Telecom Industry

“STUDY OF STUDENTS PREFERENCE TOWARDS

VARIOUS MOBILE SERVICE PROVIDERS”

By

Rohit Arora
28123
(2008-2010)

Under the Guidance of Prof. Arun Kumar

NIILM Centre For Management Studies,

New Delhi
 Telecom Industry

CERTIFICATE OF COMPLETION

This is to certify that the dissertation report on “STUDY OF STUDENTS PREFERENCE

TOWARDS VARIOUS MOBILE SERVICE PROVIDERS” prepared by Mr. Rohit Arora, a
student of Post Graduate Diploma in Business Management (PGDBM 2008-10) at NIILM-CMS
has been completed under my guidance and supervision.

This Dissertation Report has the requisite standard for the partial fulfillment of the
PGDBM. To the best of our knowledge, no part of this report has been reproduced from any
other report and the contents are based on original research.

Signature Signature

Prof. Arun Kumar Rohit Arora

(Faculty Guide) (Student)

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 Telecom Industry

ACKNOWLEDGEMENT

It takes immense pleasure for me to express my sincere gratitude to all the helping hands who
have guided me in the completion of this project. It was a great learning experience for me to
work on my project.

I am deeply indebted to my faculty guide Prof. Arun Kumar who has supported me
immensely throughout the project through discussions and by always showing me the right
course to pursue. The information and suggestions provided by him proved to be most
valuable.

Last but not the least, my effort will remain incomplete if I do not express my indebtedness to
my teachers & friends whose assistance and support are instrumental in the successful
completion of this project.

Rohit Arora
PGDBM 2008-2010
NIILM-CMS, New Delhi

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 Telecom Industry

OBJECTIVES OF THE STUDY

The subject matter for this research Project is to study the INC Porvorim student’s

preference towards the various mobile service providers. This project consists of different

objectives. They are as follows:

 To know about the student preference level associated with different mobile service

providers.

 To find out the students satisfaction towards the various service providers.

 To know which advertisement media puts more impact on the buying decision of

students.

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 Telecom Industry

Table of Content
Executive Summary

1. Indian Telecom Industry

1.1 Facts

1.2 Telecom Services

1.3 Growth Avenues

1.4 Industry Revenue

1.5 Subscriber Growth

1.6 Major Players

1.7. Major Investment

2. India’s Competitive Advantage

2.1 Stable Economic Outlook

2.2 Large Market Potential

2.3 Large Talent Pools

2.4 Low Labour Cost

3. The Road Ahead

3.1 Gradual Progression in Telecom Sector

3.2 Acquiring New Subscribers

3.3 Selling More to Existing Subscribers

3.4 Govt. Initiatives

3.5 Reason for the Increasing Importance of MVAS

4. Key Trends in Telecom Industry

4.1 Mobile Number Portability

4.2 The Inhibitors

4.3 Wimax v/s 3G

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 Telecom Industry

5. Industry Updates
5.1 Consolidation In Industry

5.2 Idea Cellular’s Acquisitions

5.3 Telenor-Unitech Deal

5.4 TTSL-DoCoMo Deal

6. FDI Investment in Telecom Sector in India

7. Data Analysis and Interpretation

8. Findings

9. Limitations

10 Suggestions

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 Telecom Industry

Executive Summary

The rapid growth in Indian telecom industry has been contributing to India’s GDP at large.
Telecom industry in India started to set up in a phased approach. Privatization was gradually
introduced, first in value-added services, followed by cellular and basic services. Telecom
Regulatory Authority of India (TRAI), was established to regulate and deal with competition
(the service providers). This gradual and thoughtful reform process in India has favoured
industry growth. Upcoming services such as 3G and WiMax will help to further augment the
growth rate. The Indian telecommunications industry is one of the fastest growing in the
world and India is projected to become the second largest telecom market globally by 2010.

This is evident from the facts of Telecom Industry for example, India added 113.26 million new
customers in 2008, the largest globally. The country’s cellular base witnessed close to 50 per
cent growth in 2008, with an average 9.5 million customers added every month. This would
translate into 612 million mobile subscribers, accounting for a tele-density of around 51 per
cent by 2012. It is projected that the industry will generate revenues worth US$ 43 billion in
2009-10.

In this report we have tried to capture most of the areas of Telecom Industry. Major
highlights of the report are History of Telecom Industry, Current Industry Analysis,
Competitive advantages, Latest Innovation, and Growth Trends, and Student Preferences
towards different mobile service providers.

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RESEARCH METHODOLOGY
Survey Design:
The study is a cross sectional study because the data were collected at a single point of time. For the
purpose of present study a related sample of population was selected on the basis of convenience.

Sample Size and Design:

A sample of 150 people was taken on the basis of convenience. The actual retailers were contacted on
the basis of random sampling.

Research Period:
Research work is only carried for 3 to 4 weeks.

Research Instrument:
This work is carried out through self-administered questionnaires. The questions included were open
ended, dichotomous and offered multiple choices.

Data Collection:
The data, which is collected for the purpose of study, is divided into 2 bases:

 Primary Source: The data has been collected directly from respondent with the help of
structured questionnaires.

 Secondary Source: The secondary data was collected from internet and references from
Library.

Data Analysis:
The data is analyzed on the basis of suitable tables by using mathematical techniques. The technique
that I have used is bar graphs.

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 Telecom Industry

1. Indian Telecom Industry

1851  Introduction of Telegraph services

1947  Foreign Telecom Companies nationalized to form PTT
1980's: The Beginning  Tele-density in 1980-81 : 0.3%
 Introduction of public pay phones
 Private Sector allowed
 Dot, MTNL and VSNL formed
Early to Mid 90's: A Messy
 Telecom policy 1994
Affair
 Basic telephony service to private operators
 49% FDI
 8 licenses began operations in Aug 1995
Late 90's  Birth of regulator : TRAI
 NTP 1999
 New Telecom Policy
2000+  CAGR of around 85% since 1999
 FDI 74% (2005)
2007-2009  having the world's lowest call rates
 the fastest growth in the number of subscribers ( 45 million in 4
months)
 the fastest sales of million mobile phones ( in a week)
 the world's cheapest mobile handset
 the world's most affordable colour phones

1.1 Facts
Total Telecom subscribers: 429.72 million (March 2009)
Wireless subscribers: 391.76 million
Wire line subscribers : 37.98 million
Tele density: 36.98%
India's service providers revenue $8.2 billion

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1.2. Telecom Services

Telecommunication sector in India is primarily subdivided into two segments, which are Fixed Service
Provider (FSPs) and Cellular Services. Telecom industry in India constitutes some essential telecom
services like telephone, radio, television and Internet. Telecom industry in India is specifically
emphasizing on latest technologies like GSM (Global System for Mobile Communications), CDMA (Code
Division Multiple Access), PMRTS (Public Mobile Radio Trunking Services), Fixed Line and
WLL(Wireless Local Loop ). India has a prospering market specifically in GSM mobile service and the
number of subscribers is growing very fast.

Internet
PMRTS
VSATs
Radio Paging
GMPCS
Basic Services
Mobile Services

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1.3 Growth Avenues

 Managed Services is another segment that is attracting telecom companies. On

account of the rapidly growing subscriber base, service providers find it difficult to
manage their infrastructure and network management operations. In such cases, they
completely or partially outsource their infrastructure or network management
operations.

