INTRODUCTION :

“ Telecom in the real sense means transfer of information between two

distant points in space ”
“ Telecom is a huge and varied bastion of technologies, companies,
services and politics that is truly global in nature ”
Telecommunication is the assisted transmission over a distance for the purpose of
communication. In earlier times, this may have involved the use of smoke signals,
drums, semaphore, flags or heliograph. In modern times, telecommunication
typically involves the use of electronic devices such as the telephone, television,
radio or computer. Early Inventors in the field of Telecommunication include
Alexander Graham Bell, Guglielmo Marconi and John Logie Baird.
Telecommunication is an important part of the world economy

Telecom stands as one of the most essential elements of the business world in
terms of “Connecting the World”

The Telecom industry is undergoing rapid transformation in terms of scale,

integration and complexity. This is largely fuelled by rapid growth in some
markets and rapid consolidation in other markets. The software Industry is in a
unique position of having to deal with regional clients that are new businesses and
growing rapidly, and also deal with the global telecom players that are rapidly
converging. The problems and challenges are different in each case warranting
different solutions. However, in all cases there is a common need for various
telecom solutions (COTS or custom built) to interact with, exchange data and
invoke services across each other. There is an imperative need for sharing the
perspectives of the telecom operators, systems integrators and the technology
providers on the enabling standards, best practices and experiences.
EMREGING TRENDS

 Emergence of Technologies

 Emergence of broadband & wireless technologies pose threat to

carriers relying on aging infrastructure

 Developed Markets

The emerging trends in Telecom industry in medium term horizon (3-5 years) from
the perspective of 3 key players – Customers (end-users) who buy the services,
Operators who sell these services and Equipment vendors who make these
services technically feasible and available.

Customers
Customers are always looking for value for money – high quality services &
abundant choice at a minimal cost! Key attributes are:

 Quality: Crystal clear quality in all modes of communication, at all times

 Quantity: Variety of services – Voice, Data, Video & Mobility – available
at the same time, from the same device and at high data speeds
 Cost: Customers have got used to the declining rates of telecom services and
expect the trend to continue in future as well.

Operators
Some of the key challenges/opportunities for the operators are:

 Customer care – Provide pleasant user experience and abundant choice in

technologies and product packages
 Outsourcing: Outsource Network and IT functions to focus on core aspects
of their business and strategic initiatives
 Inside building coverage – Ensure good coverage inside buildings even if it
means sharing network resources with competitors as nearly 70% of the
voice & data calls are expected to originate inside the buildings in the
coming years
 Coverage/Penetration in Rural areas – Adapt technology to make
communication in rural areas profitable
 Fuel bill reduction – Fuel & Power contribute about 25% of operator’s
OPEX. Operators have great interest in technologies which reduce this
 expense as it improves their bottom line as well as earns approval from
environmental considerations.

Network Vendors & Technologies

Technology advancements are driven by the applications which customers find
appealing and solve the operational issues faced by operators. Some of the key
ones are:

Triple Play, Mobility & Coverage: Customers want to be able to use the triple
play services (Voice, Data and Video) all the time and everywhere – indoor or
outdoor. Multi-billion dollars are being invested in development and enhancement
of mobile technologies like 3G, WiFi, WiMax & LTE. Enhanced need for Indoor
coverage is leading to development of Femto cells. Fixed Mobile Convergence
(FMC) is also gaining increased importance as it makes sense to switch from
Mobile access to wire line access as soon as wire line access becomes available

IP Technology: Development of MPLS technology which provides differentiated

and assured Quality of Service (QoS) has overcome the best effort nature of IP
telephony. Advancements in IP technology have also opened up new modes of
communications like web-collaboration, intelligent call-centre applications etc.
High quality video conferencing which provides almost a real interaction
experience is likely to become killer application. DWDM enables very high
bandwidth over fibre. Since high bandwidth needs to be available at the customer
premises as well, Fibre is going to penetrate deeper in the access network as well.

Machine to Machine Communications: There are physical limits to the number

of telephone connections that can be sold to human beings! Machine to machine
communication can potentially increase it in the order of billions! For this to be
commercially successful, it requires standardization of protocols & simplicity of
operation

 The telecoms trends in India will have a great impact on everything from the
humble PC, internet, broadband (both wireless and fixed), cable, handset
features, talking SMS, IPTV, soft switches, and managed services to the
local manufacturing and supply chain. This report discusses key trends in the
Indian telecom industry, their drivers and the major impacts of such trends
affecting mobile operators, infrastructure and handset vendors.
CHALLENGES :
Telecom companies face a unique set of challenges that stem from technology
trends and customer demands. The convergence of applications, networks or
content like voice, video, and data on this new-age information super highway has
become the next path-breaking move in core mass-market technology providing
single connectivity and integrated user experience.

