Mobile Services 2014

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SALES AND DISTRIBUTION
MANAGEMENT

MOBILE SERVICES




Submitted To: Submitted By: Group 5
Prof. Bhalender Singh Pranay Suyash (221093)
Puneesh (221102)
Raghav (221105)
Rahul Chhabra (221106)
Rahul John (221107)
Mayank Arora (073030)

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INDIAN TELECOMMUNICATION INDUSTRY
The Indian telecommunications network is the third largest in the world and the second largest amongst
the emerging economies of Asia. Today, it is one of the fastest growing markets in the world. The
telecommunication sector continued to register significant success during the years and has emerged as
one of the key sectors responsible for Indias resurgent economic growth. However, the market for
telecom in India expanded at the rate of just 2% in the year 2011, representing the slowest growth rate
in the past five years. By the year 2016, the market is expected to have a penetration rate of over 80%.
The mobile phone industry in India is likely to contribute US$ 400 billion to the countrys gross domestic
product (GDP) and has the potential to generate about 4.1 million additional jobs by 2020. The Total
Revenue of Telecom Service Sector went up from Rs. 1,95,442 crore in 2011-12 to Rs. 2,12,592 crore in
2012-13 indicating a growth of 8.77%.

SUBSCRIBER BASE

2009 2010 2011 2012 2013
Wireless 391.76 584.32 811.59 919.17 867.8
Fixed line 37.96 36.96 34.73 32.17 30.21
Internet Services 12.84 15.22 17.73 19.51 21.61
0
75
150
225
300
375
450
525
600
675
750
825
900
975
S
u
b
s
c
r
i
b
e
r
s

(
m
i
l
)

Subscribers (in millions)
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The decline in Wireless connections is mainly due to deactivation of inactive connections. Decline in the
wire-line subscriber base is due to fact that consumer are shifting to wireless technology. Increase in
internet subscriber base is the result of technology penetration; availability of cheap smart phones and
other hand held devices like tablets are the major factors behind the growth observed.
Growth pattern for subscriber base in different area, over last five years can be observed in the
following chart:

TELEDENSITY
The tele-density at the end of March, 2013 reached the mark of 73.32 as compared to 78.66 at the end
of previous year recording a decrease of 5.34.

MARKET SHARE
By Subscriber Base
The Wireless Subscriber base was 867.80 million as on 31st March 2013 in comparison to the subscriber
base of 919.17 million as on 31st March2012. Bharti has the highest share with 23% while Vodafone has
19% and Idea with 15%.
2009-10 2010-11 2011-12 2012-13
Wireless 49.15 38.89 13.26 -5.59
Fixed line -2.63 -6.03 -7.37 -6.09
Internet Services 18.54 16.49 10.04 10.76
-20.00
-10.00
0.00
10.00
20.00
30.00
40.00
50.00
60.00
G
r
o
w
t
h

%

Subscriber Growth
Particulars Wireless Wire-line Total
Urban subscribers (mil) 525.3 23.5 548.8
Rural subscribers (mil) 342.5 6.71 349.22
Overall Tele-density 70.85 2.47 73.32
Urban Tele-density 140.67 6.29 146.96
Rural Tele-density 40.23 0.79 41.02
Share of urban subscribers (%) 60.53% 77.78% 61.11%
Share of rural subscribers (%) 39.47% 22.22% 38.89%
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By Revenue

The Total Revenue of Telecom Service Sector went up from Rs. 1,95,442 crore in 2011-12 to Rs. 2,12,592
crore in 2012-13 indicating a growth of 8.77%. Bharti has the highest share with 27% while Vodafone
has 22% and Idea with 12%.
19%
23%
15%
15%
8%
13%
7%
Market Share of Wireless service providers by
Subscriber Base
Vodafone
Bharti
Idea
Reliance
Tata
BSNL
Others
2010 2011 2012 2013
Aircel 4648 8264 7472 11320
Bharti 38390 41138 45659 50600
BSNL 32045 29688 27934 27178
Idea 11930 15389 19322 22087
MTNL 5058 3992 3624 3714
Reliance 14792 15002 14507 16074
Tata 8737 11508 12621 13545
Vodafone 26080 30123 32021 41018
0
10000
20000
30000
40000
50000
60000
R
e
v
e
n
u
e
s

Revenues of companies
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The Telecom Sector witnessed a decline in the number of subscribers during the year 2012-13. At the
end of the financial year 2012-13 the overall telecom subscriber base was 898.02 million as compared to
951.34 million at the end of the financial year 2011-12, a decline of 53.32 million.

