SWOT and PEST Analysis of Indias Telecom Sector

SWOT and PEST Analysis of Indias Telecom Sector INTRO Indian telecom industry worlds fastest growing industry(last three years 42%) and adding millions of customer monthly and reach to mark of more than 700 million customer mark in the end of year 2010. It is the most dynamic industry and based on the tough competition, price war emerged in the 3rd quarter of 2010. It has lowest tariffs in the world and highest telephone density. It also suffers from highest churn rate 2% and 5% for postpaid and prepaid respectively. It also has lowest ARPU (average revenue per user). It is second largest network in the world (in terms of number of subscriber #1st china) The wireless sector has become so dominant that it is has almost made the landline part dormant with no new happenings/activities/technology in that domain of telecommunication services. A look at their contribution to the total telephone services shows the rapidly change face of the telecommunication industry in India. This sea change has been caused by a number of factors varying from reduction in tariffs and cost of mobile handsets to change in government policies to mindset of the general public. Market Structure Indian telecommunication market is divided into a total of 23 circles, which include 4 metros, and 19 other circles. These circles are further classified into A, B and C type of circles base in the certain economic parameters and revenue potential. Circles were categorized as A,B, C based on the revenue potential as per the 1st auction in 1995. Total Market Size: US $ 60 Billion Telecommunication Services can be broadly classified under 3 heads: Telephone, Broadcasting and Internet. An exponential growth in the number of subscribers has been witnessed over the recent years with the annual growth going as high as 47%. Indian tariffs are very low in comparison to world standards. The COMPANIES which I am going to analyze is top 5 as per the market share shown by above table BHARTI AIRTEL IDEA VODAFONE BSNL AIRCEL PEST ANALYSIS It is the frame work designed to assess the macro environment of any country, organization or company. It is basically include the following four factors but now days it extends further to PESTELED the extension denotes as ENVIROMENT -LEGAL-ETHICS-DEMOGRAPHICS. This analysis tries to find all details related to its four heads, which has some meaning to business and affect business activities.it is the part of external analysis while conducting strategic analysis for business. It is useful tool to understand business growth opportunities and if any previous decline why was decline. With the increase of competition and fast changing global scenario each firm is doing this to be dynamic in its position. POLITICAL FACTORS GOVERNMENT TYPE LABOUR LAW, FREEDOM OF PRESS, RULES OF LAW, BUREAUCRACY, CORRUPTION TRADE RESTRICTIONS/ TARIFFS POLITICAL STABILITY ECONOMIC FACTORS ECONOMIC GROWTH INTEREST RATES EXCHANGE RATES INFLATION RATE BUSINESS CYCLE STAGE SOCIAL FACTOR CULTURAL ASPECTS BUYING BEHAVIOR POPULATION GROWTH RATE AGE DISTRIBUTION INCOME DISTRIBUTION LEVEL OF EDUCATION TECHNOLOGICAL FACTOR RATE OF OBSOLESCENCE RD FACILITIES SPEED OF TECHNOLOGICAL TRANSFER POLITICAL FACTOR- these factors are related to the politics of the country, it has huge impact as India has close environment before 1991 and its difficult or impossible to set up a business. Government type the current UPA government of India is progressive and liberal which laying path to economic development SWOT ANALYSIS It denotes STRENGTH -WEAKNESS-OPPERTUNITY-THREAT and this technique used to analyze a company during strategic planning. This technique is credited to Albert Humphery who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies. BHARTI AIRTEL: Bharti airtel limited is a leading global telecommunications company with operations in 19 countries across Asia and Africa. The company offers mobile voice data services, fixed line, high speed broadband, IPTV, DTH, turnkey telecom solutions for enterprises and national international long distance services to carriers. bharti airtel has been ranked among the six best performing technology companies in the world by business week. bharti airtel had 200 million customers across its operations. STRENGTH Bharti Airtel has more than 65 million customers (July 2008). It is the largest cellular provider in India, and also supplies broadband and telephone services as well as many other telecommunications services to both domestic and corporate customers. Other stakeholders in Bharti Airtel include Sony-Ericsson, Nokia and Sing Tel, with whom they hold a strategic alliance. This means that the business has access to knowledge and technology from other parts of the telecommunications world. The company has covered the entire Indian nation with its network. This has underpinned its large and rising customer base. Weaknesses An often cited original weakness is that when the business was started by Sunil Bharti Mittal over 15 years ago, the business has little knowledge and experience of how a cellular telephone system actually worked. So the start-up business had to outsource to industry experts in the field. Until recently Airtel did not own its own towers, which was a particular strength of some of its competitors such as Hutchison Essar. Towers are important if your company wishes to provide wide coverage nationally. The fact that the Airtel has not pulled off a deal with South Africas MTN could signal the lack of any real