Success in a business environment characterized by convergence, innovation, high

customer churn, mergers, and changing regulatory demands, requires telecom
enterprises to have flexible business processes and robust infrastructure

 Driving Volume Growth

 Low Tariffs (ARPUs)

 Low Subscriber Base

 Technological Advancements

 Regulatory discord

 Cut-throat competition
Major players :
There are three types of players in telecom services:

• -State owned companies (BSNL and MTNL)

• -Private Indian owned companies (Reliance Infocomm, Bharti Tele-

Ventures,Tata Teleservices,)

• -Foreign invested companies (Hutchison-Essar(VODAFONE), Escotel, Idea

Cellular, BPL Mobile, Spice Communications)
 Major Players in different segments of Indian telecom industry

Basic Services Operators

MOBILE SERVICES
GSM Services Operators
BSNL
Airtel
MTNL
Vodafone
Reliance

Idea
TTSL

Reliance

Internet Services Operators BSNL

BSNL CDMA Services Operators

MTNL Reliance

Reliance
TTSL
TTSL
BSNL

Airtel

Mareket Share:
 Objective:

1. To identify the latest trends in telecom industry.

2. To identify different strategies of telecom industry in market.
3. To study the impact of emerging trend over consumer work.
 4. To identify different segmentation strategies adopted by telecom industry.
5. To identify various challenges face by telecom industry

Rational: we choose this topic for research to know the role

of telecom industry in present scenario and to know its benefits
to consumers. we also want to know the changes in telecom
industry from past to present time. There are various players in
telecom industry and how they differ from each other.

Research Methodology:

Research design:-
 It is an exploratory research on as there is a scope of further studies.

The study is about the trend and challenges in telecom industry

Sample design:-

 Sample population:- Indore (M.P.)

 Sample unit:- Distributor’s shop and service centers
 Sample size:-50 people
 Sample element:- Distributor’s and consumer
 Sample method:- Probability random sampling method will be used

Data collection method

Primary data:-
 Primary data are those data which are collected for the first time. we are

using the following Primary data collection method :-

1. Face to face interaction

Secondary data:-

Secondary data are those data which have already been selected by

someone else and which have already been passed through statistical process.

We are using the following secondary data collection method. :-

1. Internet
2. Industry portals
3. Journals

ANALYSIS AND INTERPERTATION:

PORTER’S FIVE FORCES

The nature of competition in an industry is strongly affected by suggested five forces. The stronger the
power of buyers and suppliers, and the stronger the threats of entry and substitution, the more intense
competition is likely to be within the industry. However, these five factors are not the only ones that
determine how firms in an industry will compete – the structure of the industry itself may play an
important role. Indeed, the whole five-forces framework is based on an economic theory know as the
“Structure-Conduct-Performance” (SCP) model: the structure of an industry determines organizations’
competitive behaviour (conduct), which in turn determines their profitability (performance). In
concentrated industries, according to this model, organizations would be expected to compete less
fiercely, and make higher profits, than in fragmented ones.

It uses concepts developed in Industrial Organization economics to derive five

forces that determine the competitive intensity and therefore attractiveness of a
market. Porter referred to these forces as the micro environment, to contrast it
with the more general term macro-environment. They consist of those forces
close to a company that affect its ability to serve its customers and make a profit.

Main Aspects of Porter’s Five Forces Analysis

Force 1: The Degree of Rivalry

The intensity of rivalry, which is the most obvious of the five forces in an industry, helps determine the
extent to which the value created by an industry will be dissipated through head-to-head competition.
The most valuable contribution of Porter's “five forces” framework in this issue may be its suggestion
that rivalry, while important, is only one of several forces that determine industry attractiveness.

 This force is located at the centre of the diagram

 Is most likely to be high in those industries where there is a threat of substitute products;
and existing power of suppliers and buyers in the market

Now let us understand the implication of degree of revelry in Indian telecom sector. The dimensions of
this parameter are determined by:

High Exit Barriers: In any industry, if the exit barrier is high it increases the difficulty of any organization
to leave the industry sector. So it makes any difficult to any willing to leave company to leave the
industry. The telecom industry suffers from high exit barriers, mainly due to its specialized equipment.
Networks and billing systems cannot really be used for much else, and their swift obsolescence
makes liquidation pretty difficult.

