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)

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

12 Staff ……………………………………………………………………………………13 Finance …………………………………………………………………………………14 3.........L.......59 Financing Strategies……………………………………………………………………........ Mission & Objectives ………………………………………………………....... Bharat Sanchar Nigam Limited (Company Profile) …………………………………………................................……………………………............S.51 6..108 Shared access is a bridge to personal connectivity……………………………………...........47 Traditional methods of financing telecommunication in developing countries ..520751161) ..............1 General Outlook of communication services ……………………………………………98 9................ Why Telecom Investment and Expansion?? ...36 Pre-reform Period and Telecommunication in India …………………………………......73 Leverage effects on ways to finance telecommunication ………………………………78 How financial development may promote growth …………………………………….........................94 Social Commitment ……………………………………………………………………95 Summary of financial statement ………………………………………………………............N................29 Indian Telecommunications at a glance …………………………………………………31 Bharat Nirman …………………………………………………………………………32 4......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.....39 5......... B.........11 Organization Chart of BSNL …………………………………………………………... a telecom service provider of India Table of Content 1.49 What is Information and Communications Technology? ......96 8... Cost efficient operations and rural telecom infrastructure convergence ………………………105 Optimised network operations …………………………………………………………106 Price to optimize network utilization…………………………………………………. Institutional History of the Telecom Sector in India ………………………………………….......59 What is financial engineering? .....……47 Investing in telecommunication projects – a multiplication effect? ....80 7........................ Executive Summary of the Project ………………………………………………………………7 2..38 Liberalization and Reforms in Telecom Sector since early 1990‘s …………………........... What is creative or innovative financing? ......79 The importance of telecommunication for economic growth …………………………...34 Progress of Reforms ………………………………………………………………….......N..............................9 Introduction ………………………………………………………………………………9 Vision..85 Growth Plan ……………………………………………………………………………92 Projects Recently Implemented / Under Development ………………………………......108 India's WiMAX subscribers to top 13 million by 2013 ………………………………111 -5By..S..... Telecom Trends and High Growth Drivers ……………………………………………………98 8...................... as a Telecom Service Provider ………………………………………………………85 BSNL as an integrated telecom service provider ……………………………………....61 Financing ways …………………………………………………………………………65 Financial risks …………………………………………………………………………....50 The Digital Divide ……………………………………………………………………... Indian Telecom Sector at a Glance ……………………………………………………………15 Status of Telecom Sector………………………………………………………… ……15 Target Set by the Government …………………………..

.141 World telecoms and IT outlook ………………………………………………………..129 Opportunities …………………………………………………………………………. References …………………………………………………………………………………….133 Data collection methods………………………………………………………………. Telecom Investment opportunities and Potential In India …………………………………….134 Source critique………………………………………………………………………….188 Auditor General of India Report on Outstanding Billed Amount in Telecom ……….189 -6By..179 Economic and social indicators of India ………………………………………………180 Sector Distribution of Investment Commitments to Infrastructure Projects …………..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.170 Financial Statement of BSNL …………………………………………………………171 Financial Performance of Airtel ………………………………………………………177 World Telecom and Telecom Industry ……………………………………………….131 12...152 16.153 17.138 Streamlining Telco‘s process efficiency ………………………………………………139 Growing pains …………………………………………………………………………139 Next-generation technologies ………………………………………………………….150 Literature……………………………………………………………………………….143 14.146 15.135 Delivering service to customers ………………………………………………………... Explanation Of Words ……………………………………………………………………….133 The road to answering our purpose……………………………………………………..140 Public-Private Investment …………………………………………………………….136 Technology choices ……………………………………………………………………137 Enter WiMAX …………………………………………………………………………138 Looking to the future …………………………………………………………………..178 Tele-density Picture in India …………………………………………………………..Neeraj Kumar Singh (Roll No.520751161) .148 Internet………………………………………………………………………………….129 Potential ……………………………………………………………………………….. Conclusions.134 13.130 Investment Facilitation Agencies ………………………………………………….. Methodology ………………………………………………………………………………….N. Findings. Analysis ……………………………………………………………………………………….... a telecom service provider of India 10.134 The benefits of wireless ……………………………………………………………….L. Appendix ………………………………………………………………………………………170 Basic Information of Indian economy and social structure ………………………….. and Recommendations ……………………………………………….S..148 Articles…………………………………………………………………………………. 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..

contemplating the opening up of all the segments of the telecom sector for private sector participation. The environment will be improved. from the stereo in your living room to the mobile phone you carry with you. Telecommunication plays a central role in helping developing countries participate in the global economy.Neeraj Kumar Singh (Roll No. panchayats. civil society organizations. NTP-99 laid down a clear roadmap for future reforms.” (Ministry of Finance. Govt. a second thing is to restructure cash flows for better financial management.520751161) . using wireless technology to achieve last mile connectivity and operating information kiosks through a partnership of citizens. not only is their GNP boosted from the production of higher value-added goods. Telecommunication is pervasive in all aspects of our lives. Because financial engineering are used to finance projects it can be used to finance telecom projects around the world.N. “A well spread out telecommunication network provides a great impetus to the economic growth in a country. 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. This will include connecting block headquarters with fiber optic network. the limit is 49 percent as it has been difficult to raise the amounts of money needed to finance the new networks. 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. Infrastructure projects in developing countries bring several improvements of the country. The sector is growing at a speed of 46-50% during the recent years. 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. 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.. the private sector and Government. they lead to: Human welfare and economic development. The Indian Telecommunications network with 353 million connections (as on September 2008) is the third largest in the world. For basic services. Foreign equity in value-added services is limited to 51 percent. By encouraging the establishment of telecommunication industries within their countries. and especially in India. 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. This kind of infrastructure project is according to Merna & Njiru (2002) important in developing countries because they are in need for that. several policy initiatives have been taken by the government. creative financing arrangements have been allowed in some cases that extend the limit to 74 percent.S. Reduction of poverty.L. 2004-11-26) -7By. but also.

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

63730 Rkm of Microwave Network connecting 602 Districts.346 million Basic Phone subscribers i. 480196 Rkm of OFC Cable. Broadband.S. Carrier service.1 Introduction Bharat Sanchar Nigam Limited (Company Profile) Bharat Sanchar Nigam Ltd.L. VSAT. 2000.5 Lakhs villages.96 million WLL capacity. Within a span of five years it has become one of the largest public sector unit in India. BSNL cellular service. 85 per cent share of the subscriber base and 92 percent share in revenue terms. has more than 46. MPLS-VPN. CellOne. more than 37382 fixed exchanges.188 million basic line telephone capacity. formed in October. introducing new telecom services with ICT applications in villages and wining customer's confidence. it has about 46. is World's 7th largest telecommunications company providing comprehensive range of telecom services in India like Wireline. -9By. 5. BSNL is numero uno operator of India in all services in its license area.Neeraj Kumar Singh (Roll No.N. 60000 BTS. 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. GSM Mobile. making focused efforts and planned initiatives to bridge the RuralUrban Digital Divide ICT sector. a telecom service provider of India Unit-2 2. CDMA mobile. 287 Satellite Stations.732 million cellular customers as on March-2009. 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. garnering 16. The company offers vide ranging & most transparent tariff schemes designed to suite every customer.807 million broadband capacity. IN Services etc. expanding the network. BSNL is the only service provider.288 million GSM Capacity. Internet. In basic services. VoIP services. BSNL has installed quality telecom network in the country and now focusing on improving it. BSNL is miles ahead of its rivals. BSNL serves its customers with its wide bouquet of telecom services.520751161) .e.19 percent of all mobile users as its subscribers. Today. 7. 45. with 29.854million internet capacity. 7330 cities/towns and 5.. Whether it is inaccessible areas of Siachen glacier and North-eastern region of the country.

