Telecom Industry in India

Corporate Catalyst India

A report on Indian Telecom Industry

SECTION 1. 1.1 1.2 1.3 2. 2.1 2.2 2.3 3. 3.1 4. 4.1 CONTENTS Industry Overview Background Segment wise Status Manufacture of Telecom Equipment Policy & Initiatives Regulatory Framework Government Initiatives Foreign Direct Investment Policy Competition Overview Major Players Challenges and Opportunities Opportunities PAGE NO. 3 3 6 9 11 11 11 12 15 15 21 21

4 29 15 17 22 18 '2002 2001 2003 2004 2005 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 Source: Telecom Regulatory Authority of India 99-00 2006 .000 people in China Not just the enabler of software.1.725.00. BPO and ITeS companies. Kochi on the software services map This has helped spread the benefits of a booming Indian economy to beyond metros and large cities. it is the fastest growing market in the world. Likely to double in 23 years Telecom services contribute 30 percent to India’s total service tax revenue The Indian telecom sector gives direct employment to more than 4. Ahmedabad.00.7 21. which was growing in the range of 20 to 25 per cent up to the year 2002-03. has moved to a higher growth path of an average rate of 40-45 per cent during the last two years. Indian Telecom Subscriber Annual Growth Rate 45 40 35 30 25 20 15 10 5 0 40 27.Corporate Catalyst India A report on Indian Telecom Industry 1.2 22 21.000 people. Jaipur. • • • • • • Telecom sector accounts for 1 percent of India’s GDP. it is also the lifeline of a fast growing E-commerce space State-of-the-art telecom infrastructure has led to the rise of cities like Mysore. INDUSTRY OVERVIEW 1.1 Background The Indian Telecommunications network with 203 million connections is the third largest in the world and the second largest among the emerging economies of Asia.1 Growth The sector.2 24 24. Today.9 42.7 24. and wealth creation is happening in tier-2 cities 1. The telecommunication sector continued to register significant success during the year and has emerged as one of the key sectors responsible for India’s resurgent India’s economic growth. compared to about 6. Mangalore.

The rapid strides in the telecom sector have been facilitated by liberal policies of the Government that provide easy market access for telecom equipment and a fair regulatory framework for offering telecom services to the Indian consumers at affordable prices. 1.5 1991 0.1. . From a teledensity of mere 0.6 2.5 per cent in the year 1989. The preference for use of wireless phones has also been predominant in the sector. it has grown to double digit in the year 2005.8 1.3 1999 2001 3. India's Growing Teledensity 25 20 Per cent 15 10 5 0 1989 0. The number of telephones has increased from 44.6 per cent in 2004) due to the mobile boom in India.6 1993 0. 1.1 2007* 2003 2005 11.4 22 * 2007 Figure Targeted Source: Telecom Regulatory Authority of India Buoyed by the better-than-expected teledensity in 2005 (11.1 1995 1997 1.6 5.2 Teldensity The telecom sector has shown robust growth during the past few years. Wireless subscribers increased from 6.53 million on February 2007.97 million on March 2002 to 203 million by February 2007. Department of Telecommunications (DoT) has revised the upwards the target of 22 per cent teledensity by 2007.1.68 million on March 2002 to 162.Corporate Catalyst India A report on Indian Telecom Industry This rapid growth has been possible due to various proactive and positive decisions of the Government and contribution of both by the public and the private sector.4 per cent against 8.3 Wireline Vs Wireless It has also undergone a substantial change in terms of mobile versus fixed phones and public versus private participation.

