Cellular industry

A
Winter Project Report
On
―Cellular Industry‖
Submitted to
S. V. Institute of Management, Kadi
In partial fulfillment of the requirement
Of
The award for the degree of
Master of Business Administration (Integrated)
In
Kadi Sarva Vishwavidyalaya, Gandhinagar
Under the guidance of
Prof. Sushil Mohanty
Assistant Professor
S.V. Institute of Management - Kadi
Submitted by
Semester-VI,
January- 2017
Name Mr. Chirag Dabgar Ms. Mamoni Kundu
University Exam No. 03 08
Batch 2014 - 19 2014 - 19

S.V. INSTITUTE OF MANAGEMENT, KADI Page 2
PREFACE
―Practice makes a man perfect‖ a very good appropriate proverb said by someone very well
fit for each and every MBA(Integrated) student who is going on fade the real world after
completing his/her MBA(Integrated).
Winter project which is mandatory for each and every MBA (Integrated) student helps them a
lot to practice the thing practically, which they are theoretically, winter project helps them in
applying their theoretical knowledge practically.
We have encountered, and do our finest efforts to bind all the information, which we
collected during our project. We optimism that we will be assure the industrial and the
university criteria for preparing the project report.
It was a determined and elevating experience for us. This project really helps us in expand of
our knowledge as glowing as in development of our skills in decision-making.

ACKNOWLEDGEMENT
It was really difficult to complete the report without getting co-operation of certain people. In
other words there are so many external people who directly or indirectly help me in our
project.
We would like to thank Kadi Sarva Vishwavidyalaya University, Gandhinagar for giving
us an opportunity to enhance our practical knowledge.
We sincerely thanks to Dr. Bhavin Pandya, Head of the Department for providing
excellent facilities and for their generosity kindness to embrace me in SVIM and to complete
the Feasibility project report successfully. We would also like to thank Prof. Sushil
Mohanty, Assistant Professor, who has constantly guided us throughout the project
unexceptionally and all concern persons who have provided us help through their
information, guidance and all kind support, which was required for preparation of this report.
As always, we value your kind recommendations and thoughts about the report. Your comments
regarding contents and coverage will be most valuable, as will your calling our attention to
specific guidelines and errors with complete oversights.
Mr. Chirag Dabgar
Ms. Mamoni Kundu

STUDENT DECLARATION
We, Mr. Chirag Dabgar and Ms. Mamoni Kundu hereby declare that the project on “Cellular
Industry” is a result of our own work and our indebtedness to other work publication, if any,
have been duly acknowledged.
Place: - Kadi
Date:-17/1/17
Mr. Chirag Dabgar
Ms. Mamoni Kundu

EXECUTIVE SUMMARY
We have done Project report on Cellular service industry. Objectives of study are to do
Environment scanning of cellular service industry. Information need is of market position,
total market; Global and Indian scenario. We have used descriptive research design for data
collection and sources are website, software, magazine and books.
The cellular Industry is considered as having potential for investment in India. India has
witnessed rapid growth cellular services. Cellular is the part of telecommunication industry.
This expected to soar in the next few years. Since the Indian sky was open for the private
sector in 1990, the industry has gone from initial euphoria, to subsequent despair, and the
hope in the wake of the move of the revenue sharing. As in well known, worldwide the
growth in telecommunication bears a close relationship to GDP growth.
The Indian market is still in the developing stage and the country can expect to witness a
robust rate of growth as India’s economy expands and continue to grow at a high rate over a
next few years.
The major players in Indian Telecommunication Industry are Airtel, Vodafone, Idea,
Reliance communication, BSNL and Reliance Jio.
The project highlights the important issues that have been in the lime light since the very long
time, mainly those of history and Indian scenario, industry structure major
Telecommunication players, a market share of different companies, important regulatory
bodies.
We have done the external environment scanning in terms of Political, Economical, Socio-
cultural, and technological factors. So political factor just like Foreign Direct Investment,
Excise duty, Service tax, Taxes on Software and Bandwidth payments, Mobile Number
Portability rule of Government affect the industry.
Economical factor just like GDP rate, Inflation rate, Household income, Employment,
Budget, Per capita income also affect the industry, Socio-cultural and other political factor
also affect the industry in different ways.

According to forces driving industry competitions, the competitive force from new entrance
is low to moderate the threat from substitute is moderate, the bargaining power of supplier is
moderate to high, the bargaining power of buyer is moderate to high and Rivalry among the
competitors is low to moderate.
The key success factors for the industry are technology, capital requirement, government
policies, service, manpower and acquisition and mergers.
The main opportunities for industry are very high growth rate of GSM Subscribers, foreign
Direct Investment, Mobile portability rule of government and 3G and 4G technology. The
threats for the industry are Regulation and tariff changes especially in the cellular operations,
lack of infrastructure and some of the international threats are also exist.

INDEX
Sr. No. Particular Page No.
Preface 2
Acknowledgement 3
Student Declaration 4
Executive Summary 5
1 Introduction about industry 9
1.1 History of Indian Cellular Industry 10
2 Study of Indian Market 13
2.1 Indian Cellular Industry Growth 15
2.2 Benefits of Cellular Industry in India 15
3 Major Players in Cellular Industry 17
3.1 Airtel 18
3.2 Vodafone 19
3.3 Idea Cellular 19
3.4 Bharat Sanchar Nigam Limited (BSNL) 20
3.5 Reliance Communication 21
3.6 Reliance Jio 22
4 PESTEL Analysis 25
4.1 Political Factor 26
4.2 Economical Factor 29
4.3 Social Factor 30
4.4 Technological Factor 32
4.5 Environmental Factor 34
4.6 Legal Factor 35
5 Michel Porter's Five Force Model 36
5.1 Threat from the New Entrants 38
5.2 Threat from Substitutes Products 41

