RESEARCH PAPER

TELECOM INDUSTRY: COMMUNICATION SERVICES

To
Dileep menon
Economics department

Topic: pre and post recession overview 2008

INTRODUCTION
Market with a subscriber base of 1.20 billion and has registered
strong growth in the past decade and half. The Indian mobile
economy is growing rapidly and will contribute substantially to
India’s Gross Domestic Product (GDP), according to report
prepared by GSM Association (GSMA) in collaboration with the
Boston Consulting Group (BCG). As of January 2019, India has
witnessed a 165 per cent growth in app downloads in the past
two years.
India is currently the world’s second-largest telecommunications
The liberal and reformist policies of the Government of India
have been instrumental along with strong consumer demand in
the rapid growth in the Indian telecom sector. The government
has enabled easy market access to telecom equipment and a
fair and proactive regulatory framework that has ensured
availability of telecom services to consumer at affordable prices.
The deregulation of Foreign Direct Investment (FDI) norms has
made the sector one of the fastest growing and a top five
employment opportunity generator in the country.

INDUSTRY ANALYSIS
India is the world's second-largest telecommunications market,
with around 1,186.63 million telephone subscriber bases at the
end of June 2019. The telecom market can be split into three
segments – wireless, wireline and internet services. The
wireless market segment comprises of 98.2 per cent of the total
subscriber base, as of June 2019 compared to 95.90 per cent
in FY11. As of May 2019, rural subscribers form 42.9 per cent
of total telephone subscribers and in April 2019 43.33 per cent,
compared to 33.35 per cent in FY11.
India is also the second largest country in terms of internet
subscribers. As of 2019, India holds the world’s highest data
usage per smartphone at an average of 9.8 GB per month. It is
expected to double to 18 GB by 2024. The number of internet
subscribers in the country increased at a CAGR of 41.58 per
cent during FY06-FY18 to reach 636.73 million in 2018-19.
India became the world’s fastest-growing market for mobile
applications in the first quarter of 2018 and remained as the
world’s fastest growing market for Google Play downloads in
the second and third quarter of 2018. The internet user base in
India has crossed 500 million mark and is likely to reach 627
million by end 2019. Total wireless data usage in India grew
119 per cent year-on-year to 1,58,50,560 terabytes between
January-March 2019.
Gross revenue of the telecom sector stood at Rs 2,37,416.6
crore (US$ 33.97 billion) in 2018-19.
Strong policy support from the government has been crucial to
the sector’s development. Foreign Direct Investment (FDI) cap
in the telecom sector has been increased to 100 per cent from
74 per cent. FDI inflows into the telecom sector during April
2000 – March 2019 totalled to Rs 2.29 lakh crore (US$ 32.82
billion). As of January 2019, expenditure on telecom
infrastructure and services by Government of India grew six-
fold to Rs 60,000 crore (US$ 8.31 billion) between 2014-19.
To propel the sector on a growth path, the Government of India
has launched the National Digital Communications Policy,
2018, which envisages attracting investments worth US$ 100
billion in the telecommunications sector by 2022.
 LIST OF TOP COMPANIES

This Photo by Unknown Author is licensed under CC BY-

 Operations in 16 countries across Asia and Africa

 Customer base of over 403 million

 Covers over 1.84 billion population

 Total Broadband subscribers stood at 118.34 million as of end of May 2019

 Consolidated total income of Rs 80,780.20 crore (US$ 11.55 billion) in FY19 and Q1
FY20 at Rs 20,737.9 crore (US$ 2.97 billion)

 Connecting India’s leading 1,000+ corporates

Bharti Airtel Limited is a leading global telecommunications company with operations

in 18 countries across Asia and Africa. It is headquartered in New Delhi, India. The
company ranks amongst the top three mobile service providers globally in terms of
subscribers. In India, the company's product offerings include 2G, 3G and 4G
wireless services, mobile commerce, fixed line services, high speed home
broadband, DTH, enterprise services including national & international long-distance
services to carriers. In the rest of the geographies, it offers 2G, 3G, 4G wireless
services and mobile commerce. Bharti Airtel had over 448 million customers across
its operations at the end of September 2018.