High Fixed Cost: The industry also suffers from high fixed cost which makes the entry barrier also very
high for the industry. It comes as no surprise that in the capital-intensive telecom industry the biggest
barrier to entry is access to finance. To cover high fixed costs, serious contenders typically require a lot
of cash. When capital markets are generous, the threat of competitive entrants escalates. When
financing opportunities are less readily available, the pace of entry slows. Meanwhile, ownership of a
telecom license can represent a huge barrier to entry.

 6-7 players in each region

 3 out of 4 BIG-Four present in each region

Very less time to gain advantage by an innovation: Every company in this industrial sector in investing a
huge amount in research and development and marketing strategy. That is why we see any offer
launched by any company is counter attacked by other companies very soon. This makes the industry
rivalry most prominent.

Eg. Caller tunes, life time card

Price wars: The price war is really very fierce in this industry. Price war in telecom industry has
commoditized the market that branding has taken a backseat.

Competition is "cut throat". The wave of industry deregulation together with the receptive capital
markets of the late 1990s paved the way for a rush of new entrants. New technology is prompting
a raft of substitute services. Nearly everybody already pays for phone services, so all competitors
now must lure customers with lower prices and more exciting services. This tends to drive
industry profitability down. In addition to low profits, the telecom industry suffers from high exit
barriers, mainly due to its specialized equipment. Networks and billing systems cannot really be
used for much else, and their swift obsolescence makes liquidation pretty difficult.

Force 2: The Threat of New Entrants

Both potential and existing competitors influence average industry profitability. The threat of new
entrants is usually based on the market entry barriers. They can take diverse forms and are used to
prevent an influx of firms into an industry whenever profits, adjusted for the cost of capital, rise above
zero. In contrast, entry barriers exist whenever it is difficult or not economically feasible for an outsider
to replicate the incumbents’ position. The most common forms of entry barriers, except intrinsic
physical or legal obstacles, are as follows:

 Economies of scale: In telecom industry the economies of scale exists from the supplier side.
That is why companies try to increase their subscriber base at drastic rate.

 Distribution channels: Distribution channels are also providing a major determining factor.
These channels are not loyal to any company and competitors can easily access them and
make out work for them.

 Customer Switching Costs: Customer switching cost is very low, as cost of new connection is
really low. And new connection offers more benefits to the customers.

The Indian telecom sector offers unprecedented opportunities for foreign

companies in various areas, such as 3G, virtual private network, international long
distance calls, value added services, etc.
witnessing M&A activities that are leading to consolidations in the industry. This trend has
assisted companies in expanding their reach in the Indian telecom market to offer better
services to customers.
The market is The Indian telecom industry has always allured foreign investors. In fact, the
cumulative FDI inflow, from August 1991 to March 2007, in the telecommunication sector
amounted to US$ 3,892.19 million. This makes telecommunication the third-largest sector to
attract FDI in India in the post liberalization era.

In India large numbers of players are emerging in the market on the national level from
its state level existence such as:
• Aircel
• Virgin
• Spice
• Idea
• Unitech

It comes as no surprise that in the capital-intensive telecom industry the biggest barrier to

entry is access to finance. To cover high fixed costs, serious contenders typically require
a lot of cash. When capital markets are generous, the threat of competitive entrants
escalates. When financing opportunities are less readily available, the pace of entry
slows. Meanwhile, ownership of a telecom license can represent a huge barrier to entry.
In the U.S., for instance, fledgling telecom operators must still apply to the Federal
Communications Commission (FCC) to receive regulatory approval and licensing. There
is also a finite amount of "good" radio spectrum that lends itself to mobile voice and data
applications. In addition, it is important to remember that solid operating skills and
management experience is fairly scarce, making entry even more difficult.
Force 3: The Threat of Substitutes
The threat that substitute products pose to an industry's profitability depends on the relative price-to-
performance ratios of the different types of products or services to which customers can turn to satisfy
the same basic need. The threat of substitution is also affected by switching costs – that is, the costs in
areas such as retraining, retooling and redesigning that are incurred when a customer switches to a
different type of product or service. It also involves:

 Product-for-product substitution (email for mail, fax); is based on the substitution of need;

 Generic substitution (Video suppliers compete with travel companies);

 Substitution that relates to something that people can do without (cigarettes, alcohol).

Now let us discuss this concept for telecom industry. The potential major substitutes for telecom
industry are as follows:

VOIP (Skype, Messenger etc.)

Online Chat
Email
Satellite phones

All of these technologies have a huge potential, though none of the above a major threat in current
scenario. So the telecom industry has to keep a close look on these substitutes.