5.3 Bargaining Power Of Suppliers 44
5.4 Bargaining Power Of Buyers 47
5.5 Rivalry among the Competitors 49
6 Finding 53
7 Conclusion 56
8 Bibliography 58

1. Introduction about Industry
1.1 History of Indian Cellular Industry
The history of the Indian Telecom sector goes way back to1851, when the first operational
landlines were laid by The British Government in Calcutta. With independence, all foreign
telecommunication companies were nationalized to form Post, Telephone and Telegraph, a
monopoly run by the Government of India.
The Indian Telecom Sector, like most other infrastructure sectors is controlled by the state.
The Department of Telecommunications (DoT), reporting to the Ministry of Communications
(MoC) is the key body for policy issues and regulation, apart from being a basic service
provider to rest of country. By an act of Parliament, the Telecom Regulatory Authority of
India (TRAI) was formed to be the regulatory agency.
Subsequently, the construction of 4,000 miles (6,400) km) of telegraph connecting Kolkata
and Peshawar in the north along with Agra, Mumbai through Sindwa Ghats, and Chennai in
the south, as well as Bangalore was started in November 1853.
In year 1880, two telephone companies namely The Oriental Telephone Company Ltd. and
The Anglo-Indian Telephone Company Ltd. approached the Government of India to establish
telephone exchanges in India. The permission was refused on the grounds that the
establishment of telephones was a Government monopoly and that the Government itself
would undertake the work.
Oriental Telephone Company Limited of England for opening telephone exchanges at
Calcutta, Bombay, Madras and Ahmadabad and the first formal telephone service was
established in the country. On 28 January 1882, Major E. Baring, Member of the Governor
General of India's Council declared open the Telephone Exchanges in Calcutta, Bombay and
Madras. The exchange in Calcutta named the "Central Exchange" had a total of 93
subscribers in its early stage. Later that year, Bombay also witnessed the opening of a
telephone exchange.

Liberalization of Indian telecommunication industry started in 1981 when Prime Minister
Indira Gandhi signed contracts with Alcatel CIT of France to merge with the state owned
Telecom Company, in an effort to set up 5,000,000 lines per year. But soon the policy was let
down because of political opposition.
Attempts to liberalize the telecommunication industry were continued by the following
government under the prime-minister-ship of Rajiv Gandhi. He invited Sam Pitroda, a US-
based Non-resident Indian NRI and a former Rockwell International executive to set up a
Centre for Development of Telemetric which manufactured electronic telephone exchanges in
India for the first time. Sam Pitroda had a significant role as a consultant and adviser in the
development of telecommunication in India.
In 1985, the Department of Telecom was separated from Indian Post & Telecommunication
Department. DoT was responsible for telecom services in entire country until 1986 when
Mahan agar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL)
were carved out of DoT to run the telecom services of metro cities (Delhi and Mumbai) and
international long distance operations respectively.
Telecom Regulatory Authority of India (TRAI) was created in 1997. It was formed to act as a
regulator to facilitate the growth of the telecom sector. It was during this period that the
Narsimha Rao-led government introduced the National Telecommunications policy (NTP) in
1994 which brought changes in the following areas:
Ownership, service and regulation of telecommunications infrastructure. The policy
introduced the concept of telecommunication for all and its vision was to expand the
telecommunication facilities to all the villages in India.
Liberalization in the basic telecom sector was also envisaged in this policy. They were also
successful in establishing joint ventures between state owned telecom companies and
international players. Foreign firms were eligible to 49% of the total stake. The multi-
nationals were just involved in technology transfer, and not policy making.

Telecommunication has supported the socioeconomic development of India and has played a
significant role to narrow down the rural-urban digital divide to some extent. It also has
helped to increase the transparency of governance with the introduction of e-governance in
India. The government has pragmatically used modern telecommunication facilities to deliver
mass education programmes for the rural folk of India.
Milestone achieve by Telecom Industry
1902 – First wireless telegraph station established
1907 – First Central Battery of telephones introduced in Kanpur
1913–1914 – First Automatic Exchange installed in Shimla
1927 – Radio-telegraph system between the UK and India
1933 – Radiotelephone system inaugurated between the UK and India.
1953 – 12 channel carrier system introduced.
1975 – First PCM system commissioned between Mumbai City and Andheri
1983 – First analogue Stored Programme Control exchange for trunk lines commission.
1995 – First mobile telephone service started on non-commercial basis on 15 August 1995.
1995 – Internet Introduced in India starting with laxmi nagar Delhi on 15 August 1999.

2. Cellular Industry in India
Cellular industries are a part of the telecommunication sector of India. It was launched in
1999 with the adoption of New National Telecom Policy by Telecom regulatory authority of
India (TRAI).
Cellular services are further divided into two categories, namely GSM (Global System for
Mobile Communications) and CDMA (Code Division Multiple Access).GSM segment
consists of players like Airtel, Vodafone, Idea, BSNL and Reliance Jio. Whereas, CDMA
segment consists of players like Reliance, Tata, etc.
There are some private service operators in each area, and an incumbent state operator.
Cellular companies provide two types of subscriptions – pre-paid and post-paid. Almost 80%
of the cellular subscriber base belongs to the pre-paid segment.
The DoT has allowed cellular companies to buy rivals within the same operating circle
provided their combined market share did not exceed 67 per cent. Previously, they were only
allowed to buy companies outside their circle.
India is the fastest growing mobile phone market in the world. The booming telecom industry
has been attracting large amount of investments in the country. It is the world’s second
largest telecommunication market with 898 million subscribers as of March 2013. The
revenue grew up by 13.4% to reach 64.1 billion US$ [8].According to the latest survey
conducted by Voice and Data, Cyber Media group journal, Bharti Airtel emerges as India's
top mobile phone operator.
At first glance, the telecom regulator’s numbers reveal that in the Indian market, Bharti Airtel
Ltd, Vodafone India Ltd and Idea Cellular Ltd continue to lead the revenue market share
charts. But take a deeper dive into the latest numbers released by the Telecom Regulatory
Authority of India(Trai) and it reveals a landmark shift in India’s telecom sector: GSM
incumbents—Bharti Airtel, Vodafone and Idea Cellular—have jointly crossed 70% in
revenue market share.

