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CHAPTER I

Why Customer
Preference for
“Postpaid Connection”
Industry Overview
Telecom Industry in India

Telecom industry in India has a big market potentiality and is a fast growing sector.

Government of India is eager to reconstitute this telecom industry by enacting effective policies

for more investments from foreign companies, which results in a very competitive and

deregulated market in the world.

The sector ranks second in the world, with over 509.03 million telephone subscriptions

by Sep 2008 end. The fast track growth of the Indian telecom industry has made it a key

contributor to India’s progress. India adopted a phased approach for reforming the telecom

sector right from the beginning. Privatization was gradually introduced, first in value-added

services, followed by cellular and basic services. An independent regulatory body, Telecom

Regulatory Authority of India (TRAI), was established to deal with competition in a balanced

manner.

This gradual and thoughtful reform process in India has favored industry growth. Today,

there are more than 509 million telecom subscribers in India. Every month, 10-14 million new

subscribers are added. Upcoming services such as 3G and WiMax will help to further augment

the growth rate. Furthermore, the Indian economy is slated to sustain its 7-9 per cent growth

rate in the near future. This is supported by the political stability that the country is experiencing

currently. India’s demographic outlook makes it one of the largest markets in the world.

A conducive business environment is also created by a favorable regulatory regime.

There exists enormous business potential for telecom companies on account of the country’s

low tele-density, which is close to 19 per cent presently. Indian Telecom sector, like any other
sector in the country, has gone through many phases of growth and diversification. Starting from

telegraphic and telephonic systems in the 19th century, the field of telephonic communication

has now expanded to advanced technologies like GSM, CDMA, and WLL to the much awaited

great 3G (Third Generation) Technology in mobile phones.


Segment Analysis

India's growth story in the telecom space shows no signs of slowdown. The country

added 113.26 million new customers in 2008, the largest globally. To put this growth into

perspective, the country’s cellular base witnessed around 48.50 per cent growth in 2008, with

an average 9.5 million customers added every month. The country had 471.7 million mobile

phone users as of September 2009 compared to 346.89 million in the corresponding period a

year ago and the total number of telephone connections (wireless and wireline) is 509.03 million

as of September end, taking the telecom penetration to over 36 per cent. It implies that one out

of every three Indian has a telephone connection.

The Indian telecom industry has been growing rapidly at a CAGR of 40.63 per cent from

2003 to 2008. Telecom sector contributed 3.4 per cent to India’s gross domestic product in for

the year 2008 and is expected to contribute 5.4 per cent by 2010. There is still a big room for

further growth. The growth will primarily driven by the rise in communications demand from semi

urban and rural India. The teledensity in rural areas being a little more than 10 per cent against

the national average of 33.23 per cent, there is huge untapped potential for mobile phone

penetration in rural India.

The total Broadband subscriber base has reached 7.21 million by the end of September

2009 as compared to 6.98 million by the end of August 2009. Even there is a huge potential in

broadband segment.

The growth in 2008 was led by Bharti Airtel, the country’s largest communications

provider. Bharti had 110.51 million customers as of September end, Vodafone had 82.84 million
and BSNL of about 53.35 million. In fact, Bharti has more customers than the state-owned

BSNL’s mobile and landline users combined.


Key points
India is a second largest and fastest growing telecom market.India is highly price

Sensitive market and has lowest tariff rates in the world .Presence of 14 Cellular service

Providers makes into a highly competitive Market, The growth engine for Indian cellular service

provider is rural market in coming years, Which is highly price sensitive market due to vendors

will continue to focus on below $25 cost handset. Indian mobile connection market continues to

be dominated by prepaid subscribers. Prepaid connections accounted for more than 89 per cent

of all mobile connections in 2007 and are expected to grow to more than 92 per cent of the

connection base by 2012.

The total services revenue for prepaid connections is expected to grow at 18.9 per cent

CAGR for the period 2008 - 2012 and the total services revenue for postpaid connections is

expected to grow at 15 per cent CAGR during the same forecast period. By 2012, the prepaid

subscriber base will cross 683 million and postpaid subscriber base will exceed 53 million

subscribers. Prepaid subscribers are expected to adopt data services faster than the post-paid

segment. Data revenues for the prepaid segment are projected to grow at 29 per cent CAGR

during the forecast period as compared to 22 per cent CAGR for the post paid subscribers

during the same period.


Introduction
A mobile connection in which one uses a mobile connection with a SIM card and pay the

monthly bill at the end of the month is a Postpaid mobile connection. In this mobile

connection one uses the SIM card to pay monthly bill based on rentals, plan charges and the

usage charges. In the case of a prepaid mobile connection a person first pay by card and then

uses the phone for general utility. While on the other hand postpaid accounts are referred as

use and pay type.

In a Postpaid connection one can find two types of components: The first component is

the monthly rental that the subscriber pay to the mobile service provider and the other

component is the usage charges. The uses charges generally vary from the kind of that have

been used by the customer.

Competitive plans are very evenly introduced by the service providers so as to attract

the maximum number of customers. An engagement with corporate for closed user group

connections allow for subsidized calls to the other group members. For this purpose generally

lower tariffs on monthly rentals and usage fees are taken. Why people choose to have a

Postpaid Plan? Generally because of the reason that the benefits of a prepaid connection are

very limited. In prepaid one pays the advance for a specific number of minutes, once the time

run-out of hands the phone is needed to be recharged for the next number of days and the due

balance is needed to be increased in amount. While in case of a postpaid plan one is needed to

pay after the end of the month. There is no time limit in case of a postpaid plan. No contract is

signed for any particular period of time and one can talk endless without giving an account to

the balance remaining-due. The prepaid mobile bills are just the formalities as voucher cards

while the post-plans are bill like, where one pays after the end of month for all the minutes which

one has used. Most of the postpaid mobile plans connection provides unlimited minutes for

talking whether one is talking just on nights or only on nights and weekends.
RESEARCH METHODOLOGY

Method of data collection


Primary data collection

The primary data collected through well designed questionnaire. The questionnaire

through which data was gathered and collected consisted of questions which were mostly

objective in nature.