 To reduce their network deployment costs, many service providers are considering
infrastructure sharing offers the following advantages:

 Improved service quality

 Increased affordability for customers

 Faster roll out of services in rural and remote areas

 Significant reduction in initial set up costs

 Increased environmental aesthetics

 Lower operating costs for service providers

 Enterprise Telecom Services includes key services, such as voice over Internet
protocol (VoIP), dedicated telecom communication systems; IT infrastructure enabled

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unified communication services, etc. Telecom service providers are increasingly

targeting enterprises by providing dedicated services and is expected to witness major
developments in near future.

 Virtual Private Network is a private data network that provides connectivity within
closed user groups via public telecommunication infrastructure. Competition is likely
to heat up in the VPN segment as DoT has relaxed the norms for private players.

 3G The Indian government plans to auction the spectrum for 3G services by inviting
bids from domestic as well as foreign players, and creating a competitive environment
that offers better services to consumers. Therefore, the 3G spectrum is among the
major investment opportunities and growth drivers of the telecom industry.

 The immense potential for 3G is reflected by the 30–40 percent annual growth in
Value-Added Services.

 Cell phone manufacturers are striving to develop USD 100 priced 3G handsets for
the Indian market.

 India expects to replicate its 2G growth in 3G services.

 WiMAX has been one of the most significant developments in wireless communication
in the recent past. Since this mode of communication provides network access in
inaccessible locations at a speed of more than 4 Mbps, it is expected to be a major
factor in driving telecom services in India, especially wireless services. Thus, it will lead
to the increased use of telecom services, Internet, value-added services and enterprise
services. WiMAX is expected to accelerate economic growth and assist in providing
better education, healthcare and entertainment services.

 It is estimated that India will have 13 million WiMAX subscribers by 2012.

 Aircel is the pioneer in WiMAX technology in India.

 The state-owned player, BSNL, aims to connect 74,000 villages through WiMAX.

 Bharti, Reliance and VSNL have acquired licenses in the 3.3GHz range to 12tilize
the opportunities offered by this domain.

 Value Added Services: The VAS industry was worth USD 632 million in 2006–07. The
industry is estimated to grow by 60 percent in 2007–08 and become an USD 1,011
million opportunity.

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 Telecom Industry

The VAS industry is currently focusing on the entertainment sector, such as the Indian
film industry and cricket; however, there is scope for growth in other avenues as
utility-based services, such as location information and mobile transactions.

 Rural Telephony: As the government targets to increase rural teledensity from the
current 2 percent to 25 percent by 2012, rural telephony will require major
investments. This segment will boost the demand for telecom services, equipment,
Internet services and other value-added services; thereby, offering great market
opportunities for telecom players.

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 Telecom Industry

1.4 Industry Revenue (2002-2010)

According to a Frost & Sullivan industry analyst, by 2012, fixed line revenues are expected to touch US$
12.2 billion while mobile revenues will reach US$ 39.8 billion in India. India has become the second
country in the world to have more than 100 million CDMA-based (code division multiple access) mobile
phone subscribers after the US, which has 157 million CDMA users. The Indian telecommunications
industry is on a growth trajectory with the GSM operators adding nearly 9 million new subscribers in
April 2009, taking the total user base to 297 million, a growth of 3.11 per cent over the additions made
the previous month. The figures, however, do not include the GSM subscriber additions made by
Reliance Telecom.

Year Revenue (US $ billion)

2002-03 9
2003-04 10
2004-05 11
2005-06 15
2006-07 20
2007-08 32
2008-09 36
2009-2010 (forecasted) 43

2002-03 9

2003-04 10

2004-05 11

2005-06 15

2006-07 20

2007-08 32

2008-09 36

2009-2010 (forecasted) 43

0 5 10 15 20 25 30 35 40 45 50

Revenue (US $ billion)

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1.5 Subscriber Growth

India added 130 million new customers in 2008-09, the largest globally. The country’s cellular
base witnessed close to 50 per cent growth in 2008, with an average 9.5 million customers
added every month.

By April 2009, the total number of telephone connections reached 441.47 million. With this
growth, the overall tele-density reached 37.94 at the end of April 2009. According to Business
Monitor International, India is currently adding 8-10 million mobile subscribers every month.
It is estimated that by mid 2012, around half the country’s population will own a mobile
phone. This would translate into 612 million mobile subscribers, accounting for a tele-density
of around 51 per cent by 2012.

Subscribers (in millions)

450
400 391.76
350
300
250 261.07
200 Subscriber (in millions)
150 165.11

100 98.77
50 52.22
33.69
0
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09

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Market Share of GSM Service Providers

Bharti Airtel Vodafone Essar BSNL !dea
Aircel Reliance MTNL MTS

0%
4%2%
7%
32%
13%

18%
24%

Source: www.coai.com

Bharti Airtel has the largest market share in the GSM segment. During 2008–09, out of the
total subscriber base of 212.51 million, the private players accounted for more than 80 per
cent, whereas, the public sector operators (BSNL and MTNL) accounted for the remaining
share (20 per cent)

Market Share of CDMA Service Providers

Reliance Tata Indicom Others

8%

35%
57%

Source: www.coai.com

Reliance Communications dominates the Indian CDMA mobile services segment with a
subscriber base of 42.71 million.

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1.6. Major Players

“Bharti Airtel” formerly known as Bharti Tele-Ventures Limited (BTVL) is among India's
largest mobile phone and Fixed Network operators. With more than 60 million subscriptions
as of 13th February 2008. It offers its mobile services under the Airtel brand and is headed by
Sunil Mittal. The company also provides telephone services and Internet access over DSL in 14
circles. The company complements its mobile, broadband & telephone services with national
and international long distance services. The company also has a submarine cable landing
station at Chennai, which connects the submarine cable connecting Chennai and Singapore.
The company provides reliable end-to-end data and enterprise services to the corporate
customers by leveraging its nationwide fiber optic backbone, last mile connectivity in fixed-
line and mobile circles, VSATs, ISP and international bandwidth access through the gateways
and landing station.

Airtel is the largest cellular service provider in India in terms of number of subscribers. Bharti
Airtel owns the Airtel brand and provides the following services under the brand name Airtel:
Mobile Services (using GSM Technology), Broadband & Telephone Services (Fixed line,
Internet Connectivity(DSL) and Leased Line), Long Distance Services and Enterprise Services
(Telecommunications Consulting for corporate).

In April 2006 Bharti Global Limited was awarded a telecommunications license in Jersey in
the Channel Islands by the local telecommunications regulator the JCRA. In September 2006
the Office of Utility Regulation in Guernsey awarded Guernsey Airtel with a mobile
telecommunications license. In May 2007 Jersey Airtel and Guernsey Airtel announced the
launch of a relationship with Vodafone for island mobile subscribers. In July 2007, Bharti
Airtel signed an MoU with Nokia-Siemens for a 900 million dollar expansion of its mobile and
fixed network. In August 2007, the company announced it will be launching a customized
version of Google search engine that will provide an 'array of services' to its broadband
customers.

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The Late Dhirubhai Ambani dreamt of a digital India — an India where the common man
would have access to affordable means of information and communication. Dhirubhai, who
single-handedly built India’s largest private sector company virtually from scratch, had stated
as early as 1999: “Make the tools of information and communication available to people at an
affordable cost. They will overcome the handicaps of illiteracy and lack of mobility.”