2.1 Indian Cellular Industry Growth:
Second-largest
 subscriber base:-
 With a subscriber base of nearly 1022.61 million by the end of September
2015, India has the second-largest telecom network in the world.
Third-highest number of
 Third highest number of internet users:-
 With 375 million internet subscriptions in October 2015, India stood third-
highest in terms of total internet users in 2015. It is expected that India will be
the second largest country in terms of internet subscribers with 402 million
internet users by December 2015.
 Most of the Internet accessed through mobile phones:-
 Mobile based Internet is a key component of Indian Internet usage, with seven
out of eight users accessing internet from their mobile phones
 Affordability and lower rates:-
 Availability of affordable smart phones and lower rates are expected to drive
growth in the Indian telecom industry
2.2 Benefits of Cellular Industry in India
2015*
Number of subscribers: 1.022 Billion
FY16ENumber of subscribers: 1.2 Billion
 Robust demand:-
 India is the world’s second-largest telecommunications market, with 1022.61
million subscribers as on September, 2015.
 With 70 per cent of the population staying in rural areas, the rural market
would be a key growth driver in the coming years.

 Attractive opportunities:-
 Telecom penetration in the nation’s rural market is expected to increase to 70
per cent by 2017 from 48.66 per cent as of September 2015. India became the
second-largest internet market in December2014.
 The government of India has introduced Digital India program under which all
the sectors such as healthcare, retail, etc. will be connected through internet.
 High ratings:-
 The country has a strong telecommunication infrastructure In terms of
telecommunication ratings, India ranks ahead of its peers in the West and
Asia.
 Policy support:-
 The government has been proactive in its efforts to transform India into a
global telecommunication hub prudent regulatory support has also helped
National Telecom Policy 2012 calls for unified licensing, full MNP and free
roaming.

3. Major Player in Cellular Industry
3.1 Airtel:
Bharti Airtel limited is an Indian multinational New Delhi, India. It operates in 20 countries
across South Asia, Africa, and the Channel Islands. Airtel has a GSM network 2G, 3G 4G
world's third largest cellular service provider China Mobile. Telecommunications Services
Company headquartered in all countries in which it operates, providing and services
depending upon the country of operation.
Airtel is the mobile telecommunications company by subscribers, with over 275 million
subscribers across 20 countries as of July 2013. It is the in India, with 192.22 million
subscribers as of August 2013. Airtel is the Second largest Asia-Pacific mobile operator by
subscriber base.
Airtel is the largest provider of mobile telephony fixed telephony broadband subscription
television Cisco Chennai and second largest provider of in India, and is also a provider of and
services. It offers its telecom services under the "airtel" brand, and is headed by Sunil Bharti
Mittal. Bharti Airtel is the first Indian telecom service provider to achieve Gold Certification.
It also acts as a carrier for national and international long distance communication services.
The company has a submarine cable landing station at Chennai, which connects the
submarine cable connecting and Singapore. Bharti Airtel added 5.10 lakh subscribers to take
its base to 20.97 crore at the end of July, 2014. Its market share in India is highest with a
value of 28.41%.

3.2 Vodafone:
Vodafone is basically the biggest telecom service provider of the U.K. which has a market of
£75 billion by June ’08. Vodafone currently has equity interests in 25 countries and Partner
Networks (networks in which it has no equity stake) in a further 42 countries. The name
Vodafone comes from Voice Data Fone, chosen by the company to ―reflect the provision of
voice and data services over mobile phones.‖
It had agreed to acquire a controlling interest of 67% in Hutchison Essar Ltd. (Hutch) for
US$11.1 billion. At the same time, it agrees to sell back 5.6% of Airtel stake back to the
Mittals. Vodafone retained 4.4% stake in Airtel.
Vodafone is the world’s leading international mobile communications company. It now has
operations in 25 countries across 5 continents and 40 partner networks with over 200 million
customers worldwide. Vodafone has also tied up with Apple’s iphone.
3.3 Idea Cellular:
As India's leading GSM Mobile Services operator, IDEA Cellular has licenses to operate in
11 circles. With a customer base of over 17 million, IDEA Cellular has operations in Delhi,
Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chhattisgarh, Uttaranchal,
Haryana, UP-West, Himachal Pradesh and Kerala.
As a leader in Value Added Services, Innovation is central to IDEA's VAS Factory. It is the
first cellular company to launch music messaging with 'Cellular Jockey', 'Background Tones',
'Group Talk', a voice portal with 'Say IDEA' and a complete suite of Mobile Email Services.