Bharti Airtel – The Smartphone Network

2019 Airtel Payments Bank launches Bharosa saving account in
which Rs 500 (US$ 7.15) will be the minimum balance
requirement also offers the free accident cover of Rs 5 lakh
(US$ 7,154)
Airtel launched its broadband service Airtel Xtream Fibre at
worth Rs 3,999 (US$ 57.21)
Airtel upgrades 4G network in Delhi NCR, deploys LTE 900
technology to boost indoor coverage
2018 Received a 10-year license to provide inflight and maritime
connectivity and broadband services from Department of
Telecommunications.

2017 Ranked amongst top 100 firms in 'The World's Most

Innovative Companies' (2017) by Forbes
Launches digital platform to offer integrated solutions

2014 Surpasses 300 million customers milestone

Airtel and Apple launch India’s first 4G on mobile

2012 Announces partnership with Qualcomm for 4G

2011 Launches 3G services in Mumbai

2006 Changes its name from Bharti Tele-Ventures Ltd. to Bharti

Airtel Ltd.

2003 AirTel subscribers exceed 3 million mark

This Photo by Unknown Author is licensed under CC

BY

 Third largest telecom-operator in India

 More than 331.3 million subscribers

 Net subscriber addition of 83 million in 2017-18

 Total Broadband subscribers stood at 322.99 million as of end of May 2019.

 Lowest call drops in the country

 Standalone total income of Rs 38,844 crore (US$ 5.56 billion) in FY19.

Reliance Jio is an entire ecosystem that allows Indians to live the digital life to
the fullest. This ecosystem consists of powerful broadband networks, useful
applications, best-in-class services and smart devices distributed to every
doorstep in India. Jio’s media offerings include the most comprehensive
libraries and programmes of recorded and live music, sports, live and catch up
television, movies and events. Jio is about creating connected intelligence for
6 billion global minds to unleash the power of a young nation. The three-
pronged focus on broadband networks, affordable smartphones and the
availability of rich content and applications has enabled Jio to create an
integrated business strategy from the very beginning, and today, Jio is
capable of offering a unique combination of telecom, high speed data, digital
commerce, media and payment services.
Reliance Jio Infocomm – Jio Digital Life

2019 Launched JioFiber in August

2019 Became the second largest operator in terms of subscribers in India

2019 Launched Digital Udaan for first time users

2018 Approved plan to spin off fibre and tower assets

Adjudged 'Best Mobile Operator Service for Consumers' at Mobile World Congress

2017 Announced acquisition of wireless spectrum, tower, fiber and MCN assets of Reliance
Communications

2017 Launched its Jiophone

2016 Surpasses 50 million subscribers within 83 days of launch

2016 Commercial roll-out of services in September 2016

 2013 Infotel Broadband renamed as Reliance Jio Infocomm

2010 Reliance Industries Limited purchased 95 per cent stake in Infotel Broadband

This Photo by Unknown Author is licensed

under CC BY-SA

 100 per cent Government owned Public Sector Undertaking

 Workforce of around 186,000

 Total Broadband subscribers stood at 21.67 million as of end of May 2019.

 Turnover of Rs 27,818 crore (US$ 4.32 billion) in FY18

BSNL is a technology-oriented company and provides all types of telecom

services namely telephone services on wireline, wireless local loop (WLL) and
mobile, broadband, internet, leased circuits and long-distance telecom
service. The company has been in the forefront of technology with 100 per
cent digital technology switching network. BSNL’s nation-wide
telecommunications network covers all district headquarters, sub-divisional
headquarters, Tehsil headquarters and almost all the block headquarters.

Bharat Sanchar Nigam Limited (BSNL)- Connecting India Faster

2018 Received approval from Department of Telecommunications to launch 4G services

2013 Telegram services discontinued

2009 Launched 3G services pan India

2007 Secured 80 per cent of Department of Telecom's rural mobile telephony towers to set up
8,000 telecommunication towers