It was with this belief in mind that Reliance Communications (formerly Reliance Infocomm)
started laying 60,000 route kilometres of a pan-India fibre optic backbone. This backbone was
commissioned on 28 December 2002, the auspicious occasion of Dhirubhai’s 70th birthday,
though sadly after his unexpected demise on 6 July 2002.

Reliance Communications has a reliable, high-capacity, integrated (both wireless and

wireline) and convergent (voice, data and video) digital network. It is capable of delivering a
range of services spanning the entire infocomm (information and communication) value
chain, including infrastructure and services — for enterprises as well as individuals,
applications, and consulting.

Today, Reliance Communications is revolutionising the way India communicates and

networks, truly bringing about a new way of life.

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.[1]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

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HISTORY

Reliance Infocomm was founded by Dhirubhai Ambani. Between 1999 to 2002 Reliance
Infocomm built 60,000 km of fibre optic backbone in India. This network was commissioned
on December 28, 2002.

FOOTPRINT

At present, Reliance Telecom's GSM cellular services are available in 340 towns within its
eight-circle footprint. Reliance's CDMA services are available in 19 states and cover about
65% of the country, state wise. Reliance Infocomm also offered for the first time in India,
mobile data services through its R-World mobile portal. This portal leverages the data
capability of the CDMA 1X network.

BUSINESS REVIEW

During the twelve months ended March 31, 2007, revenues of the Wireless business increased
by 46% to Rs. 10,728 crore (US$ 2,489 million) from Rs. 7,364 crore (US$ 1,709 million).
Wireless EBITDA increased to Rs. 3,984 crore (US$ 924 million) from Rs. 2,250 crore (US$ 522
million). Margins expanded to 37% from 31%.
EBITDA of the Global business increased by 98% during the twelve months ended March 31,
2007 to Rs. 1,271 crore (US$ 295 million). EBITDA margins increased to 24% from 12% last
year.

In the same period, the Broadband business achieved revenue growth of 123% to Rs. 1,144
crore (US$ 265 million), and EBITDA increased by more than 6 times, to Rs. 519 crore (US$
120 million). The EBITDA margin crossed 45% in the twelve months ended March 31, 2007,
from 15% in the corresponding period in the previous year.

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Tata Teleservices is part of the INR Rs. 2,51,543 Crore (US$ 62.5 billion) Tata Group, that has
over 80 companies, over 3,30,000 employees and more than 3.2 million shareholders. With a
committed investment of INR 36,000 Crore (US$ 7.5 billion) in Telecom (FY 2006), the Group
has a formidable presence across the telecom value chain.

Tata Teleservices spearheads the Group’s presence in the telecom sector. Incorporated in
1996, Tata Teleservices was the first to launch CDMA mobile services in India with the Andhra
Pradesh circle. Starting with the major acquisition of Hughes Tele.com (India) Limited [now
renamed Tata Teleservices (Maharashtra) Limited] in December 2002 the company swung
into an expansion mode. With the total Investment of Rs 19,924 Crore, Tata Teleservices has
created a Pan India presence spread across 19 circles that include Andhra Pradesh, Gujarat,
Karnataka, Delhi, Maharashtra, Mumbai, Tamil Nadu, Orissa, Bihar, Rajasthan, Punjab,
Haryana, Himachal Pradesh, Uttar Pradesh (E), Uttar Pradesh (W), Kerala, Kolkata, Madhya
Pradesh and RoWB. Having pioneered the CDMA 1X technology platform in India, Tata
Teleservices has established a robust and reliable 3G ready telecom infrastructure that
ensures quality in its services. It has partnered with Motorola, Ericsson, Lucent and ECI
Telecom for the deployment of a reliable, technologically advanced network.

The company, which heralded convergence technologies in the Indian telecom sector, is today
the market leader in the fixed wireless telephony market with a total customer base of over
3.8 million. Tata Teleservices’ bouquet of telephony services includes Mobile services, Wireless
Desktop Phones, Public Booth Telephony and Wire line ervices. Other services include value
added services like voice portal, roaming, post-paid Internet services, 3-way conferencing,
group calling, Wi-Fi Internet, USB Modem, data cards, calling card services and enterprise
services. Some of the other products launched by the company include prepaid wireless
desktop phones, public phone booths, new mobile handsets and new voice & data services such
as BREW games, Voice Portal, picture messaging, polyphonic ring tones, interactive
applications like news, cricket, astrology, etc.

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Tata Indicom redefined the existing prepaid mobile market in India, by unveiling their
offering – Tata Indicom ‘Non Stop Mobile’ which allows customers to receive free incoming
calls. Tata Teleservices today has India’s largest branded telecom retail chain and is the first
service provider in the country to offer an online channel Http://www.i-choose.in to offer
postpaid mobile connections in the country. Tata Teleservices has a strong workforce of 6000.
In addition, TTSL has created more than 20,000 jobs, which will include 10,000 indirect jobs through
outsourcing of its manpower needs. Today, Tata Teleservices Limited along with Tata Teleservices
(Maharashtra) Limited serves over 27 million customers in more than 6000 towns. With an ambitious
rollout plan both within existing circles and across new circles, Tata Teleservices offers world-class
technology and userfriendly services in 19 circles.

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Bharat Sanchar Nigam Limited (known as BSNL, India Communications Corporation Limited)
is a public sector communications company in India. It is the India's largest
telecommunication company with 25.14% market share as on December 31, 2007. Its
headquarters are at Bharat Sanchar Bhawan, Harish Chandra Mathur Lane, Janpath, New
Delhi. It has the status of Mini-ratna - a status assigned to reputed Public Sector companies in
India.

BSNL is India's oldest and largest Communication Service Provider (CSP). Currently BSNL has
a customer base of 68.5 million (Basic & Mobile telephony). It has footprints throughout India
except for the metropolitan cities of Mumbai and New Delhi which are managed by MTNL. As
on December 31, 2007 BSNL commanded a customer base of 31.7 million Wireline, 4.1 million
CDMA-WLL and 32.7 million GSM Mobile subscribers. BSNL's earnings for the Financial Year
ending March 31, 2007 stood at INR 397.15b (US$ 9.67 b) with net profit of INR 78.06b (US$
1.90 billion). Today, BSNL is India's largest Telco and one of the largest Public Sector
Undertaking with estimated market value of $ 100 Billion. The company is planning an IPO
with in 6 months to offload 10 % to public.

Bharat Sanchar Nigam Ltd. formed in October, 2000, is World's 7th largest
Telecommunications Company providing comprehensive range of telecom services in India:
Wireline, CDMA mobile, GSM Mobile, Internet, Broadband, Carrier service, MPLS-VPN, VSAT,
VoIP services, IN Services etc. Within a span of five years it has become one of the largest
public sector unit in India. BSNL has installed Quality Telecom Network in the country and
now focusing on improving it, expanding the network, introducing new telecom services with
ICT applications in villages and wining customer's confidence. Today, it has about 47.3 million
line basic telephone capacity, 4 million WLL capacity, 20.1 Million GSM Capacity, more than
37382 fixed exchanges, 18000 BTS, 287 Satellite Stations, 480196 Rkm of OFC Cable, 63730
Rkm of Microwave Network connecting 602 Districts, 7330 cities/towns and 5.5 Lakhs
villages.

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BSNL is the only service provider, making focused efforts and planned initiatives to bridge the
Rural-Urban Digital Divide ICT sector. In fact there is no telecom operator in the country to
beat its reach with its wide network giving services in every nook & corner of country and
operates across India except Delhi & Mumbai. Whether it is inaccessible areas of Siachen
glacier and North-eastern region of the country. BSNL serves its customers with its wide
bouquet of telecom services.

