in providing both fixed line as

well as wireless services, it is mainly active in the wireless segment. The fixed lines account for

only about 2% of private sector's total subscriber base. While some private players have a pan-

India presence, there are many regional players that cater to only certain service areas.

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1.7 Dominant feature of economic in Telecommunication Industry

1.7.1 Market size & Growth rate:

India’s GSM operators added 2.58 million rural subscribers in April 2014, taking the total to

297.16 million. Also, Cellular Operators Authority of India’s (COAI) data suggests that the

overall GSM subscriber base increased by 4.97 million in April 2014 taking the total GSM

subscriber base to 726.90 million customers.

The COAI data also suggests that telecom provider Bharti Airtel provided the most number of

customers in the month of April, about 990,000 new subscribers followed by Vodafone and Idea

Cellular.

It has been predicted by Ericsson that India's mobile subscriber base will grow from 795 million

in 2013 to 1145 million subscribers by 2020.

Data traffic powered by third-generation (3G) services grew at 146 per cent in India in 2013,

higher than the global average, according to an MBit Index study by Nokia Siemens Networks

(NSN).

With Bharti Airtel becoming the second largest telecommunications provider in Nigeria and Tata

Communications entering into strategic partnerships with countries such as Australia, Germany,

Austria and Malaysia, it can be observed that Indian telecommunication providers are doing

quite well in the global market.

1.7.2 Scope of competitive rivalry

The Hirschman-Herfindahl Index (HHI) for the Indian telecom industry stands at 1421.29 which

indicate a highly contestable but oligopolic industry. Moreover, the concentration of top four

firms at 66% also confirms this hypothesis. 

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1.7.3 Number of rivals

1.7.4 Technological change

Wireless technology is based on two competing platforms GSM and CDMA. Accordingly,

players have united themselves in lobbying with GSM service providers represented by Cellular

Operators Association of India (COAI) and CDMAs by Association of Unified Telecom Service

Providers of India (AUSPI). With each technology possessing inherent advantages as well as

disadvantages, it presents a difficult proposition for a new entrant to decide on its offering.

1.7.5 Vertical integration

The combination in one firm of two or more stages of production normally operated by separate

firms.

In microeconomics and management, vertical integration is where the supply chain of a company

is owned by that company. Usually each member of the supply chain produces a

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Types of playerBSNLMTNL

different product or (market-specific) service, and the products combine to satisfy a common

need. It is contrasted with horizontal integration. Vertical integration has also described

management styles that bring large portions of the supply chain not only under a common

ownership

There are three varieties: backward (upstream) vertical integration, forward (downstream)

vertical integration, and balanced (both upstream and downstream) vertical integration.

Telephone companies in most of the 20th century, especially the largest (the Bell System) were

integrated, making their own telephones, telephone cables, telephone exchange equipment and

other supplies.

1.7.6 Product Innovation

As technological convergence redefines business models across nearly every industry,

companies have a growing appetite for innovation in order to survive and thrive in a fast-paced

and unpredictable environment. While few business leaders question the need for innovation,

many companies face numerous challenges when it comes to applying it successfully to drive

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Degree of product differentiate

The market can be divided into household and industrial consumers. Additionally, they can be

differentiated as either pre-paid or post-paid users. In case of post-paid users, customers exercise

certain degree of loyalty because of high switching costs. Also, the industrial users have

customized offerings from service providers that bind them. For household customers, TRAI’s

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recommendation on MPN (Mobile Number Portability) has made it all the more important for

the companies to charge lower tariffs besides providing better services to retain subscribers.

Economies of Scale:

Existing players enjoy certain degrees of economies of scale that help them offer lower unit

pricing to customers. A notable part of the investments are one-time and are referred to as “sunk

costs” i.e operator can only exit this particular market at considerable costs. Investments in

telecom networks can be divided for the following functional elements:

-Terminal equipment

-Access Network

-Switching

-Transmission/Long line

-Other (buildings etc.)

The biggest barrier is the availability for credit financing which is highly dependent on many

external factors. However, to minimize this high deployment costs, service providers have

started considering infrastructure sharing, which has been discussed in Industry Transformation.

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1.8 Conclusion

In the given chapter we are studying about basic information of telecommunication industry in

India and their history, growth, various milestone achieved by this industry and also understand

about telephony, internet, and broadcasting. The graphical and numerical explanation of this

industry also cover in this chapter. We are also study about current situation of

telecommunication industry India and further we want to study about major players of this

industry in next chapter.

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Chapter : 2

Major Player of the industry

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2.1 Vodafone

Vodafone Group plc is a British multinational telecommunications company headquartered

in London and with its registered office in Newbury, Berkshire.] It is the world's 3rd-largest

mobile telecommunications company measured by both subscribers and 2013 revenues (in each

case behind China Mobile and SingTel), and had 434 million subscribers as of 31 March 2014.

Vodafone owns and operates networks in 21 countries and has partner networks in over 40

additional countries.[4] Its Vodafone Global Enterprise division provides telecommunications and

IT services to corporate clients in over 65 countries.

Vodafone has a primary listing on the London Stock Exchange and is a constituent of the FTSE

100 Index. It had a market capitalization of approximately £89.1 billion as of 6 July 2012, the

third-largest of any company listed on the London Stock Exchange.[5] It has a secondary listing

on NASDAQ.

Evolution as a Racal Telecom brand: 1980 to 1991

In 1980, Sir Ernest Harrison OBE, the then chairman of Racal Electronics plc. agreed to a deal

with Lord Weinstock of General Electric Company plc to allow Racal to access some of GEC's

tactical battle field radio technology. The head of Racal's military radio division – Gerry

Whent was briefed by Ernest Harrison to drive the company into commercial mobile radio.

Whent visited GE’s mobile radio factory in Virginia, USA the same year to understand the

commercial use of military radio technology.

Previously in 1979, Jan Stenbeck, a head of a growing Swedish conglomerate, set up an

American company, Millicom, Inc., to pursue mobile communications by applying for licences

in the United States

In the summer of 1982, Stenbeck approached Racal’s Whent about bidding jointly for the UK’s

second cellular radio licence, soon to be awarded, the first going by prior arrangement to British

Telecom. The two struck a deal giving Racal 60% of the new company, Racal-Millicom, Ltd,

and Millicom 40%. Due to UK concerns about foreign ownership, the terms were revised, and in

December 1982, the Racal-Milicom partnership was awarded the second UK mobile phone

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network license. Final ownership of Racal-Millicom, Ltd was 80% Racal, with Millicom holding

15% plus royalties and venture firm Hambros Technology Trust holding 5%. According to the

UK Secretary of State for Industry, "the bid submitted by Racal-Millicom Ltd… provided the

best prospect for early national coverage by cellular radio.

Vodafone Group, then Vodafone Airtouch plc: 1991 to 2000

On 16 September 1991, Racal Telecom was demerged from Racal Electronics as Vodafone

Group,] with Gerry Whent as its CEO.

In July 1996, Vodafone acquired the two thirds of Talkland it did not already own for

£30.6 million. On 19 November 1996, in a defensive move, Vodafone purchased Peoples

Phone for £77 million, a 181 store chain whose customers were overwhelmingly using

Vodafone's network  In a similar move the company acquired the 80% of Astec Communications

that it did not own, a service provider with 21 stores.

In January 1997, Gerald Whent retired and Christopher Gent took over as the CEO. The same

year, Vodafone introduced its Speechmark logo, composed of a quotation mark in a circle, with

the O's in the Vodafone logotype representing opening and closing quotation marks and

suggesting conversation.

On 29 June 1999, Vodafone completed its purchase of AirTouch Communications, Inc. and

changed its name to Vodafone Airtouch plc. The merged company commenced trading on 30

June 1999. In order to gain anti-trust approval for the merger, Vodafone sold its 17.2% stake

in E-Plus Mobilfunk. The acquisition gave Vodafone a 35% share of Mannesmann, owner of the

largest German mobile network.

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Vodafone Group plc: 2000 to present

On 28 July 2000, the Company reverted to its former name, Vodafone Group plc.

In 2001, the Company acquired Eircell, the largest wireless communications company in Ireland,

from eircom. Eircell was subsequently rebranded as Vodafone Ireland. Vodafone then went on to

acquire Japan's third-largest mobile operator J-Phone, which had introduced camera phones first

in Japan.

On 17 December 2001, Vodafone introduced the concept of "Partner Networks", by

signing TDC Mobil of Denmark. The new concept involved the introduction of Vodafone

international services to the local market, without the need of investment by Vodafone. The

concept would be used to extend the Vodafone brand and services into markets where it does not

have stakes in local operators. Vodafone services would be marketed under the dual-brand

scheme, where the Vodafone brand is added at the end of the local brand.

In 2007, Vodafone entered into a title sponsorship deal with the McLaren Formula One team,

which traded as "Vodafone McLaren Mercedes" until the sponsorship ended at the end of the

2013 season.

In May 2011, Vodafone Group Plc bought the remaining shares of Vodafone Essar from Essar

Group Ltd for $5 billion. On 1 December 2011, it acquired the Reading based Bluefish

Communications Ltd – an ICT consultancy company. The acquired operations formed the

nucleus of a new Unified Communications and Collaboration practice within its subsidiary –

Vodafone Global Enterprise, which will focus on implementing strategies and solutions in cloud

computing, and strengthen its professional services offering.

On 24 June 2013, Vodafone announced it would be buying German cable company Kabel

Deutschland. The takeover is valued at €7.7 billion, and was recommended over the bid of

rival Liberty Global.

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2.2 Bharti Airtel

Bharti Airtel limited is an Indian multinational telecommunications services company

headquartered in New Delhi, India. It operates in 20 countries across South Asia, Africa, and

the Channel Islands. Airtel has a GSM network in all countries in which it operates,

providing 2G, 3G and 4G services depending upon the country of operation. Airtel is the world's

third largest mobile telecommunications company by subscribers, with over 275 million

subscribers across 20 countries as of July 2013. It is the largest cellular service provider in India,

with 192.22 million subscribers as of August 2013. Airtel is the Second largest Asia-Pacific

mobile operator by subscriber base, behind China Mobile.

Airtel is the largest provider of mobile telephony and second largest provider of fixed

telephony in India, and is also a provider of broadband and subscription television services. It

offers its telecom services under the "airtel" brand, and is headed by Sunil Bharti Mittal. Bharti

Airtel is the first Indian telecom service provider to achieve Cisco Gold Certification. It also acts

as a carrier for national and international long distance communication services. The company

has a submarine cable landing station at Chennai, which connects the submarine cable

connecting Chennai and Singapore.

Bharti Airtel added 5.10 lakh subscribers to take its base to 20.97 crore at the end of July,2014.

Its market share in India is highest with a value of 28.41%.

Airtel is credited with pioneering the business strategy of outsourcing all of its business

operations except marketing, sales and finance and building the 'minutes factory' model of low

cost and high volumes. The strategy has since been adopted by several operators. Its network—

base stations, microwave links, etc.—is maintained by Ericsson and Nokia Siemens

Network whereas IT support is provided by IBM and transmission towers are maintained by

another company (Bharti Infratel Ltd. in India) Ericsson agreed for the first time to be paid by

the minute for installation and maintenance of their equipment rather than being paid up front,

which allowed Airtel to provide low call rates of  1/minute .