Idea Cellular is a wireless telephony company operating in various states in India. It initially
started in 1995 as a joint venture between the Tata’s, Aditya Birla Group and AT&T by
merging Tata Cellular and Birla AT&T Communications.
Initially having a very limited footprint in the GSM arena, the acquisition of Lead in 2004
gave Idea a truly pan-India presence covering Maharashtra (excluding Mumbai), Goa,
Gujarat, Andhra Pradesh, Madhya Pradesh, Chhattisgarh, Uttar Pradesh (East and West),
Haryana, Kerala, Rajasthan and Delhi (inclusive of NCR).
The company has its retail outlets under the "Idea n' U" banner. The company has also been
the first to offer flexible tariff plans for prepaid customers. It also offers GPRS services in
urban areas.
3.4 BSNL (Bharat Sanchar Nigam limited):
Bharat Sanchar Nigam Limited state-owned New Delhi, India. It was incorporated on 15
September 2000 and took over the business of providing of telecom services and network
management from the erstwhile Central Government Departments of Telecom Services
(DTS) and Telecom Operations, with effect from 1 October 2000 on a going concern basis. It
is the largest provider of fixed telephony, largest broadband mobile telephony is an Indian
telecommunications company headquartered in services provider with more than 60% Market
share, and fourth largest provider in India.
However, in recent years the company's revenues and market share have plummeted into
heavy losses due to intense competition in the Indian telecommunications sector.
BSNL is India's oldest and largest communication service provider (CSP). It had a customer
base of 117 million as of January 2014 Mumbai New Delhi, which are managed by
Mahanagar Telephone Nigam It has footprints throughout India except for the metropolitan
cities of and (MTNL).
Presently there is an intense competition in Indian Telecom sector and various rolling out
attractive schemes and are providing good customer services. But situation as on 2012, BSNL
will be third largest operator (Service) and No 1 access operator in the country.

As per the TRAI Report 2011-12, BSNL became the most trustworthy brand due to its loyalty
towards customers and its rule.
BSNL has started 3G services in 290 cities and acquired more than 600,000 customers. It has
planned to roll out 3G services in 760 cities across the country in 2010-11. According to
users and big sources BSNL's 3G data speed is much higher than other operator and also it is
competitively cheap.
3.5 Reliance communication:
Reliance Communications Ltd. (commonly called RCOM) is an Indian Internet access
(commonly called "broadband") and telecommunications company headquartered in Navi
Mumbai, India. RCOM is India's second largest telecom operator, only after Bharti Airtel. It
is the 15th largest mobile phone operator with over 150 million subscribers. Established in
2004, it is a subsidiary of Reliance Anil Dhirubhai Ambani Group.
The company has five segments:
• Wireless segment
• Broadband segment (Internet access operations)
•Global segment: national and international long-distance operations (and the wholesale
operations of its subsidiaries)
• Investment segment: investment activities of the Reliance Group companies
• Other segment: customer care and direct-to-home (DTH) activities
Reliance Communications (formerly Reliance Infocomm), along with Reliance Telecom and
Flag Telecom, is part of Reliance Communications Ventures (RCoVL). According to
National Stock Exchange data, Anil Ambani controls 66.75 per cent of the company, which
accounts for more than 1.36 billion shares of the company.

Reliance Infocomm is an Indian telecommunications company. It is the flagship company of
the Reliance-Anil Dhirubhai Ambani Group, comprising of power (Reliance Energy),
financial services (Reliance Capital) and telecom initiatives of the Reliance ADA Group.
Reliance Infocomm is currently managed by Anil Dhirubhai Ambani. It uses CDMA2000 1x
technology.
3.6 Reliance Jio:
Reliance Jio Infocomm Limited (RJIL)
Reliance Jio Infocomm Limited, doing business as Jio, is a LTE mobile network operator in
India. It is a wholly owned subsidiary of Reliance Industries headquartered in Mumbai, that
provides wireless wireless 4G LTE service network (without 2G/3G based services) and is
the only 100% VoLTE (Voice over LTE) operator in the country, with coverage across all
22 telecom circles in India.
• Founder: Mukesh Ambani
• Founded: 2007
• Headquarters: Navi Mumbai
• Parent organization: Reliance Industries
The services were first beta-launched to Jio's partners and employees on 27 December 2015
on the eve of 83rd birth anniversary of late Dhirubhai Ambani, founder of Reliance
Industries, and later services were commercially launched on 2016.
The biggest difference between other telecom operators and Jio is their optical fibre
network. An optical fibre is a wire that converts your data signal into light and transfers them
at the speed of light. The data transfer capacity of optical fibre is very high compared to
mobile towers.

Reliance Jio has the longest fibre optic network in the country, ranging over 2.5 lakh
kilometers of fibre. Reliance Jio invested ₹ 150,000 Crores ($ 22 billion) into this fibre optic
network.
Reliance Jio has announced that the network has created a world record by crossing 1.6 crore
total subscribers during the first month of operations in September 2016.
It was made possible by the introduction of Aadhaar-based paper-less Jio SIM activation
across 3,100 cities and towns, something that enabled customers to complete the SIM
activation process in a matter of minutes, by providing his/her Aadhaar number alone.
What is the effect of Reliance Jio on other telecom operators?
Shares of Bharti Airtel, Idea Cellular and Reliance Communications saw their share prices
dip further on tomorrow, after analysts slashed price targets on some of them, and warned
that the launch of new rival Reliance Industries' Jio venture is set to be much more disruptive
than earlier imagined.
1. Jio has the strongest fiber backbone:
Jio has tied up with several companies to share their fiber for transmitting the 4G tariff off the
towers. Jio itself has been rolling out its own fiber optic backbone which is estimated to be
more than 1,00,000 kilo meters across India. Jio also has access to Reliance
Communications’ fiber network, which was Mukesh Ambani’s brainwork, and it has the
largest private OFC network. Apart from intra circle OFC network, Jio is part of two
international submarine cable network – Bay of Bengal and AAE-I.
At the same time, Vodafone and Idea are depending on their microwave-based backhaul as
they have negligible amount of fiber network under the ground. However, Vodafone knows
this limitation and is in talks with YOU Telecom, which has fiber network in 12 circles. Idea
Cellular is yet to concentrate on this part, but to beat Jio on 4G turf; they’ll have to look into
this issue quite seriously.