BSNL is numero uno operator of India in all services in its license area. The company offers
vide ranging & most transparent tariff schemes designed to suite every customer.
BSNL cellular service, CellOne, has more than 17.8 million cellular customers, garnering 24
percent of all mobile users as its subscribers. That means that almost every fourth mobile user
in the country has a BSNL connection. In basic services, BSNL is miles ahead of its rivals, with
35.1 million Basic Phone subscribers i.e. 85 per cent share of the subscriber base and 92
percent share in revenue terms.

BSNL has more than 2.5 million WLL subscribers and 2.5 million Internet Customers who
access Internet through various modes viz. Dial-up, Leased Line, DIAS, Account Less
Internet(CLI). BSNL has been adjudged as the NUMBER ONE ISP in the country.

BSNL has set up a world class multi-gigabit, multi-protocol convergent IP infrastructure that
provides convergent services like voice, data and video through the same Backbone and
Broadband Access Network. At present there are 0.6 million DataOne broadband customers.
The company has vast experience in Planning, Installation, network integration and
Maintenance of Switching & Transmission Networks and also has a world class ISO 9000
certified Telecom Training Institute. Scaling new heights of success, the present turnover of
BSNL is more than Rs.351,820 million (US $ 8 billion) with net profit to the tune of Rs.99,390
million (US $ 2.26 billion) for last financial year. The infrastructure asset on telephone alone is
worth about Rs.630,000 million (US $ 14.37 billion). BSNL plans to expand its customer base
from present 47 millions lines to 125 million lines by December 2007 and infrastructure
investment plan to the tune of Rs. 733 crores (US$ 16.67 million) in the next three years. The
turnover, nationwide coverage, reach, comprehensive range of telecom services and the desire
to excel has made BSNL the No. 1 Telecom Company of India.

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IDEA CELLULAR LIMITED

Idea Cellular is a part of Aditya Birla Nuvo, a flagship company of the Aditya Birla Group. It is
a wireless telephony company operating in various states in India. It initially started in 1995
as a joint venture among the Tatas, Aditya Birla Group and AT&T by merging "'Wings
Cellular'" operating in Madhya Pradesh, UP West, Rajasthan and Tata Cellular as well as Birla
AT&T Communications. Idea is a leading cellular operator, with a subscriber base of over
seven million across the country in its eight circle operation. It controls a portfolio of India's
most attractive and mainly contiguous properties including the 11 states of Maharashtra
(excluding Mumbai), Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chattisgarh, Uttar
Pradesh (West), Uttaranchal, Haryana, Kerala and Delhi (inclusive of NCR).

Having operations in four of the five largest cellular circles in India, Idea is the market leader
in the Maharashtra and Goa; Uttar Pradesh (West) and Madhya Pradesh and Chattisgarh
circles in terms of number of subscribers. Idea's Delhi circle is also the fastest-growing fourth
operator in the country, which is an achievement in itself and showcases customer confidence
of a high degree. Idea's footprint currently covers approximately 45 per cent of India's
population and over 50 per cent of the potential telecom market.

Idea covers over 1000 towns along with a total highway connectivity of over 10,000
kilometres. Today, there are over 350 direct customer service outlets and a well-entrenched
network of over 48,000 retailers and dealers across the country. Each circle with its own
dedicated call centre and a single call resolution approach towards the customer is a unique
effort provided by any operator.

Idea offers roaming across 560 operators in India and across the world. With a clear focus on
providing unique, distinct innovative and tremendously valuable services to the subscribers,
Idea embarked upon an initiative to set up a VAS (value-added services) factory within the
company, which conceptualizes and provides tailor-made value-added services. As a leader in
value added services, innovation is central to the VAS factory. Idea was the first and only
company to launch music messaging with 'Cellular Jockey' to all its subscribers. Idea has
launched a voice portal with 'Say IDEA'. Idea also launched Global SMS for the first time in the
country, which allows the users to send and receive SMS from over 540 networks and 170
countries across technology platforms like GSM, CDMA, TDMA and satellite phones.

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A frontrunner in introducing revolutionary tariff plans, Idea has the distinction of offering the
most customer friendly and competitive pre-paid offerings, for the first time in India, with 'Eco
Talk', 'Flexi-charge', 'Super Power' and other segmented offerings. 'Lifetime Idea' is the first
and only loyalty program, for pre- paid customers, introduced by a cellular brand. 'Pay Easy' is
bill payment through the effective use of the pre-paid channel. Idea is the only operator in the
world to launch this service. It is also the only cellular operator which has launched a
complete suite of mobile e-mail services.

Customer service and innovation are the drivers of this cellular brand. Idea was the first
company in the country to launch GPRS in November 2002. It showcased EDGE (Enhanced
Data Rates for GSM Evolution) in Delhi, in July 2004. With EDGE (a 3G technology),
subscribers can enjoy live television with a data download rate of over 160 kbps. GPRS is
available on all its networks, for both pre-paid and post-paid customers. Idea subscribers also
have a richer experience while watching movie previews, multimedia messages with video
attachments, web-infotainment, high-speed video downloads, java game downloads and other
Internet-based multi-media experiences on their EDGE-enabled mobile phones. In keeping
with the promise of providing world class products and services to its customers, Idea has
added another first to its list by announcing the launch of its new VAS innovation —
Background Tones. Idea has also introduced a convenient ambulance service for its customers
of Indore. In another revolutionary and unprecedented move, Idea has announced the, "Idea
Girls' Best Friend Offer", a once-in-a-lifetime opportunity to own a free dazzling real diamond
pendant with every new postpaid connection on a plan of Rs. 150 and above.

The latest feather in the Idea cap is winning the GSM Association Award for Bill Flash. Idea
thus became the first cellular operator in India to win an award on an international platform.

The GSM Association Awards are recognized as the Oscars of the GSM mobile
industry. Idea is the only Indian operator to have won an award at this
forum since the inception.

The award was presented for Idea's unique "Bill Flash" service in the "Best Billing or
Customer Care Solution". It is indeed with pleasure that we proudly announce that Bill Flash
has been created by our in-house R&D Team.

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 Telecom Industry

Vodafone, the world’s leading international mobile communications company, has fully
arrived in India brand will be lunched in India from 21st September onwards. The popular and
endearing brand, Hutch, will be transitioned to Vodafone across India. This marks a
significant chapter in the evolutic brand change over the next few weeks will be unveiled
nationally through a high profile campaign covering all important media.

Vodafone, the world’s leading mobile telecommunication company, completed the acquisition
of Hutchison Essar in May 2007. Asim Ghosh, managing director, Vodafone Essar, said “We
have had a great innings as Hutch in India and today marks a new begin that created Hutch,
but an acceleration
into the future with Vodafone’s global expertise..” the Vodafone mission is to be the
communications leader in an increasingly connected world – enriching customers lives,
helping increased by delivering their total communication needs.

About Vodafone Essar Limited:

Vodafone Essar in India is a subsidiary of Vodafone Group plc and commenced operations in
1994 when its predecessor Hutchison tele Vodafone essar now has operations in 16 circles
covering 86% of India’s mobile customer base, with over 34.1 million customers. Over the
year, Vodafone Essar, under the hutch brand, has been named the Most Respected Telecom
Company, the Best Mobile sender effective advertiser of the year. Vodafone is the world’s
leading international mobile communications company. It now has operation network with
over 200 million customers worldwide. Vodafone has partnered with the Essar Group as its
principal joint venture partner. The Essar Group is a diversified business corporation with
interests spanning the manufacturing and service sectors like steel, energy, construction. The
group has an asset base of over Rs.400 billion and employer over 20,000 people.