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Sunil Bharti Mittal founded the Bharti Group. In 1983, Mittal was in an agreement with

Germany's Siemens to manufacture push-button telephone models for the Indian market. In

1986, Mittal incorporated Bharti Telecom Limited (BTL), and his company became the first in

India to offer push-button telephones, establishing the basis of Bharti Enterprises. By the early

1990s, Sunil Mittal had also launched the country's first fax machines and its first cordless

telephones. In 1992, Mittal won a bid to build a cellular phone network in Delhi. In 1995, Mittal

incorporated the cellular operations as Bharti Tele-Ventures and launched service in Delhi. In

1996, cellular service was extended to Himachal Pradesh.

In 1999, Bharti Enterprises acquired control of JT Holdings, and extended cellular operations to

Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of Skycell Communications, in

Chennai. In 2001, the company acquired control of Spice Cell in Calcutta. Bharti Enterprises

went public in 2002, and the company was listed on Bombay Stock Exchange and National

Stock Exchange of India. In 2003, the cellular phone operations were rebranded under the single

Airtel brand. In 2004, Bharti acquired control of Hexacom and entered Rajasthan. In 2005,

Bharti extended its network to Andaman and Nicobar. This expansion allowed it to offer voice

services all across India. In 2009, Airtel launched its first international mobile network in Sri

Lanka. In 2010, Airtel acquired the African operations of the Kuwait-based Zain Telecom. In

March 2012, Airtel launched a mobile operation in Rwanda. 

Airtel launched "Hello Tunes", a Caller ring back tone service, in July 2004 becoming to the first

operator in India to do so. The Airtel theme song, composed by A.R. Rahman, was the most

popular tune on that year.

During the 2009–10 financial year, Bharti negotiated for its strategic partner Alcatel-Lucent to

manage the network infrastructure for the tele-media business. On 31 May 2012, Bharti Airtel

awarded the three-year contract to Alcatel-Lucent for setting up an Internet Protocol access

network (mobile backhaul) across the country. This would help consumers access internet at

faster speed and high quality internet browsing on mobile handsets.

In May 2013, Bharti Infotel paid Rs 50,000 as compensation to a customer "for unfair trade

practices". The customer alleged that the company continued to aggressively demand payment

despite customer requests for disconnection of service.

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2.3 Idea Cellular

Idea Cellular, commonly referred to as Idea, is an Indian mobile network operator based

in Mumbai, India. Idea is a pan-India integrated GSM operator offering 2G and 3G services, and

has its own NLD and ILD operations, and ISP license. With revenue in excess of $4 billion;

revenue market share of nearly 15%; and subscriber base of over 121 million in FY 2013, Idea is

India’s third largest mobile operator. Idea ranks among the top 10 country operators in the world

with a traffic of over 1.5 billion minutes a day.

Initially the Birlas, the Tatas and AT&T Wireless each held one-third equity in the company. But

following AT&T Wireless' merger with Cingular Wireless in 2004, Cingular decided to sell its

32.9% stake in Idea. This stake was bought by both the Tatas and Birlas at 16.45% each.

Tata's foray into the cellular market with its own subsidiary, Tata Indicom, a CDMA-based

mobile provider, cropped differences between the Tatas and the Birlas. This dual holding by the

Tatas also became a major reason for the delay in Idea being granted a license to operate

in Mumbai. This was because as per Department of Telecommunications (DOT) license norms,

one promoter could not have more than 10% stake in two companies operating in the same circle

and Tata Indicom was already operating in Mumbai when Idea filed for its licence.

The Birlas thus approached the DOT and sought its intervention, and the Tatas replied by saying

that they would exit Idea but only for a good price. On 10 April 2006, the Aditya Birla

Group announced its acquisition of the 48.18% stake held by the Tatas at Rs. 40.51 a share

amounting to Rs. 44.06 billion. While 15% of the 48.14% stake was acquired by Aditya Birla

Nuvo, a company in-charge of the Birlas' new business initiatives, the remaining stake was

acquired by Birla TMT holdings Private Ltd., an AV Birla family-owned company.

Currently, Aditya Birla Group holds 49.1% of the total shares of the company. Malaysia

based Axiata controls a 14.99% stake in the company

On 19 May 2010, the 3G spectrum auction in India ended. Idea paid   5,768.59 crore for

spectrum in 11 circles. The circles it will provide 3G in areAndhra

Pradesh, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Kerala, Tamilnadu,Madhya

Pradesh, Maharashtra & Goa, Punjab, Uttar Pradesh (East) and Uttar Pradesh (West).

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On 28 March 2011, Idea launched 3G services in Gujarat, Himachal Pradesh and Madhya

Pradesh.[5] The launch cities were Ahmedabad, Shimlaand Indore. This makes Idea the sixth

private operator (eighth overall) to launch its 3G services in the country following Tata

Docomo, Reliance Communications, Airtel, Aircel and Vodafone.

Idea currently supports up to 21.1 Mbit/s over 2G speeds of 256 kbit/s. However, different

handsets support different speeds, from 384 kbit/s, 3.6 Mbit/s, 7.2 Mbit/s or 21.1 Mbit/s. Speeds

also depend on the 3G plan/recharge that users opt for.

Idea cellular has announced a cut of 70% in the tariff of its 3G services.

On 23 November 2011 Idea Cellular launched two affordable 3G handsets in India: Idea 3G

Smartphone Blade priced at   7,992 and Idea 3G Smartphone priced at   5,850. Both handsets

are based on Android 2.2 Froyo.

Idea has also launched a Dual-SIM Android smartphone in India on 15 June 2012 named as Idea

ID-918 at a price point of Rs. 5,994 ($108 approx.) It features Android v2.3 OS, 3.2-inch

capacitive touchscreen, 3G, Wi-Fi and 3.2 MP rear facing camera.

On 5 March 2013, Idea launched another 3G smartphone called Idea Zeal 3G which is a Dual

SIM phone with 3 Megapixel camera

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2.4 BSNL (Bharat Sanchar Nigam limited)

Bharat Sanchar Nigam Limited is an Indian state-owned telecommunications company

headquartered in New Delhi, India. It was incorporated on 15 September 2000 and took over the

business of providing of telecom services and network management from the erstwhile Central

Government Departments of Telecom Services (DTS) and Telecom Operations , with effect from

1 October 2000 on a going concern basis. It is the largest provider of fixed telephony,

largest broadband services provider with more than 60% Market share, and fourth largest mobile

telephony provider in India. However, in recent years the company's revenues and market share

have plummeted into heavy losses due to intense competition in the Indian telecommunications

sector.

BSNL is India's oldest and largest communication service provider (CSP). It had a customer base

of 117 million as of January 2014 It has footprints throughout India except for the metropolitan

cities of Mumbai and New Delhi, which are managed by Mahanagar Telephone Nigam (MTNL).

BSNL, then known as the Department of Telecommunications, had been a near monopoly during

the socialist period of the Indian economy. During this period, BSNL was the only telecom

service provider in the country. MTNL was present only in Mumbai and New Delhi. During this

period BSNL operated as a typical state-run organization, inefficient, slow, bureaucratic, and

heavily unionised. As a result subscribers had to wait for as long as five years to get a telephone

connection. The corporation tasted competition for the first time after the liberalisation of Indian

economy in 1991. Faced with stiff competition from the private telecom service providers,

BSNL has subsequently tried to increase efficiencies itself. DoT veterans, however, put the onus

for the sorry state of affairs on the Government policies, where in all state-owned service

providers were required to function as mediums for achieving egalitarian growth across all

segments of the society

During the financial year 2008–09 (from 1 April 2008 to 31 March 2009) BSNL has added 8.1

million new customers in various telephone services taking its customer base to 75.9 million.

BSNL's nearest competitor Bharti Airtel is standing at a customer base of 62.3 million. However,

despite impressive growth shown by BSNL in recent times, the Fixed line customer base of

BSNL is declining. In order to woo back its fixed-line customers BSNL has brought down long

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distance calling rate under OneIndia plan, however, the success of the scheme is not known and

BSNL faces bleak fiscal 2009-2010 as users flee.

Presently there is an intense competition in Indian Telecom sector and various Telcos are rolling

out attractive schemes and are providing good customer services. But situation as on 2012,

BSNL will be third largest operator (Service) and No 1 access operator in the country. As per the

TRAI Report 2011-12, BSNL became the most trustworthy brand due to its loyalty towards

customers and its rule.

Access Deficit Charges (ADC, a levy being paid by the private operators to BSNL for providing

service in non-lucrative areas, especially rural areas) has been slashed by 20% by TRAI, w.e.f. 1

April 2009.[17] The reduction in ADC may hit the profits of BSNL.

BSNL has started 3G services in 290 cities and acquired more than 600,000 customers. It has

planned to roll out 3G services in 760 cities across the country in 2010-11. according to users

and big sources BSNL's 3G data speed is much higher than other operator and also it is

competitively cheap.

Broadband services: The shift in demand from voice to data has revolutionized the very nature of

the network. BSNL is poised to cash on this opportunity and has planned for extensive expansion

of the Broadband services. The Broadband customer base of 3.56 Million customer in

March'2009 is planned to be increased to 16.00 million by March 2014. On 13 June 2012, BSNL

employees participated called off an earlier planned nationwide strike against discriminatory

policies of BSNL management upon promise by Management to resolve the Demands of the

protesting unions.

In March 2013, BSNL was also (according to one study) a major transit point for internet spam

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2.5 Reliance communication

Reliance Communications Ltd. (commonly called RCOM) is an Indian Internet

access (commonly called "broadband") and telecommunications company headquartered in Navi

Mumbai, India. RCOM is India's second largest telecom operator, only after Bharti Airtel. It is

the 15th largest mobile phone operator with over 150 million subscribers. Established in 2004, it

is a subsidiary of Reliance Anil Dhirubhai Ambani Group.

The company has five segments:

Wireless segment

Broadband segment (Internet access operations)

Global segment: national and international long-distance operations (and the wholesale

operations of its subsidiaries)

Investment segment: investment activities of the Reliance Group companies

Other segment: customer care and direct-to-home (DTH) activities

Subsidiary Reliance Telecommunication Limited (RTL) operates in Gujarat, Madhya

Pradesh,West Bengal, Himachal Pradesh, Odisha, Bihar, Assam, and the northeast of India. It

first offeredGSM services in January 2003.

Reliance Tech Services is the IT services wing of Reliance Anil Dhirubhai Ambani group. It

provides IT consultancy, business process outsourcing and software development for

Reliance Communications and other ADA group companies.

Reliance Globalcom owns the Fiber-Optic Link Around the Globe undersea cable system

On 19 May 2010, the 3G spectrum auction in India ended. Reliance Communications paid   

58642.9 million for spectrum in 13 circles. The circles it will provide 3G in

are Delhi, Mumbai, Kolkata, Punjab, Rajasthan, Madhya Pradesh, West Bengal, Himachal

Pradesh, Bihar, Odisha, Assam, North East, Jammu & Kashmir. RCOM recently has started

to offer 3G services through network sharing in the states where it does not hold license for

3G operations. Reliance provides 3G services in Uttar Pradesh East through Aircel's 3G

network and in Uttar Pradesh West through Tata Docomo's 3G network and it allows Tata

Docomo customers to roam on Reliance's network in Delhi, where Tata Docomo does not

operate. On 11 June 2010, the broadband wireless access (BWA) or 4G spectrum auction in

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India ended. Infotel Broadband, a subsidiary of Reliance Industries,won pan-India licence in

the auction across 22 circles, the only telecom operator other than state-

owned BSNL/MTNL to do so.Infotel paid the government   128477.7 million for the licence.

