Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance

its growth with a case study of B.S.N.L., a telecom service provider of India

University Centre Address
InfoTech, University Study Centre (Sikkim Manipal University), 3/7, Central Park, City Centre, Durgapur-713216, West Bengal.

Centre Code 0249 Title of the project report
“Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India.”

By- Neeraj Kumar Singh (Roll No-520751161)
A project report submitted in partial fulfillment of the requirements for the degree of Master of Business Administration of Sikkim Manipal University, India.

Sikkim-Manipal university of Health, Medical and technological sciences, Distance education wing, Syndicate house, Manipal-576104.

-1By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

Project Synopsis
Title
―Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider in India.”

Objectives
The objective of the project can be summarized as follows1) The first objective is to access the Indian telecom sector, its current status & structure, its appellate authority, its telecom policies, service offerings, investment opportunities & incentives, research & development works, growth potential, government vision and mission etc. 2) The second objective is to find out the socio-economic impact of telecommunication investment in developing countries like India, the effect of information and communication technologies, the digital divide in developing and developed nations. 3) The third objective is to find out different financing strategies and financial ways to finance a telecom projects in India, and to access the different financial risks associated with. 4) The fourth objective is to establish the relation between the telecom investment and its effect on the growth in global perspective. 5) The fifth objective is to take the case of B.S.N.L. ( A govt. of India enterprise), a telecom service provider, to access its current business structure, service offerings, current growth in terms of revenue and profits, service expansions, its asset structure, social commitment. 6) The sixth objective is to find out the telecom trends in global perspective, high growth drivers, business patterns, cost efficient operation, and how to expand in low ARPU Rural markets. 7) The seventh objective is to see the picture of public-private partnership contribution in telecom growth in India, their investment pattern and their differential contribution to the telecom growth. 8) The eighth objective is to look into the telecom investment opportunities and potential in Indian telecom sector and the public private investment avenues and nodal agencies. 9) At last, to bring out the conclusion for financing needs of telecom sectors, their socio-economic effects, find out the viable technological options to grow in rural telephony, proving the purpose of people‘s growth, analyzing the global telecom growth and public private contributions, observing the chunk of investment required to revolutionize the growth, in developing nations like India.

-2By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

Methodology
To fulfill the objective of the project, different research methodologies have been used to come on the conclusions. Mainly descriptive study has been made to keep the research simple and narrative and some time quantitative and mainly qualitative approaches have been made to the subject. Mainly secondary data which have been collected from different websites, magazine, research papers, interactions and books, have been used for analysis purpose. Different case studies have been taken in to consideration to bring out some facts. Company financials available in public domains have been compared and telecommunication papers available on websites of ministry of finance, D.O.T., and TRAI have been looked up. Some surveys of telecom vendors in India, have also been taken into consideration to pull out the conclusions on the subject.

-3By- Neeraj Kumar Singh (Roll No- 520751161)

Neeraj Kumar Singh (Roll No.B.L. a telecom service provider of India Acknowledgement I am very much thankful to the people who have helped me in preparation of this project.520751161) . Srikanta Ghosh.L. (Admin).S. B.N.. S. D.L. who not only explained the topics very well but has thrown the light on the practical aspect of the project too.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. I am thankful to my friends giving their remarkable contribution and special thanks to Mr. Durgapur. Mr.D. faculty at Sikkim Manipal University study centre.. Srikanta Ghosh. D. / Panagarh & B. I am very much grateful to Mr. Chakraborty.S.E.. Durgapur for their endeavor support for completing this project.S. who has given me the opportunities to do this project. Durgapur.N. B.E. Rana. directly or indirectly.N. I would like to give special thanks to Mr.. (Neeraj Kumar Singh) -4By. N.

................79 The importance of telecommunication for economic growth ………………………….50 The Digital Divide ……………………………………………………………………..108 India's WiMAX subscribers to top 13 million by 2013 ………………………………111 -5By... as a Telecom Service Provider ………………………………………………………85 BSNL as an integrated telecom service provider ……………………………………...N..................……………………………..... Telecom Trends and High Growth Drivers ……………………………………………………98 8..... Indian Telecom Sector at a Glance ……………………………………………………………15 Status of Telecom Sector………………………………………………………… ……15 Target Set by the Government …………………………................................L.... Why Telecom Investment and Expansion?? .......51 6.108 Shared access is a bridge to personal connectivity……………………………………..9 Introduction ………………………………………………………………………………9 Vision...... a telecom service provider of India Table of Content 1.49 What is Information and Communications Technology? .39 5...................38 Liberalization and Reforms in Telecom Sector since early 1990‘s …………………....... Mission & Objectives ………………………………………………………..........12 Staff ……………………………………………………………………………………13 Finance …………………………………………………………………………………14 3.47 Traditional methods of financing telecommunication in developing countries ...Neeraj Kumar Singh (Roll No..11 Organization Chart of BSNL …………………………………………………………........ Institutional History of the Telecom Sector in India ………………………………………….............L........Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B........ Bharat Sanchar Nigam Limited (Company Profile) …………………………………………..1 General Outlook of communication services ……………………………………………98 9..S...................... Executive Summary of the Project ………………………………………………………………7 2............73 Leverage effects on ways to finance telecommunication ………………………………78 How financial development may promote growth …………………………………….59 Financing Strategies……………………………………………………………………...……47 Investing in telecommunication projects – a multiplication effect? ........94 Social Commitment ……………………………………………………………………95 Summary of financial statement ……………………………………………………….............N.....................34 Progress of Reforms …………………………………………………………………............85 Growth Plan ……………………………………………………………………………92 Projects Recently Implemented / Under Development ……………………………….96 8........ What is creative or innovative financing? ......................61 Financing ways …………………………………………………………………………65 Financial risks ………………………………………………………………………….......29 Indian Telecommunications at a glance …………………………………………………31 Bharat Nirman …………………………………………………………………………32 4........................................36 Pre-reform Period and Telecommunication in India ………………………………….......... B.59 What is financial engineering? ...........80 7... Cost efficient operations and rural telecom infrastructure convergence ………………………105 Optimised network operations …………………………………………………………106 Price to optimize network utilization………………………………………………….........520751161) .S.

.188 Auditor General of India Report on Outstanding Billed Amount in Telecom ………. Analysis ………………………………………………………………………………………..143 14.134 13.179 Economic and social indicators of India ………………………………………………180 Sector Distribution of Investment Commitments to Infrastructure Projects …………..136 Technology choices ……………………………………………………………………137 Enter WiMAX …………………………………………………………………………138 Looking to the future …………………………………………………………………. Appendix ………………………………………………………………………………………170 Basic Information of Indian economy and social structure ………………………….Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.152 16. Findings.133 The road to answering our purpose……………………………………………………. Explanation Of Words ……………………………………………………………………….135 Delivering service to customers ………………………………………………………. The Role of Public & Private Players in Indian Telecom Sector………………………………113 Airtel as a private telecom service provider……………………………………………115 Performance parameters of BSNL ……………………………………………………119 11...170 Financial Statement of BSNL …………………………………………………………171 Financial Performance of Airtel ………………………………………………………177 World Telecom and Telecom Industry ……………………………………………….178 Tele-density Picture in India ………………………………………………………….134 Source critique………………………………………………………………………….S.. References …………………………………………………………………………………….130 Investment Facilitation Agencies ………………………………………………….. Telecom Investment opportunities and Potential In India …………………………………….N..153 17.189 -6By.140 Public-Private Investment …………………………………………………………….150 Literature……………………………………………………………………………….129 Opportunities …………………………………………………………………………..141 World telecoms and IT outlook ………………………………………………………......146 15..520751161) ..129 Potential ………………………………………………………………………………. and Recommendations ………………………………………………...133 Data collection methods……………………………………………………………….134 The benefits of wireless ……………………………………………………………….131 12. Methodology …………………………………………………………………………………..L. Conclusions.148 Internet………………………………………………………………………………….148 Articles…………………………………………………………………………………. a telecom service provider of India 10.Neeraj Kumar Singh (Roll No.138 Streamlining Telco‘s process efficiency ………………………………………………139 Growing pains …………………………………………………………………………139 Next-generation technologies ………………………………………………………….

Neeraj Kumar Singh (Roll No.. a telecom service provider of India Unit-1 Executive Summary of the Project India has taken positive steps towards liberalizing the telecommunications market and introducing private investment and competition in basic telecommunications services. contemplating the opening up of all the segments of the telecom sector for private sector participation. This kind of infrastructure project is according to Merna & Njiru (2002) important in developing countries because they are in need for that. of India. Foreign equity in value-added services is limited to 51 percent. and especially in India. the limit is 49 percent as it has been difficult to raise the amounts of money needed to finance the new networks.520751161) . “A well spread out telecommunication network provides a great impetus to the economic growth in a country. The Government is committed to expanding rural connectivity through a slew of measures so that rural users can access information of value and transact business. Considering the significance of its contribution and also the need to integrate with the global economy. The environment will be improved. the economy can progress to that which is predominantly characterized by secondary or tertiary industries Usually financial engineering are used to reduce the financial risk. from the stereo in your living room to the mobile phone you carry with you. NTP-99 laid down a clear roadmap for future reforms. a second thing is to restructure cash flows for better financial management. creative financing arrangements have been allowed in some cases that extend the limit to 74 percent. Reduction of poverty. civil society organizations. Telecommunication plays a central role in helping developing countries participate in the global economy. panchayats.L. This will include connecting block headquarters with fiber optic network. the private sector and Government. The sector is growing at a speed of 46-50% during the recent years.N. Because financial engineering are used to finance projects it can be used to finance telecom projects around the world. By encouraging the establishment of telecommunication industries within their countries. Govt. 2004-11-26) -7By. but also.S. Telecommunication is pervasive in all aspects of our lives. several policy initiatives have been taken by the government.” (Ministry of Finance. Infrastructure projects in developing countries bring several improvements of the country. The Indian Telecommunications network with 353 million connections (as on September 2008) is the third largest in the world. For basic services. These technological innovations we have in our lives are often taken for granted and it is unfeasible for us to imagine how we can function without them.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. they lead to: Human welfare and economic development. not only is their GNP boosted from the production of higher value-added goods. using wireless technology to achieve last mile connectivity and operating information kiosks through a partnership of citizens.

At the one side where Indian people have got improved and diverse services at better prices.N. it can be said to be the government purpose vehicle. got more independence. but at the other side.N. The health of these companies tells the story of operating environment of Indian telecom industry. So. B.N. is playing a major role in India‘s telecom arena. its financial needs. made professional approach in its growth keeping the mission of government‘s social view. growth areas.L.L. from its parent body Department of Telecom ( DOT ) working under ministry of telecommunication. In this competitive era. has shrank the margins of operation. India. to regulate the Indian telecom industry.L..Neeraj Kumar Singh (Roll No. All development. expansion. in the perspective of Indian telecom sector as a whole. and should try implementing the project of lesser break-even time. in spite of how much it cost to your exchequer. the growth of telecom in India was very much dismal. fierce competition between these operators.L. you can‘t get the chance to be left out in implementing the new technology.S. The time span of these technologies are very less. non-profitable operations. formed.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Here. New entity.N. -8By. New technology in telecom brings the new dimension of businesses. a government of India enterprise. It has been expanded into different kind of telecom fields and being competitive with others private players in the sector.L. and analyzed its business operations. pacing the structural growth of India. so it is indispensable for the country‘s growth. Different kinds of innovative ways of financing are available and which will be suited best. formed on 1st October-2000. great challenges were before the government to fire the telecommunication growth. Now different technologies and market efficient technologies are available.520751161) . the financial health of these companies have been affected.S. so that financing needs may be fulfilled and growth can be intact. When B. and new reform in social arena. and maintaining its financial health.S.S. fulfilling the purpose of socio-economic development of India. Their social impact has been viewed and trend in telecom evolution has been considered to make the viable investment. The growth figure of Airtel has been seen and analyzed the contribution of private players in telecom growth in India. the company should analyze its commercial aspect.S. How these financing can be arranged.N. a telecom service provider of India To understand the telecom sector growth. it is needed to analyze the giant companies working in telecom sector. The telecommunication markets are evolving all over the world very rapidly and day by day a new technology is coming to rock the bourses but at some cost. Bharat Sanchar Nigam Limited. Because it is wholly owned by government. it should be analyzed case by case basis. and before implementing the options available. and other private players. growth need financing. The exploded growth in Indian telecom industry after telecom reforms has shown at the one side a tremendous telecom infrastructure growth both by B. corporatization of DOT done. we have taken the case of B.

. VoIP services. Internet.346 million Basic Phone subscribers i.188 million basic line telephone capacity.5 Lakhs villages. 287 Satellite Stations. Within a span of five years it has become one of the largest public sector unit in India.96 million WLL capacity. is World's 7th largest telecommunications company providing comprehensive range of telecom services in India like Wireline.732 million cellular customers as on March-2009. 7. with 29. it has about 46. BSNL serves its customers with its wide bouquet of telecom services. 2000. making focused efforts and planned initiatives to bridge the RuralUrban Digital Divide ICT sector. formed in October. Whether it is inaccessible areas of Siachen glacier and North-eastern region of the country. 63730 Rkm of Microwave Network connecting 602 Districts. 5. 480196 Rkm of OFC Cable. The company offers vide ranging & most transparent tariff schemes designed to suite every customer. Broadband. Carrier service. In basic services.1 Introduction Bharat Sanchar Nigam Limited (Company Profile) Bharat Sanchar Nigam Ltd.e.Neeraj Kumar Singh (Roll No. 45. expanding the network.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. BSNL has installed quality telecom network in the country and now focusing on improving it.S. IN Services etc. -9By. BSNL is numero uno operator of India in all services in its license area. MPLS-VPN. In fact there is no telecom operator in the country to beat its reach with its wide network giving services in every nook & corner of country and operates across India except Delhi & Mumbai.807 million broadband capacity. 85 per cent share of the subscriber base and 92 percent share in revenue terms.L. 7330 cities/towns and 5. CDMA mobile. has more than 46.288 million GSM Capacity. BSNL cellular service. garnering 16.854million internet capacity.N. more than 37382 fixed exchanges. 4. CellOne. a telecom service provider of India Unit-2 2.19 percent of all mobile users as its subscribers. Today. GSM Mobile. BSNL is the only service provider. BSNL is miles ahead of its rivals. introducing new telecom services with ICT applications in villages and wining customer's confidence. 60000 BTS. VSAT.520751161) .

. The infrastructure asset on telephone alone is worth about Rs. BSNL plans to expand its customer base from present 47 millions lines to 125 million lines by December 2007 and infrastructure investment plan to the tune of Rs.000 million (US $ 14. BSNL has been adjudged as the NUMBER ONE ISP in the country. Scaling new heights of success.26 billion) for financial year 200607.351. data and video through the same Backbone and Broadband Access Network.L.99. The company has vast experience in Planning. 1 Telecom Company of India.67 million) in the next three years. The turnover. Dial-up. reach. Leased Line.37 billion).10 By.733 crores (US$ 16. the present turnover of BSNL is more than Rs.520751161) .436 million WLL subscribers and 3.557 million DataOne broadband customers and 5. At present there are 3.S. . Account Less Internet(CLI). BSNL has set up a world class multi-gigabit.807 million equipped capacity at the end of March-2009. network integration and Maintenance of Switching & Transmission Networks and also has a world class ISO 9000 certified Telecom Training Institute.630. a telecom service provider of India BSNL has more than 5.Neeraj Kumar Singh (Roll No. multi-protocol convergent IP infrastructure that provides convergent services like voice. DIAS.390 million (US $ 2. Installation.693 million Internet Customers who access Internet through various modes viz.N.820 million (US $ 8 billion) with net profit to the tune of Rs.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. comprehensive range of telecom services and the desire to excel has made BSNL the No. nationwide coverage.

To provide point of interconnection to other service provider as per their requirement promptly. National Plan Target of 500 million subscriber base for India by 2010.2 MISSION i.11 By. 2. ii.1 VISION To become the largest telecom Service Provider in Asia. 1 GSM operator in its area of operation.L.2. a telecom service provider of India 2.Neeraj Kumar Singh (Roll No. iii.S. To Provide world class telecom infrastructure in its area of operation and to contribute to the growth of the country's economy. To provide quality and reliable fixed telecom service to our customer and there by increase customer's confidence. 2.     . ii.2 Vision.520751161) .N. To facilitate R & D activity in the country.2.. Providing telephone connection in villages as per government policy. To provide mobile telephone service of high quality and become no. Mission & Objectives 2. Broadband customers base of 20 million in India by 2010 as per Broadband Policy 2004. Contribute towards: i.2. Implementation of Triple play as a regular commercial proposition.3 OBJECTIVES   To be the Lead Telecom Services Provider. To provide world class State-of-art technology telecom services to its customers on demand at competitive prices.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. iv.

a telecom service provider of India 2..3 Organization Chart of BSNL .520751161) .N.Neeraj Kumar Singh (Roll No.S.12 By.L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.

4 Staff Distribution of Group-wise staff strength of DoT and BSNL (numbers) as on 31st March 2007 is indicated below: .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.13 By.S..Neeraj Kumar Singh (Roll No.520751161) .L.N. a telecom service provider of India 2.

(Note: 1 US $ = 40. 124578 Crores (US $ 31. These investments have been financed by the internal accruals.13 billion) as on 31.25 billion) and Revenues is Rs. 10. 88.50 billion).5. The Company has a net worth of Rs.5 Finance Bharat Sanchar Nigam Limited.520751161) .51 billion) in 2007-08.2008. 38053 crores (US $ 9.S. . is certainly on a financial ground that's sound.03.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.5. a telecom service provider of India 2. the largest Public Sector Undertaking of the Nation.1 Gross Investment in Fixed Assets The BSNL is making substancial investment year to year for its network expension and mordenisation.128 crores (US$ 22.000 crores (US $ 2. 7180 crore ( US $ 1.14 By. authorised equity capital of Rs. 5.2 Cumulative Capital Outlay BSNL has Gross Fixed Assets of over Rs.79 billion) in Fixed Assets. Paid up Equity Share Capital of Rs.02 INR as on 31-03-2008) 2.02 billion).N.Neeraj Kumar Singh (Roll No.000 crores (US $ 1. During the current financial year BSNL has made the gross investment of Rs.L.. 2.

It has achieved a phenomenal growth during the last few years and is poised to take a big leap in the future also. Driven by various policy initiatives. particularly beginning with the announcement of NTP 1994 and was subsequently re-emphasized and carried forward under NTP 1999.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. .. It is one of the prime support services needed for rapid growth and modernization of various sectors of the economy. Indian telecommunication sector has undergone a major process of transformation through significant policy reforms.1. including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government. The Telecom Regulatory Authority of India (TRAI) was. called the Telecom Regulatory Authority of India Act. a telecom service provider of India Unit-3 Indian Telecom Sector at a Glance The telecom services have been recognized the world-over as an important tool for socio-economic development for a nation.520751161) .N. The sector is growing at a speed of 46-50% during the recent years. 1997. established with effect from 20th February 1997 by an Act of Parliament. thus. to regulate telecom services. This rapid growth is possible due to various proactive and positive decisions of the Government and contribution of both by the public and the private sectors.1 Status of Telecom Sector The Indian Telecommunications network with 353 million connections (as on Setember 2008) is the third largest in the world.L.15 By. 3.Neeraj Kumar Singh (Roll No. the Indian telecom sector witnessed a complete transformation in the last decade.1 Telecom Regulatory Authority of India (TRAI) The entry of private service providers brought with it the inevitable need for independent regulation. 3.S. The rapid strides in the telecom sector have been facilitated by liberal policies of the Government that provides easy market access for telecom equipment and a fair regulatory framework for offering telecom services to the Indian consumers at affordable prices.

S. orders and regulations issued cover a wide range of subjects including tariff. which will enable India to play a leading role in emerging global information society. between two or more service providers.. The New Telecom Policy. establishing a Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to take over the adjudicatory and disputes functions from TRAI. The directions. It also recognized the need for resolving the prevailing problems faced by the operators so as to restore their confidence and improve the investment climate.520751161) . contemplating the opening up of all the segments of the telecom sector for private sector participation. It clearly recognized the need for strengthening the regulatory regime as well as restructuring the departmental telecom services to that of a public sector corporation so as to separate the licensing and policy functions of the Government from that of being an operator. decision or order of TRAI. 3. interconnection and quality of service as well as governance of the Authority. orders and directives to deal with issues coming before it and provided the required direction to the evolution of Indian telecom market from a Government owned monopoly to a multi operator multi service open competitive market.16 By.N. . TDSAT was set up to adjudicate any dispute between a licensor and a licensee. which promotes a level playing field and facilitates fair competition. The TRAI Act was amended by an ordinance. 1999 (NTP-99) was approved on 26th March 1999.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. effective from 24 January 2000.L. NTP-99 laid down a clear roadmap for future reforms. to become effective from 1st April 1999.2 New Telecom Policy 1999 The most important milestone and instrument of telecom reforms in India is the New Telecom Policy 1999 (NTP 99). a telecom service provider of India TRAI‘s mission is to create and nurture conditions for growth of telecommunications in the country in manner and at a pace.1. between a service provider and a group of consumers. In pursuance of above objective TRAI has issued from time to time a large number of regulations. One of the main objectives of TRAI is to provide a fair and transparent policy environment. and to hear and dispose of appeals against any direction.Neeraj Kumar Singh (Roll No.

a telecom service provider of India Key features of the NTP 99 include: · · · · Strengthening of Regulator. Spectrum Management made transparent and more efficient. All the commitments made under NTP 99 have been fulfilled.2000 the guidelines for entry of private sector in National Long Distance Services without any restriction on the number of operators.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. · · Department of Telecommunication Services (DTS) corporatised in 2001. and the reform process is now complete with all the sectors in telecommunications opened for private competition. some even ahead of schedule.17 By. Private telecom operators licensed on a revenue sharing basis.3 National Long Distance National Long Distance opened for private participation.1.S. The Government announced on 13.Neeraj Kumar Singh (Roll No. Resolution of problems of existing operators envisaged.L. · Direct interconnectivity and sharing of network with other telecom operators within the service area was permitted. . National long distance services opened to private operators.. in letter and spirit. plus a one-time entry fee.N. 3. International Long Distance Services opened to private sectors. The DOT guidelines of license for the National Long Distance operations were also issued.520751161) .08. each one of them.

There is now no limit on the number of service providers in this sector. · Licence period would be for 20 years and extendable by 10 years.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. · · Private operators will have to enter into an arrangement with fixed-service providers within a circle for traffic between long-distance and short-distance charging centers. The revenue sharing agreement would be to the extent of 6%. · Private operators to pay one-time entry fee of Rs.25 million plus a bank guarantee of Rs.1. However.N.NLD Guidelines · Unlimited entry for carrying both inter-circle and intra-circle calls. Total foreign equity (including equity of NRIs and international funding agencies) must not exceed 74%.L.Neeraj Kumar Singh (Roll No.200 million. 3. which will be released on fulfillment of the roll out obligations. India had agreed under the GATS to review its opening up in 2004.250 million.25 million plus a Financial Bank Guarantee (FBG) of Rs.4 International Long Distance In the field of international telephony. The annual licence fee including USO contribution is @ 6% of the Adjusted Gross Revenue and the fee/royalty for the use of . · Seven years time frame set for rollout of network. open competition in this sector was allowed with effect from April 2002 itself. a telecom service provider of India Highlights . The applicant company pays one-time non-refundable entry fee of Rs. The licence for ILD service is issued initially for a period of 20 years. with automatic extension of the licence by a period of 5 years. spread over four phases. Promoters must have a combined net worth of Rs.. · Private operators allowed to set up landing facilities that access submarine cables and use excess bandwidth available. Any shortfall in network coverage would result in encashment and forfeiture of bank guarantee of that phase.520751161) .S.18 By.25 million.

In addition. these PoPs should conform to Open Network Architecture (ONA) i. Credits to the Fund shall be through Parliamentary approvals.19 By.10. Preferably. the Indian Telegraph (Amendment) Act. At present 10 ILD service providers (9 Private and 1 Public Sector Undertaking) are there. may also give grants and loans.12. An administrator was appointed for this purpose.2006 as the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act.5 Universal Service Obligation Fund Another major step was to set up the Universal Service Obligation Fund with effect from April 1. Subsequently.520751161) .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. . The resources for implementation of USO are raised through a Universal Service Levy (USL) which has presently been fixed at 5% of the Adjusted Gross Revenue (AGR) of all Telecom Service Providers except the pure value added service providers like Internet. The Fund is to be utilized exclusively for meeting the Universal Service Obligation and the balance to the credit of the Fund will not lapse at the end of the financial year. E-Mail service providers etc. Subsequently. 3. should be based on internationally accepted standards to ensure seamless working with other Carrier‘s Network.L.N. An Ordinance was promulgated on 30.S. 2002.2004. 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed by both Houses of Parliament in December 2003. 1885. the licensee undertakes to fulfill the minimum network roll out obligations for installing at least one Gateway Switch having appropriate interconnections with at least one National Long Distance service licensee. an Act has been passed on 29.2006 as the Indian Telegraph (Amendment) Ordinance 2006 to amend the Indian Telegraph Act. The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules. the Central Govt. a telecom service provider of India spectrum and possession of wireless telegraphy equipment are payable separately. Voice Mail. There is no bar in setting up of Point of Presence (PoP) or Gateway switches in remaining location of Level I Tax‘s. As per current roll out obligations under ILD license.Neeraj Kumar Singh (Roll No.1.03.. 2004 were notified on 26. 1885 in order to enable support for mobile services and broadband connectivity in rural and remote areas of the country.e.

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. services. Audiotex services. for a period of 20 years.1. a telecom service provider of India 3. which cover collection. Further.1. Any Indian company with a maximum foreign equity of 74% is eligible for grant of license. carriage. Closed User Group (CUG) as Value Added Services over its network to the subscribers falling within its service area on non-discriminatory basis. transmission and delivery of voice and/or non-voice messages over Licensee‘s network by deploying circuit. and for proper conduct of telegraph and telecom services has decided to issue the new guidelines for grant of license of Internet services on non-exclusive basis. respectively. Unified Access Services operators are free to provide. Revenue and the fee/royalty for the use of spectrum and possession of wireless telegraphy equipment are payable separately.L. The frequencies are assigned by WPC wing of the Department of Telecommunications from the frequency bands earmarked in the applicable National Frequency Allocation Plan and in coordination with various users subject to availability of scarce spectrum. The sector has seen tremendous technological advancement for a period of time and has necessitated taking steps to facilitate technological ingenuity and provision of various services.N. The licence Fee is 10%. Video Conferencing. At present 3 to 6 service providers (2-5 Private and 1 Public Sector Undertaking) are there in most of the service areas. within their area of operation. 3. and/or packet switched equipment. The licence for Unified Access Services is issued on nonexclusive basis.20 By. and consumer interest in particular. Videotex. . The Government in the public interest in general.7 Internet Service Providers (ISPs) Internet service was opened for private participation in 1998 with a view to encourage growth of Internet and increase its penetration. 8% & 6% of Adjusted Gross Revenue (AGR) for Metro and Category `A‘. Category `B‘ and Category `C‘ Service Areas.6 Unified Access Services Unified access license regime was introduced in November‘2003. E-Mail.520751161) .. extendable by 10 years at one time within the territorial jurisdiction of a licensed Service Area.Neeraj Kumar Singh (Roll No.S. The country is divided into 23 Service Areas consisting of 19 Telecom Circle and 4 Metro Service Areas for providing Unified Access Services (UAS). the Licensee can also provide Voice Mail.

