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Indian Telecom Sector

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					Indian


   Telecommunication


                  Sector




                       August 2007



                              www.ibef.org
Presentation Plan


      1       Telecom Industry Overview

      2       Telecom – Investment Attracting Sector

      3       Regulatory Framework and Its Impact

      4       Emerging Trends in Telecom Market

      5       Major Players in Telecom Sector

      6       Growth Avenues



                                                                  2
                                                       www.ibef.org
Presentation Plan


      1       Telecom Industry Overview

      2       Telecom – Investment Attracting Sector

      3       Regulatory Framework and Its Impact

      4       Emerging Trends in Telecom Market

      5       Major Players in Telecom Sector

      6       Growth Avenues



                                                                  3
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Indian Telecom Industry – A Lucrative Option


Indian Telecom Industry
In recent years, the Indian telecom industry has witnessed phenomenal growth. A conducive business environment, favourable
demographic outlook and the political stability enjoyed by the country have contributed to the growth of the industry. India
achieved the distinction of having the world's lowest call rates (2–3 US cents), the fastest sale of million mobile phones (1 week),
the world's cheapest mobile handset (USD 19) and the world's most affordable colour phone (USD 31).




                                                           Indian Telecom Industry – Facts

                            One of the fastest growing cellular markets in       Total telecom subscribers – 225.21 million
                             the world in terms of number of subscriber            (June 2007)
                             additions – 19.35 million in 3 months (April to
                                                                                  Tele density – 19.86 percent (June 2007)
                             June 2007)
                                                                                  Number of new mobile subscribers added
                            Expected to reach total subscriber base of
                                                                                   every month – 7.34 million (June 2007)
                             about 500 million by 2010 (i.e., more than
                             one phone for every household)                       ARPU for GSM – USD 6.6 per month

                            Annual growth rate of the telecom                    Telecom equipment market – USD 17,100
                             subscribers – 47 percent (2006–07)                    million (2006–07)

                            More GSM subscribers than fixed-line                 Handset market – USD 4,750 million (2006–
                             subscribers                                           07)




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Telephony services (mobile and basic) and Internet services
dominate the Indian telecom services

The Indian telecom market generated revenues of approximately USD 20 billion in 2006–07. It registered a CAGR of
approximately 22 percent from 2002–03 to 2006–07. The CAGR from 2006–07 to 2009–10 is expected to stabilise at 21
percent. Apart from mobile telephony services, other value-added services are also gaining importance.


                                                                           Revenues of Indian Telecom Industry: 2002–07 (USD billion)

                                                                                                          50                                                          43




                                                                                 Revenues (USD billion)
                                                                                                                                    Registered an
                                                                                                          40                      annual growth of 33
                                                                                                                                  percent in 2006–07
                                                                                                          30
                  Telecom Services – India                                                                                                       20
                                                                                                          20                             15
                                                                                                                  9      10      11
                                                                                                          10

                                                                                                          0
                                                                                                               2002-03 2003-04 2004-05 2005-06 2006-07   …..   ….   2009-10




     The Indian telecom services can be divided predominantly into basic, mobile and Internet services. It also comprises smaller segments,
     such as radio paging services, Very Small Aperture Terminals (VSATs), Public Mobile Radio Trunked Services (PMRTS) and Global
     Mobile Personal Communications by Satellite (GMPCS).

     The growth witnessed in the mobile services and Internet services segments was higher as compared to other services, such as basic
     services and radio paging services.



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Private players account for highest subscriber base growth in the
basic telephony services segment

                                                                                    Market Share* of Basic Services Segments in
                                                                                    India (2006–07)

                                                                                               WLL (F)
                                                                                                17%




                  Basic Services
       Basic services include fixed wireline and
        wireless in local loop (WLL-fixed). In 2006–
                                                                                                                                   Fixed
        07, basic services subscribers exceeded 50                                                                                 83%
        million.

       Fixed wireline services hold a major market
        share of 83 percent in basic services.