GROWTH OF HUTCHISON ESSAR (1992-2005):

In 1992 Hutchison Whampoa and its Indian business partner established a company that in
1994 was awarded a licence to provide mobile telecommunications services in Mumbai

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(formerly Bombay) and launched commercial service as Hutchison Max in November 1995.
Analjit Singh of Max still holds 12% in company.

By the time of Hutchison Telecom's Initial Public Offering in 2004, Hutchison Whampoa had
acquired interests in six mobile telecommunications operators providing service in 13 of
India's 23 licence areas and following the completion of the acquisition of BPL that number
increased to 16. In 2006, it announced the acquisition of a company that held licence
applications for the seven remaining license areas.

In a country growing as fast as India, a strategic and well managed business plan is critical to
success. Initially, the company grew its business in the largest wireless markets in India - in
cities like Mumbai, Delhi and Kolkata. In these densely populated urban areas it was able to
establish a robust network, well known brand and large distribution network -all vital to long-
term success in India. Then it also targeted business users and high-end post-paid customers
which helped Hutchison Essar to consistently generate a higher Average Revenue Per User
("ARPU") than its competitors. By adopting this focused growth plan, it was able to establish
leading positions in India's largest markets providing the resources to expand its footprint
nationwide.

In February 2007, Hutchison Telecom announced that it had entered into a binding
agreement with a subsidiary of Vodafone Group Plc to sell its 67% direct and indirect equity
and loan interests in Hutchison Essar Limited for a total cash consideration (before costs,
expenses and interests) of approximately US$11.1 billion or HK$87 billion.

1992: Hutchison Whampoa and Max Group established Hutchison Max

2000: Acquisition of Delhi operations Entered Calcutta and Gujarat markets through ESSAR
acquisition

2001: Won auction for licenses to operate GSM services in Karnataka, Andhra Pradesh and
Chennai

2003: Acquired AirCel Digilink (ADIL - Essar Subsidiary) which operated in Rajasthan, Uttar
Pradesh East and Haryana telecom circles and renamed it under Hutch brand

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 Telecom Industry

2004: Launched in three additional telecom circles of India namely 'Punjab', 'Uttar Pradesh
West' and 'West Bengal'

2005: Acquired BPL, another mobile service provider in India

2008: Vodafone acquired Dishnet Wireless, a service provider in Orissa and has successfully
launched its services in the following circle.

2008: Vodafone launched the Apple iPhone 3G to be used on its 17 circle 2G network.

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1.7. Major Investments

The booming domestic telecom market has been attracting huge amounts of investment which
is likely to accelerate with the entry of new players and launch of new services. Buoyed by the
rapid surge in the subscriber base, huge investments are being made into this industry.

 The Russian government is likely to pick up equity amounting to US$ 670 million-US$
700 million in Sistema Shyam TeleServices Ltd (SSTL), a joint venture between Russia-
based telecom major Sistema and Shyam Group in India, by the end of this financial
year. SSTL is also planning to invest US$ 5.5 billion over the next 5 years in India.

 Norway-based telecom operator Telenor has bought a 60 per cent stake in Unitech
Wireless for US$ 1.23 billion.

 Japanese telecom major NTT DoCoMo acquired a 27.31 per cent equity capital of Tata
Teleservices for about US$ 2.6 billion in November 2008.

 Bahrain's Batelco has signed a deal to buy 49 per cent in Chennai-based S-Tel, a GSM
service provider, for US$ 225 million.

 BSNL, India's leading telecom company in revenue terms, will put in about US$ 1.16
billion in its WiMax project.

 Vodafone Essar will invest US$ 6 billion over the next three years in a bid to increase its
mobile subscriber base from 40 million at present to over 100 million.

 Telecom operator Aircel, which launched GSM mobile services in Bangalore in

February 2009, plans to invest US$ 220.58 million over the next year to set up base
stations across the state.

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2. India’s Competitive Advantage

An analysis of the Indian telecom industry under the Porter’s Diamond Model reveals that
India offers a competitive advantage for firms operating in the country.

India is the fastest growing free market

democracy in the world. It has a mature
and dynamic private sector, which
accounts for 75 per cent of India’s GDP,
and a market with enormous potential
due to its large size and diversity. It is also
expected to achieve the highest growth
rate among the BRIC countries (Brazil,
Russia, India and China). India offers
significant business opportunities to the
services, as well as the manufacturing
sectors. This is because India offers benefits such as cost advantage in product development
and back-office processing and the large-scale availability of skilled English-speaking
professionals. The middle class population is also a significant market for any business entity.
AT Kearney ranked India as the second-most attractive democracy in its FDI confidence index.
The success of MNCs is a proof that India is an attractive investment destination. India’s huge
domestic market and buoyant economic growth have always attracted foreign investors.
Some of the key advantages of investing in India are outlined below.

2.1 Stable Economic Outlook:

A decade of reforms has opened the country to greater competition and spurred industries to
become more efficient. India is currently the fourth-largest economy on PPP basis and is well
positioned on a continuously increasing growth curve. India’s emergence as a leading
destination for foreign investment is a result of positive indicators such as a stable 6 per cent
annual growth, rising foreign exchange reserves of over US$ 266.18 billion(July 24th 2009)
and Foreign Direct Investment (FDI) of US$ 15 billion. Goldman Sachs had earlier predicted
that India will become the third-largest economy in the world. However, it has now revised its
previous estimates and claims that by 2050, India will even surpass the US and become the

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second-largest economy after China. The country’s economic growth has become more
attractive due to the rising share of the services sector in the GDP.

2.2 Large Market Potential

Around 30-40 million people in India join
the middle class every year. The country’s
upper middle class spends 6 percent of its
earnings on telecom services. India is one of
the largest consumer markets in the world.
Due to rapid economic growth and rise in
disposable income, the spending power of
consumers is increasing rapidly. It has been
forecasted that 15 years down the line,
Indians will be approximately four times
richer than they are today. As per this forecast, Indians will purchase five times more cars and
consume three times more crude oil than they do today.

According to the 2001 census, about 54 per cent of the country’s total population was below
25 years of age. By 2013, another 200 million people will be joining the league, representing
an exponential growth in the ‘consuming class’. India will become a large consumer of world
resources - be it natural or man-made, thereby offering numerous opportunities to marketers
around the globe. Approximately 33 per cent of India’s population will be residing in urban
areas by 2026, as against 28 per cent in 2001.

2.3 Large Talent Pool

The working age population is expected to rise by 83 per cent by 2026. India has over 380
universities and about 1,500 research institutes, which churn out approximately 200,000
engineers, 300,000 post graduates, 2,100,000 other graduates and around 9,000 PhDs. This
large base of skilled manpower offers unparalleled advantages to the companies operating in
India. As a result, many multinational companies have either established operation hubs in
India to leverage this sizeable talent pool, or they have outsourced their work to a third party
in India. The numerous BPOs and KPOs flourishing in India are a direct consequence of
companies choosing the latter option.