3.21 By. tele-medicine. all of which resulted in lower tariff environment on voice telephony. It came into force with effect from 1 February 2004.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. which covered arrangements amongst service providers for payment of IUC.15-5.1. The setting up of National Internet Exchange of India (NIXI) would enable bringing down the international bandwidth cost substantially. cable TV network. Government has announced Broadband Policy in October 2004.4835 GHz band has been delicensed. With a view to encourage Broadband Connectivity. both outdoor and indoor usage of low power Wi-Fi and Wi-Max systems in 2. It is estimated that the number of broadband subscribers would be 9 million by 2007 and 20 million by 2010.Neeraj Kumar Singh (Roll No. The main features of the new IUC regime were lower Access Deficit Charges (ADC). Cellular Mobile Services. a telecom service provider of India 3. reduction of ADC on NLD and ILD calls. These technologies include optical fibre. .725-5. covering Basic Services. entertainment as well as employment generation by way of high-speed access to information and web based communication. transit and termination of calls in a multioperator environment.35 GHz and 5. The use of low power indoor systems in 5.L.30 per minute irrespective of the terminating network.4 GHz-2.875 GHz bands has also been delicensed in January 05.. 2003 and issued the same in October 2003.1. thus making the broadband connectivity more affordable. National Long Distance (NLD) and International Long Distance (ILD) services.S. uniform termination charges of Rs 0. e-governance. The main emphasis is on the creation of infrastructure through various technologies that can contribute to the growth of broadband services.520751161) . Broadband connectivity has been defined as ― Always On‖ with the minimum speed of 256 kbps. including Wireless-in-Local Loop (Mobile). Asymmetric Digital Subscriber Lines (ADSL).9 Broadband Policy 2004 Recognizing the potential of ubiquitous Broadband service in growth of GDP and enhancement in quality of life through societal applications including tele-education. DTH etc. The SACFA/WPC clearance has been simplified. This regulation provided for charges payable by one operator to another for origination.8 Interconnection Usage Charges In January 2003. TRAI notified the Interconnection Usage Charges (IUC) Regulation.N.

police stations etc. By this new policy.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. The service providers permitted to enter into franchisee agreement with cable TV network operators. a telecom service provider of India The prime consideration guiding the Policy includes affordability and reliability of Broadband services..520751161) . employment opportunities. the Government intends to make available transponder capacity for VSAT services at competitive rates after taking into consideration the security requirements. Departments of Local Self Governments. Panchayats. public health institutions and panchayats by 2008. health centres.L.Neeraj Kumar Singh (Roll No. DOT will be subsidizing the infrastructure cost of Broadband network through support from USO Fund to ensure that Broadband services are available to users at affordable tariffs. banks. The Year 2007 was declared the year of broadband.000 exchanges in rural areas. Target has been set for 20 million broadband connections by 2010 and providing Broadband connectivity to all secondary and higher secondary schools. In rural areas. incentives for creation of additional infrastructure. can be provided with this connectivity in the vicinity of above-mentioned 20.N. Departments of Health and Family Welfare. secondary schools. Departments of Education is very important to carry the advantage of broadband services to the users particularly in rural areas.22 By. The role of other facilitators such as electricity authorities.000 existing exchanges in rural areas having optical fibre connectivity. Departments of ITs of various State Governments. national security and bring in competitive environment so as to reduce regulatory interventions. connectivity of 512 KBPS with ADSL 2 plus technology (on wire) will be provided from about 20. However.S. . the service providers permitted to provide Receive-Only-Internet Service. Community Service Centres. induction of latest technologies. the Licensee shall be responsible for compliance of the terms and conditions of the licence. Panchayats. Further in the case of DTH services.

reduction in ADC and the increased competition. · The peak National Long Distance tariff for above 1000 Kms.06 .04 per minute in 2006.10 Tariff Changes The Indian Telecom Sector has witnessed major changes in the tariff structure.67 per minute to US$ 0. The Telecommunication Tariff Order (TTO) 1999. Canada & UK. · The International Long Distance tariff from US$ 1.US$ 0.02 per minute in 2006.S. in 2000 has come down from US$ 0. · The mobile tariff for local calls has reduced from US$0.L.520751161) . had begun the process of tariff balancing with a view to bring them closer to the costs.US$ 7.82 per month .1.36 per minute in 2000 to US$ 0.36 per minute in 1999 to US$ 0.16 per minute in 2004 for USA.Neeraj Kumar Singh (Roll No. has resulted in a dramatic fall in the tariffs.23 By. a telecom service provider of India 3..009 .N.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. This supplemented by Calling Party Pay (CPP). issued by regulator (TRAI). · The Average Revenue Per User of mobile is between US$ 5.

and Voice Mail The above would be subject to the following conditions: · FDI upto 100% is allowed subject to the conditions that such companies would divest 26% of their equity in favor of Indian public in 5 years.S. (Press Note 3(2007)) Foreign direct investment upto 74% permitted.11 Foreign Direct Investment (FDI) In Basic. Composite FDI permitted is 74% (49% under automatic route) subject to grant of license from Department of Telecommunications and adherence by the companies (who are investing and the companies in which investment is being made) to the license conditions for foreign equity cap and lock in period for transfer and addition of equity and other license provision. Electronic Mail.Neeraj Kumar Singh (Roll No. wherever required.. In manufacturing sector 100% FDI is permitted under automatic route. Proposals for FDI beyond 49% shall be considered by FIPB on case-to-case basis. and Global Mobile Personal Communications by Satellite.520751161) .24 By. subject to licensing and security requirements for the following: · Radio Paging Service FDI upto 100% permitted in respect of the following telecom services: · · · Infrastructure Providers providing dark fibre (IP Category I).N. if these companies were listed in other parts of the world. · · The above services would be subject to licensing and security requirements.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Cellular Mobile. a telecom service provider of India 3. Paging and Value Added Service.1. .L.

royalty up to 5 percent for domestic sales and 8 percent for exports in telecom manufacturing projects.and global mobile personal communications by satellite. · Foreign equity of 74%(49 % under automatic route) permitted for telecom services .25 By. cellular mobile. technology fee up to US $ 2 million.12 Investment Opportunities and Incentives An attractive trade and investment policy and lucrative incentives for foreign collaborations have made India one of the world‘s most attractive markets for the telecom equipment suppliers and service providers.1. paging.L. Automatic approval of 100 percent foreign equity.basic. basic.S. Scope for tax exemption on financing through venture capital Concessional import duties for import of equipment by telecom service projects (including cellular. · · · · · · · Telecom services projects extended a number of incentives: Amortization of license fee Tax holiday Enhanced limit of external commercial borrowings Rebate on subscription to shares/debentures. internet etc.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.) · Full repatriability of dividend income and capital invested in the telecom sector.N.520751161) . a telecom service provider of India 3. value added services .Neeraj Kumar Singh (Roll No. . · · No industrial license required for setting up manufacturing units for telecom equipment..

Mobile Gramin Sanchar Sewak Scheme (GSS) – a mobile Public Call Office (PCO) service is provided at the doorstep of villagers.1. 2772 GSSs are covering 12043 villages.49% in Mar 2003 to approx. In the rural area teledensity increased from 1.33 million in 31.15 % during last 5 years (about 7% per annum). 2008) provided in the rural areas.520751161) .2008.63 million as on 31. a telecom service provider of India 3.03.15 Rural Telephony Apart from the 76. 3.1.13 Network Expansion The telecom sector has shown robust growth during the past few years.35 million in 30.S.2003 to 38.2008.2008.Neeraj Kumar Singh (Roll No.L.1. Also. an incremental growth of 34.66 million as on 30.09. Further. The following table shows the growth trend of telecom sector from last five years: The number of telephones has increased from 54. Thus.65 million fixed and WLL connections (as on Sep.31million as on 30.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. 11.11% in 2003 to 30.32% in Mar 2003 to 75.18 million to 4. The broadband subscribers grew from a meager 0. to provide Internet service.e.64 % in September 2008 i. The target of 80 million rural connection by 2010 will be met during . At present. the fixed line subscribers decreased from 41.76% in september 2008.09.26 By. Wireless subscribers increased from 13. 3.2003 to 353.91 million during the last 4 years. Sanchar Dhabas (Internet Kiosks) have been provided in more than 3500 Block Headquarters out of the total 6337 Blocks in the country.3 million as on 31.14 Trend in Tele-density Tele-density in the country increased from 5.. More than 2 lakh PCOs are also providing community access in the rural areas.5% in September 2008 and in the urban areas it is increased from 14.2003 to 315.09.N. 551064 VPTs have been provided.03. 92% of the villages in India have been covered by the VPTs. Whereas.03.This indicates a rising trend of Indian telecom subscribers. It has also undergone a substantial change in terms of mobile versus fixed phones and public versus private participation.

Pilot projects on the existing and emerging technologies have been undertaken including WiMax. infrastructure vendors.344 million.000 towers by 2010.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Also to beef up R&D infrastructure in the telecom sector and bridge the .520751161) .Neeraj Kumar Singh (Roll No. USO subsidy support scheme is also being utilized for sharing wireless infrastructure in rural areas with about 18. 3G etc.L.1. 3. Efforts are being continuously made to develop affordable technology for masses. 3.27 By. Research is on for the preparation of tested infrastructure for enabling interoperability in Next Generation Network.S. Modern technologies inductions are being promoted. as also comprehensive security infrastructure for telecom network. a telecom service provider of India year 2008 itself. Inflow of FDI into India‘s telecom sector during Jan 1991 to August 2008 was about Rs 233. 3G and Broadband Wireless Access(BWA) policies has since been issued.16 Opportunities India offers an unprecedented opportunity for telecom service operators.N.1.. Emphasis is being given to technologies having potential to improve rural connectivity.17 Research & Development India has proven its dominance as a technology solution provider. manufacturers and associated services companies. more than 6 per cent of the approved FDI in the country is related to the telecom sector. Also. It is expected that the telecom equipment R & D shall be doubled by 2010 from present level of 15%. A host of factors are contributing to enlarged opportunities for growth and investment in telecom sector: · · · An expanding Indian economy with increased focus on the services sector Population mix moving favorably towards a younger age profile Urbanization with increasing incomes 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.

28 By. top academic institutes and the Government of India together set up the Telecom Centres of Excellence (COEs). Support Planned Predictive Growth for stability.S.520751161) .L. Reduce Rural Urban Digital Divide to reach out to masses. Management of National Information Infrastructure (NII) during Disaster Cater the requirement of South East Asia as Regional Telecom Leader · · · · · · · .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.N. a telecom service provider of India digital divide. The main objectives of the COEs are as follows: · Achieve Telecom Vision 2010 that stipulates a definite growth model and take it beyond. Secure Information Infrastructure that is vital for country‘s security.Neeraj Kumar Singh (Roll No. Capacity Building through Knowledge for a sustained growth. cellular operators. Utilize available talent pool and create environment for innovation..

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. · Broadband coverage for all Gram panchayats by the year 2010 3.5 Introduction of Spread of IPTV and Mobile TV · IPTV in 600 towns by 2010.2.3 Broadband · · Broadband with minimum speed of 1 mbps. 3. Broadband coverage for all secondary & higher secondary schools and public health care centres by the end of year 2008. .Neeraj Kumar Singh (Roll No.2.N. Reduce urban-rural digital divide from present 25:1 to 5:1 by 2010. a telecom service provider of India 3.2.2.1 Network expansion · · 500 million connections by the year 2010. 3.S. · Increase sharing in urban areas to 70% by 2010.2.4 Infrastructure Sharing · USO subsidy support scheme for shared wireless infrastructure in rural areas with about 18. Provision of mobile coverage of 90% geographical area by 2010.29 By.L.2 Rural telephony · · One phone per two rural households by 2010 (about 80 million rural connections)..520751161) .000 towers by 2010. 3.2 Targets Set By The Government 3.

N.S.2. Comprehensive security infrastructure for telecom network. 3.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.2. a telecom service provider of India 3.. · · Quadrupling production in 2010.7 Research & Development · · · · Pre-eminence of India as a technology solution provider.8 International Bandwidth · Facilitating availability of adequate international bandwidth at competitive prices to drive ITES sector at faster growth.6 Manufacturing · Making India a hub for telecom manufacturing by facilitating more and more telecom specific SEZs.30 By. Tested infrastructure for enabling interoperability in Next Generation Network. .L. Achieving exports of 6 times from present level of 0.520751161) . 3. Doubling the telecom equipment R&D by 2010 from present level of 15%.5 billion in 2010.2.Neeraj Kumar Singh (Roll No.

31 353..Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.6 lakh Foreign Direct Investment (in million) (from 182042 January 2000 till August 2008) Licenses issued Basic CMTS UAS Infrastructure Provider I ISP (Internet) ISP with Telephony (Broadband) National Long distance International Long Distance 2 60 224 177 382 125 24 19 million .N.L.Neeraj Kumar Singh (Roll No.31 By.64 38.35 315.66 5.520751161) .3 Indian Telecommunications at a glance (As on 30th September 2008) Rank in world in network size Tele–density (per hundred populations) Telephone connection (In million) Fixed Mobile Total Village Public Telephones 3rd 30.S. a telecom service provider of India 3.

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

3.4

Bharat Nirman

A time-bound plan for rural infrastructure by the Government of India in partnership with State Governments and Panchayat Raj Institutions 2005-2009. ―Bharat Nirman will be a time-bound business plan for action in rural infrastructure for the next four years. Under Bharat Nirman, action is proposed in the areas of irrigation, road, rural housing, rural water supply, rural electrification and rural telecommunication connectivity. We have set specific targets to be achieved under each of these goals so that there is accountability in the progress of this initiative.” - Dr. Manmohan Singh Prime Minister Goal: Every village to be connected by telephone: remaining 66,822 villages to be covered by November 2007 The Department of Telecom in the Ministry of Communications and Information Technology has the responsibility of providing telephone connectivity to the 66,822 villages that remain to be covered.

3.4.1 Funds
The resources for implementation of universal services obligation are raised through a Universal Service Levy which has presently been fixed at 5% of the adjusted gross revenue of all telecom service providers except the pure value added service providers like internet, voice mail, e-mail service providers. The rules also make a provision for the Central Government to give grants and loans to the Fund. The balance to the credit of the Fund does not lapse at the end of the financial year. USO Fund assigns the task of providing VPTs on the basis of bids through open tender and in this case the work has been assigned to Bharat Sanchar Nigam Ltd. Out of the 66,822 villages identified, connectivity in 14,183 remote and far-flung villages will be provided through digital satellite phone terminals. From the USOF, assistance is provided for both capital expenditure as well as operational expenditure. It is estimated that a total sum of Rs.451 crore would be required to provide VPTs in these 66,822 villages and the entire sum will be met out of USOF and no separate allocation from Government would be required.

- 32 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

3.4.2 Additional Incentives
Telecom service providers are being assisted through the USOF to penetrate into the rural areas for the following activities: - Maintenance of existing village public telephones (VPTs). - Provision of an additional rural community phone in villages with a population of more than two thousand and where no public call office exists. - Replacement of village public telephones installed on Multi Access Radio Relay (MARR) technology. - Telephone lines installed in household in specified rural areas.

3.4.3 Increasing Rural Teledensity
Rural teledensity will be significiantly enhanced during the period of Bharat Nirman.

3.4.4 Knowledge Connectivity
The Government is committed to expanding rural connectivity through a slew of measures so that rural users can access information of value and transact business. This will include connecting block headquarters with fibre optic network, using wireless technology to achieve last mile connectivity and operating information kiosks through a partnership of citizens, panchayats, civil society organizations, the private sector and Government.

- 33 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

Unit-4

Institutional History Of The Telecom sector in India

The telegraph act of 1885 governed the telecommunications sector. Under this act, the government was in-charge of policymaking and provision of services . Major changes in telecommunications in India began in the 1980s. Under the Seventh Plan (1985-90), 3.6 percent of total outlay was set aside for communications and since 1991, more than 5.5 percent is spent on it (Figure 1). The initial phase of telecom reforms began in 1984 with the creation of Center for Department of Telematics (C-DOT) for developing indigenous technologies and private manufacturing of customer premise equipment. Soon after, the Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were set up in 1986. The Telecom Commission was established in 1989. When telecom reforms were initiated in 1994, there were three incumbents in the fixed service sector, namely DoT (Department of Telecom), MTNL and VSNL. Of these, DoT operated in all parts of the country except Delhi and Mumbai. MTNL operated in Delhi and Mumbai and VSNL provided international telephony. Given its all-India presence and policy-making powers, the DoT enjoyed a monopoly in the telecom sector prior to the major telecom reforms. However, subsequent to the second phase of reforms in 1999, which included restructuring the DoT to ensure a level playing field among private operators and the incumbent, the service-providing sector of DoT was split up and called Department of Telecom Services (DTS). DTS was later corporatized and renamed Bharat Sanchar Nigam Limited (BSNL). This meant separation of the incumbent service provider from the policy-maker. Broadly, DoT is now responsible for policy-making, licensing and promotion of private investments in both telecom equipment and manufacture and provision of telecom services. BSNL, a corporate body, is responsible for the provision of services. A crucial aspect of the institutional reform of the Indian telecom sector was setting up of an independent regulatory body in 1997 – the Telecom Regulatory Authority of India (TRAI), to assure investors that the sector would be regulated in a balanced and fair manner. TRAI has been vested with powers to ensure its independence from the government. The government has retained the licensing function with itself. The main issue with respect to licensing has not been whether it should be with the regulator but that the terms and conditions of licensing should involve consultations with TRAI to ensure transparency in the bidding process Some of the main functions of TRAI include fixing tariffs for telecom services, dispute-settlement between service providers, protecting consumers through monitoring of service quality and ensuring compliance to license conditions, setting service targets and pricing policy for all operators and service providers.

- 34 By- Neeraj Kumar Singh (Roll No- 520751161)

Appropriate communications software is also necessary to manage the transmission of data between computers. This equipment makes it possible to conduct electronic meetings while the participants are at different locations. To illustrate the . between service provider. Typically. The Internet is a continuously evolving global network of computer networks that facilitates access to information on thousands of topics. It is predicted that computing performance will double every eighteen months.S.520751161) . between service provider and a group of consumers. To fairly adjudicate any dispute between licensor and licensee.N. and then the teletypewriter. a telecom service provider of India Further changes in the regulatory system took place with the TRAI Act of 2000 that aimed at restoring functional clarity and improving regulatory quality. Facsimile (fax) equipment transmits a digitized exact image of a document over telephone lines. Messages are digitized so the caller's message can be stored on a disk. transmitted voices. 1997). Facsimile transmission also enjoyed rapid growth during this time. It began in the mid-1800s with the telegraph. telecommunications development has been rapid and wide reaching. At the receiving end. Telecommunications is the transmission of data and information between computers using a communications link such as a standard telephone line. Actually. Some applications that rely on this communications technology include the following: Electronic mail (e-mail) is a message transmitted from one person to another through computerized channels. and a communication channel connecting the two users. television cameras. The 1990s have seen the greatest advancement in telecommunications. Since the 1960s. TRAI can frame regulations and can levy fees and charges for telecom services as deemed necessary. telecommunications is not a new concept.. The rate of advancement in computer technology shows no signs of slowing. Voice mail is similar to an answering machine in that it permits a caller to leave a voice message in a voice mailbox. it has been estimated that the power of the computer has doubled thirty-two times since World War II (With row.L. communication equipment for sending and receiving data. whereby sounds were translated manually into words.Neeraj Kumar Singh (Roll No. The Internet is utilized by millions of people daily. developed in 1876. developed in the early 1900s. a basic telecommunications system would consist of a computer or terminal on each end. a separate disputes settlement body was set up called Telecom Disputes Settlement and Appellate Tribunal (TDSAT). and communications software and equipment. was able to transmit the written word. the fax machine converts the digitized data back into its original form. Videoconferencing involves the use of computers. The development of dial modem technology accelerated the rate during the 1980s. Both the sender and receiver must have access to on-line services if they are not connected to the same network. In addition. E-mail is now one of the most frequently used types of telecommunication.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. The regulatory body also has a separate fund (called the TRAI General Fund) to facilitate its functioning. then the telephone.35 By.

88 million cellular lines in March 1998 (DoT Annual Report. the entire country was divided into 21 telecom circles.520751161) .36 By. excluding Delhi and Mumbai (Singh et. reported that only fifty thousand computers existed in the world in 1975.L.6 percent of households will be able to afford $30 (for a $1000 investment per line). there exists competition in most service areas. 1995). In December 2002. the technology of modern telecommunications will be discussed. former U. 2002). DoT and MTNL were joined by private operators but not in all parts of the country.1 Private Participation in Telecom For the provision of basic services.2 Teledensity and Village Public Phones (VPTs) India's rapid population increase coupled with its progress in telecom provision has landed India's telephone network in the sixth position in the world and second in Asia (ITU). The much publicized statistic about telecom development in India is that in the last five years. the market is still dominated by the incumbent. After the recent changes. By mid-2001. 72 per cent of the total private investment in telecom has been in cellular mobile services followed by 22 per cent in basic services. the rise in coverage of cellular mobile will imply increased competition even for the basic service market because of competition among basic and cellular mobile services. increasing productivity. This increase in telecommunication capabilities allows businesses to benefit from the information revolution in numerous ways. With telecom markets opened to competition. it was estimated that more than fifty thousand computers were sold every ten hours (U.N. In the following sections.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. whereas. 4. the private sector provided approximately 10 million telephones in fixed. . then only about 1. After a recent licensing exercise in 2002.5 times those added in the last five decades! The annual growth rate for basic services has been 22 percent and over 100 percent for internet and cellular services.1 Progress of reforms 4. by 1995. all six of the private operators in the basic segment had started operating (Table 1).1. However.S. As Dossani (2002) argues. 4.S. WLL (Wireless Local Loop) and cellular lines compared to 0. 1999). Department of Commerce. Deregulation and new technology have created increased competition and widened the range of network services available throughout the world. Ronald Brown.. and identifying new markets.Neeraj Kumar Singh (Roll No. the comparison of teledensity of India with other regions of the world should be made keeping in mind the affordability issues. the lines added for basic services is 1. a telecom service provider of India computer's rapid growth.1. secretary of commerce. Assuming households have a per capita income of $350 and are willing to spend 7 percent of that total income on communications. the stage is now set for greater competition in most service areas for cellular mobile Over time. al. such as streamlining their inventories.S.

DoT tariffs cross-subsidized the costs of access (as reflected by rentals) with domestic and international long distance usage charges (Singh et. re-balancing of tariffs .37 By.10 lakhs in December 2002 for VPT and from 90. internet (international gateways) and 49 percent in national long distance.9 phones per 100 persons in India compared to the average 7. led to a high degree of cross-subsidization and introduced inefficient decisionmaking by both consumers and service-providers.4 in rural areas. pricing of the kind that prevailed in India prior to the reforms. This coverage increased from 4.reducing tariffs that are above costs and increasing those below costs .N. 2003)..3 Foreign Participation India has opened its telecom sector to foreign investors up to 100 percent holding in manufacturing of telecom equipment. about 44 percent of the FDI was in cellular mobile and about 8 percent in basic service segment.1.1 lakhs in March to 106. . the government has made efforts to connect villages through village public telephones (VPT) and Direct Exchange Lines (DEL). most of the FDI has come in the cellular mobile sector partly due to the fact that there have been more cellular mobile operators than fixed service operators. In basic telecom for example. more than 84 percent of the villages were connected by 503610 VPTs with private sector also providing 7123 VPTs . a telecom service provider of India Teledensity has risen to 4.4 Tariff-setting An essential ingredient of the transition from a protected market to competition is the alignment of tariffs to cost-recovery prices. 74 percent in radio-paging services. Traditionally. internet services. basic telephone. the coverage is still much higher in urban areas . cellular mobile. foreign direct investment (FDI) in the telecom sector is second only to power and oil . This total FDI includes the categories of manufacturing and consultancy and holding companies 4. BSNL has been mainly responsible for providing VPTs.S.1. 1999).13. Figure 2 shows the growth rate of fixed and cellular mobile subscription between 1998 and 2002. 2002). which is not surprising in view of the relatively lower subscriber base for cellular mobile. For instance. The overall telecom growth rate is likely to be high for some years. Since 1991.6 lakhs in March 2002 to 5. A noteworthy feature of the growth rate is the rapid rate at which the subscriber base for cellular mobile has increased in the last few years of the 1990s. given the increase in demand as income levels rise and as the share of services in overall GDP increases.6 lakhs in December 2002 for DELs. 56.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Until now. Although. Foreign investors have been active participants in telecom reforms even though there was some frustration due to initial dithering by the government. during the period 1991-2001.279 crores (Figure 4) (DoT Annual Report.520751161) .7 in urban areas compared to1. The growth rate will be even higher due to the price decrease resulting from a reduction in cost of providing telecom services. and infrastructure providers (e-mail and voice mail).3 mainlines per 100 people around the world. Therefore. and other value added services (FICCI. al.Neeraj Kumar Singh (Roll No.L.858 FDI proposals were received during 1991-2002 totaling Rs. 4.was an essential pre-condition to promoting competition among different service providers and efficiency in general.

The service rendered by the government monopoly was also very poor. obsolete instruments and machinery in the telephone department were the order of the day in the pre reforms era. as in many developing countries. private operators are expected to provide consumers value for their money.38 By.6 in 1997-98. Telephone faults per 100 main lines came down to 10.1. al. 1999). In India.L. Cost based pricing. a person seeking a telephone connection had to wait for years before he could get a telephone connection. Armed with financial and technical resources.Early 1990's saw initial attempts to attract private investment.N.72 and 26.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.g. A notable revolution has occurred in the telecom sector. it conducted periodic reviews and made changes in the tariff levels. Government also retained the rights for manufacturing of Telecommunication equipments.Neeraj Kumar Singh (Roll No. Table 4 shows the current level of telephone charges in India effective from January. cross connections due to faulty / ill maintained telephone lines. the call charges were quite high. due to lack of funds with the government.14 in Mumbai and Delhi respectively in 2002-03 compared to 11. if necessary. also provides a basis for making subsidies more transparent and better targeted to specific social objectives. low teledensity resulted in great emphasis being laid on rapid expansion often at the cost of quality of service.the Department of Telecommunication (DoT). In fact. e. 2003.. the government could never meet the demand for telephones. Telecommunication equipment manufacturing was deli censed in the year 1991. and greater incentive to make profits.S. Wrong billing. telephones lying dead for many days continuously due to slackness on the part of the telecom staff to attend to complaints. MTNL and VSNL were created in the year 1986. Subsequently. a major departure from the pre-reform scenario. Re-balancing led to a reduction in cross-subsidization in the fixed service sector. 4. One of the benefits expected from the private sector's entry into telecom is an improvement in the quality of service to international standards.32 and 19. this was entirely in the hands of the central government and due to lack of competition.2 Pre reform period and Telecommunication in India Before 1990's Telecommunication services in India were complete government Monopoly . In the pre reforms era.520751161) . 4. a telecom service provider of India TRAI issued its first directive regarding tariff-setting following NTP 99 aimed at re-balancing tariffs and to usher in an era of competitive service provision. . achieving the USO.5 Service Quality One of the main reasons for encouraging private participation in the provision of infrastructure rests on its ability to provide superior quality of service. Quality of service was identified as an important reform agenda and TRAI has devised QOS (Quality of Service) norms that are applicable across the board to all operators (Singh et. Further.