0 per cent (123.33 40.19 50.53 41. the mobile subscriber additions in India is more than 6 million mark.42 41.68 million telephones) in March 2002 to 78.25 12.96 84.73 47.61 9. the highest in the world.03 40.80 million telephones) in March 2002 to 65.27 52.23 32.85 per cent (6. At present.Corporate Catalyst India A report on Indian Telecom Industry India's Growing telecom subscribers 120 100 Million Units 112 80 60 40 20 0 38. The share of private sector in the number of telephones has increased from 15. There is a clear distinction between the Global Satellite Mobile Communication (GSM) and Code Division Multiple Access (CDMA) technologies used and the graph below shows the divide between the two.99 2002 2003 2004 2005 2006 PSUs Private Source: Telecom Regulatory Authority of India (TRAI) Participation of the private entities in the telecom sector is rapidly increasing rate there by presenting the enormous growth opportunities.69 0.8 per cent (149.39 March’02 March’03 March’04 March’05 March’06 Fixed lines CDMA GSM Feb-07 Source: Telecom Regulatory Authority of India (TRAI) This is confirmed from the rising share of wireless phones.92 26.43 0.44 million telephones) in December 2006.12 per cent (6.01 60.12 20.29 41.67 15.59 million telephones) in December 2006.38 57.15 6.88 79.62 42. which increased from 14. Changing market composition: Public Vs Private Percentage Share 100% 80% 60% 40% 20% 0% 15. .46 69.92 40.04 39.

(44.2 GSM Sector In terms of the Global System for Mobile Communication (GSM) subscriber base this now places India third after China and Russia. the wireline services in the country is becoming stagnant. 2006 9% 8% 83% BSNL M T NL O ther P r ivate O per ator s On the other hand.1 million per month.2.2. Distribution of Market Share Of Urban and Rural Wireline Subscriber as on December 31.92 million at present and is growing at 0.7 million GSM subscribers .3 million as on December 2006.Corporate Catalyst India A report on Indian Telecom Industry Technology-wise Wireless Market Share (QE Dec 2006) CDMA. Mahanagar Telephone Nigam Limited (MTNL) is one of the first in the world to deploy the Asymmetric Digital Subscriber Line (ADSL2+) network.29 million on March 2002 registered a negligible growth to reach 40. China had 401. Internet Protocol Television (IPTV) services have started in Delhi and Mumbai on MPEG-4 Part-10 (H. The total subscriber base of Wireline that was 38. 1.264) based Content Delivery platform. Broadband demand has picked up and promises to stabilise fixed line growth which is 1.2 1.19 million) 30% GSM. (105.43 million) 70% Source: Telecom Regulatory Authority of India (TRAI) 1.1 Segment wise Status Wireline Services With increasing penetration of the wire less services.

Private operators have 75 per cent subscribers whereas Public sector Operators (BSNL & MTNL) have 25 per cent subscribers in the GSM segment.1 million by the end of 2002. . The subscriber base that was merely 1. 1. lowered tariffs and offered many citizens access to communication services for the first time. The total GSM subscriber base in India crossed the 100 million mark to touch 105. has grown to 44. Source: Telecom Regulatory Authority of India Number of Public Sector Units (PSUs) licensee are 23 where are number of operational private operator licensee are 70. Department of Telecommunications has issued 22 new licensees to private operators in Dec.2 million. 06 and these new licenses have not commenced their services till now. The introduction of CDMA services has created competition.2.79 million in the quarter ending December 2006.3 CDMA Services CDMA technology was introduced in India as a limited mobility solution. while other players in CDMA Technology have the remaining 7 per cent. Russia 152.Corporate Catalyst India A report on Indian Telecom Industry in November 06. Reliance Communication (former Reliance Infocomm) has the highest subscriber base with 60 per cent market share followed by Tata Tele Services Limited with 33 per cent market share.43 billion in December 2006.

6 7. just the top 20 ISPs service 98 per cent of subscribers.’06 Internet subscribers Broadband subscribers Source: Telecom Regulatory Authority of India Similarly. Growing telecom subscribers 10 9 8 7 6 5 4 3 2 1 0 8.2.64 4.32 0. Though a large number of Internet Service Providers (ISPs) has been licensed (389) to operate Internet service today.4 Internet Services Internet services were launched in India on August 15. A liberal licensing regime was put in place to increase Internet penetration across the country. only 32 actually provide the service.23 3. while internet telephony is permitted to 128 ISPs. In November 1998 the government opened up the sector to private operators.18 March’02 March’03 March’04 March’05 March’06 Dec. Government loses . 1995. The slow growth of internet and broadband will make the target of 18 million internet subscribers and 9 million broadband connections by 2007 tough to achieve.55 3.05 5.03 Million Units 1. The growth of IP telephony or grey market is also a serious concern.55 2.Corporate Catalyst India A report on Indian Telecom Industry Source: Telecom Regulatory Authority of India 1.

