Impact of 3g on Mobile Vas in IndiaEssay Preview: Impact of 3g on Mobile Vas in IndiaReport this essayThe Indian Telecom Industry is a highly competitive market offering huge growth potential. At the end of financial year 2009-2010, it had registered a 44.57% growth in subscriber base compared to the previous year (Trai, 2010) . The market is cluttered with a large number of players, both big and small, such as Bharti Airtel, Reliance Communication, BSNL, MTNL, Aircel, Idea, Tata Docomo and Uninor. Fierce competition between the players on pricing, quality of service and value added services has resulted in high churn rate. The launch of 3G services and the implementation of Mobile Number Portability (MNP) has further intensified the competition and increased the churn rate. The industry operates on a low price-high volume strategy as a result of which, despite the high growth of 30% in subscriber base, the annual revenue in FY10 increased by only 3.7%. The huge untapped rural and semi-rural Indian market has shifted the focus of service providers to improve network coverage in these areas. This has given a boost to the Indian infrastructure industry. The government has increased FDI from 49% to 72%, thus making the industry more attractive to foreign investors. This will in turn help the operators meet their capital requirements.
Bharat Sanchar Nigam Limited (BSNL) is the 4th largest service provider and the largest wireline provider in the country. After a drop in its financial performance in 2009, it has restructured its organization into four new verticals to shed its bureaucratic image. Since it is a state-owned service provider, it is forced to operate in rural India- the primary cause for its losses. However, with the backing of the Department of Telecom, BSNL will have access to several multi-crore telecom projects which it can use to consolidate its financial position.
Bharti Airtel is the leading service provider in the industry but with the telecom industry getting saturated it is looking for new avenues to grow. With a significant drop in its CAGR it is looking to expand internationally and also reduce its costs. Some of its major recent initiatives include acquisition of Zain telecom to establish itself in the untapped African market; and a joint venture with Idea and Vodafone to create Indus towers which will help reduce its fixed costs by outsourcing its infrastructure requirements. The Indus joint venture is of extreme significance as it can be seen as a strategic move by Bharti Airtel to compete with BSNL. Bharti has tried to rebrand itself as an international brand by changing its logo, its signature tune and outlook.
Dharmen is looking to add over 1,000 towers to its network and build on existing infrastructure across the country in a bid to expand. The company has already opened up its main office in Dhaka.
“Indus and Vodafone have also been making investments because we are growing and we want to have the largest number of dedicated customers in the country who will come to our offices without having to wait for a week for work. As our customers in this country expect low-wage jobs, their business will go over faster than in others because they will pay a premium. They will stay with us to get the best services when our customers have been waiting for hours with our company in India,” said Rajan Sharma, MD, CFO, Srinivasa Khande.
“We are investing in India as a global company and a key area for Bharti Airtel to expand in.
“We are looking at Bharti Airtel to help generate revenue, invest in new facilities and develop our infrastructure. This is the major focus on us as we see very big potential for Indian mobile business over from other markets. The Airtel is also using the Indian market with great emphasis and we are looking to bring Bharti Airtel to India. Our team has worked with numerous Indian mobile companies in the past and look forward to working with them to take on India’s mobile business and our goal is to get India mobile by the end of this decade. Airtel has an active and profitable stake in India and is a company with a very solid and strong competitive position for its brand. Airtel’s global brand profile is strong right now and it is in great hands,” said Rajan Sharma.
As the company’s founder, Shrikant Khande is a former chief executive of Idea Cellular and chief executive officer of Idea India . He has been working very closely with the Airtel board and is looking forward to expanding to many regions.
The group’s portfolio includes business services, banking, insurance and insurance in India, investments in energy infrastructure and telecom networks.