1 1991-92: 1. 12.NTP 1994 .07 million(fixed lines) in 1991.3 Liberalization and reforms in Telecom sector since early 1990's 4. a situation which is entirely opposite to the conditions prevailing in the pre reforms era when one had to wait for years to get a telephone connection. allowed private/foreign players to enter the 'basic' and the 'new cellular mobile section. Wireless in Local Loop (WLL) telephones and cellular mobile telephones were unknown in India a few years ago. there are 54. licenses were issued against license fees through a bidding process. The first step toward deregulation and beginning of liberalization and private sector participation was the announcement of National Telecom Policy 1994.33 million are fixed line telephone connections. FDI up to 49% of total equity was also allowed in these sectors.39 By. The policy allowed one private service provider to compete in basic services with the incumbent DoT in each DoT internal circle. On 24th July 1991.L. The number of telephone connections which was only 2.520751161) .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. 2.N.Neeraj Kumar Singh (Roll No. The ultimate beneficiary has been the consumer. Prices of services in this sector have fallen drastically. for the first time. protect the interest of the consumers.60 million are WLL telephones1. This policy initiated the setting up of an independent regulator–the Telecom Regulatory Authority of India (TRAI). The main objective of TRAI is to provide an effective regulatory framework to ensure fair competition while. when one had to wait for years to get a telephone connection.15 million (fixed lines) in 1981 increased to 5. Cell phones charges have come down so much that today one can see even a common man going around with a cell phone in his hand. As part of the implementation of the NTP 94.3. a telecom service provider of India Today. there are many players in the telecom sector.S. Telecom Manufacturing Equipment license was delicensed in 1991. Today (as in 2003). Automatic foreign collaboration was permitted with 51 per cent equity by the collaborator. 3. Gone are the days.69 million are cellular mobiles and the remaining 0. at the same time. which was established in 1997. 4.62 million telephone connections of which 41. It allowed duopoly in cellular mobile services in each circle. .. Government announced the New Economic Policy. The private companies are giving various incentives to attract customers. Telephone connections are today affordable to everyone and are also easily available.

. TRAI was set up as an autonomous body to separate the regulatory functions from policy formulations and operational functions. 3. 2.N.3. 4. For value added services the foreign equity cap was fixed at 51 per cent.3. 3. 4.S.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. radio paging and cellular mobile.L. voice mail.3. videotex services. subject to license.3 1994-95: 1. An agreement between Department of Telecommunication (DoT) and financial institutions to facilitate funding of cellular and basic telecom projects. a telecom service provider of India 4. audiotex services. .Neeraj Kumar Singh (Roll No.40 By. Foreign equity participation up to 49 per cent was allowed in basic telecom services.520751161) . The Government announced a National Telecom Policy 1994 in September 1994. 4. 5. Internet Policy was finalized. permitted in companies providing Global Mobile Personal Communication (GMPC) by satellite services. electronic mail. It opened basic telecom services to private participation including foreign investments.2 1992-93: Value added services were opened for private and foreign players on franchise or license basis. External Commercial Borrowing (ECB) limits on telecom projects made flexible with an increased share from 35 per cent to 50 per cent of total project cost. Eight cellular licensees for four metros were finalized. 2. radio paging.3. and video conferencing. data services using VSAT's.5 1998-99: FDI up to 49 per cent of total equity. These included cellular mobile phones. 4. Coverage of the term "infrastructure" expanded to include telecom to enable the sector to avail of fiscal incentives such as tax holiday and concessional duties.4 1996-97: 1.

TRAI Act was amended.3.. 3. First phase of re-balancing of tariff structure started. 2. 2. 4. DOT/MTNL was permitted to start cellular mobile telephone service. especially with respect to the need and timing of introduction of new services provider.Neeraj Kumar Singh (Roll No. A package for migration from fixed license fee to revenue sharing offered to existing cellular and basic service providers. STD and ISD charges were reduced by 23 per cent on an average. Department of Telecom Services and Department of Telecom operations corporatized by creating Bharat Sanchar Nigam Limited. To separate service providing functions from policy and licensing functions. TRAI reconstituted: clear distinction was made between the recommendatory and regulatory functions of the Authority.520751161) . National Telecom Policy 1999 was announced which allowed multiple fixed Services operators and opened long distance services to private operators.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S. 5.N. 3.3. a telecom service provider of India 4. The Amendment clarified and strengthened the recommendatory power of TRAI. Domestic long distance services opened up without any restriction on the number of operators. Voice and data segment was opened to full competition and foreign ownership increased to 100 per cent from 49 per cent previously. 4. 6.L.6 1999-00: 1. . and in terms of licenses to a services provider.41 By.7 2000-01: 1. 7. Department of Telecom Services was set up.

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Competition was introduced in all services segments. 6. 2002 from March 31. 7. 4. private players were allowed to set up international gateways via the submarine cable route.3. . The five-year tax holiday and 30 per cent deduction for the next five years available to the telecommunication sector till 31st March 2000 was reintroduced for the units commencing their operations on or before 31st March 2003. Communication Convergence Bill..S. 2001 was introduced in August 2001. 4. 5.Neeraj Kumar Singh (Roll No. The termination of monopoly of VSNL in International Long Distance services was antedated to March 31. In August 2000.L. 3.520751161) . 5. These concessions were also extended to internet services providers and broadband networks. 2004. The licensing terms and conditions for Cellular Mobile were simplified to encourage entry for operators in areas without effective competition. Internet Service Providers were given approval for setting up of International Gateways for Internet using satellite as a medium in March 2000. Second phase of tariff rationalization started with further reductions in the long distance STD rates by an average of 13 per cent for different distance slabs and ISD rates by 17 per cent.8 2001-02: 1.N. Thirteen ISP's were given clearance for commissioning of international gateways for Internet using satellite medium for 29 gateways. TRAI recommended opening up of market to full competition and introduction of new services in the telecom sector. 2.42 By. Usage of Voice over Internet Protocol permitted for international telephony service. a telecom service provider of India 4.

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

6. License conditions for Global Mobile Personal Communications by Satellite finalized in November 2001.

7. National Long Distance Service was opened up for unrestricted entry with the announcement of guidelines for licensing NLD operators. Four companies were issued Letter of Intent (LOI) for National Long Distance Service of which three licenses have been signed.

8. The basic services were also opened up for competition. 33 Basic Service licenses (31 private and one each to MTNL and BSNL) were issued up to 31stDecember 2001.

9. Four cellular operators, one each in four metros and thirteen were permitted with 17 fresh licenses issued to private companies in September/October 2001. The cell phone providers were given freedom to provide, within their area of operation, all types of mobile services equipment, including circuit and/or package switches that meet the relevant International Telecommunication Union (ITU)/ Telecom Engineering Centre (TEC) standards.

10. Wireless in Local Loop (WLL) was introduced for providing telephone connection in urban, semiurban and rural areas.

11. Disinvestment of PSU's in the telecom sector was also undertaken during the year. In February 2002, the disinvestment of VSNL was completed by bringing down the government equity to 26 per cent and the management of the company was transferred to Tata Group, a strategic partner. During the year, HTL was also disinvested.

12. Government allowed CDMA technology to enter the Indian market.

13. Reliance, MTNL and Tata were issued licenses to provide the CDMA based services in the country.

14. TRAI recommended deregulating regulatory intervention in cellular tariffs, which meant that operators need no longer have prior approval of the regulator for implementing tariff plans except under certain conditions.

- 43 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

4.3.9 2002-03 1. International long distance business opened for unrestricted entry.

2. Telephony on internet permitted in April 2002.

3. TRAI finalized the System of Accounting Separation (SAS) providing detailed accounting and financial system to be maintained by telecom service providers. 4.3.10 2003-04 1. Unified Access Service Licenses regime for basic and cellular services was introduced in October 2003. This regime enabled services providers to offer fixed and mobile services under one license. Consequently 27 licenses out of 31 licenses converted to Unified Access Service Licenses.

2. Interconnection Usage Charge regime was introduced with the view of providing termination charge for cellular services and enable introduction of Calling Party Pays regime in voice telephony segment.

3. The Telecommunication Interconnection Usage Charges Regulation 2003 was introduced on 29th October 2003 which covered arrangements among service providers for payment of Interconnection Usage Charges for Telecommunication Services and covered Basic Service that includes WLL (M) services, Cellular Mobile Services, and Long Distance Services (STD/ISD) throughout the territory of India

4. The Universal Service Obligation fund was introduced as a mechanism for transparent cross subsidization of universal access in telecom sector. The fund was to be collected through a 5 per cent levy on the adjusted gross revenue of all telecom operators.

5. Broadcasting notified as Telecommunication services under Section 2(i)(k) of TRAI Act.

- 44 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

4.3.11 2004-05 1. Budget 2004-05 proposed to lift the ceiling from the existing 49 per cent to 74 per cent as an incentive to the cellular operators to fall in line with the new unified licensing norm.

2. 'Last Mile' linkages permitted in April 2004 within the local area for ISP's for establishing their own last mile to their customers.

3. Indoor use of low power equipments in 2.4 GHz band de-licensed from August 2004.

4. Broadband Policy announced on 14th October 2004. In this policy, broadband had been defined as an "always-on" data connection supporting interactive services including internet access with minimum download speed of 256 kbps per subscriber.

5. The Telecommunications (Broadcasting and Cable Services) Interconnection Regulation 2004 was introduced on 10th December 2004.

6. BSNL and MTNL launched broadband services on 14th January 2005.

7. TRAI announced the reduction of Access Deficit Charge (ADC) by 41 per cent on ISD calls and by 61 per cent on STD calls which were applicable from 1st February 2005.

4.3.12 2005-2006 1. Budget 2005-2006 cleared a hike in FDI ceiling to 74 per cent from the earlier limit of 49 per cent. 100 per cent FDI was permitted in the area of telecom equipment manufacturing and provision of IT enabled services.

2. Annual license fee for National Long Distance (NLD) as well as International Long Distance (ILD) licenses reduced to 6 per cent of Adjusted Gross Revenue (AGR) with effect from 1st January 2006.

- 45 By- Neeraj Kumar Singh (Roll No- 520751161)

are required for making India a hub for telecom equipment manufacturing and attract FDI. BSNL announced 33 per cent reduction in call charges for all the countries for international calls.46 By. creation of integrated facilities for telecom equipment through SEZ and encouraging overseas vendors to set up facilities in India. 4. 7. Certain measures like financial packages. Ceiling Tariff for higher capacities reduced by about 70 per cent and for lower capacity by 35 per cent. BSNL and MTNL launched the 'One-India Plan' with effect from 1st March 2006 which enable the customers of BSNL and MTNL to call from one end of India to other at the cost of Rs. The NTP 1999 sought to promote exports of telecom equipments and services.13 11th plan (2007-20012) FDI in Telecom sector has increased in recent years with value of 81.62 billion with share of 10% in total inflow during January 2000 to June 2005. 4.520751161) . Quality of Service (Code of Practice for Metering and Billing Accuracy) Regulation 2006 introduced on 21st March 2006. There is thus immense potential for indigenous manufacturing in India.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. it is essential to enhance the prospect for inflow of increased funds. a telecom service provider of India 3. 5. Therefore. 1 per minute. any time of the day to phone.. This is mainly in telecom services and not in telecom manufacturing sector. . 6. formation of a telecom export promotion council.L. Most of the state-of-the-art telecom equipments including mobile phones are imported from abroad.3. But till date export of telecom equipment remains minimal.N.S. TRAI fixed Ceiling Tariff for International Bandwidth. It has also undergone a substantial change in terms of mobile versus fixed phones and public versus private participation. Regulation on Quality of Service of Basic and Cellular Mobile Telephone Services 2005 introduced on 1st July 2005.Neeraj Kumar Singh (Roll No. The telecom sector has shown robust growth during the past few years.

1998). This has made most of the developing countries heavy with debt and is spending a large portion of their small finances in meeting debt payments. 1998). The level of finance available for borrowing the traditional sources has reduced in the recent past (Merna & Njiru. . Telecommunication is pervasive in all aspects of our lives. housing. 1998). The private sector has participated in infrastructure projects that are financed and managed by the public sector as consultants and contractors during the implementation phase of infrastructure development projects.. thus making developing countries borrowing to service debts and not financing infrastructure development projects.47 By. Telecommunication plays a central role in helping developing countries participate in the global economy.520751161) . The main reason for this is that telecommunication competes with food. But it is important to focus on telecommunication investments. financing it from state funding is probably the easiest method to use (ITU. When introducing telecommunication into a country. most developing countries rely on borrowing from multi-lateral and bilateral agencies to finance infrastructure developments. sanitation.” (John Williamson. The level of funding provided from national budget financing will depend on the priorities of the national government and its total tax resources. 2002). Due to low levels of public finance derived from general taxation.S. because it improves the other mentioned problems. health. The main reasons to fund telecommunications infrastructure are the positive externalities that occur from the services used (World Bank. political and economic changes that are reshaping modern society and world order (Dunning & Hamdan. In certain parts of the world these thing are unheard of and the people who live there have not experienced the numerous benefits of modern telecommunications. transport and education. These technological innovations we have in our lives are often taken for granted and it is unfeasible for us to imagine how we can function without them. from the stereo in your living room to the mobile phone you carry with you. Globalization is a central driving force behind the rapid social.. 1997). a telecom service provider of India Unit-5 Why Telecom Investment and Expansion??.1 Traditional methods of financing telecommunication in developing countries Funds for the development of infrastructure projects are traditionally obtained from general taxation or borrowed from multi-lateral and bilateral agencies (Merna & Njiru. The Rural Telecom Dilemma) 5.Neeraj Kumar Singh (Roll No.N. Traditional methods of public financing and management of infrastructure projects have failed to keep pace with the rising demand for infrastructure services in most developing countries. One of the key elements of globalization is telecommunication.L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. “Telecommunication maybe isn’t the highest priority for developing countries.

Decentralization and integration processes.Neeraj Kumar Singh (Roll No. Adequate quantity and reliability of infrastructure such as telecommunication are key factors in the ability to participate and compete in international trade.2 Social and economic as well as political benefits Better provision of social services.1 Direct economic benefits Costs and time saved. Infrastructures such as telecommunications are a vital factor to the activities of households and to economic production. Integration and empowerment of communities. a telecom service provider of India 5. 2. households and other users is one of the major challenges of economic development Infrastructure represents the wheels of economic activity. Benefits from telecommunications infrastructure are several and can be grouped into three Categories: 1.48 By. Users demand infrastructure services not only for direct consumption but also for raising their productivity (Bond.g.S.1. Reduction of poverty 3. 5. substituting more expensive means of communication and learning.1. education and health.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Human welfare and economic development. e..520751161) . Infrastructure services are used in the production process of nearly every sector. 1997). Providing a service as telecommunications or other infrastructure service to meet the demand of businesses.N. Improvement of the environment. even in traditional commodities .L.

1 Macroeconomic Linkages between Infrastructure Reform and Poverty Category Economic growth Benefits More private participation in infrastructure may help growth. there should ultimately be some employment creation. In Latin America. poverty may not be reduced by much and inequality may increase.2.49 By. a 1 % growth in per capita GDP leads to a reduction of the share of the poor of close to half a percentage point. The negative impact of layoffs on poverty can be mitigated through severance packages and other policies.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.Neeraj Kumar Singh (Roll No. The poor may be hurt by the reduction of public subsidies for infrastructure services (there may be cuts in the subsidies for both connections and consumption). 1997). .L. If infrastructure reforms generate economic growth. investments by large foreign corporations dealing in the modern communication technologies may be expected as their confidence in the country's improving economy increase. Reforms may generate layoffs and reductions in wages.N. privatisation) and the phasing out of subsidies generate fiscal space for other public programs that may be better targeted and more pro-poor.2 Investing in telecommunication projects – a multiplication effect? One benefit from what the innovations bring to developing nations is the improvement of the overall economy (Dunning & Hamdan. but it may take time. not only is their GNP boosted from the production of higher valueadded goods. Infrastructure reform can contribute to broadly based growth. but also. 1997). Risks If economic growth benefits mostly the non poor. by increasing productivity and easing access to capital markets. By encouraging the establishment of telecommunication industries within their countries.. Employment Public Expenditures Revenues from reforms (for example. and thereby poverty reduction. 5. with a possible reduction in social welfare. a telecom service provider of India 5.520751161) . at least during the transition period.S. the economy can progress to that which is predominantly characterized by secondary or tertiary industries (Dunning & Hamdan. Should these industries flourish and even expand.

The main market for the Indian software has been the USA.50 By. 2003). Europe.Neeraj Kumar Singh (Roll No. ICT industry generated 7. India exports software to 95 countries around the world and serves as a major outsourcing hub. 2002). paves way for understanding the multi-dimensionality of the ICT and its applicability in helping reduce poverty across various sectors (OECD. and to a lesser degree. has been a beneficiary of global software outsourcing. poor and disadvantaged (Mahmud. The manufacturing sector of ICT hardware and software contributes to the economic growth and creates employment in countries like China. or libraries (ITU. health care. Malaysia and Mexico.. 2002). Socio-economic development was earlier limited to providing services from top-down approaches to the communities who are less privileged. India. Since these sectors rarely create direct employment for the very poor. The important factor in this broad definition is that. The Organization for Economic Co-operation and Development‘s (OECD) definition makes a distinction between the manufacturing and service dimensions of the ICT. There is no denying of the fact that ICT has been recognized as an important tool for socioeconomic development.3 What is Information and Communications Technology? Information and Communications Technology (ICT) is an umbrella term that includes any communication device or application.N. cellular phones. activities producing and distributing ICT products can be found everywhere in the economy (OECD. achieving spectacular growth in this sector. ICT‘s are often spoken of in a particular context. on the other hand. 185 of the Fortune 500 companies outsourced their software requirements in India alone. a telecom service provider of India 5. as it breaks the traditional dichotomy between manufacturing and services.L. In 1998 OECD member countries agreed to define the ICT sector as a combination of manufacturing and services industries that capture. computer and so on. The definition OECD made. such as ICT‘s in education. encompassing: radio.000 jobs in India in 1998 (UNDP.7 billion USD in 1999 and creating over 180. 2001). as well as the various services and applications associated with them. . transmit and display data and information electronically.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. such as videoconferencing and distance learning. 2002). television.520751161) .S.

N. the gap between ―information rich and information poor‖ community is also increasing.Neeraj Kumar Singh (Roll No. “The information and technology gap and related inequities between industrialized and developing nations are widening: a new type of poverty -information poverty .” (United Nations. Relevant and concerned information. 2003).Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. The digital divide. is therefore often just a symptom of a much more profound and longstanding economic and social division within and between societies. and thus it is little different from other income. accelerating the flow of free data and information. Most developing countries. a telecom service provider of India 5. especially the least developed countries are not sharing in the communications revolution.L. 2000) .S. Hence.51 By. is missing. linked to poverty.looms. which they want to know.4 The digital divide According to ITU (2002) the digital divide is a result of socio-economic disparities. and which existed prior to the ICT revolution. health and education divides.520751161) . Lack of information is one of the major causes for this situation (Jaggi.. and shrinking time and national boundaries. The new millennium has ushered in a world of greater inter-connectivity.

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.52 By..L.N.520751161) .S. a telecom service provider of India .Neeraj Kumar Singh (Roll No.

L.520751161) .Neeraj Kumar Singh (Roll No.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.53 By.S..N. a telecom service provider of India .

S. a telecom service provider of India .520751161) .L.54 By.Neeraj Kumar Singh (Roll No.N.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B..

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B..55 By.L.N.S.Neeraj Kumar Singh (Roll No. a telecom service provider of India .520751161) .

N.56 By.L.Neeraj Kumar Singh (Roll No.. a telecom service provider of India .520751161) .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.

520751161) .Neeraj Kumar Singh (Roll No..L.S. a telecom service provider of India .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.N.57 By.

such as building roads. it strengthens democracy. hospitals and providing drinkable water.L.N. foster empowerment of the poor.S. ICT was generally considered as a luxury and was not considered as a viable option for development policy where other needs. Thanks to the huge amount of information easily accessible and hardly controllable by governmental institutions.520751161) .. 2001). the digital divide has today become one of the most prominent considerations in the development divide. The G8 Dot Force. International initiatives are proliferating. Exclusion from ICT increases the divide between the developed and developing countries. facilitate access to education and health. help improve the environment and prevent natural disasters. However. etc. United Nations (UN) considers ICT a priority for the development of poor countries.Neeraj Kumar Singh (Roll No. the UN ICT Task Force and several other initiatives are aimed at effectively promoting access to ICT in the developing countries.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. were considered more urgent (Pedrelli et al.58 By. a telecom service provider of India In the past. . and the early judgment is no longer sustainable. and many developing countries agree on the importance of the role that ICT can play in their development. ICT can support the poor in business development. especially when considering the following points: ICT provides exceptional opportunities to effectively fight against poverty in the developing countries: for example.

and then choose a financial way based on those circumstances.Neeraj Kumar Singh (Roll No.520751161) . This has lowered the costs and time spending in these operations.N.59 By. The term financial engineering is even younger and was introduced during the 1980s. a telecom service provider of India Unit-6 What is creative or innovative financing? When you are planning for a way to finance a project it is important to do a deep research of the different specific factors that a country has. equity and risk. 6. 6.1. Finnerty (1988) defines financial engineering as the development and creative application of financial technology to solve financial problems and exploit financial opportunities.1 Public-private financial engineering Financial Engineering Public Private Direct Indirect Equity Risk Debt Mezzanine Equity According to Gerald (1998) the word finance was introduced in 1960s.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. The private sector has three mechanisms for participation and they are debt.S. . indirect. A factor that made it easier to start use financial engineering was the introduction of computers and communication technology or also known as ICT‘s.L..1 What is financial engineering? financial engineering are divided in a public and a private sector. mezzanine and equity. The public sector has four mechanisms for participation and they are direct.

520751161) . and especially in developing countries. Swaps and derivatives trading or dealing. Risk management. trading and portfolio management decisions. Infrastructure projects in developing countries bring several improvements of the country.60 By.” Lawrence Galitz (1995) Financial engineering is about employing theoretical finance and computer modelling skills to make pricing. Usually financial engineering are used to reduce the financial risk. Corporate Strategic planning. 1995). Reduction of poverty. When you are using derivative securities and other methods. Methods can be employed to take on unlimited risks under certain events. Portfolio management. a second thing is to restructure cash flows for better financial management (Galitz. Financial engineering are usually used in these areas: Investment banking. Primary and derivative securities valuation.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. The environment will be improved. hedging. .S. Financial information systems management. they lead to: Human welfare and economic development.L.N. or completely eliminate other risks by utilizing combinations of derivative and other securities (Galitz.Neeraj Kumar Singh (Roll No. 1995). Because financial engineering are used to finance projects it can be used to finance telecom projects around the world. This kind of infrastructure project is according to Merna & Njiru (2002) important in these countries because they are in need for that.. financial engineering aims to precisely control the financial risk that an entity takes on. a telecom service provider of India ”Financial engineering is the use of financial instruments to restructure an existing financial profile into one having more desirable properties. Securities trading.

61 By. During this time the government receives a payment from the operator. BOT and BOO also have this characteristics.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. but in BTO the ownership of the facility is directly transferred from the private party when the delivery is done. Because the private party runs the facility they get return of their investments. When the time period has exceeded. In short terms the private party build.3 Build-Own-Operate (BOO) As mentioned in BTO. BOT means that a consortium owns the project for a specific time period. Then the government signs a contract with a private company to be able to operate the facility. the completed BOT project is transferred to the government.L. They are also allowed to sell the facility at any time. 6.1 Build-Operate-Transfer (BOT) The build operate transfer system was according to Merna & Njiru (2002) introduced in the early 1980s by Targut Ozal who was the Prime Minister in Turkey at that time. the private party have the ownership of the facility during the projects whole lifetime. According to Ernst & Ngoc-Nga Pham (1994).2. BOO are used in projects that involve privatization or public private partnership. When you are using the BOO system. own and operate the facility. 2002). 6. A normal BOT project last approximately 20-30 years. and operates a facility for a specific period.2. a franchise is received by a private entity from the public sector. 1990. 6. the ownership will be transferred back to the public sector. when they privatized parts of the telephone system. design..2 Financing Strategies In this section we will present the different strategies involved when financing telecommunication projects. While the project is operating it is allowed to charge users to cover the investments. The BOT system has also been referred to Ozal‘s formula (Merna & Njiru. . This involves finance. The BTO system was successfully used in Thailand.2 Build-Transfer-Operate (BTO) Menheere & Pollalis (1996) says that BOT are often used in projects that involve privatization or public private partnership. at market value.Neeraj Kumar Singh (Roll No. a telecom service provider of India 6.S.2.520751161) . In other words.N. The revenue from the project is used to cover the debts and provide return on equity. construction.

Project Oxygen This is according to ITU maybe the most interested fiber-optic cable projects.2. Fiber-optic Link Across the Globe (FLAG) FLAG cooperate with RASCOM (The Regional African Satellite Communication System) to ensure connectivity to countries that are land-locked.62 By. a telecom service provider of India 6.L. a method of financing telecommunication that will be covered later.N. 6. The roll that the government agency has is to assume the operating risk. South African Far East (SAFE) Through private financing a telecommunication network are planned to be set up in this area.4 Build-Lease-Transfer (BLT) Ernst & Ngoc-Nga Pham (1994) tells that the completed facility is leased to the government agency when you are using the BLT system.S..520751161) . these payments provides a fixed rate of return on equity and amortising of debts. While using the BLT system the government can shift the financial risk to the private sector.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. This fiber-optic cable network are planned to cover 90 % of the world‘s international telecom traffic. Some examples of this method are shown below. AFRILINK This is a pan-African proposal to set up submarine cables through the entire continent‘s coastline.2.5 Fiber-optic cable or satellite ITU (2004-09-20) defines this strategy as through fiber-optic cable or satellite set up a telecommunication network in developing countries.Neeraj Kumar Singh (Roll No. This method is like cross border initiatives. . The government agency is also responsible that payments are done to the private sector.