The company has vast experience in Planning. Dial-up.693 million Internet Customers who access Internet through various modes viz. At present there are 3. .99.807 million equipped capacity at the end of March-2009.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.390 million (US $ 2.26 billion) for financial year 200607. nationwide coverage. 1 Telecom Company of India.S. BSNL has set up a world class multi-gigabit.. The turnover. Installation.67 million) in the next three years. network integration and Maintenance of Switching & Transmission Networks and also has a world class ISO 9000 certified Telecom Training Institute.436 million WLL subscribers and 3.733 crores (US$ 16. a telecom service provider of India BSNL has more than 5. comprehensive range of telecom services and the desire to excel has made BSNL the No.10 By. Scaling new heights of success.820 million (US $ 8 billion) with net profit to the tune of Rs.351. the present turnover of BSNL is more than Rs. DIAS. reach.520751161) . multi-protocol convergent IP infrastructure that provides convergent services like voice.37 billion).557 million DataOne broadband customers and 5.630. data and video through the same Backbone and Broadband Access Network.Neeraj Kumar Singh (Roll No.000 million (US $ 14.L.N. 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. Leased Line. The infrastructure asset on telephone alone is worth about Rs. Account Less Internet(CLI). BSNL has been adjudged as the NUMBER ONE ISP in the country.

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

S.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) .Neeraj Kumar Singh (Roll No.12 By.. a telecom service provider of India 2.3 Organization Chart of BSNL .N.

Neeraj Kumar Singh (Roll No.L.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.N. a telecom service provider of India 2.S.520751161) .

.02 billion). a telecom service provider of India 2.51 billion) in 2007-08.02 INR as on 31-03-2008) 2.25 billion) and Revenues is Rs.L.520751161) . Paid up Equity Share Capital of Rs.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.000 crores (US $ 2.50 billion).13 billion) as on 31.128 crores (US$ 22. 10.79 billion) in Fixed Assets.2 Cumulative Capital Outlay BSNL has Gross Fixed Assets of over Rs. 38053 crores (US $ 9. (Note: 1 US $ = 40.5. .5. 5. During the current financial year BSNL has made the gross investment of Rs.N.03. 124578 Crores (US $ 31. 2. These investments have been financed by the internal accruals. is certainly on a financial ground that's sound. authorised equity capital of Rs.1 Gross Investment in Fixed Assets The BSNL is making substancial investment year to year for its network expension and mordenisation. 7180 crore ( US $ 1.2008.14 By. The Company has a net worth of Rs.S. 88. the largest Public Sector Undertaking of the Nation.5 Finance Bharat Sanchar Nigam Limited.000 crores (US $ 1.

including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government.N. 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. It is one of the prime support services needed for rapid growth and modernization of various sectors of the economy. The Telecom Regulatory Authority of India (TRAI) was.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. 1997.S. established with effect from 20th February 1997 by an Act of Parliament. . Driven by various policy initiatives. 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. 3. thus. called the Telecom Regulatory Authority of India Act.1.1 Status of Telecom Sector The Indian Telecommunications network with 353 million connections (as on Setember 2008) is the third largest in the world. particularly beginning with the announcement of NTP 1994 and was subsequently re-emphasized and carried forward under NTP 1999.L. 3.1 Telecom Regulatory Authority of India (TRAI) The entry of private service providers brought with it the inevitable need for independent regulation.Neeraj Kumar Singh (Roll No.. The sector is growing at a speed of 46-50% during the recent years. the Indian telecom sector witnessed a complete transformation in the last decade. Indian telecommunication sector has undergone a major process of transformation through significant policy reforms.15 By. to regulate telecom services. It has achieved a phenomenal growth during the last few years and is poised to take a big leap in the future also. 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.

The TRAI Act was amended by an ordinance. 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.Neeraj Kumar Singh (Roll No. contemplating the opening up of all the segments of the telecom sector for private sector participation.520751161) . and to hear and dispose of appeals against any direction. NTP-99 laid down a clear roadmap for future reforms. to become effective from 1st April 1999.L. orders and regulations issued cover a wide range of subjects including tariff. .. 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. 3. decision or order of TRAI.2 New Telecom Policy 1999 The most important milestone and instrument of telecom reforms in India is the New Telecom Policy 1999 (NTP 99). In pursuance of above objective TRAI has issued from time to time a large number of regulations. TDSAT was set up to adjudicate any dispute between a licensor and a licensee. One of the main objectives of TRAI is to provide a fair and transparent policy environment.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. 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. establishing a Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to take over the adjudicatory and disputes functions from TRAI. The New Telecom Policy. effective from 24 January 2000. between two or more service providers. which promotes a level playing field and facilitates fair competition. 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.16 By. which will enable India to play a leading role in emerging global information society. 1999 (NTP-99) was approved on 26th March 1999. between a service provider and a group of consumers.1.N. The directions.S.

· Direct interconnectivity and sharing of network with other telecom operators within the service area was permitted. a telecom service provider of India Key features of the NTP 99 include: · · · · Strengthening of Regulator.Neeraj Kumar Singh (Roll No. each one of 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. Resolution of problems of existing operators envisaged.17 By. plus a one-time entry fee.08.1.. 3. The DOT guidelines of license for the National Long Distance operations were also issued.S. All the commitments made under NTP 99 have been fulfilled. The Government announced on 13. National long distance services opened to private operators. Spectrum Management made transparent and more efficient. in letter and spirit. International Long Distance Services opened to private sectors.520751161) .N. and the reform process is now complete with all the sectors in telecommunications opened for private competition. some even ahead of schedule.3 National Long Distance National Long Distance opened for private participation. Private telecom operators licensed on a revenue sharing basis.L. . · · Department of Telecommunication Services (DTS) corporatised in 2001.2000 the guidelines for entry of private sector in National Long Distance Services without any restriction on the number of operators.

25 million. India had agreed under the GATS to review its opening up in 2004.25 million plus a bank guarantee of Rs. The applicant company pays one-time non-refundable entry fee of Rs. · Private operators to pay one-time entry fee of Rs.25 million plus a Financial Bank Guarantee (FBG) of Rs. open competition in this sector was allowed with effect from April 2002 itself.N. The annual licence fee including USO contribution is @ 6% of the Adjusted Gross Revenue and the fee/royalty for the use of . · Private operators allowed to set up landing facilities that access submarine cables and use excess bandwidth available. However.Neeraj Kumar Singh (Roll No. with automatic extension of the licence by a period of 5 years. Any shortfall in network coverage would result in encashment and forfeiture of bank guarantee of that phase. Total foreign equity (including equity of NRIs and international funding agencies) must not exceed 74%. spread over four phases. Promoters must have a combined net worth of Rs. a telecom service provider of India Highlights . The licence for ILD service is issued initially for a period of 20 years.520751161) . 3.NLD Guidelines · Unlimited entry for carrying both inter-circle and intra-circle calls. · · 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. which will be released on fulfillment of the roll out obligations.250 million. There is now no limit on the number of service providers in this sector..18 By. The revenue sharing agreement would be to the extent of 6%.1. · Licence period would be for 20 years and extendable by 10 years.4 International Long Distance In the field of international telephony.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.200 million. · Seven years time frame set for rollout of network.S.L.