2. Stronger ecosystem of jio:
Reliance Industries placed Jio as a digital arm, not just another data service provider. While
Airtel, Vodafone, and Idea launched 4G as next-generation data services. They are charging
for 4G services similar to their 3G plans. Jio has an array of utility apps under its hoods
including social networking app Jio Chat, cloud services app Jio Drive, music streaming
services Jio Beat, video streaming services Jio Play, and so on.
Jio definitely is placed better than these incumbents who have not focused on these parts so
far. Jio will have its own LYF series of 4G-supported Smartphone’s, which are VoLTE and
VoWIFI supported.
3. Jio has relatively cheaper tariffs:
Reliance Jio is expected to come with reasonable pricing for its 4G LTE and related contents.
While Airtel, Idea, and Vodafone offer 4G data at the existing price of 3G. They are not
charging extra, but for mass adoption of 4G it needs disruptive pricing.

PESTEL Analysis of Cellular Industry
4.1 Political factor analysis
Excise duty:
Lowest 8% excise duty will encourage Indian telecom equipment manufacturers. And they
will help the cellular service provide by providing the cheaper equipment.
Base transceiver site is an immovable property and cannot be termed as “Goods” for the
purpose of charging excise duty under central excise act.
In order to justify indigenous manufacturing of professional telecommunication products
such as telecom power supplies, repeaters, infrastructure equipment for GSM/CDMA
network, switches, the countervailing duty (CVD) on imports of such products should
continue. IT should not be withdrawn so that imports are not promoted particularly from
countries, which are dumping their goods into India.
The Govt. has committed to develop telecommunication particularly in rural and remote areas
to bridge the digital divide. It is therefore suggested that exception from this additional duty
of 4% be provided for fully assembled imported telecom equipment.
Impact on Industry:
Service providers sourcing indigenously manufactured cellular equipment have now banned
allowed setting off against the service tax payable on the services. This is a welcome move
and would also incentives services providers to source indigenous equipment in the fiercely
competitive global equipment market. Supply and services are burden with this additional
duty of 4%.

Service tax
Since, as per the service tax credit rules, amount of service tax deposited on behalf of foreign
company could be set off against the output service tax liability, a clarification should be
issued to do away with the requirement of registration of foreign company in India. Credit
should also be allowed for the VAT or any other duty paid in foreign country on the same
income.
Impact on industry: It does not affect the operators because they will charge from the
customers. But main impact is the prices of the product will increase. Currently, telephones
are the single 22 largest contributor to the services tax kitty of government at 40% of total
services tax collected by the government.
Mergers and acquisition rule:
Merger and acquisition shall be as per policy guidelines on the subject issued by Dot (No. 20-
100/2007-AS-I dated 22nd
April, 2008) or any subsequent revision thereof. This policy is
applicable for mergers between 2 license holders only in a service area.
These conditions shall also be applicable to ISP licenses that are awarded BWA Spectrum.
Key features of the current M&A policy are as below:
Prior approval of the DOT would be required for the merger of licenses and any permission
for mergers shall be accorded only after completion of three years from effective date of the
licenses( as defined in the licenses);
The market share of the merged entity in the relevant service area shall not be greater than
40% either in terms of subscriber base separately for wireless as well as fixed line subscriber
base or in terms of Adjusted Gross Revenue.
Impact on industry:
Due to merger and acquisition rule large player cannot acquire other company because after
merger and acquisition the market share should not exceed more than 30%. Major trends in
the telecom sector is increasing M&A activity, deregulation of telecom policies and growing
interest of international investors.

Unified licensing:
The government announced to adopt unified access licensing regime, which would in the
future provide a single, technology- neutral license for fixed and cellular operators, the hope
is that this new license category will prevent a repeat of the recent controversy, and allow
new technologies to enter the Indian market without requiring a wholesale rewrite of
licensing laws. A unified access license now costs Rs 1,650 crore.
Factor Attractiveness
Favorable Unfavorable
Excise Duty 
Mergers and Acquisition 
Service Tax 
Unified licensing 
So over all we can say that the political factor is favorable in cellular industry.

4.2 Economic analysis:
 The Indian Telecom Industry has been playing an important role in the world
economy and global revenues in 2008 were USD4 trillion, expected to grow at a steep
11% p.a. CAGR over the next 2 years.
 Indian’s telecom service revenue was USD30 billion in2008, and Ernst and Young
analysts believe it is projected to almost double to USD 55 BILLION by 2012.
 GDP contribution -2% .
 Output per annum -136,833 crores per annum & increasing 20% for every month.
 Increase in disposable incomes.
 Falling mobile phone prices.
 Falling call charges rates with more utility.
So over all we can say that the economic factor is moderate to favorable in cellular industry.

4.3 Social factors analysis
Change in lifestyle
 Fast –changing lifestyle are forcing telecom companies to enlarge the breadth and
depth of their services.
 Joint ventures in the entertainment sector to add more services. For instance, version
now offers version FIOS, a basic fiber –optic service. For instances digital television,
voice and high – speed internet services.
Regional shift in population
 The rural Indian consumer managed to remain an attractive proposition, especially in
the demand for consumer goods and telecom services.
 3 lakh PCOs are providing community acess in the ruala areas. Further, mobile
Gramin Sanchar Sewek Scheme (GSS) a mobile public call office (PCO) services is
provided at the doorstep of villagers.
Employment opportunities:
 Several career paths lead to the Indian telecom industry.
 The telecom sector offers a variety of career options where there is room for everyone
a degree holder or diploma holders, a candidate with a part – time certification course
or one with a full time degree.
 The certificate courses for employment in the industry are:
 Certificate in Telecom Engineering
 Certificate in Information Technology
 Certificate in Computer Science
 Certificate in Management Information System

Change in lifestyle 
Regional shift in population 
Employment Opportunity 
So over all we can say that the social factor is favorable in cellular industry.