2. France Telecom. In longer terms. For instance in Latvia the government sold 60 % of the telecommunication to private companies.6 Privatization According to Ferreira & Khatami (1996) the public ownership during 1970s and 1980s in developing countries lead to economic instability and structural inefficiencies. which lead to many bidders that wanted to invest in the country‘s telecommunication. expanded opportunities for growth and employment.Neeraj Kumar Singh (Roll No. The main benefits that a privatization results in are the following: Increased quantity of production.520751161) ..63 By.S. a telecom service provider of India 6. OTE (Greece) and Deutsche Telekom.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. When privatization was introduced in late 1980s the economy has improved in these countries. for example Telia. The privatization shall then be followed by a deregulation and the main purpose of this is that the privatized enterprises should face market forces. Generation of new technologies. 1996) According to Merna & Njiru (2002) privatization is the most innovative way of financing infrastructure projects. Increased foreign investments. Reduced unit cost of production.N. Improved quality of the output.” Merna & Njiru (2002) also say that privatization should be preceded by liberalization because it will help open up the market to international competition.L. . The definition of privatization is according to Gayle & Goodrich (1990): “The process of reducing the roles of government while increasing those of the private sector activities or asset ownership. (Ferreira & Khatami. Telekom Finland. Tele Danmark.

2. Business-cooperation-contracts. Refurbish-operate-lease. Build-own-operate-transfer.64 By.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.7 Acronyms Merna & Njiru (2002) describes a number of different acronyms that involves in different ways to finance infrastructure projects. .N. a telecom service provider of India 6.520751161) . Rehabilitate-operate-transfer. Build-rent-transfer. Design-build-operate-maintain.S. Build-own-operate-subsidies-transfer.. Design-build-finance-maintain Design-build-finance-operate Finance-build-own-operate-transfer.L.Neeraj Kumar Singh (Roll No. these are: BOD BOL BOOST BOOT BRT BCC DBOM DBFM DBFO FBOOT ROL ROT Build-operate-deliver Build-operate-lease.

3 Financing ways Here we will present the most common innovative ways to finance telecommunication projects. The leasing company then gives a payment to the supplier which sends the material for the telecommunication network to the country.1 Leasing According to Sigurd Hansson (1998) there are three different kinds of leasing: 1..L. Financial leasing – In this case a leasing company will be involved.S. If new material or products are launched the company upgrade the system to these new models.520751161) . The third way is when a sale of a service happens in the same time period when lending out a good.3. 6. Operational leasing – The company that lends out the material are responsible for reparations and maintains.Neeraj Kumar Singh (Roll No. How leasing works today: Customer Supplier Leasing Company . The country that wants to set up a telecommunication network in their country give monthly payments to the leasing company.N. 2.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India 6. 3.65 By.

N. Koller & Murrin (2000) explain that joint venture loans are an effective partnership. 5. 6. 4. They also decide that the leasing company will be the buyer.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. When the customer has got the equipment. the main reason for this is that the strong part of the joint venture will dominate in decision making. 3. they decide price. The customer decides which supplier they want to buy from. The big advantage to lease instead of buying is that the customer does not need to have financial resources except for the monthly payments. but to make this happen they must be structured. If one of the companies is weaker than the other it will generate a hinder to successful management.66 By. This will lead to that the country can establish a telecommunication network in a short time period and then pay the leasing company on a monthly basis.520751161) . a telecom service provider of India Deeper explanations of the leasing process that are showed in this figure are: 1.S. An survey that these authors have made show that when two company are involved in a joint venture that are evenly split. It is also important in this perspective to have two companies that are evenly strong and also as strong as possible to increase the chance to success.Neeraj Kumar Singh (Roll No. there is a 60 % chance to success. When the renting time has expired. the customer can continue to rent the equipment. usually every month.2 Joint venture loans If the loan for the investment is very big it could be difficult for one single company to lend the total sum. The leasing company pays for the equipment to the supplier. .3. The leasing company then buys the equipment and it will be delivered to the customer. To facilitate that these factors will be involved in the joint venture. but if the joint venture is not evenly split the chance to success is only 31 %. 6. Flexibility and autonomy are the main factors for a joint venture to work well. The leasing contract is established between the customer and the leasing company. it is recommended that an independent president are chosen and also do a full business system. Flexibility is important because the market and customer needs changes all the time. delivery and installation conditions. Copeland. which means that two or more companies share the risks and benefits of the loan. One solution to this problem is joint venture loans. which will lead to that the strong company put its own interest above the weaker company and even the whole joint venture. but at this time to a significant lower price.L.. they will start to pay the leasing company. 2.

The next part of the money will be paid when the equipment has been installed. 2003)..Neeraj Kumar Singh (Roll No.3. usually given from the government to a specific project.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.67 By. in other words set up guarantees for the investment. 6. The subsidiary method is good to financing telecommunications projects. a telecom service provider of India A joint venture often ends when the predetermined goal has been reached.3. according to Stromberg (2003). A better method for the telecom operator would be to give telecom equipment to the developing country. One part of the subsidy has been a gift from the government to the operators. give the country some instructions where the money will be spent.S. it is recommended to prepare for this break up in advance so that all parties that are involved are prepared for that.N.520751161) . Another form of subsidies is that the government reduces the taxes for a company that needs assistance. It could be a sum of money from example a foreign telecom operator that wants to invest in new markets. which would lead to a lock-in effect. An effect that the guarantees has. that makes a donations by either give out money for a certain project. give guarantees or subsides. These guarantees provides credit enhancement to financing infrastructure projects which according to Stromberg (2003) leads to economic growth and reducing poverty. Finally the remaining money will be paid to the operators in semi-annual installments that will last for several years. . thereby they get more financial resources. To reduce this risk the investor could. is when they are set it could be easier to get money from other investors.5 Telecom subsidies A definition of a subsidy is according to Cannock (2001) a grant or a monetary gift. there could be a risk that the country uses the money for other projects.4 Guarantees When an investor sends money that is aimed for a specific developing country. 6.S.3. The most common way gifts are given are from help organizations like U. Agency for International Development (USAID) or SIDA. 6.L.3 Gifts Gifts to developing countries could come in different forms. because they see that it is decided where the money will be invested and they do not risk to send money to developing countries that will use the money for other projects than has been determined (Stromberg.

These projects are financed by multilateral development banks (MDBs)..6 Aid A definition by Merna & Njiru (2002) of aid is a direct gift of money from a government or the World Bank. the African Development Bank (AfDB) and the InterAmerican Development Bank.S.520751161) . a telecom service provider of India 6. Bilateral aid The definition of bilateral aid is money sent from one government to another government. the Overseas Economic Cooperation Fund (OECF) of Japan and finally Kreditanstalt Fur Wiederaufbau (KFW) in Germany. Multi-lateral aid This aid is primarily aimed for infrastructure projects.L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. grants and funds to development banks. These banks drawing funds from several countries and their loans are usually more favorable than commercial banks. The aid is aimed for developing countries to raise their community and social welfare.3. It can be described in two different forms.68 By. Some examples of bilateral aid agencies around the world are UK‘s Department for International Development (DfID). The gift of money could be in different forms for example loans. Aid is usually aimed for two different sectors. the Asian Development Bank (ADB). The donor could be involved in the project and decide what shall be done.Neeraj Kumar Singh (Roll No. Some examples of these banks are the World Bank Group.N. This aid is aimed to finance a specific project in the country that gets the money. Projects aid This form of aid is often very structured from the donor. . Programme aid This form of aid finance imports in return for sectoral policy reforms.

Pacific Telecommunications Council (2004-10-20) illustrate that vendor and supplier financing could have a good supportive role in building up telecommunication.69 By. The task of the RASCOM project was to harness the satellite communication for the 40 African countries that was involved.Neeraj Kumar Singh (Roll No. A problem that ITU (2004-09-20) says about vendor and supplier financing is that this method only covers the cost of imported equipment. 1. for example in Thailand . vendor and supplier financing for telecommunication can take two different forms.L. 2.. Through the past decades several projects of this type has been successful in developing countries (ITU. and therefore not other costs like labor and domestic equipment. Pan-African Telecommunications Network (PANAFTEL) This project was built in the mid 1970s. When this financing method is used the vendor put its own credit at risk. a telecom service provider of India 6. It involved a cross-border network of radio links. could be difficult to capture through this method. The SPACECOM Project This project was launched in 1994 by ITU. Uganda and Tanzania. This project focused on bringing space technology to rural development.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.3. The Regional African Satellite Communication System (RASCOM) This project was established in 1993. 6.7 Cross-border initiatives A cross-border initiative means that several countries cooperate to build up a common telecommunication networks.520751161) . especially in Kenya. 2004-09-20).8 Vendor and supplier financing According to ITU (2004-09-20). This involves reduction in interest payments of a loan. Loans and guarantees.3.N. Despite this there have been successful telecommunication projects in developing countries that have used this method. but a problem could be that the large amount of money that is required for these projects. Interest rate subsidy.

Therefore the investor tries to be positioned between these two goals with a medium return and risk. Then they decide which offer that are best suitable for them. the country has to pay on a monthly basis to access the network. This could be a good starting point and thereafter decide which financial tool the country wants to use to invest in the telecommunication network. 2002) 6. 2003). the two basic ones are call and put options. Ideally for the investor is of course to have high returns and low risk.9 High yield dept (junk bonds) High yield debt also referred to junk bonds means that the private investors are satisfied with a good return.10 Reverse bid A definition (Merna & Njiru. A definition (Investorwords. There are several kinds of options. a telecom service provider of India 6.70 By. . (Merna & Njiru.520751161) . They spread the information to different suppliers and get bids from them. 2004-12-02) of pre-paid would be that you pay for access to a certain product or service in advance. 6. but it is a fairly recent concept in the United States.N. Call option A call option gives the holder the right but not the obligation to buy the underlying asset at a certain date for a certain price. 2003) junk bond is a successful tool for financing telecommunication projects in the future. These payments are often done on a monthly basis. It is very difficult to combine these two.3. To be able to receive a good return from a telecom project it is important to invest at an early stage (ITU.3.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. A connection to the telecommunication industry would be that when the telecommunication network is built. A connection to this market could be to start with a developing county that are interested in building a telecommunication network in their country. which Hull (2003) defines as follow.. According to (ITU. 6.Neeraj Kumar Singh (Roll No.12 Options According to Neftci (2004). 2002) of a reverse action would be that the buyers post their need for a project and then the suppliers bid to realize the need.3.S. The supplier that demands the least amount of money gets the deal and could start the project.L. options are an instrument of volatility.11 Pre-Paid The pre-paid system was introduced in Germany in the 1920s.3.

The main difference between an American option and a European option according to Hull (2003) is that the American option could be exercised at any time during its lifetime and the European option only can be exercised at the end of its lifetime. These are sharing. for example by the Ministry of Communication: Science and Technology (2004-11-19).13 Self financing As mentioned in many articles. the public sector usually takes the responsibility for that risk. If there is any risk that they together cannot control.3. which is a model for pricing European options. a criteria for a successful self financed telecommunication company in a developing country is that there are already a telecommunication network in the country.S. Sharing public private partnership This partnership means that the private and public sector share the risk for the project. a telecom service provider of India Put option A put option gives the holder the right but not the obligation to sell the underlying asset at a certain date for a certain price. if there would be big price movements the investor can take an action on the basis of that.14 Public Private Partnership Merna & Njiru (2002) indicate that public private partnership could be divided into three different types of partnerships. The main reason for this according to Hull (2003) is that the investor has the right but not the obligation to take an action. . This model was developed 1973 by Fisher Black.520751161) . which are plain vanilla and exotic options.3. A soft loan is a loan with lower rates than an ordinary bank loan. The advantage that this method has is that it provides insurance for the investor. Dominant public private partnership This kind of partnership is usually financed by a soft loan that the public sector usually is responsible for. 6.71 By. Neftci (2004) describes that there are several more options but they usually are divided in two categories. 6. The options in the plain vanilla category are treated with the Black-Scholes model. Options can be used in big projects like a telecommunication investment.N. that the company owns..Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. dominant and independent.Neeraj Kumar Singh (Roll No.L. Myron Scholes and Robert Merton.

. In resent years it has reduced a bit.520751161) .2 billion USD in 1990 to 57.L. Government-owned telecommunication According to Hadi Salim (1995) this system leads to that the government has monopoly of the telecommunication market in the country. If the country instead chooses to concentrate on the private sector in the domestic market they will reduce the risk.72 By. The partnership is involving the government and one or more private sector companies. Public sector investments This is a method that was used in Pakistan when they upgraded their telecommunication system in 1980.3. Private sector investments According to Kessides (2004).Neeraj Kumar Singh (Roll No. a telecom service provider of India Independent public private partnership This partnership is used in projects with high risks. investments from foreign private company could be a big risk for the developing countries. Private sector investments have risen from 6.15 Domestic ways of financing telecommunication investments If a country is not interested in foreign investors for their telecommunication projects. As mentioned in the article by Hadi Salim there could be a problem with government owned telecommunication because the government is suspicious of technology. but with a big difference that the public sector also are involved. there are some different options that could be successful. When this method is used the public sector does direct financing investments in the project.3 billion USD in 1998. The public sector in a developing country could be one part of financing a telecommunication network (Asia Trade Hub.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.. When this is done they know how big the loan would be and they also know how long time it will take to repay it (ITU. (Merna & Njiru. When this is done they have to continue calculate how many customers and how much they have to use the telecom services on a monthly basis.N. 2003). Customers pay for the investments If a country chooses to use this method they have to make precise calculation of how much the investments will cost. Principally is a public private partnership a form of privatization.S. 2002) 6. 2004-10-28).

The authors define financial risks as: “The impact on the financial performance of any entity exposed to risk.N. A problem that can arise in developing countries is that they have exotic currencies. which could result in big losses when the money are exchanged to a local currency. because the company could both win and lose on the deal. In the long time perspective the rate could be paid for example every 6 month until the loan matures. Interest rate risk Interest rate risk is a risk that affects both the borrowing and investing sides directly.. When a country that wants to invest in telecommunication has to deal with foreign currencies.” There are several kinds of financial risks that Merna & Njiru (2002) describes.Neeraj Kumar Singh (Roll No. which means that they have a currency that not are traded on any existing exchange market.S. it normally results in some form of currency risk. which may result in a more difficult process. Currency risk This kind of risk is usually seen in cross border flow of funds. because they do not know if the share price will rise or fall in the future.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. and here follows a presentation of them. The risk of equity is connected with warrants and convertible bonds. In the short time perspective the investment and its risk mainly depend on the money market.73 By.L.4 Financial risks When it comes to financial risks that could be involved in telecommunication projects Merna & Njiru (2002) claims that risks are usually known before because there are always two parties involved that has opposite viewpoints. . This risk is usually classified in a short and a long time perspective. a telecom service provider of India 6. The currency risk could also be a problem for foreign investors and other organizations that give money support to developing countries. If a company let investors buy warrants and bonds on the shares of a company there would be a risk involved. if the shares rise or fall it will affect the equity.520751161) . Equity risk The equity is usually connected with the share capital.

which is operation. Political risk This kind of risk follows by a publicity guaranteed loan or a loan directly to a foreign government. This risk is usually a result of that a seller is forced to sell under the market price which will result in lower incomes and volatile liquidity.74 By. at least to some extent. because of some problems. An example could be a developing country that has signed a contract with a financial institution of borrowing money. inconvertibility of foreign currency.S.N. when the loan is going to be paid back and the lender cannot accomplish the payments. If the project does not reach its goals it could result in a liquidity risk. if the supplier for some reason cannot deliver the required material.520751161) . Counterparty risk or credit risk Counterparty risk which is also called credit risk is seen in any financial transaction that involves two parties. The definition of political risk is: “The exposure to a loss in cross-border lending caused by events that are. is a risk if the project is not finished when it was supposed to. It could also be in diverse. Other factors that may affect the political risk in a country could be war. could be a risk if.. for example a telecommunication does not work properly or are involved in some legal issues which also result in more expenditures. expropriation of assets.Neeraj Kumar Singh (Roll No. a political risk is the risk that the investor could lose the money because of the countries political structure. terrorism or civil disturbance. under the control of the government of the borrowing country.” (Nagy. Some examples of political risks are tax laws.L. The second. . is input and outputs. A connection to the different related factors are that the first which is completion.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. the whole project could be affected. which will result in more expenditure. Liquidity risk Liquidity risk has a connection to commercial risk. 1979) In other words. The third and final. operation or input and output of the project and it could affect the financial performance. this will be enclosed with a risk because it is not for sure that the financial institution could accomplish the deal at the right time. The risk in this case is that a project often are dependent of suppliers. a telecom service provider of India Commercial risk Commercial risks are related to the completion. the government repudiation to sign a contract.

o Consumer price index This method compares the prices of products at different time periods. The products that are chosen. Montgomery Research (2004-12. It is important that companies understand how the regulatory market model works and then try to lessen the effects of the regulatory risk. o Commodity price index The price change of a selection of commodities is measured.L. One factor that can contribute to inflation is that the money supply in a specific country increases. a telecom service provider of India Regulatory risk Montgomery Research (2004-12-02) defines regulatory risk as the external regulatory actions and development that can impact the financial and operational performance of a company.S. o Producer price index This method compares the price incomes for different products to a producer at different time periods. which in other words means that the money loosens its value and the price for different projects could reach unlimited values. this could include revenue requirement.Neeraj Kumar Singh (Roll No.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Finally.. There are a lot of different methods of measuring inflation and here follow a description of some of them.520751161) . 1.N. 3.02) gives the following statement that companies should follow. .75 By. calculate the expected results and variance for each regulatory risk scenario. Inflation Inflation is defined (Investorwords. are products that are bought by the typically consumer. 2. Assign probabilities for every potential outcome for each regulatory scenario. cost structure and operational processes. The main difference between this method and the consumer price index is that the taxes that the consumer pays could vary from the taxes that the producer has to pay. o Wholesale price index Here the change of price is measured at the wholesaler. Quantify the financial impact for each regulatory scenario to the company. 2004-12-02) as a sustained rise in the general levels of prices.

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

o GDP deflator This is measured by the total amount of money spend on GDP. This method is the broadest measure of price levels. (Investorwords, 2004-12-02) A small amount of inflation in a country usually has a positive effect on the economy, but when the inflation increases it could have dramatically effects on the economy. A British economist called A.W. Phillips found a relationship between inflation and unemployment. When the inflation is high, the unemployment is low and vice versa, the Phillips curve is shown in the following figure.

- 76 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

6.4.1 Other typically risks in telecommunication projects
Merna & Njiru (2002) describes some other risks that may affect, for example an investment in telecommunication. Technological risk This is a risk that could be seen in all technological projects, for example in a telecommunication network. The risks contain temporarily shut downs of the network for some reasons, it can also be because of an upgrading of the network. Operating risk These risks are involved in commercial risk and it covers these scenarios. 1. The risk that the project cannot run at the predicted efficiency. 2. The risk that the project gets too expensive to run. 3. The project could be delayed, for example the suppliers could not deliver the needed material. 4. Natural disasters may arise that disturb the projects, for example fire and flooding. High transaction costs This is a part of operating risk, which contain the risk that the cost of using a network gets too high. Transaction cost also covers the risk that the business deals are too

- 77 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

6.5

Leverage effects on ways to finance telecommunication

A definition of leverage could be as follow, “The ability to control large amounts of a financial asset with a comparatively small amount of capital.” (The Handbook of World Stocks, Derivative & Commodity Exchanges, 2004-10-29) Usually the road to a successful leverage project is that a person/country that wants to invest in a project spends a minor sum of their budget and loan the rest of the money. This will generate that they have money left for other investments (The Handbook of World Stocks, Derivative & Commodity Exchanges, 2004-10-29). A leverage effect can be seen in three different projects: 1. Start-up grants/gifts. 2. Financial snow-ball effect. 3. Creating new investments. (LOCREGIS, 2004-10-29) A connection to this segment could be a developing country with a limited amount of money that wants to invest in telecommunication, therefore creating new investments. To be capable of manage this, is to take some percentage of their money and then loan the rest to build up the telecommunication network. Then they will have the remaining money left to upgrade the network or spend in other projects. According to the International Labor Organization (2004-10-29) there is another view of leverage effects which are seen when the projects are implemented. This involves factors that arise because of the new project. Some examples could be that new projects generate new jobs and new business can arise that has this project as a requirement for their own business, a good example is telecommunication. According to the World Bank (2004-12-02), new jobs in developing countries will generate poverty reduction. The new jobs will also generate economic growth which also helps reducing poverty.

- 78 By- Neeraj Kumar Singh (Roll No- 520751161)

79 By. a telecom service provider of India 6.N.520751161) ..Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.L.S.Neeraj Kumar Singh (Roll No.6 How financial development may promote growth .

Neeraj Kumar Singh (Roll No. Guislain & Qiang (2003) argues that the telecommunication sector includes both the production and distribution of equipment and the delivery of services (see Figure 12). it is often among the first infrastructure sectors to allow private and foreign provision.520751161) .7 The importance of telecommunication for economic growth “A well spread out telecommunication network provides a great impetus to the economic growth in a country.N. 2002).S. and therefore. is responsible for the economic growth in India (Proctor & Olivier. especially in the telecom sector which has been driven by transparent policies and better market conditions to attract foreign investments. . It is one of the key drivers of economic growth and plays a vital role in the competitiveness of modern economies. several policy initiatives have been taken by the government. India‘s move toward globalisation by progressive reforms.” (Ministry of Finance.L. 2004-11-26) The Indian economy is on the path of recovery.. Govt. a telecom service provider of India 6. of India. The gradual opening up of the economy ensured steady growth even at a time when other countries were in the grip of massive slowdown. Furthermore.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a trend setter for other sectors to open up and follow the path of reform. Considering the significance of its contribution and also the need to integrate with the global economy.80 By.

a telecom service provider of India A study by Contessi (2003) shows informal evidence.S. The study showed that there seems to be larger growth effects from telecommunication development in developing countries than in developed countries. .520751161) . a result that contradicts earlier findings. The result stems from a larger indirect impact of telecommunications in other sectors.L.N.Neeraj Kumar Singh (Roll No.81 By. Correlation between teledensity and GDP per-capita (178 countries) An econometric study by Jacobsen (2003) analysed the relationship between telecommunication development and economic growth.. that there is positive correlation between GDP per capita of a country and its endowment of connections.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.

520751161) . a telecom service provider of India .L..N.82 By.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.Neeraj Kumar Singh (Roll No.S.

L. GDP is strongly correlated with main telephone lines. They show that in the period between 1990 and 1999.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.N.Neeraj Kumar Singh (Roll No..S.83 By. . a telecom service provider of India The above figures show the correlations Jacobsen (2003) made. The relationship between GDP and personal computers and between GDP and telecommunications investment is also large.520751161) . while cellular telephones seem to have somewhat lesser correspondence with GDP.

1 Successful developing countries In this section we will present the data we have collected on the developing countries that have been successful in developing and expanding communication.N.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B..520751161) .L. literature and articles. The data is gathered from the Internet. a telecom service provider of India 6.Neeraj Kumar Singh (Roll No.S. Financing ways developing countries prefer (42 developing countries) Strategies developing countries prefer (42 developing countries) .84 By.7.

All the services provided by the company can be broadly classified as: Wire Line Services CDMA WLL Limited Mobility Services GSM & CDMA Based Full Mobility Services National Long Distance Services International Long Distance Services Leased Lines. as a Telecom Service Provider BSNL has installed Quality Telecom Network in the country and now focusing on improving it. introducing new telecom services with ICT applications in villages and wining customer's confidence. expanding the network. a telecom service provider of India Unit-7 B. Prepaid calling card etc.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S. It is niche in all verticals of telecom fields and is serving the nation by being with the nation.. The company offers vide ranging & most transparent tariff schemes designed to suite every customer. BSNL is numero uno operator of India in all services in its license area.85 By..P.1 BSNL as an integrated telecom service provider BSNL being the oldest telecom player. if we take the legacy of DoT before its formation.P. is a diverse telecom service provider. 7.T. & I.S.N.520751161) . Services.L. IN Services viz. D.N.L.S.Neeraj Kumar Singh (Roll No.S. .

86 By. NIC and EVDO 4. BSNL Internet: PSTN dial up access ISDN dial up access Leased line access Direct Internet Access (DIAS) Account free Internet dial up access based on CLI BROADBAND connection Wi-Fi SANCHARNET CARD Wi-Max WAP & GPRS Co-location service Web-hosting SMS & Bulk SMS .. BSNL offers different kinds of products suiting the different kind of people with different kind of need. These various product offered by BSNL can be summarized as follows: 1. a telecom service provider of India To fulfill the telecom service need of the nation.S. BSNL Mobile: Prepaid and Postpaid Unified Messaging WAP/ GPRS/ MMS 3G services 3.520751161) . BSNL Landline: Fixed Line Pre-paid (FLPP) BSNL PCO Phone plus services ISDN 2. BSNL WLL: Post-paid fixed mobility Post-paid and Pre-paid with full mobility BSNL data card.L.N.Neeraj Kumar Singh (Roll No.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.

Data Communication HVNET RABMN INMARSAT . Inet 14. BSNL Web Conferencing 12. BSNL Managed Network Services 6. a telecom service provider of India 5. Audio Conferencing 10. MPLS BASED VPN SERVICE 7.Neeraj Kumar Singh (Roll No.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S. EPABX 15.520751161) .. Intelligent Network Services (IN) 9. Leased Line : Managed Leased Line Service(MLLN) Access link Services 8.L.87 By. Video Conferencing 11.N. Fleet Management Solution 13.

5 m GSM lines. Bangalore.1.Neeraj Kumar Singh (Roll No. BSNL has set up a separate international business division to explore telecom opportunities abroad.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.2 Developmental Plans (2008-09) Expansion of 13. Pune & Kolkata. The North African Tunisian country is set to issue new licenses for fixed line and basic mobile services. Addition of 1206 K TDM TAX Addition of 200 IDRs Satellite System for Inaccessible Stations.88 By.N.S. Agreement signed with Franchisees for another 50 Cities VOIP: EOI under consideration 3G Services: Have been launched in Feb-2009 in select cities and now pan India roll-out is on the card. Moving aggressively on its overseas expansion plans. .1 New Initiatives WiMAX: Tender Invited for 1000 BTS at Rural Block HQs covering 25000 village communities centers. The PSU had already received in-principle board approval to enter the global market and bidding for Tunisia was one such step.1.520751161) . New Generation N/W: Is being deployed to meet future technology compatibility. BSNL chairman Mr Kuldeep Goyal had said the company would look at valuable buyout opportunities based on due diligence of the target company.. include national and international longdistance services. Expansion of 3m Broadband. a telecom service provider of India 7. DTH Services: Planning‟s to launch this service is on the card. The licences. 7. Expansion of 2 m WLL (CDMA) lines Introduction of 200K IP Transit Switch. IPTV: Launched in Three Cities viz.L. initially for 15 years.

206 as on 30.130 5. the company‘s presence in different categories of services are as follows: Basic Telephone (Bfone) Total Number of connections WLL (Tarang) Total Number of connections Village Public Telephones Total Number of Telephones Public Telephones (Local.430 45.09.N.22.31.22.09.09.01.S.09. a telecom service provider of India As per the records found from the company sources..024 50.08 Transmission Systems Digital (Route kms) Coaxial Microwave UHF Optical Fiber (Route kms) 6.182 as on 30.89 By.09.09.08 5. STD and Highway) Total Number of Public Telephones STD Stations Number of STD Stations Transmission Systems as on 30.520751161) .Neeraj Kumar Singh (Roll No.08) MCPC-VSATs IDR Systems (2 Mb/ 8 Mb) 82 99/38 .96.60.086 as on 30.08 46.09.120 as on 30.641 as on 30.08 19.08 33.269 Satellite Based Services (as on 30.08 3.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.L.