       BSNL and MTNL are market leaders in this                                     Market Share* of Basic Service Operators in
        segment.                                                                     India (2005–06)
       Although the government-owned BSNL
        dominates the segment in terms of                                           100%
                                                                                            80%
                                                                                                  74%
        subscriber base and market share, private                                   80%
        players have registered a notable growth.                                   60%
                                                                                    40%
                                                                                                                                                18%
                                                                                    20%                          9%      8%            11%

                                                                                     0%
                                                                                              BSNL                 MTNL           Other Private Players

                                                    * In terms of Subscriber Base                  As of 31 March 2005    As of 31 March 2006
                                                                                                                                                          6
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Mobile telecom services provide an unprecedented growth
opportunity for companies


                              Mobile services have led to a spectacular growth in the Indian telecom industry. Currently, 12 players are active in this segment. The total
                              number of wireless subscribers escalated to 185.13 million at the end of June 2007, with a monthly addition of more than 6 million wireless
                              subscribers. Despite the decreasing ARPU*, the minutes of usage is on a rise, which provides impetus to the mobile services growth in India.




                             Minutes of Usage per Month – Mobile Services

                   USA                                                               838
                                                                                                       Despite a low teledensity of approximately 19 percent, India has
                                                                                                       the second highest minutes of usage per month. This offers huge
                                                                                                       growth opportunity to telecom companies.
             India                                          461


  China                                         303


Russia                           88




                        10       ARPU* in India – Mobile Services
 ARPU (USD per month)




                        8

                        6                                                                              The declining ARPU implies that India Inc. is tapping a large
                                                                                                       market at the bottom of the pyramid by reducing tariffs; thereby,
                        4
                                                                                                       enhancing affordability.
                        2

                        0
                              Q1 2006     Q2 2006       Q3 2006          Q4 2006   Q1 2007
                                                      GSM         CDMA
                                                                                                * Average Revenues per User

                                                                                                                                                                             7
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Number of mobile subscriber will propel the total subscriber base
to 500 million by 2010

                                                                                                          Telecom Subscriber Base and Teledensity in India

                                                                                                                  250                                                                                24




                                                                                                                                                                                                           Teledensity (in percent)
                                                                                       Subscribers (in million)
                                                                                                                                                                              18.3               19.9 20
                                                                                                                  200
     The telecom subscriber base has witnessed an
                                                                                                                                                                12.8                                 16
      explosive growth; the additions in the current year                                                         150
                                                                                                                                                      9.1                                            12
                                                                                                                                                                                         225.21
      registered a growth of approximately 47 percent over                                                        100                     7.0
                                                                                                                                                                            206
                                                                                                                          5.1                                                                        8
                                                                                                                                                                140.3
      the previous year.                                                                                          50                                 98.4
                                                                                                                                           76                                                        4
                                                                                                                          53
     The subscriber base registered a CAGR of 40.4                                                                0                                                                                 0
                                                                                                                        2002–03          2003–04   2004–05     2005–06    2006–07        2007–08
      percent for 2002–03 to 2006–07.
                                                                                                                                                                                       (As of June
                                                                                                                                                                                          2007)
                                                                                                                                            Telecom Subscriber Base      Teledensity




                                                                                                                                Market Share* of Wireless** Operators
                                                                                                                                (As of June 2007)
                                                                                                                                                                           Idea
                                                                                                                                          Hutch                             9%
                                                                                                                                           17%


                                                                                                                                Others
                                                                                                                                 8%                                                     Airtel
    The state-owned BSNL was the second largest service provider after Bharti                                                                                                           23%

    Airtel (23 percent) in the Indian wireless telecom market with a market share of
    approximately 19 percent for the year ending March 2007.
                                                                                                                                  BSNL
                                                                                                                                  17%                                             Reliance
                                                                                                                                                                               Communications
                                                                                                                                                                                   17%
                                                                                                                                         TTSL
                                                                                                                                          9%
                                                       * In terms of Subscriber Base                                    ** Includes GSM, CDMA and WLL-F services
                                                                                                                                                                                                                                      8
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  GSM surpasses CDMA in number of additions to subscriber base

                                                                Market Share* of Wireless Operators
                                                                (as of quarter ending March 2007)
GSM surpasses CDMA segment by a large
margin in terms of subscriber numbers.