Secondary data collection

The secondary data for the study got from visiting Cellular service Providers outlets and

gathering informative materials and published information. Current information regarding the

subject and company will be getting from newspapers, business magazines, customer care

executives, journals, internet, and by referring certain books on Indian Telecom Sector.

Method of sampling
Sampling technique
Sampling procedure: Probability convenience sampling method

Sample size: 200 respondents were selected for analysis.

Method of sampling
The method used for sample technique was non Probability convenience sampling

method. This method is used because it is known previously as to whether a particular person

will be asked to fill the questionnaire. Convenient sampling is used because only those people

will be asked to fill the questionnaires who were easily accessible and available to the

researcher.

Frame work of Analysis


The collected data was to be analyzed by using statistical technique like Percentage

Analysis. The data was to be analyzed by using Statistical Program for Social Sciences (SPSS)

software.
Type of Study
The study conducted is a conclusive descriptive statistical study; by this study I come to

the decision which is precise and rational. The study is conclusive because after doing the study

I come to a conclusion regarding the position of the mobile connections in the minds of

respondents of different groups. The study is statistical because throughout the study all the

similar samples are selected and group together. All the similar responses are taken together as

one and their percentages are calculated.

Thus, this, conclusive descriptive statistical study is the best study for this purpose as it

provides the necessary information which is utilize to arrive at a concrete decision.

Limitation of the Study


The research will be conducted in a limited area , so the respondent will be limited so

cannot be treated as a whole population and the respondent may be biased.


Test Results
Mobile Connection type in Chennai and Expense Per Month Cross tabulation

Expense Per Month


Mobile
Connection Up to Rs.501-1000 Rs1001- More than Total
type Rs.500 1500 1500
in Bareilly
Prepaid 90 61 17 11 179

Postpaid 7 8 4 2 21`

Total 97 69 21 13 200

Inference: From the table it be shown that about 90 out of 97 are spending less
than Rs.500 and have Prepaid connection and just 7 out of 97 are spending less than and
have Postpaid connection.

Mobile Connection type in Chennai and Network Availability Cross tabulation

Network availability
Mobile
Connection Total
type Very Good Satisfied bed Very bed
in Bareilly good
Prepaid 22 62 79 11 5 179

Postpaid 1 6 10 2 2 21`

Total 23 68 89 13 7 200

Inference: From the table it be shown that about 79 out of 89 are satisfied with
Network availability and are having prepaid connection and 10 out of 89 have postpaid
connection.

Mobile Connection type in Chennai and Customer Profession type Cross tabulation
Mobile Customer profession type
Connection
type Total
in Bareilly Service Business man Student House wife
person
Prepaid 100 21 52 6 179

Postpaid 11 1 9 0 21

Total 111 22 61 6 200

Inference : From the table it be shown that about 100 out of 111 are service

Professional with having prepaid connection and 11 out of 111 are having postpaid

connection.

Mobile Connection type in Chennai and Rating on Call charge rate Cross tabulation

Mobile Rating on call charge rate


Connection
type Total
Very good Good Satisfied Bad Very Bad
in Bareilly
Prepaid 35 41 89 10 4 179

Postpaid 3 3 13 1 1 21`

Total 38 44 102 11 5 200

Inference : From the table it be shown that about 89 out of 102 are satisfied with
the charge rates with having prepaid connection and 13 out of 102 are having postpaid
connection.

Mobile Connection type in Chennai and Reason for Choosing a particular


connection Cross tabulation.

Mobile Reason for choosing a particular connection


Connection
type Usage Switching Cheaper call Less hassle Total
in Bareilly control cost freedom charges involved

Prepaid 96 70 9 4 179

Postpaid 11 7 1 2 21`

Total 107 77 10 6 200

Inference : From the table it be shown that about 96 out of 107 are opting the
particular connection with having prepaid connection and 11 out of 107 are having
postpaid connection.
Findings:

It is found that Aircel is the Market Leader in Chennai with 32% market share and

Lowest market share is of BSNL with just 5% .

It is found that majority of respondents about 89.5 % using prepaid connection and just

10.5% of the respondents is using Postpaid connection in Chennai among the respondents.

It is found that more than 50% of the respondents believe that the customer care

Executives Behavior is Warm and Helpful and just 1.5 % of the Respondent believes that they

are lazy and very slow in Responding.

It is found that about 44.5 % of the respondents are satisfied with the customer care

services provided by their Cellular Services.

More than 49 % of the respondents spend Less than 500 Rupees per month and just 6.5

% of the respondent spends above 1500 Rupees per month.

It is analyzed that about 44.5 % of the respondents are satisfied with the Network

Availability by their service Provider.

It is found that more than 50% of the respondents are service Professionals and second

largest respondent Group is of Students.

About 52% of the respondents are satisfied with their service providers call rates and

just 3% respondent says its very bad.

More than half of Respondents ( 53%) are using their particular connections to

control cost of mobile usage.

It is found that about 67 % of the overall respondents are satisfied with their

service providers and just 2.5% says they are not happy with their service providers.

It is found that about 69 % of the respondents prefer GSM Technology service providers.

It is found that 56% of the respondents uses their connections for 1-2 years and there

are 1.5% of the respondent uses the same number for more than 3 years.

It is found that about 40% of the respondents are satisfied with the Value added services

provided by their service providers.


Suggestion
It is seen that just 44.5 % of the respondents are Satisfied with the customer care

services so there is room for improvement in the customer care services for cellular services as

the customer care services are the pillars which play a very vital role in the cellular

services, the company which provide the best customer service will the winner at the

end.

It is seen that about 49% of the respondent spend less than Rs 500 on the cellular

service , that is the reason that ARPU (Average Revenue Per User ) of the Cellular service

Providers are very Low now , so to increase the ARPU , the cellular service providers needs to

bring More VAS to increase ARPU .

