TELECOM INDUSTRY

The Indian telecommunications industry is one of the fastest growing in the world driven by wireless revolution. India is today one of the largest telecom markets in the world, with an addition of more than 18 million subscribers every month. Telecom sector has continued to emerge as the prime engine of economic growth, contributing to nearly 2% of the Indian GDP. Indian telecommunication sector has undergone a major transformation through significant policy reforms, particularly under NTP 1999. Driven by various policy initiatives, the Indian telecom sector has achieved a phenomenal growth during the last few years and is poised to take a big leap in the future. The history of telephone services in India found its beginning when a 50-line manual telephone exchange was commissioned in Kolkata in the year 1882 in less than five years after Alexander Graham Bell invented the telephone. Today India has the world's secondlargest mobile phone users with over 903 million as of January 2012. In recent years, the Telecom sector has been delivering strong returns on investments and steady subscriber additions. This growth has been built on wireless revolution. The industry is expected to reach a size of 344,921 Crore (US$ 68.81 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. Key Statistics

Telecom Regulatory Authority of India (TRAI) has revealed that the country's mobile subscriber base has increased from 893.84 million in December 2011 to 903.73 million in January 2012.

Telecom operators added 9.88 million mobile subscribers in January 2012. The overall tele-density reached 77.57 per cent. Broadband subscriber base increased from 13.30 million at the end of December 2011 to 13.42 million at the end of January 2012.

Industry experts believe that Smartphone segment would be the fastest-emerging

division that would even outpace the overall handset market. The segment is anticipated to account for 29 per cent of the total handset volume with 97.2 million units by 2017, registering a CAGR of around 40 per cent. Third largest in the world and the second largest among the emerging economies of Asia, the Indian Telecommunication network has emerged as a leader time and again. Owing to this growth, a large number of multinational telecommunication leaders are pouring into the nation and expressing their interest to invest in the telecom industry in India.

BHARTI AIRTEL
Bharti Airtel Limited, commonly known as Airtel, is the largest Indian telecommunications services company headquartered at New Delhi, India. It operates in 20 countries across South Asia, Africa and the Channel Islands. Airtel has GSM network in all countries, providing 2G, 3G and 4G services depending upon the country of operation. Airtel is the world's third-largest mobile telecommunications company with over 261 million subscribers across 20 countries as of August 2012. It is the largest cellular service provider in India, with 186.9 million subscribers at the end of August 2012. Airtel is the third largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom. Airtel is the largest provider of mobile telephony and second largest provider of fixed telephony in India, and is also a provider of broadband and subscription television services. It offers its telecom services under the airtel brand, and is headed by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom service provider to achieve Cisco Gold Certification.It also acts as a carrier for national and international long distance communication services. The company has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore. It is known for being the first mobile phone company in the world to outsource all of its business operations except marketing, sales and finance. Its networkbase stations, microwave links, etc.is maintained by Ericsson, Nokia Siemens Network and Huawei, and business support is provided by IBM, and transmission towers are maintained by another company (Bharti Infratel Ltd. in India)] Ericsson agreed for the first time to be paid by the minute for installation and maintenance of their equipment rather than being paid up front, which allowed Airtel to provide low call rates of 1/minute (US$0.02/minute).] During the last financial year (200910), Bharti negotiated for its strategic partner Alcatel-Lucent to manage the network infrastructure for the tele-media business. On 31 May 2012, Bharti Airtel awarded the three year contract to Alcatel-Lucent for setting up an Internet Protocol access network (mobile backhaul) across the country. This would help consumers access internet at faster speed and high quality internet browsing on mobile handsets. Its area of operations include: The Indian Subcontinent: Airtel Bangla in Bangladesh. Airtel, in India. Airtel Sri Lanka, in Sri Lanka. Airtel Africa, which operates in 17 African countries: Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Sierra Leone, Tanzania, Uganda and Zambia. The British Crown Dependency islands of Jersey and Guernsey, under the brand name Airtel-Vodafone, through an agreement with Vodafone.

PORTERS FIVE ANALYSIS

Threat from Competition HIGH Wireless Market Top 4 garnering 75% market share Price competition from bsnl and mtnl. Untapped rural market. The subscriber growth for Airtel is only 37% as compared to Reliance & Vodafone whose growth is nearly 60%.

Customer Bargaining Power - HIGH Lack of differentiation among Service Providers Cut throat Competition Low Switching Costs Mobile Number Portability Businesses & Consumers

Supplier Bargaining Power LOW Airtel outsources all its business functions except- marketing, sales and finance. Its networkbase stations, microwave links, etc.is maintained by Ericsson, Nokia Siemens Network and Huawei. Information technology from IBM. Passive infrastructure from Bharti Infratel and Indus Towers. Call center outsourcing Hinduja TMT, IBM Daksh, Nortel.

Threat of Substitutes HIGH Landlines CDMA Video conferencing VOIP Skype, Gtalk, Yahoo Messenger E- mail and social networking sites

Threat of New Entrant LOW Because: Huge License Fees to be paid upfront & High gestation period Entry of MVNOs & WiMAX operators Spectrum Availability & Regulatory Issues Infrastructure Setup Cost - High Rapidly changing technology

Threat of New Entrants: HIGH Because: Entry through 3G New Entrants are ready to enter with Huge Capital Considering the attractiveness of the market. Increase Of FDI to 76% bringing competiton from Foreign players. New Entrants from Non telecom companies with the ease of Outsourcing Previously Low, Now High