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2.4 Low Labour Cost

CII estimates that manufactured product outsourcing accounted for US$ 10 billion in 2007.
The value will escalate to US$ 50 billion by 2015. India has one of the lowest labour costs
among the developing countries, which is the foremost factor for attracting multinational
giants in every sector. The Ministry of Commerce, Government of India, has estimated that off
shoring operations to India can provide a cost benefit of up to 40 to 60 per cent, as compared
to developed countries. The country has also emerged as a major R&D hub with more than
hundred Fortune 500 companies based in India. An apt example is Nokia, which has set up its
manufacturing operations in India considering the long term sustainable demand for mobile
telephony. The company believes that this initiative will help the company in reducing time to
market and respond better to customer requirements. It has pumped in US$ 150 million into
its Chennai facility.

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3. The Road Ahead

The target for the 11th Plan period (2007-12) is 600 million phone connections with an
investment of US$ 73 billion. Apart from the basic telephone service, there is an enormous
potential for various value-added services. In fact, the real potential for telecom service
growth is still lying untapped.

According to the CII Ernst & Young report titled 'India 2012: Telecom growth continues',
revenue from India's telecom services industry is projected to reach US$ 54 billion in 2012, as
against US$ 31 billion in 2008.

3.1 Gradual Progression in Telecom Sector :

The progression chart below depicts the major regulations and events driving the extra
ordinary growth of Telecom sector from year 1999 to 2008. In order to capitalize this
opportunity of meeting the consumer needs in highly competitive market the operators have
reduced the tariffs to attract consumers with low purchasing power primarily in semi urban
and rural India. In fact lucrative offers like being paid for incoming calls have transformed the
scenario completely. Through these changing regulations and events, the Industry players are
aiming to achieve the following
 Acquiring new subscribers by expanding in Semi Urban and Rural India
 Selling more services to existing subscribers

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The recent TRAI recommendation permitting PC-to-phone calls where ISPs can offer cheaper
STD calls and even free local calls. This would result in further reduction of voice tariffs. This
would lead to increased focus on MVAS by mobile operators.

3.2 Acquiring New Subscribers through expansion in Rural India

Acquiring customers have always been a great challenge for companies. Given the current
level of saturation in Metros and Urban Market and cut throat competition among operators ,
increasing subscriber base in urban market would be all the more challenging. Therefore a lot
of operators with adequate support from Government are eyeing the rural market for future
growth. Big operators like Airtel have claimed that soon mobile connections and recharge
vouchers etc will be available at all such places from where people buy match boxes. This
certainly explains the future penetration of these services in remotest of villages.

3.3 Selling More to Existing Subscribers

This is relatively easier as compared to acquiring new customers. Also since now the new
subscriptions will largely happen at the bottom of the pyramid therefore the new
subscriptions will further lower the average revenue per user. In such a scenario mobile VAS
sector is a potential long-term revenue stream as it will be easier to sell more to the existing
customers.

3.4 Government Initiatives

Government also has supported the growth of this sector by coming out with a number of
initiatives for the low end subscribers of rural India, and Universal Service Obligation (USO)
fund was one such initiatives. The USO fund was an initiative taken up by the government to
increase rural teledensity. In recent developments, BSNL and two private operators will erect
427 towers in remote areas offering over four lakh mobile connections. All the towers are
expected to be erected and commissioned by December 2008. Under the second phase, DoT
aims at erecting 11,000 towers throughout the country to offer over 11 million mobile
connections ADC was levied by Telecom Regulatory Authority of India (TRAI) in 2003 to
provide support for BSNL's rural telephone obligation. Telecom Regulatory Authority of India
(TRAI) has recently given orders for the withdrawal of the ADC (Access Deficit Charge) and
the subsequent passing of the benefit to the consumers by the telecom operators.

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3.5. The reasons for the increasing importance of MVAS can be classified as:
Decrease in ARPU despite increase in MOU: Though the subscriber base is growing at a
rapid pace and has positively impacted industry revenues, operator margins also have shrunk
owing to competition and lower “Average Revenue per User” (ARPU) as the major growth is
coming from bottom of the pyramid. As ARPU declines and voice gets commoditized, the
challenge is to develop alternative revenue streams and retain customers by creating a basis
for differentiation in high-churn markets. Need for differentiation: There is a greater need
among the telecom operators to differentiate themselves from each other.

 Number of Licensees: With increasing number of licensees (98 UASL, and 37 cellular
licenses) in the telecom space the average numbers of operators in many circles have
increased to 5-6 operators offering more choices to the consumer. Thus the
competition among the operators has increased tremendously. Therefore it is very
important for them to differentiate themselves from the others. Now that voice has got
commoditized these operators are using MVAS for their differentiation and marketing
these services heavily for creating awareness among the consumers.

 Decreasing Call Rates: In order to attract consumers with relatively low purchasing
powers primarily from Semi Urban and Rural India the operators have drastically
reduced the call rates making it affordable to even the lower segment of society. The
tariff in India is one of the lowest at Rs.1 per minute as compared to the tariff in
developed nations like USA and UK where the call rates are Rs.13 and Rs7-8
respectively.

 3G bidders who are non operators: The arrival of new technologies will give rise to
greater competition as many non operators are also bidding for the 3G licenses.
Department of Telecom has planned to allow five 3G operators in each circle
depending on the availability of spectrum. Therefore there would be a greater need to
differentiate oneself in order to attract new customers and retain the existing ones.

 Saturation in Metro and Urban Market: The metro/urban areas offer high level of
penetration and have significant mobile subscribers. In such a highly saturated market
with the entry of MVNO’s the competition will get fierce. Therefore capitalizing on
value added services will give operators opportunity to increase ARPU by providing
premium services.

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 Increasing need and demand from consumers: In addition to the above supply side
reasons the ‘pull effect’ from consumers asking for more than just basic telephony is
also a key driver for MVAS services. Today most of the consumers are seeking more
from their communication device apart from just mobility and desire to stay
connected. As we have seen, Telecommunication has moved beyond providing just
basic voice calls. The mobile phone has evolved from a mere communication device to
an access mode with an ability to tap a plethora of information and services available
in the ecosystem. This is the reason why it is now being referred to as the ‘fourth
screen’, after Cinema halls, Television and PC.

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4. Key trends in telecom industry

4.1 Mobile Number portability (MNP)

One of the most frequent definitions that prevail in the telecom circles for number portability
is: "Number portability is a circuit-switch telecommunications network feature that enables
end users to retain their telephone numbers when changing service providers, service types,
and or locations."

Why mobile number portability (MNP)? When fully implemented nationwide by both wireline
and wireless providers, portability will remove one of the most significant deterrents to
changing service, providing unprecedented convenience for consumers and encouraging
unrestrained competition in the telecommunications industry. In short, this is the best method
to increase the efficiency of the service provider by increasing the competition, thereby
ensuring better services in all respects.

From the subscribers’ perspective, this is a deceptively simple and very welcome change,
because they can change wireless service providers without worrying about notifying friends,
family and business contacts that their wireless number is changing. In addition, being able to
‘port’ a number from one provider to another eliminates the hassle and expenses of changing
business cards, stationery, invoices and other materials for businesses.

From the wireless carrier’s perspective the change is anything, but simple. Virtually all of
wireless carriers’ systems are affected. Especially any system that relies on mobile identity
numbers (MINs) or mobile directory numbers (MDNs) will be affected. Examples of critical
systems and processes that would be affected are: billing, customer service, order activation,
call delivery, roamer registration and support, short messages service center, directory
assistance, caller ID, calling name presentation, switches, maintenance and CSC systems, home
location registers (HLRs), and visiting location registers (VLRs).