It is observed that about only 45% of the respondent are satisfied with the network

availability by their service provider , the network quality is one of the primary reason of the

Aircel being a market leader in Tamil Nadu , so for competing with aircel other service

providers must enhance their network quality .

It is observed that just 40% of the respondent is satisfied with the value added services

provided by their service providers it means there is still a lot of room for the new innovative

VAS services which can increase the service providers revenue and attracting new

subscribers.

Conclusion
Thus, Based on the literature findings, it is possible to prepare an instrument to measure the

preference of customer in term of prepaid and postpaid connections .Customer service and Value

added Service (VAS) are Critical in Mobile services which act as a differentiator for Service Provider

and help customer in deciding about the mobile connections type ,Total cost of Ownership (TCO) is

a major factor in deciding about the type of connection and that is the Reason that Mostly customer

prefer Prepaid connection as the TCO is less in prepaid compared to Postpaid connection . With the

launch of the 3G Technology the VAS will be the dominant factor in future to decide about the type

of connection that will be chosen by the customer. People Prefer Mostly the GSM Technology

because of the facility to change the SIM Frequently whereas this facility is not available in CDMA.

The high ARPU (Average Revenue per User) can be achieved only by Providing the new innovative

services like Nokia Weather service for Farmers in India which cost just Rs.2 / Per day only which

they Provide with the Collaboration of different service Providers


Mobile Phone
Service Providers

Mobile Phone Service Providers

1. Bharti Airtel
Bharti Airtel retained its leading position among telecom service

providers and posted a growth of five per cent to end 2009-10 fiscal with

revenues of Rs 38,800 crore (Rs 388 billion).The company is structured

into four strategic business units -- mobile, telemedia, enterprise and digital TV. The company

has with operations in 18 countries with a footprint covering 1.8 billion people. Sunil Bharti Mittal

is the chairman and managing director of the company.

In March 2011, Bharti Airtel bought the African operations of Kuwait-based Zain Telecom

for $10.7 billion. Recently, it has joined a consortium of global telecom operators to announce

the launch of the EASSy cable system -- the 10,000 km undersea cable connecting Africa to

Europe.

2. BSNL

Bharat Sanchar Nigam Limited saw a drop in its revenue for the

second consecutive year to post Rs 30,240 crore (Rs 302.4 billion), a

drop of 14 per cent, even though it retained the number two position among telecom players.

BSNL offers both fixed line and mobile services with broadband connections. With over 71.68

million subscribers, BSNL currently is the largest wire line service provider in India.

The company has reported around 6 crore (600 million) 2G connections and 9,73,378

3G connections since February 2010. All major towns and cities are covered through BSNL

network. Gopal Das is the new chairman and managing director of BSNL.

3. Vodafone Essar

The Indian subsidiary of Vodafone Group, Vodafone Essar recorded 13.7 per cent

growth to emerge as the third largest player with revenue of Rs 23,200 crore (Rs 232
billion).The company commenced operations in 1994 when its predecessor Hutchison Telecom

acquired the cellular license for Mumbai. It has operations across the country with over 106.34

million customers. It is the world's leading international mobile communications group with

approximately 347 million proportionate customers as on 30 June 2010 and has around 40

partner networks worldwide.

Vittorio Colao is Vodafone chief executive, and Marten Pieters is managing director and

CEO, Vodafone Essar.

4. Reliance Communications

Reliance ADA Group's flagship company, Reliance Communications reported a negative

growth of 3.5 per cent with revenue of Rs 22,130 crore (Rs 221.3 billion). It is India's largest

private sector information and communications company, with over 100 million subscribers.It

has established a pan-India, high-capacity, integrated (wireless and wireline), convergent

(voice, data and video) digital network, to offer services spanning the entire infocomm value

chain.

Anil D Ambani is the chairman of the company

5. Idea Cellular

Idea Cellular is part of the Aditya Birla Group and has bagged fifth position with a

revenue of Rs 11,390 crore (Rs 113.9 billion).It is a leading GSM mobile services operator in

India with 67 million subscribers. Idea offers both prepaid and post paid services. It is a pan-

India operator with services being made available in all parts of the country. Idea was the first

cellular service provider to launch General Packet Radio Service (GPRS) and Enhanced Data

rates for GSM Evolution (EDGE) in the country.

Kumar Mangalam Birla is the chairman of the group.

6. Tata Communications

Tata Communications reported revenue of Rs 11,000 crore (Rs 110 billion).


The company holds leadership position in emerging markets.Tata Communications

leverages its advanced solutions capabilities and domain expertise across its global and pan-

India network to deliver managed solutions to multi-national enterprises, service providers and

Indian consumers. The Tata Global Network includes one of the most advanced and largest

submarine cable networks, a Tier-1 IP network, with connectivity to more than 200 countries

across 400 PoPs, and nearly 1 million square feet of data center and collocation space

worldwide.

Srinath Narasimhan is the managing director and CEO of Tata Communications.

7. Tata Teleservices

Tata Teleservices spearheads the Tata Group's presence in the telecom sector. It has

posted revenue of Rs 6,900 core (Rs 69 billion).Established in 1996, Tata Teleservices, one of

the 96 companies of Tata Group, has its network in 20 circles. It is the first company to launch

CDMA mobile services in India. It launched mobile operations in January 2005 under the brand

name Tata Indicom. It enjoys a pan-India presence through existing operations in all of India's

22 telecom circles. Tata Teleservices operates under five different brands -- Tata Indicom

(CDMA services), Tata DOCOMO (GSM services), Virgin Mobile, Tata Wacky (which is the

brand for fixed wireless phones), Tata Photon (the company's brand that provides a variety of

options for wireless mobile broadband access) and T24.

Tata Teleservices Ltd, along with Tata Teleservices (Maharashtra) Ltd, serves nearly 70

million customers in more than 450,000 towns and villages across the country.

Anil Sardana is the managing director of Tata Teleservices.