The Rules for administration of the Fund known as Indian Telegraph (Amendment) Rules.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 Universal Service Obligation Fund Another major step was to set up the Universal Service Obligation Fund with effect from April 1. 1885 in order to enable support for mobile services and broadband connectivity in rural and remote areas of the country.2004.520751161) . should be based on internationally accepted standards to ensure seamless working with other Carrier‘s Network. 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed by both Houses of Parliament in December 2003.03. the Central Govt. There is no bar in setting up of Point of Presence (PoP) or Gateway switches in remaining location of Level I Tax‘s. 2002. Preferably. E-Mail service providers etc. In addition.Neeraj Kumar Singh (Roll No.2006 as the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act. 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.N.L. 3. Voice Mail. Subsequently. As per current roll out obligations under ILD license. 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.2006 as the Indian Telegraph (Amendment) Ordinance 2006 to amend the Indian Telegraph Act. a telecom service provider of India spectrum and possession of wireless telegraphy equipment are payable separately. an Act has been passed on 29. An administrator was appointed for this purpose.10. 2004 were notified on 26.12. Credits to the Fund shall be through Parliamentary approvals. these PoPs should conform to Open Network Architecture (ONA) i. 1885. Subsequently. At present 10 ILD service providers (9 Private and 1 Public Sector Undertaking) are there..S. An Ordinance was promulgated on 30.e. may also give grants and loans.1. 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.19 By. the Indian Telegraph (Amendment) Act. .

.Neeraj Kumar Singh (Roll No.. Revenue and the fee/royalty for the use of spectrum and possession of wireless telegraphy equipment are payable separately. and consumer interest in particular. E-Mail. within their area of operation.20 By. 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 Licensee can also provide Voice Mail. extendable by 10 years at one time within the territorial jurisdiction of a licensed Service Area. The licence for Unified Access Services is issued on nonexclusive basis.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. Further.L. At present 3 to 6 service providers (2-5 Private and 1 Public Sector Undertaking) are there in most of the service areas.520751161) . The Government in the public interest in general. Closed User Group (CUG) as Value Added Services over its network to the subscribers falling within its service area on non-discriminatory basis. The licence Fee is 10%. 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.1.N. 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.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. Unified Access Services operators are free to provide. and/or packet switched equipment. Videotex. 8% & 6% of Adjusted Gross Revenue (AGR) for Metro and Category `A‘. 3.1. Video Conferencing. Category `B‘ and Category `C‘ Service Areas. which cover collection. Any Indian company with a maximum foreign equity of 74% is eligible for grant of license. respectively. carriage.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). transmission and delivery of voice and/or non-voice messages over Licensee‘s network by deploying circuit. services. for a period of 20 years. a telecom service provider of India 3.6 Unified Access Services Unified access license regime was introduced in November‘2003. Audiotex services.

The use of low power indoor systems in 5. entertainment as well as employment generation by way of high-speed access to information and web based communication. thus making the broadband connectivity more affordable. uniform termination charges of Rs 0. The setting up of National Internet Exchange of India (NIXI) would enable bringing down the international bandwidth cost substantially. Asymmetric Digital Subscriber Lines (ADSL).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 estimated that the number of broadband subscribers would be 9 million by 2007 and 20 million by 2010. Government has announced Broadband Policy in October 2004. This regulation provided for charges payable by one operator to another for origination. tele-medicine. e-governance. 2003 and issued the same in October 2003. 3.. TRAI notified the Interconnection Usage Charges (IUC) Regulation. Cellular Mobile Services. The SACFA/WPC clearance has been simplified. reduction of ADC on NLD and ILD calls. With a view to encourage Broadband Connectivity.N.30 per minute irrespective of the terminating network. DTH etc. Broadband connectivity has been defined as ― Always On‖ with the minimum speed of 256 kbps.875 GHz bands has also been delicensed in January 05. It came into force with effect from 1 February 2004.4835 GHz band has been delicensed. both outdoor and indoor usage of low power Wi-Fi and Wi-Max systems in 2. The main emphasis is on the creation of infrastructure through various technologies that can contribute to the growth of broadband services.1.1. including Wireless-in-Local Loop (Mobile).S.4 GHz-2. transit and termination of calls in a multioperator environment.21 By.35 GHz and 5.15-5.L. .8 Interconnection Usage Charges In January 2003. a telecom service provider of India 3. which covered arrangements amongst service providers for payment of IUC. covering Basic Services.520751161) .Neeraj Kumar Singh (Roll No. National Long Distance (NLD) and International Long Distance (ILD) services.725-5. cable TV network. These technologies include optical fibre. The main features of the new IUC regime were lower Access Deficit Charges (ADC).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. all of which resulted in lower tariff environment on voice telephony.

Neeraj Kumar Singh (Roll No. the Licensee shall be responsible for compliance of the terms and conditions of the licence. The Year 2007 was declared the year of broadband. 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. Departments of Health and Family Welfare. can be provided with this connectivity in the vicinity of above-mentioned 20. police stations etc. Panchayats. a telecom service provider of India The prime consideration guiding the Policy includes affordability and reliability of Broadband services.520751161) . By this new policy. Further in the case of DTH services. employment opportunities.L. Departments of Education is very important to carry the advantage of broadband services to the users particularly in rural areas.000 exchanges in rural areas. national security and bring in competitive environment so as to reduce regulatory interventions. In rural areas. Community Service Centres.22 By. secondary schools.S. Departments of ITs of various State Governments.. banks. the service providers permitted to provide Receive-Only-Internet Service. Target has been set for 20 million broadband connections by 2010 and providing Broadband connectivity to all secondary and higher secondary schools.N. Panchayats.000 existing exchanges in rural areas having optical fibre connectivity. The service providers permitted to enter into franchisee agreement with cable TV network operators. incentives for creation of additional infrastructure. public health institutions and panchayats by 2008. health centres. induction of latest technologies. The role of other facilitators such as electricity authorities. . However. connectivity of 512 KBPS with ADSL 2 plus technology (on wire) will be provided from about 20.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. 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.

23 By.N.1. This supplemented by Calling Party Pay (CPP).Neeraj Kumar Singh (Roll No.67 per minute to US$ 0.36 per minute in 1999 to US$ 0. a telecom service provider of India 3.36 per minute in 2000 to US$ 0.16 per minute in 2004 for USA.06 .82 per month .US$ 0. reduction in ADC and the increased competition. issued by regulator (TRAI).10 Tariff Changes The Indian Telecom Sector has witnessed major changes in the tariff structure.04 per minute in 2006. has resulted in a dramatic fall in the tariffs. Canada & UK. · The Average Revenue Per User of mobile is between US$ 5. in 2000 has come down from US$ 0.009 .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.02 per minute in 2006..520751161) . · The International Long Distance tariff from US$ 1. · The peak National Long Distance tariff for above 1000 Kms.US$ 7. had begun the process of tariff balancing with a view to bring them closer to the costs. The Telecommunication Tariff Order (TTO) 1999.S. · The mobile tariff for local calls has reduced from US$0.

if these companies were listed in other parts of the world. (Press Note 3(2007)) Foreign direct investment upto 74% permitted.L. and Global Mobile Personal Communications by Satellite.520751161) ..24 By. a telecom service provider of India 3.Neeraj Kumar Singh (Roll No.S. 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). wherever required. In manufacturing sector 100% FDI is permitted under automatic route.11 Foreign Direct Investment (FDI) In Basic. Electronic Mail. · · The above services would be subject to licensing and security requirements. Proposals for FDI beyond 49% shall be considered by FIPB on case-to-case basis.1. 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. Paging and Value Added 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. 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. .N. Cellular Mobile.

