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Research On Telecom Sector

The document summarizes research on the telecom sector in India. It provides an overview of key trends in the industry, including major players, growth drivers, and expected future growth. It then analyzes the industry using Porter's Five Forces model, finding bargaining power of buyers and intensity of rivalry to be high due to many competitors and ease of switching. The conclusion recommends telecom companies pursue mergers to reduce competition and offer special packages to students to attract more customers.

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Shubhan Khan
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107 views7 pages

Research On Telecom Sector

The document summarizes research on the telecom sector in India. It provides an overview of key trends in the industry, including major players, growth drivers, and expected future growth. It then analyzes the industry using Porter's Five Forces model, finding bargaining power of buyers and intensity of rivalry to be high due to many competitors and ease of switching. The conclusion recommends telecom companies pursue mergers to reduce competition and offer special packages to students to attract more customers.

Uploaded by

Shubhan Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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1

RESEARCH ON TELECOM SECTOR

By- Abdul Shubhan khan


2

Acknowledgement

I am very grateful to Fincrux technologies team for


their guidance.
Working on the project is hard, need hard work and
concentration but I made it possible with the support
which I had received from Fincrux technologies team.
I learned a lot from this project and acquired useful
knowledge.
I am thankful to all for giving me guidance,
encouragement and right path to work on it. I thank
everybody who has directly or indirectly helped me in
this project to make it successful.
3

Table of content

Topic Pg. no.

Summary 4
Key companies in the 5
market

Porters five forces analysis 6


Conclusion 7
4

SUMMARY
The Telecom industry in India is the second-largest in the world with a subscriber base of
over 1.2 bn.
The industry has witnessed exponential growth over the last few years primarily driven by
affordable tariffs, wider availability, roll-out of Mobile Number Portability (MNP),
expanding 3G and 4G coverage, evolving consumption patterns of subscribers and a
conducive regulatory environment.
Indian smartphone users consume maximum data in the world at 12GB/month and which
could increase to 25 GB/month by 2025.
• Total number of Subscriber Identity Module (SIM) connections is expected to reach
1.4 bn by 2020 from 1.1 bn in 2017
• Telecom industry contribution to GDP is expected to reach 8.2% by 2020 from 6.5%
in 2017
100% FDI is allowed in the Telecom, wherein upto 49% is allowed through the automatic
route and beyond 49% under government route.
The Telecommunications industry is divided into following subsectors: Infrastructure,
Equipment, Mobile Virtual Network Operators (MNVO), White Space Spectrum, 5G,
Telephone service providers and Broadband.
As per GSMA, India is on its way to becoming the second-largest smartphone market
globally by 2025 with around 1 billion installed devices and is expected to have 920 million
unique mobile subscribers by 2025 which will include 88 million 5G connections.
Telecom tower in India is set to boom as its tenancy ration will increase from 1.95 times in
2016 to 2.9 times by 2020 due to the expansion of 3G and 4G and the onset of 5G
technologies.
5

KEY COMPANIES IN THE MARKET

Company Ownership Presence


Mahanagar Telephone Government (56.3 per Fixed-line and mobile
Nigam Ltd (MTNL) cent), Life Insurance telephony (in Delhi
Corporation (18.8 per and Mumbai), data and
cent) Internet

Bharat Sanchar Nigam Government (100 per Fixed-line and mobile


Ltd (BSNL) cent) telephony (GSM
– outside Delhi and
Mumbai), data and
Internet in 22 circles

Bharti Airtel Bharti Group (45.48 Broadband and mobile


per cent), Pastel Ltd (GSM) in 22 circles
(14.79 per cent), Indian
Continent Investment
(6.65 per cent),

Vodafone Idea Limited Aditya Birla Group Broadband and mobile


and Vodafone Group (GSM) in 22 circles
partnership

Reliance Jio Info Reliance Industries Broadband and mobile


COMM Limited.
6

PORTER’S FIVE FORCE ANALYSIS

The threat of new entrants: HIGH


Huge barriers to entry in form of large economies of scale, low product differentiation, large
capital requirements, heavy switching cost to buyers, and unfavourable government policies
in form of high license costs, spectrum usage charges, exit barriers etc. and presence of 6-7
players in each region dissuades new players from entering the market.

Bargaining Power of suppliers: MODERATE


Hardly any threat of substitute products as there is no substitute available in the market.
Although it might appear that the telecom equipment suppliers have considerable bargaining
power over telecom operators, it is not the case. Large number of equipment manufacturers
along with enough number of vendors dilute the bargaining power.

Bargaining Power of buyers: HIGH


The low differentiation between the services provided by the telecom operators and low cost
of switching for retail customers backed by Mobile Number Portability has resulted in the
services being treated by customers as a commodity. Although the customers are price takers
in the market, their bargaining power is moderate on account of the ease of switching. The
business customers will however find it difficult to switch to alternative service provider.

Threat of Substitutes: LOW to MODERATE


With Emergence of wireless devices and other technological break-through, the market share
of wireline companies has dwindled. Some of the substitutes like IP telephone, Email and
Instant Messaging etc. Has also reduced the volume of voice traffic of the wireless telecom
operators however there are no commercially viable substitutes available as of now. Hence
threat of substitutes is low.

Intensity of rivalry: HIGH


The industry is highly fragmented with 15 players, such that there are as many as five-six
players in one region. With low product and service differentiation, lower prices and
innovative services are means of attracting new customers. This tends to drive the margins
and profits down. In addition, the high exit barriers in form of regulations and specialized
equipment have increased the overall competition. Customers’ low switching cost and price
sensitivity are increasing competition among players, High exit barriers are also intensifying
competition. There are around 6 to 7 players in each region, leading to intense competition.
7

Conclusion
The tide has turned for the telecom sector in India, as growth and profitability has accelerated
in recent times. Tower companies are reaping benefits of a turnaround in the sector as
operators have started investing in networks to boost data penetration.
So far very little analysis is done on telecom sector using Porter five forces model. Analysis
indicates that although to meet competition the top service provider is struggling hard but the
presence of strong rivals has put a challenge. From above discussion, we may conclude that
the presence of rivals is the main area that needs company’s management serious attention.
Company may follow the strategy of horizontal integration by taking the decision of merger
or acquisition with any of its one or two rivals. The leader should offer special packages for
students / education sector since they are the main service users.

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