8. Aircel
Aircel recorded the highest growth of 37.2 per cent among operators in 2009-10.The

company posted a revenue of Rs 4,700 crore (Rs 47 billion) to move to the number eight slot. It

is a joint venture between Maxis Communications Berhad of Malaysia and Sindya Securities

Investments Private Limited, whose current shareholders are the Reddy family of Apollo

Hospitals Group of India. Aircel commenced operations in 1999 and became the leading mobile

operator in Tamil Nadu. It emerged a market leader in Assam and in the North Eastern

provinces within 18 months of operations.

Today, the company has a foothold in 21 circles including Chennai, Tamil Nadu, Assam,

North East, Orissa, Bihar, Jammu & Kashmir, Himachal Pradesh, West Bengal, Kolkata, Kerala,

Andhra Pradesh, Karnataka, Delhi, UP(West), UP(East), Maharashtra & Goa , Mumbai, Madhya

Pradesh and Punjab.

It has over 43 million customers in the country.

MTNL

Mahanagar Telephone Nigam Limited (MTNL)'s revenue dropped nearly by a fifth

highest among the top 10 players -- to Rs 3,650 crore (Rs 36.5 billion).The company has

achieved a customer base of 8.06 million in the two metro cities of Delhi and Mumbai. The

government currently holds 56.25 per cent stake in the company. Today it has more than

9,00,000 GSM mobile connections.

The company was in the forefront of technology induction by converting 100 per cent of

its telephone exchange network into the state-of-the-art digital mode.

Kuldip Singh is chairman & managing director of MTNL.

TTML
The third Tata group company is this arena, Tata Teleservices Maharashtra Limited

(TTML) is ranked number 10, among the top ten telecom players in India, with revenues of Rs

2,300 crore (23 billion. This helped the group's earning go past the Rs 20,000 crore (Rs 200

billion) mark. TTML leads the Tata group's presence in the telephony sector in the telecom

circles of Maharashtra and Goa, including Mumbai. TTML commenced landline operations in

1998 and has the largest wire line base in Mumbai and Maharashtra amongst all private

operators. The company has over 600,000 subscribers.

Kishor Chaukar is the chairman of TTML.


Telecom and IT

The vision of telecommunications in 2020 is a vision of information society built on an edifice

where IT and telecommunications merge. Rapid technological convergence has already implied

a symbiotic overlap between the development strategies of IT and telecommunications. Part of

today’s IT is ‘telecom writ large’, it flourishes on the telecom-network and in turn permits modern

day telecommunications to use sophisticated IT-software. Hardware is a common platform for

both IT and telecom.

There is a legacy vision derived from export-success of India’s software that has given

rise to optimism regarding India’s growing pre-eminence in global IT canvas. Such a vision

builds on a much larger vision of all round development of IT that pervades wide cross-section

of Indian economy and society. Deeper analysis shows that there is need for a comprehensive

IT development strategy to ensure India’s durable presence in the global software market. As

discussion in the subsequent paragraphs will show, ‘enclave’ type development of software with

exclusive focus on export can not bring about desired benefits if such a strategy ignores the

linkages between export and the domestic market. Vision 2020, therefore, is a much larger

vision.
Competition Policy

Countries often differed in pattern of sequencing and the speed of liberalization. Competition

has been controlled within limit by state policy through licensing of limited number of market

players in certain segments granting thereby a period of exclusivity to the operators.

Heterogeneity of routes to sectoral reforms, as seen from the examples of some of the Asian

countries, classified into different combination of policies and approaches to telecom reform, are

presented below:

1. Competition in the fixed line segment with state owned incumbents: China, India and

Korea.

2. Privatization of state owned incumbents but deferred competition through exclusivity

granted to private investors: Hong Kong, Indonesia, Malaysia, Pakistan and Singapore.

3. Simultaneous introduction of privatization and competition: Japan and Sri Lanka.

4. Opening up of local market to competition first: Hong Kong, India and Singapore.

5. Opening up of competition in the international services first: Korea, Malaysia and the

Philippines.
Introduction of second domestic long distance carrier first: China

The sector ministry exercises regulatory functions: China, Indonesia, Japan, Korea,

Malaysia, Taiwan and Thailand.

1. Separate regulator with the responsibility for interconnection lying with the dominant

operator while regulator is responsible for arbitration of disputes: Hong Kong, Pakistan

and Philippines.
In most countries, restricting the number of licensees or imposing geographic limitations

has limited competition. In India, for instance, competition in cellular telephony was allowed in a

duopoly mode. This was gradually increased to licensing of four operators in each of the four

metros and thirteen circles. Basic service in India is still limited to one private operator

competing with state owned incumbents in the circles. Though private sector has been licensed

and they are laying infrastructure, metros are still in the grip of public sector monopoly and it will

take a while before private competition takes place. Differences in modes of privatization have

been observed in other countries. In Thailand, private entry was allowed through Build Operate

and Transfer (BOT) mode while the network was controlled by the state. In Vietnam, network

was publicly managed with foreign operators participating in provision of training, equipment

and supervision through Business Cooperation Contracts (BCCs). China did not allow private

entry in the telecom sector and limited competition between state-owned entities of the

ministries. Many countries in Asia restricted foreign equity participation. For example, China,

India, Indonesia, Korea, Malaysia, the Philippines and Thailand limited foreign equity below fifty

per cent.
It is interesting to note that competing technological standards have also limited

competitions. Countries are divided in their technical options for mobile networks. While Europe

predominantly opted for Global System for Mobile communications (GSM) technology and USA

for Code Division Multiple Access (CDMA), within Asia, China, India, Indonesia and Malaysia

have opted for GSM in cellular mobile network, whereas Hong Kong, Korea, the Philippines,

Singapore and Thailand have opted for CDMA.