According to Cellular Operators Association of India (COAI) director-general Rajan S.

Mathews, Reliance Industries was expected to launch 4G services in December 2011 They

were expected to use LTE technology. On 25 May 2012, RCom announced a price reduction

of 61% on its 3G services.

In 2011 Reliance provided up to 28 Mbit/s data rate in India with its MIMO technology.

On 31 January 2013, Reliance announced its partnership with Lenovo to market co-branded

smartphones in India. The smartphones were said to use the Android operating system and

have dual-core processors.

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Chapter 3

Analysis of Indian Telecommunication Industry

3.1 Strategic group mapping of Telecommunication industry

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Y

X

National Global

Geographical Scope

Figure :Strategic Group Mapping of Telecom Companies

Interpretation

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50000

10000

Tata

Airtel

Reliance

Idea Vodafone

20000

net sales (in crores)

40000

5000

BSNL

In order to visualize the segmentation of strategic groups, it is useful to design a "map" (Müller-

Stewens 2005):

For this purpose we have determine two variable which is helpful in classify the strategic

groups. These criteria form the X axis, where we have sketch as the geographical scope

i.e national and global. We have use these criteria, which are of high importance in terms

of the behaviour of the competitors presence.

Thereafter on Y axis we have took different variable that is net sales are in crores of

companies in the sector has been positioned on the map.

Net sales of following companies :

Bharti Airtel : 49918.50

Vodafone : 39800.60

Idea : 26431.97

Reliance communication : 11176.00

Tata Communication : 4376.40

The last step is to divide the companies into strategic groups. The companies which are

closest to each other form a strategic group. Additionally we have illustrate the net sales

of the strategic groups by the size of the circles.

note: the size of the circles does not represent the market shares in this figure.

3.2 Competitive profile Matrix

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It is a tool that compares the firm and its rivals and reveals their relative strengths and

weaknesses.”

Page | 38

CRITICAL SUCCESS FACTOR

Weight VODAFONE Bharti Airtel Reliance Communication

Rating Score Rating Score Rating Score

Market share 0.12 3 0.36 4 0.48 3 0.36

Customer service 0.10 4 0.4 3 0.3 2 0.2

Customer Loyalty 0.06 2 0.12 4 0.24 2 0.12

Financial Position 0.07 4 0.28 3 0.21 4 0.28

Strong online present

0.05 2 0.1 4 0.2 3 0.15

Profit Margin 0.11 3 0.33 4 0.44 3 0.33

Price competitiveness

0.11 3 0.33 3 0.33 2 0.22

Value added service

0.04 4 0.16 3 0.12 2 0.08

Proper speed and bandwidth

0.12 4 0.48 3 0.36 2 0.24

Strong connectivity

0.10 4 0.4 4 0.4 1 0.10

Billing Transparency

0.02 2 0.04 3 0.06 1 0.02

Technical competence

0.02 2 0.04 4 0.08 1 0.02

Handling of complaints

0.08 4 0.32 3 0.24 2 0.16

Total 1 3.04 3.46 2.28

Understanding the tool

In order to better understand the external environment and the competition in a particular

industry, firms often use CPM. The matrix identifies a firm’s key competitors and compares

them using industry’s critical success factors. The analysis also reveals company’s relative

strengths and weaknesses against its competitors, so a company would know, which areas it

should improve and, which areas to protect.

Weight

Each critical success factor should be assigned a weight ranging from 0.0 (low importance) to

1.0 (high importance). The number indicates how important the factor is in succeeding in the

industry. If there were no weights assigned, all factors would be equally important, which is an

impossible scenario in the real world. The sum of all the weights must equal 1.0. Separate factors

should not be given too much emphasis (assigning a weight of 0.3 or more) because the success

in an industry is rarely determined by one or few factors. In our project, the most significant

factors are ‘Market share’ (0.12), ‘Price Competitiveness’(0.11), ‘Strong Connectivity’ (0.10).

Rating

The ratings in CPM refer to how well companies are doing in each area. They range from 4 to 1,

where 4 means a major strength, 3 – minor strength, 2 – minor weakness and 1 – major

weakness. Ratings, as well as weights, are assigned subjectively to each company, but the

process can be done easier through benchmarking.

Score & Total Score

The score is the result of weight multiplied by rating. Each company receives a score on each

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factor. Total score is simply the sum of all individual score for the company. The firm that

receives the highest total score is relatively stronger than its competitors. In our Project, the

strongest performer in the market is Bharti Airtel (3.46 points) and its main competitor is

Vodafone (3.04 points)

Benefits of the CPM:

The same factors are used to compare the firms. This makes the comparison more

accurate.

The analysis displays the information on a matrix, which makes it easy to compare the

companies visually.

The results of the matrix facilitate decision-making. Companies can easily decide which areas

they should strengthen, protect or what strategies they should pursue.

3.3 External Factor Matrix (EFE)

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Key External Factors Weight Rating Weighted Score

Opportunities

Population 0.30 4 1.2

Changing Population psychograph 0.19 2 0.38

Increased Penetration level 0.12 1 0.12

FDI 0.12 3 0.36

Threats

Government Policies 0.15 3 0.45

New Technology 0.12 4 0.48

Total 1 2.99

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When using the EFE matrix we identify the key external opportunities and threats that are

affecting or might affect a company by analysing the external environment with the tools like

PEST analysis, OT Analysis.

EFE Matrix. The ratings in external matrix refer to how effectively company’s current strategy

responds to the opportunities and threats. The numbers range from 4 to 1, where 4 means a

superior response, 3 – above average response, 2 – average response and 1 – poor response.

Ratings, as well as weights, are assigned subjectively to each factor. In our Project, we can see

that the company’s response to the opportunities is rather poor, because only one opportunity has

received a rating of 4, while the rest have received the rating of 1. The company is better

prepared to meet the threats, especially the first threat.

Weighted Scores & Total Weighted Score

The score is the result of weight multiplied by rating. Each key factor must receive a score. Total

weighted score is simply the sum of all individual weighted scores. The firm can receive the

same total score from 1 to 4 in matrix. The total score of 2.99 is an good score. In external

evaluation a low total score indicates that company’s strategies are well designed to meet the

opportunities and defend against threats.

In our project, the company has received total score 2.99, which indicates that company’s

strategies are effective in exploiting opportunities or defending against threats. The company

should improve its strategy and focus more on how take advantage of the opportunities.

Benefits

The matrix have the following benefits:

Easy to understand. The input factors have a clear meaning to everyone inside or

outside the company. There’s no confusion over the terms used or the implications of the

matrices.

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Easy to use. The matrix do not require extensive expertise, many personnel or lots of

time to build.

Focuses on the key internal and external factors. Unlike EFE only highlight the key

factors that are affecting a company or its strategy.

Multi-purpose. The tools can be used to build SWOT analysis, IE matrix, GE-McKinsey

matrix or for benchmarking.

Limitations

Easily replaced. EFE matrix can be replaced almost completely by PEST analysis,

SWOT analysis, competitive profile matrix and partly some other analysis.

Doesn’t directly help in strategy formation. Both analyses only identify and evaluate

the factors but do not help the company directly in determining the next strategic move or

the best strategy. Other strategy tools have to be used for that.

Too broad factors. SWOT matrix has the same limitation and it means that some factors

that are not specific enough can be confused with each other. Some strengths can be

weaknesses as well, e.g. Changing population psychograph, which can be a strong and

valuable Changing population psychograph or a poor Changing population psychograph.

The same situation is with opportunities and threats. Therefore, each factor has to be as

specific as possible to avoid confusion over where the factor should be assigned.

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3.4 Porter Five Force Model

Porter (1980) gave the idea of deployment of five forces for the industry analysis

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He said that these forces jointly determine the competitive intensity of a firm within the industry.

Strength of these forces leads to lower profitability of an organization and vice versa.

Wheelen& Hunger (2002) also considered Porter’s approach for industry analysis but he also

included sixth force i.e. relative power of other stakeholders. The Porter’s model provides an

easy and simple approach for industry analyses. This model also provides an opportunity to take

important decisions like whether to enter in a particular industry or to leave it. This is also a very

simple tool in the hands of strategists to determine the profitability position of a firm.

present and future of mobile service payment by using Porter’s five competitive forces model

(consumer power, merchant power, new e- payment service, traditional payment service and

competition between m-payment service providers and four contingency forces like social

environment, commercial environment, technological environment and legal/regulatory

environment. They were in view that factors like social environment and traditional payment

service were never considered earlier in research work. Little consideration was given to the five

factors like commercial environment, legal/regulatory environment, merchant power, new e-

payment services and competition between m-payment service providers.

While highly studied factors were technological environment and consumer power. According to

them there is no clear relationship between mobile service payments, electronic payments,

traditional service payments and banking services. Furthermore he also stressed that business to

business commerce should also be given more attention.

framework of five forces is not applicable in case of religious organization. Since instead of five

forces, the force of mission, faith and loyalty determines organizational efficiency and

profitability.

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Analysis

We have analyzed the performance of Bharti Airtel by considering Porter five forces model.

1. Intensity of Competition Among Rivals

Bharti Airtel has strong rivals in telecommunication sector of India like BSNL and Vodafone.

Initially, it had only two competitors but now this figure has jumped to more than ten. All these

companies are providing similar services with the same capabilities. Although it has enhanced its

investment in last few years and working hard to expand its network yet the presence of strong

competitors is a major threat for its successful survival. The detail data are available in the first

section.

2. Bargaining Power of Buyer

Although subscribers are not concentrated, not purchase in bulk but still can easily switch for

better quality, coverage and rates. In this context subscribers’ position is strong. Bharti is the

leading operator in Access segment in terms of number of subscribers. However, in term of net

additions during the quarter, Idea recorded the highest growth of 7.66 million, followed by

Bharti (6.29 million) and Vodafone (4.88 million).

3. Threats from Substitutes

Presence and easy availability of substituted products is a great threat for the successful survival

of any organization since it can enforce the company to cut the price of its product. The growth

rate of reliance is more than Bharti and that of Vodafone is almost comparable to Bharti as

shown in table 1.

4. Potential Entry of New Competitors

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Since current telecom technologies involve heavy capital investment so chances of success for

new entrants are very limited. Still it is seen that few new entrant like Idea is growing very

rapidly and the growth rate is much higher than the top service providers.

5. Bargaining Power of Suppliers

As far as the suppliers are concerned, the pros and cons to all service providers are equal that

may be in human resource or products.

The conclusion from the analysis is shown in tabulated form (Table 2).

Table 2

Forces High Medium

Low

Intensity of competitons

Bergaining power of buyers

Threats from substitutes

Threats from new entrants

Forces

V . Conclusion

So far very little analysis is done on telecom sector using Porter five forces model. Analysis

indicates that although to meet competition the top service provider is struggling hard but the

presence of strong rivals has put a challenge. From above discussion, we may conclude that the

presence of rivals is the main area that needs company’s management serious attention.

