Last updated: August 24, 2019
Topic: BusinessCompany
Sample donated:

The Indian Telecom industry is comprised of three types of players. The State owned companies, private companies and foreign invested companies. Main State owned companies are BSNL and MTNL. Major private Indian owned companies include Tata teleservice, Tata Communications, Reliance communications. And finally, the major foreign invested companies in this sector are Vodafone, Idea cellular, Bharti Airtel Limited. BSNL Bharath Sanchar Nigam Limited was formed in October 2000, When the Department of Telecom operations of Government of India was converted in to a company.

It is presently the leading telecommunication company in India. It is also the largest public sector firm of the country. Presently, it has got about 46 million basic telephone capacity, 8 million Wireless Local Loop (WLL) capacity and about 52 million GSM capacity. BSNL is way ahead in landline subscribers compared to its rivals, with about 35. 1 million basic phone subscribers, which is 85% of the subscriber base. BSNL has got about 2. 5 million internet customers. In cellular services, BSNL is competing with the top contenders so as to become the largest provider of GSM services.

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Bharti Airtel Bharti Airtel is one of India’s leading telecom service provider. It concentrates on GSM services, wireless landline services, internet broadband services and also Direct To Home(DTH) digital TV services. Airtel extents its presence in all 22 licensed India telecom circles. It also provides GSM services in countries like Sri Lanka, Bangladesh and also 16 countries in Africa. It has about 187. 7 million GSM subscribers. It is also the largest mobile service provider in the country, with 21. 34% market share in India.

Reliance communications. Reliance communications formerly Reliance infocomm, a leading integrated telecom company, is a flagship company of the Anil Dhirubhai Ambani Group (ADAG) of companies. It has over 100 million customers. Reliance India mobile was launched in 2002. It was the initial initiative of Reliance communications. Since then it has grown to become one of the leading provider of CDMA services in India. Reliance communications also provide internet broadband service and fixed landline telecommunication service in India. Lately, Reliance communications have launched their DTH Digital TV service called the BIG TV.

Reliance communications have the second most market share in mobile service provider in India with 17. 37% of the market share. Tata Teleservices Limited Tata Teleservices limited is the telecommunications wing of the Tata Group, the business giant in India. It is one of the main CDMA service providers in India. Tata Teleservices started its operation in 2005 under the brand name Tata Indicom. Presently Tata Indicom has its presence in all the 22 telecom circles in India. Tata Indicom was found to be having the least congested network in a survey conducted by Telecom Regulatory Authority of India (TRAI).

In 2008 Tata launched its GSM service called the Tata Docomo. Tata Docomo marked significant milestone in Indian telecom industry, by introducing the per second tariff. Other than CDMA and GSM services, Tata Teleservices also provides internet services. Tata Teleservice has over 70 million customers in the country. Tata Communications Tata Communications was formed by merging VSNL, VSNL International and Teleglobe. Tata Communications is a leading global player in the world of communication. It has one of the most advanced technologies in the world.

Tata Communications have got the largest sub marine cable networks in the world. It connects to over 200 countries across 400 PoPs. Services of Tata Communications include broadband, Wi Fi services, Net Telephony, Mail services etc. Vodafone Essar Vodafone Essar is Vodafone Group’s Indian subsidiary. Vodafone started its Indian operations in 1994. It was formarly known as Hutch. Vodafone is presently the leading provider of mobile services in the world. And currently, it has over 118. 04 million subscribers in India.

Vodafone has second most subscriber base in India, which is second only to Airtel. Idea Ideas Cellular is the subsidiary Aditya Birla Group. It has got its presence in all 22 telecom circles of India. It has got over 72 million customers in India, And is considered the third largest mobile provider behind Airtel and Vodafone. It has 15. 02% market share. Power of consumers The Indian telecom industry is a vast industry with over 1. 5 billion consumers. This includes 652 million mobile customers. With a large number of competitors, the industry is considered to be very competitive in nature.