emerging market investment opportunity for the business once the Indian market has become mature. Opportunities The company possesses a customized version of the Google search engine which will enhance broadband services to customers. The tie-up with Google can only enhance the Airtel brand, and also provides advertising opportunities in Indian for Google. Global telecommunications and new technology brands see Airtel as a key strategic player in the Indian market. The new iPhone will be launched in India via an Airtel distributorship. Another strategic partnership is held with BlackBerry Wireless Solutions. Despite being forced to outsource much of its technical operations in the early days, this allowed Airtel to work from its own blank sheet of paper, and to question industry approaches and practices for example replacing the Revenue-Per-Customer model with a Revenue-Per-Minute model which is better suited to India, as the company moved into small and remote villages and towns. The company is investing in its operation in 120,000 to 160,000 small villages every year. It sees that less well-off consumers may only be able to afford a few tens of Rupees per call, and also so that the business benefits are scalable using its Matchbox strategy. Bharti Airtel is embarking on another joint venture with Vodafone Essar and Idea Cellular to create a new independent tower company called Indus Towers. This new business will control more than 60% of Indias network towers. IPTV is another potential new service that could underpin the companys long-term strategy. Threats Airtel and Vodafone seem to be having an on/off relationship. Vodafone which owned a 5.6% stake in the Airtel business sold it back to Airtel, and instead invested in its rival Hutchison Essar. Knowledge and technology previously available to Airtel now moves into the hands of one of its competitors. The quickly changing pace of the global telecommunications industry could tempt Airtel to go along the acquisition trail which may make it vulnerable if the world goes into recession. Perhaps this was an impact upon the decision not to proceed with talks about the potential purchase of South Africas MTN in May 2008. This opened the door for talks between Reliance Communications Anil Ambani and MTN, allowing a competing Inidan industrialist to invest in the new emerging African telecommunications market. Bharti Airtel could also be the target for the takeover vision of other global telecommunications players that wish to move into the Indian market. VODAFONE- Vodafone Essar is the Indian subsidiary of Vodafone Group and commenced operations in 1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai. The company now has operations across the country with over 127.34 million customers. In a survey conducted by Indias leading business weekly, Vodafone Essar was awarded Most Respected Company in the Telecom Sector for 2010.Vodafone is one of the worlds leading international mobile communication group STRENGTH Presence in many countries and backed by number one telecom country. Provider of 3G and blackberry services and business solution. Number one gainer due to MNP 50,000 customer. WEAKNESS THREAT OPPORTUNITIES Emerging markets and expansion abroad Innovation Product and services expansion Growing data business and 3G auctioning VAS as a means to increase ARPU (big boss, Zoo Z00) Growing Enterprise solution market (10.2% in 2009 anticipated) Large capital can be raised by listing Vodafone on Indian Stock Exchange(IPO) Tower sharing business with Indus Towers iDEA- idea is the 3rd largest mobile services operator in India, in revenue terms, and recorded a subscriber base of over 78 million as on end November 10. It became a pan-India integrated GSM operator covering the entire telephony landscape of the country, and expanded its NLD and ILD operations in FY 2010. During the year, Idea increased its revenue market share by over 1%, despite stiff tariff war in the market. The company has won license to offer 3G services in 11 service areas, which generate over 81% of the companys total revenue. Ideas 3G services will be launched in the year 2011. STRENGTH WEAKNESS THREAT OPPORTUNITIES AIRCEL The Aircel group 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, with Maxis Communications holding a majority stake of 74% .Aircel commenced operations in 1999 and became the leading mobile operator in Tamil Nadu within 18 months. In December 2003, it launched commercially in Chennai and quickly established itself as a market leader a position it has held since. STRENGTH WEAKNESS THREAT OPPERTUNITIES BSNL Bharat Sanchar Nigam Ltd. formed in October, 2000, is Worlds 7th largest Telecommunications Company providing comprehensive range of telecom services in India: Wire line, CDMA mobile, GSM Mobile, Internet, Broadband, Carrier service, MPLS-VPN, VSAT, VoIP services, IN Services etc. Presently it is one of the largest leading public sector unit in India. STRENGTH WEAKNESS THREAT OPPERTUNITIES Industry- pestel, porter, 7s Firm- swot,sap,etop,competitor, internal,externalpestel external factor external factor etop industry analysis competitors analysis competitors analysis mraketing analysis internal factor analysis swot pestel external factor external factor etop industry analysis competitors analysis competitors analysis mraketing analysis internal factor analysis swot pestel external factor external factor etop industry analysis competitors analysis competitors analysis mraketing analysis internal factor analysis swot