4.4 Technology Factor Analysis:
Research &Development
Object for R&D Expansion
 There has been a shift in R&D from basic research that may have long- term benefits
to:-
 Research focused on more immediate needs, the telecommunications industry
 Association
 Telecom research that focuses on the long–term future, rather than 18 month
development cycle of a given company’s next product.
 To continue investing in R&D to maintain competitiveness when the economy
improves
Reasons behind R&D
 Expand and upgrade networking and high end computing infrastructures
 Increase cyber security
 Human-computing interaction
 Information management
 High confidence software and system
 Increase investment in education and training
 Focus on next generation video
 Public safety multimedia
 Next generation enterprise solution
 4G broadband networking

 Mobile device displays
 Audio quality
 Power management
 Location-based service
R&D Expansion 
Increase Cyber security 
Location-based service 
So over all we can say that the technological factor is favorable in cellular industry.

4.5 Environmental analysis:
 The strong growth of the telecom, industry and increased equipment obsolescence
has caused a dramatic rise in the amount of electronic waste worldwide.
 Today, environmental issues have become one the most important factors to be
considered in the telecom industry.
 Operators are paying increasing attention to their environment performance and are
cooperating more closely with telecom equipment manufacturers.
 China mobile is one example. In December 2007, they launched the ―Green Initiative
Program‖, which aims to save energy and reduce emissions for its outsourcing
system and complementary equipment.
 International regulations on environmental protection, especially those for telecom
operations and manufacturing, are widely recognized and followed.
 ISO14004:2004provides guidelines on the elements of an environment management
system and its implementation.
 The process includes choosing the proper products and networking solutions to
reduce negative impact on the environment.

4.6 Legal analysis:
The telecommunications falls under the legislative competence of the Union and not the
States. Consequently the legal framework governing telecommunication sector is within the
control of the Union Government and the Parliament.
In India Legal framework with respect to telecom infrastructure is made up of main acts:
The Indian Telegraph Act 1885.
The Wireless Telegraphy Act 1933.
The Telegraph Wireless (Unlawful Possession)Act 1950
The Cable Television Network (Regulation) Act 1996.
The genesis of the telecommunication regulatory authority of Indian (TRAI) lies in the
bidding process for the grant of cellular licenses.
First major dispute, entered into by TRAI, was between itself and the Central Government.
The question of grant or amendment of a license by the Central Government acting in its
capacity as the licensor falls outside the jurisdiction of the powers of TRAI.
TRAI Act which was amended and passed in 2000 and the frameworks relating to the TRAI
currently in force have been analyzed subsequently.
According to the TRAI Act amended in 2000, the functions of the original TRAI have now
been divided between two separate bodies.
The Telecom Regulatory Authority of India (TRAI).
The Telecom Dispute Settlement and Appellate Tribunal.

5.1Threats from the New Entrants:
Government policy:-
 Minimum requirement of number of towards for GSM service.
 Method of selection: the pre- qualified applicant (s)/bidder(s) shall be subject to
a = Techno- Economic evaluation, for final selection.
Low to
moderate
TRAI Rules:-
 Pay on basis per second plan.
 License Fees:
 The licenses shall also pay License fee annually @ 1 (one) % of Adjusted Gross
Revenue (AGR) of the License company.
 There shall be a moratorium of License fee payment for first two year from
effective date of the License.
 Entity Fee: Onetime, non- refundable, Entry Fee of Rs. 1(one) crore is required
to be paid for grant of MNP service license.
Low to
Moderate
Capital requirement:-
 The capital-investment telecom industry the biggest barrier to entry is access to
finance.
 Extremely high infrastructure setup costs
 Big investment for networking in terms of technology, cable network,
transmission, switching up gradation of network & replacement and centers.
 The telecom industry suffers from high exit barriers, mainly due to its
specialized equipment. Networks and billing system cannot really be used for
much else, and their swift obsolesce makes liquidation pretty difficult. Exit can
be a cause of high loss to firm.
Low

Customer switching cost:-
 Cost of new connection low for the customers.
 Proposed number portability is applied.
 So market penetration can be done easily.
Moderate
to high
Economic of Scale:-
 To achieve economic of scale is not easy for cellular services provider because
for that they should have excellences in the area of customer services,
technological up- gradation and distribution network.
 Solid operating skills and management experiences is fairly scarce, making entry
even more difficult.
 Declining ARPU in industry over period of time.
Low to
moderate
Customer loyalty:
 Customers can avail different options with attractive. So, they can get better
services loyalty is comparatively moderate. But customers prefer generally those
service providers that provided life time in coming with minimum call rate.
 Existing firms have good image for customers.
 Existing players have the knowhow to serve their customers.
 In this situation, the customer may not relay on new player that do not have
brand name. So, the acceptance rate of new players somewhat lower.
Moderate

FACTORS ATTRACTIVENESS
Low
1
Low –
moderate
2
Moderate
3
Moderate
high
4
High
5
Capital Requirement *
Government Policy *
TRAI Rules *
Customer Switching
Costs
*
Economics of Scale *
Customer Loyalty *
Sum of score 1 6 3 4 0
Total score 14
No of factors 6
Average score 2.33
 So over all we can say that competitive force from new entrants is low to moderate which
is supported by the average score 2.33.