4.2 The Inhibitors

4.2.1 Huge Costs: One of the most common barriers in MNP implementation, within any
country, has been the implementation cost. Service Providers have been constantly bargaining
for time, based on the cost factor, from their respective governments. Referring to the recent
example of the US, where each of the large carriers would need to spend $50–60 million to

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institute the service and an equivalent sum to maintain it. The FCC on this plea gave wireless
carriers in the US another year, i.e., till November 2003, for resolving implementation issues.
The experience of developed countries exhibits that local number portability for fixed wireline
was introduced within two to three years of introduction of competition to incumbent state
telcos. The cost estimate for the implementation of WNP in developed nations like the US can
be very helpful for the other countries, who wish to think on the lines of number portability. To
add on increased marketing costs are to be realized as the carriers look to lock up their
current base before number portability is implemented, and then aggressively pursue the
customers of other carriers thereafter.

4.2.2 Customer Retention/Increased Competition: Every subscriber in a race to retain its

customer would like to offer its customers best services so as to save them from porting. It’s
like a blessing in disguise for the customers, as they would get better service irrespective of the
carrier, albeit with the same number. Infrastructure Upgrade: To support WNP, a company
has to upgrade both its hardware and software capabilities, which will amount to some cost.
Softwares need to be upgraded to provide proper routing of calls. The carriers need to
upgrade their networks to handle portability requests. The provider, which has its portability
compatible would be expected to attract maximum customers and will emerge the winner.

4.2.3 Cost Recovery and Bill Reconciliation/Query Processing: When a customer plans to
shift, the old service provider (OSP) has to perform a query to identify if there are any billing
amounts pending, which they need to recover before the subscriber moves to the new service
provider (NSP).

4.3 Wimax v/s 3G

The WiMAX vs. 3G cellular showdown is poised to become one of the next great market battles
in the telecom industry. Fortunes will be made and lost in this battle, and the user experience
of the Internet will be irreversibly changed in the process. 3G scores for voice; Wimax may lead
to increased broadband penetration. With the Department of Telecommunications gearing up
for simultaneous release of 3G and WiMax spectrum, analysts expect the two emerging
wireless technologies to battle it out for supremacy.
WiMAX or Worldwide Interoperability for Microwave Access is a telecom technology that
enables wireless transmission of data. The technology is available as IEEE 802.16D (fixed) and
IEEE 802.16E (mobile). It offers downloads of up to 70 Mbps as compared to the 15 Mbps that

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3G provides. Mobile WiMax offers download speeds of around 20 Mbps. In India, companies
like Tata Communications Internet Services, Intel, Bharat Sanchar Nigam Ltd, Bharti Airtel
and Reliance Communications are the proponents of WiMax. Most of the companies have had
beta-runs of the technology. According to a top official with a service provider, telecom service
providers are in various stages of WiMax implementation. Some companies have
commercially launched fixed WiMax services in certain cities.
While opponents of WiMax say currently it cannot be used for mobile applications, the first
mobile WiMax network was introduced in Italy this July. Another reason for the industry
pinning its hopes on WiMax is its ability to increase the broadband penetration. WiMax makes
huge sense for companies as it enables them to provide cheaper mobile internet and
broadband services, in turn, increasing the internet penetration. However, this will adversely
impact services like GPRS and e-mail on mobile asusers might move over to WiMax-enabled
devices for data, even though they might stick with 3G or 2G spectrum for voice. The Telecom
Regulatory Authority of India has set a target of 20 million broadband connections by 2010
from the current 4.3 million. The industry expects WiMax to bridge the gap. According to a
consultant of Ernst & Young service providers would mainly use the technology for gaining
traction with the customers, as providing the last mile over the conventional digital subscriber
lines would be time-consuming and costly.

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5. Industry Updates
5.1 Consolidation in Industry.

Telecom players are looking to tap into global funds to finance their aggressive growth plans.
This will result in partnerships joint ventures and equity sellout to foreign players. New license
holders will continue to look to sell their stake at a premium. New policies will seek to curb
this license arbitrage. Smaller players with operations in only a few circles will find in difficult
to compete with the nationwide players. The industry may see consolidation with these
smaller operators being acquired by the larger ones. “Unbundling of the corporation” will
continue as companies will seek f or economies of scale and lower startup cost by
infrastructure sharing. 3G and WiMax license will spur M&A and partnership activity.

5.2. Idea Cellular’s Acquisition of Spice Telecom

There were three transactions as part of this acquisition; acquisition of shares of Spice, a non-
compete fee and a capital infusion of about Rs 7300 crores received from TM International
Bhd (TMI). With respect to shares, Idea acquired 40.8% stake of Spice Communications at Rs
77.30 a share for Rs 2,716 crore. There was a share swap in which Spice shareholders got 49
Idea shares for every 100 Spice shares held. An additional Rs 544 crore was paid to the
promoters of Spice group as 'non-compete fee'.
The deal was strategically important for Idea Cellular as it was looking forward to transfer
itself into a pan-India telecom service provider. The spectrum auctioned by GoI is a scarce
resource nowadays and cost a premium. Also there’s restriction by TRAI with respect to
number of operators per telecom circle. So it makes sense to acquire a small telecom operator.
Small players like Spice Telecom operating at only a few circles(Karnataka and Punjab) will
find difficult to compete with the nationwide players in the long run. So it was a win-win deal
for both companies.

5.3. Telenor-Unitech Deal

Norwegian Telecom major Telenor is in the process of acquiring controlling stake of 67.25%
in Unitech wireless via equity infusion. The enterprise valuation of Unitech Wirelsss is about Rs
10,900 crore. As per the deal, Telenor will infuse cash in four stages and at each phase, by
increasing its stake in Unitech Wireless. In the first phase, they got 33.5% ownership in
Unitech Wireless. In the second phase they completed the acquisition for a 49 per cent stake in

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Unitech Wireless by paying Rs 1,130 crore for a further 15.5 per cent stake in the company.
The acquisition is expected to be completed by end of this quarter.

5.4 TTSL – DoCoMo Deal.

Japanese carrier NTT DoCoMo acquired 26 per cent stake in Tata Teleservices (TTSL). The Tata
DoCoMo-branded GSM service has already started in Southern India and gradually will be
expanded nationwide. DoCoMo’s international expansion plans have not always proven
successful, with the firm historically preferring to take small stakes in firms and then try to
influence their strategy. It has been less prepared to take majority stakes and impose its will, as
other leading carriers have chosen to do.
The difficulties faced by the firm in spreading its domestically successful i-mode service
internationally typify the obstacles it has faced overseas. With Tata, DoCoMo had said
“participating proactively in TTSL’s management by providing human resources and technical
assistance to help realise improved network quality and the possible introduction of leading-
edge, value-added services.”

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6. FDI Investments in the Telecom Sector in India

The Indian telecom industry has always allured foreign investors. In fact, the cumulative FDI
inflow, from August 1991 to March 2007, in the telecommunication sector amounted to US$
7,513.22 million. This makes telecommunication the third-largest sector to attract FDI in
India in the post liberalization era. The investment was majorly in handset manufacturing
and telecom service provider.

