TELECOM INDUSTRY

INTRODUCTION: The Indian telecommunications industry is the world's fastest growing telecommunications industry, with 671.69 Million telephone (landlines and mobile) subscribers and 635.51 Million mobile phone connections as of June 2010. It is also the second largest telecommunication network in the world in terms of number of wireless connections after China. The Indian Mobile subscriber base has increased in size by a factor of more than one-hundred since 2001 when the number of subscribers in the country was approximately 5 million to 635.51 Million in June 2010. As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile subscribers by 2013. Furthermore, projections by several leading global consultancies indicate that the total number of subscribers in India will exceed the total subscriber count in the China by 2013. The industry is expected to reach a size of 344,921 cr. (US$ 74.85 billion) by 2012 at a growth rate of over 26%, and generate employment opportunities for about 10 million people during the same period. According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly. In 2008-09 the overall telecom equipments revenue in India stood at 136,833cr (US$ 29.69 billion) during the fiscal, as against 115,382cr (US$ 25.04 billion) a year before. MARKET OVERVIEW The telecom sector in India has witnessed unparalleled growth by global standards in the last decade and continues to be one of Indias biggest success stories. This growth has been built on the wireless revolution. At the end of January 2010, the overall tele-density was recorded at 49.5 per cent with a total telephone subscriber base of 581.81 million. By 2012, the total telecom subscriber base is expected to reach approximately 700 million to include about 650 million wireless users and approximately 50 million fixed line users, driven by a rise in the demand for communications from semi-urban and rural India. Revenues of the Indian telecom industry are projected to reach US$ 45 billion by 2012 as compared to US$ 26 billion in 2008. The KEY PLAYERS in the Indian telecom market are Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), Bharti Airtel Limited, Reliance Communication, Vodafone, Idea Cellular, Aircel and Tata Teleservices. On landlines, intra-circle calls are considered local

calls while inter-circle are considered long distance calls. 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 (i.e. To call Delhi, 011 would be dialed first followed by the phone number). For international calls, "00" must be dialed first followed by the country code, area code and local phone number. The country code for India is 91. SUBSCRIBER STATISTICS Telephony Subscribers (Wireless and Landline): 621.28 million (Mar 2010) Land Lines: 36.96 million (Mar 2010) Cell phones: 617.53 million (May 2010) Yearly Cell phone Addition: 178.25 million (Jan-Dec 2009) Monthly Cell phone Addition: 20.31 million (Mar 2010) Teledensity: 52.74% (Mar 2010) Projected Teledensity: 1 billion, 84% of population by 2012. SWOT ANALYSIS OF TELECOM INDUSTRY STRENGTHS Huge wireless subscriber potential. Fastest growing mobile market in the world. Consumers are ready to pay for cutting edge Services. Government proposes to hike FDI limit in Telecom to 74% Unified license regime.

WEAKNESS Lowest call tariffs in the world Market strongly regulated by Government body Governing both ISP and Telecom sectors Too many authorities ruling the sector Huge potential for low end and cheap handsets Wide scale Consumer churn in Telecom and ISP Wide spread VAS deployment is restricted due to Language and literacy problems

OPPORTUNITIES To offer value added services on GSM, CDMA and IP. Language independent services. Mobile Marketing concepts. Content influenced by local culture and Global success stories. M-Commerce. Unified messaging platforms. Foreign investment in form of equity or technology. THREATS Low cost service providers no possibility of breaking Even in short term Weak IPR protection Software and digital content Piracy Political instability Regulatory interference.

PESTLE ANALYSIS POLITICAL FACTORS Political factors, are how and to what degree a g o v e r n m e n t intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods or merit bads). Furthermore, governments have great influence on the health ,education, and infrastructure of a nation. ECONOMIC FACTORS Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to wha textent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported

goods in an economy companies have used telecommunication to help build global empires. This is self-evident in the case of online retailer but according to academic Edward Lenert, even the conventional retailer has benefited from better telecommunication infrastructure compared to its competitors. In cities throughout the world, home owners use their telephones to organize many home services ranging from pizza deliveries to electricians. Even relatively poor communities have been noted to use telecommunication to their advantage. In Bangladeshs Narshingdi district, isolated villagers use cell phones to speak directly to wholesalers and arrange a better price for their goods. In coffee growers share mobile phones to follow hourly variations in coffee prices and sell at the best price. SOCIAL FACTORS Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For increasing the cost of labor). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers). Telecommunication is playing an increasingly important role in social relationships. In recent years, the popularity of social networking sites has increased dramatically. These sites allow users to communicate with each other as well as post photographs, events and profiles for others to see. The profiles can list a person's age, interests, gender and relationship status. In this way, these sites can play important role in everything from organizing social engagements to courtship. Prior to social networking sites, technologies like S M S and the telephone also had a significant impact on social interactions. In 2000, market research group Ipsos MORI reported that 81% of 15 to 24 year-old SMS users in the United Kingdom had used the service to coordinate social arrangements and 42% to flirt. TECHNOLOGICAL FACTORS Technological factors include ecological and environmental aspects, such asR & D activity,a u to m a t io n, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation technological

change in the telecom and computer have radically change in business scenario in turn the new demands of business have spurred many telecom technological innovation in order to exploit these innovation for completing in global market business community the world over has been putting pressure on government to revise the policy regulation and structure of the telecom sector.several country across the world have responded by restructuring the state controlled telecom service provider increasing private participation and deregulating service provision. ENVIRONMENTAL FACTORS Environmental factors include weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance.Furthermore, growing awareness to climate change is affecting how companies operate and the products they offer--it is both creating new markets and diminishing or destroying existing ones. LEGAL FACTORS Legal factors include discrimination law ,consumer law , antitrust law , employment law and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.