5.2 Threat from the Substitute Product:
Substitutes of GSM are
Substitute Substitution Criteria
Close Far
CDMA Service Providers *
Online call through internet (VOIP) *
Fix Line Services *
Online Chat *
Email *
Mail *
Online call through internet (VOIP):
 The online calls, which are made by using Internet, can be considered as a
substitute of the telecom services. The calls are received through Internet and
then distributed on the local network. The uses of such facilities are actually
illegal but still their use is increasing in metro cities. So it is becoming a
threat for the telecom services.
Low to
moderate
Online chat:
 Online chat which can be done through internet is a major substitute of the
telecom services. People can communicate with each other using web cameras
&microphones. This substitute is good in performance as well as cheaper in
prices. So the industry has significant threats from the growth of the substitute
facility. Obviously earlier this facility required use of telephone line but now
day using radio line& other facility, one can use this facility to communicate
with each other.
Moderate

CDMA:
 CDMA is the closest competitor of GSM, because it provides similar services
like provided by GSM service provider but major different is CDMA service is
limited to domestic use.
 The CDMA is having good sound quality as compare to GSM service
Moderate
to High
Fixed line service:
 Many years ago, land line charges are less than wireless services. That time no
of land line subscribers are high than wireless subscribers. Nowadays corporate
and also many organizations are containing landline because of free charge of
interconnecting. Also landline provided offer attractive schemes.
Moderate
to High
`
E-mail:
 The fastest way of communication is through electronic mail. It is cheap as well
as faster way of communication. But the main disadvantage of this substitute is
that the use of email is not easy for everyone in compare of simple mail so far as
backward areas of India are concern. So we can say that right now the threat is
moderate from this substitute but it will be high in future.
Moderate

Low
1
Low-
moderate
2
Moderate
3
Moderate
high
4
High
5
CDMA *
Fixed Line Service *
Online call through Internet
(VOIP)
*
Online chat *
E-mail *
Total score 16
No of factor 5
Average score 3.2
 So over all we can say that competitive force from substitute is moderate which is
supported by the average score 3.2

5.3 Bargaining power of Suppliers:
Number of suppliers:
 Suppliers have good bargaining power over rivals whenever the items they
provide are commodities available on the market from very few suppliers
with ample capability to fill orders.
 Here the suppliers of telephone instrument and wires are few so their
bargaining power is moderately high.
Moderate
high
Switching cost:
 Some cases like software development it may be a higher switching cost for
GSM service providers.
 Cost of switching or charging their hardware would lead to additional cost in
modifying the architecture.
High
Scarcity inputs:
 There is no scarcity of inputs in telecommunication industry because there is
much software, technology availability from many different suppliers.
Low
moderate
Differentiation of inputs of suppliers:
 In this any industry any suppliers do not provide any different inputs because
any suppliers fine new invention then another supplier easily imitates that
invention in few times.
Low
moderate

Rivalry among suppliers:
 There are few suppliers of network infrastructure (base stations and system
controllers, tower). Information technology, passive infrastructure, calls
centre outsourcing. So we can say that rivalry among suppliers is low.
 So there are much competitive pressures from the suppliers.
Moderate
to high
Backward integration:
 Telecom equipment suppliers have considered bargaining power over telecom
operators. Indeed without high –tech broadband switching equipment, fiber –
optic cables, and mobile handset and billing software, telecom operators
would not be able to do the job of transmitting and data from place to place.
 Suppliers are also more powerful when they can supply a component more
cheaply than industry members can make it themselves. Here the production
of telephone instruments, cables and other material is very costly for the
telecom services provider companies so they have to be dependent on the
suppliers of this equipment. And because of this reason their bargaining
power is high.
Moderate
to high

Low
1
Low-
moderate
2
Moderate
3
Moderate
high
4
High
5
Number of suppliers *
Switching cost *
Scarcity inputs *
Differentiation of inputs of
suppliers
*
Rivalry among suppliers *
Backward integration *
Total score 21
No of factor 6
Average score 3.50
 So over all we can say that the competitive force from supplier is moderate to high
which supported by the average score 3.50.

5.4 Bargaining Power of Buyer
The number of buyers:
 The completion among the competitors is very high but the companies are
offering the same services to all the customers & there is no any scope for the
customization of service for the customers or differentiation in price & quality
of service. So, the bargaining power of customer is low.
Low
The switching cost:
 The switching cost of buyer to competing brands will be relatively low.
Because number portability is the feature by which customer can change
service providers at low cost without changing number.
 Moreover it is easy to switch from one service provider to another service with
less cost & documentation.
High
Brand preference:
 The brand preference for price, service, and network connectivity among the
buyer s are different. The price sensitive customers are preferring low price,
service oriented customers are good network coverage & service.
Moderate
to high

Awareness about different offers:
 Cellular service industries consumers are extremely well informed as to prices
offered by alternative providers. By frequent TV advising, celebrity
endorsement, billboard, radio and bulk message & calls informs consumers of
the various long-distance rates and services that are available. Consumers are
very informed as to pricing structure and are unlikely to withstand rates deviate
too far from the lowest possible rate.
High
Low
1
Low-
moderate
2
Moderate
3
Moderate
high
4
High
5
The number of buyer
*
The switching cost
*
Brand preferences
*
Awareness about different
offers
*
Total score 15
No of factor 4
Average score 3.75
 So over all we can say that the bargaining power of buyer is moderate to high which
is supported by the average score 3.75.

