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national or domestic long distance and international long distance services. The state

operators (BSNL and MTNL), account for almost 90 per cent of revenues from basic

services. Private sector services are presently available in selective urban areas, and

collectively account for less than 5 per cent of subscriptions. However, private services

focus on the business/corporate sector, and offer reliable, high- end services, such as

leased lines, ISDN, closed user group and videoconferencing.

Cellular services can be further divided into two categories: Global System for Mobile

Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sector

is dominated by Airtel, Vodafone-Hutch, and Idea Cellular, while the CDMA sector is

dominated by Reliance and Tata Indicom. Opening up of international and domestic long

distance telephony services are the major growth drivers for cellular industry. Cellular

operators get substantial revenue from these services, and compensate them for reduction

in tariffs on airtime, which along with rental was the main source of revenue. The

reduction in tariffs for airtime, national long distance, international long distance, and

handset prices has driven demand.

The telecom sector is also afflicted by a number of restraints. These include:

• Sluggish pace of reform process.

• Lack of infrastructure in semi-rural and rural areas, which makes it difficult to

make inroads into this market segment as service providers have to incur a huge

initial fixed cost.

• Limited spectrum availability.

But notwithstanding these constraints, telecom sector has undergone a revolution in the

past decade and has played a major part in bridging the rural-urban divide.

The telecom industry is one of the fastest growing industries in India. India has nearly

200 million telephone lines making it the third largest network in the world after China

and USA. With a growth rate of 45%, Indian telecom industry has the highest growth rate

in the world.

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Bharti Airtel added the highest ever net addition of 5.3 million customers in a single

quarter (Q4-FY0607) and also the highest ever net addition of 18 million total subscribers

in 2006-07

The company will invest up to $3.5 billion this fiscal (07-08) in network expansion. It has

an installed base of 40,000 cellsites and 59% population coverage After the proposed

network expansion, an additional 30,000 towers will result in the company achieving

70% population coverage Bharti has over 39 million users as on March 31, 2007 It has

set a target of 125 million subscribers by 2010 Prepaid customers account for 88.5% of

Bharti’s total subscriber base, an increase from 82.7% a year ago .ARPU has dropped to

Rs 406 Non-voice revenues, (SMS, voice mail, call management, hello tunes and Airtel

Live) constituted 10% of total revenues during Q4, lower than 10.7% in the Q4 of the

previous year Blended monthly minutes of usage per customer in Q4 was at 475 minutes.

The company Has completed 100% verification of its subscribers and in the process

disconnected three lakh subscribers

Bharti Airtel’s enterprise Services, President - David is busy connecting India to Europe.

David announced the building of 15,000 km 3.84 Terabit OFC sub-marine cable system

connecting Europe [London] to India via the Middle East. The project is known as

Europe India gateway [EIG] and is expected to cost $700 million, which is to be

completed by Q2-2010. Alcatel Lucent and Tyco are the telecom vendors for the project.

Members in the EIG consortium include - AT&T, BT, C&W, Djibouti Telecom, Du,

Gibtelecom, IAM, Libyan Telecom, MTN Group Ltd., Omantel, PT Comunicacoes-S.A,

Saudi Telecom Company, Telecom Egypt, Telkom SA Ltd, and Verizon Business.

In May 2008, it emerged that Bharti Airtel was exploring the possibility of buying the

MTN Group, a South Africa-based telecommunications company with coverage in 21

countries in Africa and the Middle East. The Financial Times reported that Bharti was

considering offering US$45 billion for a 100% stake in MTN, which would be the largest

overseas acquisition ever by an Indian firm. However, both sides emphasize the tentative

nature of the talks, while The Economist magazine noted, "If anything, Bharti would be

marrying up," as MTN has more subscribers, higher revenues, more subscribers and

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• Philip Kotler – Marketing Management

• Naresh K. Malhotra – Marketing Research





• www.economicstimes/


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