                                                                                             CDMA, 27%
                                                           GSM, 73%

Bharti Airtel dominates the GSM segment with a
market share of approximately 31 percent for the                                                                Reliance Communications and TTSL
year ending March 2007, followed by BSNL with                                                                   dominates the Indian CDMA mobile services
a share of approximately 23 percent subscribers.                                                                segment.

                                                   * In terms of Subscriber Base

      Market Share GSM* Service Providers (as of                                             Market Share* CDMA Service Providers (as of
      quarter ending March 2007)                                                             quarter ending March 2007)

                              Reliance, 2.8%                                                                                  HFCL, 0.3%
                Spice, 2.3%                 BPL, 0.9%
           MTNL, 2.3%
          Aircel, 4.6%                                                                                  TTSL, 35.9%
                                                    Bharti, 30.8%                                                                          Reliance,
          Idea, 11.6%                                                                                                                       55.2%


          Hutch, 22.0%
                                                                                                      MTNL, 0.5%


                                                    BSNL, 22.8%                                              BSNL, 8.0%
                                                                                                                          Syam Telilink,
                                                                                                                             0.2%


                                                                                                                                                            9
                                                                                                                                                www.ibef.org
 Various other services emerged by leveraging the telecom
 services industry

                                                                   Radio Paging
                                                     In 1995, radio paging services emerged as a
                                                     promising segment in India. However, this
                                                     segment could not compete with cellular
                                                     services in general and SMS technology in
                                                     particular, and is currently shrinking. At
                                                     present, only four radio paging service
                                                     providers are present in the Indian market.



Public Mobile Radio Trunked Services                                                                                  GMPCS*

PMRTS have not grown to their expected potential                                                       GMPCS services were launched in India
in India. The high licence fee leaves a very thin                                                      in 1999. These services allow a
margin for services providers; thereby, inhibiting                                                     subscriber to communicate from any
its growth. About 31,000 subscribers are currently                     Other Telecom                   point on earth through a handheld
availing this service in India from 12 different                         Services                      terminal. Moreover, the telephone
operators.                                                                                             number remains unchanged,
                                                                                                       irrespective of the subscriber‘s location.


                                                         Very Small Aperture Terminals
                                                                     (VSAT)
                                                     The market for VSAT services increased by
                                                     5.73 percent during the quarter ending in
                                                     December 2006, and the segment had a total
                                                     subscriber base of 55,070. HCL Comnet is the
                                                     largest of the eight players functioning in the      * Global Mobile Personal
                                                                                                          Communication by Satellite
                                                     market.
                                                                                                                                                    10
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Broadband services to drive Internet penetration in India


                                                                                                                              Internet Subscribers: 1998–2007
                                                                                                                      10                                                                                                9.27




                                                                                      Internet Subscribers (In million)
                                                                                                                          8                                                                                   6.94

                                                                                                                                                                                                    5.55
                                                                                                                          6                                                               4.55
                                                                                                                                                                                3.64
                                                                                                                                                                      3.42
 The emergence of private players and new technologies have provided a strong                                             4                                 3.04

 impetus to the growth of Internet and broadband services. The quality and                                                                        0.95
                                                                                                                          2
                                                                                                                                        0.28
 penetration of these services have undergone changes, with significant                                                        0.14

 improvement in the telecom infrastructure. The Internet subscriber base                                                  0




                                                                                                                              1997–98


                                                                                                                                        1998–99


                                                                                                                                                  1999–00


                                                                                                                                                            2000–01


                                                                                                                                                                      2001–02


                                                                                                                                                                                2003–03


                                                                                                                                                                                          2003–04


                                                                                                                                                                                                    2004–05


                                                                                                                                                                                                              2005–06


                                                                                                                                                                                                                        2006–07
 registered a CAGR of 60 percent for the period 1997–98 to 2006–07.