519) 74.Neeraj Kumar Singh (Roll No.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.2009)   Total number of connections District Headquarters covered - 46. a telecom service provider of India Mobile Services (As on 28.454(outof 54.02.90 By.049 618(All covered)      Total number of villages covered Total number of Town/cities covered National Highway covered (Km) State Highway covered (Km) Railway route covered (Km) - 2.975 19.930(out of 1.896(out of 60.90.520751161) .684.971 55.L..240.731 .77) 42.S.N.

L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.754 1427 .520751161) .91 By.S.N.Neeraj Kumar Singh (Roll No. a telecom service provider of India Telex/Telegraph Offices Departmental Telegraph Offices Telecom Centers Combined Offices Bureau-Fax Centers 961 716 44..

. infrastructure and human resource should certainly.92 By. a telecom service provider of India 7. size. ISDN services shall be extended to all the district headquarters. To set up Internet Nodes progressively up to District headquarters level. Objective of the plan are: The telephone connection shall be provided on demand and it shall be sustained. has revolutionized the very nature of the network. analogue coaxial and radio systems. Consolidation of the network and maintaining high quality of service comparable to International standards is the key aim of the Growth Plan. To provide digital transmission links up to all SDCAs.2 Growth Plan BSNL's future plan include a fast expansion programme of increasing the present 34 million lines to twice that number by 2005 and some 120 million lines by 2010. give it a distinct advantage. All the technologically obsolete analog exchanges will be replaced with digital exchanges. BSNL has already set in place several measures that should enable it to evolve into a fully integrated multi-operator by 2005 and its incumbent status. and from wireline to wireless. Junction and long distance network so as to make available sufficient bandwidth for the spread of Internet and Information technology. The shift in demand from voice to data domination. Extensive use of Optical fiber System in the local. To provide Intelligent Network Services.Neeraj Kumar Singh (Roll No.S.520751161) . Replacement of life expired.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Introduction of latest telecom services like National directory enquiry. Upgrading existing STD/ISD PCOs to full fledged Public Tele-Info Centers (PTIC) for supporting Multi media capability and Internet Access. progressively all over the country (major cities have already been covered). Introduction of Wireless technology (Supporting Internet Access) and optical fiber technology in subscriber loop. computerization etc. subject to demand.N.L.. Digital connectivity shall be made available to all the exchanges by 2007. The Network shall be made fully digital.

BSNL has over 60. the actual size of the orders could be 124 million lines . The reservation for ITI is likely to be outside this tender. erecting one cell site costs about Rs 30 lakh. Jharkhand. Nortel. which is equivalent to 31 million lines. It operates all over India. could be reserved for state-owned ITI.000 crore. About 30% of the contract size. or a single company can also bid for all the components.L. The scheme will cover 4 million customers in two phases. infrastructure and operating and business support systems (OSS & BSS).520751161) . Off these. North East. Huawei and ZTE. 3G lines. to other telecom companies in semi. Uttranchal and West Bengal. if this be the case. which takes the most of the cost and time for any operator. In a bid to infuse additional competition. Rajasthan. which will be expanded to 4 million in phase-II. about 21 million lines are reserved for third generation (3G) services. The tender details have been sent to global network majors.Neeraj Kumar Singh (Roll No.. including Ericsson. BSNL has more towers in tier-II and -III cities. Karnataka. Nokia Siemens. This implies. So it has decided to lease out those towers with unutilized capacity to the operators. The bids of all companies will be opened on July 16-2008. except Delhi and Mumbai. BSNL has decided to lease out its passive infrastructure that includes towers mainly. Aimed at generating more revenue and fully utilizing the huge tower base. this implies that the maximum order than equipment major can bag is for 50 million lines.urban areas in the country. The PSU plans to lease out its Ground Based Towers in circles such as Andaman and Nicobar. According to the industry analysts. Orissa. BSNL has divided the tender into four components. BSNL plans to cash in on its pan-India presence." The agreement would be on bilateral basis.S. Gujarat. Motorola. Jammu & Kashmir. Punjab.5 million customers covering about 1000 cities during 2002-03. Chhatisgarh. companies can bid individually for any of the four components. The tender conditions also stipulate that one company cannot be awarded more than two zones. Madhya Pradesh. Himachal Pradesh. South and West Zones and 18 million for the East Zone. 2G lines. Haryana.93 By. Phase-I will cover about 1. Bihar.000 towers and the most of them are in semiurban areas where private operators have small footprint. The BSNL contract is split into three parts of 25 million each for the North.N.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. BSNL executives say the total value of the contract could be about Rs 40. Maharashtra. Kerala. Andhra Pradesh Assam. State-owned BSNL has floated a tender for 93 million lines. Alcatel Lucent. Uttar Pradesh (East and West). a telecom service provider of India Cellular Mobile Service 'Cell One' of BSNL was launched on 19th October 2002 .

3              Projects Recently Implemented / Under Development National Internet Backbone of BSNL Voice over IP Broadband Services . And. Telephone Directory on CD ROM and on the internet.520751161) . being rapidly implemented as the backbone for running customer-friendly services. the change and the pace of it are more pronounced .N.IXP & Internet Data Centers (IDC) E-Commerce 7. Internet Exchange Points .L.from basic telephony to voice.1 Information Technology With the convergence of technologies. DOTSOFT . DLCs. DQ (Directory Enquiry). video and data services.3. IVRS (Interactive Voice Response System) and accounting and billing systems are already operational at BSNL. and from bandwidth on demand to virtual private networks. FRS (Fault Repair System).ADSL & High Speed Internet Managed Leased Line Network (MLLN) Access Network . technology and expertise for full service support to e-commerce enterprises. IT is making the entire plethora of BSNL's telecom services expand. catalyzed by the global IT revolution the world is witnessing change as never before in recorded history. Infrastructure. a telecom service provider of India 7. .94 By. an integrated commercial & FRS package being inducted countrywide.S. In the realm of telecommunication.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.LMDS. to provide single window convenience.. RLC etc.Neeraj Kumar Singh (Roll No.

Strive to provide a balance between the provision of universal service to all uncovered areas.S. a telecom service provider of India 7..L.4 Social Commitment BSNL is committed to provide quality Telecom Services at affordable price to the citizens of the remotest part of the Country.Neeraj Kumar Singh (Roll No.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.520751161) . Transform in a time bound manner. Access to telecommunications is of utmost importance for achievement of the country's social and economic goals.N. . including the rural areas. Availability of affordable and effective communications for the citizens is at the core of the vision and goal of the new Telecom policy 1999.95 By. the telecommunications sector to a greater competitive environment in both urban and rural areas providing equal opportunities and level playing field for all players. hilly and tribal areas of the country. BSNL is making all effort to ensure that the main objectives of the new Telecom Policy 1999 (salient points indicated below) are achieved. Encourage development of telecommunication facilities in remote. and the provision of high-level services capable of meeting the needs of the country's economy.

a telecom service provider of India 7.Neeraj Kumar Singh (Roll No.S..Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.N.5 Summary of financial statement .L.96 By.520751161) .

The plan was to divest 10 per cent through the IPO. Bharti Airtel.N.00.19. which is valued just over $38 billion.00.97 By.000 crore. In financial yerar 2008-09. BSNL's valuation is much higher. Industry analysts had estimated the BSNL to be valued at over Rs4. If BSNL does manage to raise Rs40.16. According to analysts. The company has also committed to invest about Rs60. larger than the combined market capitalization of Bharti Airtel Rs1. 342 crore and Reliance Communications (RCom) at Rs1. the telco would be valued at Rs4.000 crore by selling a 10% stake. the company would invest about Rs15. the $37-45 billion valuation is a fair one. the market valuation of Bharti Airtel is just around $37 billion. 10 million more than the country‘s largest private operator.125 respectively the second.000 crore to expand its mobile and broadband networks.000 crore by 2010 to expand its telecom infrastructure and operations .L.Neeraj Kumar Singh (Roll No.00. "If we include the asset value. BSNL has about 81 million subscribers. Incidentally.000 crore (around $100 billion). a telecom service provider of India The BSNL board has cleared the company‘s proposed $10-billion listing.S. However.520751161) . This will catapult BSNL into the league of top telcos in the world in terms of market cap. The valuation of India's largest telecom company was estimated by analysts to stand at over Rs4..000 crore. a top BSNL official said that this was only the book value of the company and did not include its asset value.and third largest telecom companies.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.

new subscribers.1 Telecom Trends and High Growth Drivers General Outlook of communication services Communication services between people will continue to evolve as per their growing needs Richer communication stimulates all three drivers for growth:. a telecom service provider of India Unit-8 8.520751161) .L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S. services & traffic In 2009 global data revenues will reach $189 billion of which 50% will be „richer communication‟ services Price pressure on voice services accelerates need for new revenues .N.Neeraj Kumar Singh (Roll No..98 By.

N..520751161) .S.L. one of the keys to success in today's highly competitive telecommunications market.Neeraj Kumar Singh (Roll No. . wireless operators need a well-balanced bundle of high-quality and attractive valueadded services. To deliver this. service providers need new killer apps to boost ARPU and generate revenue across all customer segments. a telecom service provider of India As voice becomes a commodity.99 By.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.

the great growth is ahead in this sector.Neeraj Kumar Singh (Roll No. I .100 By. a telecom service provider of India t han India is seeing phenomenal growth in wireless market and touching the 37% tele-density at the end of March-2009 on the basis of unprecedented growth in wireless customers. and there is significant portion of the population is still not having the access to the service.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Now the wireless market is on the growth trajectories of the business cycle in India.S.520751161) ..L.N.

N.Neeraj Kumar Singh (Roll No. a telecom service provider of India 2/3 of the World Population are not connecte 4G.520751161) .a 102% annual revenue increase despite the economic downturn that began affecting operator revenues in Q308.L.78 million in 2007 . "Total BWA/WiMAX revenues for 2008 totaled US$1.S.82 billion.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B." .5 million new subscribers last year. Broadband Wireless and WiMAX technologies attracted nearly 1. according to Maravedis. compared with US$898. And quarter-onquarter growth reached a highly respectable 21%.101 By.. an analyst specializing in several sectors within telecoms.

Neeraj Kumar Singh (Roll No. .N.. Approximately 70% of Indian households have no access whatsoever to fixed lines. Enter wireless.S. a telecom service provider of India To say that India offers potential is a complete under-statement.520751161) . enter broadband. enter WiMAX.102 By.L. to mention just a few to tap the untapped potential which is extra-ordinarily high.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.

a telecom service provider of India The WiMAX network will enable BSNL to offer enterprise customers high.S..Neeraj Kumar Singh (Roll No. and Internet access. e-governance. telemedicine. and e-commerce in remote areas Internet access is still the big broadband driver in India.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.L.520751161) . with wireless broadband becoming the clear option owing to economics and ease of deployment .bandwidth data communications services such as MPLS. as well as VoIP.N. e-education.103 By. leased line. VPN.

Neeraj Kumar Singh (Roll No. a telecom service provider of India Different access technologies are available for implementation but all needs project feasibility on revenue and profit terms.L. MBMS will be successfully launched which will change the pattern of Indian economy significantly. ADSL2+.S. LTE. per capita income will be increased and purchasing power of the Indian customer will be increased.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. CDMA2000.104 By. and feasibility of high end premium product like fiber. GSM. Fixed WiMAX. As India GDP will grow faster. EVDO to access the broad rural market of India. EDGE. HSPA. and implemented the access technologies like ADSL. These technologies have tremendous potential to bring revolutionary effects. Now the companies are focusing on low cost services to access the customers in rural India. WCDMA..N.520751161) . VDSL2. .

N. for instance. Ovum's Emerging Markets Practice Leader. optimized network costs." says Angel Dobardziev. Only then can a service provider focus on driving up profitability through locally-focused promotions. "A number of emerging market operators face significant operational challenges at least partly due to a disconnect between marketing and network operations. a telecom service provider of India Unit-9 Cost Efficient Operations and Rural Telecom Infrastructure Convergence Reaching and profitably serving low-income users is a big challenge for the mobile industry in emerging markets. while different markets require different approaches and considerations.S. which is an under-utilised network as a result of poor choice of coverage or inept marketing: "Successful operators bring marketing and network operations close together in targeting rural areas. For example. With 70% of India's population in rural areas. In the more sparse rural areas. as the pace at which they are building network capacity cannot meet with the heavy flow of new customers." says Angel Dobardziev.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. public access phones and PCs to demonstrate the value of the services and aggregate demand.” Consulting firm Ovum's latest report outlines three aspects that operators must consider in serving low ARPU users.Neeraj Kumar Singh (Roll No.. several African operators are being warned by regulators to tone down their marketing. flexible pricing and strong distribution networks.520751161) .L.105 By. . A close connection between marketing and network operations is crucial to profitability in emerging markets. such disconnect is more likely to produce the opposite challenge. “Service providers must focus on tight marketing-operational alignment. a profitable rollout strategy there should focus on covering the most attractive rural communities first.

520751161) .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. operational/business support systems (OSS and BSS). More importantly. service providers must adopt distributed network architectures. partly because backhaul is becoming cheap and plentiful. a telecom service provider of India 9. In low ARPU markets. . When designing network coverage for low ARPU areas. the first principle is to have as few cell sites as possible. Each additional site generates incremental costs for equipment. transmission and power. operators must take the opposite approach to what is happening in mature markets.L. with base station clustering and local call switching.N.1 Optimized network operations Service providers must pay particular focus on four key areas when it comes to optimizing their networks for low Average Revenue Per Users (ARPU).106 By. backhaul and transmission. security.Neeraj Kumar Singh (Roll No. site.. where switching at the edge of the network is shifting towards the core.S. They are: network design and rollout. base station equipment and site costs.

S. that: "With carriers focusing more on reducing opex and capex.Neeraj Kumar Singh (Roll No.N. Unified OSS removes some of the bottlenecks associated with best-of-breed OSS solutions.520751161) .. a commissioned work conducted by Yankee Group Research on behalf of Clarity International. a unified OSS solution provides a compelling value proposition that ensures long-term viability.L. . a telecom service provider of India Does ―Best of Breed‖ OSS adequately address the challenges of OSS in emerging markets? The Yankee Group commented in ―Unified OSS architecture is the critical underpinning for automating the telecom service delivery factory‖.107 By.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.

operators will be missing out on significant revenues. and even to agree that commissions would not be paid if the subscriber left the network within a certain period. a telecom service provider of India 9. and as a result top up their phones by small amounts more frequently..N. Meanwhile. If there isn't an agent nearby to serve rural users locally. "Some emerging market operators in Asia and Africa have managed to reduce their dealer commissions to US$1.3 Shared access is a bridge to personal connectivity An effective local distribution network is one of the most critical components of a service provider's marketing efforts for low ARPU users.L. in the same way that budget airlines generate their profits by ensuring higher aircraft utilization." The research suggests service providers should consider dealer commissions another key lever in optimizing subscriber acquisition and retention costs in order to ensure low ARPU customers remain profitable. .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. particularly those based in remote rural areas. Angel Dobardziev explains: "operators must price their services to ensure optimum network utilization and profitability." says Dobardziev. Bharti Airtel's Public Call Offices and BSNL‘s Rural broadband package to Common Service Centre. such as BSNL‘s Village Public Telephone. This is an approach that operators need to consider for the next wave of low ARPU users. Carefully optimized selection.520751161) . 9. To these users. these users earn small sums of money frequently (often daily). incentives and promotional support for the network of agents and airtime resellers are an essential element of an operator's marketing strategy.S.108 By.2 Price to optimize network utilization Transparency and simplicity in pricing are essential for low ARPU users. locally and in small enough amounts that they can afford.Neeraj Kumar Singh (Roll No. Typically. getting the phone initially is less a challenge than topping it up regularly. service providers need to weave shared-access voice and data services into their marketing strategies.

N. The operator should innovate in their retail outlet to comprise the existing capability to serve the current services and if needed could adopt the future changes in service offerings. .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.L.S.520751161) ..109 By.Neeraj Kumar Singh (Roll No. that reduces the cost and expedite the sales process of future services. a telecom service provider of India Flexibility in design keeps the scope of improvement and expansion.

" .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Unified OSS focuses on simplification through pre-integration..N. Frost and Sullivan in ―Market Insight featuring OBCE Trends‖ agree that: "This pre-integrated approach streamlines the rollout of an OSS deployment and yields greater out-of-the-box functionality.Neeraj Kumar Singh (Roll No. from SLA management to field-force logistics.L. technology dependent solutions. a telecom service provider of India A comprehensive service delivery platform of B.110 By. It avoids costly one-off.L. consolidation of operational data and centralised workflow spanning end-to-end operational processes.S. to streamline and adopt the rapid changes in telecom operations.S.520751161) .N.

. for example. Licence holders need to have at least 20 MHz of spectrum to support wide-scale deployments and to build profitable businesses. approximately 10. Currently there are about 300.Neeraj Kumar Singh (Roll No. lying in wireless technologies. Urgent and radical measures are required.000 BWA/WiMAX base station sectors were deployed in total. There is huge potential for broadband wireless Internet and Voice-over-Internet Protocol (VoIP) services in India because there are still more than 600. With the highly competitive nature of the global wireless market.and are likely to fall further. particularly in GSM.N.L.S. 9. a telecom service provider of India Today. While the global economy is lying dormant. but most currently have 12 MHz or less. Handset and terminal costs are also low . compared to the time needed to deploy a wireline network.111 By. Personal computer penetration levels in India have to be around 15 million throughout the country. And wireless is extremely cost effective.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. demand for telecommunications services in India continues to fuel significant growth in the sector. It has to be said that one major obstacle looms in the way of widespread WiMAX rollout. Government agencies are now in discussion with telecoms companies. If the national Department of Defence releases some of its spectrum to civilian operators. opening up the market to low-income users. can be deployed and offering services within a matter of weeks.000 villages with no basic communication means.000 BWA/WiMAX subscribers already using these services.4 India's WiMAX subscribers to top 13 million by 2013 Deployment of 3G and WiMAX streams will generate a reasonable user base over the next five-year period. infrastructure costs are very low.. According to research firms Maravedis and Tonse that in 2008. WiMAX is the key to mass communication. wireless networks can be deployed rapidly. there is a strong need to accept the challenges of rural communication coverage in emerging markets and win those challenges by concrete efforts of intelligent solutions. there could be more spectrum available. A GSM network. The Ultra Low Cost Handset initiative driven by the GSM Association is targeting the sub-US$20 handset.520751161) .

can give it an edge to launch its operations rapidly. India is expected to see the world's lowest end-to-end cost for WiMAX services. Computer penetration is still very low and the Indian telecom sector operates in a volume-driven market and innovative business models such as public-private partnerships will emerge.S. and being a niche player in all front. Wire-line business is a capital intensive field with long break-even time. B. . Sridhar Pai. SMEs and large enterprises alike. WiMax technology and by going wireless it can improve on margin front and expand its business rapidly. Its operational margins are being hit by higher cost of its operation.L. SOHO.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.N. was initially a wire line operator and later came into wireless market.L..‖ Tonse Telecom CEO. using these new technology. together with low cost devices and a vibrant ecosystem.N.Neeraj Kumar Singh (Roll No.520751161) .112 By. For the severely under-served Indian broadband market. With the implementation of 4G. The resulting ecosystem and opportunities will make India a dream destination for vendors and investors.S. Prior presence in rural market. with costs driven down faster than in any other market. a telecom service provider of India ―In the next six years India has the potential to become one of the top broadband wireless markets on the planet. demand for wireless broadband connectivity continues across all sectors: retail.

113 By. In this process. Idea. formed from DoT being a public sector telecom operator.520751161) .. Vodafone. Here we take the case of largest public sector telecom operator. .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Reliance. a telecom service provider of India Unit-10 The Role of Public & Private Players in Indian Telecom Secotor NTP-99 laid down a clear roadmap for future reforms. and lagest private sector telecom operator. B.L.L.Neeraj Kumar Singh (Roll No.N. Tata Teleservice.N. It clearly recognized the need for strengthening the regulatory regime as well as restructuring the departmental telecom services to that of a public sector corporation so as to separate the licensing and policy functions of the Government from that of being an operator.S. Both public and private players have contributed significantly in the Indian telecom growth. B. for the comparison of their performance in telecom sector.L.N.S. We can name few major operators as Airtel. Airtel. After this a number of private players have been emerged and invested heavily in the Indian telecom sector.S. contemplating the opening up of all the segments of the telecom sector for private sector participation.

a telecom service provider of India From the above graph we can see that private players are playing a significant role in the churning out the customer base in Indian wireless market.L.520751161) . .S. Customer Market Share percentage is shrinking year by year..L‘s 12.N.Neeraj Kumar Singh (Roll No.94m customer in 2008-09 in comparison to B. around 2.3m.N.L. Airtel has added 31.N. due to private players aggressive growth.114 By.L. Airtel being a private player is outpacing the public sector enterprises. Airtel has largest subscriber among all players and B. is at the forth place in customer market share.S.5 times more. and thus fulfilling the objectives of NTP-99.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. B.S.N.S.

L.N..1 Airtel as a private telecom service provider .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.520751161) .115 By. a telecom service provider of India 10.Neeraj Kumar Singh (Roll No.

.1 Airtel Performance Indicator .L.N. a telecom service provider of India 10.116 By.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.520751161) .1.Neeraj Kumar Singh (Roll No.

a telecom service provider of India 10.520751161) .Neeraj Kumar Singh (Roll No.S.1.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.117 By.2 Airtel Segment investment and contribution .N.L..

To subsidize the effect.520751161) . the operators have to churn out the customers rapidly.S.N. a telecom service provider of India The fierce competition between the operators in India is dragging the ARPU to the lower side which is affecting the bottom level of companies financial.. Airtel is beating all the expectation and has been evolved as a strong player in Indian telecom arena.118 By.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. . It is showing the example for the others to follow.Neeraj Kumar Singh (Roll No.L. Airtel has maintained his financial growth despite lowering ARPU with increased volume of customers.

1 Performance parameters of BSNL FINANCIAL PARAMETERS : : Rs. GSM 3.) = 31297816/39209432 ( 79.12 1.L. a telecom service provider of India 10.41%) =4579023/70117895 (6.2.53%) 4.N.Neeraj Kumar Singh (Roll No.119 By. . Billed /Cell/Month (Cellular) (upto March 2008) 10.2 1. All these are due to slow growth in customer addition.S. OVERALL MARKET SHARE): (BSNL/(PSU+PVT. and poor operational efficiency. WLL MARKET SHARE : : : (Based on Figures of Private Operators provided by ERU Cell of DOT) (BSNL/(PSU+PVT.281.L..)) =72559976/308509620 (23.53 Rs.520751161) .2.N.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Fixed 2. lowering ARPU is affecting the financials of the company and year on year its margins of profit is shrinking and very dismal growth in revenue front.51%) B.S. Billed /Del/Month (Basic services)(upto March 2008) 2.357.2 10.82%) ‖ ‖ = 36683137/199182293 (18.

Neeraj Kumar Singh (Roll No.520751161) J A K rl C hn R K & K tk TN aj A . a telecom service provider of India Billed Amount (Pre-paid + Post-paid) Previous to previous Month Previous Month Current Month 900000 800000 700000 600000 Rupees in thousands 500000 400000 300000 200000 100000 0 ol sm N EI N EII P K M H G uj M P C hg W B O rs B ih Jh kd A &N Pn j H ar H U P P( E U ) P( W ) U AL .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N..120 By.L.

.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India Outstanding Amount Previous to Previous Month Previous Month Current Month 900000 800000 700000 600000 Rupees in thousands 500000 400000 300000 200000 100000 0 Ch g TN HP UP (E UP ) (W ) UA L NE -I NE -II Bi h Jh kd A& N Ko l As m J Kr l Ch n Pn j Ha r Ra j H G uj M P O rs AP W B & Kt k K M .Neeraj Kumar Singh (Roll No.121 By.N.S.L.520751161) .

122 By.. a telecom service provider of India Outstanding per Postpaid Subscriber Previous to Previous Month Previous Month Current Month 12000 10000 8000 Rupees 6000 4000 2000 0 HP UP (E UP ) (W ) UA L Bi h Jh kd A& N As m O rs Kt k K H NE -I NE -II P Ch g TN J Kr l Ch n j Ha r Ra j Ko l G uj W B Pn M & M AP .N.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.Neeraj Kumar Singh (Roll No.L.520751161) .

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.520751161) NE-I Chn HP Har WB TN .123 By.. a telecom service provider of India ARPU (Pre-paid + Post-paid) Previous to previous Month Previous Month Current Month 450 400 350 300 Rupees 250 200 150 100 50 0 Asm NE-II UAL Bih MP MH A&N Guj Kol Pnj Raj AP Chg Ors Ktk Krl Jhkd UP(E) J&K UP(W) .S.L.Neeraj Kumar Singh (Roll No.N.

72 280.52 -39. RAJASTHAN N.89 358.(WEST) UTTRANCHAL WEST BENGAL CALCUTTA CHENNAI Total Target Curr.57 -96.94 349.68 Last Yr.96 412.19 267.28 -38.76 -86.72 338.47 -37.P.21 -12.00 Variation from last year (Rs.14 -20.75 159.66 -17.28 159.89 -14.93 306.42 352.06 287.15 -13.73 307.P.-I U.60 ARPU in Descending order CHENNAI CALCUTTA A&N MAHARASHTRA U.75 372.44 280.) February 2009 Achievement Name of the Unit A&N A.72 317.-II ORISSA PUNJAB RAJASTHAN TAMIL-NADU U.08 -13.12 269.02 -53.28 227. UTTRANCHAL A.19 220.83 -8. a telecom service provider of India Average Revenue per DEL per month (Rs. 28.67 244.P.15 344.88 227.44 315.-I N.70 -17. CHHATTISGARH MAHARASHTRA N.00 -43. 28.76 402. & K.88 307.) -69.75 410. TAMIL-NADU CHHATTISGARH HARYANA GUJARAT BIHAR ASSAM KERALA PUNJAB M.95 -93.88 397.03 449..67 307.93 256.02.88 366.27 -19.29 208. & K.P.60 -15.94 358.30 -22.95 230.41 380. 491 416 448 385 459 400 388 304 542 512 350 334 396 435 410 494 356 332 373 434 301 451 425 320 499 577 407 Current yr.93 260.91 -20.60 -39.77 -7.09 369.87 -54.E.38 399.76 361.19 304.67 -25.72 208.88 317.P.61 -1.68 .P.P.73 366.06 307.94 226.07 269.20 316.E.48 306. KARNATAKA KERALA M.91 -49.40 -60.14 -52.86 -117.89 300.S.124 By.08 439.(EAST) U.48 226.31 -13.02.78 -85.(EAST) H.P.520751161) .N.27 256.14 -30.48 531.P.46 244.08 349.83 -21.59 -24.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.18 304.34 -93.27 352.29 -21.27 322.19 438.01 376.93 337.E. Yr.42 322.02 -41.96 337.10 -240.14 -10.L.30 -12.06 292.86 390.46 315.12 338.76 -32.27 244.45 -13. ORISSA WEST BENGAL N.96 220.07 287.51 326.90 -14.75 361.18 410.P.57 -56.32 Variation from last year (%) -15.07 -3.39 -56.00 266.E.89 244.74 423.32 -11.Neeraj Kumar Singh (Roll No.93 -72. J.32 275.53 369.29 260. ASSAM BIHAR JHARKHAND GUJARAT HARYANA H.47 -58.30 -87.18 372.-II Total 438.13 -35.53 438.13 -55.(WEST) KARNATAKA JHARKHAND J.