5.5 Rivalry among the Competitors:
Number of firms:
A large number of service operators firms participation
 Large number of foreign players like Vodafone , Idea Cellular
 Private players Reliance Communication ,Tata tele services
 Government’s players BSNL.
 Reliance Jio new market player. Reliance Jio is becoming a formidable player
in the telecom sector even before the complete roll out of its services.
 A major trend in the telecom sector is increasing M&A activity: - Vodafone
purchased stake in Hutch, Idea acquire stake in Spice.
High
Market growth:
 Increasing awareness of people towards different brand of cellular service
providers.
 Due to reduction in the price of handset the make has grown.
 Due to Growing market, the existing players are making try to capture the
market by various offers.
High
Fixed cost:
 The fixed cost of industry is high.
 High investment in technology, mainly due to its specialized equipment.
 User rights for advanced and ultra modern technologies from foreign
companies having expertise in the subject areas. However, the benefit of this
exemption has been removed, which leads to an increase in costs for Indian
concern.
Moderate

Switching cost:
 Switching cost is low.
 All the players are providing many schemes at different rates.
 No much documentation is needed for switching from one to another
subscriber.
High
Product differentiation:
 Market players a use all sorts of tactics and activities from intensive
advertisement campaigns to promotional stuff and price wars etc,
telecommunication industry.
 New technology is prompting a raft of substitute services. So provide a service
that is very similar.
 Almost same terms and condition applied for different companies.
 The different call charges sms cost, callar tune cost by different companies.
 Very less time to gain advantage by an innovation (E.g. caller tune , life time
card)
Moderate
Exit barrier:
 The telecom industry suffers from high exit barriers, mainly due to its
specialized equipment. Network and billing systems cannot really be used for
much else, and their swift obsolescence makes liquidation pretty difficult.
 Exit can be a cause of high loss to firm.
High

Low
1
Low-
moderate
2
Moderate
3
Moderate
high
4
High
5
Number of Firms *
Market Growth *
Fixed cost *
Switching cost *
Product Differentiation *
Exit Barrier *
Total score 26
No of factor 6
Average score 4.33
 So over all we can interpret that the competitive force from rivalry among the
competitor are low to moderate according to average score 4.33.

Attractiveness of industry by the competitive environment analysis
Competitive Force Attractive Score
Bargaining power of buyer 3.75
Threat from the substitute products 3.20
Bargaining power of suppliers 3.50
Threat from the New Entrants 2.33
Rivalry among the Competitors 4.33
Total 17.11
No of factors 5
Average score 3.42
According to competitive force analysis we can interpret that the attractiveness of industry is
moderate according to average score of cellular service provider industry which is 3.42.

Findings
New entrants can take advantage of gaps in the offerings of these aging pioneers, or find
innovation ways to market product or service.
 Re-examining high levies:
 The Indian telecom sector is one of the highest taxed sectors in the developing world,
through levies, which comprise service tax, revenue share, spectrum cess, and value
added tax.
 Bringing down operators :
 To expand the telecom services, there will be greater investment needs in the future.
Telco's will have to engage on active and passive infrastructure sharing.
 Rational policy for spectrum allocation:
 The allocation of adequate spectrum is an urgent requirement for and existing
operators. A clear roadmap for future spectrum allocation has to be drawn, whether it
is a 2G or a 3G platform. Operators need to be cautious in 'bidding' and should not
overpay for spectrum as that could disturb project economics.
 Data revenues to provide 'Buffer':
 India's data revolution is going to be fuelled by 3G, 4G and WIMAX. For the data
revolution to reach villages, low-cost access devices, vernacular content, and
community initiatives such as E-governance need to be in place.

 Enhancing skill sets:
 The sector will require specialist resources to support and sustain growth over the
next four to five years. And pressure on talent is expected to increase with the
deployment of 3G and WiMAX services. The private sector will need to reorient its
focus on talent development through training schools and facilitation programs that
cater to the needs of the telecom industry.
Impact of global economic downturn:
• The current financial crisis could have a low-to-medium impact on the telecom
sector in terms of rising costs of capital and reduction in discretionary spending on
the part of customers, among other determinants.

Conclusion:
The technology improvement has helped the sector to perform better and has also expanded
the meaning of the term "telecommunication" from just audio message transformation to
virtual presence of person. The sector clearly shows a scope for future.
In our opinion, instead of taking a short-term view of paying capacity, the telecom companies
should focus on a long -term game. There is one word that telecom companies are hearing a
lot these days-"Volumes". They need volumes to sustain the network and the large employee
base they have enrolled. In this regard, companies like reliance is giving up to 30%
commission on each call. If and when the carrier access codes are introduced, there could be
a tough fight among these outlets, as far as prices are concerned. Yet, prices can go down
further by almost 40% of the present structure.
The other part could be earning through volumes. New players like Virgin Mobile, which
already has international presence in close to 17 countries are entering India. It is doing so in
collaboration with Tata Tele services. The target market for Virgin Mobile is the youth,
which in India is around 54% of its population.
Mobile number portability (MNP) is introduced by Jan 2011. A neutral third - party operator
is likely to be licensed to provide an end toned MNP solution. MNP could well better service
quality. There are challenges like porting time, allocation of capital and operational porting
costs among positive and will be set once the committee submits its final report on the same.
India is well prepared for the introduction of NGN (Next-Generation Networking). Being a
late starter in the telecom scenario, India has the advantage of using the latest technology and
so it is in a better position when compared to many other countries as far as introduction of
NGN is concerned. Besides, the TRAI has identified introduction of NGN as apriority area.
As of today seem favorable toward the continued growth of the telecom industry.

Bibliography
Websites:-
www.ibef.org
www.trai.gov.in
www.dot.gov.in
https://en.wikipedia.org/wiki/Telecommunications_in_India
www.telecom.economictimes.indiatimes.com
www.indiainbusiness.nic.in/newdesign/index.php?param=industryservices.../2
https://www.quora.com/What-is-the-effect-of-Reliance-Jio-on-other-teleco...
www.businessinsider.in/...effect-Reliance-Jio-offers

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