However, several countries are now opting for more than one standards. For example, in

USA, ‘Companies like AT&T and Cingular are increasingly moving to GSM’. ‘China is going with

some CDMA as well.’ India is using CDMA in Wireless in Local Loop (WLL). Multiple

technological standards fragment market rendering base stations purchased from one company

unworkable with switches bought from another company potentially limiting the scope of

exploitation of economies of scale that could accrue in a multi-vendor environment.


Government Initiatives

The Government has taken the following main initiatives for the growth of the Telecom

Sector:

• All telecom services have been opened up for free competition for unprecedented

growth

• 217 (Information Technology Agreement) ITA-I items are at zero Customs Duty. Specified

capital goods and all inputs required to manufacture ITA-I, items are at zero Customs Duty

• Availability of low cost mobile handsets

The international Long Distance Services (ILDS) opened with effect from April 2002. Calling

Party Pays (CPP) regime was implemented with effect from 1st May 2003

• Guidelines for Unified Access Service License regime were issued in November 2003, 27

licenses out of 31 Basic Service Licenses were converted to Unified Access Service Licenses

• In April 2004, license fee for Unified Access Service Providers (UAS) was reduced

by 2 per cent.

• License fee for infrastructure Provider-II reduced from 15 per cent to 6 per cent of the Adjusted

Gross Revenue and spectrum charges between 2 to 4 per cent in June 2004.
• Entry fee for NLD licenses was reduced to Rs. 2.5 Crore from Rs. 100 Crore. Entry fee for ILD

reduced to Rs. 2.5 Crore from Rs. 25 Crore

• Lease line charges have been reduced to make the bandwidth available at competitive prices

to facilitate growth in IT enabled services

• One India plan i.e. single tariff of Re. 1/- per minute to anywhere in India was introduced from

1st March 2006 by the Public Sector Undertakings. This tariff was emulated by most of the

private service providers also. This scheme has led to death of distance in telecommunication

and is going to be instrumental in promoting National Integration further

• The robust telecom network has also facilitated the expansion of BPO industry that is having

500,000 employees now and adding 400 employees per day.

• Annual license fee for National Long Distance (NLD), International Long Distance (ILD),

Infrastructure Provider-II, VSAT commercial and Internet Service Provider (ISP) with internet

telephony (restricted) licenses was reduced to 6 per cent of Adjusted Gross Revenue (AGR)

with effort from Jan 2006.

• The Government’s policy is neutral on use of technology by telecom service providers subject

to availability of scarce resources such as spectrum etc.

• License Fees 6-10 per cent of Adjusted Gross Revenue (AGR)


Foreign Direct Investment Policy

Foreign Direct Investment (FDI) was permitted in the telecom sector beginning with the

telecom manufacturing segment in 1991 - when India embarked on economic liberalisation. FDI

is defined as investment made by non-residents in the equity capital of a company. For the

telecom sector, FDI includes investment made by Non-Resident Indians (NRIs), Overseas

Corporate Bodies (OCBs), foreign entities, Foreign Institutional Investors (FIIs), American

Depository Receipts (ADRs)/Global Depository Receipts (GDRs) etc.

Present FDI Policy for the Telecom sector:

• In Basic, Cellular Mobile, National Long Distance, International Long Distance, Value Added

Services and Global Mobile Personal Communications by Satellite, FDI is limited to 49 per cent

(under automatic route) subject to grant of licence from the Department of Telecommunications

and adherence by the companies (who are investing and the companies in which investment is

being made) to the licence conditions for foreign equity cap and lock-in period for transfer and

addition of equity and other license provisions.

• Foreign Direct Investment up to 74 per cent permitted, subject to licensing and security

requirements for the following:

- Internet Service (with gateways)

- Infrastructure Providers (Category II)


- Radio Paging Service

• FDI up to 100 per cent permitted in respect to the following telecom services:

- ISPs not providing gateways (Both for satellite and submarine cables)

- Infrastructure Providers providing dark fibre (IP Category I)

- Electronic Mail

- Voice Mail

The above is subject to the following conditions:

- FDI up to 100 per cent is allowed subject to the condition that such companies would divest 26

per cent of their equity in favour of Indian public within 5 years, if these companies are listed in

other parts of the world.

- The above services would be subject to licensing and security requirements, wherever

required.

- Proposals for FDI beyond 49 per cent shall be considered by Foreign Investment Promotion

Board (FIPB) on a case-to-case basis.

• In the manufacturing sector 100 per cent FDI is permitted under the automatic route.

• In Basic, Cellular Mobile, paging and Value Added service, and Global Mobile Personal

Communications by Satellite, FDI is permitted up to 49 per cent (under automatic route) subject

to grant of license from Department of Telecommunications


• Foreign direct investment up to 74 per cent permitted, subject to licensing and security

requirements for the Internet Service (with gateways), Infrastructure Providers (category-II),

Radio Paging Service.

• FDI up to 100 per cent permitted in respect of

- ISPs not providing gateways (both for satellite and submarine cables),

- Infrastructure Providers providing dark fibre (IP Category I);

- Electronic Mail; and

- Voice Mail

• FDI up to 49 per cent is also permitted in an investment company, set up for making

investment in the telecom companies licensed to operate telecom services.

Investment by these investment companies in a telecom service company is treated as part of

domestic equity and is not set of against the foreign equity cap.

• Manufacturing - 100 per cent FDI is permitted under automatic route.

• FDI is subject to the following conditions

FDI up to 100 per cent is allowed subject to the conditions that such companies would divest 26

per cent of their equity in favour of Indian public in 5 years, if these companies are listed in other

parts of the world.


• The above services would be subject to licensing and security requirements, wherever

required.

• Proposals for FDI beyond 49 per cent shall be considered by FIPB on case to case basis.
Major Players

There are three types of players in telecom services:

• State owned companies (BSNL and MTNL)

• Private Indian owned companies (Reliance Infocomm, Tata Teleservices,)

• Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures, Escotel, Idea

Cellular, BPL Mobile, Spice Communications).