25 By.1. Scope for tax exemption on financing through venture capital Concessional import duties for import of equipment by telecom service projects (including cellular. a telecom service provider of India 3. value added services . basic.520751161) . . Automatic approval of 100 percent foreign equity. royalty up to 5 percent for domestic sales and 8 percent for exports in telecom manufacturing projects. · · No industrial license required for setting up manufacturing units for telecom equipment.. paging. internet etc. technology fee up to US $ 2 million.Neeraj Kumar Singh (Roll No. · · · · · · · 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.L.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.basic. cellular mobile. · Foreign equity of 74%(49 % under automatic route) permitted for telecom services .and global mobile personal communications by satellite.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.S.

15 % during last 5 years (about 7% per annum). Also. It has also undergone a substantial change in terms of mobile versus fixed phones and public versus private participation.1.09.e.03.1. to provide Internet service. 3.65 million fixed and WLL connections (as on Sep.49% in Mar 2003 to approx.2003 to 38.13 Network Expansion The telecom sector has shown robust growth during the past few years.5% in September 2008 and in the urban areas it is increased from 14.15 Rural Telephony Apart from the 76. 551064 VPTs have been provided. 92% of the villages in India have been covered by the VPTs.33 million in 31. Sanchar Dhabas (Internet Kiosks) have been provided in more than 3500 Block Headquarters out of the total 6337 Blocks in the country. Further. Mobile Gramin Sanchar Sewak Scheme (GSS) – a mobile Public Call Office (PCO) service is provided at the doorstep of villagers. 2772 GSSs are covering 12043 villages..1. Whereas.26 By.31million as on 30. 11.32% in Mar 2003 to 75.Neeraj Kumar Singh (Roll No.09. Wireless subscribers increased from 13. Thus.2003 to 353.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.This indicates a rising trend of Indian telecom subscribers. At present. The target of 80 million rural connection by 2010 will be met during .N. the fixed line subscribers decreased from 41.09. More than 2 lakh PCOs are also providing community access in the rural areas. 3. an incremental growth of 34.76% in september 2008.L.63 million as on 31.520751161) .3 million as on 31.2008.03. 2008) provided in the rural areas.14 Trend in Tele-density Tele-density in the country increased from 5.18 million to 4.66 million as on 30.2008.2008.35 million in 30. a telecom service provider of India 3.91 million during the last 4 years. The broadband subscribers grew from a meager 0.03.11% in 2003 to 30. The following table shows the growth trend of telecom sector from last five years: The number of telephones has increased from 54.64 % in September 2008 i.2003 to 315. In the rural area teledensity increased from 1.

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. 3G and Broadband Wireless Access(BWA) policies has since been issued. infrastructure vendors. It is expected that the telecom equipment R & D shall be doubled by 2010 from present level of 15%. a telecom service provider of India year 2008 itself. Emphasis is being given to technologies having potential to improve rural connectivity.344 million.16 Opportunities India offers an unprecedented opportunity for telecom service operators. Pilot projects on the existing and emerging technologies have been undertaken including WiMax. Inflow of FDI into India‘s telecom sector during Jan 1991 to August 2008 was about Rs 233.S. 3.27 By.1.520751161) . Efforts are being continuously made to develop affordable technology for masses. 3G etc. more than 6 per cent of the approved FDI in the country is related to the telecom sector. manufacturers and associated services companies. Modern technologies inductions are being promoted. Also.N.1.17 Research & Development India has proven its dominance as a technology solution provider.Neeraj Kumar Singh (Roll No. Research is on for the preparation of tested infrastructure for enabling interoperability in Next Generation 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. 3.L. Also to beef up R&D infrastructure in the telecom sector and bridge the . USO subsidy support scheme is also being utilized for sharing wireless infrastructure in rural areas with about 18. as also comprehensive security infrastructure for telecom network..000 towers by 2010.

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

a telecom service provider of India 3. Provision of mobile coverage of 90% geographical area by 2010.2.000 towers by 2010.3 Broadband · · Broadband with minimum speed of 1 mbps.2. · Increase sharing in urban areas to 70% by 2010. Broadband coverage for all secondary & higher secondary schools and public health care centres by the end of year 2008. 3. · Broadband coverage for all Gram panchayats by the year 2010 3. Reduce urban-rural digital divide from present 25:1 to 5:1 by 2010.29 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.5 Introduction of Spread of IPTV and Mobile TV · IPTV in 600 towns by 2010.2 Targets Set By The Government 3. 3.L.N.2 Rural telephony · · One phone per two rural households by 2010 (about 80 million rural connections)..2.4 Infrastructure Sharing · USO subsidy support scheme for shared wireless infrastructure in rural areas with about 18.520751161) .Neeraj Kumar Singh (Roll No.2.S. 3.2.1 Network expansion · · 500 million connections by the year 2010. .

N. 3.30 By. Doubling the telecom equipment R&D by 2010 from present level of 15%..Neeraj Kumar Singh (Roll No. Comprehensive security infrastructure for telecom network. 3.7 Research & Development · · · · Pre-eminence of India as a technology solution provider.6 Manufacturing · Making India a hub for telecom manufacturing by facilitating more and more telecom specific SEZs.520751161) .L. a telecom service provider of India 3.5 billion in 2010. Achieving exports of 6 times from present level of 0.2.2.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. Tested infrastructure for enabling interoperability in Next Generation Network.8 International Bandwidth · Facilitating availability of adequate international bandwidth at competitive prices to drive ITES sector at faster growth.2. · · Quadrupling production in 2010.

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.64 38.6 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.35 315.31 By.66 5. a telecom service provider of India 3.31 353.L.S.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 30.520751161) .

