The 3G challenge in India

Abstract

Indian Telecom continues to attract much media attention for both wrong and right reasons. To put things in perspective, Indian telecom market has been growing at a CAGR of approximately 30 percent since 1995, primarily owing to the mobile services growing at CAGR of 117%. With additions of more than 14 million subscribers per month in the year2009, the telecom subscriber base has grown to 723 million in September 2010, second only to China. The next inflection point proved to be the recent 3G and BWA auctions that brought windfall gains to the government but caused the winners to reflect on the high spectrum price they had to pay. The launch of 3G services is expected to spur data usage on mobile and portable devices; thanks to the delivery of rich content such as video streaming, music and movie downloads, mobile TV, video conferencing etc. While voice obviously would be of higher quality, telcos are expected to pitch better data delivery as their USP. A host of factors such as affordable handsets, availability of relevant mobile apps and mobile content, right pricing of data plans would be the growth drivers to attain critical mass for 3G in a short period of time. To set the context for our report The 3G Challenge in India , we map out the significant milestones in Indian telecom industry, the evolution of 3G and the recent 3G auction in India. The report provides a holistic view of the Indian 3G landscape, including industry and competitive analysis using structured framework, profiling of top players (Bharti Airtel, Reliance Communications and Idea Cellular) on the basis of their strengths and weaknesses, their current 3G footprint and their financial stature. The break even analysis of these operators projects the tentative break even period, keeping in mind the expected 3Gsubscriber base and the associated ARPU. We have substantiated most of the observations with the associated statistics and attempted to draw inferences based upon them. The report also touches upon the Go To Market strategy for the telecom operators for 3G.We have done a step by step consumer analysis to find out the target segment of the populace, suggested the pricing strategy (while reviewing the current pricing plans) and proposed a new channel management strategy for 3G operators in India. While we gleaned information from secondary sources, the significant aspect of this report are the discussions with key stakeholders (Telecom Operators, Network Equipment Vendors, Handset Manufacturers, Analyst Community, Research Organizations etc.) in the Telecom space, to get their views and strategies to exploit the immense commercial potential of 3G. The challenges faced by different stakeholders in the 3G space are manifold and we have attempted to dissect these challenges and arrive at focus areas in order to handle these challenges. At the end of it all, we arrived at a list of recommendations, which we believe are relevant to the Telecom ecosystem to spur the growth of 3G.