Company may follow the strategy of horizontal integration by taking the decision of merger or

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acquisition with any of its one or two rivals. The leader should offer special packages for

students / education sector since they are the main service users.

3.5 PESTEL Analysis of Telecom Industry

A management technique that enables an analysis of four external factors that may impact the

performance of the organization. These factors are: Political, Economic, Social, and

Technological.

1. Political Factors

India is politically very unstable, whenever the government changes, its policies are also changed

and that hampers the functioning of every business sector, so is the telecom sector affected.

1. National Telecom Policy 1994

In 1994, the Government announced the National Telecom Policy which defined certain

important objectives, including availability of telephone on demand, provision of world class

services at reasonable prices, improving India’s competitiveness in global market and promoting

exports, attractive FDI and stimulating domestic investment, ensuring India’s emergence as

major manufacturing / export base of telecom equipment and universal availability of basic

telecom services to all villages. It also announced a series of specific targets to be achieved by

1997

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2. New Telecom Policy 1999

The most important milestone and instrument of telecom reforms in India is the New

TelecomPolicy 1999. The New Telecom Policy, 1999 was approved on 26th March 1999, to

become effective from 1st April 1999. NTP-99 laid down a clear roadmap for future reforms,

contemplating the opening up of all the segments of the telecom sector for private sector

participation. It clearly recognized the need for strengthening the regulatory regime as well as

restructuring the departmental telecom services to that of a public sector corporation so as to

separate the licensing and policy functions of the Government from that of being an operator. It

also recognized the need for resolving the prevailing problems faced by the operators so as to

restore their confidence and improve the investment climate.

Key features of the NTP 99 include

Strengthening of Regulator.

National long distance services opened to private operators.

International Long Distance Services opened to private sectors.

Private telecom operators licensed on a revenue sharing basis, plus a one-time entry fee.

Resolution of problems of existing operators envisaged.

Direct interconnectivity and sharing of network with other telecom operators within the

service area was permitted.

Department of Telecommunication Services (DTS) corporatized in 2000.

Spectrum Management made transparent and more efficient.

3. Telecom Regulatory Authority of India (TRAI)

 The entry of private service providers brought with it the inevitable need for independent

regulation. The Telecom Regulatory Authority of India (TRAI) was, thus, established with effect

from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of

India Act, 1997, to regulate telecom services, including fixation/revision of tariffs for telecom

services which were earlier vested in the Central Government.

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TRAI’s mission is to create and nurture conditions for growth of telecommunications in the

country in manner and at a pace, which will enable India to play a leading role in emerging

global information society. One of the main objectives of TRAI is to provide a fair and

transparent policy environment, which promotes a level playing field and facilitates fair

competition. In pursuance of above objective TRAI has issued from time to time a large number

of regulations, orders and directives to deal with issues coming before it and provided the

required direction to the evolution of Indian telecom market from a Government owned

monopoly to a multi operator multi service open competitive market. The directions, orders and

regulations issued cover a wide range of subjects including tariff, interconnection and quality of

service as well as governance of the Authority.

The TRAI Act was amended by an ordinance, effective from 24 January 2000, establishing a

Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to take over the

adjudicatory and disputes functions from TRAI. TDSAT was set up to adjudicate any dispute

between a licensor and a licensee, between two or more service providers, between a service

provider and a group of consumers, and to hear and dispose of appeals against any direction,

decision or order of TRAI.

4. Wars and Conflicts

The country is presently peaceful and in coming future their is no chance of any war in the

country ,so investing in the india is quiet good and meaningful .

Regarding conflicts the country is having internal political conflict , which in result are little bit

harmful for investing as government stability is not very strong.

2. Economic Factors

1. Economy situation

GDP -$1876.80 billion (2014)

GDP growth 1.2%

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Inflation 5.52% (October 2014)

The Indian economy is growing at normal rate , and most important the population of India the

mostly youth , so entering in the Indian market will be a good sign of investment , the

government of India is putting good effort in encouraging the FDI in the country by providing

tax benefits.

2. Economy Trends

The continuing dominance of youth - Youngsters are different from oldies in a hundred ways,

and anyone can make a long list of the differences. How this will affect Indian society cannot

really be predicted, except to say that it will be more mobile (think more migrants), and more

volatile (stronger responses to frustrations-- one manifestation being the spread of extremist Left

ideology in some 60 districts).

It will adapt faster to new trends, and marketers will be encouraged to focus on low-cost

products and services because youngsters usually have less money. It will probably mean that the

two-parent home (for nurturing children) will remain the predominant norm for long, and that

there will be a strong saving habit because families will be planning (among other things) for

their children's educational future.

India's increasing openness to the world -The foreign trade component of India's GDP (if we

include trade in both goods and services, like software) is now about 55 per cent -- nearly three

times what it used to be. Foreign institutional investors own about 25 per cent of India's listed

stock. And Indian firms were buying three overseas companies a week, through 2006.

A country that is open to the world reacts in fundamentally different ways from a closed system

(of the kind that India used to be).

There is greater self-confidence, faster acceptance of new influences and ideas, a willingness to

accept global benchmarking, and a speedier response to changing circumstance. It is simply a

more adaptive and therefore a more efficient system. Translate that to mean more productivity

growth.

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The growth of the middle class- In 2013-14, the National Council for Applied Economic

Research forecasts it will be 200 million. Marry that with growing urbanisation, and it is a safe

guess that well over a third of all Lok Sabha constituencies will have a sizeable middle class and

urban voter base. Think, then, of the many changes this might bring about. The obvious point is

about growth of consumption, but we can go beyond that.

The spread of connectivity and awareness- A country that has 5 million phones and another with

180 million; between a country with 10 million TV sets and one with 120 million; between a

country whose trucks move at 25 km per hour on the highways (counting the time taken for

stops), and 50 km per hour.

3. Taxation specific to product/services

   In Basic, Cellular Mobile, Paging and Value Added Service, and Global Mobile Personal

Communications by Satellite, Composite FDI permitted is 80% (49% under automatic route)

subject to grant of license from Department of Telecommunications subject to security and

license conditions

FDI up to 80% (49% under automatic route) is also permitted for the following: -

Radio Paging Service

Internet Service Providers (ISP's)

FDI up to 100% permitted in respect of the following telecom services: -

Infrastructure Providers providing dark fibre (IP Category I);

Electronic Mail; and

Voice Mail

In telecom manufacturing sector 100% FDI is permitted under automatic route.

4. Investment Opportunities and Incentives

An attractive trade and investment policy and lucrative incentives for foreign collaborations have

made India one of the world’s most attractive markets for the telecom equipment suppliers and

service providers.

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No industrial license required for setting up manufacturing units for telecom equipment.

Automatic approval of 100 percent foreign equity, technology fee up to US $ 2 million, royalty

up to 5 percent for domestic sales and 8 percent for exports in telecom manufacturing projects.

Foreign equity of 80% (49 % under automatic route) permitted for telecom services - basic,

cellular mobile, paging, value added services, NLD, ILD, ISPs - and global mobile personal

communications by satellite.

Full reparability of dividend income and capital invested in the telecom sector. 

3. Social Factors

1. Age distribution:

The telecom industry in India like Vodafone, Airtel, Idea etc are selling their products according

to various age distribution basis. They make the schemes available to youngsters with low call

rates and messages schemeFor adults if we see make call rates low in std section.

2. Change in tastes and preferences :

As we know price war is going on so the customer can shift over to next brand which cost less

to him so the company has to go according to the needs and preferences of the customer.

3. Social welfare:

Many companies are doing social welfare and taking initiatives for that we can examine the

latest e.g. of idea cellular co. For example on 26 Nov 2009 that it collected money for the victims

of 26/11 attack by the subscribers of idea when any call was made.

4. .Consumer buying patterns :

The buying behaviour of the customers in India is changing , the customers are shifting to buy

the new products and service according the offers and schemes available to them.

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4. Technological Factors

1. Replacement Technology

Technology in India is replacing very fast with change in time, as the economy is growing the

technology is also, so the company bringing new technology will be very successful.

2. Research funding

Govt is providing various tax benefits and subsidies to the players which are in research and

development fields of telecom sector , the govt has also open various research institutes where

the research is done with the collaboration of various private research companies .

Telecommunications companies with 3G services will no longer be allowed to avail of tax breaks

found under Section 80 IA of the Income Tax Act.

The tax breaks under Section 80 IA are given to companies building infrastructure. In the

telecommunications sector, companies can choose a 10 year period out of the first 15 years of

operations to qualify for the tax benefits.

Companies can choose to avail of a 100 percent exemption on taxable profit in its first five years

and a 30 percent exemption for the next five years.

3. Innovation potential

Innovations potential in India for technology is very high as the internet and broadband and 3G

and 4G services are still niche so coming in India is very profitable.

5. Legal Factors

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Until 1985, the Indian Telegraph Act of 1885 and the Wireless Telegraph Act of 1932 provided

the legal basis for the central government's telecommunications monopoly. Under these laws,

posts and telecommunications were combined in one P&T department run by the Ministry of

Communications. In the late 1970s and early 1980s protests against poor service by subscribers,

politicians, industrialists, and business leaders coincided with global and national pressure for

liberalization. As a result, a parliamentary committee was established in 1981, which

recommended numerous structural and service improvements.

A separate Department of Telecommunications (DoT) was established in 1985, under the

Ministry of Communications and two supposedly public sector undertakings (PSUs)(VSNL and

MTNL) were created to expand, develop, and manage crucial segments of the Indian

telecommunications system.

The National Telecom Policy (NTP) of 1994 provided the basis for liberalizing the

telecommunication market. It recognized the importance of liberalization and private sector

participation as key elements of economic development. With the entry of private sector in the

provision of telecommunication services a need was felt to have an independent regulatory body.

The above requirement was indicated in the guidelines issued for entry of private sector in basic

telecom service. Accordingly, Telecom Regulatory Authority of India (TRAI) was established in

the year 1997 in pursuance of TRAI (Ordinance) 1997, which was later replaced by an Act of

Parliament, to regulate the telecommunication services. Legal framework of telecom in India is

supported by TRAI (Telecom Regulatory Authority of India), having purpose of Independent

regulator to control telecom industry.

India continues to be one of the fastest growing telecom markets in the world. Reforms

introduced by successive Indian governments over the last decade have dramatically changed the

nature of telecommunications in the country.

6. Ecological Factors

In present scenario, telecommunication services are widely used all over the world. People

extensively use telephone services, internet services and many more. Initially, there were wired

phones which are not hazardous to our health and also to the environment. Now, more than 80

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million people use pocket-sized cellular phones as a principal form of communication and many

researches proved that these smaller phones, with their smaller antenna, increase exposure to

microwaves and pose a potential health threat to the frequent user.

Wireless Technology Research (WTR), formed by the Cellular Telecommunications Industry

Association (CTIA) to research the effects of cellular phones, has indicated several health

problems traceable to radiation exposure due to phone use like many cases of people suffering

from brain tumour, memory loss, and genetic damage in human blood. A recent study indicated

that the number of immune cancer cells doubled in mice exposed to microwaves.