    Market Share of Top Five Internet Service                         BSNL and MTNL caters to more than two-thirds of Internet subscribers in India.
    Providers (as of quarter ending March 2007)

                                                BSNL, 45.2%           India had 2.52 million broadband connections at the end of June 2007.


           Bharti Airtel,
              6.8%
                                                                      Private players are catching up fast due to increased penetration of Internet and
                                                                      broadband services in India.
                 Reliance,                              MTNL, 19.0%
                  6.1%
                            Sify, 8.9%
                                                                      The telecom market will experience high penetration of Internet services with the
                                    Others, 14.0%                     support from government policies and introduction of novel technologies in
                                                                      India.



                                                                                                                                                                                                                                      11
                                                                                                                                                                                                                            www.ibef.org
Presentation Plan


      1       Telecom Industry Overview

                                    Telecom Handset Market

      2       Telecom – Investment Attracting Sector

      3       Regulatory Framework and Its Impact

      4       Emerging Trends in Telecom Market

      5       Major Players in Telecom Sector

      6       Growth Avenues

                                                                       12
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Indian telecom handset market booming along with mobile
services industry

    The Indian handset market grew at a phenomenal rate in 2006                    Mobile Handsets Market in India: 2004–07
     with the sale of approximately 30–35 million handsets. It is
                                                                                                                                         4,750
     estimated that by 2011, sales of mobile handsets will reach                  5,000

     150 million units.                                                           4,000
                                                                                                                          3,231




                                                                    USD Million
    Competitive pricing has triggered the growth of coloured                     3,000
                                                                                                          1,966
     handsets, which accounted for 65 percent of the market in                    2,000    1,610
     2006; whereas, the share of monochrome handsets has
                                                                                  1,000
     declined to 35 percent.
                                                                                     0
    Mobile phones are available at prices as low as USD 28–35.                           2003–04        2004–05         2005–06        2006–07

    Camera phones currently occupy 15 percent of the sales
     volume.
                                                                                          The CDMA category is growing faster than the GSM
                                                                                          category. It captured 25 percent of the market volume in
    Market Share of GSM and CDMA Handset                                                  2005–06 as against a 20.5 percent share in the
    Manufacturers: 2006–07                                                                previous year.
                        Huaw ei     Others
                Haier     1%         7%
                 1%
            ZTE                                                                           Overall, Nokia has a market share of 53 percent; it
            4%
                                                                                          dominates the GSM mobile handsets with a market
      Samsung
        6%
                                                                                          share of approximately 73 percent.


     Sony Ericsson
          6%                                    Nokia
                                                53%
                                                                                          LG dominates in the CDMA handsets market with a
                 LG                                                                       market share of 60 percent.
                11%

                         Motorola
                          11%

                                                                                                                                                     13
                                                                                                                                        www.ibef.org
Presentation Plan


      1       Telecom Industry Overview

      2       Telecom – Investment Attracting Sector

      3       Regulatory Framework and Its Impact

      4       Emerging Trends in Telecom Market

      5       Major Players in Telecom Sector

      6       Growth Avenues



                                                                 14
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India: An Ideal Destination for Investments in Telecom Sector




 World’s largest democracy
 Independent judiciary
 Skilled and competitive labour force
 Fifth largest telecom network in the world; second largest among the emerging economies after
  China
 On an average, about 6–7 million new users added per month, making India the world’s fastest
  growing wireless services market
 Liberal Foreign Investment Regime–FDI limit increased from 49 percent to 74 percent; the rural
  telecom equipment market is also open to large investments
 Among the countries offering the highest rates of return on investment
 The large untapped potential in India’s rural markets–1.9 percent teledensity in rural markets as
  compared to the national level of 18 percent
 Expected to become the second largest telecom market by 2010
 The government promoting telecom manufacturing by providing tax sops and establishing telecom
  specific Special Economic Zones
 Fully repatriable dividend income and capital invested in telecom equipment manufacturing



                                                                                                         15
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Increasing mobile subscriber numbers and low level of teledensity
offers large opportunities to Indian companies

                                   Large number of additions                           Low teledensity (depicting                                           Telecom
                                   in telecom subscribers                             large untapped potential)                                             Advantage

                           The telecom subscriber base has witnessed an explosive growth; the additions in year 2006-07 registered a growth of
                            approximately 47 percent over the previous year.