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

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)

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

S.L. then only about 1.1 Progress of reforms 4.1. whereas. 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. DoT and MTNL were joined by private operators but not in all parts of the country. As Dossani (2002) argues. Ronald Brown. former U. The much publicized statistic about telecom development in India is that in the last five years. increasing productivity. After a recent licensing exercise in 2002. and identifying new markets.88 million cellular lines in March 1998 (DoT Annual Report.520751161) . the comparison of teledensity of India with other regions of the world should be made keeping in mind the affordability issues. In the following sections. 1995). reported that only fifty thousand computers existed in the world in 1975. all six of the private operators in the basic segment had started operating (Table 1).. it was estimated that more than fifty thousand computers were sold every ten hours (U.1.5 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. the technology of modern telecommunications will be discussed. In December 2002. With telecom markets opened to competition. such as streamlining their inventories.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 stage is now set for greater competition in most service areas for cellular mobile Over time. Deregulation and new technology have created increased competition and widened the range of network services available throughout the world.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). 1999).Neeraj Kumar Singh (Roll No. al.6 percent of households will be able to afford $30 (for a $1000 investment per line). secretary of commerce. 72 per cent of the total private investment in telecom has been in cellular mobile services followed by 22 per cent in basic services.36 By. This increase in telecommunication capabilities allows businesses to benefit from the information revolution in numerous ways. 4. Assuming households have a per capita income of $350 and are willing to spend 7 percent of that total income on communications.1 Private Participation in Telecom For the provision of basic services. .N. By mid-2001.S. After the recent changes. Department of Commerce. 4. However. the lines added for basic services is 1. WLL (Wireless Local Loop) and cellular lines compared to 0.S. excluding Delhi and Mumbai (Singh et. a telecom service provider of India computer's rapid growth. the entire country was divided into 21 telecom circles. by 1995. there exists competition in most service areas. the market is still dominated by the incumbent. the private sector provided approximately 10 million telephones in fixed. 2002).

and other value added services (FICCI. 4. 56. The growth rate will be even higher due to the price decrease resulting from a reduction in cost of providing telecom services. internet services. BSNL has been mainly responsible for providing VPTs. 1999). This total FDI includes the categories of manufacturing and consultancy and holding companies 4. Foreign investors have been active participants in telecom reforms even though there was some frustration due to initial dithering by the government. pricing of the kind that prevailed in India prior to the reforms. DoT tariffs cross-subsidized the costs of access (as reflected by rentals) with domestic and international long distance usage charges (Singh et. Although. given the increase in demand as income levels rise and as the share of services in overall GDP increases.6 lakhs in March 2002 to 5.4 in rural areas. Figure 2 shows the growth rate of fixed and cellular mobile subscription between 1998 and 2002. internet (international gateways) and 49 percent in national long distance.1.3 Foreign Participation India has opened its telecom sector to foreign investors up to 100 percent holding in manufacturing of telecom equipment.3 mainlines per 100 people around the world. and infrastructure providers (e-mail and voice mail).13.6 lakhs in December 2002 for DELs. Since 1991.7 in urban areas compared to1. In basic telecom for example.L.S. basic telephone.reducing tariffs that are above costs and increasing those below costs . re-balancing of tariffs . during the period 1991-2001.858 FDI proposals were received during 1991-2002 totaling Rs. the coverage is still much higher in urban areas .was an essential pre-condition to promoting competition among different service providers and efficiency in general. Therefore. about 44 percent of the FDI was in cellular mobile and about 8 percent in basic service segment. The overall telecom growth rate is likely to be high for some years. 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. more than 84 percent of the villages were connected by 503610 VPTs with private sector also providing 7123 VPTs . foreign direct investment (FDI) in the telecom sector is second only to power and oil . led to a high degree of cross-subsidization and introduced inefficient decisionmaking by both consumers and service-providers. cellular mobile. Traditionally. Until now.1. .9 phones per 100 persons in India compared to the average 7. For instance. a telecom service provider of India Teledensity has risen to 4.1 lakhs in March to 106. the government has made efforts to connect villages through village public telephones (VPT) and Direct Exchange Lines (DEL). 2003).Neeraj Kumar Singh (Roll No.279 crores (Figure 4) (DoT Annual Report. This coverage increased from 4. which is not surprising in view of the relatively lower subscriber base for cellular mobile.4 Tariff-setting An essential ingredient of the transition from a protected market to competition is the alignment of tariffs to cost-recovery prices. 2002).N. al.37 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.10 lakhs in December 2002 for VPT and from 90.520751161) .. 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. 74 percent in radio-paging services.

g. Re-balancing led to a reduction in cross-subsidization in the fixed service sector. achieving the USO.. 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. due to lack of funds with the government.72 and 26. the call charges were quite high. Table 4 shows the current level of telephone charges in India effective from January. the government could never meet the demand for telephones. A notable revolution has occurred in the telecom sector. The service rendered by the government monopoly was also very poor.38 By. Cost based pricing. Subsequently.6 in 1997-98.N. In the pre reforms era.14 in Mumbai and Delhi respectively in 2002-03 compared to 11.32 and 19. low teledensity resulted in great emphasis being laid on rapid expansion often at the cost of quality of service.L. Telecommunication equipment manufacturing was deli censed in the year 1991. MTNL and VSNL were created in the year 1986. 1999).S. it conducted periodic reviews and made changes in the tariff levels. also provides a basis for making subsidies more transparent and better targeted to specific social objectives. this was entirely in the hands of the central government and due to lack of competition. In India. al. a major departure from the pre-reform scenario. e. Telephone faults per 100 main lines came down to 10. . Armed with financial and technical resources.520751161) .Early 1990's saw initial attempts to attract private investment. Government also retained the rights for manufacturing of Telecommunication equipments. obsolete instruments and machinery in the telephone department were the order of the day in the pre reforms era. One of the benefits expected from the private sector's entry into telecom is an improvement in the quality of service to international standards. if necessary.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 person seeking a telephone connection had to wait for years before he could get a telephone connection.Neeraj Kumar Singh (Roll No. as in many developing countries.2 Pre reform period and Telecommunication in India Before 1990's Telecommunication services in India were complete government Monopoly . 4. Wrong billing. cross connections due to faulty / ill maintained telephone lines. private operators are expected to provide consumers value for their money.1. telephones lying dead for many days continuously due to slackness on the part of the telecom staff to attend to complaints.the Department of Telecommunication (DoT). 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. In fact.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. Further. and greater incentive to make profits. 4. 2003.

Wireless in Local Loop (WLL) telephones and cellular mobile telephones were unknown in India a few years ago. Telephone connections are today affordable to everyone and are also easily available. Gone are the days. 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. protect the interest of the consumers. licenses were issued against license fees through a bidding process. 3.NTP 1994 . Automatic foreign collaboration was permitted with 51 per cent equity by the collaborator.L.33 million are fixed line telephone connections. FDI up to 49% of total equity was also allowed in these sectors. 4. Today (as in 2003).62 million telephone connections of which 41.Neeraj Kumar Singh (Roll No. allowed private/foreign players to enter the 'basic' and the 'new cellular mobile section. Prices of services in this sector have fallen drastically. Telecom Manufacturing Equipment license was delicensed in 1991.07 million(fixed lines) in 1991. The policy allowed one private service provider to compete in basic services with the incumbent DoT in each DoT internal circle. It allowed duopoly in cellular mobile services in each circle.1 1991-92: 1. at the same time. there are 54. As part of the implementation of the NTP 94. a telecom service provider of India Today. . for the first time. which was established in 1997. The main objective of TRAI is to provide an effective regulatory framework to ensure fair competition while. there are many players in the telecom sector. The private companies are giving various incentives to attract customers.N.. 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. when one had to wait for years to get a telephone connection.39 By. 2.3 Liberalization and reforms in Telecom sector since early 1990's 4. On 24th July 1991.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 number of telephone connections which was only 2. The ultimate beneficiary has been the consumer.520751161) . Government announced the New Economic Policy.15 million (fixed lines) in 1981 increased to 5.60 million are WLL telephones1.S. 12. This policy initiated the setting up of an independent regulator–the Telecom Regulatory Authority of India (TRAI). The first step toward deregulation and beginning of liberalization and private sector participation was the announcement of National Telecom Policy 1994.3.69 million are cellular mobiles and the remaining 0.

