Essay About Telecom Sector Leads And Rapid Growth

Equity Research on Bharti Airtel India
Overview:- Telecom Sector in IndiaIndia is the second largest telecommunication market with 1002 million users by May 2015, of which 89.25% are active users. With an internet penetration of 19%, India stood as third highest number of internet users in the world. (According to TRAI).Around 75% of Indian users are in the age group of 15 to 34 years. India has a tele density of 79.67% of which Urban tele density stood at 147.38% and rural at 45.76% .The 3G subscriber base of 40million expanding at a CAGR of 84%. (According to IDC)The rapid growth in telecom sector leads to addition of 400US$ to India’s GDP (according to GSMA collaboration with BCG). Policy Effects: – The government has been proactive in its effort to transform India into telecommunication hub. National telecom Policy 2012 bring into existence with unified licensing, free roaming across India and MNP (Mobile Number Portability).The deregulation of FDI (Foreign Direct Investment) raised to 100% in 2013, thus improving the more inflow pipeline to enhance the services. The rapid growth in the telecom sector due to government policies make them the existing companies more competitive and [pic 1][pic 2]The Indian telecom sector is expected to create four million direct and indirect jobs over the next 5 years on the back of the government’s efforts to increase penetration in rural areas along with the growth in the smartphone numbers and internet usage, according to estimates by Randstad India[pic 3]From the above analysis, the internal competition is very high drives to price wars & customer has an advantage of bargaining more as his/her switching costs are less. There is no threat of substitute products or new companies come into, because of high OEM.   The other factors can influence telecom sector areNet Neutrality:- It is the principle that individuals should be free to access all content-applications equally, regardless of the source, without Internet service providers discriminating against specific online services or websites. In other words, it is the principle that the company that connects you to the internet does not get to control what you do on the internet. Without net neutrality rules in place, ISPs can prevent users from visiting some websites, provide slower speeds for services like Netflix and Hulu, or even redirect users from one website to a competing website. The debate on net neutrality caches eyeballs when Airtel imposed special tariffs on Voice over Internet Protocol (VoIP) for WhatsApp, Skype etc. in December 2014.In February,2015 Facebook launches internet.org wit reliance communications adds more fuel to the issue. Internet.org allows users to connect to 38 websites for free through reliance network and limiting its search engines to Bing and few websites. It denies the equal free access to all websites on company’s policy of focus on education& health sectors.With the raise of public dissent over the objections in using the free net due to different reasons, TRAI (Telecom Regulatory Authority of India) releases a consultation paper on Over-the-top services (OTT) and net neutrality for public feedback.The final report on the humongous one million feedbacks is yet to deliver by TRAI.The implications of the result could change the strategies & sales prospectus of all the service providers. The introduction of 4G/LTE with the TRAI result on net neutrality could take a significant course in quality and morality of the service provider.