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The Top Shots

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CIOL Bureau
New Update

The annual Indian communication industry

performance survey, V&D 100 1999 reveals that the total communications market size for

the fiscal 1998-99 was at Rs 25,365.22 crore. The Top 100 companies or the V&D 100

Club contributed Rs 23,262.32 crore. Apart from this, the 390 other companies that we

covered contributed Rs 1,602.90 crore. Plus the companies which we missed or could not get

any information about, together must have pooled in roughly Rs 500 crore to the industry

kitty, thereby taking the total market size to Rs 25,365.22 crore.

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"The Top 10 Club" companies

notched up 67.95 percent of the total revenue as their combined turnover was estimated to

be Rs 17237.88 crore. This indicates that communications industry is still dominated by

large players. But considering the fact there are too many market segments here and the

number of players comparatively low, it is expected that this dominance of the Top 10

companies over the industry will go down and more local and niche area players will

emerge.

The V&D 100 Club



There has been no change in the positions of the Top 6 companies. VSNL still retains the #
1 position with a turnover of Rs 7,189.60 crore, an increase of 12.41 percent from last

years turnover of Rs 6,395.80 crore. MTNL is firmly sitted on the # 2 position with a

turnover of Rs 5,443.89 as the next competitor ITI still has a long way to go as it has a

modest turnover of Rs 1,600.00 crore. TCIL is placed at # 4 position and Sterlite is

placed at # 5 with a turnover of Rs 562 crore. The Top 6 companies have not only retained

their positions, but have also shown a growth of more than 12 percent with only exception

being Sterlite which has grown by only 2.18 percent. Global Telesystems has



maintained its # 7 position even with a growth of 13.55 percent. HFCL is a surprise
entrant in the Top 10 as the company with an impressive growth of 115.69 percent. HTL Ltd

has retained its # 8 position and has grown by 28.57 percent. A marginal increase of 6.93

percent has pushed Wipro Infotech at the # 9 position and at the bottom of the table is

Usha Beltron, with a turnover of Rs 243.90 crore.

The V&D100 Club has 106 companies under

its fold , as there were a few tie-ups for some ranks. GEIL Projects & Services Ltd

and Enkay Telecom were tied up at the 40th rank, with a turnover of Rs 70

crore; Punwire

Mobile Communications Ltd and Skycell Communications Ltd were tied up at the 79th place

with a turnover of Rs 26.00 crore; Microwave Communications and Telstra V-Comm were placed

at 87th position with a turnover of Rs 24 crore; and Meera Agencies Pvt Ltd, Syntel

Telecom, and Tata Infotech Ltd were all tied up at 97th position with a turnover of Rs

20.00 crore. One hopes that in the years to come as shakeout and consolidations take place

on the one hand and more players come up on the other, there will be stiffer competition

between the players and each competitor will have to fight harder to have a position in

V&D100 Club.

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V&D

100–The Top 10 Club (1998-99) Company Turnover (Rs Crore) (1998-99) 98-99 Rank Turnover (Rs Crore) (1997-98) 97-98 Rank Growth (in

percent)
VSNL 7189.60 1 6,395.80 1 12.41 MTNL 5443.89 2 4,645.54 2 17.18 ITI 1600.00 3 1,270.00 3 25.98 TCIL 639.00 4 560.00 4 14.10 Sterlite 562.00 5 550.00 5 2.18 Global Tele-Systems 539.50 6 475.11 6 13.55 HFCL 392.11 7 181.79 – 115.69 HTL Ltd 360.00 8 280.00 8 28.57 Wipro Infotech 267.88 9 250.50 10 6.93 Usha Beltron 243.90 10 230.00 – 6.04

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As many as 30 companies in the

V&D 100 Club are JVs primarily between MNCs and Indian companies. Plus there are 22

MNCs. This clearly displays a good hold that MNCs have on the Indian communications market

space as well as the fact that they have a high level of interest in India. These JVs have

the financial muscle or the technical expertise to support the Indian partners as they are

in the process of consolidating their brands in the Indian market. The presence of 11

public sector companies says that they are there by virtue of being an old and established

company but it also means that these public sector units are gearing up to face the

growing threat from the private sector. While in some cases they are likely to succeed, in

some case they will not. In the future we are likely to see more PSUs exiting from the

V&D100 Club, if they do not perform well.

