Porters Five Forces

Impact on

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Mobile

Telephony

VAS

Wi-Fi

Data

Telemedia

DTH

Broadband Internet

Leased

Lines

Landline &

EPABX

VPNs

Closed

Circuit Lines

Mobile

Telephony

DTH

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Telecommunication Market in India

The 2nd largest telecommunication market in the world, and the fastest growing

974 million mobile connections in mid-2015

19% CAGR over FY0715

Tele-density up from 18.3 in 2007 to 79.67 in 2015

Total mobile services market revenue in India is expected to touch US$ 37 billion in 2017

5.2% CAGR between 2014 and 2017

Sources: TRAI, IBEF, GSMA, IDC

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Five Forces - Mobile Telephony

Buyer Power Large number of buyers

Not too much information

Low ability to backward integrate

Low bargaining leverage

Cost of voice telephony relative to their spends

Lack of differentiation among Service Providers

Concentration of prime buyers relative to products

Low switching cost

Supplier Power Large number of SIM and handset providers

No link between handset and cellular service

SIMs mainly produced in India

Multiple SIM providers per operator

High tower supply compared to demand

Little or no forward integration

Network Equipment - Huge Demand and Few Suppliers, but increasingly commoditised

Threat of Competitors ~3 operators per circle, more in large value circles

Number Portability

Low product differentiation

Lower end customers for Reliance, giving them lower ARPU compared to others

High diversity of Rivals

Threat of Substitutes Landline

VOIP Skype, Gtalk, Yahoo Messenger

Low Buyer Inclination to substitute

Voice Quality an issue

Also limited due to regulation

Threat of New Entrants Huge License Fees to be paid upfront

High gestation period

Spectrum Availability

Regulatory Issues

Rapidly changing technology

Brand Identity & Brand Switching cost

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PESTEL - Mobile Telephony

Arrangement with fixed service providers for traffic between long distance and short distance charging centres a must

One time Entry fee of Rs.25 mn plus Bank Guarantee of Rs.200 mn

Seven years time frame for rollout, spread over 4 phases

Shortfall in network coverage could result in forfeiture of BG

Operators allowed to set up landing facilities that access submarine cables and use excess bandwidth

No industrial license required for setting up manufacturing units for telecom equipment

100% Direct FDI allowed

TRAIs controversial spectrum recommendations

Changing Government Policies Sources: TRAI, MIB documents, slideshare

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DTH Market in India

More than 800 channels available in India

TV penetration still at just 56%

97% of TV HHs are single TV homes

Predominantly a cable TV market

67% of TV HHs have cable

DTH penetration ~30%

Customers flirt between these Modes of Signal

DTH growing at 15% p.a.

DD Freedish a game changer

Sources: TRAI, MIB, BARC India

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Five Forces - DTH

Buyer Power Fragmented market across the country

Easy to switch between operators and alternate Modes of Signal (Cable, IPTV); nearly zero cost to switch

Trial packs increase flirtation

Highly price sensitive

Supplier Power India the 2nd largest DTH market in

Asia

Easy availability of CPEs

Good Ku Band availability

Content available in abundance

Threat of Competitors 7 players, including DD FreeDish

Price Cuts and Free trial packs a burden on revenues and top lines

Threat of Substitutes Cable TV still a predominantly strong

presence in India

IPTV services growing slowly but steadily

Ease of switching

Improved quality by cable operators

Threat of New Entrants High Subscriber Acquisition Cost (SAC)

Market is already crowded

High Entry Cost

Difficult to obtain license for media service

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PESTEL - DTH

Operators to set up earth stations in India within 12 months of getting a license

DTH licenses in India cost $2.14 million and will be valid for 10 yrs

Necessary to have Indian management control and CEO

Foreign equity capped at 49%, FDI capped at 20%

Broadcasters not allowed to offer exclusive content to a specific player

Broadcasters stake in DTH venture and vice versa capped at 20%

Rule of must carry for all DTH operators

Weather plays a strong role in DTH service quality

Sources: Intt Journal of Mktg, Behind a Billion Screens Nalin Mehta, BARC India

Thank you