                           The subscriber base witnessed a CAGR of 40.4 percent during 2002–03 to 2006–07.

                           The impressive growth in the subscriber base has resulted in a significant increase in teledensity. In 2006–07, India had a
                            teledensity of 18.3 percent, as compared to year 2005-06 figure of 12.80 percent, signifying a growth of 43 percent.



                           250                                                                    24




                                                                                                       Teledensity (in percent)
Subscribers (in million)




                                                                               18.3        19.9 20
                           200
                                                                  12.8                            16
                           150
                                                        9.1                                       12
                                                                                       225.21
                           100              7.0
                                                                              206                 8
                                   5.1                            140.3
                           50                          98.4                                       4                               Even though the Indian telecom industry has exceeded a
                                   53        76
                            0                                                                     0                               subscriber base of 200 million, its teledensity is only 18
                                 2002–03   2003–04   2004–05     2005–06    2006–07 2007–08 (as                                   percent. Thus, the Indian market provides telecom service
                                                                                       of June
                                                                                        2007)                                     providers with a large untapped potential due to the
                                              Telecom Subscriber Base      Teledensity
                                                                                                                                  country‘s increasing population and its low teledensity. The
                                                                                                                                  government has plans to raise teledensity to 40–45 percent
                                                                                                                                  by 2010; thereby, offering greater growth opportunities for
                                                                                                                                  service providers.

                                                                                                                                                                                                 16
                                                                                                                                                                                     www.ibef.org
Presentation Plan


      1       Telecom Industry Overview

      2       Telecom – Investment Attracting Sector

      3       Regulatory Framework and its Impact

      4       Emerging Trends in Telecom Market

      5       Major Players in Telecom Sector

      6       Growth Avenues



                                                                 17
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Regulatory Framework provides level playing field for all operators


                                             The Department of telecommunications (Government of India) is the main
                                             governing body for the industry.

                                             Telephone Regulatory Authority of India (TRAI) assists the Government of
                                             India (GoI) to take timely decisions and introduce new technologies in the
                                             country.


                                                   Indian Telecom Industry Framework


                Indian Government Bodies                                                                          Independent Bodies



   They formulate various policies and pass laws to                                            They undertake various research activities and monitor
   regulate the telecom industry in India.                                                     the quality of service provided in the Indian telecom
                                                                                               industry. They also provide various recommendations to
                                                                                               improve the status of telecom operations in India.

  Wireless Planning and      Handles spectrum allocation and                                     Telecom Regulatory
  Coordination (WPC)         management                                                          Authority of India (TRAI)   Independent regulatory body


  Department of              DoT – Licensee and frequency
                                                                                                 Telecom Disputes            Telecom disputes settlement body
  Telecommunications         management for telecom
                                                                                                 Settlement and Appellate
                                                                                                 Tribunal (TDSAT)
                             Exclusive policy making body of
  Telecom Commission         DoT


  Group on Telecom and       Handles ad hoc issues of the
  IT (GoT-IT)                telecom industry




                                                                                                                                                                18
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Various important regulations and laws have been passed in the
Indian telecom industry post-liberalisation era

             Department of Telecommunication (DoT) is the main body formulating laws
             and various regulations for the Indian telecom industry.