Challenges & Opportunities

The telecom sector has been one of the fastest growing sectors in the Indian economy in

the past 4 years. This has been witnessed due to strong competition that has brought down

tariffs as well as simplification of policy environment that has promoted healthy competition

among various players. Due to this reason, telecom density in the country has risen to over 12

per cent at the end of January 2006, from 3.6 per cent in March 2001.

The mobile sector alone has been growing rapidly and has emerged as the fastest

growing market in the whole worlds. Currently of a size nearing 70 million (GSM and CDMA),

this sector is expected to reach a size of nearly 200 million subscribers by financial year 2008.

5.28 million mobile subscribers additions were registered in July 2006, compared to 4.78 million

in June and 4.25 million in May. More than 200 million subscribers addition is expected by July

2007.

The government has eased the rules regarding inter circle and intra circle mergers. This

has led to a slew of mergers and acquisitions in the recent past. Also as the sector is moving

closer to maturity, further consolidation is a reality and this will lead to the survival of more

profitable players in this segment.


In order to further promote the use of Internet in the country the government is taking proactive

steps to develop this sector with the help of the various players in this segment. For this

purpose, the use of broadband technology is being mooted and this will go a long way in

improving the productivity of the Indian economy as well as turn out to be the next big

opportunity for telecom companies after the mobile communications segment.

Non-voice services and VAS are the gold mines. The big takeoff is expected with the rollout of

3G services in early 2007, once the spectrum issues are sorted out. Internet users base fast

reaching near the English speaking population base. Local language and content required for

further growth.

Infrastructure equipment cost is down to a fraction of what prevailed just a few years

ago. Operators can plan better expansion plan now.

Increased viability for the operators to expand to semi-urban and rural markets, hence,

accelerate growth further.

It’s not without reason that India is tipped to be the world’s third-larges economy by

2050! No wonder if it happens much earlier.


Investors can look to capture the gains of the Indian telecom boom and diversify their operations

outside developed economies that are marked by saturated telecom market and lower GDP

growth rates.

At a time when global telecom majors are struggling to cope with their losses and the

rollout of 3G networks, which has been a non-starter for close to a year now; India, with its

telecom success story, represents an attractive and lucrative destination for investment.
CHAPTER II
Aircel
Introduction to Aircel

Aircel group is a mobile phone service provider in India. It offers both prepaid and

postpaid GSM cellular phone coverage throughout India. Aircel is a joint venture between Maxis

Communications of Malaysia and Apollo Hospital Enterprise Ltd of India. UTSB has a 74%

stake in Aircel and the remaining 26% is with Apollo Hospitals. It is India’s Seventh largest GSM

mobile service provider with a subscriber base of over 51.83 million, as of January 31, 2011. It

has a market share of 6.72% among the GSM operators in the country. As on date, Aircel is

present in all 23 telecom circles (including Andhra Pradesh, Assam, Bihar & Jharkhand,

Chennai, Delhi & NCR, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka,

Kerala, Kolkata, Madhya Pradesh, Mumbai, North East, Orissa, Punjab, Rajasthan, Rest of

Maharashtra & Goa, Rest of Tamil Nadu, Rest of West Bengal, Uttar Pradesh East, Uttar

Pradesh West) as per the company plans to become a pan-India operator by 2010. Additionally,

Aircel has also obtained permission from Department of Telecommunications (DoT) to provide

International Long Distance (ILD) and National Long Distance (NLD) telephony services. It also

has the largest service in Tamil Nadu.


Aircel word

The Aircel Group is a result of alliance between Maxis Communications Berhad of

Malaysia (74% equity) and Apollo Hospital Enterprise Ltd of India (26% equity). It is a

partnership of two flourishing brands, each a leader on its own turf.

The Aircel Group, formed in 1994, offers affordable and outstanding mobile services to a vast

subscriber base in India. Aircel has a vision of delighting its customers by giving them the

respect they deserve. Our goal is to provide our customers with exemplary service and

persistently look for new ways to surpass their expectations.

Aircel commenced operations in 1999. In our first decade of operations, we concentrated on

building our foundations in the southern part of the country, and soon emerged as the regional

market leaders. We worked hard and achieved that success by remaining focused on growth

opportunities. Soon after our company began with its expansion in 2005 and has now set its

sight on becoming a pan India operator. Our project pipeline is robust, allowing for sustainable

long-term growth.

In addition to our leadership position in Tamil Nadu, Aircel met with extraordinary success in the

Eastern frontier circles. We pride ourselves on customer satisfaction and managed to emerge

as the market leaders in Assam and North Eastern states within 18 months of operations.

During this period, our company gained a strong foothold in 10 circles, to provide better access

to our customers. Today, Aircel operates in 18 telecommunication circles and the company is

ready to embark on a dynamic expansion plan, swiftly rolling out in new circles in the near

future.

Aircel recognizes the tremendous growth in its customer base. We have also got an
authorization from the Department of Telecommunications for ILD and NLD telephony services

and are now on track to realize our dream of becoming a nationwide player by the year 2010.

Aircel offers its customers, services and products that are easy to understand and use. All

offerings are stimulating and at the same time extremely unique as Aircel continues to re-invent

itself constantly to deliver the best and most up-to-date services. The brand instils a felling of

pride, confidence and reliance among all stakeholders by anticipating their desires and fulfilling

the same efficiently.

With our foundations deeply set on our brand vales of simplicity, creativity, trust and excitement,

we will continue to deliver superior services to our customers and will do our best to live up to

their high expectations.

 The Aircel Group is a result of alliance between Maxis Communications Berhad of Malaysia

(74% equity) and Apollo Hospital Enterprise Ltd of India (26% equity). It is a partnership of two

flourishing brands, each a leader on its own turf.

The Aircel Group, formed in 1994, offers affordable and outstanding mobile services to a vast

subscriber base in India. Aircel has a vision of delighting its customers by giving them the

respect they deserve. Our goal is to provide our customers with exemplary service and

persistently look for new ways to surpass their expectations.