Products and services from non-traditional telecom industries pose serious substitution threats.
Cable TV and satellite operators now compete for buyers. The cable guys, with their own direct
lines into homes, offer broadband internet services, and satellite links can substitute for high-
speed business networking needs. Railways and energy utility companies are laying miles of
high-capacity telecom network alongside their own track and pipeline assets. Just as worrying for
telecom operators is the internet: it is becoming a viable vehicle for cut-rate voice calls.
Delivered by ISPs - not telecom operators - "internet telephony" could take a big bite out of
telecom companies' core voice revenues.

Telecom sectors offers a wide range of services in India, such as wireline, CDMA
mobile, GSM mobile, internet, broadband, carrier, MPLS-VPN, VSAT, VoIP, IN, etc.
Internet telephone
It is emerging as a best option in place of because it is cheaper and video as an added
advantage.
INTERNET SEVICE MARKET
PROVIDER SHARE(%)
BSNL 45.2
MTNL 19
SIFY 8.9
BHARTI AIRTEL 6.8
RELIANCE 6.1
Force 4: Buyer Power

Buyer power is one of forces that influence the appropriation of the value created by an industry. The
most important determinants of buyer power are the size and the concentration of customers. Other
factors are the extent to which the buyers are informed and the concentration or differentiation of the
competitors. Kippenberger (1998) states that it is often useful to distinguish potential buyer power from
the buyer's willingness or incentive to use that power, willingness that derives mainly from the “risk of
failure” associated with a product's use.

 This force is relatively high where there a few, large players in the market, as it is the case with
retailers a grocery stores;

 Present where there is a large number of undifferentiated, small suppliers, such as small farming
businesses supplying large grocery companies;

 Low cost of switching between suppliers, such as from one fleet supplier of trucks to another.

In the context of Indian telecom industry we can say that the following points influence the buyer
power:

 Lack of differentiation among the service provider

 Cut throat competition
 Customer is price sensitive
 Low switching costs
 Number portability to have negative impact

With increased choice of telecom products and services, the bargaining power of buyers is rising.
Let's face it; telephone and data services do not vary much, regardless of which companies are
selling them. For the most part, basic services are treated as a commodity. This translates into
customers seeking low prices from companies that offer reliable service. At the same time, buyer
power can vary somewhat between market segments. While switching costs are relatively low
for residential telecom customers, they can get higher for larger business customers, especially
those that rely more on customized products and services.
Force 5: Supplier Power

Supplier power is a mirror image of the buyer power. As a result, the analysis of supplier power typically
focuses first on the relative size and concentration of suppliers relative to industry participants and
second on the degree of differentiation in the inputs supplied.

At first glance, it might look like telecom equipment suppliers have considerable bargaining
power over telecom operators. Indeed, without high-tech broadband switching equipment, fiber-
optic cables, mobile handsets and billing software, telecom operators would not be able to do the
job of transmitting voice and data from place to place. But there are actually a number of large
equipment makers around. There are enough vendors, arguably, to dilute bargaining power. The
limited pool of talented managers and engineers, especially those well versed in the latest
technologies, places companies in a weak position in terms of hiring and salaries.

The ability to charge customers different prices in line with differences in the value created for each of
those buyers usually indicates that the market is characterized by high supplier power and at the same
time by low buyer power.

In the drawback of Indian telecom industry the following should be kept in mind:

 Large number of suppliers: The industry basically has a large number of suppliers, which helps them
to choose from a lot of options. So they try to select the best option to deliver the value to the
customers and to have a competitive advantage from their competitor.

 Shared tower infrastructure: Technology has helped them to share the tower infrastructure. This
basically helps them to reduce the initial investment a lot.

 Limited pool of skilled managers and engineers especially those well versed in the latest.

 Medium cost of switching since changing their hardware would lead to additional cost in modifying
the architecture.

 Overall influence on the industry – medium.

As far as telecom industry is concerned, it is service based industry which is intangible,
so in this case there are less suppliers or we can say the role of suppliers are almost
negligible in the case of telecom industry. We are trying to analyze that minor role
1. Mobile hand set suppliers: There can be many suppliers for handset, some of them are
-

Nokia, Sony Ericsson, Motorola, and Siemens etc. Many big telecom giants have their
own handset manufacturing (back ward integration) like Reliance Classic, Tata Indicom
or they have collaboration with some known companies like Reliance communication
have tie ups with Samsung and LG for their CDMA services.
2. Some other suppliers for this industry can be the Optical fibre suppliers, Aluminum
suppliers (aluminum is required for the tower) but their bargaining power is limited.
3. Other important parameters can be the software assistance where suppliers can have
the edge some of the main software solution provider are TCS, Infosys, Wipro, Satyam
etc. Again one thing is noticeable that big giants like Reliance and Tata have their own
units for software solution and companies like Vodafone, Spice are taking services from
above stated companies. So here software providers have bargaining power because
suppose Vodafone can’t go to Reliance info for their software solution so here
suppliers can have edge over the companies.