The most interesting observation was in

terms of the type of activities of the players. Out of the 100 companies, 44 belong to the

services and 56 to the equipment category. This means that the service industry still has

a long way to go, as they are logically expected to overtake the vendors dealing in

products only. This is specially true of a new market like India where a lot of

investments are going into developing infrastructure backbone. Infrastructure companies

have started making their mark as 15 companies feature in the V&D 100 Club. Also,

non-telecom players like the Power Grid, GAIL, and the Railways, which though have not

been covered in the V&D 100 survey, are enhancing their networks as opening of long

distance telephony has given them enough width to leverage on in the future. The

infrastructure equipment industry grew by 24 percent. In future one can see a huge

investment by the utilities companies in the area of communications and such companies

becoming dominant players.

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The V&D 100 Club has 18 companies from

the cellular sector. These companies have not done well but the sheer number of

subscribers help them in pushing their revenue base.



Segment-wise

Break-up
Segments Numbers Total Revenue Percent Average
Cellular 18 1367.29 5.88 75.96
Infrastructure 15 4048.37 17.41 269.89
Networking/Structured Cabling 15 745.47 3.20 49.70
Telecom Cables 12 1807.68 7.78 150.64
Integration 9 536.95 2.30 59.66
VSAT 8 297.08 1.28 37.13
Multi Product 7 775.5 3.34 110.78
Paging 6 183.29 0.78 30.54
T&M 4 126.54 0.54 31.63
Businesscom 3 265.45 1.14 88.48
Personal Communication 3 155.65 0.68 51.88
Telecom Software 2 260.08 1.12 130.04
Multiple Services 2 12633.49 54.30 6316.74
Others 2 59.48 0.25 29.74
Total 106 23262.32 100.00 219.45

As other services have not been doing

well, the cellular service providers had a definite advantage over others and state wide

circle operators was encashing on that as 1998-99 was the year for circle operators and

not metros.

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Around 15 networking/structured cabling

companies feature in the V&D 100 Club. This was primarily due to the fact that the

networking industry grew by 92 percent in the fiscal 1998-99 and registered an all-time

high of Rs 537 crore. In future we might see an increase in the number of companies

dealing in such products as everybody will try to jump into the networking bandwagon. This

will result in drop in prices and shakeouts. Only those companies will survive which will

provide more value to its customers.

Integration accounted for Rs 536.95 crore

whereas VSATs accounted for Rs 297.08 crore. In terms of numbers, the installed capacity

of VSATs in the country increased from 6,000 to 8,490 registering a growth of 41.5

percent. This is another pointer to the fact that users are looking for complete

solutions. As more and more corporate houses go in for networking, the market for network

integration will increase in size and one can see a multiple of big players emerging to

cater to it.

Even though paging contributed only around

Rs 183.29 crore in the V&D 100 Club, six companies were able to make their positions

in the Club. If the paging services had done well, the V&D 100 Club would have

accomodated more players. The same story goes for the cellular too. The interesting fact

for both paging and cellular is that they are not doing well in the areas where they were

tried first, but are doing well in the new areas that they have been introduced. Surely,

there is a market for this service, its only a matter of conducive environment and right

strategies, before we see some more paging and cellular companies entering the V&D 100

Club.

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Four T&M companies figured in the

V&D 100 Club in spite of the non-buying of the private operators. The DoT purchases

and large scale buying from GAIL, Power Grid, and the Railways compensated the industry.

With three basic service operators having

already started the services in MP, Maharashtra, and Andhra Pradesh, chances are that

these operators and many that will start the service in the coming fiscal have a fair

chance to make to the V&D 100 Club. Radio Trunking and Internet companies still have a

long way to go as they are still busy in collecting the requisite number of subscribers to

make a mark in the market.

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Modus Operandi The entire exercise of

V&D100 started in April of this year, with the sending of questionnaires to about

1,000 probable communications companies which deal in communications in some way or the

other — in terms of products or services. Only 260 companies filled up the

questionnaire and sent the it back to us, which speaks of the openness and transparency

most of these companies keep harping about. However, we were able to get company

information from informal and other sources for another 230 companies. So, altogether a

total of 490 companies have been covered in the V&D 100 survey. Though ideally, a lot

of factors such as profitability, market capitalisation rate, corporate image,

geographical reach, customer satisfaction levels, innovativeness etc were intended to be

included to ranking parameters, the kind of response and co-operation we got did not allow

us. Finally, the rankings were done only on the basis of revenues from communications

products and services.

In some cases the companies

sent us their total revenues with or without break-up of communications revenues. In such

cases we have done our own estimation of the company’s communication figures. One

change that has been from this year in terms of defining our horizon for communications

services is that we have dropped systems integration from it. Hence, revenues accruing

only from network integration has been considered for this years ranking. A total of 3,840

manhours and countless cups of tea and coffee at Voice & Data has gone into the making

of this Annual Issue, considered to be the Bible of Indian communications Industry.



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