Strategic Analysis of the Telecom Sector

8/3/2019 Strategic Analysis of the Telecom Sector

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STRATEGIC ANALYSIS OF THETELECOM SECTOR

Presented by:

Lalit Achtani

Mihir Baliya

Khilav JoshiBhartendu Khatri

Siddharth Manani

Navin Jain

Himanshu Shah


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World scenario of the telecom sector


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Mobile. 2699.270 M Fixed.1229.987 M

Population 6563.69 M Teledensity. 60.02

Telephone connections in millions

220.743

837.195

1744.815

1090.504

35.997

Africa

America

Asia

Europe

Oceania


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Countries with more than 100% Teledensity

Africa Seychelles

Americas Argentina, Aruba, Bahamas, Barbados,Canada, Jamaica, Puerto Rico, United States ofAmerica

Asia- Japan, Korea (Rep.), Qatar, Singapore, Taiwan,

UAE Europe- Andorra, Austria, Belgium, Bulgaria, Croatia,

Cyprus, Czech Republic, Denmark, Estonia, Finland,France, Germany, Greece, Greenland, Hungary,

Iceland, Ireland, Italy, Latvia, Lithuania, Luxemburg,Malta, Monaco, Netherlands, Norway, Poland,Portugal, Russia, Slovak Republic, Slovenia, Spain,Sweden, Switzerland, Ukraine, United Kingdom

Oceania- Australia, New Zealand


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Countries with maximum mobile phoneconnections

853

771

292

213 205168

107 107 101 101

China India US Russia Brazil Indonesia Germany Japan Mexico Pakistan

No of mobile phone connections(Millions)

No of mobile phone connections(Millions)


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Global players

589

343

382

225 220.2199

184 182

156

China Mobile Vodafone Singtel America MovilClaro

Telefonica Telenor Orange China Unicom T-mobile

Subscribers in million

Subscribers in million


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Telecom sector in India

One of the fastest growing sector in India

3G and broadband wireless access (BWA) spectrum

auction , network rollout in semi-rural areas andincreased focus on the value added services (VAS)market were the key drivers of growth

India is presently the second largest telecom marketafter China.

Source:ibef.org


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Quick figuresData Figures

Number of telephone subscribers 742.12 million

Tele-density 62.51

Wireless subscriber base 706.69 million

GSM cellular subscriber baseubscriberbase

526.18 million

CDMA cellular subscriber base 273.14 million

Year Revenue(Rs billion)

2002-03 360

2003-04 400

2004-05 440

2005-06 600

2006-07 800

2008-09 1280

2009-10 1720Expected CAGR(2009-13) 21.1%

Source:ibef.org


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Industry sectors


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Major players

Telecom services Mobile handsets


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Major Investments

FDI investment in 2010: Rs4248 crore

10 M&A deals in 2010 of worth Rs640 bn

Bharati Airtel acquisition of Zain telecom worth US$ 10.7billion

Acquisition of 95 per cent stake in Infotel Broadband for

US$ 1,032.26 million by Reliance Industries

Acquisition of 26 per cent stake of US-based mobilechipmaker Qualcomms Indian arm for US$ 57.72 million

by India's Tulip Telecom and Global Holding.


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Growth avenues


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PESTEL Framework

Political

Economic

Socio-cultural

Technological

Environmental

Legal


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Porters 5 forces

CompetitiveRivalry

High

Threatof Entry

Low

Buyingpower

High

Threat ofSubstitute

Low

Power ofSuppliers

Moderate


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Strategic Clock

Low Price Strategy UNINOR

Hybrid strategy-VIRGIN MOBILEGET PAID FORINCOMING CALL

Differentiation Strategy- TATA DOCOMO

Failure Strategy-VIDEOCON


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Strategic Capability Analysis


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Strategic Resources

Resources

Financial

Physical

Reputational

Technological

Intellectual

Organisati

onal


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Brand reputation Profit margin has been increasing at high rate.

Financial strength Healthy growth in Market share Strategic alliance

Technology innovation Strong advertising and promotion

Strength:


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Late entry in Broadband or internet service: Less PAN India presence

Target only North India Not a player of Direct to Home Service

Not a big player in urban market

Weakness


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Value

Rarity

Robustness

Non-substitutability

Capabilities for sustainable advantage


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Accessibility of Call Centre Number

Response time to the customer for operator assistance

Post-paid - Metering and billing credibility

Pre-paid - Metering and credit & debit credibility

Percentage of Billing/Charging complaints resolved

Time taken for refund of deposits or any payments

Closure of telephone or termination of service on request

from

Benchmarking:


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Corporate Level Strategy


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DIVERSIFICATION

FORWARD Integration

Reliance communication has forward integrationby opening reliance web world

BACKWARD INTREGATION.

Reliance has gone for backward integration

through reliance infratel which developstelecommunication infrastructure in India.


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Organizing for success


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Organization Structure


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Processes


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Relationship

Financial ControlStrategy

Ericsson ICICIBank


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Enabling success

Personal andorganizational

competencies

Performancemanagement

People asresource

Personal

behavior

Collectivebehavior

People andbehavior

HR functions

Linemanagers

Structures andprocesses

Organizingpeople


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International Strategy:

Vodafone Plc acquisition ofHutch


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Acquisition Rationale

VODAFONE AND HUTCH DEAL

Market Selection and Entry

Economic Factor

Changing Demographics


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SYNERGY CLAIMED BYVODAFONE

Vodafone gets access to the fastest growing mobile phone market inthe world that is expected to touch 500 million subscribers by 2010.

Cellular penetration in rural India is below 2%, but 67% of Indias

population lives in rural India

3G is set to take off in India, allowing data and video to ride oncellular networks. Vodafone already offers 3G elsewhere in theworld.

India is key to Vodafone strengthening its presence in Asia, a regionseen as the big telecom story


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Key to sustain competitive

advantage


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Sustaining Competitive advantage

Acquisition of an existing player in that state.

Retaining the core business and outsourcing the alliedactivities is an effective strategy followed by Airtel.

Supplier Relationships and Integrations Change


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Managing strategic change:


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BSNL in financial turmoil

80% drop in net profit in 2008-09 to Rs575 crore

BSNL actually making losses as the interest income ofreserves contributed to profits.

Market share of BSNL had fallen to miniscule 14.14%

Surrendering of excess landline phones, preferences ofmobile phones over landline, poor customer services,lack of sufficient network infrastructure for GSM were themajor factors for the downfall.


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Adaptation Evolution

Reconstruction Revolution

NatureOf change

Scope of change


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Action plan

BSNL hired BCG which came up with a four prongedrevival plan

Company to focus on consumer mobility, broadband,enterprise business and new businesses such asinfrastructure sharing

Consumer segmentation in the enterprise business

Plan to divest 30% stake for mega GSM plan


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Contd

Entering new growth avenues such as sharing of towers,managed networks, providing IT services such assecurity firewalls.

BSNL to collect dues worth Rs 3,092 crore dues from thecustomers.

There was a proposal to lay off 1 lac employees underthe VRS scheme.

Effort to increase demand of landline connections byoffering broadband, SMS, VOIP services with landline.


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Context of Change

Time

Scope

Capability: Disinvestment, lack of GSM lines

Readiness


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Force field analysis

Pushing factors

Huge cash reserves

First mover in 3Gservices

Strong foothold in

landline business

Resisting factors

Lack of readiness

Difficulty in disinvestment

Lack of infrastructure

Less average revenue

per customer

Excess workforce

Bureaucracy

Strategic Analysis of the Telecom Sector

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