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Telecommunictions: September 2009
Telecommunictions: September 2009
September 2009
TELECOMMUNICTIONS September 2009
Regulatory framework
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
• Annual growth rate of telecom subscribers (June 2008–June 2009) – 42.68 per cent
• Average Revenue Per User (ARPU) for GSM (as on 30 June 2009) – US$ 3.801
Sources: 1) Exchange rate as on 30 June 2009 (1 US$ = INR 48.64380) , TRAI and TRAI; 2) Average exchange rate for the year 2008–09 and TRAI;
3) Cybermedia; 4) Stockwatch
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
• The Indian telecom industry can be primarily divided into basic, cellular mobile and internet services. It also
has 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 mobile services in India are growing more than basic wireline services.
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
Source: TRAI
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
• The Minutes of Usage (MoU) for GSM have Minutes of Usage (MoU) Per Subscriber
been significantly higher than those for CDMA. Per Month in India
The MoUs for CDMA service have declined
from 364 in March 2008 to 357 in March 2009,
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
(in millions)
Source: TRAI Report
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
• Reliance Communications dominates the Indian CDMA mobile services segment with a subscriber
base of 54.19 million.
Market Share Of GSM Service Providers (As of June 2009) Market Share Of CDMA Service Providers (As of June 2009)
Radio paging services were launched in India in 1995. This service, however, could not compete
well with cellular services in general and SMS technology in particular and is shrinking continuously.
At present, all but four radio paging service providers have been marginalized in the Indian market.
At present, there are 8 VSAT service providers in India including BSNL, Bharti Airtel, Hughes
Communication and HCL Comnet Ltd. The number of subscribers of VSAT services increased on a
quarterly basis by 6,108 to 108,328 in June 2009.The market for VSAT services registered a 5.98
per cent growth for the quarter ending June 2009. Hughes Communication is the market leader,
with a market share of 29.4 per cent, followed by Bharti Airtel with 25.9 per cent.
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
PMRTS services have been showing a negative growth. PMRTS’ subscriber base decreased by 2.06 per
cent during the quarter ending June 2009.1 High license fee for this service leaves low margin for
services providers, thereby inhibiting its growth. In India, 12 operators are offering this service to a total
of more than 30,951 subscribers.
GMPCS2 services were launched in India in 1999. These services allow a subscriber to communicate
with others from any point on earth through a hand-held terminal. Moreover, the telephone number
remains unchanged, irrespective of the subscriber’s location. Iridium India Telecom Limited is the pioneer
in GMPCS services in India. The Government of India has restricted foreign equity participation in this
segment to 74 per cent.
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
* The Internet subscribers for the above graph does not include
wireless data subscribers and those with broadband connections
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
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TELECOM INDUSTRY OVERVIEW
Telecommunications September 2009
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TELECOMMUNICTIONS September 2009
Regulatory framework
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TELECOM - ATTRACTING INVESTMENTS
Telecommunications September 2009
• Independent judiciary
• Third-largest telecom network in the world, second-largest among the emerging economies after China
• On an average, approximately 8 million users are added per month, making India the world’s fastest growing
telecom market.
• Liberal Foreign Investment Regime: FDI limit increased from 49 per cent to 74 per cent; the rural telecom
equipment market also open to large investments
• The large untapped potential in India’s rural markets revealed by 9.21 per cent teledensity in rural markets as
compared to the national level of 28 per cent in 2008.
• The government is 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
Source: TRAI
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TELECOMMUNICTIONS September 2009
Regulatory framework
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REGULATORY FRAMEWORK
Telecommunications September 2009
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REGULATORY FRAMEWORK
Telecommunications September 2009
• The establishment of the UALR (2003) eliminated the need for separate licences for different services. This
regime allowed players to offer both mobile and fixed-line services under a single licence after paying an
additional entry fee. The regime does not take into account the national and international long-distance
services and Internet access services.
• Between February and March 2008, DoT granted 120 new licences to provide Unified Access Services to
various companies, including Datacom Solutions Pvt Ltd, Aska Projects Ltd, Swan Telecom Pvt Ltd, Loop
Telecom Pvt Ltd and S Tel Ltd.