LG Electronics set up plant of manufacturing GSM mobile phones near Pune.32 BSNL Sify Reliance Communications YOU Telecom Others MTNL Bharti Airtel VSNL Hathway Cable & Datacom Source: Telecom Regulatory Authority of India Internet subscribers stood at 8. Aspcom. Motorola is likely to go into production in the first quarter of 2007. Solectron etc have decided to set up their manufacturing bases in India. The last two years saw many renowned telecom companies setting up their manufacturing base in India.42 9. Flextronics has set up an SEZ in Chennai.00 per cent.96 1.12 Lakhs Internet subscribers against 3.26 1. The total Internet subscribers increased from 6. Mahanagar Telephone Nigam Limited (MTNL) has retained second position with a subscriber’s base of 1.02 per cent.Corporate Catalyst India A report on Indian Telecom Industry revenue.6 million at the end of December 2006 registering a growth of 28. Elcoteq has set up handset manufacturing facilities in Bangalore. The scope of services under existing ISP license conditions are unclear.55 million during the last quarter. 2006 5. Nokia set up its manufacturing plant in Chennai. New services like IP-TV and IP-Telephony are becoming popular with the demand likely to increase in coming years.3 Manufacture of Telecom Equipment Rising demand for a wide range of telecom equipment. particularly in the area of mobile telecommunication. Bharat Sanchar Nigam Ltd (BSNL) has retained its top position and reported a subscriber base of 38.06.66 million.45 44.39 19. registering an increase of 6. Other major companies like Foxconn.7 million at the end of December 2005 to 8. has provided excellent opportunities to domestic and foreign investors in the manufacturing sector. .33 6.6 million for the quarter ending 31st December 2006. Ericsson has set up GSM Radio Base Station Manufacturing facility in Jaipur. Ericsson recently launched their R&D Centre in Chennai.29 6. Sify Limited is third with a base of 8.000 subscriber 1. The growth trend during the quarter is positive as compared with last quarter where it was 5.03 per cent.57 5. Internet Subscriber Base in per cent as on December 31. The aim is for US$ 2 billion FDI in manufacturing. while unlicensed operation by certain operators violates the law and depletes licensed operators market share.

Cisco have also shown interest in setting up their R&D centers in India. A large number of companies like Alcatel. With above initiatives India is expected to be a manufacturing hub for the telecom equipment. The Government has already set up Telecom Equipment and Services Export Promotion Forum and Telecom Testing and Security Certification Centre (TETC).5 billion in 2010. .Corporate Catalyst India A report on Indian Telecom Industry doubling the production in 2007 and quadrupling it in 2010. Target has been set for achieving exports of 6 times from present level of 0.