2. 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. An agreement between Department of Telecommunication (DoT) and financial institutions to facilitate funding of cellular and basic telecom projects. 3.L. audiotex services.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. voice mail. 5. 3.5 1998-99: FDI up to 49 per cent of total equity. 2. Foreign equity participation up to 49 per cent was allowed in basic telecom services.S.N. TRAI was set up as an autonomous body to separate the regulatory functions from policy formulations and operational functions. These included cellular mobile phones. 4. 4. videotex services. permitted in companies providing Global Mobile Personal Communication (GMPC) by satellite services. .3. For value added services the foreign equity cap was fixed at 51 per cent.4 1996-97: 1. The Government announced a National Telecom Policy 1994 in September 1994. data services using VSAT's. radio paging and cellular mobile. Eight cellular licensees for four metros were finalized. and video conferencing..2 1992-93: Value added services were opened for private and foreign players on franchise or license basis. It opened basic telecom services to private participation including foreign investments. 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.3.Neeraj Kumar Singh (Roll No. Internet Policy was finalized.3 1994-95: 1.40 By. 4.3. 4. electronic mail.3.520751161) . radio paging. a telecom service provider of India 4. subject to license.

4. National Telecom Policy 1999 was announced which allowed multiple fixed Services operators and opened long distance services to private operators.41 By.N. Voice and data segment was opened to full competition and foreign ownership increased to 100 per cent from 49 per cent previously.L. Department of Telecom Services and Department of Telecom operations corporatized by creating Bharat Sanchar Nigam Limited.Neeraj Kumar Singh (Roll No. a telecom service provider of India 4. A package for migration from fixed license fee to revenue sharing offered to existing cellular and basic service providers. Department of Telecom Services was set up.S. DOT/MTNL was permitted to start cellular mobile telephone service. First phase of re-balancing of tariff structure started. especially with respect to the need and timing of introduction of new services provider. 4. To separate service providing functions from policy and licensing functions. 3.520751161) . 6.7 2000-01: 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. TRAI Act was amended. . Domestic long distance services opened up without any restriction on the number of operators. The Amendment clarified and strengthened the recommendatory power of TRAI. and in terms of licenses to a services provider.3.. TRAI reconstituted: clear distinction was made between the recommendatory and regulatory functions of the Authority. STD and ISD charges were reduced by 23 per cent on an average. 2. 3.3.6 1999-00: 1. 5. 7. 2.

TRAI recommended opening up of market to full competition and introduction of new services in the telecom sector.S. a telecom service provider of India 4.L. Communication Convergence Bill. 2004. . 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 2003.8 2001-02: 1.42 By. 4. private players were allowed to set up international gateways via the submarine cable route.Neeraj Kumar Singh (Roll No. Usage of Voice over Internet Protocol permitted for international telephony service. Internet Service Providers were given approval for setting up of International Gateways for Internet using satellite as a medium in March 2000. 7. The termination of monopoly of VSNL in International Long Distance services was antedated to March 31. In August 2000.3.N. 2.. The licensing terms and conditions for Cellular Mobile were simplified to encourage entry for operators in areas without effective competition. 2002 from March 31. Competition was introduced in all services segments. 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.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. 2001 was introduced in August 2001.520751161) . 3. 4. 6. These concessions were also extended to internet services providers and broadband networks. 5. Thirteen ISP's were given clearance for commissioning of international gateways for Internet using satellite medium for 29 gateways.

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)

The NTP 1999 sought to promote exports of telecom equipments and services..3. .46 By. BSNL announced 33 per cent reduction in call charges for all the countries for international calls. 4. 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. There is thus immense potential for indigenous manufacturing in India. 6. are required for making India a hub for telecom equipment manufacturing and attract FDI.S.13 11th plan (2007-20012) FDI in Telecom sector has increased in recent years with value of 81. Regulation on Quality of Service of Basic and Cellular Mobile Telephone Services 2005 introduced on 1st July 2005. But till date export of telecom equipment remains minimal. TRAI fixed Ceiling Tariff for International Bandwidth. Certain measures like financial packages. This is mainly in telecom services and not in telecom manufacturing 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. 1 per minute.62 billion with share of 10% in total inflow during January 2000 to June 2005. any time of the day to phone.L. Therefore. a telecom service provider of India 3.Neeraj Kumar Singh (Roll No. Ceiling Tariff for higher capacities reduced by about 70 per cent and for lower capacity by 35 per cent. creation of integrated facilities for telecom equipment through SEZ and encouraging overseas vendors to set up facilities in India. it is essential to enhance the prospect for inflow of increased funds.N. 5. Quality of Service (Code of Practice for Metering and Billing Accuracy) Regulation 2006 introduced on 21st March 2006.520751161) . 4. Most of the state-of-the-art telecom equipments including mobile phones are imported from abroad. formation of a telecom export promotion council. 7. The telecom sector has shown robust growth during the past few years. It has also undergone a substantial change in terms of mobile versus fixed phones and public versus private participation.

1998).520751161) . “Telecommunication maybe isn’t the highest priority for developing countries. thus making developing countries borrowing to service debts and not financing infrastructure development projects. Telecommunication plays a central role in helping developing countries participate in the global economy.” (John Williamson. Telecommunication is pervasive in all aspects of our lives. 1998). sanitation. because it improves the other mentioned problems. 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. health. The level of finance available for borrowing the traditional sources has reduced in the recent past (Merna & Njiru. But it is important to focus on telecommunication investments. financing it from state funding is probably the easiest method to use (ITU. The level of funding provided from national budget financing will depend on the priorities of the national government and its total tax resources. political and economic changes that are reshaping modern society and world order (Dunning & Hamdan. The main reason for this is that telecommunication competes with food.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 Rural Telecom Dilemma) 5. When introducing telecommunication into a country.Neeraj Kumar Singh (Roll No.. Due to low levels of public finance derived from general taxation. 1998).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. 2002). Globalization is a central driving force behind the rapid social. most developing countries rely on borrowing from multi-lateral and bilateral agencies to finance infrastructure developments. 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.N. . transport and education.. One of the key elements of globalization is telecommunication.L. a telecom service provider of India Unit-5 Why Telecom Investment and Expansion??. 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. 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. 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.47 By.S. housing. 1997). The main reasons to fund telecommunications infrastructure are the positive externalities that occur from the services used (World Bank. from the stereo in your living room to the mobile phone you carry with you.