Cognitive effects: A 2013 study examined the effects of exposure to radiation emitted by

standard GSM cell phones on the cognitive functions of humans. The study confirmed the

existence of an effect of exposure on response times to a spatial working memory task, as well as

the fact that exposure duration may play a role in producing detectable effects on performance.

Health hazards of base stations: Another area of concern is the radiation emitted by the fixed

infrastructure used in mobile telephony, such as base stations and their antennas, which provide

the link to and from mobile phones. This is because, in contrast to mobile handsets, it is emitted

continuously and is more powerful at close quarters. Base station emissions must comply with

safety guidelines. Several surveys have found increases of symptoms depending upon proximity

to electromagnetic sources such as mobile phone base stations.

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3.6 OT Analysis

A Scan of the internal and external environment is an important part of the strategic planning

process. Environmental factors internal to the firm usually can be classified as strengths (S)or

Weaknesses (w), and those external to the firm can be classified as opportunities (O)or threats

(T). Such an analysis of the strategic environment is referred to as a SWOT analysis.

The SWOT analysis provides information that is helpful in matching the firms resources and

capabilities to the competitive environment in which it operates. As such, it is instrumental in

strategy formulation and selection. The following diagram shows how a OT analysis fits into an

environmental scan:

Opportunity

Population : The population of India is really an opportunity of telecom service

providers, as the number of population without telecom service is also very high. The

industry has to target India's huge population to grow.

Changing Population Psychograph : population psychograph is also changing

previously telecom service was thought as an emergency service, now it has become an

essential part of life in our country.

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Increased Penetration Level: All the organizations of the industry are trying to increase

their penetration level, in other word to increase the tele-density of the country. The

urban Indian population gives a real growth prospect to the industry.

FDI : The foreign direct investment in telecom has been hiked up from 49% to 74%. This

move is positive for the sector, as it requires investments of Rs 700- 900 million over the

next 5 years. FDI inflow by 2004 was 9950.94 cores in telecom. Countries like Europe,

Korea, and Japan telecom are likely to enter India, as India is seen as fastest growing

telecom market in world.

Threats

The threats to the industry are the following :

Government Policies - Government may provide licenses to many foreign operators,

which may already have pose a threat for the existing players in the industry.

New Technology can the Potential of changing the entire industry dynamics or even

create substitute of the telecom services existing.

Some of the examples are follows.

VOIP( Skype, Messenger etc.)

Online chat

Email

Satellite phones

To summarize the SWOT analysis we can draw the following framework for telecom

industry:

Figure: 3.1

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3.7 The Porters Diamond Model

The Method developed by porter analyzes four different dynamics of a nation. The four different

determinants of the system are plotted as a diamond in Figure below:

Figure: 3.2

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Firm Strategy, Structure and Rivalry

Demand Conditions

Related and Supporting Industries

Factor Conditions

Chance

Government

Figure -Porter Diamond Model

As Analysis of the Indian Telecom industry under the porters Diamond model reveals that India

offers a competitive advantage for firms operating in the country.

Firm Strategy, Structure, and Rivalry:

Intensive competition in the country has made it possible for service providers to offer

the service with lowest fare in the world profitably.

Many new handsets have been launched.

Factors Conditions:

Presence of skilled labour pool.

Rapidly developing incomes of consumers.

Increasing disposable incomes of consumers.

Increasing demand due to changing lifestyles and growing attraction for mobiles with

new features.

Related supporting Industries:

Competent handset manufacturer have produces the lowest priced handset for the Indian

market.

Handset players are setting up manufacturing bases in India for better operation

management.

Many telecom equipment & Software companies are based in India.

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Various value added service providers and content developers are present in India.

Demand Conditions:

India has a large middle class of 300 million.

Growing affordability and lifetime free schemes have created a market at the bottom of

the pyramid.

Low tele density (-18%) offers huge future potential.

Governments:

The government extends full support to industry through reform processing.

Policies are in place to safeguard the interests of service providers as well as those of

consumers.

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3.8 7 Ps Service Marketing

Following are the 7 ps of Services Marketing

1. Product / services

There is little difference between product and service, when a customer buys a physical product,

he can feel it, see it has tangible aspect whereas services have intangible aspect, a customer can

only benefit from the service only as it has performed by services provider such as operating a

patient consulting a lawyer, getting advise from tax advisor.

Vodafone, the mobile service brand of Vodafone Essar, has emerged as the ''Most Admired

Mobile Service Brand Online'' in India followed by Tata Indicom and Aircel in an pan-India

survey conducted by Drizzlin Media. The survey shows that Reliance Mobile emerged as the

least admired brand.

The term ''DoCoMo'' is usually accompanied by a barrage of wild, high-end mobile hardware, so

we have a tendency to sit up and pay attention whenever the storied name appears on a carrier

anywhere in the world. India's Tata Teleservices of which NTT DOCOMOholds a 26 percent

share is set to launch a newly- branded GSM service as Tata DoCoMo in the southern part of the

country this month, followed by a ''gradual'' expansion nationwide. The logo 's pretty awesome,

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the name's pretty awesome now we just need some Japanese domestic market handsets to go

along with it and we'll be in business.

2.Price

In determining the prices of services, the one characteristic, which has great impact is their

perish ability and the fact that fluctuation in demand cannot be met through inventory . Hotels

and Airlines and telecom sectors offer lower rates during off season and lower telephone charges

for outstation call after peak Hours are the example of how pricing can be used.

Price of the all companies are very affordable for the customer and it is as par customers demand

A combination of a price war and a contentious proposal by the Telecom Regulatory Authority

of India, or TRAI, sent telecom stocks reeling. By the end of the week, shares of India's largest

telecom firm Bhatia Airtel LTD, Reliance communications Ltd and Idea Cellular Ltd had fallen

fall by 21.4% , 22% and 15%, respectively. The telecom regulator had recommended that per-

second billing be made mandatory for mobile operators so users pay only by the second.

Following the adverse making reaction, Trai chairman J.S. Sharma clarified that the regulator

was considering making per-second billing one of the options that operators would have to offer,

and not only option. ''It's one of the ideas that is being worked upon. It 's not as if any decision has

been taken.''

Tata Teleservices Ltd's Tata DoCoMo was the first operator to offer per-second billing

nationally. Vodafone EssarLtdlaunched a plan allowing users with a bonus card to call people in

neighbouring states but not in the same regional circle at 50 paise per minute. Idea, too, has also

highlighted a 50-paisa option as a key price point.

Reliance was the first service provider to offer a flat rate of 50 paisa for calls within India,

national roaming and text messages across networks on a minute' s worth of talk time.

Reliance' s stated objective is to offer a simple package to customers; but the new offer could be a

key card when number portability is launched.

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3.Promotion

The fundamental difference which must be kept in mind while designing the promotion strategy

for services, is that customer rheas more on subjective impassions rather than concrete cvidence.

This is because of the inherent intangible nature of nature of services. Secondly, the customer is

likely to judge the quality of services on the actual services. Thirdly since it is difficult to sample

the services before paying for it, the customer finds it difficult to evaluate a product.

Pamphlets,

Hoardings,

Newspaper,

magazines

4. Place

The most important decision element in the distribution strategy relates to the issue of location

of the services so 83 to attract the maximum number of customer such as those of Doctors,

teachers, consultant, machinist etc, poses distribution constraints since they are to serve only

limited and fractional markets.

5. People

people constitute an important dimension in the management of services in their role both as

performers of service and as customer. They must, therefore, be well informed and provide the

kinds or services that win customer approval. People as performance of services are important

because ''A customer sees a company through its employees. The employee represents the first

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line of contact with the customer. The firm must recongnize that each employee is a salesman for

the company services''.

Daily telecom e-newsletter with telecom world information, serving you with daily top Indian &

international new right there in you mailbox. updating people in just five minutes about the daily

happenings of telecom sector. Stop searching just open your mail box and get what you want -

fresh - new, daily update, share market information, latest in technology, articles and what you

request you get, all free

Telecom India Daily reaches out to Top professionals, decision makers, technocrats, engineers

associated with leading technology vendors, communications companies, infrastructure

providers, service providers, network integrators, telecom manufacturers and above all the

upcoming professionals - students, with a regular informative update on the latest developments

in the rapidly changing interactive media environment.

Highlights

An immense source of information and latest updates.

Keep employees up to date about the happenings in telecom.

Helping organizations to understand the ongoing business and improves the decision

power of people working within.

Information & data provided can be utilized to explore new areas. Stage for companies to

showcase their press releases.

Sales staff, marketing staff, corporate, students etc.

6. Physical Evidence

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Clearness in doctors clinic, exterior appearances and interior decor of restaurant, the comfort of

the seating arrangement in a cinema hall, adequate facility for personal needs at the airport, all

contribute towards the image of the service and organization as perceived by the customer. The

common elements in these are that they all are physical, tangible and controllable aspects of a

service organization. They constitute physical evidence of the service Stores, logos

7.Process

In service organization, the system by which you receive delivery of service constitutes the

process. In fast food outlets the press comprises buying coupons at one counter and picking up

the food against that at another counter.

Services can be described on the basis of types of process used in the delivery of the service.

The three kinds of deliver process that are applicable in case of service product are line

operation, Job shop type of operation is mere use full. Hospital, restaurants and educational

institutions usually have these types of delivery process. Intermittent operations are use full when

the types of service is rarely repeated, Firms offering consultancy for projects use this kind of

delivery system. Advertising agencies also use intermittent delivery system since each

advertising campaign requires a unique set of input factors.

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Chapter 4

Financial Analysis

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4.1 Financial analysis Introduction

Financial analysis (also referred to as financial statement analysis or accounting analysis or

Analysis of finance) refers to an assessment of the viability, stability and profitability of a

business, sub-business or project.

It is performed by professionals who prepare reports using ratios that make use of information

taken from financial statements and other reports. These reports are usually presented to top

management as one of their bases in making business decisions.

Continue or discontinue its main operation or part of its business;

Make or purchase certain materials in the manufacture of its product;

Acquire or rent/lease certain machineries and equipment in the production of its goods;

Issue stocks or negotiate for a bank loan to increase its working capital;

Make decisions regarding investing or lending capital;

Other decisions that allow management to make an informed selection on various

alternatives in the conduct of its business.

Goals

Financial analysts often assess the following elements of a firm:

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1. Profitability - its ability to earn income and sustain growth in both the short- and long-term. A

company's degree of profitability is usually based on the income statement, which reports on the

company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;

3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;

Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition

of a business as of a given point in time.

4. Stability - the firm's ability to remain in business in the long run, without having to sustain

significant losses in the conduct of its business. Assessing a company's stability requires the use

of the income statement and the balance sheet, as well as other financial and non-financial

indicators. Etc.

Method

Financial analysts often compare financial analysis (of solvency, profitability, growth, etc.):

Past Performance - Across historical time periods for the same firm (the last 5 years for

example),

Future Performance - Using historical figures and certain mathematical and statistical

techniques, including present and future values, this extrapolation method is the main

source of errors in financial analysis as past statistics can be poor predictors of future

prospects.

Comparative Performance - Comparison between similar firms.

4.2 Objective of financial analysis

• Provide objective, actionable analysis to support informed Recommendations and decision

making by both the WTOP and Town management.