The TRAI’s functions are recommendatory. Issuance of Intra-Circle Merger and Acquisition Guidelines provide investors an opportunity to take stakes in existing telecom operations. Introduction of this regime has also broken the legal/regulatory impasse between the cellular and basic service providers. Specified capital goods and all inputs required to manufacture ITA-I.1 Regulatory Framework POLICY AND INITIATIVES The Telecom Regulatory Authority of India (TRAI) was set up in March 1997 as a regulator for Telecom sector. regulatory and tariff setting in telecom sector. TDSAT has been empowered to adjudicate any dispute • • • • between a licensor and a licensee between two or more service providers between a service provider and a group of consumers hear and dispose of appeal against any direction. decision or order of TRAI Tariffs for telecommunication services have evolved from a regime where tariffs were determined by Telecom Regulatory Authority of India to a regime where tariffs are largely under forbearance. The Universal Service Levy is presently 5 per cent of the Adjusted Gross Revenue (AGR) of all telecom service providers except the pure value added service providers like Internet. Telecom Disputes Settlement and Appellate Tribunal (TDSAT) came into existence in May. Universal Service Obligation Fund (USOF) exclusively for meeting the Universal Service Obligation was established in April. items are at zero Customs Duty • Availability of low cost mobile handsets . Indian Telegraph Act has been amended in October’2006 to provide support for all telegraph services including mobile and broadband to bridge the digital divide. 2002.Corporate Catalyst India A report on Indian Telecom Industry 2 2. operators can offer telecom access services to consumers in a technology neutral manner. 2000. the markets of which are not competitive. subject to fulfilling certain conditions. With the introduction of the Unified Access Licensing Regime.2 Government Initiatives The Government has taken the following main initiatives for the growth of the Telecom Sector: • All telecom services have been opened up for free competition for unprecedented growth • 217 (Information Technology Agreement) ITA-I items are at zero Customs Duty. TRAI intervenes by regulating the tariffs for only those services. 2. Voice Mail. E-Mail service providers etc.

5 Crore from Rs. Cellular Mobile. Licence Fees 6-10 per cent of Adjusted Gross Revenue (AGR) Foreign Direct Investment Policy Foreign Direct Investment (FDI) was permitted in the telecom sector beginning with the telecom manufacturing segment in 1991 . Present FDI Policy for the Telecom sector: • In Basic.5 Crore from Rs. Overseas Corporate Bodies (OCBs). foreign entities. FDI is limited to 49 per cent (under automatic route) subject to grant of licence from the Department of Telecommunications and adherence by the companies (who are investing and the companies in which investment is being made) to the . 100 Crore. Annual license fee for National Long Distance (NLD). FDI includes investment made by Non-Resident Indians (NRIs).per minute to anywhere in India was introduced from 1st March 2006 by the Public Sector Undertakings. Calling Party Pays (CPP) regime was implemented with effect from 1st May 2003 Guidelines for Unified Access Service License regime were issued in November 2003. license fee for Unified Access Service Providers (UAS) was reduced by 2 per cent License fee for infrastructure Provider-II reduced from 15 per cent to 6 per cent of the Adjusted Gross Revenue and spectrum charges between 2 to 4 per cent in June 2004 Entry fee for NLD licenses was reduced to Rs. This scheme has led to death of distance in telecommunication and is going to be instrumental in promoting National Integration further The robust telecom network has also facilitated the expansion of BPO industry that is having 500. VSAT commercial and Internet Service Provider (ISP) with internet telephony (restricted) licenses was reduced to 6 per cent of Adjusted Gross Revenue (AGR) with effort from Jan 2006. 27 licenses out of 31 Basic Service Licenses were converted to Unified Access Service Licenses In April 2004. Entry fee for ILD reduced to Rs.Corporate Catalyst India A report on Indian Telecom Industry • • • • • • • • • • • 2. 2. FDI is defined as investment made by non-residents in the equity capital of a company.when India embarked on economic liberalisation. 1/. Value Added Services and Global Mobile Personal Communications by Satellite.3 The international Long Distance Services (ILDS) opened with effect from April 2002.000 employees now and adding 400 employees per day. National Long Distance. For the telecom sector. single tariff of Re. American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) etc.e. This tariff was emulated by most of the private service providers also. The Government’s policy is neutral on use of technology by telecom service providers subject to availability of scarce resources such as spectrum etc. 25 Crore Lease line charges have been reduced to make the bandwidth available at competitive prices to facilitate growth in IT enabled services One India plan i. Foreign Institutional Investors (FIIs). 2. International Long Distance. International Long Distance (ILD). Infrastructure Provider-II.