INDUSTRY FORECAST
The telecom industry saw a drop in the number of subscribers by approx 5% and is expected to touch
the 1 billion subscriber base by next year. The mobile phone industry in India is likely to contribute US$
400 billion to the countrys gross domestic product (GDP) and has the potential to generate about 4.1
million additional jobs by 2020. In terms of revenue, it is expected to grow at a CAGR of approx 8% and
should cross the 250 thousand crore mark in 2015-16.
Year Number of subscribers in million Revenue in 000 crore
2010-2011 584.32 177
2011-12 811.59 195
2012-13 919.17 213
2013-14 915.19 231
2014-15 1082.615 249
2015-16 1192.634 267
2016-17 1302.653 285

6%
27%
15%
12%
2%
9%
7%
22%
Market Share of Wireless Service Provider by
Revenue
Aircel
Bharti
BSNL
Idea
MTNL
Reliance
Tata
Vodafone
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COMPANY FORECAST
Vodafone
Higher customer additions and growth in data revenue have helped Vodafone India post a 13 per cent
rise in service revenues, at Rs. 37,606 crore for the financial year ended March 31. It is expected to grow
at a rate of 13-14% and cross the INR 50k crore mark by 2016-17 on account of increase in subscriber
base and improved internet services.
Year Number of subscribers in million Revenue in 000 crores
2010-11 124.3 26.08
2011-12 147.7 30.123
2012-13 147.5 32.021
2013-14 153
37.606
2014-15 164.6
43.191
2015-16 173.19
48.776
2016-17 181.78
54.361


0
200
400
600
800
1000
1200
1400
Number of subscribers in million
Revenue in 000 crore
0
20
40
60
80
100
120
140
160
180
200
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Number of subscribers in million
Revenue in 000 crores
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IDEA
Idea Cellular has maintained its track record of being the fastest growing operator in the market. Idea
witnessed YoY revenue growth of 18.6 percent in FY14, approx double the growth rate of the industry. It
is expected to grow at in near future at a rate of 13-14% and touch the 150 million subscribers by the
year 2016.
Year Revenue in 000 crores Number of subscribers in million
2010-11 11.9 82.66
2011-12 15.4 98.4
2012-13 19.32 114.14
2013-14 22 121
2014-15 25.783 133.78
2015-16 29.223 145.08
2016-17 32.664 156.38


Environmental Scan of Mobile Services Industry
Any industry is affected by a range of environmental factors that shape the opportunities and pose
threat to the companies operating in that sector. Therefore, it is important to analyse the Macro
environmental factors thoroughly before preparing the corporate strategies for future.
PESTLE ANALYSIS
Political factors are basically to what degree the government intervenes in the economy. Specifically,
political factors include areas such as tax policy, labour law, environmental law, trade
restrictions, tariffs, and political stability.
FDI - In a major reform push, government decided to increase FDI cap in telecom to 100 per cent
from 74, up to 49 through automatic route and beyond that FIPB in August 2013.
0
20
40
60
80
100
120
140
160
180
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Revenue in 000 crores
Number of subscribers in million
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It will help the industry to get fresh funds and lower financial burden.
Foreign investors will no longer need to partner with Indian investors in order to comply with
regulatory requirements.
In 2012, there had been disputes among foreign investors with their India partners in firms
like Uninor and Etisalat DB.
Telecom Security Policy- In Sept 2013, the home ministry expressed strong reservations over
the proposed national telecom security policy saying it must lay down guidelines allowing
interception of communication network by only law enforcement agencies.
The home ministry had also red flagged the widespread use of Chinese telecom equipments.
The proposed national telecom security policy is expected to ensure that all future
procurements would be done through trusted Indian or foreign vendors and telecom operators
will get their networks audited yearly for bugs and security breaches.
In 2011, MNP (Mobile Number Portability) became operational in India and helped increase the
no. of mobile services users tremendously.
Spectrum Auction Failures: In 2012 & 2014, the spectrum auction saw reduced no. of bids from
the telecom services companies and therefore parts of spectrum remained unsold. A major tiff
was reserve rates that were quite high.
The regulator has proposed a slashing of the reserve rates for the upcoming auction. However
the same has questioned by the DoT panel.
Lack of transparency in Auctions & scams in past have also affected the Industry scenario.
Such high prices may end up causing problems for mobile phone users in longer term.

Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These
factors have major impacts on how businesses operate and make decisions

GDP growth rate- The slowing growth rate of the economy is a concern for all the companies
regardless of the sector. The growth rate is hovering around 5-6 %.
GDP contribution is approximately 3% by the Telecom Industry and mobile services industry is
steadily increasing this percentage.
Disposable Incomes: Per capita income & Disposable Incomes affect the purchasing power of
the Indian household and in turn affect the mobile services industry as the people are more
likely to spend more if they have more spare cash in their wallets.
Lowering Mobile Handsets Prices: There is no dearth of options these days for the mobile
phone users to choose from. The fierce competition has led to lowering prices of handsets and
thus increasing the growth levels of mobile services industry also.
Tele density- An important factor in determining the penetration levels at Rural & Urban levels.
Inflation & Interest rates- Inflation is an important economic factor affecting price levels. Rising
interest rates have resulted in increase in debt servicing costs for operators. Consequently
operators are under immense margin pressures

Social factors include the cultural aspects and include health consciousness, population growth rate,
age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand
for a company's products and how that company operates.

Change in lifestyle- Fast-changing lifestyles is forcing telecom companies to enlarge the breadth
and depth of their services. Joint ventures in the entertainment sector to add more services. For
instance, Verizon now offers Verizon FiOS, a basic fiber-optic service which includes digital
television, voice and high-speed internet services.
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Teledensity & Increasing Rural-Urban Divide: The rural Indian consumer managed to remain an
attractive proposition, especially in the demand for consumer goods and telecom services.
India's teledensity has improved from under 4% in March 2001 to around 73% by the end of
March 2013. Rural and semi urban areas where teledensity is the lowest need to be targeted in
a better way.
Demographics & Young India: India, being a young country ( 75 % of population under the age
of 35) offers greater avenues for mobile services industry. The social habits of a younger
population point to the youth being highly interested in seeking new Mobile Apps & mobile
service like 3G,4G internet services etc.
Consumer buying patterns: The buying behaviour of the customers in India is changing , the
customers are shifting to buy the new products and service according the offers and schemes
available to them.


Technological factors include technological aspects such as R&D activity, automation, technology
incentives and the rate of technological change. They can determine barriers to entry, minimum
efficient production level and influence outsourcing decisions.

Increasing Competition: The main challenges facing Indian telecom service providers is growth
of the profit margin as well as competition with the likes of Whatsapp and Facebook Messenger,
which are eliminating a chief source of income for the telecom providers.
Untapped Potential: The 3G- value added services potential is still not fully tapped and there is
a lot of room to improve the network coverage and increase customers for the service
providers.
Research funding : Govt is providing various tax benefits and subsidies to the players which are
in research and development fields of telecom sector , the govt has also open various research
institutes where the research is done with the collaboration of various private research
companies .
Innovation potential: Innovations potential in India for technology is very high as the internet
and broadband and 3G and 4G services are still niche so coming in India is very profitable.
Telecommunications companies with 3G services will no longer be allowed to avail of tax breaks
found under Section 80 IA of the Income Tax Act. The tax breaks under Section 80 IA are given to
companies building infrastructure. In the telecommunications sector, companies can choose a
10 year period out of the first 15 years of operations to qualify for the tax benefits.

Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and
safety law. These factors can affect how a company operates, its costs, and the demand for its
products.

TRAI: Legal framework of telecom in India is supported by TRAI (Telecom Regulatory Authority
of India), having purpose of Independent regulator to control telecom industry.
Cancellation of Spectrum Licenses: In Feb 2012, the Supreme court of India ordered the
cancellation of all the 122 unified access service licences issued in January 2008 by former
telecom minister A Raja. All 2G mobile operators whose licences were cancelled in February
2012 had to stop offering services to consumers forthwith.
It affected half a dozen telecom circles and nearly 75 million mobile users across the country.

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Environmental/Ecological factors include ecological and environmental aspects such as weather,
climate, and climate change

Harmful effects of Mobile Handsets: People extensively use mobile telephone services, internet
services etc. many researches proved that these smaller phones, with their smaller antenna,
increase exposure to microwaves and pose a potential health threat to the frequent user.
Environmental performance: Operators are paying increasing attention to their environmental
performance, and are cooperating more closely with equipment manufacturers.
International Guidelines: International regulations on environmental protection, especially
those for telecom operations and manufacturing, are widely recognized and followed.
ISO 14004:2004 provides guidelines on the elements of an environmental management system
and its implementation. The process includes choosing the proper products and networking
solutions to reduce negative impact on the environment.