                                                                    ILD services was
                                                      BSNL was                                                                                     Number portability
                               Independent                          opened to                                        Intra-circle merger
                                                      established                                                                                  was proposed
         Private players       regulator, TRAI,                     competition                                      guidelines were
                                                      by DoT                                   Calling Party Pays
         were allowed in       was established                                                 (CPP) was
                                                                                                                     established      Attempted to (pending)
         Value Added                                                          Go-ahead to      implemented                            boost Rural
         Services                                                             the CDMA                                                telephony
                                                                              technology
                        1994                   1999                    2002                                                                2005                 2007
                                                                                                    2003           2004
 INDIA




           1992                                            2000                Internet           Unified Access                                     2006
                                    1997
                                                                               telephony          Licensing
                                                                               initiated          (UASL) regime      Broadband
                                                                                                  was introduced     policy 2004
                  National                                                                                                                             Decision on 3G
                                           NTP-99 led to               Reduction of                                  was
                  Telecom Policy                                                                                                      FDI limit was    services (awaited)
                                           migration from high-        licence fees         Reference                formulated—
                  (NTP) was                                                                                                           increased from
                                           cost fixed license                               Interconnect             targeting 20
                  formulated                                                                                                          49 to 74 percent
                                           fee to low-cost                                  order was                million
                                           revenue sharing                                  issued                   subscribers by
                                           regime                                                                    2010




                                   ILD – International Long Distance
                                                                                                                                                                        19
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                       Important regulations and their impact on the Indian telecom
                       industry
                                                        Unified Access Service License Regime (UASL)
                                                        Unified licensing marked the end of the license regime in the Indian telecom industry. It helped in aligning convergent
                                                        technologies and services. The establishment of the Unified Access Licensing Regime (2003) eliminated the need for different
                                                        licenses for different services. Players are now allowed to offer both mobile and fixed-line services under a single license after
                                                        paying an additional entry fee. This does not take into account national and international long-distance services and Internet
                                                        access services.
Cellular Tariff (INR per minute)




                                   16                                                                                     150




                                                                                                                                Number of Subscribers
                                                                                          Lowering of ADC                 120
                                   12                                            UASL,                                                                  Access Deficit Charges (ADC)
                                                            Telecom Tariff       CPP




                                                                                                                                     (millions)
                                                            Order
                                                                                                                          90
                                   8                                                                                                                    ADC makes it mandatory for a service provider at the caller‘s
                                               NTP 99                      WLL                                            60                            end to share a percent of the revenue earned with the service
                                   4
                                                                                                                          30                            provider at the receiver‘s end in long-distance telephony. This
                                                                                                                                                        subsidises the infrastructure costs of the service provider
                                   0                                                                                      0                             enabling access at receiver‘s end, especially because rental
                                        1998    1999    2000     2001     2002   2003    2004     2005      2006   2007                                 for fixed-line services is low. Revision in the ADC regime is
                                                               Cellular Tariff     Total Cellular Subscribers
                                                                                                                                                        expected to be followed by further tariff reduction in telecom
                                                                                                                                                        services.



                                                        Universal Service Obligation (USO)
                                                        The USO policy was laid along with NTP ‘99 to widen the reach of telephony services in rural India. All telecom operators are
                                                        bound to contribute 5 percent of their revenues to this fund. This system was put in place to bridge the wide gap between urban
                                                        and rural teledensity, bringing it down from the current 31 percent. Initially, only basic service providers were under the purview of
                                                        USO. Later, its scope was expanded to include mobile services also. Although it increases the cost burden for the telecom
                                                        companies, USO helps in building the telecommunication infrastructure in the rural areas.

                                                                                                                                                                                                                    20
                                                                                                                                                                                                         www.ibef.org
Presentation Plan


      1       Telecom Industry Overview

      2       Telecom – Investment Attracting Sector

      3       Regulatory Framework and Its Impact

      4       Emerging Trends in Telecom Market

      5       Major Players in Telecom Sector

      6       Growth Avenues



                                                                 21
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FDI and other M&A activities increasing in number

Major trends in the telecom sector is increasing M&A activity, de-regulation of telecom policies and growing
interest of international investors.

         Recent Deals in Telecom Sector                                               The Indian telecom industry has a 74 percent FDI limit in the
                                                                                      telecom services segment.