P.69 .P.89 85.03 85.75 73. & K.P. & K.07 63.E.77 89.35 59.47 90.92 94.43 91.(EAST) ASSAM J.79 98.92 84.P.58 94.E.125 By.P.S.-I ASSAM BIHAR JHARKHAND Total 3rd Month 154.61 91.(WEST) HARYANA ORISSA M.46 88.26 94. CHHATTISGARH WEST BENGAL U.57 93.00% Circle CHENNAI KERALA TAMIL-NADU KARNATAKA PUNJAB A.E.520751161) .30 92.P.42 96.67 69.75 83.71 83.57 95.84 95.E.76 27.13 94.66 94.42 93.(WEST) CALCUTTA UTTRANCHAL HARYANA RAJASTHAN H.67 88. MAHARASHTRA WEST BENGAL CALCUTTA J. A&N CHHATTISGARH U.17 81.P.36 Circle CHENNAI GUJARAT KERALA TAMIL-NADU PUNJAB KARNATAKA CALCUTTA MAHARASHTRA A. GUJARAT UTTRANCHAL RAJASTHAN H.71 60. M.(EAST) N.50 81.48 93.75 92. U.31 84.(WEST) ORISSA A&N M.P. MAHARASHTRA U. a telecom service provider of India Status of Collection Efficiency Descending Order as on February 2009 Target ---> 99.08 90.P.00% Target ---> 97.P.45 88. UTTRANCHAL HARYANA U.39 91.55 91.77 81.28 87. A&N WEST BENGAL CHHATTISGARH U.71 81.08 97.57 91.E.10 84.P.28 92.06 68.33 89.36 73.L.35 91.52 91.89 84.42 93.77 72.-II BIHAR Total 2nd Month 96. RAJASTHAN H.74 96.P.27 77.04 93. & K.21 64.-II CHENNAI KERALA GUJARAT PUNJAB TAMIL-NADU KARNATAKA A.71 73.-II Total 6th Month 98.(EAST) ASSAM JHARKHAND N.N.P.02 56.79 88.00% Target ---> 90.73 70.82 93.88 90. ORISSA J.-I JHARKHAND N. N.37 94.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.-I BIHAR N.19 91.85 86.03 87.58 81.96 76.49 91..P.Neeraj Kumar Singh (Roll No.62 Circle N.45 96.88 92.90 90.97 96.62 96.59 40.E.43 89.39 95.P.

97 96. the total arrears of revenue is over Rs4030.76 27.88 Target-> Collection Efficiency of lowest 3 circles as on 28.. (%) 56.L.2009 6th Month Target -> 99% CIRCLE Chennai Kerala Tamilnadu C.57 95.L.N. (%) 98. a telecom service provider of India Collection Efficiency of top 3 circles as on 28.E.37 94.42 96.S.2.55 CIRCLE Jharkhand NE-II Bihar Target 2nd Month 90% C. (%) 97.Neeraj Kumar Singh (Roll No.E.E.79 98.S.09 6th Month Target -> 99% CIRCLE NE-I Bihar NE-II C.21 64.2.26 CIRCLE Chennai Gujarat Kerala Target 2nd Month 90% C.E.520751161) . (%) 72..N. (%) 69.E.79 Target-> As per Auditor General of India report.E.74 96. (%) 96.07 63.42 3rd Month -> 97% CIRCLE Assam Bihar Jharkhand C.71 60.59 40.62 3rd Month -> 97% CIRCLE Chennai Kerala Gujarat C. .126 By.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.51 Crore at the end of June-2007 in respect of telephone and telegraph services which will have adverse impact on the financial health of commercial undertaking like B.06 68.

.L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.520751161) . a telecom service provider of India .127 By.N.Neeraj Kumar Singh (Roll No.S.

N. a telecom service provider of India Indian Telecom market is a big cake and both public and private can share it.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S. and this is evolving the better picture of India..520751161) . . Magic lies in public-private partnership.128 By. Its financing need is too big that government can‟t alone do the magic.Neeraj Kumar Singh (Roll No.L. Both have to come forwarded to fulfill the aspiration of India‟s telecom services need and a great impact of this will lead India to the new sunny horizon of prosperity.

Wireless segment subscriber base grew at 62% p. 290 million subscribers .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Mobile operators have deployed both CDMA (62 million users) and GSM (189 million users) wireless networks (February 2008).S.129 By.L. down from over 90% in 2000 & Private companies have added subscribers at a CAGR of 80% since 2000.(February 2008). Revenue-share model for licenses issued by the Government for telecom services in India. Industry grew by about 22% in FY 2007 over FY 2006.N. Policy on Active Infrastructure Sharing to be announced shortly. The Indian telecom market has both public and private sector companies participating.520751161) . US$23 billion revenues in FY 2007. over the last 4 years. Public sector has over 27% subscriber market share.a.. 100% FDI is permitted in telecom equipment manufacturing India has a telecom policy that aims to encourage private and foreign investment. Entry fee and net worth requirements have been reduced. Universal Access Service License (UASL) recently issued to 5 new players. Value added service features constitute about 10% of revenue (2% in 2001).Neeraj Kumar Singh (Roll No. Unified access licenses are available for providing telecom services on a pan-India basis in both. GSM & CDMA technologies.39 million fixed lines and 251 million wireless . Policy on Mobile Number Portability (MNP) & 3G to be announced shortly. FIPB approval is required for foreign investment exceeding 49% in all telecom services.1 Opportunities India is the fifth largest Telecom services market in the world. The telecom subscriber base has grown at about 40% p. . a telecom service provider of India Unit-11 Telecom Investment opportunities and Potential In India 11. Government has simplified NLD and ILD license norms and lowered entry barriers. . In India 74% to 100% FDI is permitted for various telecom services. Highlights are An independent regulator – the Telecom Regulatory Authority of India (TRAI). New entrants given 3 years to set up infrastructure.a.

Neeraj Kumar Singh (Roll No. and consumer premise equipments etc. LG. Siemens.2 Potential Favourable demographics and socio-economic factors leading to high growth: Growth of disposable income combined with changes in lifestyle Increasing affordability . Over 8 million new users are added every month – mostly in wireless 11. Ericsson are all investing in India .N. 3G. projected growth of 27% p. Lucent. Alcatel.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.. gaming console. Nokia.low tariffs. to reach 500 million subscribers by March 2010.130 By. easy payment plans and low-cost handset Increased coverage and availability of mobile services Investment opportunity of over US$76 billion across many areas: Network infrastructure to increase service coverage Roll-out of additional network for 2G.a. a telecom service provider of India India is expected to be among the fastest growing telecom markets in the world.S.520751161) . WIMAX etc. set top box. Applications/software for voice.L. Elcoteq. modem. data and broadcasting services Devices like the mobile handset.

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

11.3 Investment Facilitation Agencies
11.3.1 Foreign Investment Promotion Board (FIPB) The FIPB is a specially empowered board chaired by the Secretary, Ministry of Finance (MoF), set up specifically for expediting the approval process for foreign investment proposals. There are no prescribed application forms for applying to FIPB, except in the case of purely technical collaborations. Proposals for FDI may be sent to the FIPB unit, Department of Economic Affairs, Ministry of Finance or through any of India‘s diplomatic missions abroad. The government has introduced a mailbox facility for accepting FDI proposals through the Internet and providing an acknowledgement number for these, with the condition that a hard copy should be received in original before the proposal is considered by the government.

11.3.2 Foreign Investment Implementation Authority (FIIA) The Government of India has set up FIIA in the Ministry of Industry and Commerce to facilitate quick translation of FDI approval and implementation. The organisation also provides a proactive one-stop, after-care service to foreign investors by helping them obtain the necessary approvals, sort out operational problems and meet various government agencies to find solutions to problems and maximize opportunities through the partnership approach. FIIA, in accordance with its mandate, assumes the following role: • U nderstands and addresses concerns of investors • U nderstands and addresses concerns of approving authorities • Initiates multi-agency consultation • Refers matters not resolved at the FIA level to higher levels on a quarterly basis, including cases of project slippage on account of implementation bottlenecks

11.3.3 Investment Comision (IC) The three-member Investment Commission, set up in the Ministry of Finance in December 2004 by the Government of India, has Mr. Ratan Tata as Chairman and Mr. Deepak Parekh and Dr. Ashok Ganguly as members. The Investment Commission advises the Government of India on changes in policy and procedures that will enhance investment in India, recommends projects and investment proposals that should be fast tracked/mentored and promotes India as an investment destination.

- 131 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

11.3.4 Secretariat for Industrial Assistance (SIA) The SIA, functioning with the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, acts as a gateway to industrial investment in India. It provides a single-window clearance for entrepreneurial assistance and facilitates the processing of investors‘ applications requiring government approval.

11.3.5 India Brand Equity Foundation (IBEF) IBEF collects, collates and disseminates comprehensive information on India. The website, www.ibef.org has been developed as a single-window resource for in-depth information and insight on India. IBEF also produces a wide range of well-researched publications focused on India‘s economic and business advantages.

- 132 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India

Unit-12

Methodology

This chapter will cover the methods we have used in this project. We will describe chosen methods, how the work has been carried out to answer our purpose, data collection methods. Additionally, methodology problems that have come up during the process will be presented. Motivations and justifications for all adopted methods will also be given.

12.1 The road to answering our purpose
The problem formulation process has been iterative, from looking at one problem from a certain view to another. We began to look for the Indian telecom reforms for fulfilling the communication needs of Indian people, in the perspective of the vision seen by the government of India, and effect of these reforms on the socio-economic growth. We have found the relations that showed a connection between telecommunication and poverty reduction thus making it more interesting for us to investigate the relationship between telecommunication and how to finance it more innovative. To be able to do this we have searched for information in literature and articles that reflects this topic, which has helped us getting a theoretic foundation. The empirical material of this project consists of survey data collected by different research firms, World bank report, and government of India economic reports, have been taken into consideration as a secondary data to bring out some conclusions. The telecom vendor‘s presentations on the growth trends and future turnings have been taken to analyze and find out the area of investment for complementing the purpose of financing. Public company, BSNL and private company Airtel, financials available in the public domain have been taken into consideration to analyze the success of public-private route of investment in India. How much the telecom investment opportunities in India is, to find out this, we have searched and analyze the government of India‘s public domain information and statistics. We have gone through many telecom manuals, telecom analyst ‗s views & consulting agencies papers in internet domain to collect the data related to telecom growth figures, estimate figures, future trend, financing trend, revenue figures, investment figures etc.

- 133 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. The main reason for this is that many articles are written by personal reflections. investment estimate. . The secondary data in this project are government of India telecom growth figures.2. . estimates of consulting firms.N. a telecom service provider of India 12. articles. government‘s reports and literature on the subject.Neeraj Kumar Singh (Roll No.L. To avoid this kind of information our ambition is to have as much scientific literature as possible. tape recordings and information that are available in other electronic forms. World bank reports. social and economic indicators.2 Secondary data Problems can however occur.3 Source critique When you are using secondary data it is important that you have a critical behavior to the literature. 12.or secondary data that is to be collected.2 Data collection methods Data can be collected in different ways depending on if it is primary.. as it can be difficult to find relevant material. 12. like internet. Telecom statistics of different research analysts. Example of secondary data are information that are documented in books. But we have also used other sources to learn more about this subject. To achieve the data necessary to accomplish the purpose of this project mainly secondary data has been collected through mainly internet domains. It can also be difficult to value the quality and usefulness of the found material.520751161) . articles in newspaper and magazines etc.S. companies financials.134 By.

India. anyone within the coverage area of the base station with a suitable terminal can gain access to modern digital voice and data communications services. regardless of the type of terrain. increased employment and created new wealth. . Wireless networks have the capability to cover large areas.135 By.Neeraj Kumar Singh (Roll No. In many regions of the world. some twenty five years after the Maitland Report for the United Nations identified the importance of ensuring universal access to communications. such as Africa. As an example. With wireless technology these problems are easily resolved. has been dubbed the ―digital divide‖ and until comparatively recently no viable solutions to bridging this divide presented themselves.520751161) . Unfortunately. the problem has remained largely unresolved. in drawing up a list of the ten key goals for national growth. particularly electrical power.L. without the need to lay cables.. makes such a task almost impossible. And there is no need to provide an individual wired connection to each household. put communications on a par with water and energy in terms of importance.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India Unit-13 Analysis Access to modern communications is a basic requirement for economic growth and social harmony. Wireless base stations can be self-powered by a variety of methods. In studies carried out by the International Telecommunications Union (ITU) it was found that just the simple provision of a public pay telephone box in a remote village which previously had no communications with the outside world stimulated economic activity. The cost and effort required to deploy traditional copper or fibre cable networks to remote rural areas would be astronomical and would take many decades.S.N. That access to communications is an essential precursor for economic activity and growth is not in dispute. This gap between the telecommunications ―haves‖ who have easy access to services such as the Internet and the telecommunications ―have nots‖ who do not. China and South America. so important are communications deemed that the Indian Government. there are still large numbers of people who do not have this access: indeed there are probably hundreds of millions of people who have not even seen or used a telephone. 13.1 The benefits of wireless The reason that so many people remain unconnected to any kind of communications network is simple. The lack of existing infrastructure.

opening up the market to low-income users. where average revenue per user (ARPU) is less than US$5 a month and falling. have set the pace with innovative ideas such as electronic topping up. The mobile phone has become the world‘s most ubiquitous personal item. Operators such as Bharti Telecom in India. Similarly. for example. With the highly competitive nature of the global wireless market. And yet operators in lesser developed markets must also look to the future. which is already occurring in mature markets. And wireless is extremely cost effective. as has already been indicated. the global cellular market has grown to almost three billion. A further development will be the demand for personalisation. a telecom service provider of India Most importantly. In the 25 years since the first cellular phone call was made.Neeraj Kumar Singh (Roll No.136 By. Wireless has proved its case beyond doubt.L. Many people would rather leave home without their wallet than without phone. not just in regard to simple things such as ring tones and wallpaper. Developments in wireless technology have produced an evolution from analogue cellular. Low-cost handsets are essential and. 13.N.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. this is being addressed by the global wireless industry through the Ultra Low Cost Handset initiative.520751161) . basic handsets offering simple voice and text messaging will meet the communications demands of their customers but very rapidly these demands will change. but beyond that with applications such as personal service menus which cover all the applications and services which they need to fit with their individual lifestyles. representing around half of the world‘s population. compared to the time needed to deploy a wireline network. And growth continues apace. A GSM network. In the early days of market growth. operators must be able to deploy their networks cost-effectively. can be deployed and offering services within a matter of weeks.‖ Most importantly. The Ultra Low Cost Handset initiative driven by the GSM Association is targeting the sub-US$20 handset. . With such a strong connection it is inevitable that the owners of mobile phones want to personalise them for their own individual requirements.and are likely to fall further. and operational costs must be kept to a minimum. Often the business plans which work for operators in mature markets are not appropriate and considerable ―thinking outside the box‖ is required. Handset and terminal costs are also low . Subscribers will no longer be satisfied with basic communications: they will be looking for more advanced data and multimedia services. particularly in GSM. to digital cellular with the advent of GSM..2 Delivering service to customers A number of key elements need to be in place for operators to provide communications to the ―havenots.S. infrastructure costs are very low. and now the wireless world is moving towards IP (Internet Protocol). wireless networks can be deployed rapidly. wireless services must be affordable as incomes are usually low in lesser developed markets.

The most ubiquitous wireless technology is cellular radio which over the last fifteen years has undergone a transformation. Above all cellular provides the key benefit of mobility. Another key benefit is global roaming which extends mobility from the user‘s home network to any other GSM/3G network worldwide.Neeraj Kumar Singh (Roll No. operators will need to deploy a mix of wireless technologies. which first introduced packet switching. Germany is one of the countries leading the evolution to High Speed Packet Access (HSPA). a telecom service provider of India Operators in mature markets are already responding to this shift in demand and are offering an increasing range of services and applications which the end user can adapt and modify to his or her requirements.‖ will initially be offered in Dusseldorf. of course. The big question for all operators is which wireless technology from the ever-growing range on offer is most appropriate for the delivery of advanced services and applications.137 By. The demand for personalisation will soon be a factor which operators in lesser developed markets will have to address. the global market place behind GSM and the technologies that build on GSM ensure the availability of a massive range of costeffective mobile phones. GSM users can use their phone in more than 130 countries.3 Technology choices The reality is that in order to meet the demands of their customers for an ever-widening range of advanced services.N. Cellular technologies offer many benefits to operators looking to deliver personalised services to their customers. From its introduction in 1991 GSM has evolved from delivering voice and basic text messaging through GPRS.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. that ability to make and receive calls wherever you are and whenever you want. Frankfurt. Hanover and Munich. for example. .8mb/s. the term used to describe the implementation of both HSDPA and HSUPA.520751161) .L. to 3G/UMTS. And. a significant improvement on the 384kb/s currently available. 13. dubbed ―UMTS Broadband.S. Both the T-Mobile and Vodafone services will deliver download speeds of 1. which offers the first truly capable data communications capability. T-Mobile is deploying Siemens HSPA technology to deliver high speed data services to its customers in Germany and Austria. The next evolution will be to HSDPA and HSUPA which will deliver wire line data throughput speeds in both the uplink and downlink. each having its own specific applications. The service.. Today. Vodafone in Germany is also introducing mobile broadband services at DSL speeds using Siemens HSPA solutions.

Neeraj Kumar Singh (Roll No. WLAN. And all this without burdening the user with any details of the technologies involved – intelligence in the network and devices will hide these complexities from the consumer. The alternative wireless technology attracting the most interest these days is WiMAX (Worldwide Interoperability for Microwave Access).. . last-mile broadband connectivity to homes and businesses and for mobile wireless networks.N. As developing a new radio interface can take up to ten years it is obvious that.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. WiMAX is a standards-based wireless technology for providing high-speed. It can be deployed as a wireless ―last mile‖ solution for fixed and mobile operators planning to deliver wireless DSL services to rural and remote areas where providing services by cable or fibre is difficult or uneconomic. GSM/GPRS/EDGE. work is already ongoing to create the next generation.4 Enter WiMAX Cellular alone.520751161) . WiMAX.5 Looking to the future The global wireless industry is constantly looking to the future. WiMAX is based on the IEEE 802. even as 3G reaches maturity and alternative solutions such as WiMAX become more widely deployed. Already operators are planning to use a mix of cellular and WiMAX technologies to deliver services and this trend will accelerate as the wireless world moves towards its future vision. This flexible approach will enable operators to use combinations of different access technologies to deliver a service mix which will be unique for each customer. as well as fixed networks such as ISDN and DSL. Instead mobile networks will have multiple wireless accesses connected via a unified multimedia IP network. The WiMAX specifications have now been evolved to support nomadic users and a new standard is being defined for mobile WiMAX users.S. Operators need to evaluate their technical options as the best solution will nearly always be a mix of different technologies which together deliver flexible solutions which meet user‘s needs.138 By. may not be the answer to delivering the right service mix and operators need to look at other wireless technologies as well. Although there is still much detailed R&D still to be carried out. The access networks connected to the common core will include 3G. WiMAX offers a wireless alternative to cable and DSL broadband access. working to develop the next generation of wireless technology. the overall picture of what will come beyond 3G in the 2010/2012 timeframe is already clearly outlined.L.16-2004 specification for wireless high-speed Internet access promoted by the WiMAX Forum. 13. however. Within the next few years mobile networks will move away from having a core network accessed through a single air interface. a telecom service provider of India 13.

as this off-sets low ARPU. For example. Many operators are replacing legacy with new OSS.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B..L. Expansion can be extremely rapid. OSS Observer (Emerging Markets Outlook. often rural populations that typically have low tele-density. are critically important when maintaining services over such a geographical extent. This low ARPU is offset by potential for customer growth. For operators in emerging markets the key is in accessing their large. one Indian operator is achieving a ratio of 1:1750. India covers 3 million km2 and 70% of the 1. the Philippines.7 Growing pains In emerging markets. While the opportunity for customer growth is clear. an OSS must take the strain of a rapidly expanding customer base. This is doubly important because operators in emerging . Where the subscriber base already exists. Simply put. Thailand and China and around a tenth that of some Western European operators. Operators in emerging markets are using Unified OSS to achieve end-to-end process efficiency and automation without facing the costs and time-scales of ―Best of Breed‖ OSS.520751161) . This rapid increase in subscriber numbers or service revenue is often essential for the business plan. only slightly lower than Indonesia. Operators in emerging markets need OSS that helps them ―go live‖ with services quickly and manage the transition from low to high revenue services. the legacy OSS cannot efficiently.1 billion population lives in rural areas with tele-density of around 2%.N. Operators in Eastern Europe and CIS are challenging their legacy platforms as they experience demand for broadband services.139 By. and ARPUs are low. often delivering many functions simultaneously. as in Eastern Europe. despite network availability and a consumer base demanding higher value services. as the service is still relatively new. thus supporting business models based on rapid growth and high customer subscription. rapidly and reliably deliver the order-to-cash process. some operators in emerging markets achieve tens of millions of subscribers within a few years.Neeraj Kumar Singh (Roll No. monthly growth of one million subscribers being fairly common. The estimated ARPU in India is around US$8 per month.S. This is being achieved initially through rapid growth in subscribers but to sustain this and turn it into operational efficiency operators look to their OSS to automate and manage the end-to-end operational processes. automation and intelligent management of manual activities. 13. Malaysia. February 2008) forecasts that residential broadband will grow faster than revenue. at a CAGR of 27%. the OSS must support consumer demands to rapidly transition from low to high revenue services.6 Streamlining Telco‟s process efficiency Most operators in emerging markets must contend with comparatively low ARPU. Some operators in Asia are achieving ratios of staff to subscribers that are almost half that of counterparts in Western Europe and North America. a telecom service provider of India 13. leading to operational efficiency.

Wireless broadband is an excellent means of reaching rural or transient populations and coverage ―black spots‖. Operators in emerging markets should be wary of equipment vendors "giving away" their equipment and technology-aligned management solutions. In India 3G and CDMA2000 are currently capturing public interest. In just a few years.140 By.520751161) . the OSS for emerging markets must reduce time-tomarket for new products. competition is a major reason why India has some of the lowest mobile rates in the world. multi-technology and multi-vendor OSS platforms. In addition to coping with demands of growth. One emerging market operator estimates that the right choice of OSS saved around US$200 million in life-time integration costs and delivered sophisticated OSS functionality two years earlier. One shared characteristic of most emerging markets is that they are a hive of innovation and experimentation.Neeraj Kumar Singh (Roll No. optical fibre provides far more bandwidth.. futureproofing for evolution and customer centric perspectives.N. Within seven months of starting up.000 km now laid. Subscribers in emerging markets are technology-literate and competition is relentless. .8 Next-generation technologies For many developing countries. Instead of deploying copper or fibre. 13. Once again taking this February's OSS Observer as the source. The need to defend market share and capture new subscribers drives innovation in service offerings. throughout this intense growth period.L. Demands for 12-15 new products and features per year for mobile service providers in emerging markets are not unheard of and are being supported by Unified OSS today. Instead they should consider longer term use of flexible. Unlike copper cable. Various operators in emerging markets are building broadband optic fibre networks. wireless broadband equipment can be secured against theft and removes much of the cost of laying and maintaining hundreds of kilometres of infrastructure.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. they were the country‘s largest mobile operator. Compared to copper cable. but a starting point. while being cost comparable and less subject to theft. completely bypassing the copper lines still used in many developed countries. at two cents per minute. many countries are deploying wireless coverage to provide an instant broadband service. providing holistic network management. when compared to ―Best of Breed‖ OSS. as is provided by Unified OSS. but this may be challenged by WiMAX and technologies such as PLC which continue to exploit niche opportunities. since they can solve many problems facing operators. next-generation technologies are not a long-term aim. India-based Reliance Communications has become the world‘s largest IP-enabled optic fibre-cable network with 230. a telecom service provider of India markets have often invested heavily in infrastructure and strive for high utilization through customer growth to balance costs.S.

Telecommunications accounted for 64 percent of investment commitments to infrastructure projects with private participation in South Asia in 2001–06.L. poor governance and accountability.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Nevertheless. delivering the infrastructure services needed to sustain and accelerate growth in South Asia remains a major challenge. Estimates suggest that closing the gap in service provision and meeting future needs will require infrastructure investment in the range of 7–8 percent of GDP a year.N. manifested in many sectors in distorted pricing.9 Public-Private Investment India has had the most success attracting more private investment in infrastructure in 2006 than any other developing country. India has seen the most dramatic growth in private investment in telecommunications. This large and growing role of telecommunications is much like the overall trend for developing countries. the region‘s governments will need to close the infrastructure policy deficit. a telecom service provider of India 13.S. The private sector can do more to help close the region‘s infrastructure service deficit. But first.. a big increase over its 39 percent share in 1996– 2000.Neeraj Kumar Singh (Roll No. . and weak financial and operational performance. Long-standing policies in most other South Asian countries are beginning to bear fruit as well. But the trend in South Asia is somewhat more extreme.520751161) .141 By.

the most compelling reason for investors to be in India is that it provides a high return on investment.Neeraj Kumar Singh (Roll No. Fast-growing disposable incomes..142 By.both through the Equity markets . India attracted more investment commitments to infrastructure projects with private participation in 2006 than any other developing country. India is experiencing a rapid growth in consumer spending.000 in PPP* terms). Thanks to the success of its reforms in transport and telecommunications. This has led to the creation of a rapidly growing .520751161) . Estimates from a World Bank study suggest that annual GDP growth of 7. India is a free-market democracy with a legal and regulatory framework that rewards free enterprise. a telecom service provider of India India has attracted most of the investment commitments to infrastructure projects with private participation in the region. Brazil.termed Foreign Institutional Investment (FII) and Foreign Direct Investment (FDI). and well ahead of those in China. as India is by far the region‘s largest economy. The economic reforms since the early nineties have unleashed a new entrepreneurial spirit creating a vibrant economy supported by rising per capita income.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Over 300 million Indians (63 million households) are expected to have a household income of over US$6. entrepreneurship and risk taking. commitments in India were nearly twice those in its nearest rival. While its size and growth potential make India attractive as a market. This is not surprising. increased availability and use of consumer finance and credit cards complement the keenness of the average Indian to adapt to and assimilate global trends. But it has also made the broadest and most sustained efforts to attract investment. India is in the global arena for increased foreign investment .N.S.000 by 2015 (over US$30. Indeed.5 percent would lead to annual investment needs of about 5 percent of GDP to meet the increased demand for infrastructure services along with another 2 percent of GDP for capital replacement.L.

according to Pyramid Research. converged electronic devices with Internet access. services and manufacturing continues at about 10-12% p.a.10 World telecoms and IT outlook FROM THE ECONOMIST INTELLIGENCE UNIT Global IT spending will continue to outpace global economic growth over the five years to 2011 as companies continue to upgrade their corporate networks worldwide. Sales growth of the PC will slow over the forecast period. Revenues from broadband services will leap from US$137bn this year to US$207bn in 2011.520751161) .143 By. but the rate of growth will moderate from nearly 10% this year to 5% in 2010.Neeraj Kumar Singh (Roll No. a telecom service provider of India consumer base and one of the world‘s largest markets for manufactured goods and services. Growth in key sectors like infrastructure. particularly in Asia.L. a US telecom consultancy.N. Primary drivers will include the increased demand from small and medium-sized enterprises. Average revenue per subscriber will decline in the period. . From strong double-digit figures of the past few years.S. global PC shipments will grow by just 4. as operators compete more aggressively for customers on price. This growth will be driven by emerging markets and Western Europe where penetration levels are lower. Purchasing and owning a mobile phone will continue to be a worldwide obsession. continued network equipment and service upgrades across the business sector.. the US IT consultancy.3% per annum between 2007 and 2011.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. 13. and steady demand from both the corporate sector and consumers for innovative. Worldwide demand for broadband internet connections will grow in double-digits the next five years for the world‘s sixty largest economies to 585m subscribers by 2011. according to Pyramid. according to IDC. accounting for nearly 40% of total fixed line revenue worldwide.