Manufacturing .Electronic Mail . and . FDI is subject to the following conditions • • • . paging and Value Added service. Foreign Direct Investment up to 74 per cent permitted. and Global Mobile Personal Communications by Satellite.The above services would be subject to licensing and security requirements. Radio Paging Service FDI up to 100 per cent permitted in respect of . Investment by these investment companies in a telecom service company is treated as part of domestic equity and is not set of against the foreign equity cap. wherever required.100 per cent FDI is permitted under automatic route.Infrastructure Providers providing dark fibre (IP Category I).Voice Mail The above is subject to the following conditions: . .FDI up to 100 per cent is allowed subject to the condition that such companies would divest 26 per cent of their equity in favour of Indian public within 5 years.Internet Service (with gateways) . .Voice Mail FDI up to 49 per cent is also permitted in an investment company. Infrastructure Providers (category-II). . FDI is permitted up to 49 per cent (under automatic route) subject to grant of license from Department of Telecommunications Foreign direct investment up to 74 per cent permitted.Infrastructure Providers providing dark fibre (IP Category I) . • • • • • In the manufacturing sector 100 per cent FDI is permitted under the automatic route.Corporate Catalyst India A report on Indian Telecom Industry • licence conditions for foreign equity cap and lock-in period for transfer and addition of equity and other license provisions.Radio Paging Service FDI up to 100 per cent permitted in respect to the following telecom services: . if these companies are listed in other parts of the world. . In Basic.Electronic Mail. Cellular Mobile. subject to licensing and security requirements for the following: . set up for making investment in the telecom companies licensed to operate telecom services.Proposals for FDI beyond 49 per cent shall be considered by Foreign Investment Promotion Board (FIPB) on a case-to-case basis.ISPs not providing gateways (both for satellite and submarine cables).Infrastructure Providers (Category II) .ISPs not providing gateways (Both for satellite and submarine cables) . subject to licensing and security requirements for the Internet Service (with gateways).

wherever required. . The above services would be subject to licensing and security requirements.Corporate Catalyst India A report on Indian Telecom Industry • • • FDI up to 100 per cent is allowed subject to the conditions that such companies would divest 26 per cent of their equity in favour of Indian public in 5 years. Proposals for FDI beyond 49 per cent shall be considered by FIPB on case to case basis. if these companies are listed in other parts of the world.

25% stake in the company. USD 8 billion (Turnover) It has a network of over 45 million lines covering 5000 towns with over 35 million telephone connections. 733 crores (US$ 16. COMPETITION OVERVIEW 3.s key metros. Within a span of five years it has become one of the largest public sector unit in India. The Govt.) • Foreign invested companies (Hutchison-Essar. Idea Cellular. VoIP services. Broadband. Spice Communications) Bharat Sanchar Nigam Limited (BSNL) Name Year of Establishment Company Profile Bharat Sanchar Nigam Limited (BSNL) 2000 Bharat Sanchar Nigam Ltd. Escotel.47 billion (Revenue) It has a customer base of 5. IN Services etc.1 Major Players There are three types of players in telecom services: • State owned companies (BSNL and MTNL) • Private Indian owned companies (Reliance Infocomm. BSNL plans to expand its customer base from present 47 millions lines to 125 million lines and infrastructure investment plan to the tune of Rs.92 million MTNL has formed a Joint Venture company in Nepal by the name of United Telecom Ltd. Tata Teleservices. MTNL with a market share of about 13% of the National telecom Network has a customer base of 5. MTNL has set up its 100% subsidiary . Bharti Tele-Ventures. Sales/Revenues/Turnover Global Presence/ Marketing Network Acquisitions / Strategic Alliances Future Prospect Mahanagar Telephone Nigam Limited (MTNL) Name Year of Establishment Company Profile Mahanagar Telephone Nigam Limited (MTNL) 1986 MTNL was set up by the Government of India to upgrade the quality of telecom services. Internet. expand the telecom network.Mahanagar Telephone Mauritius Limited. for providing basic. (UTL) in collaboration with Telecom Consultants India Limited (TCIL) in 2001 for providing WLL based basic services in Nepal. is World's 7th largest Telecommunications Company providing comprehensive range of telecom services in India: Wireline. CDMA mobile. GSM Mobile. mobile and international long distance Sales/Revenues/Turnover Global Presence/ Marketing Network Acquisitions / Strategic Alliances . of India currently holds 56.Corporate Catalyst India A report on Indian Telecom Industry 3. MPLS-VPN.67 million) in the next three years. USD 2. Carrier service. (MTML) in Mauritius. introduce new services and to raise revenue for telecom development needs of India. BPL Mobile. VSAT.92 million.