•  Assess the cash flow implications of a range of operating scenarios.

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•  Provide tools to support the discussion of restoring the project’s financial integrity so that

funds are available when the need for repair arises.

Filtration :

Here we have done Filtrations for Financial Analysis. We have make this because we want some

standard Companies for Financial Analysis. So we got four Companies on the basis of filtration

criteria.

Step Characteristics Result1 Net Profit2 EPS 4

Above We have taken list of Companies on the basis of some companys characteristics. One is

net profit , among 35 companies we taken 10 companies which profit is above 100 cr. In 2013. In

which we got 6 companies.

Than after we have taken a earning per share as characteristics in which we got other final four

company which are taken for further financial Analysis.

Table : List of Company

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4.3 Ratio analysis

A ratio is a relationship between two numbers of the same kind ] (e.g., object, persons, students,

spoonfuls, units of whatever identical dimension), expressed as "a to b" or a:b, sometimes

expressed arithmetically as a dimensionless quotient of the two that explicitly indicates how

many times the first number contains the second (not necessarily an integer).

Importance of Ratio Analysis

Importance of Ratio Analysis for financial

analysis.

Managementparadise.com is bringing some of the tool for financial analysis and report.

Understand the term of Ratio Analysis steps and process.

The ratio analysis is the most important tools of financial analysis. The various groups of people

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No. Name of Company

1 Vodaphone South

2 TATA Telecommunication

3 Hexacommunication

4 Bharti Airtel

having different interest are interested in analyzing the financial information.

These groups use the analysis to determine particular financial characteristics of which they are

interested. The importance of ratio analysis can be summarized for various groups of peoples

vested with the diversified interests are as under:

1. For short term creditors – The short term creditors like bankers and suppliers of materials can

determine the firm’s ability to meet its current obligation with the help of liquidity ratio and

quick ratio.

2. For long term creditors – The long term creditors like debenture holders and financial

institutions can determine the firm’s long term financial strength and survival with the help of

leverage or capital structure ratio as debt equity ratio.

They can know :

a) what sources of long term are employed?

b) What is the relationship between various sources of finances?

c) Is there any risk to the solvency of the firm due to the employment of excessive long term

debts?

3. For the management – The management can determine the operating

efficiency with the firm is utilizing its various in generating the sales revenues with the help of

activity ratio such as capital turnover ratio, stock turnover ratio, etc…

4. For investors – The investor can determine the magnitude and direction of the movements in

firm’s earning with the help of profitability ratio such as earning per share etc…

4.3.1 Debt Equity Ratio

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Debt-to-Equity ratio is the ratio of total liabilities of a business to its shareholders' equity. It is a

leverage ratio and it measures the degree to which the assets of the business are financed by the

debts and the shareholders' equity of a business.

Analysis

Lower values of debt-to-equity ratio are favorable indicating less risk. Higher debt-to-equity

ratio is unfavorable because it means that the business relies more on external lenders thus it is at

higher risk, especially at higher interest rates. A debt-to-equity ratio of 1.00 means that half of

the assets of a business are financed by debts and half by shareholders' equity. A value higher

than 1.00 means that more assets are financed by debt that those financed by money of

shareholders' and vice versa.

An increasing trend in of debt-to-equity ratio is also alarming because it means that the

percentage of assets of a business which are financed by the debts is increasing.

Name of Company Year

2011 2012 2013

Vodafone South 0.61 0.71 0.64

TATA Communication 0.63 0.67 0.79

Hexa communication 0.50 0.71 0.37

Bharti Airtel 0.43 1.17 0.35

Total 2.17 3.26 2.15

Industry total 0.54 0.82 0.53

(Debt to equity ratio)

Significance and interpretation:

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A ratio of 1 or 1 : 1 means that creditors and stockholders equally contribute to the assets of the

business.

A less than 1 ratio indicates that the portion of assets provided by stockholders is greater than the

portion of assets provided by creditors and a greater than 1 ratio indicates that the portion of

assets provided by creditors is greater than the portion of assets provided by stockholders.

Creditors usually like a low debt to equity ratio because a low ratio (less than 1) is the indication

of greater protection to their money. But stockholders like to get benefit from the funds provided

by the creditors therefore they would like a high debt to equity ratio.

Debt equity ratio vary from industry to industry. Different norms have been developed for

different industries. A ratio that is ideal for one industry may be worrisome for another industry.

A ratio of 1 : 1 is normally considered satisfactory for most of the companies.

4.3.2 Current Ratio

Current ratio, also known as liquidity ratio and working capital ratio, shows the proportion of

current assets of a business in relation to its current liabilities.

Current ratio expresses the extent to which the current liabilities of a business (i.e. liabilities due

to be settled within 12 months) are covered by its current assets (i.e. assets expected to be

realized within 12 months). A current ratio of 2 would mean that current assets are sufficient to

cover for twice the amount of a company's short term liabilities.

Interpretation & Analysis

Current ratio is a measure of liquidity of a company at a certain date. It must be analyzed in the

context of the industry the company primarily relates to. The underlying trend of the ratio must

also be monitored over a period of time.

Generally, companies would aim to maintain a current ratio of at least 1 to ensure that the value

of their current assets cover at least the amount of their short term obligations. However, a

current ratio of greater than 1 provides additional cushion against unforeseeable contingencies

that may arise in the short term.

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Businesses must analyze their working capital requirements and the level of risk they are willing

to accept when determining the target current ratio for their organization. A current ratio that is

higher than industry standards may suggest inefficient use of the resources tied up in working

capital of the organization that may instead be put into more profitable uses elsewhere.

Conversely, a current ratio that is lower than industry norms may be a risky strategy that could

entail liquidity problems for the company.

Current ratio must be analyzed over a period of time. Increase in current ratio over a period of

time may suggest improved liquidity of the company or a more conservative approach to

working capital management. A decreasing trend in the current ratio may suggest a deteriorating

liquidity position of the business or a leaner working capital cycle of the company through the

adoption of more efficient management practices. Time period analyses of the current ratio must

also consider seasonal fluctuations.

Name of Company Year

2011 2012 2013

Vodaphone South 0.61 0.71 0.64

TATA Communication 0.63 0.67 0.79

Hexacommunication 0.50 0.71 0.37

Bharti Airtel 0.43 1.17 0.35

Total 2.17 3.26 2.15

Industry total 0.54 0.82 0.53

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2011 2012 20130

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

(Current ratio)

Industry standards

Current ratio must be analyzed in the context of the norms of a particular industry. What may be

considered normal in one industry may not be considered likewise in another sector.

Traditional manufacturing industries require significant working capital investment in inventory,

trade debtors, cash, etc, and therefore companies operating in such industries may reasonably be

expected to have current ratios of 2 or more.

However, with the advent of just in time management techniques, modern manufacturing

companies have managed to reduce the size of buffer inventory thereby leading to significant

reduction in working capital investment and hence lower current ratios.

In some industries, current ratio of lower than 1 might also be considered acceptable. This is

especially true of the retail sector which is dominated by giants such as Wal-Mart and Tesco.

This primarily stems from the fact that such retailers are able to negotiate long credit periods

with suppliers while offering little credit to customers leading to higher trade payables as

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compared with trade receivables. Such retailers are also able to keep their own inventory

volumes to minimum through efficient supply chain management.

Importance

Current ratio is the primary measure of a company's liquidity. Minimum levels of current ratio

are often defined in loan covenants to protect the interest of the lenders in the event of

deteriorating financial position of the borrowers. Financial regulations of various countries also

impose restrictions on financial institutions to lend credit facilities to potential borrowers that

have a current ratio which is lower than the defined limits.

4.3.3 Net Profit Margin

Net profit ratio (NP ratio) is a popular profitability ratio that shows relationship between net

profit after tax and net sales. It is computed by dividing the net profit (after tax) by net sales.

Formula:

For the purpose of this ratio, net profit is equal to gross profit minus operating expenses and

income tax.  All non-operating revenues and expenses are not taken into account because the

purpose of this ratio is to evaluate the profitability of the business from its primary operations.

Examples of non-operating revenues include interest on investments and income from sale of

fixed assets. Examples of non-operating expenses include interest on loan and loss on sale of

assets.

The relationship between net profit and net sales may also be expressed in percentage form.

When it is shown in percentage form, it is known as net profit margin. The formula of net profit

margin is written as follows:

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Name of Company Year

2011 2012 2013

Vodafone South 7.51 12.06 13.97

TATA Communication 6.47 14.87 18.35

Hexa communication 22.52 22.65 22.04

Bharti Airtel 16.72 14.23 16.78

Total 53.22 63.81 71.14

Industry total 13.305 15.95 17.785

2011 2012 20130

2

4

6

8

10

12

14

16

18

20

(Net profit margin)

Significance and Interpretation:

Net profit (NP) ratio is a useful tool to measure the overall profitability of the business. A high

ratio indicates the efficient management of the affairs of business.

There is no norm to interpret this ratio. To see whether the business is constantly improving its

profitability or not, the analyst should compare the ratio with the previous years’ ratio, the

industry’s average and the budgeted net profit ratio.

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The use of net profit ratio in conjunction with the assets turnover ratio helps in ascertaining how

profitably the assets have been used during the period.

4.3.4 Average Collection Period

Average collection period is computed by dividing the number of working days for a given

period (usually an accounting year) by receivables turnover ratio. It is expressed in days and is

an indication of the quality of receivables.

The formula is given below:

Name of Company Year

2011 2012 2013

Vodafone South 1.21 0.90 0.66

TATA Communication 0.43 0.42 0.53

Hexa communication 3.07 4.71 3.57

Bharti Airtel 0.17 0.16 0.16

Total 4.88 6.19 4.92

Industry total 1.22 1.5475 1.23

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2011 2012 20130

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

(Average collection ratio)

Significance and Interpretation:

Like receivables turnover ratio, average collection period is of significant importance when used

in conjunction with liquidity ratios.

A short collection period means prompt collection and better management of receivables. A

longer collection period may negatively effect the short-term debt paying ability of the business

in the eyes of analysts.

Whether a collection period is good or bad, depends on the credit terms allowed by the company.

For example, if the average collection period of a company is 50 days and the company allows

credit terms of 40 days then the average collection period is worrisome. On the other hand, if the

company’s credit terms are 60 days then the average collection period of 50 days would be

considered very good.

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4.3.5 Trend Analysis :

Business owners look for trends, or patterns, that can alert them to future performance

opportunities or problems. For example, even though this year’s total sales revenues might be the

same as last year’s, you might spot a growing trend of selling more low-margin items than the

previous year. This can result in lower profits even if you have the same revenues. Spotting this

trend early can help you take steps to address it, such as raising prices, cutting costs or spending

more marketing communications dollars promoting higher-margin items. If a particular product

has declining sales, you might change it or drop it from your line. If fewer and fewer men are

buying your product, you might shift your focus to marketing to women.