                                                                                      The GoI has permitted 100 percent FDI in manufacturing of
                    Vodafone purchased stake in Hutch
                    from Hong Kong's Hutchison                                        telecom equipment in India.
                    Telecom International for USD
                    11.08 billion.                                                                                  FDI in Telecom Sector

                 Reliance Communications Limited has sold a five percent                                                              680
                                                                                                    700
                 equity share capital of its subsidiary Reliance Telecom
                 Infrastructure Limited to international investors across the                                                                        521




                                                                                FDI (USD million)
                 US, Europe and Asia. The deal was worth USD 337.5                                  500
                 million.
                                                                                                    300
                                                                                                           116           129
                    Telekom Malaysia acquired a 49
                                                                                                    100
                    percent stake in Spice
                                                                                                          2003–04       2004–05     2005–06       2006–07
                    Communications for USD 179
                    million.
                                                                                            The Indian telecom industry has always attracted foreign
                                                                                            investors. In fact, the cumulative FDI inflow, during the August
                    Maxis Communications acquired a
                                                                                            1991 to March 2007 period, in the telecommunication sector
                    74 percent stake in Aircel for USD
                    1.08 billion.                                                           amounted to USD 3,892 million. It is the third largest sector to
                                                                                            attract FDI in India in the post-liberalisation era.
                                                                                            FDI calculation takes into account radio paging, cellular mobile
                   Ericsson to design, plan, deploy and                                     and basic telephone services in the telecommunication sector.
                   manage Bharti Airtel network and
                   facilitate their expansion in the rural
                   areas, under a USD 2 billion
                   contract.

                                                                                                                                                               22
                                                                                                                                                     www.ibef.org
Presentation Plan


      1       Telecom Industry Overview

      2       Telecom – Investment Attracting Sector

      3       Regulatory Framework and Its Impact

      4       Emerging Trends in Telecom Market

      5       Major Players in Telecom Sector

      6       Growth Avenues



                                                                 23
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Major Players in different segments of Indian telecom industry

             Basic Services Operators
                                                                     MOBILE SERVICES                 GSM Services Operators
  BSNL
                                                                        Airtel
 MTNL

                                                                       Vodafone
 Reliance

                                                                       Idea
 TTSL


                                                                       Reliance


                                                                        BSNL
             Internet Services Operators

  BSNL
                                                                                                     CDMA Services Operators

  MTNL                                                                    Reliance

  Reliance
                                                                          TTSL
  TTSL
                                                                           BSNL


  Airtel


                               MTNL – Mahanagar Telecom Nigam Ltd.   TTSL – Tata Teleservices Ltd.
                               BSNL – Bharat Sanchar Nigam Ltd.                                                                 24
                                                                                                                      www.ibef.org
Presentation Plan


      1       Telecom Industry Overview

      2       Telecom – Investment Attracting Sector

      3       Regulatory Framework and its Impact

      4       Emerging Trends in Telecom Market

      5       Major Players in Telecom Sector

      6       Growth Avenues



                                                                 25
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  India presents a host of opportunities for telecom companies

                           Infrastructure
          Rural            Sharing                Managed
          Telephony                               Services



   Value-Added
                              Growth                       Virtual Private
   Services
                              Avenues                      Network



             WiMax
                                                Enterprise
                                                Telecom
                               3G               Services
                                                                             To reduce their network deployment costs, many service providers are considering
                                                                                 infrastructure sharing offers the following advantages:
Virtual Private Network is a private data network                               Improved service quality
that provides connectivity within closed user groups via                        Increased affordability for customers
public telecommunication infrastructure. Competition is                         Faster roll out of services in rural and remote areas
likely to heat up in the VPN segment as DoT has                                 Significant reduction in initial set up costs
relaxed the norms for private players.                                          Increased environmental aesthetics
                                                                                Lower operating costs for service providers


Enterprise Telecom Services includes key
services, such as voice over Internet protocol (VoIP),
                                                                                 Managed services is another segment that is attracting telecom companies.
dedicated telecom communication systems, IT
                                                                                 On account of the rapidly growing subscriber base, service providers find it difficult
infrastructure enabled unified communication services,
                                                                                 to manage their infrastructure and network management operations. In such
etc. Telecom service providers are increasingly targeting
                                                                                 cases, they completely or partially outsource their infrastructure or network
enterprises by providing dedicated services and is
                                                                                 management operations.
expected to witness major developments in near future.