PORTERS MODEL













Rivalry
among
existing
competitors
Threats
from
substitutes
Bargaining
power of
suppliers
Threat
from new
entrants
Bargaining
Power of
buyers
Heavy capital
investments required for
setup, high licensing
costs, price sensitivity of
the market etc. create
barriers for new entrants
-> Low
Pressure of delivering new services,
keeping prices low while delivering
high quality services, potential for
growth into rural markets etc. has led
to high competition -> High
Network Infrastructure
providers, IT support, Telecom
Equipment manufacturers etc. -
> Medium
MNP gives the users
option to change
providers if they are
not happy with the
services -> Medium

Major substitutes: VOIP, Online chat,
email, satellite phones etc. -> High

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TARGET SEGMENT AND CONSUMER BEHAVIOUR
VODAFONE
1) SEGMENTATION: Vodafone has segment in major three bases demographic, psychographic and
behavioural. Vodafone does their segmentation based on demographics of occupation dividing the
user base into consumers and business. The business solutions include machine to machine
solutions, company solutions and other business connectivity solutions. The consumers are
segmented based on geographic area urban and rural and behavioural (user status) - pre paid or
post-paid users. Similarly in Psychographic segment it mostly segment according to lifestyle and
personality. In behavioural segment it divides into three types on the benefit like local call, STD call
and ISD call etc. regarding usage rate medium usage rate and light usages with various schemes for
them.

2) TARGETING: Vodafone targets various users such as high end users, low end users, business
professionals and common man. Vodafone is adapting multi segment approaches in India. They are
offering different series of product according to demand of related market. E.g. home calling card
especially for professional to call family from abroad and Chhota recharge of Rs 10 for middle class
customer and inexpensive SMS facility for young. Never the less Vodafone has different services for
their different segment which matches their requirements. Vodafone has tied up with various
mobile companies like Blackberry, Nokia, Samsung and others to provide their service along with
the phone to increase its customer base.

3) POSITIONING: Initially Hutch positioned as more of young and a fun brand. The positioning
strategies have been highly successful. PUG dog which was a very powerful visual imagery.
Similarly happy to help, where ever you go our network follows are some of the famous
promotional lines which are quite success help to enhance their position in Indian market. Never
the less well known character ZOOZOOS was introduced by Vodafone in April 2009 during
premier league and hit, helped to make different position in the mind of customer. This shows the
importance of or attention that Vodafone gives to urban segments who are more influenced by the
visual ads and hoardings in big cities.
IDEA
1) SEGMENTATION: Idea cellular provides GSM mobile services in different regions across various
circles. The consumer market for mobile services is majorly segmented as: Geography based there
is distinguished between rural and urban area users. Idea mainly penetrates towards rural areas.
Interestingly, unlike its peers, Ideas 3G strategy hinges on the rural areas. While operators like
Bharti airtel, Vodafone Essar and Reliance Communications have launched their services in the
metros before going to the smaller towns and villages, Idea is targeting semi-urban subscribers in
the initial phases of its 3G launch as they already have the advantage of high speed internet
through fixed line as well as wireless services.

Demographic: Customers are segmented according to their ages and Idea offers mobile services
accordingly to age and gender. Young customer between age 15-25 years require less cost and high
usage where Idea offer young cards to these age group customers. Same for males and females
segment they have different attitudes to use of mobile phones. Considering this Idea offer women
cards where with low cost women can talk for long time.
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Behavioral: On basis of usage rate customers can segmented as light, medium and and Idea provide
special benefits to such type of users. On basis of user status customers are segmented as first time
users and regular brand loyal customers. Idea offers lots of different cards and benefits for first
time user so that they become brand loyal and better and new offers to regular customers to
maintain their brand loyalty.

2) TARGET MARKET: Idea follows on multi segment approach working on the demands of different
segment areas. To target Youth or young people between the age 15 to 25 years, Idea started My-
Gang Pre-Paid card on which the local group calls rate 10 paisa per minute and message one paisa
per minute. To attract women Idea introduce Women card which provide offers like emergency
calling, calling at the rate of 50/min from 2 p.m. to 4 p.m.(kitty party rates). Idea not only young
and women customers but offers lots of customized products to provide to various different
segmentation of people like lovers, business people, old age people, low income people
3) POSITIONING: Main focus of Idea is to target new markets for eg:rural area of India. Idea mobile
provides affordable and reliable services with efficient and stable network in count to, innovative
and customised products that set free customers from limitations of time The different ad
campaigns based on An Idea can change your life an ad series called what an idea sirji to ullu
math banao mainly focused towards creating new ideas, raise awareness and provide solutions to
social issues which brings the presence of Ideas network in depth everywhere across India.
The mobile service providers have found out the various needs of the different segments and
have introduced various plans for each segment.
The shift in trends from SMS to online messaging apps like Watsapp, Line and prominence of social
media like Facebook and Twitter has made the company to create more internet packs and services
with various data usage limits and validity days targeting the urban and metropolitan crowd. The
companies have acquired the spectrum for 3G services to provide faster internet access to the
urban and semi urban population who wants good service.
With increasing number of portable users they have also provided and improved on the data card
service segment for employees who want to check mails, update their supervisors and do the work
on the go.
The service providers offers various solutions like call conferencing offers to consumers and
corporate employees who are always want to be connected with their associates and friends.
The m-pesa facility started by Vodafone allows customers to pay various bills, recharge phones etc.
through their own mobile phones by integrating with debt cards or credit cards and banks. This
makes it easy for making payments and saves time for the customer. Similarly Idea is also
promoting m-banking with the launch of the Idea MyCash facility in collaboration with Axis Bank.
Aside from offering basic banking services like cash deposit, cash withdrawal and balance enquiry,
the mobile-based financial inclusion initiative enables money transfer by migrant populations in
urban areas to their beneficiaries back home. Other services include live TV streaming, travel
booking etc.
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SWOT: Vodafone