MTNL is adding nearly 450 more Base Transceiver Stations (BTS) in Delhi and Mumbai.084 billion (Revenue) The company has 52 subsidiaries in 21 countries as well as operations across four continents. Future Prospect Videsh Sanchar Nigam Limited (VSNL) Name Year of Establishment Company Profile Videsh Sanchar Nigam Limited (VSNL) 1986 The Videsh Sanchar Nigam Limited (VSNL) . MTNL is also making its entry in the field of M-commerce too. MTNL has restructured Millenium Telecom Ltd. The company operates a network of earth stations.000 a year. growth of lines is expected to be around 400. which will enable the customers to transact business with the help of his mobile phone or similar hand held devices. (MTL) as a Joint Venture company of MTNL and BSNL with 51% and 49% equity participation respectively. MTNL-STPI IT Services Ltd. The company is also offering flexible agreements and charging methods to meet the growing demands of the wholesale voice market Sales/Revenues/Turnover Global Presence/ Marketing Network Acquisitions / Strategic Alliances Future Prospect Bharti Name Year of Establishment Bharti 1985 . USD 1. is a 50:50 Joint Venture between Software Technology Parks of India (STPI) and Mahanagar Telephone Nigam Limited. Kolkata and Chennai. VSNL is adding its capacity to meet the overwhelming demand for connectivity to India in the wholesale voice services domain. The JV formed in 2006. VSNL's main gateway centers are located at Mumbai. New Delhi. The company will now be entering into new business stream of international long distance operations and will be executing a project of submarine cable system. (MTNL). both east and west from India With the increased economic activity due to liberalization. submarine cable systems. switches. for USD 130 million in 2005 The company plans to expand its wholesale voices services across the EU. to effectively enable enterprise customers and retail voice carriers to connect to India. VSNL acquired Nasdaq-listed Teleglobe International Holdings Ltd for $239 million in 2005 Videsh Sanchar Nigam Ltd acquired Tyco Global Network.Corporate Catalyst India A report on Indian Telecom Industry services in 2004. and value added service nodes to provide a range of basic and value added services and has a dedicated work force of about 2000 employees. submarine cable system.a wholly Government owned corporation.

in 1998 Bharti Tele-Ventures acquired an effective 32. data services and a wide range of value added services and applications aimed at enhancing productivity of enterprises and individuals.73 billion (Turnover) The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles while the Airtel Telemedia Services business offers broadband & telephone services in 94 cities. Bharti Telecom and British Telecom formed a 51%:49% joint venture. Middle East. Rs. USD 767 million (Revenue) Reliance Communications has IP-enabled connectivity infrastructure comprising over 150. the US. Bharti’s operations are broadly handled by two companies: the Mobility group and the Infotel group. 1995 for promoting investments in telecommunications services. a wholly owned subsidiary of Reliance Infocomm in 2004 Sales/Revenues/Turnover Global Presence/ Marketing Network Acquisitions / Strategic Alliances . FLAG Telecom amalgamates with Reliance Gateway. Sales/Revenues/Turnover Global Presence/ Marketing Network Acquisitions / Strategic Alliances Future Prospect Reliance Communication Name Year of Establishment Company Profile Reliance Communications 1999 Reliance Telecom's cellular services are available in 340 towns within its eight-circle footprint. International wholesale telecommunications service provider. Reliance Infocomm offers a complete range of telecom services covering mobile and fixed line telephony including broadband. Bharti BT Internet for providing Internet services.000 kilometers of fiberoptic cable systems in India. to undertake the largest infrastructure project between Singapore and Indian companies in 2001 Bharti Airtel company is planning to set up 3000 more towers as part of enhancing their rural coverage and will now focus on rural and semi-urban areas. Bharti Aquanet.36% equity interest in Bharti Mobile (formerly JT Mobiles). the cellular services provider in Karnataka and Andhra Pradesh circles in 1999 Bharti Telesonic entered into a joint venture. Reliance Infocomm also offered for the first time in India. and the Asia Pacific region. Its subsidiaries operate telecom services across India. This portal leverages the data capability of the CDMA 1X network. 1. With SingTel for establishing a submarine cable landing station at Chennai in 2001 A 50:50 joint venture between Bharti and SingTel.Corporate Catalyst India A report on Indian Telecom Industry Company Profile Bharti Tele-Ventures Limited was incorporated on July 7. Europe. mobile data services though its R-World mobile portal. national and international long distance services.