Table : List of Company

Name of Comoany Year

2011 2012 2013

Vodaphone South 6277.33 11512.4 12736.7

TATA Communication 3611.77 4091.77 4416.12

Hexacommunication 2943.45 3379.1 3666.1

Bharti Airtel 38017.7 41603.8 45350.9

Total 50850.25 60587.07 66169.82

Industry total 12712.56 15146.76 16542.45

Graph : Sales Trend Analysis

2011 2012 2013

02000400060008000

1000012000140001600018000

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Interpretation:

You may see here that Four company’s average making sales avg. which is goes up in graph. It is indicating that from 2011 to 2013 sales going up which means there is nothing any problem in sales nd that’s why profit margin also goes up. The reason is that internet user are become increase day to day and Bharti Airtel have make less in charges in phone calls.

Expenses

Table : List of Company

Name of Company Year

2011 2012 2013

Vodafone South 6315.94 8462.4 9241.4

TATA Communication 2780.9 3103.8 3447.18

Hexa communication 2029.72 2257.6 2555.7

Bharti Airtel 24677.4 27960.1 31880.2

Total 35803.96 41783.9 47124.48

Industry total 8950.99 10445.95 11781.12

Graph : Expenditure Trend Analysis

2011 2012 20130

2000

4000

6000

8000

10000

12000

14000

Interpretation

You may see hare that Expenditure trend is going on increase due to sale also goes up. Expenses are goes up from 8950.99 in 2011 to 31880.2 in 2013. Airtel Having a high charges of internet package than vodaphone which is more costly call rate company.

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Chapter 5

Business Plan

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Executive Summary

Uninor Cellular Providers is taking advantage of an opportunity to become a highly

distinguished and recognized industry leader in the cellular communications industry. It is the

goal of our company to become established as the leading distributor of wireless

communications services.

In order to achieve this goal, Cellular Providers' critical success factors will be to identify

emerging trends and integrate them into Cellular Providers' operations, respond quickly to

technology changes/be there early, provide high-quality services, continue to invest time and

money in marketing and advertising, continue to expand into specialty markets, and stay ahead

of the "technology curve."

Uninor services are commercially available in 6 circles, covering a population footprint of 600

million people. Uninor serves more than 3 crore customers in the states of Uttar Pradesh,

Uttarkhand, Bihar, Jharkhand, Maharashtra, Goa, Gujarat and Andhra Pradesh. The mobile

service provider targets youth and other communities within the Indian mass market. In recent

Spectrum auctions Uninor secured fresh spectrum in 4 of its existing circles and in a new circle

of Assam.

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5.1 Company Introduction

Telewings Communications (operating under the brand name Uninor), is an Indian mobile

network operator based in Gurgaon, Haryana, India. The company is a subsidiary of Telenor

Group, a telecommunications company headquartered in Oslo, Norway, and Telenor now owns

100% of the stake in Telewings Communications.

Telewings offers mobile voice and data services based on the GSM technology, on 5 MHz

spectrum. Uninor services are commercially available in 6 circles, covering a population

footprint of 600 million people. Uninor serves more than 3 crore customers in the states of Uttar

Pradesh, Uttarkhand, Bihar, Jharkhand, Maharashtra, Goa, Gujarat and Andhra Pradesh. The

mobile service provider targets youth and other communities within the Indian mass market. In

recent Spectrum auctions Uninor secured fresh spectrum in 4 of its existing circles and in a new

circle of Assam.

Spectrum acquired by Uninor in the 1800Mhz band UP East – 1.8 MHz UP West – 2.0 MHz

Bihar and Jharkhand – 2.2 MHz Andhra Pradesh – 1.4 MHz Assam – 6.0 MHz

Objectives

- Capture the market through provide innovative product in telecom segment.

- To achieve higher level of satisfaction through quality telecom.

- To achieve high market share in telecom segment.

Vision

Empower societies we provide the power of digital communication, enabling everyone to

improve their lives, build societies and secure a better future for all.

Our vision to empower societies is a clear call to action. We bring vital infrastructure,

new services and products that stimulate progress, change and improvement.

Mission

We’re here to help our customers We exist to help our customers get the full benefit of

being connected. Our success is measured by how passionately they accept us and make

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us a part of their life.

5.2 Company Description

.

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Type privateIndustry TelecommunicationsFounded 2009Headquarters Gurgaon, IndiaKey people Jon Fredrik Baksaas (Nominated CEO)Services Mobile telephony Wireless internetOwners Jon Fredrik BaksaasEmployees 1,600Parent Telenor GroupWebsite www.uninor.in

5.3 Process for taking Franchise of Uninor

Step 1 : Centre sends LOI, signs MOU.

Centre submits following legal papers & certifications: Bank Statements for

last 6 months + IT Returns of 1 years)

Company Profile with Pictures of Existing Infrastructure.

Pan card Snapshot Required.

Step 2 : Centre is called to sign SLA with Uninor.

Step 3 : The guarantee approval and audit by Uninor.

Step 4 : Centre has to ensure that all that is mentioned in the company profile and

other legal papers & certification is true and correct.

Step 5 : Centre has to send LOI & sign MOU

Process Details :-

1. Per slot =25 seats.

2. Fixed Payout each form = INR 20.00.

3. workload= 4000 forms/ per seat/ per month.

4. 50% Advance payment for 2 months. (Direct payment transfer).

5. Royalty- 15% of monthly billing.

6. NO Accuracy Required.

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5.4 List of Documents required for Franchise

Partnership deed (MoA / AoA )

License from Govt. (shop registered under municipality)

Sales Tax number (TIN number)

PAN number for business

“Gumasta-dhara” certificate

Opening of bank account

Telephone/Fax connection (land line)

5.5 STP Analysis of UNINOR in Mehsana

Segments: Geographic, and demographic Wise urban and rural area and male as Well as

female.

Target groups: We are targeting young student’s middle class and lower class.

Positioning: We are set our positioning on the base of service quality and lower price

5.6 Government Policy

Rules & Regulation Established By Confederation Of Indian Industry

Action To Be Taken By Government For Telecom Industry

Improve infrastructure

Provide support for new technologies and establish technology up-gradation fund (TUF)

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Implement strengthening R&D

Set-up talent development infrastructure

Improve image of the industry

Consolidate acts into an Integrated telecom Legislation, simplify regulatory structure and

strengthen regulations

Rationalize taxes and duties

Develop India’s telecom inventory

5.7 Rules & Regulation for Telecom Industry

(A)Rules under Environment (Protection) Act, 1986

Manufacture, Storage and Import of Hazardous technology Rules, 1989, 2000

Telecom disaster (Emergency Planning, Preparedness and Response) Amendment Rules,

1996

Public Liability Insurance Act, 1991, 1992

(B)Health & Safety Related Laws & Regulations

Factories Act, 1948, 1987

Explosives Act, 1889

Petroleum Act, 1934, Rules, 1976

Motor Vehicle Act, 198

Requirements in case of Low Level techniques used

Identify hazards associated with industrial activity and take adequate steps for

Prevention and control

Provide relevant information to persons liable to be affected by a major accident

Develop information in the form of a safety data sheets

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Requirements in case of the Medium & High level techniques used

Submit written report regarding “Notification of site” at least three months before

commencing any activity using hazardous materials

Submit “Safety Report” at least 3 months before commencing activity

Requirements in case of the Medium & High level techniques used

Submit an up-to-date safety report at least ninety days before making any

modification

New and existing industrial activities to carry out safety auditand submit report within

30 days

Submit a safety audit update report once a year and forwarding a copy within 30 days

Prepare up-to-date on site emergency plan before commencing a new industrial

activity involving specified technology

5.8 Method of Distribution of UNINOR

UNINOR–(Distribution Channel)

Distributor

Retailer

Consumer

Uninor actively uses an electronic Distribution Management System, which pulls in data

from various sources.

All field sales managers have a handheld device connected to a central database,

providing real-time updates on sales and inventory numbers.

The Sales Tracking System ensures retailers do not run out of stock and are always

supplied with relevant products in real time.

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When layered with geographical intelligence through an automatic system, it get an

accurate insight on the sales and revenue performance matched to every single base

station. This forms the core of ‘every base station profitable’ mantra.

The Uninor system is built on distribution systems successfully deployed in Telenor’s

other Asian markets. With further tailoring and optimization in India, this system now

forms the model for other Telenor business units in the region.

5.9 Marketing & Sales promotion

Personal sales

Internet / Interactive Selling

Consumer oriented sales Promotion

- High Rich in Rural & Urban

- Demonstration

- Free sample

profit oriented sales Promotion

- Dealer incentive

- Employee Allowance

TRAI recommendations to terms and conditions for unified license (access

services)

The Dot has recently finalized the draft unified license (access services) (UL (AS)) and requested

the TRAI to provide its recommendation on the terms and conditions of the draft UL(AS). The

TRAI released its recommendations on 'Terms and Conditions of Unified License (Access

Services)' on 2 January 2013 (UL Recommendations).

The key recommendations of the TRAI have been analyzed below.

Delinking Spectrum from License

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TRAI has highlighted the change in the Government's policy with respect to the previous regime

where spectrum was linked to the Unified Access Service Licence (UASL). In the new regime

since spectrum has been delinked from the license and has to be obtained independently, TRAI

recommends that the terms and conditions relating to various spectrum bands should not be a

part of the UL (AS). Accordingly, for different bands of spectrum assigned, a separate Wireless

Operating License (WOL) should be entered into with the licensee. This means that there would

be two different licenses i.e. National level/Service Area level UL(AS) and WOL. This would

avoid the need of amending the license each time an operator gets spectrum in different bands.

Substantial Equity/Cross-Holding Requirement

The draft of the UL (AS) makes reference to the cross-holding restriction that prohibited any

shareholder from holding no more than 10% of the equity of any two telecom licensees in the

same telecom circle. TRAI has pointed out that under the new regime it would be possible for a

group company with national level licenses such as National Long Distance/International Long

Distance/Internet Service Provider licence to overlap with the service area UASL licenses of its

other group entities. The TRAI, had, in April 2012, recommended that restrictions on cross-

holding in more than one licensee company in the same service area should be applicable only if

they have been allocated spectrum. Since in the new regime, spectrum is delinked from the

license, TRAI recommends that substantial equity or cross-holding requirement should only be

linked to spectrum holding and should only be stated in the WOL agreement.

Promoter Lock-in

On a similar point, in relation to the condition that requires the licensee to obtain prior

permission of the DoT for the sale of equity within the lock in period, TRAI recommends that

this condition should be included in the WOL agreement, since the lock-in period requirement

aims to prevent promoters from making quick financial gains on the basis of spectrum. While

this clause may have been relevant in the context of spectrum bundled with the license, its

inclusion is no longer relevant in the license now that spectrum is separately auctioned and

delinked from the license. Since the value of spectrum is determined by way of a market driven

process, the M&A activities should not be deterred by way of lock-in restrictions, which

substantially hinders acquisitions in this sector.

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Value Added Services

The UL Recommendations state that the licensee must be allowed to provide voice mail services,

audiotex services, videoconferencing, unified messaging services and other 'value added

services' over its network for subscribers in its service area, on a non-discriminatory basis. The

TRAI notes that the current scope of value added services is limited and seeks to expand it in line

with its recommendation issued previously. TRAI had in May 2012, defined 'value added

services' to mean enhanced no-core services, which either add value to basic tele services (such

as standard voice calls, voice/non-voice messages, fax and data transmission) or those that can be

provided as standalone application services through telecommunication network.