• The USO policy was implemented along with National Telephone Policy (NTP) 1999 to widen the reach
of telephony services in rural India. All telecom operators are bound to contribute 5 per cent 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 per cent. 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 telecom companies, USO helps in building the telecommunication
infrastructure in rural areas.
Source: TRAI
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REGULATORY FRAMEWORK
Telecommunications September 2009
WLL
NTP 99
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REGULATORY FRAMEWORK
Telecommunications September 2009
Regulatory framework
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KEY TRENDS IN TELECOM INDUSTRY
Telecommunications September 2009
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KEY TRENDS IN TELECOM INDUSTRY
Telecommunications September 2009
Regulatory framework
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GROWTH AVENUES
Telecommunications September 2009
Sources: 1) TRAI Report; 2) International Business Times; 3) Indiapwire 4) Business Standard 5) e-Eighteen.com Ltd
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GROWTH AVENUES
Telecommunications September 2009
• BSNL launched 3G services under the proposed 'India-Golden 50' scheme that allows customers
to make long-distance calls for 50 paise (About US 1 cent) per minute. The subscribers also get
additional features such as video telephony, Internet access, video on demand, mobile TV and
others facilities.3
Sources: 1) TRAI Report; 2) International Business Times; 3) Indiapwire 4)
Business Standard 5) e-Eighteen.com Ltd.
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GROWTH AVENUES
Telecommunications September 2009
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 terrains at a speed
of more than 4 Mbps, it is expected to be a major factor in driving telecom services in India,
especially the wireless services. Thus, it will lead to the increased use of telecom services, internet,
value added services and enterprise services.
ICOMM Tele and Beceem Communications jointly announced the commercial availability of WiMAX
modems for the Indian market.
The Telecom Ministry is also planning to auction three WiMax slots for US$ 1.07 billion with an
approximate auction cost of US$ 358 million each.
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GROWTH AVENUES
Telecommunications September 2009
Managed service is another segment that is attracting telecom companies. On account of the rapidly
growing subscriber base, service providers find it difficult to manage their infrastructure and
network. In such cases, they completely or partially outsource their infrastructure or network
management operations.
Bharti Airtel and Nortel entered into an enhanced managed-services agreement in November 2008
that allows Nortel to continue providing contact centre technology (CCT) solutions.
In turn, Bharti Airtel is able to leverage Nortel’s solution to provide its customers with interactive
voice and video response capabilities.
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GROWTH AVENUES
Telecommunications September 2009
In order to curtail their network deployment costs, many service providers are considering infrastructure
sharing. It is a major step towards India’s ambitious target of 500 million subscribers by 2010.
• TRAI has recommended all mobile service providers in India to share infrastructure so as to meet the
requirements of the flourishing telecom industry.
• Its proposal to Department of Telecommunications (DoT) states that the mobile telephony service
providers should have better cooperation among them and have least regulatory interventions.
• The service providers can share active infrastructure if they have entered into a mutual agreement.
• The sharing of infrastructure includes sharing of antenna, feeder cable, nodes, radio access network
and transmission system only.
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Source: TRAI
GROWTH AVENUES
Telecommunications September 2009
Virtual Private Network is a private data network that provides connectivity within closed user groups
(CUG) via public telecommunication infrastructure. It is similar to leasing/owning lines and yet getting
exclusive access.
Telecom service providers are increasingly targeting enterprises by providing them dedicated services.
Some of the key services include VoIP, dedicated telecom communication systems; IT infrastructure-
enabled unified communication services, etc. This segment is expected to witness major developments
as the demand for enhanced telecom infrastructure is increasing along with the growth in the
information and communication technology (ICT) industry.
Source: TRAI
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GROWTH AVENUES
Telecommunications September 2009
•Mumbai-based Mobile Value Added Service company called Planet41 Mobi-Venture Ltd is planning
an initial public offer in the coming months.
•The telecom companies can leverage VAS services to increase ARPU through content rather than
voice services.
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GROWTH AVENUES
Telecommunications September 2009
Teledensity percentage
to 2009, to set up about 100,000 community
service centres in rural areas to provide
broadband connectivity.
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