FDI in Telecommunication Sector (US $ million)

2003-04 116

2004-05 129

2005-06 680

2006-07 521

2007-08 1275.65

2008-09 2345.38

With stable macroeconomic impetus and numerous other advantages, India has the potential
to become the electronics manufacturing hub of the world. Excited by the record-breaking
industry growth, investors have outlaid US$ 1.5 billion in the past two and a half years in the
Indian telecom sector. India will receive an additional US$ 2 billion investment in the next one
year. With the world now recognising India’s manufacturing potential, the Indian telecom
handset manufacturing market is likely touch US$ 7 billion by 2010. An example is Nokia. The
company has already produced 25 million handsets in its Chennai facility. It will pump in an
additional US$ 150 million to this set up. The company exports around 20 per cent of its
volume to South-east Asia, the Middle East and Africa. Local manufacturing allows companies
to avoid 4 per cent countervailing duties on imported handsets, thereby further reducing the
cost.

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7. Data Analysis & Interpretation

DEMOGARPHIC FEATURES OF REPONDENTS

Particulars Numbers %age

Male 85 56.67
Female 65 43.33

90
80
70
60
50
40
30
20
10
0
Male Female

1. Do you have any Mobile Connection?

PARTICULARS NUMBER %AGE

Yes 150 100%
No 0 0%
160

140

120

100

80

60

40

20

0
Yes No

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INTERPRETATION: All the respondents had mobile connections. This shows the increase in
usage and popularity of mobile phones in students.

2 How many mobile connections do you have?

Particulars No. of respondents %age

1 103 68.66
2 45 30
more than 2 2 1.33

120

100

80

60

40

20

0
1 2 more than 2

INTERPRETATION: Out of 150 respondents 69% says that they had 1 connection while 30%
were having 2 or more connections.

3. Which service are you using?

Particulars No. of respondents %age

Prepaid 132 88
Postpaid 18 12

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140

120

100

80

60

40

20

0
Prepaid Postpaid

INTERPRETATION:
Out of 150 respondents 88% were using prepaid connections while only 12% of respondents
were using postpaid connections.

4. Which Mobile connection are you currently using?

PARTICULARS NO.OF RESPONDENTS %AGE

AIRTEL 30 20.00
VODAFONE 21 14.00
IDEA 18 12.00
RELIANCE 15 10.00
MTNL 3 2.00
TATA INDICOM 30 20.00
AIRCEL 24 16.00
MTS 9 6.00

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35

30

25

20

15

10

0
AIRTEL VODAFONE IDEA RELIANCE MTNL TATA AIRCEL MTS
INDICOM

INTERPRETATION:
Out of 150 respondents 20 % were using Airtel & another 20% were using Tata Indicom due
to its coverage and call charges, and share of Aircel is increasing due to its charges and
facilities like internet etc. Share of Vodafone and Idea is decreasing due to its highest call
charges and most of the student prefer those who provides low call charges and more value
added services.

5. Are you satisfied with the services?

PARTICULARS NUMBER %AGE

Yes 112 74.67

No 38 25.33

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120

100

80

60

40

20

0
Yes No

6. Which facility attracts you most?

PARTICULARS No. of respondents %age

COVERAGE 31 20.67

CALL CHARGES 74 49.33

ROAMING
5 3.33
CHARGES

G.P.R.S. 33 22.00

OTHERS 7 4.67

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80

70

60

50

40

30

20

10

0
COVERAGE CALL CHARGES ROAMING G.P.R.S. OTHERS
CHARGES

INTERPRETATION:
Out 150 respondents 50% of respondents were attracted by the call charges, and 20% of
students prefer coverage facility, 22% by G.P.R.S.

7. Which advertisement media puts more impact on your buying decision?

NO. OF
PARTICULARS %AGE
RESPONDENTS

T.V. 82 54.67

NEWSPAPERS 23 15.33

MAGAZINES 5 3.33

INTERNET 30 20.00

OTHERS 10 6.67

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90

80

70

60

50

40

30

20

10

0
T.V. NEWSPAPERS MAGAZINES INTERNET OTHERS

INTERPRETATION:
Through this we can infer that T.V advertising have great impact on the students rather than
other mode of communication media.

8. From how long you are availing the services of this particular service provider?

NO. OF
PARTICULARS %AGE
RESPONDENTS

1 year 75 50.00

2 years 45 30.00

3 years 20 13.33

More than 3
10 6.67
years

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 Telecom Industry

80

70

60

50

40

30

20

10

0
1 year 2 years 3 years More than 3 years

INTERPRETATION:
Out of 150 respondents 50% were availing the services of those particular service providers
since 1, due to increase in competition every day companies launches new schemes so that
students prefer to shift from one service provider to other according to their need and
requirements.

9. Would you like to change your current service provider in future?

No. OF
PARTICULARS %AGE
RESPONDENTS

Yes 62 41.33

No 88 58.67

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100
90
80
70
60
50
40
30
20
10
0
Yes No

INTERPRETATION:
Out of 150 respondents 60% did not want to change their current service providers, because

due to high competitive market every service provider provides the same type of services to its

customer.

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8. FINDINGS

 Few years back mobile connections were not common among the students. But with

the mobile revolution now we can find almost every student with mobile phone.

 Most of the students prefer prepaid connections than postpaid connections.

 Most preferred cellular company amongst the students is Airtel and Tata Indicom and

the least preferred company is MTS and MTNL.

 Mostly the students are satisfied with the services provided by their cellular companies.

 Maximum number of respondents were attracted towards the Call Charges and

Coverage and the least like the roaming services.

 T.V., Newspaper and Internet are the best media advertisements that put more impact

on the students buying decisions.

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9. LIMITATIONS

 This study is restricted only to the South Delhi. So, the results may not be applicable to

other areas.

 This study is based on the prevailing customer’s preference. But the customer’s

preference may change according to time, fashion, technology, development, etc.

 Sample Size is very small i.e. 150 only.

 The respondents at most times are not available

 The respondents before knowing about the survey refuses.

 It was not possible to complete survey on all the mobile service providers.

 It was difficult to cover the entire market and know the behavior of the respondents.

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10 . SUGGESTIONS

 MTNL, MTS, Idea should try to expand their customer’s network.

 All the service providers are try to increase post paid users.

 Vodafone, Idea and MTNL should give periodical offers to attract the students.

 Conducting better marketing research for understanding the needs of the customers.

 Adopting better promotion strategies.

 Better communication channels for proper coordination and feedback from the

customers.

 Hire better and capable employees with better understanding of the market for

effective performance.

 Need to properly segment the market based on the needs and fulfill the needs of the

customers accordingly.

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7. Conclusion

 The Indian Telecom Service provider industry is gearing for a revolution. The customer

is driving this revolution and will see more unique and sophisticated offerings coming

his way.

 This study attempts to find out the perception of students regarding cell phone service

providers.

 This decade, most of the students using cell phones. So, service providers are increasing

in more level. Service provider should over come another one’s competition.

 It leads to adding new features, schemes, periodical offers to their service. So, the

students get maximum benefit from their service provider.

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8. References

1. Cellular Statistics – Cellular Operator Association of India

2. IBEF report 2007-08 : Telecommunication - MARKET & OPPORTUNITIES.

3. Voice and Data(May 2009): Mobile Number Portability - Poaching with Portability.

4. Business India : Telecom Takeover.

5. Moneycontrol.com: Idea Spice deal

6. World Bank Report: Spectrum auctions in India: lessons from experience

Search Engines:
www.google.com
www.prowess.com
Books:
Marketing Research by N.K. Malhotra

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