has been named the 'Most Respected Telecom Company'. Essar is still minority stakeholder in company Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced operations in 1994 when its predecessor Hutchison Telecom acquired the cellular licence for Mumbai. Public Booth Telephony and Wireline services. Other services include value added services like voice portal. Vodafone Essar now has operations in 16 circles covering 86% of India's mobile customer base. Rajasthan. calling card services and enterprise services. Maharashtra. Uttar Pradesh (W). the leading provider of managed Ethernet services in 2007 The company plans to concentrate on mobile content services other than voice. and has paid Rs. Inc. Haryana.3 million shareholders. Tata Teleservices’ bouquet of telephony services includes Mobile services. Tata Teleservices Name Year of Establishment Company Profile Tata Teleservices 1996 Tata Teleservices is a part of the $12 billion Tata Group. USB Modem. South Korea. Punjab.Corporate Catalyst India A report on Indian Telecom Industry Future Prospect Reliance Communication acquired a US based Yipes Holdings. Orissa. Gujarat. Bihar. ("Yipes"). post-paid Internet services. This CAPEX will be used for network expansion of its CDMA business to over 4. Mumbai. data cards. Karnataka. which has 93 companies. group calling.500 towns from the present 2. It also plans to spend Rs 5 billion every year for the next three years. over 200. Wireless Desktop Phones. The company also plans to launch international data roaming facility in Canada. followed by Latin America and then to Asian countries like Japan. Chennai. China and other countries. Sales/Revenues/Turnover Global Presence/ Marketing Network Acquisitions / Strategic Alliances Future Prospect Vodafone Name Year of Establishment Company Profile Vodafone Acquired majority stake in Hutch Essar in India. 3-way conferencing.000 towns and expansion of its GSM operations.000 employees and more than 2. Tata Teleservices has acquired Hughes Tele.78 million customers. by buying out complete stake of Hutch in 2007. (India) Limited [now renamed Tata Teleservices (Maharashtra) Limited] in 2002 The company is also expanding its footprint. with over 45. under the Hutch brand. 4. Delhi. Kerala. roaming. Vodafone Essar. Tata Teleservices has presence in across 19 circles that includes Andhra Pradesh. Uttar Pradesh (E). Himachal Pradesh. Tamil Nadu. Madhya Pradesh and West Bengal. the 'Best Mobile Service in the country' . Wi-Fi Internet.17 billion ($90 million) to DoT for 11 new licenses under the IUC (interconnect usage charges) regime.