The power of consumers is believed to reduce with the increase in number of consumers, but that is not the case as far as the Indian Telecom industry is concerned. This is because shifting from a telecom operator to another is fairly simple. This increases the power of consumers in this industry. Since there are a wide variety of offers the customers can choose from, the operators are forced to give out best offers they can provide to them. Since a bulk of customers in Indian telecom industry is from the middle class, the customers are very price sensitive in nature.

So the operators try their best to attract them with better tariff rates. Tata Docomo is an example of a company that used their prising strategy to work in attracting more subscribers. It bought the per second tariff to the market, which was warmly welcomed by the Indian telecom subscribers. This forced all of the competitors to bring in the per second tariff to their business. There are also many options available for internet customers in India. With all competitors of this industry starting to provide broadband connections, the subscribers are left with many options.

Switching between internet service providers is also easy. These factors increase the bargaining power of the customers. Power of suppliers The telecom industry needs many equipments ranging from mobile phone handsets, accessories, integrated chips, software etc. Mobile handset providers include Nokia, Sony Ericsson, Samsung, LG etc. Some of the mobile operators provide their own handsets. This is done by partnership with a third party handset manufacturer. Examples for this are the Reliance communications and the Tata teleservices.

Both these companies have their own branded mobile phone handsets made by Huawei, Samsung and LG. Since there are a wide range of companies available in the handset market the bargaining power of the suppliers as far as the mobile phone handsets are concerned is limited. Internet service providers need various equipments such as the DSL Modems and optical fibre. Bargaining power for the suppliers of these products are limited. Integrated chips for many equipments are supplied by companies like ARM Microcontrollers and Motorola. The number of suppliers for integrated chips is limited.

This gives an edge to the suppliers. Many companies like ARM Microcontrollers sell their products to the telecom companies with high price. But the telecom companies have no option left but to buy the equipments from them, since these companies are pioneers in making integrated chips. This clearly gives the suppliers bargaining power. Another kind of suppliers to the telecom industry is the content providers. Many companies like TCS, Wipro and Infosys provide software required for the telecom industry. Some telecom companies like the Tata teleservice and Reliance communications have their own software wing.

The bargaining powers of these suppliers are very high, since the number of companies providing these products are not so high. Also shifting from one product to another is no easy task. It would require the telecom company to spend a lot more money for shifting from one software product to other. Threat of new entrants Some of the existing players in telecom industry in India are BSNL, Airtel, Reliance, Tata, Idea and Vodafone. There are many new entrants in this field like Aircel, Uninor and Videocon, who already have started operations. Also many more operators like Unitel, Shyam Systema and Etisalat DB, who is ready to be launched.

The main strategy of the new entrants is to provide low cost service. This has led to a price war between the main competitors. Like Videocon and Uninor is offering unlimited free calls to any landline or mobile by charging a fixed price per month. Although this would help the new entrants during their initial period, this would not be a threat to the existing players. This is because of many factors. One is that, the existing telecom companies are using 900MHz spectrum, whereas the new players are using 1800MHz spectrum, which is considered to be less efficient.

This makes huge difference as far as the call qualities are concerned. Secondly, with 1800MHz, the new players need to place more mobile signal towers as compared to the existing players who use a 900 MHz spectrum. This could affect the efficiency of the new players. Also the profit they could make is very low because of this. So the threat of new entrants in Telecom industry in India is considered to be low at this point of time. Threat of Substitutes Presently there are no threats of substitutes as such in the telecom industry. Only the technologies used are considered to be substituted.

One of the new technologies introduced in India lately is the 3G. At present only BSNL has launched its 3G services in India. Many other players such as Airtel and Vodafone are planning to launch its 3G services by the end of the year 2010. But despite its high popularity, only one out of five urban users is expected to use 3G services initially. Many other technologies which are getting popular among people are the internet telephony, VoIP etc. Many people use internet telephony because it is cheap as far as long distance calls are concerned.