Relianc
17%
e

Hutch 16%

TTSL 10%

9.6
Idea
%
The first BCG matrix will be plotted for Idea Cellular Limited, our chosen SBU, with respect to
the market leader, Bharti Airtel. Taking the market share of Bharti as 1X, the relative market
share of Idea comes as 0.39X. The BCG matrix thus, would look like as under.
BCG Matrix of Idea Cellular Limited with respect to Airtel
Market Growth Rate (in %)

10X 1X 0.39X 0.1X

Relative Market Share

Analysis of BCG matrix:

In the above matrix, Idea Cellular Limited falls in the first quadrant of “QUESTION MARKS”.
The circle size represents the absolute market share (i.e. 12%) of our SBU in the telecom sector.
We will formulate the strategies which Idea should follow in the later part of this project.
Plotting the Competitors
1. Bharti Airtel: Bharti Airtel is the market leader in the telecom sector with a market share
of 31%. The market challenger in this industry is Vodafone. So we plot the BCG matrix
of Airtel with respect to Vodafone. Taking the market share of Vodafone (i.e. 23%) as
1X, the relative market share of Airtel comes as 1.35X. The BCG matrix of Airtel will
look as under:

BCG Matrix of Bharti Airtel with respect to Vodafone

Market Growth Rate (in %)

10X 1.35X 1X 0.1X

Relative Market Share

Analysis of BCG matrix:

In the above matrix, Bharti Airtel falls in the quadrant of “STAR” with respect to the market
challenger. The circle size represents the absolute market share (i.e. 31%) of Airtel in the
telecom sector.
 2. Vodafone Essar: Vodafone is the market challenger in the telecom sector with a market
share of 23%. The market leader in this industry is Vodafone and so we plot the BCG
matrix of Vodafone with respect to Airtel. Taking the market share of Airtel (i.e. 31%) as
1X, the relative market share of Vodafone comes as 0.74X. The BCG matrix of Airtel
will look as under:
BCG Matrix of Vodafone with respect to Airtel
Market Growth Rate (in %)

10X 1X 0.74X 0.1X

Relative Market Share

Analysis of BCG matrix:
In the above matrix, Vodafone falls in the quadrant of “QUESTION MARK” with respect to the
market LEADER. The circle size represents the absolute market share (i.e. 23%) of Vodafone in
the telecom sector.
 3. BSNL: BSNL is another competitor ahead of IDEA in the telecom sector with a market
share of 19%. The market leader in this industry is Airtel and so we plot the BCG matrix
of BSNL with respect to Airtel. Taking the market share of Airtel (i.e. 31%) as 1X, the
relative market share of BSNL comes as 0.61X. The BCG matrix of Airtel will look as
under:
BCG Matrix of Idea Cellular Limited with respect to Airtel
Market Growth Rate (in %)

10X 1X 0.6X 0.1X

Relative Market Share

Analysis of BCG matrix:

In the above matrix, BSNL falls in the quadrant of “QUESTION MARK” with respect to the
market LEADER. The circle size represents the absolute market share (i.e. 19%) of BSNL in the
telecom sector.
Growth Rate
8.3 SWOT 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 firm's 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 SWOT analysis fits into an environmental scan:

Strengths
Here we will analyze the strengths of the telecom industry as a whole. The most important factors are:

 Technology is advanced and easy to implement: For telecom industry the technology is
really advanced and more and more investment is done on technology to get world class
infrastructure and knowhow to put in this field. Recently the telecom sector is going to add
3G spectrum as its latest up-gradation.

 Management Team has prior experience: The management team controlling Indian telecom
sector in really efficient. Thank goes to the IITs which produce world class engineers. So
Indian telecom sector has abundance of technological knowhow.

8.3.2 Weakness
The weaknesses of the Indian telecom sector are as follows.

 High Cost of Infrastructure: The infrastructure cost of telecom industry is very high.

 Low customer retention power: The customer retention power for telecom industry is really
low and the customer changes their service provider company very soon.
8.3.3 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.

 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.

8.3.4 Threats

The treats 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 change the market dynamics: A lot of new technologies are coming. Then
even have 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 SWAT analysis we can draw the following framework :

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