Aircel commenced operations in 1999. In our first decade of operations, we concentrated on

building our foundations in the southern part of the country, and soon emerged as the regional

market leaders. We worked hard and achieved that success by remaining focused on growth

opportunities. Soon after our company began with its expansion in 2005 and has now set its

sight on becoming a pan India operator. Our project pipeline is robust, allowing for sustainable

long-term growth.
In addition to our leadership position in Tamil Nadu, Aircel met with extraordinary success in the

Eastern frontier circles. We pride ourselves on customer satisfaction and managed to emerge

as the market leaders in Assam and North Eastern states within 18 months of operations.

During this period, our company gained a strong foothold in 10 circles, to provide better access

to our customers. Today, Aircel operates in 18 telecommunication circles and the company is

ready to embark on a dynamic expansion plan, swiftly rolling out in new circles in the near

future.

Aircel recognizes the tremendous growth in its customer base. We have also got an

authorization from the Department of Telecommunications for ILD and NLD telephony services

and are now on track to realize our dream of becoming a nationwide player by the year 2010.

Aircel offers its customers, services and products that are easy to understand and use. All

offerings are stimulating and at the same time extremely unique as Aircel continues to re-invent

itself constantly to deliver the best and most up-to-date services. The brand instils a felling of

pride, confidence and reliance among all stakeholders by anticipating their desires and fulfilling

the same efficiently.

With our foundations deeply set on our brand vales of simplicity, creativity, trust and excitement,

we will continue to deliver superior services to our customers and will do our best to live up to

their high expectations.


Business solution

Technology related business solutions are an indispensable part of trade and commerce

in today’s marketplace. These business solutions aim at generating value for consumers by

effectively utilizing technology to advance their day to day processes.

Today every company needs unique technology related solutions specific to their individual

environment. Keeping the same in mind, Aircel offers a comprehensive range of business

related applications to empower every aspect of your business. Our business enhancement

solutions are aimed at generating profitable results for your enterprise. Our products ranging

from premium internet services, E-Conferencing, MPLS VPN and Smart Stream provide a

gamut of services that will support your needs.

Let us assist you in implementing innovative business solutions customized to your needs and

make your day to day business processes more efficient by simplifying your busy world.
Aircel Services

 My aircel.

 Pocket Internet

 Dialer Tunes

 Missed call Alert

 Music on demand

 Face book voice update

 Pocket learing

 Movie partner

 Voice station

 MMS

 Blyk on aircel

 Doctor on call

 Job alert

 Live astrology
Chapter III

Competitive Study between


Aircel & Vodafone
And
Data Analysis
After the data collection, it was compiled, classified and tabulated manually and with help of

computer. Then the task of drawing inferences was accomplished with the help of percentage and

graphic method. Different suggestions given by me to the Company after analyzing the views of

every respondent are also given in the report.

Keeping in mind the objectives of the study, the survey was being done and following

interpretation was being drawn.

DEMOGARPHIC FEATURES OF REPONDENTS

1. Sex ratio of the respondents

S.NO. PARTICULARS NUMBER %AGE

A MALE 39 78%

B FEMALE 11 22%

90%
Male
80% Femal
e
70%

60%

50%

40%

30%

20%

10%

0%
INTERPRETATION: The graphical representation of the table shows that out of 50

respondents 39 were male and 11 were female

2. AGE GROUP OF RESPONDENTS

S.NO. PARTICULARS NUMBER %AGE

A 15-25 21 42%

B 25-35 18 36%

C 35-45 6 12%

D Above 45 5 10%

INTERPRETATION: The graphical representation of the table shows that out of total

respondents 42% were of age 15-25, 36% 25-35, 12% 35-45, and rest were above 45.

3. LITERACY RATE AMONG THE RESPONDENTS

S.NO. PARTICULARS NUMBER %AGE

A Matriculate 8 16
B Intermediate 17 34

C Graduation 19 38

D Post-Graduation 56 12

INTERPRETATION: The graphical representation of the table shows that out of total

respondents 8 were matriculate,17 were intermediate,19graduateand rest 6 were

postgraduate.

4.Who is your current service provider?

S.NO. PARTICULARS NUMBER %AGE

A Aircel 14 28

B Vodafone 25 50

C Other 11 22
Aircel

INTERPRETATION The 14 person were used Air Tel and 25 person were used vodaphone

and 11 were used other.

5. For how long you are using this mobile connection?

Aircel
S.NO. PARTICULARS NUMBER %AGE

A Less than 6 month 2 14%

B 6 to 12 months 3 21%

C Above 12 months 9 65%


Interpretation Two person were used since six month and three were used since

twelve months and nine were used since two year.

Vodafone
S.NO. PARTICULARS NUMBER %AGE

A Less than 6 month 1 4%

B 6 to 12 months 3 12%

C Above 12 months 21 84%

INTERPRETATION The one person were used since six months and three were used since

one year and twenty were used since two year

Other
S.NO. PARTICULARS NUMBER %AGE

A Less than 6 month 1 9%

B 6 to 12 months 2 18%

C Above 12 months 8 73%


INTERPRETATION The one person were used since six months and two were used since

one year and eight were used since two year.

6. What was the reason for choosing this mobile connection?

Aircel
S.NO. PARTICULARS NUMBER %AGE

A Recommended by 5 36%
friend and relative
B Recommended by 2 14%
retailer
C Brand image 1 7%

D Advertisement 6 43%
INTREPRETATION: Five were recommended by friends and relative and two were

by retailer and one was by brand image and six were by advertisement .

Vodafone
S.NO. PARTICULARS NUMBER %AGE

A Recommended by 6 24%
friend and relative
B Recommended by 2 8%
retailer
C Brand image 8 28%

D Advertisement 10 40%

INTREPRETATION: Six were recommended by friends and relative and two were

by retailer and seven were by brand image and ten were by advertisement.