005. Madhya Pradesh.9 per cent.1 per cent in Idea. Goa. UP-West. holds 35. Haryana. Aditya Birla Nuvo Ltd. thereby acquiring original license for the Andhra Pradesh Circle Acquired RPG Cellular Limited and consequently the license for the Madhya Pradesh (including Chattisgarh) Circlein 2001 In 2004 acquired Escotel. Chattisgarh. which is India's first truly multinational corporation.7 per cent. Sales/Revenues/Turnover Global Presence/ Marketing Network Acquisitions / Strategic Alliances Future Prospect . Idea Name Year of Establishment Company Profile Idea 1995 Idea Cellular is part of the Aditya Birla Group. Grasim 7. Other advancements in the telecom industry will help it cut costs .use of e-mail to send bills to customers. Uttaranchal. and Hindalco 10. sharing cell sites. Himachal Pradesh and Kerala. 24. Vodafone Essar is expecting to touch over 35 million customers across 400.378. it will also look at international long distance in the near future. Merged with Tata Cellular Limited in 2001. IDEA Cellular has operations in Delhi. Gujarat. Andhra Pradesh.08 million (Revenue) It has operations in 25 countries across 5 continents and 40 partner networks with over 200 million customers worldwide. 44.000 shops and thousand of hutch’s own employees along with employees of its business associates. Birla TMT Holdings Ltd. Rs.50 million (Sales Turnover) Has a customer base of over 17 million. smaller base transmission stations that will mean lesser infrastructure requirements and expenses and independent tower operators. UP(W) & Kerala and new licensee in HP Acquired Escorts Telecommunications Limited (subsequently renamed as Idea Telecommunications Limited) in 2006 Merger of seven subsidiaries with Idea Cellular Limited in 2007 Idea also plans to enter rural and neglected circles as a strategy to gain subscribers. incumbent cellular service provider in Haryana. Along with its plan to go for a national long distance licence.5 per cent. USD 69. Maharashtra.Corporate Catalyst India A report on Indian Telecom Industry Sales/Revenues/Turnover Global Presence/ Marketing Network Acquisitions / Strategic Alliances Future Prospect and the 'Most Creative and Most Effective Advertiser of the Year'.

Corporate Catalyst India A report on Indian Telecom Industry Market Share of Wireless Operators (QE Dec 2006) Hutch 16% TTSL 10% IDEA 8% Others 7% BSNL 18% Bharti 21% Reliance 20% .

accelerate growth further It’s not without reason that India is tipped to be the world’s third-larges economy by 2050! No wonder if it happens much earlier .1 Opportunities The telecom sector has been one of the fastest growing sectors in the Indian economy in the past 4 years. Currently of a size nearing 70 million (GSM and CDMA). further consolidation is a reality and this will lead to the survival of more profitable players in this segment In order to further promote the use of Internet in the country the government is taking proactive steps to develop this sector with the help of the various players in this segment. Internet users base fast reaching near the English speaking population base. The mobile sector alone has been growing rapidly and has emerged as the fastest growing market in the whole worlds. For this purpose. Local language and content required for further growth Infrastructure equipment cost is down to a fraction of what prevailed just a few years ago. hence. Operators can plan better expansion plan now Increased viability for the operators to expand to semi-urban and rural markets. 5. the use of broadband technology is being mooted and this will go a long way in improving the productivity of the Indian economy as well as turn out to be the next big opportunity for telecom companies after the mobile communications segment Non-voice services and VAS are the gold mines.28 million mobile subscribers additions were registered in July 2006.6 per cent in March 2001.Corporate Catalyst India A report on Indian Telecom Industry 4. The big takeoff is expected with the rollout of 3G services in early 2007. compared to 4. More than 200 million subscribers addition is expected by July 2007 The government has eased the rules regarding inter circle and intra circle mergers. Also as the sector is moving closer to maturity. Due to this reason. from 3.78 million in June and 4. telecom density in the country has risen to over 12 per cent at the end of January 2006. This has led to a slew of mergers and acquisitions in the recent past. once the spectrum issues are sorted out. this sector is expected to reach a size of nearly 200 million subscribers by financial year 2008. This has been witnessed due to strong competition that has brought down tariffs as well as simplification of policy environment that has promoted healthy competition among various players. CHALLENGES AND OPPORTUNITIES 4.25 million in May.

Corporate Catalyst India A report on Indian Telecom Industry Investors can look to capture the gains of the Indian telecom boom and diversify their operations outside developed economies that are marked by saturated telecom markets and lower GDP growth rates. with its telecom success story. At a time when global telecom majors are struggling to cope with their losses and the rollout of 3G networks. . represents an attractive and lucrative destination for investment. which has been a non-starter for close to a year now. India.

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