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A study on Indian Telecom Industry

Abstract:

The primary objective of this study is to analyze how the landlines (wire line connections) are

declining and the emergence of cellular (wireless) in the Indian telecom industry. Further it will

comprise telecom industry analysis with the help of various frameworks like industry structure,

type of competition, MACRO environment analysis, PESTLEID analysis, Porters Five Force

model etc.

The other aspect of the study will be equity research of one of the telecom providers ³Bharti

Airtel´ as it is one of biggest player in the telecom industry. The equity research will give the

insight of company¶s growth and where it really stands in market (Is it worth to buy the share of 

Bharti Airtel or not?)

Further this study would describe the various technologies that are likely to replace the wired and

wireless network.

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Industry Overview:

The growth in the telecom service can be measured in terms of following parameters-

y  Teledensity

y   Number of subscribers

y  Revenue from the sector and financial size (market size)

y  EBITDA

y  Minutes of Use(per subscribers per month)

y  Average revenue per user 

y  FDI in the sector 

y  Telecom tariff 

y  Contribution to the GDP

y   Number of players

These parameters have been changed over the period of time with the evolution of telecom. But

 before analyzing these statistics one should know how the telecom services emerged in India, the

regulatory frameworks, their impact on its growth. This will also give a brief snapshot of the

history of the telecom service industry.

The broad structure of the Telecommunication Service Industry can be represented as:

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1.1: Regulatory Framework for Indian Telecommunication Services Industry

The main regulatory body for telecommunication services is the DoT (Department of 

Telecommunication). The other bodies which provide recommendation and helps DoT to

form policies are Telecom Regulatory Authority of India (TRAI), Telecom Commission,

Telecom Disputes Settlement and Appellate Tribunal (TDSAT), Cellular Operations

Authority of India (COAI)

  DoT: Department of Telecommunication was set up in the year  1991. The major 

function of DoT is the policy formation and licensing. It has been formulating

developmental policies and projects for the accelerated growth of the telecommunication

services. It is also responsible for frequency management in the field of radio connection

in close coordination with the international bodies. It also enforces wireless regulatory

measures by monitoring wireless transmission of all users in the country.

TRAI- Telecom Regulatory Authority of India was set up in March 1997 as an

independent regulator for Telecom sector. The TRAI¶s functions are recommendatory,

regulatory and  tariff setting in telecom sector. Further TRAI has been reconstituted through

Telecom Regulatory Authority of India (Amendment) Act, 2000. The reconstitution was

for the demarcation of regulatory and recommendatory function of TRAI. As a result of 

this it became mandatory for Government to seek recommendation of TRAI for specified

matters. This amendment also led setting up of separate dispute settlement mechanism.

( TDSAT)- Telecom Disputes Settlement and Appellate Tribunal came into existence in

May, 2000. TDSAT has been empowered to adjudicate any dispute ± between a licensor 

and a licensee, between two or more service providers, between a service provider and a

group of consumers, hear and dispose of appeal against any direction, decision or order of 

TRAI.

Telecom Commission- This was set up on February 2000 consisting of a Chairman, four 

full time members and four part time members. The part time Members are Secretary

(IT), Secretary (Finance), Secretary (Planning Commission) and Secretary (IP&P). The

  primary functions are policy formulation, licensing, wireless spectrum management,

administrative monitoring of PSUs, research & development and

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standardization/validation of equipment. This was primarily made for deal with urgent

  policy issues in telecom sector both public and private. This  also consists of Policy

Planning Cell in Economic Research unit to prepare discussion paper, policy papers on

national and international issues relating to telecom sector.

COAI- Cellular Operators Association of India

  Economic Research Unit (  ERU ) - It is a  multi-disciplinary unit in DoT consisting of 

economists, statisticians, engineers and financial experts, provides various inputs on

technoeconomic  issues relating to telecom policy formulation and planning. The Unit

  provides telephone demand projections for basic services to the Telecom Commission

and all the Circle Heads at all India level. The Annual Report of the Department of 

Telecommunication is also coordinated and brought out by the Unit