Deals like these underline the rapidly changing environment for telecom service operators. The vast majority will be web-linked products and services. As a result. will convince more managers to trade in their carry-on luggage for the latest video conferencing systems. but telecom service providers are taking the plunge nonetheless. Forecasts for mobile TV are varied. which have high-speed internet connections. will remain flat over the next five years.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a US-based consulting firm. Fixed-line telecoms revenue. Web 2. companies will continue to launch tempting new products for both the business and consumer market. This growth will be driven by more than the purchase of the latest music video. The mobile phone – and its uses – will be transformed by the higher capabilities of the latest handsets which are now rolling out around the world. stem severe profit erosion for the most efficient players. According to Pyramid Research. already outnumber conventional handsets in Japan and are growing quickly in other developed economies.520751161) .144 By. however. according to Pyramid. from about 11% in 2006. The IT and telecom sectors‘ drive to innovate will continue to be backed by its strong commitment to research and development (R&D). Third generation (3G) phones. the increased popularity of on-demand. with income from broadband and other internet services making up for the rapidly declining sales of fixed line voice service. net-enabled devices. At the same time. the third largest US mobile service provider. ranging from internet radios to Internet Protocol TV (IPTV) and mobile phones equipped for banking. TV and social networking. Sprint Nextel. will gain traction in a wider circle of industries. Sales of these goods will dampen the growth in demand for the traditional PC. sales of 3G phones or phones with high-speed net connections will account for 35% of all the world‘s mobile phone subscriptions by 2011. Some will be tied to global issues.S. the Japanese were more likely to be using their phone than their PC to connect to the internet. there will be increased reliance on network availability and dependability. 35% of online banking households will be using mobile banking in 2010. In the first quarter of 2007. as traditional PC-based tasks move to smaller. Rising concerns about the impact of air travel. The sector‘s ability to keep costs low through global sourcing as well as ruthless attention to supply-chain efficiencies and economies of scale should. On the demand side. according to Pyramid. a telecom service provider of India Price competition will remain keen in the years ahead.0 initiatives. online work environments.. This will drop from US$339bn this year to US$273bn in 2011 as more customers move to mobile phone use only – even inside their house – or internet telephony. online services —as opposed to traditional software with its endless upgrades – will offer continued opportunities for innovative start-ups.N. Customers opting for a US$20/month data plan will be able to watch the four most recent episodes of their favourite shows for free. will be more than three times that of mobile voice revenue over the forecast period. By early 2007. up from 1% now. such as the environment. for example.L. . According to Celent. and is expected to hit US$224bn in 2011.Neeraj Kumar Singh (Roll No. which create a platform for collaborative. music included) for mobiles. signed a deal with ABC to offer full episodes of major prime-time shows streamed directly to subscribers mobile phones. The growth in revenues from data downloads (video.

well below that of other major emerging markets such as China (46%) Brazil (69%) and Russia (111%). Vodacom and Cell C battled so hard for customers that mobile penetration hit 75% in 2006.5% over the next five years to reach 390m by 2011. these two regions and Japan will account for 83% of IT spending in 2007 but this will slip to 79% in 2011.. software and services in Asia. In South Africa. the main risks to this forecast are on the upside. That is because the fixed-line infrastructure in many poorer countries remains woefully undeveloped due to inefficiency.S. and growth is expected to remain in double digits for the next two years. developing countries will continue to show the fastest growth rates of mobile phone subscriptions globally. will jump from US$734bn to US$875bn in the same period. according to Pyramid. with mobile phone revenues outstripping fixed-line voice revenues by more than 320% in 2011. Given the relative ease of setting up a mobile phone network.520751161) . the penetration of mobile phones in the Middle East and Africa will reach only 54% by the end of the forecast period.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. global mobile phone service revenues.Neeraj Kumar Singh (Roll No. We forecast that growth in purchases of IT equipment.L. The buoyant economies of India and China will be the major reason for this erosion. the handset has taken on a surprisingly strong role in the developing world.N. Even so. The number of subscribers could rise faster as economic growth accelerates. Africa. China and India alone will account for more than 55% of the IT spending in the region. a telecoms consultancy. a telecom service provider of India By contrast. this scenario is already playing out – three players MTN. for example. Europe and North America – will account for the lion‘s share of IT spending globally over the next five years. high levels of government regulation or all three. well above the rate of worldwide growth for the forecast period. However. our forecasts show that India‘s penetration will still be just 33% by the end of the forecast period. Even with the strong growth rates forecast. The leading economies of the developed world – Japan. according to Wireless. under-investment. Asia. excluding Japan. The research shows clear digital divide between rich and poor will remain for the next five years at least. will run at about 8-9%. but there will be some reduction in their domination of the sector. and 39% for Asia. excluding Japan. According to the EIU forecasts. The Economist Intelligence Unit forecasts that India will see the number of mobile subscriptions rise by an annual average of 27. . excluding Japan. competition continues to drive down prices and new service packages are offered. In addition to the sheer convenience of the mobile phone for customers in wealthy nations. recorded a 46% increase in mobile customers in 2006.145 By. will handsomely outpace the developed world in IT spending over the next five years.

instead of onesingle way. there remain many millions of people who do not have access to communications.N. Its single data-model exploits relationships between network. This will attract more investors. Wireless offers a solution to this problem. Despite the ubiquity of GSM and other cellular technologies. The main advantage by using a combination of strategies and financing ways. . this is very important. because they will get better security on their investments. and over the next few years access to communications will become the norm rather than the exception. which is an innovative way of financing telecommunication. A crucial factor for the country is to lower all possible risks.S. customer. avoiding integration and data synchronization costs.520751161) . a telecom service provider of India Unit-14 Findings. makes such a task almost impossible. Unified OSS is proven to help operators in emerging markets enjoy business benefits of sophisticated OSS solutions. Wireless is extremely cost effective. Conclusions.L. operators will rapidly evolve their service offerings to deliver a true. personalised. service.. communications experience to customers worldwide. is that the risks will be reduced. through simplicity and flexibility. The most innovative way a country or company can finance telecommunication is to find the right combination of financing ways and strategies. driven by demand from customers. particularly electrical power. like political risk. Operators need to evaluate their technical options as the best solution will nearly always be a mix of different technologies which together deliver flexible solutions which meet user‘s needs.146 By. Those communications will initially be basic voice but. and Recommendations Access to modern communications is a basic requirement for economic growth and social harmony. currency risk and inflation which will reduce the risks for the investors even more. The lack of existing infrastructure. It helps operators in emerging markets achieve RoI on their infrastructure investments sooner and. SLA and field-engineer in managing the customer experience.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. infrastructure costs are very low. Unified OSS can deploy faster and with lower risk than ―Best of Breed‖ OSS solutions. The cost and effort required to deploy traditional copper or fibre cable networks to remote rural areas would be astronomical and would take many decades.Neeraj Kumar Singh (Roll No. particularly in GSM. With the highly competitive nature of the global wireless market. to have the knowledge of which ways to choose from is a key in finding the optimal combination for a country or company. The reason that so many people remain unconnected to any kind of communications network is simple. allows operators to engage their subscribers with innovative products over evolving networks.

GSM. In India. which will. providing voice services.N. . expanding rapidly and keeping the project costs low with increased operating efficiency using unified OSS. and government should focus on this with creating the conducing environment of investment. for example reduce the currency risk.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. public-private partnership has been proved boon for the telecom industry. WiMax.Neeraj Kumar Singh (Roll No. CDMA etc.L. rather than wire line. Instead. FDI does not only contribute to capital accumulation.147 By.S. by using innovative ways the risks will be reduced which leads to poverty reduction. Research shows that increased FDI leads to increased economic growth.. Traditional ways to finance telecommunication might not be the most efficient way to reduce poverty because of the risk that traditional ways stand for. concentrating to volume growth despite lowering ARPU. By involving the private sector together with the public sector. but it also seems to act as a vehicle for technology transfers and hence to foster growth by increasing total factor productivity. The companies should focus on the future technology like NGN. the risks reduce and make the telecommunication projects safer to invest in.520751161) . a telecom service provider of India It is also important that the developing countries try to finance locally. enhancing value added services. and also involve the private sector.

finmin. ―Privatisation.in Ministry of External Affairs : http://www.in Ministry of Finance : http://www.asiatradehub.in Wireless Planning & Coordination Wing : http://www.aptsec..bisnetindia. Its Current Status and Future Prospects": http://www.org.com European Commission: http://europa.com .148 By.ameritrade.dot.1 Internet References BSNL Corporate site: http://bsnl.com/ppp_debate1.htm Economist: http://www.sebi.gov.apecsec.indmin.za/DCD/policydocs/whitepaper/cl2pat.com Directory of Indian Ministries and Departments : http://www.com Asia-Pacific Economic Cooperation: http://www1.gov.commin. Chandler (2000). Patrik (1997).sba.L. Eurotunnel: http://www.ciionline.Neeraj Kumar Singh (Roll No.nic.ericsson.S.gov.wpc.nic.in Private Investment Promotion in Indian Telecom: http://www.economist.gov. "Foreign Direct Investment and Economic Growth In Some MENA Countries": http://www.local.com Asia-Pacific Telecommunity (APT) : http://www.gov. a telecom service provider of India Unit-15 15.com Bashir.gov.eurotunnel. ―Development aspects of municipal infrastructure delivery‖: http://www.dot.in Telecom Engineering Center: http://www.assocham.tcil-india.520751161) .org/public/english/employment/ent/papers/grameen.htm Bond. Patrik (1998).rbi.gov.in Ministry of Communications and Information Technology: http://www.luc.sg Asia Trade Hub: http://www.in Securities and Exchange Board of India : http://www.org Ameritrade Education Centre: http://www.org Associated Chambers of Commerce : http://www.ilo.co.nic. participation and protest in the restructuring of municipal services‖: http://www.gov.edu/orgs/meea/volume1/bashir.com Ericsson: http://www.moc.gov.in The Parliament of India: http://www.in Reserve Bank of India : http://www.org Federation of Indian Chambers of Commerce and Industry : http://www.parliamentofindia.in Department of Telecommunication: http://www.in Secretariat of Industrial Assistance : http://www.int.nic.nic.meadev.gov.htm Telecom Regulatory Authority of India: http://www.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.in Telecommunications Consultants of India Limited : http://www.dot.mit.html Bond. Abdel-Hameed M.in/osp/osp.org.htm Burr.in Confederation of Indian Industry : http://www.nic.thewaterpage.N.in National Portal of India: http://india.eu. "Grameen Village Phone.in Department of Commerce : http://www.in Ministry of Information Technology : http://www. (1999).trai.tec.

org World Bank (2000a).. Andy: http://fic.149 By.org/projects/internet/010toolkit/afpt1.html UN."Measuring the Information economy": http://www.L.pdf .mcst.org Ministry of Communication . of India: http://indiabudget.ptc.com OECD: http://www.org International Labour Organisation: http://www.exchange-handbook.N.org International Finance Corporation: http://www.520751161) .org Investorwords: http://www.pdf Montgomery Research: http://www.S.oecd.opt-init.un.investorwords.locregis.iafe.developmentgoals.infodev.net Millenium Development Goals. Derivative & Commodity Exchanges: http://www. "Internet Economic Toolkit for African Policy Makers": http://www. "Creating a Development Dynamic.pdf Pacific Telecommunications Council: http://web.worldbank.ilo.worldbank.wharton.com LOCREGIS: http://www.org UNDP (2001). http://www.nic.telecomweb.ifc.in/es2001-02/chapt2002/chap94.upenn.org/wbi The World Bank Group: http://www.edu/fic/0402.quantlet.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.Neeraj Kumar Singh (Roll No. Final Report of the Digital Opportunity Initiative": http://www.co.com The Handbook of World Stocks.org International Telecommunication Union: http://www.org World Bank: http://www.com Kuritzkes.utilitiesproject.pdf Methods and Data .org/dataoecd/16/14/1835738.gov.oecd. http://www.uk. a telecom service provider of India International Association of Financial Engineers: http://www. The World Bank Institute: http://www.org OECD(2002).itu.Science and Technology: http://www.org/framework/pages/es.org Telecomweb: http://www.mv Ministry of Finance.Quantlets: http://www.worldbank. Govt.

Oxford Bulletin of Economics and Statistics.520751161) . a telecom service provider of India 15. Barry P. "India in the 1980s and 1990s: A Triumph of Reforms".S. Maria & Levine. "Rural poverty and agricultural performance in post-independence India". Aristomene (1996). N. New Delhi. 1997. Annual Report 2002-2003.150 By. Brookings Institution. Economic Research Unit (Statistics Wing). Ahluwalia. (1999).Neeraj Kumar Singh (Roll No. "State level performance under economic reforms in India" Working Paper No. "Does Foreign Direct Investment Accelerate Economic Growth?".. November 27. Stanford University Department of Telecommunications. 2007 Panagariya. M. Arvind (2004). ―Defining Financial Engineering‖. & Ngoc-Nga Pham. Convergence Clubs and the Role of Financial Development".N. 2001. Clive & Rich. New Delhi Department of Telecommunications "Indian Telecommunication Statistics: Policy Framework. University of Minnesota. (1994). Business Standard: August 22. Jean-Claude & Varoudakis. Center for Research on Economic Development and Policy Reform. Bosworth. Economic Survey. Berthelemy. Ministry of Communications.L. Joe (1998). East Asian Executive Reports. Susan M. Ministry of Communication and Information Technology. Oxford Economic Papers. Gerald. Robert (1994). Financing infrastructure in developing economies: Benefits". . Annual Reports of the Department of Telecommunications. Bell. MS. Status and Trends". Financial Engineering News. Ross (2002).Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Carkovic. "Economic Growth. "That old Gandhi magic". 96. Recommendations on Issues relating to Broadcasting and Distribution of TV channels. 2006). Ministry of Communications and Technology and the Telecom Regulatory Authority of India (TRAI)–various issues. Ernst.2 Articles TRAI (March 20. & Collins. "Capital Flows to DevelopingEconomies: Implications for Saving and Investment". The Economist.

"Financial Development. Chr. Pedrelli.Neeraj Kumar Singh (Roll No.N. "Telecommunications Development and Economic Growth in Developing Countries". European Parliament . Jörgen (1999).S. Sridhar. Swedish International Development Cooperation Agency (SIDA). The Journal of Finance. "Telecommunications Infrastructure and Economic Growth: Evidence from Developing Countries". Ross (1997). Karen F. Levine. Economic Growth and Poverty Eradication".Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. "Financial Development and Economic Growth: Views and Agenda".151 By.520751161) . & Sridhar. Maurizio et al (2001). Anders & Levin. a telecom service provider of India Isaksson. . Jacobsen. National Institute of Public Finance and Policy: India. Michelsen Institute. "Developing countries and the ICT revolution". Varadharajan (2004).L. Kala S.Directorate General for Research. (2003)..

Qiang. a telecom service provider of India Literature Ferreira.-W. Kamran (1996).N.. Christine Z. Quorom Books. Salih N (2004).) 2002. Andrew (1997).L. Principles of Financial Engineering.152 By. (Ed. . Human Development Report. Tony & Njiru. Dossani. Financing Private Infrastructure in Developing Countries.S. Herndon: World Bank. Merna. Bodmin: Thomas Telford Limited.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.Neeraj Kumar Singh (Roll No. United Nations Development Programme (2000). Financing Infrastructure Projects. Kayani. London: Elsevier Inc. Neftci. Options for Rural Telecommunications Development. Washington DC: World Bank. New York: Oxford University Press. Cyrus (2002). Telecommunications reform in India. Contribution of Information and Communication Technologies to Growth.520751161) . (2003). R. Rogati & Dymond. Washington DC: World Bank. David & Khatami.

i. Basic Telephone Service Mean the collection.e. It is based on the International Telecommunication Union (ITU) family of standards under the IMT-2000. it is the total revenue divided by the number of subscribers. i. carriage. a telecom service provider of India Unit-16 Explanation Of Words In this chapter we will try and explain words that we have used during this project. ADC (Access Deficit Charges) Access Deficit Charge (ADC). .Neeraj Kumar Singh (Roll No. superseding 2.520751161) .5G. is the amount payable by the service provider at the caller's end to the service provider at the receiving end for accessing services rendered by the latter in domestic long distance telephony. transmission and delivery of voice or non-voice messages over the Licensee‘s Public Switched Telephone Network (PSTN) and includes provision of all types of services except those which require separate licence. The distinguishing characteristic of ADSL over other forms of DSL is that the volume of data flow is greater in one direction than the other. This would be the means to subsidize the below cost tariffs. ARPU (Average Revenue Per User) Average revenue per user (sometimes average revenue per unit) usually abbreviated to ARPU is a measure used primarily by consumer communications and networking companies.L.. AGR (Adjusted Gross Revenue) The amount of annual income that a person or company has after various adjustments for income or corporation tax purposes. ADSL (Asymmetric Digital Subscriber Lines) Is a form of DSL. 3G 3G is the third generation of telecommunication hardware standards and general technology for mobile networking.153 By.e.N. a data communications technology that enables faster data transmission over copper telephone lines than a conventional voiceband modem can provide. rental/local call charges.S. it is asymmetric.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.

WiMAX etc. BTS (Base Transceiver System) A base transceiver station (BTS) is a piece of equipment that facilitates wireless communication between user equipment (UE) and a network. WLL. Under Bharat Nirman.S.154 By. road. node B (in 3G Networks) or.520751161) . rural electrification and rural telecommunication connectivity. which use CDMA as an underlying channel access method. simply. WiFi. and video to businesses or homes. computers with wireless internet connectivity. . BTS is also referred to as the radio base station (RBS).L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. rural water supply. CAGR Compounded Annual Growth Rate: is the average annual growth rate calculated over a period (either forecast or historical) CDMA (Code division multiple access) Code division multiple access (CDMA) is a channel access method utilized by various radio communication technologies. The most common example of BWA is wireless LAN. CDMA.N. UEs are devices like mobile phones (handsets). data. The network can be that of any of the wireless communication technologies like GSM. a telecom service provider of India Bharat Nirman Bharat Nirman will be a time-bound business plan for action in rural infrastructure for the next four years. It should not be confused with the mobile phone standards called cdmaOne and CDMA2000 (which are often referred to as simply "CDMA"). For discussion of the LTE standard the abbreviation eNB for enhanced node B is widely used. but efforts are intensively continuing to deliver ubiquitous broadband network access by deploying adequate radio technologies like Metropolitan Area Networks. BWA (Broadband Wireless Access) Broadband Wireless Access (BWA) systems utilize base stations to provide broadband voice. rural housing.. 3G and wireless LAN which can even be combined in one single device to ensure seamless operation. Broadband Wireless Access (BWA) technologies provide broadband data access bay wireless means to consumer and business markets. WLL phones. WiFi and WiMAX gadgets etc.Neeraj Kumar Singh (Roll No. WAN. the base station (BS). action is proposed in the areas of irrigation. It offers an alternative to the wired "last-mile" access links.

Instead. the calling party pays for those calls. Creative financing Is where the seller provides the financing for the purchase of a property. with a direct membership of over 5.L. It is the use of one of several methods that enable a seller to dispose the good quickly without requiring the buyer to qualify for and obtain financing at a lending institution.155 By. of Information Technology in partnership with the Indian telecom industry. CII is an Indian business association. It is a research organisation established by the Indian government‘s Dept. however. conveyed by means of a telecommunication system which is designed or adapted to be capable of being used while in motion. A part of creative financing is microfinance.S. CII The Confederation of Indian Industry: Founded in 1895.000 companies from around 300 national and regional sectoral associations.N. CMIE The Centre for Monitoring Indian Economy: is an independent economic organization which specializes in monitoring and researching the Indian economy CMTS (Cellular Mobile Telephone Service) Means Telecommunication Service provided by means of a telecommunication system for the conveyance of messages through the agency of wireless telegraphy where every message that is conveyed thereby has been. The Telecommunication Network research group at IIT Madras is playing a key role in incubating CEWiT. The Cellular Mobile Telephone Service refers to transmission of voice or non-voice messages over licensee‘s network in real time only. a telecom service provider of India CEWiT (Centre of Excellence in Wireless Technology) Centre of Excellence in Wireless Technology is public-private initiative to develop indigenous worldclass Next Generation wireless technology in India.300 companies from the private as well as public sectors. This Service does not cover broadcasting of any messages voice or non-voice.Neeraj Kumar Singh (Roll No. or is to be.. including SMEs and MNCs and indirect membership of over 80.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. CPP (Calling Party Pay) Calling Party Pays (CPP) is the arrangement in which the mobile subscriber does not pay for incoming calls. .520751161) . Cell Broadcast is permitted only to the subscribers of the service.

available for use. DTS (Department of Telecommunication Services) The service-providing sector of DoT was split up and called Department of Telecom Services (DTS).L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. .N. is a shop supposedly selling goods direct from the factory at a discount.520751161) . DTH (Direct to Home) DTH is defined as the reception of satellite programmes with a personal dish in an individual home.Neeraj Kumar Singh (Roll No. Dark Fiber In fiber optic communications.048 Mb/s. DEL (Direct Exchange Line) Means a telephone connection between the subscriber‘s terminal equipment and the terminal exchange. dark fiber or unlit fiber (or fibre) refers to unused fibers.S. usually a small market with short operating history. Factory outlet Also called an outlet shop. DOT (Department of Telecom) The Department of Telecommunications is part of the Ministry of Communications and Information Technology in the executive branch of the Government of India.E1 level means a primary PCM bandwidth of 2.. DTS was later corporatized and renamed Bharat Sanchar Nigam Limited (BSNL).156 By. Any other calls would be rejected. Emerging markets It is a financial market of a developing country. a telecom service provider of India CUG (Closed User Group) Closed User Groups are groups of mobile telephone subscribers who can only make calls and receive calls from members within the group.

FIPB (FOREIGN INVESTMENT PROMOTION BOARD ) Has been set up by the government of India in order to increase the flow of foreign direct investments into the country. equal to total consumer.520751161) .L. .. One use is when a bank wants a carrier to release a shipment which it has financed but the original bills of lading are not yet available for surrender to the carrier. its gross domestic product). FDI (Foreign Direct Investment ) in its classic form is defined as a company from one country making a physical investment into building a factory in another country. it is a business association with over 1.S. minus the value of imports.e. a telecom service provider of India FBG (Financial Bank Guarantee) An indemnity letter in which the bank commits itself to pay a certain sum if a third party fails to perform or if any other form of default occurs. investment and government spending.157 By.500 corporate members Financial engineering Is a process by which quantitative methods are used to design financial transactions and the financial structure of an organization in order to maximize the organization‘s effectiveness. GDP (Gross Domestic Product) Is the total market value of all goods and services produced in a country in a given year.Neeraj Kumar Singh (Roll No. together with its income received from other countries (notably interest and dividends). plus the value of exports. By doing this.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. FICCI Federation of Indian Chambers of Commerce and Industry: Set up in 1927. It is the establishment of an enterprise by a foreigner. Foreign Investment Promotion Board (FIPB) has been able to give a major boost to the Indian economy.N. GNI (Gross national income) Gross national income (GNI) comprises the total value produced within a country (i. less similar payments made to other countries.

a telecom service provider of India GNP (Gross national product) Is the value of all final goods and services produced within a nation in a given year. ILD (International Long Distance) Access to the outside of the country by a service provider. an ambitious pilot project to introduce rural mobile services kick started by Bharat Sanchar Nigam Lmited (BSNL) and the Department of Posts in 2002. knowledge and a decent standard of living).N. and tertiary gross enrolment ratio. knowledge is measured by a combination of the adult literacy rate and the combined primary. Longevity is measured by life expectancy at birth. and a decent standard of living. is ready to be regularized and go national. . The HPI-1. GSM (Groupe Spécial Mobile) GSM (Global System for Mobile communications: originally from Groupe Spécial Mobile) is the most popular standard for mobile phones in the world.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. minus income earned by foreigners from domestic production. GSS (Gramin Sanchar Sewak Scheme ) The Grameen Sanchar Sewak (GSS) scheme.or technologies (ICT) is an umbrella term that includes all technologies for the manipulation and communication of information. plus income earned by its citizens abroad. Human poverty is a concept that captures the many dimensions of poverty that exists in both poor and rich countries. but this is far too narrow a definition. it is the denial of choices and opportunities for living a life one has reason to value. HPI-1 (Human Poverty Index) Poverty has traditionally been measured as a lack of income. after a resounding triumph in the Indian state West Bengal.Neeraj Kumar Singh (Roll No. human poverty index for developing countries. HDI (Human Development Index) Is a summary composite index that measures a country's average achievements in three basic aspects of human development: longevity.L..S. measures human deprivations in the same three aspects of human development as the HDI (longevity. and standard of living by GDP per capita (PPP USD). ICT Information and Communications Technology . knowledge.520751161) .158 By. secondary.

