Telecom industry and competitive

landscape in India: will MTNL and

Case Analysis

Submitted By:
Group 9
Q1) Do you think Purwar would successfully bring back the lost glory of BSNL and
MTNL to become the leading telecom operators of the country? Why or why not?

Both the possibilities are there:

No, because
Lack of aggressiveness in the business model
Delay in adaptation of new technologies and new services for the customers
Poor HR policies and staff shortage
Heavy Debts in the financials

Yes, because
Already a dominating market player in wireline and wireless networks
Have ready-to-target market because of the huge customer base
Can make the best use of the first mover advantage in the 5G spectrum space
Government support and backup
Improvement and dynamic adaptation of features in product like OTT platforms tie ups, new moves advantage
in 5G, government support and advancement of business strategies can revamp BSNL and MTNL networks

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Q2) Is the telecom industry profitable? What are the key drivers of profitability?
Which of the player(s) is making a profit? Why?

If we look at the balance sheets of the major telecom companies mentioned in the case study only Reliance Jio is
profitable, other operators like Airtel, Vodafone Idea, MTNL and BSNL are in huge losses and struggling in the
overall business.Overall, with tight margins and heavy debts the telecom industry is in the bad shape. One of the
major issues with the telecom sector is the huge debt component both in form of government penalties and burden
of loans

Key drivers of profitability

In the telecom sector, out of all the players only Reliance Jio is profitable because:
Reliance Jio operates on 4G network, saving cost on 2G 3G services are which declining
Captured a huge market by providing the free calling and internet packs in the initial days
Multi-million-dollar capital backed parent company
Aggressive in pricing strategy in the market
Provided non-traditional telecom services like Jio Cinema, Jio Music and Jio Books
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Q3) Discuss the possible benefits and risks associated with the merger of BSNL and
MTNL?

Benefits:
BSNL is the largest provider of wireline telecommunication in the country, with a 33.75% market share
MTNL has a “Navaratna” status and thus enjoys various benefits from it and both are PSU entities as a result of which
they enjoy preferred treatment from the government
The 5G spectrum shall be supplied administratively (free of cost) to BSNL and MTNL by the GOI, which is a huge
opportunity for them to tap into remote corners of the country
With their combined presence, the two public sector operators will be well-positioned to meet the government's
broadband expansion ambitions under the Digital India project.
Fixed-line networks of BSNL can be leveraged to enable higher-speed Internet access, and a combined organisation
might take advantage of this potential.

Risks:
They are facing liquidity crunch, declining customer base, fierce competition on cost
The financial health of BSNL and MTNL is poor and they are highly levered (high debt)
Both of them are facing issues related to staff shortage at work, leading to a surge in customer complaints and more
time in their resolution
Groundbreaking inventors like Elon Musk are moving up the level of competition in the recommunication sector to
the next level
Due to a lack of digitalization of their services, they are deeply ingrained in the value chain system of running the firm

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Q4) Discuss the difference between value chain and value network, subsequently
highlighting their pros and cons. Should Purwar make a transition attempt of the
telecom value chain to a value network? What should be his strategy?

Traditionally, the value chain is linear, with a single supplier supplying items to a single merchant, who then sells
them to a single client. The value network model is more complicated, as it includes several suppliers, retailers, and
customers. This implies that merchants may interact with other retailers in addition to their consumers and suppliers.
The value network model also spreads risk among all ecosystem players rather than depending on a single member
to deliver all commodities or services required for production or consumption.
A value chain is frequently about the processes and activities within a corporation, whereas external parties are more
likely to be involved in the process of a value network.
Value Chains have limited "Sharing & Collaboration" while Value network makes it easier for people and information
to connect with each other.
The value chain perspective restricts value creation to a single end product enriching a single organisation while not
utilising the full potential of the chain's connected players.
The value network is primarily concerned with maximising value by combining values from the many economic actors
in the system, including suppliers, rivals, and customers. The value networks are made up of autonomous pieces that
are linked by service level agreements

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Q4) Discuss the difference between value chain and value network, subsequently
highlighting their pros and cons. Should Purwar make a transition attempt of the
telecom value chain to a value network? What should be his strategy?

Yes, Purwar should make a transition from value chain to value network.

Purwar can leverage the 5G Spectrum being offered by the GoI and offer services at prices lower than the
competition to build a user base (similar to Jio)
He can start by entering into tie-ups with OTT platforms like Netflix and Sonyliv in order to compete with firms like Jio
and Airtel who have already started to provide such services
He can also build an in-house ecosystem of applications such as BSNL/MTNL Cinema, BSNL/MTNL Live TV,
BSNL/MTNL Mart etc.
Since players are already competing on costs, they would have to compete on similar lines to ensure increase
adoption but would have to make their offerings more attractive in terms of value creation
BSNL/MTNL could acquire a competitive edge and improve its market share by collaborating with other businesses
and stakeholders in the value network and negotiating exclusive contracts.

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Thank You

Meet The Team

BA037-21 Vyom Aggarwal