2000 Incorporated on September 15, 2000

PRODUCER ANALYSIS
Telecom Regulatory Authority of India’s financial data report for the
September quarter gives a glimpse of how much share Reliance Jio Infocomm
Ltd has captured just a year after it started operations.
Based on reported gross revenue numbers, Jio accounted for a 14.5% share of
India’s wireless telecom market in the second quarter (Q2). But there is an
element of double counting with gross revenues, as it includes payments
made to (and received from) other operators for roaming arrangements and
for termination. To that extent, it makes more sense to look at adjusted gross
revenues (AGR), which captures net revenues accruing to each company.
Based on reported AGR numbers, Jio had a 13.9% share of the market last
quarter. Of course, this is overstated because a portion of Jio’s revenues
related to the June quarter was recognized in Q2. BNP Paribas Securities
India Pvt. Ltd said in a note to clients, “Jio’s gross revenue market share (RMS)
was 14.5% in 2Q18 as it booked revenue for two quarters in 2Q18. Its 1H18
RMS of 8.7% is a more meaningful number."
While this may be true, it is a rather redundant number to work with, since Jio
has increased tariffs twice since July and is adding customers at a relatively
fast clip. New customers are now signing up at an Arpu (average revenue per
user) of Rs160 or so after including a proportionate share of the Prime
membership (valid only till March 2018). Even old customers are now
generating an Arpu of around Rs130 for the company, based on the tariff for
the flagship 84-day plan.
Jio had reported revenues of Rs6,140 crore for the September quarter, with an
implied paid subscriber base of around 131 million. Assuming that base is
now generating an Arpu of Rs130, and that new subscribers (roughly six
million a month) are coming in at Rs160, Jio should end up with revenues of
Rs6,000 crore in the December quarter as well.
Revenues of incumbents, meanwhile, are still declining, as a higher share of
subscribers adjust to lower tariff plans, as well as due to the 57% cut in
interconnect usage charges. As such, Jio may end up with an even higher
market share in Q3 than what was reported in Q2.
Eventually, most analysts expect Jio, Bharti Airtel Ltd and the Vodafone-Idea
combine to corner 30-32% of the market each, with the remaining in the
hands of public sector companies. But the pace at which Jio is headed towards
that number is clearly taking most people by surprise.

CONSUMER ANALYSIS
The consumer analysis of telecom industry tells about the consumer taste and
preferences. It looks at the ways in which segmentation has now become
generally accepted within the industry – and thus how the central question has
moved on from whether segmentation should be done at all, to what is the
right sort of segmentation for a particular business, business issue and target
audience. Four segmentation schemes are considered: Customer Value
Segmentation, Customer Behaviour Segmentation, Customer Life cycle
Segmentation and Customer Migration Segmentation. Looking at examples of
how each of the above tends to be used, the article concludes that advanced
use of segmentation allows each customer to be part of a micro-segment,
which allows for precise targeting, with knowledge of what the retention and
value drivers are for each customer. The end result is higher retention and
growth, with the parallel benefit of enhanced business planning, where
specific growth and retention targets may be assigned to each segment.
This research framework consists of three factors which are influencing mobile users such as
assurance, reliability and responsiveness among all as observed from the literature.

Assurance: Assurance is knowledge and courtesy of employees and their ability to convey
trust and confidence. The assurance dimension is particularly important in service industries
offering high level of credence qualities, such as auto repair medical and telecommunication
services. The importance of the assurance dimension increases in proportion to the risk and the
greater the inability for a customer to evaluate the service. Employees should have the
competence to inspire trust and confidence in consumers about the ability of GSM service
providers in anticipating and meeting consumers’ need. Offering better warranty terms convey
greater assurance to customers and can result in greater sales.

Reliability means accomplishing the services on time and in consistent manner, free
from errors. Reliability is defined as the ability to perform the promised service
dependably and accurately. It is emphasized that reliability means doing what you say
you will do. The authors explained further by saying customers have consistently stated
that a company’s ability to deliver promises is the most factor to providing service
quality.

Responsiveness: Responsiveness is the willingness to help the consumers in case of any

problem. Solving the complaints of consumers efficiently creates a positive image about the
quality of service but if consumers are kept waiting, it creates negative impression about the
quality of service. Responsiveness is the willingness to help customers and to provide prompt
service. It is stated that customers judge a company’s responsiveness by assessing the amount
of time it takes and the attentiveness that is offered in response to their requests, questions,
complaints, and problems.

Demand analysis of telecom industry

1.In the year 2010 the demand of the telecom industry decreased as well
2.in the year 2012 the demand of it decreased more at the rate of