Tripartite agreement

The TRAI has recommended that the tripartite agreement which must be executed between

licensor, licensee and lenders (as one of the conditions for transfer or assignment of licence),

should be modified to include ‘spectrum’ and that this requirement be prescribed in the WOL

agreement.

Performance Guarantee

TRAI has made specific recommendations on the performance bank guarantee (PBG) for (i)

compliance with conditions of the license agreement and (ii) PBG for roll-out obligations. With

respect to PBG of Rs. 10 (ten) Crores for compliance with conditions of the license agreement

and instructions of the DoT, the TRAI recommends that the condition must be deleted from the

license agreement and instead must be retained as a part of the WOL. With respect to PBG for

roll-out obligations, the TRAI recommends:

a. In respect of each of the service areas, except Delhi, Mumbai and Kolkata, PBG shall be

submitted for an amount of Rs. 14 (fourteen) Crores per service area. This PBG would be

valid for a minimum period of six (6) years, further extendable by two (2) years.

b. In case of Delhi, Mumbai and Kolkata PBG shall be submitted for an amount of Rs. 7

(seven) Crores per service area valid for a minimum period of two (2) years, further

extendable by two (2) years.

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Penalties

The UL Recommendations state that the maximum financial penalty for major violations of

license terms and conditions should be reduced from Rs. 50 (fifty) Crores to Rs. 10 (ten) Crores,

a figure in proportion to the entry free, paid-up capital and net worth criteria of a licensee in each

service area. Currently, there are no stipulated guidelines on how the penalty should be imposed

and the DoT usually imposes with maximum penalties, even for minor violations.

TRAI has recommended that the penalty be levied on the basis of whether a violation is minor or

major and the recurrence of the violation. While the penalty prescribed is exclusive of the

liquidated damages prescribed in the license agreement, the UL Recommendations recommend

that the Dot must be given the right to cancel the license if a major violation is committed after

the fourth time.

Other Recommendations

The UL Recommendations have also suggested changes to the definition of Adjusted Gross

Revenue (AGR), in that intra-service area roaming revenues should not be excluded from Gross

Revenue for calculating the AGR of the service provider. Further, for levying spectrum charges,

it recommends that only the revenue from the wireless services must count towards AGR

calculation.

The TRAI has also suggested inclusion of two new clauses to the draft UL (AS). First clause

enables the TRAI to undertake regular spectrum audit for overlooking its efficient management.

The licensee will be required to provide relevant data, reports, test, equipment and other

accessories and permit inspection of its sites by TRAI personnel.

The second and the more important one suggests that the WOL must include a condition that

operators whose entire spectrum holding in a particular band (900MHz/ 1800MHz and 800MHz)

has been liberalized and must be permitted to share spectrum without any additional one-time

spectrum charge, subject to the guidelines issued by the Dot from time to time. However,

spectrum trading is not permitted at present.

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5.10 Sources of Finance

A franchise might raise new funds from the following sources:

Bank Statement

balance standing to the credit of a depositor at a bank.

The bank balance is also known as the balance per bank or balance per bank statement

and it refers to the ending balance appearing on a bank statement

A bank is a financial intermediary that accepts deposits and channels those deposits into

lending activities, either directly by loaning or indirectly through capital markets.

Personal Savings

The first place to look for money is your own savings or equity. Personal resources can include

profit-sharing or early retirement funds, real estate equity loans, or cash value insurance policies.

Friends and Relatives

Founders of a start-up business may look to private financing sources such as parents or friends.

It may be in the form of equity financing in which the friend or relative receives an ownership

interest in the business. However, these investments should be made with the same formality that

would be used with outside investors.

5.11 Price Plans

Local packs (Gujarat)

Page | 95

Uninor’s unbelievable local packs. It’s talking time with Uninor’s amazing local plans

for Gujarat users. Now your city has got closer with Uninor’s unbelievable local plans so enjoy

talking with your near and dear ones.

MRP Validity (day)

Key benefit

Rs.6 3 666 Sec for Local U2U & 666 Sec for Local U2ORs.7 2 Unlimited local U2U Calls Vaild for 2 DaysRs.13 28 All Local calls @1.2p/2 secRs.23 7 7000 sec Local U2U & 3000 sec Local U2O Valid for 7 DaysRs.29 28 All Local calls @ 1p/2 sec for 28 daysRs.38 28 30,000 Local U2U Secs for 28 daysRs.88 28 Unlimited Local U2U Calls for 28 Days + 100 MB Data validity

1 DayRs.101 28 Unlimited Local U2U calls free;Local U2O calls @30p/min for

28 DaysRs.149 28 26,000 Sec Local U2U and 24,000 Sec Local U2O for 28 DaysRs.198 28 500 Minutes Local U2U and 500 Minutes Local U2O free for 28

Days and 100 MB data for 1 DayRs.201 28 900 All Local MinsRs.238 90 Unlimited Local U2U for 90 daysRs.249 28 145,000 Sec Local U2U and 55,000 Sec Local U2O for 28 Days

Internet package

MRP Validity(days) Benefits

Rs. 42 30 Unlimited WhatsApp & Facebook + 250 MB Data for 30 Days

RS. 9 2 45 MB Data for 2 days

Rs. 14 3 125 MB DATA for 3 Days

Rs. 25 6 250 MB Data for 6 Days

Rs. 27 30 1GB during 11 pm to 7 am

Rs. 47 14 500 MB Data for 14 Days

Rs. 125 28 1.5 GB Data Valid for 28 Days

Rs. 151 30 2 GB Data for 30 Days

SMS Pack

MRP Validity(days) Benefits16 28 100 local and national SMS free46 28 2,500 local + National SMS

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ISD Pack

MRP Validity(days) Benefits19 30 America, Canada and U.K(landline)for 2ps/per seconds,

Bangladesh for 4ps/seconds, Nepal for 10ps/seconds, Gulf country for 15ps/seconds.

5.12 Cost of Project

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Sr.no. Particulars Amount

1 Site on Rent 25000

2 Computer (23500*3) 70500

3 Furniture 50000

4 Machinery & Equipments (Zerox machine) 5000

5 Raw material expenses ( blank paper) 2000

6 Marketing and Sales Promotion Expenses -

7 Staff Salary

head office ( experienced ) 1 * 15000

Computer operator 3 * 7500

Labor 1 * 2500 40000

8 Other Expenses 10000

Total 2,02,500

Cash on Hand 47500

Cost of project 2,50,000

5.13 Estimated Profit and Loss

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Particular Year (2014-15)

Sales 345000

Commission 6,900

Sim Recharge com. 13800

Total income 3,65,700

Expenditure

Salary 40,000

Electricity bill 6,000

Rent 25,000

Miscellnious exp. 10,000

Total Exp. 81,000

Net Profit 2,84,700

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Chapter :6

Conclusion and Limitations

6.1 Challenges for Telecom Industry

Page | 100

The Challenges of the day is to search for new cost effective ways to roll out telecom services in

rural areas it means one has to choose proper and effective technology for deployment and

leverage on the use of available infrastructure to reduce cost and time of role out of services.

Those service providers who create the business would emerge wireless and the rest would

remain spectators.

Connectivity of network and cost of bandwidth are also important to facilitate broadband usage.

Availability of local application and content is another are of concern available on website as of

today is in English. The content in local and regional language will increase interest of the local

population in broadband utilization.

Wireless technology is the future growth driver for which spectrum is the most important input.

The task of spectrum management in a multi-user and multi usage scenario is more daunting and

crucial than ever before.

6.2 FINDINGS

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New entrants can take advantage of gaps in the offerings of these aging pioneers, or find

innovation ways to market product or service.

Re-examining high levies: The Indian telecom sector is one of the highest taxed sectors in the

developing world, through levies, which comprise service tax, revenue share, spectrum cess, and

value added tax.

Bringing down operators capex: To expand the telecom services, there will be greater

investment needs in the future. Telco's will have to engage on active and passive infrastructure

sharing.

Rational policy for spectrum allocation: The allocation of adequate spectrum is an urgent

requirement for and existing operators. A clear roadmap for future spectrum allocation has to be

drawn, whether it is a 2G or a 3G platform. operators need to be cautious in 'bidding' and should

not overpay for spectrum as that could disturb project economics.

Data revenues to provide 'Buffer': India's data revolution is going to be fuelled by 3G and

WIMAX. For the data revolution to reach villages, low-cost access devices, vernacular content,

and community initiatives such as E-governance need to be in place.

Enhancing skill sets: The sector will require specialist resources to support and sustain growth

over the next four to five years. And pressure on talent is expected to increase with the

deployment of 3G and WiMAX services. The private sector will need to reorient its focus on

talent development through training schools and facilitation programs that cater to the needs of

the telecom industry.

Impact of global economic downturn:The current financial crisis could have a low-to-medium

impact on the telecom sector in terms of rising costs of capital and reduction in discretionary

spending on the part of customers, among other determinants.

6.3 LIMITATION

Page | 102

We have collected the secondary data where we cannot able to get exact information about the

telecommunication industry privilege in the market as based in past data and hence cannot be

reliable guide to future performance as future is dependent on other factors.

6.4 CONCLUSION

Page | 103

The technology improvement has helped the sector to perform better and has also expanded

the meaning of the term "telecommunication" from just audio message transformation to virtual

presence of person. the sector clearly shows a scope for future.

In our opinion, instead of taking a short-term view of paying capacity, the telecom companies

should focus on a long -term game. There is one word that telecom companies are hearing a lot

these days-"Volumes". They need volumes to sustain the network and the large employee base

they have enrolled. In this regard, companies like reliance is giving up to 30% commission on

each call. If and when the carrier access codes are introduced, there could be a tough fight among

these outlets, as far as prices are concerned. Yet, prices can go down further by almost 40% of

the present structure. Part of the same . The other part could be earning through volumes. New

players like Virgin Mobile, which already has international presence in close to 17 countries are

entering India. It is doing so in collaboration with Tata Tele services. The target market for

Virgin Mobile is the youth, which in India is around 54% of its population. Mobile

number portability (MNP) is to introduced by Jan 2011. A neutral third - party operator is

likely to be licensed to provide an end toned MNP solution. MNP could well better service

quality. There are challenges like porting time, allocation of capital and operational porting

costs among positive and will be set once the committee submits its final report on the

same.

The telecom sector is attracting significant domestic and global investment. The capital

investment made by the telecom service industry during 2006-07 was around $8.5 billion,

out of which $550 million was foreign direct investment. The margins and profits of

almost ail the telecom companies have been increasing .In fact there are cases where

significant portions of profit of international telecom companies have been from their

operations in India.

India is well prepared for the introduction of NGN (Next-Generation Networking). Being a late

starter in the telecom scenario, India has the advantage of using the latest technology and

so it is in a better position when compared to many other countries as far as introduction of

NGN is concerned. Besides, the TRAI has identified introduction of NGN as apriority area. As

of today seem favourable toward the continued growth of the telecom industry. The target of

500 million telephone connection by the year 2010 is very much achievable. Ever with 300

Page | 104

million telephone connection, the tele-density of the country is only about 26 percent. It has

been noted that mobile telephone is growing at an annual rate of over 90 percent. Also, on an

average over eight million subscribers are being added every month. Beside the basic telephone

service, there is a huge potential for different Value Added Service (VAS). In fact , the real

potential for telecom service growth is still lying untapped.

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