Other
S.NO. PARTICULARS NUMBER %AGE

A Recommended by 2 18%
friend and relative
B Recommended by 2 18%
retailer
C Brand image 6 55%

D Advertisement 1 9%
INTREPRETATION: Two were recommended by friends and relative and two

were by retailer and six were by brand image and one was by advertisement

7. While purchasing a connection does advertisement plays any role?

S.NO. PARTICULARS NUMBER %AGE

A Yes 42 84%

B No 8 16%

INTERPRETATION: The forty two people were saying yes and eight were says no.

S.NO. PARTICULARS NUMBER %AGE


A Television 31 62%

B Radio 0 0%

C Newspaper 11 22%

D Magazine 8 16%

8. From where you watch the advertisement most?

INTERPRETATION: The mostly people sees advertisement in the television .


9. Which telecommunication has good advertisements?

S.NO. PARTICULARS NUMBER %AGE

A Aircel 21 42%

B Vodafone 24 48%

C Any other 5 10%

Aircel

INTERPRETATION: mostly Vodafone have good advertisement

10. How well advertisements of the Aircel catch your attention?


S.NO. PARTICULARS NUMBER %AGE

A Very well 22 44%

B Somewhat well 12 24%

C Undecided 6 12%

D Not at all 10 20%

INTERPRETATION: The 22 person says very well and 12 person says some

what well and 6 were undecided and 10 were says no.

11. How well did the advertisement of Vodafone catch your attention ?

S.NO. PARTICULARS NUMBER %AGE

A Very well 26 52%

B Some what well 10 20%

C Undicided 6 12%

D Not at all 8 16%


INTERPRETATION: The 26 person says very well and 10 person says some

what well and 6 were undecided and 8 were says no.

12. Do you think that advertisement made by company informs you

about these new products?

S.NO. PARTICULARS NUMBER %AGE

A Yes 34 68%

B No 12 24%

C Undecided 4 8%

INTERPRETATION: The 34 person says yes and 12 person says no and 4 person

were no response .

13. Based on advertisements made by company, would you like to go for

more connection for you or your family in future ?


S.NO. PARTICULARS NUMBER %AGE

A Yes 38 76%

B No 7 14%

C Undecided 5 10%

INTERPRETATION: The 38 person says yes and 7 people says no and 5 person

were no response.

14. Do you collect any information search before making purchase?

S.NO. PARTICULARS NUMBER %AGE

A Yes 42 84%

B No 8 16%

INTERPRETATION: The forty two person were saying yes and eight were says no

15. If yes, which sources are used?


S.NO. PARTICULARS NUMBER %AGE

A Operator Reference 5 10%

B Dealer 8 16%

C Advertisement 25 50%

D Magazine 4 8%

E Reference from friends 6 12%


and relative
F Any other 2 4%
LIMITATIONS
No project is without limitations and it becomes essential to figure out the various

constraints that we underwent during the study. The following points in this direction

would add to our total deliberations:-

1. During the study, on many occasions the respondent groups gave us a cold

holder.

2. The respondents from whom primary data was gathered any times displayed

complete ignorance about the complete branded range, which was being studied.

3. Lack of time is the basic limitation in the project.

4. Some retailers/whole sellers refuse to cooperate with the queries.

5. Some retailers/wholesalers gave biased or incomplete information regarding the

study.

6. Lack of proper information and experience due to short period of time.

7. Some retailers did not answer all the questions or do not have time to answer.
CONCLUSIONS

1. People like to watch advertisement on television mostly.

2. Respondents like to purchase new mobile connection based on advertisements.

3. Maximum respondents were in favor of that, Vodafone’s advertising is better

than other companies.

4. Maximum number of respondents were in favor of that, they would like to

purchase more connection of the company with good advertisement policy.


BIBLIOGRAPHY
In this project report, while finalizing and for analyzing quality problem in details

the following Books, Magazines/Journals and Web Sites have been referred. All the

material detailed below provides effective help and a guiding layout while designing this

text report.

Books:

Principles of Marketing –Philip Kotler & Kevin Keller edi.12

Market Research – D.D. Sharma

Research Methodology – C.R. Kothari

Websites:

www.Aircelworld.com

www.google.com

www.india.com

www.Vodafone.in
QUESTIONNAIRE
Dear Sir/Madam
I am the student of MBA-4th Semester at Northern India Engineering College doing a
project “THE IMPACT OF ADVERTISING ON BUYER BEHAVIOUR: - A
STUDY ON AIRCEL V/S VODAFONE ” Please co-operates to fill this questionnaire.
1. Name_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

2. Sex:
(a) Male (b) Female

3. Age:
(a) 15-25 (b) 25-35

(c) 35-45 (d) Above 45

4. Education:
(a) Matriculate (b) Intermediate

(C) Graduation (d) Postgraduate


5. Who is your current service provider?

a) Aircel

b) Vodafone

c) Any other

6. For how long you are using this mobile connection?

a) Less than 6 months.


b) 6 to 12 months.
c) Above 12 months

7. What were the reasons for choosing this mobile connection?

a) Recommended by friends or relatives.


b) Recommended by retailers.
c) Brand image
d) Advertisement
8. While purchasing a connection advertising plays any role

a) Yes
b) No

9. from where you watch the advertisement most


a) Television
b) Radio
c) Newspaper
d) Magazines

10. Which telecommunication has creative advertising?


a) Air Tel
b) Vodafone
c) Any other

11. How well did advertisement of the Aircel catch your attention?
a) Very well
b) Somewhat well
C) Undecided
d) Not at all.

12. How well did the advertisement of the Vodafone catch your attention?
a) Very well
b) Somewhat well
C) undecided
d) Not at all
13. Do you think that advertisement made by company informs you about there products?
.a) Yes
b) No
C) Undecided
14. Do you collect any information search before making purchase?
Yes
No

15. If yes, which sources are used?

a) Magazines
b) Dealers
c) Operators references
d) Advertisement
e) Reference from friends and relatives
f) Any other

“Thanks for your valuable time and co-operation ”

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