Report on Indian Telecom Industry
Report on Indian Telecom Industry

Report on Indian Telecom Industry

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  • Pages: 6 (3022 words)
  • Published: October 12, 2017
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Contents Acronyms 2.

5GBetween 2nd and 3rd Generation 2GSecond Generation 3GThird Generation ADCAccess Defecit Charge ARPUAverage Revenue Per User AUSPIAssociation of Unified Service Provider of India BSNLBharat Sanchar Nigam Limited CDMACode Division Multiple Access COAICellular Operators Association of India DOTDepartment of Telecommunication DTSDepartment of Telecom Service EBITDAEarning Before Interest Tax Depreciation and Amortization FYFinancial Year GSMGlobal System Mobile IDCIndustrial design Centre ILDInternational Long Distance ILPIndustrial liaison ProgramIPTVInternet Protocol Television ISPInternet Service Provider MPLS-VPNMulti-Protocal Label Switching-Virtual Private Network MTNLMahanagar Telephone Nigam Limited NLDNational Long Distance NPLCNational Private Leased Circuits ROIReturn on Investment RSRupees TDSATTelecom Dispute Settlement Appellate Tribunal TELECOMTelecommunication TRAITelecom Regulatory Authority of India UKUnited Kingdom USAUnited States of America VizVidelit (latin=namely) V-SATVery Small Aperture Terminal VSNLVidhesh San WIMAXWorldwide Intreroterability for Microwave Access WLLWireless in Local Loop AbstractTelecommunications industry is one of the fastest growing industries in India due to a variety of factors. It has been evident that fast movers manage to capture the larger share of the pie. RCOM, with the aim of riding the wave of change, is looking not only at the domestic but the international market. And with technological advantages it as the potential to achieve the Vision 2010 of operating in 50 countries. With the favourable external environment, and a strategic position in market, RCOM can not only overtake the market leader by entering GSM segment.

It is also favourable to enter the rural markets with the reduction in ADC.Now is the time to take advantage of the expected future reforms and the Indian growth story

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to capitalize on the goodwill of the parent company and the existing infrastructure. Introduction 1. 1 Industry Definition Telecommunications Services Sector – The GICS Telecommunications Sector contains “companies that provide communications services primarily through a fixed-line, cellular, wireless, high bandwidth and/or fibre-optic cable network”.

1. 2 Scope of the report This report is limited in scope by the geography and industry segment. It is limited to India and covers telecommunication services segment.It is also limited to Reliance Communications (RCOM), which is a subsidiary of Reliance Communication Ventures Limited (RCoVL). However, the overall external environment’s effect has been analysed. 1.

3 Significance of Telecommunication Services The Indian telecom market has been displaying sustained high growth rates. Riding on expectations of overall high economic growth, consequent rising income levels, and the fast-evolving technology, it offers unprecedented opportunities. A combination of factors is driving growth in the telecom market, promising rich returns on investments.The other segments of Telecommunications industry revolve around Telecommunications Services and are almost dependent on it. Industry Analysis 2.

1 Industry overview Indian telecom market comprises of three sub-markets (Exhibit 1). One of these is Telecommunications Services. The industry has come a long way since the time first phone was introduced in the country (Exhibit 2). The market is divided into 23 circles and different operators operate n different circles – some are present in specific circles while some have a Pan-India presence (Exhibit 3).Although there are many sectors in the industry, more than fifty percent revenue is contributed by the wireless segment, as also it is the sector driving the growth and is the forerunner in technology advancement.

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2.

2 Industry Structure 2. 3 Policy, law and regulation Regulatory participants: ?Ministry of Communication & Information Technology ?Department of Telecommunication (DoT) ?Telecom Regulatory Authority of India (TRAI) ?Telecom Dispute Settlement Appellate Tribunal (TDSAT) The policy and regulatory environment is favourable for competition and investment.It has been realised that independent regulation is the key factor for growth and the policy reforms reflect that. In 1999, the Government of India authored a very forward looking National Telecom Policy 1999 (NTP-1999), which acknowledged that access to telecommunications is of utmost importance for the achievement of the country’s social and economic goals. Availability of affordable and effective communication for the citizens was the core vision and goal of this telecom policy. Reforms in Indian Telecom Sector Pre-1994 1994-1999 999-2002 2002 onwards ?MTNL – Mumbai and Delhi; DTS elsewhere ?No mobile service ?NLD – DoT per/ BSNL ILD – VSNL? 4 private fixed service providers with less than 1% market share ? 2 GSM mobile players in each circle ?13 players start mobile service ?Licenses converted to revenue sharing ?Private sector share less than 5% in revenue terms ?Competition in NLD and ILD ?Licenses on Revenue share ?4 mobile operators / circle ?Calling Party Pays ?CDMA launch ?3-6 operators in each circle ?Intra-circle merger guidelines ?Unified Licensing •National Telecom Policy (NTP) 1994 TRAI constituted 1997•NTP 1999 •BSNL formed 2001 •Internet Telephony 2002 •FDI – 49 %•Broadband policy 2004 •FDI – 74% 2005 National Telecom Policy, 1994New Telecom Policy, 1999Unified Licensing Regime Since the announcement of the policy, Government has undertaken various concrete steps to achieve the policy objectives.

The migration from a fixed to a revenue share licence regime provided the desired relief to the private operators – earlier burdened by huge debts that they had to service due to their licence fee commitments.This was the starting point of the cellular revolution being witnessed in the country today, wherein almost 2 million lines are getting added to the network every month. Liberalisation of the national and international long distance sectors (NLD and ILD) by the Government led to the setting up of private companies in both service segments, and the consequent competition that has emerged has led to reduction in tariffs, which are lower than 80 per cent of the pre-liberalisation days. The reduced tariffs are now almost at par with world benchmarks.Recognising the convergence of markets and technologies, the Government, in December 2003, came out with the Unified Access Licence allowing both basic and cellular service providers to provide access, using any technology in a specified service area.

The Government also announced the Interconnection Usage Charge regime in January 2003, implemented from May 2003, to facilitate cost-oriented interconnection in the Indian telecom market with multiple operators – both public and private, with multiple service offerings.Reduction in Access Deficit Charges (ADC) in 2008 gives an advantage to the private players. Inactive infrastructure constitutes around 60% of the overall tower capex. Sharing towers help operators in not only reducing capital investment but also help facilitate faster network rollouts. It becomes all the more attractive when prospective target subscribers are from tier 2 & 3 towns,

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