Indian

Telecommunication

Sector

August 2007

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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

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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
the world in terms of number of subscriber
additions – 20 million in (April to sept 2009)
 Expected to reach total subscriber base of
about 1000million by 2012 (i.e., more than
two phone for every household)
 More GSM subscribers than fixed-line
subscribers
 Total telecom subscribers – 688.38million in
july 2010
 Tele density – 58.17percent in 2010 july
 Number of new mobile subscribers added
every month – 16.92 million in 2009
 Telecom equipment market – 136833 cr. In
2008-09

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

The total revenue in the telecom service sector was Rs. 86,720 crore in 2005-06 as against Rs. 71, 674 crore in
2004-2005, registering a growth of 21%. The total investment in the telecom services sector reached Rs.
200,660 crore in 2005-06, up from Rs. 178,831 crore in the previous fiscal.

Telecom Services – India

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).

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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 (2009-10)
6%

Basic Services wireline

wireless
 Basic services include fixed wireline and
wireless in local loop (WLL-fixed). In May
2010 basic services subscribers exceeded
638.05 million.
 Wireless services hold a major market
share of 94.28 percent in basic services. 94%

 Bharti Airtel and Reliance are market Market Share* of Basic Service Operators in
leaders in this segment. India (2009-10)
 Subscriber of wireline = 5.72%
60.00%
 Subscriber of Wireless = 94.28%
50.00%

40.00%

30.00%

20.00%

10.00%
* In terms of Subscriber Base
0.00%
Bharti Airtel Reliance Vodafone Others 5
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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 2010 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
quarter ending March 2010) Market Share* CDMA Service Providers (as of
quarter ending March 2010)
Spice, 2.3% Reliance, 2.8%
BPL, 0.9% HFCL, 0.3%
MTNL, 2.3%
Aircel, 4.6%
TTSL, 35.9%
Bharti, 30.8%
Idea, 11.6% Reliance,
55.2%

Hutch, 22.0%
MTNL, 0.5%
BSNL, 22.8%
BSNL, 8.0%
Syam Telilink,
0.2%

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 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 its subscriber to communicate from any
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.
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Broadband services to drive Internet penetration in India

The emergence of private players and new technologies have provided a

strong impetus to the growth of Internet and broadband services. The quality
and penetration of these services have undergone changes, with significant
improvement in the telecom infrastructure. The Internet subscriber base
registered a CAGR of 60 percent for the period 1997–98 to 2009-2010

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 2010)

BSNL, 45.2% India had 6.35 million broadband connections at the end of June 2010

Bharti Airtel, Private players are catching up fast due to increased penetration of Internet and
6.8% broadband services in India.

Reliance, MTNL, 19.0%

The telecom market will experience high penetration of Internet services with the
6.1%
support from government policies and introduction of novel technologies in
Sify, 8.9% India.
Others, 14.0%

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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
 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

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

Large number of Low teledensity (depicting Telecom

additions in telecom large untapped potential) Advantage
subscribers
 The telecom subscriber base has witnessed an explosive growth; the additions in year 2009-10 registered a growth of
approximately 56 percent over the previous year
 The impressive growth in the subscriber base has resulted in a significant increase in teledensity. In 2009–10.

Even though the Indian telecom industry has exceeded a

subscriber base of 200 million, its teledensity is only 18
250 24
percent. Thus, the Indian market provides telecom service

Teledensity (in percent)

Subscribers (in million)

18.3 19.9 20
200
providers with a large untapped potential due to the
12.8 16
150 country’s increasing population and its low teledensity. The
9.1 12
225.21
100 7.0 government has plans to raise teledensity to 72 percent by
206 8
5.1 140.3
50
76
98.4 4 2013; thereby, offering greater growth opportunities for
53
0 0 service providers.
2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 (as
of June
2007)
Telecom Subscriber Base Teledensity

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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.

IndianTelecom
Indian TelecomIndustry
IndustryFramework
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

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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.

Important Deals in Telecom Sector The Indian telecom industry has a 74 percent FDI limit
in the telecom services segment.
Vodafone purchased stake in Hutch The GoI has permitted 100 percent FDI in
from Hong Kong's Hutchison
Telecom International for USD manufacturing of telecom equipment in India.
11.08 billion.

Reliance Communications Limited has sold a five percent

equity share capital of its subsidiary Reliance Telecom
Infrastructure Limited to international investors across the
US, Europe and Asia. The deal was worth USD 337.5
million.
Telekom Malaysia acquired a 49
percent stake in Spice
Communications for USD 179
million.
Maxis Communications acquired a
74 percent stake in Aircel for USD
1.08 billion.
The Indian telecom industry has always attracted
foreign investors. In fact, the cumulative FDI inflow,
during the August 1991 to March 2010period, in the
telecommunication sector amounted to USD 4,538
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 and basic telephone services in the
telecommunication sector.

Ericsson to design, plan, deploy and

manage Bharti Airtel network and
facilitate their expansion in the rural
areas, under a USD 2 billion
contract.

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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. 13
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 India presents a host of opportunities for telecom companies

Infrastructure
Rural Sharing Managed
Telephony Services

Value-Added
Growth
Growth Virtual Private
Services
Avenues
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),
dedicated telecom communication systems, IT
Managed services is another segment that is attracting telecom companies.
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.

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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.

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Value-Added Services and Rural Telephony holds large market
potential in India
Value-Added Services in India (2009–10)
The VAS industry was worth USD 1102 million in
Person to
Application & Game & Data, 7% 2009–10. The industry is estimated to grow by 60
Application to
Person SMS, Others (MMS percent in 2011–12 and become an USD 1,611 million
15% etc.), 3% 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
As the government targets to increase rural teledensity from the
current 2 percent to 25 percent by 2012, rural telephony will
require major investments. This segment will boost the demand
for telecom services, equipment, Internet services and other
value-added services; thereby, offering great market
opportunities for telecom players.

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 THANK YOU
• PRESENTED BY
• RAJESH KUMAR BISWAS
• ANIKET KHODE
• PIYUSHKUMAR BORAD
• RAJU SHAH
• JOY DUTTA
• GIRIRAJ SHARMA

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