Strong international Pressence
Brand recognition
Well defined cost reduction initiatives
2nd higest market share in and 2nd higest subscriber base in inda
Excellent Network Coverage
Licensing in all circles
Strong branding and marketing initiatives eg. ZooZoo
Strengths
Uncertainty in revenue growth in the HSDPA network
High customer churn (33.33%)
Not able to relate to people in rural India
Weakness
Emerging rural markets
Growing data business and 3G auctioning
Growing Enterprise solution market
Tower sharing Joint Venture - Indus Towers
Mobile transactions and mobile banking services (M-paisa)
4G in India
Growth in mobile advertising
Opportunities
Highly competitive market
Increase in data rates (doubled)
MNP
Tax dispute with government
License extension rejection in 7 service areas
Threats
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SWOT: IDEA

Cost advantage
Good Network coverage (22 circles)
Good Customer Support through extensive network of customer touch points(> 4500
outlets, >7000 call centre seats)
Latest in technology
Robust Network infrastructure
Offers a range of high speed mobile broadband services at low prices
Flexible plans
High brand visibility through advertisements which consumers can relate to
Celebrity brand ambassadors (Abhishek Bachchan)
New offers based on customer requirements
Strong market position (3rd largest mobile operator)
Preferred by approx. 25% of those wanting to use Mobile Network Portability
Strengths
Online Presence
Chargeable internet on other network while roaming
Not diversified
High PF while recharging
Non Global presence.
Price competition from BSNL and MTNL
Untapped Rural Market
Weakness
Growth in online users
Acquisitions
Product and services expansion by introducing more mobile devices for network connectivity
like dongles
Handset market
VAS
3G & 4G services in new circles
Capturing more share of the MNP users
Untapped rural Markets
Partnership with service providers like Opera for internet packages
Growth in demand of data centric services
Opportunities
Intense market competition from new entrants as well as large telecom giants
Hostile takeover by rivals.
New entrant's low price offerings
Saturation in telecom services industry
New taxation policies
New Generation Technology such as Whatsapp
Changes in TRAI regulations
Threats
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REFERENCES

1. http://www.trai.gov.in/Content/Annual_Reports.aspx accessed on 25th June 2014
2. http://www.thehindubusinessline.com/companies/vodafone-india-posts-13-rise-in-service-
revenue-for-201314/article6029904.ece was accessed on 27th June 2014
3. http://www.lightreading.in/lightreadingindia/news-wire-feed/296165/idea-records-revenue-
share-growth was accessed on 27th June 2014
4. http://www.business-standard.com/article/economy-policy/supreme-court-cancels-122-
telecom-licences-112020300086_1.html accessed on 26 June 2014
5. http://articles.economictimes.indiatimes.com/2013-08-01/news/40962900_1_telecom-
sector-cent-fdi-100-fdi accessed on 27th June 2014
6. http://www.equitymaster.com/research-it/sector-info/telecom/Telecom-Sector-Analysis-
Report.asp accessed on 27th June 2014
7. http://www.ukessays.com/essays/economics/pestel-analysis-of-indian-telecom-sector-
economics-essay.php accessed on 27th June 2014
8. http://www.studymode.com/essays/Airtel-Vs-Idea-Stp-Analysis-969622.html accessed on 27
June 2014
9. http://www.academia.edu/5324363/Comparison_of_Airtels_and_Vodafones_marketing_stra
tegy_in_India accessed on 27 June 2014
10. http://www.ukessays.com/essays/marketing/gaurav-bashyal-stp-strategy-and-vodafone-
marketing-essay.php accessed on 27 June 2014