ISDN and GSM services on mobile phones. or in Internet servers provided by any part. right of way. The trend is to raise the threshold of the broadband definition as the marketplace rolls out faster services. Internet Broadband Broadband Internet access. typically stated as its acronym IN. as of 2008. It allows operators to differentiate themselves by providing value-added services in addition to the standard telecom services such as PSTN. is a network architecture intended both for fixed as well as mobile telecom networks. ranging up from 64 kbit/s up to 1. often shortened to just broadband.. the intelligence is provided by network nodes owned by telecom operators. while the United States FCC. International Long Distance Telecommunication Service Means telecommunication services originating within India and terminating outside India and vice versa.S.159 By. duct space. the 2006 OECD report is typical by defining broadband as having download data transfer rates equal to or faster than 256 kbit/s. . as opposed to solutions based on intelligence in the telephone equipment.0 Mbit/s. a telecom service provider of India Infrastructure Provider (S) Means a person or persons providing inactive elements of the telecom network including dark fibers. In IN. defines broadband as anything above 768 kbit/s.520751161) .Neeraj Kumar Singh (Roll No. towers. as well as those who provide end to end bandwidth to other service providers IN Services The Intelligent Network. is high data rate Internet access—typically contrasted with dial-up access over a 56k modem.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Data rates are defined in terms of maximum download because several common consumer broadband technologies such as ADSL are "asymmetric"—supporting much slower maximum upload data rate than download. IN is based on the Signaling System #7 (SS7) protocol between telephone network switching centers and other network nodes owned by network operators. Although various minimum bandwidths have been used in definitions of broadband. etc.N.L.

established to standardize and regulate international radio and telecommunications. and organizing interconnection arrangements between different countries to allow international phone calls — in which regard it performs for telecommunications a similar function to what the UPU performs for postal services. It is one of the specialized agencies of the United Nations. Cellular. data and applications processed by platform to a customer via Television. such as dial-up.L. Switzerland. PDA. ISD (International Subscriber Dialing) Means facility for direct connectivity between an end user in India with another end user in another country by means of direct dialing through licensed networks. ISP (Internet Service Providers) An Internet service provider (ISP. cable modem or dedicated high-speed interconnects. and has its headquarters in Geneva. allocation of the radio spectrum. a telecom service provider of India IPTV An IPTV (Internet Protocol Television) service (or technology) is the new convergence service ( or technology) of the telecommunications and broadcasting through QoS controlled Broadband Convergence IP Network including wire and wireless for the managed..N. and Mobile TV terminal with STB module or similar device. Audio. . Business process outsourcing (BPO) is a form of outsourcing that involves the contracting of the operations and responsibilities of a specific business functions (or processes) to a third-party service provider. The ISP connects to its customers using a data transmission technology appropriate for delivering Internet Protocol datagrams. controlled and secured delivery of a considerable number of multimedia contents such as Video. also called Internet access provider. Its main tasks include standardization.Neeraj Kumar Singh (Roll No.520751161) .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. or IAP) is a company that offers its customers access to the Internet. It was founded as the International Telegraph Union in Paris on 17 May 1865. next to the main United Nations campus. it is also categorized as an information technology enabled service or ITES.S. DSL. ISUP Means Integrated Service Digital Network (ISDN) User Part ITES Given the proximity of BPO to the information technology industry. ITU The International Telecommunication Union is the second-oldest international organization still in existence (the oldest being the Rhine Commission).160 By.

. a network connecting different Short Distance Charging Areas (SDCAs). Leased Circuits Means telecommunication facilities leased to subscribers or service providers to provide for technology transparent transmission capacity between network termination points which the user can control as part of the leased circuit provision. in a certain city you can find more capital. MPLS is well suited to the task as it provides traffic isolation and differentiation without substantial overhead.L. in rural India. money transfers. MARR (Multi Access Radio Relay) Access technology used to provide V.T. loans. payment services. Microfinance Is the provision of a broad range of financial services such as deposits.Neeraj Kumar Singh (Roll No. people that has a higher education.S. and insurance to poor and low-income households and their micro enterprises. For example. Local component Is a factor that you can find locally in an area.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.e. carriage and delivery of switched bearer telecommunication service over a long distance network i. It is what you can find as local condition and make it to your advantage. a telecom service provider of India IUC (Interconnection Usage Charges) It is the charge levied by the telecom company to whom a call is being terminated to. ..P. National Long Distance National Long Distance Service means picking up. more labor and so on.520751161) .161 By.N. MPLS-VPN MPLS VPN is a family of methods for harnessing the power of Multiprotocol Label Switching (MPLS) to create Virtual Private Networks (VPNs).

It also improves the Quality of Services for the customers of member ISPs. which was popularized during the Clinton Administration under the leadership of Vice-President Al Gore. data.520751161) . and images.162 By. saving foreign exchange. The general idea behind NGN is that one network transports all information and services (voice. databases. store. computers. NLDO (National Long Distance Operator) means the telecom operator providing the required digital capacity to carry long distance telecommunication service within the scope of LICENSE for National Long Distance Service. process. by avoiding multiple international hops and thus reducing latency.N. data. . a telecom service provider of India NGN (Next Generation Networking) Iis a broad term to describe some key architectural evolutions in telecommunication core and access networks that will be deployed over the next 5–10 years. keyboards. which may include various types of tele services defined by ITU. NGNs are commonly built around the Internet Protocol. interoperable hardware and software. NII includes more than just the physical facilities (more than the cameras. switches. telephones.. and multi media etc. Its main purpose is to facilitate exchange of domestic Internet traffic between the peering ISP members. televisions.Neeraj Kumar Singh (Roll No. and printers) used to transmit. It was a proposed. video. optical fiber transmission lines. monitors. switches. advanced. and therefore the term "all-IP" is also sometimes used to describe the transformation towards NGN. interactive services. like it is on the Internet. text. fax machines. data.L. seamless web of public and private communications networks. it encompasses a wide range of interactive functions. satellites. fax. microwave nets. video and audio tape. This enables more efficient use of international bandwidth. scanners. user-tailored services. cable.S. and consumer electronics to put vast amounts of information at users' fingertips. such as voice. computers. compact disks. NII (National Information Infrastructure) The National Information Infrastructure (NII) was the product of the High Performance Computing and Communication Act of 1991. and all sorts of media such as video) by encapsulating these into packets. and multimedia databases that are interconnected in a technology-neutral manner that will favor no one industry over any other. NIXI (National Internet Exchange of India) The National Internet Exchange of India is the neutral meeting point of the ISPs in India. It was a telecommunications policy buzzword. wire.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. and display voice.

S. In common usage. or a person of Indian origin who resides outside India. The optical fiber elements are typically individually coated with plastic layers and contained in a protective tube suitable for the environment where the cable will be deployed.520751161) . led by Robert Marjolin of France. this often includes Indian born individuals (and also people of other nations with Indian blood) who have taken the citizenship of other countries NTP 1999 The New Telecom Policy. its membership was extended to non-European states. OFC (Optical fiber cable) An optical fiber cable is a cable containing one or more optical fibers. contemplating the opening up of all the segments of the telecom sector for private sector participation. a person of Indian origin who is born outside India. it was reformed into the Organisation for Economic Co-operation and Development by the Convention on the Organisation for Economic Co-operation and Development. 1999 (NTP-99) was approved on 26th March. NTP-99 laid down a clear roadmap for future reforms. 1999. Later. Other terms with the same meaning are overseas Indian and expatriate Indian.. In 1961. Most OECD members are high-income economies with a high HDI and are regarded as developed countries. It originated in 1948 as the Organisation for European Economic Co-operation (OEEC). 1999.L.163 By. OECD The Organisation for Economic Co-operation and Development (OECD) (in French: Organisation de coopération et de développement économiques.Neeraj Kumar Singh (Roll No. OCDE) is an international organisation of 30 countries that accept the principles of representative democracy and free-market economy. to help administer the Marshall Plan for the reconstruction of Europe after World War II. Open Network Architecture (ONA) Open network architecture (ONA) is the overall design of a communication carrier's basic network facilities and services to permit all users of the basic network to interconnect to specific basic network functions and interfaces on an unbundled. a telecom service provider of India NRI.Non Resident Indian A non-resident Indian (NRI) is an Indian citizen who has migrated to another country. to become effective from 1st April.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. equal-access basis. The ONA concept consists of three integral components: >Basic serving arrangements (BSAs) >Basic service elements (BSEs) >Complementary network services .N.

N. ISPs typically have multiple POPs.164 By. service of prescribed quality and grade of service in a non-discriminatory manner. Pre-Paid Phone Card Is a card you purchase in advance (for a set price) and use to make short or long distance phone calls. These cards are usually sold in USD amounts or by number of minutes. Point of Interconnection (POI) Means a mutually agreed upon point of demarcation (based on TRAI determinations/regulations) where the exchange of traffic between the two Parties takes place. Point of Presence (POP) (as applicable to ILDO) Means setting up of switching center and transmission center of appropriate capacity by the Licensee to provide on demand. Point of Presence (PoP) A point-of-presence (POP) is an artificial demarcation point or interface point between communications entities. It may be either part of the facilities of a telecommunications provider that the Internet service provider (ISP) rents or a location separate from the telecommunications provider. Point of Presence (POP) (as applicable to BSO) Means setting up of switching centre and transmission centre of appropriate capacity by Basic Telephone Service Provider at the SDCA level to provide. A point of presence was a location where a long-distance carrier could terminate services and provide connections into a local telephone network.L. ATM switches and digital/analog call aggregators. on demand. service of prescribed quality and grade of service in a non-discriminatory manner. . sometimes numbering in the thousands.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India PCO A Public call office (PCO) is a telephone facility located in a public place in India. It is a physical location that houses servers. Point of Presence (POP) (as applicable to NLDO) Means setting up of switching center and transmission center of appropriate capacities by National Long Distance Service Provider at the LDCC level to provide on demand inter-circle long distance services of prescribed quality and grade of service in a non-discriminatory manner.Neeraj Kumar Singh (Roll No.S. routers.. An Internet point of presence is an access point to the Internet. POPs are also located at Internet exchange points and colocation centres.520751161) .

making recommendations on the various issues related to International Telecom Union (ITU).N..Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. These schemes are sometimes referred to as PPP or P3. R&D The phrase research and development (also R and D or.S. PPP Public-private partnership (PPP) describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies.e. i. including knowledge of man. refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge. R&D). citing clearance of all wireless installations in the country etc.165 By. to sort out problems referred to the committee by various wireless users. PSTN Means the Public Switched Telephone Network. QOS Means Quality of Service. culture and society. formulation of the frequency allocation plan. a telecom service provider of India Private Sector Company Means a company in which 51% or more of the subscribed and paid up equity is owned and controlled by a private entity. and the use of this stock of knowledge to devise new applications. managed and run by the Government of India.Neeraj Kumar Singh (Roll No.L. according to the Organization for Economic Co-operation and Development. more often. Growth is "pro-poor" if the incomes of poor people grow faster than those of the population as a whole.520751161) . . SACFA (Standing Advisory Committee on Radio Frequency Allocation) SACFA makes the recommendations on major frequency allocation issues. inequality declines. Public Sector Company (PSU) Public Sector Undertaking a company (majority) owned. Pro-poor growth Compares changes in the incomes of poor people with respect to changes in the incomes of the nonpoor.

S. 1999 (TTO ‘99) envisaged rebalancing of tariffs wherein an increase in the rentals was coupled with a reduction in call charges for STD and ISD. the implementation of tariff re-balancing was specified in three phases. Steady State Growth Is traditional economic theory that growth rates of different countries would converge towards a natural rate.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. Tele-density Is main lines per 100 inhabitants.520751161) .. The increase in rentals and the reduction in STD/ ISD call charges required for a rebalancing of tariffs were found to be too sharp to be implemented in one phase. 2000 (hereinafter called the ―Act‖) to adjudicate disputes and dispose of appeals with a view to protect the interests of service providers and consumers of the telecom sector and to promote and ensure orderly growth of the telecom sector. Telecommunication Tariff Order (TTO) 1999 The Telecommunication Tariff Order. . 2000. 1997 by TRAI (Amendment) Act.166 By. TRAI (Telecom Regulatory Authority of India) The Telecommunications Regulatory Authority of India (Hindi: भारतीय दरसंचार विनिमयक प्राधिकरण) ू or TRAI (established 1997) is the independent regulator established by the Government of India to regulate the telecommunications business in India. The first phase was implemented on 1st April. 1999.N.Neeraj Kumar Singh (Roll No. TDSAT (Telecommunications Dispute Settlement and Appellate Tribunal ) By the Amendment Act an Appellate Tribunal known as the ―Telecom Disputes Settlement & Appellate Tribunal‖ has been set up under Section 14 of the Telecom Regulatory Authority of India Act. Therefore.L. a telecom service provider of India SEZ A Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. The second phase was scheduled to be implemented with effect from 1st April.

and achieving world peace. democracy. UN The United Nations (UN) is an international organization whose stated aims are to facilitate cooperation in international law. Headquartered in New York City. On 27 October 2003. The UNDP is an executive board within the United Nations General Assembly.N. Asia and the Near East. recover from a disaster or striving to live in a free and democratic country. it receives overall foreign policy guidance from the United States Secretary of State and seeks to "extend a helping hand to those people overseas struggling to make a better life.L. It provides assistance in SubSaharan Africa.520751161) . agriculture and trade. Latin America and the Caribbean. There are currently 192 member states. to stop wars between countries. the UNDP works internationally to help countries achieve the Millennium Development Goals (MDGs).S. An independent federal agency. the UNDP is funded entirely by voluntary contributions from member nations. health. Additionally. UNDP The United Nations Development Programme (UNDP) is the United Nations' global development network. and to provide a platform for dialogue.. and humanitarian assistance. From its headquarters on international territory in New York City. USAID advances U. it produced a blueprint for a UASL regime that called for a single licence for ―basic service operators‖ BSO and cellular carriers.S. The UN was founded in 1945 after World War II to replace the League of Nations. The organization has country offices in 166 countries. The UNDP Administrator is the third highest ranking member of the United Nations after the United Nations Secretary-General and Deputy Secretary-General. conflict prevention.Neeraj Kumar Singh (Roll No. the UN and its specialized agencies decide on substantive and administrative issues in regular meetings held throughout the year.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. social progress. both BSO and cellular carriers gained the freedom to offer basic and/or cellular mobile services using any technology. foreign policy objectives by supporting economic growth. international security. and Eurasia. USAID The United States Agency for International Development (USAID) is the United States federal government organization responsible for most non-military foreign aid. human rights. a telecom service provider of India UAS (Unified Access Services ) TRAI issued its ―Consultation Paper on Unified Access Services Licensing (UASL)‖ for basic and cellular services on 16 July 2003. On 11 November 2003. USAID . including nearly every recognized independent state in the world.167 By. economic development. Europe. where it works with local governments to meet development challenges and develop local capacity. the government endorsed this plan. As a result.

Internet telephony. 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed in December 2003.12. and Trade. is a percentage of the revenue earned by the operators under various licenses.2 m. . Democracy. VoIP Voice over Internet Protocol (VoIP) is a general term for a family of transmission technologies for delivery of voice communications over IP networks such as the Internet or other packet-switched networks. Subsequently. The Fund is to be utilized exclusively for meeting the Universal Service Obligation by providing access to telegraph services to people in the rural and remote areas at affordable and reasonable prices. on-the-move (utilising phased array antennas) or mobile maritime communications. VSAT (A Very Small Aperture Terminal) Is a two-way satellite ground station with a dish antenna that is smaller than 3 meters.N.168 By. USOF (Universal Service Obligation Fund ) The Indian Telegraph (Amendment) Act. and Humanitarian Assistance.2006 as the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act. Conflict. Global Health. an Act has been passed on 29. and specifically those services listed as "Value-Added Services" in the Regulations or Orders. Agriculture. VAS(Value-Added Services) Means such services as may be available over a Telecommunications System in addition to Voice Telephony or Data Services.. g VSATs are most commonly used to transmit narrowband data (point of sale transactions such as credit card. Data rates typically range from narrowband[vague] up to 4 Mbit/s. 1885 to enable provision of all types of telegraph services. voice over broadband (VoBB). polling or RFID data. The USO Fund was established with the fundamental objective of providing access to ‗basic‘ telegraph services. Most VSAT antennas range from 75 cm to 1. VSATs access satellites in geosynchronous orbit to relay data from small remote earth stations (terminals) to other terminals (in mesh configurations) or master earth station "hubs" (in star configurations). Other terms frequently encountered and synonymous with VoIP are IP telephony. a telecom service provider of India is organized around three main pillars: Economic Growth. or SCADA).Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. VoIP or video).520751161) . and broadband phone. or broadband data (for the provision of Satellite Internet access to remote locations.S.L.Neeraj Kumar Singh (Roll No. VSATs are also used for transportable. broadband telephony. USL (Universal Service Levy ) Universal Service Levy (USL).

Wire-line In the United States.520751161) . meaning ‗Worldwide Interoperability for Microwave Access‘.. WLL(Wireless in Local Loop) WLL-M is a communication system that connects customers to the landline network using radio frequency signals instead of conventional copper wires. New Technology Group (NTG) and Standing Advisory Committee on Radio Frequency Allocation (SACFA). the pair of wires from the central switch office to a subscriber's home is called a subscriber loop. is a telecommunications technology that provides wireless transmission of data using a variety of transmission modes.169 By.S. which was formed in June 2001 to promote conformity and interoperability of the standard. It is typically powered by -48V direct current (DC) and backed up by a large bank of batteries (connected in series) in the central office. The forum describes WiMAX as "a standards-based technology enabling the delivery of last mile wireless broadband access as an alternative to cable and DSL".Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.N. including licensing and caters for the needs of all wireless users (Government and Private) in the country. The name "WiMAX" was created by the WiMAX Forum. The technology provides up to 3 Mbit/s broadband speeds without the need for cables.16 standard (also called Broadband Wireless Access). WPC is divided into major sections like Licensing and Regulation (LR). resulting in continuation of service during most commercial power outages.Neeraj Kumar Singh (Roll No. a telecom service provider of India VPT(Village Public Telephone) Telephone connections provided in rural villages. The services provided on this pair of wire are called wire-line services. created in 1952. The technology is based on the IEEE 802. from point-to-multipoint links to portable and fully mobile internet access. WiMax WiMAX. is the National Radio Regulatory Authority responsible for Frequency Spectrum Management. for the full or part connection between the subscriber and the exchange WPC ( Wireless Planning & Co-ordination (WPC) Wing) Wing of the Ministry of Communications.L. .

L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.Neeraj Kumar Singh (Roll No.170 By.520751161) .N.S.1 Basic Information of Indian economy and social structure . a telecom service provider of India Unit-17 Appendix 17..

Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.520751161) .N.Neeraj Kumar Singh (Roll No.171 By.S. a telecom service provider of India 17..2 Financial Statement of BSNL .L.

Neeraj Kumar Singh (Roll No.S.L.N.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India ..520751161) .172 By.

S.520751161) .Neeraj Kumar Singh (Roll No.173 By.N. a telecom service provider of India .L..Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.

L.N..S.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India .520751161) .Neeraj Kumar Singh (Roll No.174 By.

520751161) .S.L.Neeraj Kumar Singh (Roll No..175 By.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India .N.

176 By.L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India .S.N..520751161) .Neeraj Kumar Singh (Roll No.

N..L.Neeraj Kumar Singh (Roll No.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India 17.520751161) .S.3 Financial Performance of Airtel .177 By.

1 1.0 8.4 159.9 217.8 55.289.L.6 2.5 762.1 1.258.3 23.6 24.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.6 52..0 1.7 239.3 126.6 1.1 2.2 144.0 11. .4 1.3 212.186.482.5 107.8 841.073.3 4.217.2 9.6 39.5 15.5 26.2 1.7 26.5 23.4 5.376.6 585.174.2 1.4 11.3 10.7 20.1 3.7 1.520751161) .824. Source: Economist Intelligence Unit.1 926.5 175.8 60.030.247.4 2.5 1.8 2.150.8 32.1 21.4 World telecoms and technology industry 2002 2003 980.3 351.3 49.5 1.9 22.1 1.3 23.114.8 45.587.0 543.1 198.3 2.6 22.970.4 57.028.668.7 (a) 60 countries covered by the Economist Intelligence Unit‟s industry service.2 23.6 1.7 17.0 2.3 532.N.0 23.4 21.8 22.178 By.8 1.0 475.200.3 415.6 1.1 648.Neeraj Kumar Singh (Roll No.1 284.5 252.2 3.8 29.0 68.9 265.8 159. a telecom service provider of India 17.0 1.071.4 1.1 225.4 13.9 1.954.113.503.2 1.1 18.7 7.5 20.143.0 19.7 2004 2005 2006 2007 2008 2009 2010 2011 Telephone main lines (m) per 100 people Mobile subscribers (m) per 100 people Internet users (m) per 100 people Broadband subscriber lines per 100 people Personal computers (per 1000 people) 931.S.

N.Neeraj Kumar Singh (Roll No..5 Tele-density Picture In India .179 By.S. a telecom service provider of India 17.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.L.520751161) .

4 427 National Income Unit Gross Domestic Product (GDP) Share in GDP Agriculture Industry Manufacturing Services Net National Product Per capita NNP Per capita PPP Gross Domestic Savings Gross Domestic Capital formation (% to GDP) 26 (%) (%) (%) (%) (US$ Bn) (US$) (US$) (% to GDP) 24 25 17 51 579 530 2.000) (Per 1.065 28 25 8 68 65.L.S..000) (Per 1.880 28 (US$ Bn) Value 652 .180 By.000 live births) (Years) (Million) Value 1.N.520751161) . a telecom service provider of India 17.Neeraj Kumar Singh (Roll No.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.6 Economic and social indicators of India Demography Unit Population Urban population Birth rate Death rate Infant mortality rate Life expectancy Labor force (Million) (% to total) (Per 1.

8 1 25 17 48 90 Value *Centrifugal sugar expressed in raw value Infrastructure & communications Unit Electricity production Electricity consumption Per capita Rail route Air passengers carried Motor vehicles TV sets Telephone main lines Cellular Mobile subscribers Personal computers Internet Users Researchers in R & D R & D Expenditure (Bn kwh) (kwh) (km) (Mn) Value 587 538 63.181 By.000 people) 55 (per 1.4 88 73 13 0.85 .000 people) 7 (per 1.Neeraj Kumar Singh (Roll No.) 94 (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) 206.L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India Agriculture Unit Production Foodgrains Rice Wheat Sugar* Tea Tobacco Oilseed Cotton Fruits Vegetables Fertiliser Consumption per hectare of arable land (kg.140 22.S.000 people) 16 (per Mn people) (% to GDP) 120 0.520751161) .N.3 (per 1..000 people) 41 (per 1.000 people) 83 (per 1.000 people) 10 (per 1.

8 External debt Unit Total Debt outstanding Debt service ratio ($ Bn) (%) Value 113.182 By.6 18.644 450 (% to GDP) 31 (Ave.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.5 5. 2005 ($ Bn) (%) ($ Bn ($ Bn) ($ Bn) (Rs.L./ per US$) Value 79 0.520751161) .. a telecom service provider of India External Sector & Exchange rate Unit Exports As % of world exports Exports of commercial services Imports Forex reserves† Exchange rate† † Pertains to September 30.N.3 .Neeraj Kumar Singh (Roll No.00 Inflation. Banking & Capital market Unit Consumer prices Domestic credit by Banking sector Commercial bank Lending rate Total Insurance density Total Insurance penetration FDI inflows Listed domestic companies Market capitalisation (%) ($) (% to GDP) ($ Bn) (No.8 25 107 143 44.S. % ’04-05) Value 3.5 16 3 5.) ($ Bn on 28/7/05) 10.

520751161) .5 1. Economic Survey of India 04-05. (%) Value 26..L.N.183 By. TSMG. 2004-05 Source: Statistical Outline of India 2004-05.Neeraj Kumar Singh (Roll No.7 0.5 8 16.2 Poverty Unit Population below poverty line Note: Data generally relate to the latest available period.000 population) (% to GDP) ($) (Mn) (Mn) Value 99 61 1. a telecom service provider of India Social sector indicators Unit Gross enrolment ratio in primary schools Adult literacy Labour cost per worker in manufacturing Education expenditure (Public) Physicians Health expenditure (Public) Health expenditure per capita Conventional contraceptive users Overall pill users (%) (%) ($ per year) ( % to GDP) (per 1.1 .5 8.S. CMIE.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.800 3.

N.L.520751161) . a telecom service provider of India .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.Neeraj Kumar Singh (Roll No..S.184 By.

.L.185 By.S.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.N.520751161) .Neeraj Kumar Singh (Roll No. a telecom service provider of India .

N.S.L.Neeraj Kumar Singh (Roll No.520751161) . a telecom service provider of India .186 By.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B..

520751161) .S.Neeraj Kumar Singh (Roll No..187 By.L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India .N.

S.Neeraj Kumar Singh (Roll No.520751161) .7 Sector Distribution of Investment Commitments to Infrastructure Projects .N..L.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.188 By. a telecom service provider of India 17.

a telecom service provider of India 17.8 Auditor General of India Report on Outstanding Billed Amount in Telecom .S.520751161) .N.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B..Neeraj Kumar Singh (Roll No.L.189 By.

L..190 By. a telecom service provider of India .520751161) .Neeraj Kumar Singh (Roll No.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.

Neeraj Kumar Singh (Roll No.L.191 By.520751161) . a telecom service provider of India .N.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S..

S.Neeraj Kumar Singh (Roll No.N. a telecom service provider of India ..Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.520751161) .192 By.L.

fellowship. India. or any other similar title or prizes.N.520751161) .L. a telecom service provider of India Declaration I here by declare that the project report entitled ―Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B... a telecom service provider of India.L. diploma.S. Place: Date: (Neeraj Kumar Singh) Reg.193 By.S. is my original work and not submitted for the award of any other degree.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.N.Neeraj Kumar Singh (Roll No. No:520751161 .‖ submitted in partial fulfillment of the requirements for the degree of Masters of business Administration to Sikkim-Manipal University.

L.194 By. (Finance & Marketing) . titled “Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B. a telecom service provider of India..S..” is approved and is acceptable in quality and form.A. Internal Examiner External Examiners (Srikanta Ghosh) M.520751161) .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.B.Neeraj Kumar Singh (Roll No.N. a telecom service provider of India Examiner‟s Certification The project report of Mr Neeraj Kumar Singh.L.S.N.

” submitted in partial fulfillment of the requirements for the degree of „Masters of Business Administration‟ of Sikkim-Manipal University of Health. diploma. Neeraj Kumar Singh. a telecom service provider of India University study centre certificate This is to certify that the project entitled “Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.520751161) .S.:520751161 Certified (Srikanta Ghosh) M.Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.( Finance & Marketing ) . a telecom service provider of India. fellowship or other similar titles or prizes and that the work has not been published in any journal or Magazine.A..195 By.B.L.Neeraj Kumar Singh (Roll No. Medical and technological sciences by Mr..N. has been worked under my supervision and guidance and that no part of this report has been submitted for the award of any other degree.No.N. Reg.L.S.

S.520751161) . a telecom service provider of India Project Examination Marks Statement for MBA IV Semester (Revised) University: Sikkim Manipal University Status: Date of Examination: Roll.196 By.. Name Internal Evaluator No. Synopsis Methodology Analysis + Findings 25 marks IE3 Project Report VIVA Total internal evaluator‘s marks 100 marks IE= IE1+ IE2 + IE3 + IE4 + IE5 Learning Centre Code:0249 External Evaluator Grand Total Marks Total external evaluator‘s marks 100 marks EE= EE1+ EE2 +EE3 + EE4 + EE5 200 Marks Synopsis Methodology Analysis + Findings 25 marks EE3 Project Report VIVA Neeraj Kumar Singh 05 marks IE1 10 marks IE2 25 marks IE4 35 marks IE5 05 marks EE1 10 marks EE2 25 marks EE4 35 marks EE5 We here by certify that the project examination has been conducted on the date as indicated above and the information given above has been verified and found correct.N.Neeraj Kumar Singh (Roll No. 1) Internal Examination Signature with Date 2) External Examiner Signature with Date Name: Srikanta Ghosh 520751161 Name: Centre In Charge stamp with signature .Descriptive qualitative approach towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.L.

Sign up to vote on this title
UsefulNot useful