1 Direct economic benefits Costs and time saved. a telecom service provider of India 5. households and other users is one of the major challenges of economic development Infrastructure represents the wheels of economic activity. Providing a service as telecommunications or other infrastructure service to meet the demand of businesses.1. Benefits from telecommunications infrastructure are several and can be grouped into three Categories: 1. substituting more expensive means of communication and learning.Neeraj Kumar Singh (Roll No.g. Integration and empowerment of communities. e. 2. Reduction of poverty 3..48 By.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. Users demand infrastructure services not only for direct consumption but also for raising their productivity (Bond. 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.S. Infrastructures such as telecommunications are a vital factor to the activities of households and to economic production. Decentralization and integration processes. Improvement of the environment. 5. Infrastructure services are used in the production process of nearly every sector.1. education and health. even in traditional commodities . 1997). Human welfare and economic development.

there should ultimately be some employment creation.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 thereby poverty reduction.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.520751161) . a telecom service provider of India 5. 5. with a possible reduction in social welfare. 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). The negative impact of layoffs on poverty can be mitigated through severance packages and other policies. by increasing productivity and easing access to capital markets..Neeraj Kumar Singh (Roll No. the economy can progress to that which is predominantly characterized by secondary or tertiary industries (Dunning & Hamdan.49 By. poverty may not be reduced by much and inequality may increase. . In Latin America.S. Should these industries flourish and even expand.L. Risks If economic growth benefits mostly the non poor.N. not only is their GNP boosted from the production of higher valueadded goods. Employment Public Expenditures Revenues from reforms (for example. at least during the transition period. Reforms may generate layoffs and reductions in wages.1 Macroeconomic Linkages between Infrastructure Reform and Poverty Category Economic growth Benefits More private participation in infrastructure may help growth. 1997). Infrastructure reform can contribute to broadly based growth. privatisation) and the phasing out of subsidies generate fiscal space for other public programs that may be better targeted and more pro-poor. 1997). By encouraging the establishment of telecommunication industries within their countries. If infrastructure reforms generate economic growth. but also. a 1 % growth in per capita GDP leads to a reduction of the share of the poor of close to half a percentage point. but it may take time. investments by large foreign corporations dealing in the modern communication technologies may be expected as their confidence in the country's improving economy increase.2.

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

Hence.” (United Nations.Neeraj Kumar Singh (Roll No. Relevant and concerned information. which they want to know. especially the least developed countries are not sharing in the communications revolution. 2000) . “The information and technology gap and related inequities between industrialized and developing nations are widening: a new type of poverty -information poverty . a telecom service provider of India 5.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. is therefore often just a symptom of a much more profound and longstanding economic and social division within and between societies..4 The digital divide According to ITU (2002) the digital divide is a result of socio-economic disparities.looms.520751161) . and which existed prior to the ICT revolution. the gap between ―information rich and information poor‖ community is also increasing.N. linked to poverty.51 By. and thus it is little different from other income. Most developing countries. Lack of information is one of the major causes for this situation (Jaggi.S.L. and shrinking time and national boundaries. accelerating the flow of free data and information. is missing. 2003). health and education divides. The digital divide. 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.S.N.520751161) . a telecom service provider of India .52 By..L.Neeraj Kumar Singh (Roll No.

Neeraj Kumar Singh (Roll No..N.L. a telecom service provider of India .53 By.S.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.

Neeraj Kumar Singh (Roll No. a telecom service provider of India .S.520751161) .L.54 By.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.S. a telecom service provider of India .520751161) .55 By.L.Neeraj Kumar Singh (Roll No.N..

S.L.520751161) . a telecom service provider of India .N.Neeraj Kumar Singh (Roll No.56 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..

57 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) . a telecom service provider of India .S.N.Neeraj Kumar Singh (Roll No.L..

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

520751161) . The term financial engineering is even younger and was introduced during the 1980s. This has lowered the costs and time spending in these operations.S. 6. 6.1 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.N.1 What is financial engineering? financial engineering are divided in a public and a private sector.. indirect. equity and risk. mezzanine and equity. Finnerty (1988) defines financial engineering as the development and creative application of financial technology to solve financial problems and exploit financial opportunities.59 By. . The public sector has four mechanisms for participation and they are direct. 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. 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. The private sector has three mechanisms for participation and they are debt.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.L.1. and then choose a financial way based on those circumstances.

Financial information systems management. 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. When you are using derivative securities and other methods.” Lawrence Galitz (1995) Financial engineering is about employing theoretical finance and computer modelling skills to make pricing.60 By. Usually financial engineering are used to reduce the financial risk.. Swaps and derivatives trading or dealing. 1995).N. Methods can be employed to take on unlimited risks under certain events. Reduction of poverty.Neeraj Kumar Singh (Roll No. 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. or completely eliminate other risks by utilizing combinations of derivative and other securities (Galitz. Securities trading. .S. hedging. Corporate Strategic planning. Financial engineering are usually used in these areas: Investment banking. trading and portfolio management decisions. a second thing is to restructure cash flows for better financial management (Galitz. The environment will be improved. Portfolio management. 1995). Because financial engineering are used to finance projects it can be used to finance telecom projects around the world. Primary and derivative securities valuation. Infrastructure projects in developing countries bring several improvements of the country. and especially in developing countries. Risk management.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) . they lead to: Human welfare and economic development.L.

2002).61 By. A normal BOT project last approximately 20-30 years. BOT means that a consortium owns the project for a specific time period. They are also allowed to sell the facility at any time. when they privatized parts of the telephone system. While the project is operating it is allowed to charge users to cover the investments.520751161) . This involves finance. In other words.L.2 Build-Transfer-Operate (BTO) Menheere & Pollalis (1996) says that BOT are often used in projects that involve privatization or public private partnership. BOO are used in projects that involve privatization or public private partnership. The BOT system has also been referred to Ozal‘s formula (Merna & Njiru. at market value. When you are using the BOO system.N. 6.Neeraj Kumar Singh (Roll No.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. construction. . the private party have the ownership of the facility during the projects whole lifetime. the completed BOT project is transferred to the government.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. own and operate the facility. Then the government signs a contract with a private company to be able to operate the facility. BOT and BOO also have this characteristics. and operates a facility for a specific period. the ownership will be transferred back to the public sector. 6. 1990. a franchise is received by a private entity from the public sector.2 Financing Strategies In this section we will present the different strategies involved when financing telecommunication projects. In short terms the private party build. design.. According to Ernst & Ngoc-Nga Pham (1994). a telecom service provider of India 6. The BTO system was successfully used in Thailand.S. The revenue from the project is used to cover the debts and provide return on equity. Because the private party runs the facility they get return of their investments.2.2. When the time period has exceeded. During this time the government receives a payment from the operator. 6.2.3 Build-Own-Operate (BOO) As mentioned in BTO.

L.Neeraj Kumar Singh (Roll No..2.62 By. these payments provides a fixed rate of return on equity and amortising of debts. This method is like cross border initiatives. This fiber-optic cable network are planned to cover 90 % of the world‘s international telecom traffic. a telecom service provider of India 6. AFRILINK This is a pan-African proposal to set up submarine cables through the entire continent‘s coastline.2. Some examples of this method are shown below.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. South African Far East (SAFE) Through private financing a telecommunication network are planned to be set up in this area.N. While using the BLT system the government can shift the financial risk to the private sector. a method of financing telecommunication that will be covered later.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. The government agency is also responsible that payments are done 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. 6. The roll that the government agency has is to assume the operating risk. Project Oxygen This is according to ITU maybe the most interested fiber-optic cable projects. 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.S.520751161) .

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

2. Build-own-operate-subsidies-transfer. Refurbish-operate-lease. Rehabilitate-operate-transfer. a telecom service provider of India 6.64 By. Design-build-operate-maintain.. Business-cooperation-contracts. Design-build-finance-maintain Design-build-finance-operate Finance-build-own-operate-transfer. Build-rent-transfer.7 Acronyms Merna & Njiru (2002) describes a number of different acronyms that involves in different ways to finance infrastructure projects. .N. these are: BOD BOL BOOST BOOT BRT BCC DBOM DBFM DBFO FBOOT ROL ROT Build-operate-deliver Build-operate-lease. Build-own-operate-transfer.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) .L.S.