                                                                                                                                                                          26
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Emerging technologies – 3G and WiMax to assist in penetration of
telecom services in India


  The Indian government plans to auction the spectrum for 3G services by inviting bids from
   domestic as well as foreign players, and creating a competitive environment that offers better
   services to consumers. Therefore, the 3G spectrum is among the major investment
   opportunities and growth drivers of the telecom industry.
  The immense potential for 3G is reflected by the 30–40 percent annual growth in Value-
   Added Services.
  Cell phone manufacturers are striving to develop USD 100 priced 3G handsets for the Indian
   market.
  India expects to replicate its 2G growth in 3G services.




                                                  WiMAX has been one of the most significant developments in wireless communication in the recent
                                                  past. Since this mode of communication provides network access in inaccessible locations at a speed
                                                  of more than 4 Mbps, it is expected to be a major factor in driving telecom services in India, especially
                                                  wireless services. Thus, it will lead to the increased use of telecom services, Internet, value-added
                                                  services and enterprise services. WiMAX is expected to accelerate economic growth and assist in
                                                  providing better education, healthcare and entertainment services.
                                                 It is estimated that India will have 13 million WiMAX subscribers by 2012.
                                                 Aircel is the pioneer in WiMAX technology in India.
                                                 The state-owned player, BSNL, aims to connect 74,000 villages through WiMAX.
                                                 Bharti, Reliance and VSNL have acquired licenses in the 3.3GHz range to utilise the opportunities
                                                  offered by this domain.


                                                                                                                                                              27
                                                                                                                                                www.ibef.org
Value-Added Services and Rural Telephony holds large market
potential in India
Value-Added Services in India (2006–07)
                                                                                                 The VAS industry was worth USD 632 million in
        Person to
       Application &          Game & Data, 7%                                                    2006–07. The industry is estimated to grow by 60
       Application to
                                   Others (MMS
                                                                                                 percent in 2007–08 and become an USD 1,011
       Person SMS,
           15%                       etc.), 3%                                                   million opportunity.

     Ringtone
  Dow nload, 35%

                                     Person to Person
                                        SMS, 40%
                                                        The VAS industry is currently focussing on the entertainment sector, such as the Indian film
                                                        industry and cricket; however, there is scope for growth in other avenues as utility-based
                                                        services, such as location information and mobile transactions.




            Rural Telephony                                                                                                 Urban Rural Teledensity in India
                                                                                                                   50

                                  As the government targets to increase rural teledensity
                                                                                                                   40




                                                                                                 Teledensity (%)
                                  from the current 2 percent to 25 percent by 2012, rural
                                  telephony will require major investments. This                                   30

                                  segment will boost the demand for telecom services,                              20
                                  equipment, Internet services and other value-added
                                                                                                                   10
                                  services; thereby, offering great market opportunities
                                  for telecom players.                                                             0
                                                                                                                        1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
                                                                                                                                              At Year Ending March
                                                                                                                                              Urban       Total      Rural




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                                                                                                                                                                             www.ibef.org
DISCLAIMER

This presentation has been prepared jointly by the India Brand Equity Foundation (―IBEF‖) and
Evalueserve.com Pvt. Ltd., EVALUESERVE (‗authors‘).

All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. The
same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any
medium by electronic means and whether or not transiently or incidentally to some other use of this
presentation), modified or in any manner communicated to any third party except with the written approval of
IBEF.

This presentation is for information purposes only. While due care has been taken during the compilation of this
presentation to ensure that the information is accurate to the best of the Author‘s and IBEF‘s knowledge and
belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice.

The Author and IBEF neither recommend or endorse any specific products or services that may have been
mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of
decisions taken as a result of any reliance placed in this presentation.

Neither the Author nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or
omission on the part of the user due to any reliance placed or guidance taken from any portion of this
presentation.


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