3.3 Financing ways Here we will present the most common innovative ways to finance telecommunication projects.N.520751161) .S. The country that wants to set up a telecommunication network in their country give monthly payments to the leasing company.1 Leasing According to Sigurd Hansson (1998) there are three different kinds of leasing: 1. How leasing works today: Customer Supplier Leasing Company .Neeraj Kumar Singh (Roll No.65 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 third way is when a sale of a service happens in the same time period when lending out a good..L. 6. 2.3. Financial leasing – In this case a leasing company will be involved. a telecom service provider of India 6. Operational leasing – The company that lends out the material are responsible for reparations and maintains. The leasing company then gives a payment to the supplier which sends the material for the telecommunication network to the country. If new material or products are launched the company upgrade the system to these new models.

5.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. Koller & Murrin (2000) explain that joint venture loans are an effective partnership.N. The leasing contract is established between the customer and the leasing company. The customer decides which supplier they want to buy from. a telecom service provider of India Deeper explanations of the leasing process that are showed in this figure are: 1. they will start to pay the leasing company. the customer can continue to rent the equipment. When the customer has got the equipment.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. 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. The big advantage to lease instead of buying is that the customer does not need to have financial resources except for the monthly payments. They also decide that the leasing company will be the buyer. Copeland. Flexibility and autonomy are the main factors for a joint venture to work well. The leasing company pays for the equipment to the supplier.3. An survey that these authors have made show that when two company are involved in a joint venture that are evenly split. which will lead to that the strong company put its own interest above the weaker company and even the whole joint venture. the main reason for this is that the strong part of the joint venture will dominate in decision making. but to make this happen they must be structured. 2.S. it is recommended that an independent president are chosen and also do a full business system. 4. The leasing company then buys the equipment and it will be delivered to the customer. 6. Flexibility is important because the market and customer needs changes all the time. but if the joint venture is not evenly split the chance to success is only 31 %. 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. 6.66 By. When the renting time has expired.Neeraj Kumar Singh (Roll No. If one of the companies is weaker than the other it will generate a hinder to successful management. To facilitate that these factors will be involved in the joint venture. delivery and installation conditions.. they decide price. One solution to this problem is joint venture loans. usually every month. there is a 60 % chance to success.520751161) . but at this time to a significant lower price. . which means that two or more companies share the risks and benefits of the loan. 3.

there could be a risk that the country uses the money for other projects. The subsidiary method is good to financing telecommunications projects. Agency for International Development (USAID) or SIDA.3.L.520751161) .N.67 By. 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. 6. give the country some instructions where the money will be spent. is when they are set it could be easier to get money from other investors.. which would lead to a lock-in effect. The next part of the money will be paid when the equipment has been installed. Finally the remaining money will be paid to the operators in semi-annual installments that will last for several years. 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. it is recommended to prepare for this break up in advance so that all parties that are involved are prepared for that.4 Guarantees When an investor sends money that is aimed for a specific developing country. To reduce this risk the investor could.S. Another form of subsidies is that the government reduces the taxes for a company that needs assistance. a telecom service provider of India A joint venture often ends when the predetermined goal has been reached.3 Gifts Gifts to developing countries could come in different forms. thereby they get more financial resources. . usually given from the government to a specific project. The most common way gifts are given are from help organizations like U. according to Stromberg (2003). 2003).5 Telecom subsidies A definition of a subsidy is according to Cannock (2001) a grant or a monetary gift.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. in other words set up guarantees for the investment. An effect that the guarantees has.S. that makes a donations by either give out money for a certain project.Neeraj Kumar Singh (Roll No.3. One part of the subsidy has been a gift from the government to the operators. A better method for the telecom operator would be to give telecom equipment to the developing country. 6. 6. It could be a sum of money from example a foreign telecom operator that wants to invest in new markets.

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

Pan-African Telecommunications Network (PANAFTEL) This project was built in the mid 1970s. could be difficult to capture through this method. especially in Kenya. but a problem could be that the large amount of money that is required for these projects. Interest rate subsidy. A problem that ITU (2004-09-20) says about vendor and supplier financing is that this method only covers the cost of imported equipment.520751161) . Through the past decades several projects of this type has been successful in developing countries (ITU.. The SPACECOM Project This project was launched in 1994 by ITU. 2.8 Vendor and supplier financing According to ITU (2004-09-20). for example in Thailand . a telecom service provider of India 6. vendor and supplier financing for telecommunication can take two different forms.L.S.7 Cross-border initiatives A cross-border initiative means that several countries cooperate to build up a common telecommunication networks.N. and therefore not other costs like labor and domestic equipment. When this financing method is used the vendor put its own credit at risk. Despite this there have been successful telecommunication projects in developing countries that have used this method. It involved a cross-border network of radio links.Neeraj Kumar Singh (Roll No. This project focused on bringing space technology to rural development. The Regional African Satellite Communication System (RASCOM) This project was established in 1993.3. Uganda and Tanzania. Loans and guarantees.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. 1. 2004-09-20).69 By. This involves reduction in interest payments of a loan.3. Pacific Telecommunications Council (2004-10-20) illustrate that vendor and supplier financing could have a good supportive role in building up telecommunication. 6. The task of the RASCOM project was to harness the satellite communication for the 40 African countries that was involved.

which Hull (2003) defines as follow. It is very difficult to combine these two.Neeraj Kumar Singh (Roll No. a telecom service provider of India 6. .520751161) .11 Pre-Paid The pre-paid system was introduced in Germany in the 1920s. The supplier that demands the least amount of money gets the deal and could start the project. Therefore the investor tries to be positioned between these two goals with a medium return and risk..3. the two basic ones are call and put options. A definition (Investorwords. They spread the information to different suppliers and get bids from them. A connection to this market could be to start with a developing county that are interested in building a telecommunication network in their country. the country has to pay on a monthly basis to access the network.N. To be able to receive a good return from a telecom project it is important to invest at an early stage (ITU. options are an instrument of volatility. According to (ITU.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.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.3. 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. 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. 2004-12-02) of pre-paid would be that you pay for access to a certain product or service in advance. 2003).L.10 Reverse bid A definition (Merna & Njiru.S. These payments are often done on a monthly basis.3. Ideally for the investor is of course to have high returns and low risk. but it is a fairly recent concept in the United States. 2002) 6. 6.70 By. Then they decide which offer that are best suitable for them. There are several kinds of options. 6. 2003) junk bond is a successful tool for financing telecommunication projects in the future. A connection to the telecommunication industry would be that when the telecommunication network is built.3. This could be a good starting point and thereafter decide which financial tool the country wants to use to invest in the telecommunication network.12 Options According to Neftci (2004). (Merna & Njiru.

3. The main reason for this according to Hull (2003) is that the investor has the right but not the obligation to take an action. if there would be big price movements the investor can take an action on the basis of that.3. These are sharing. If there is any risk that they together cannot control. The advantage that this method has is that it provides insurance for the investor. Myron Scholes and Robert Merton.13 Self financing As mentioned in many articles. Dominant public private partnership This kind of partnership is usually financed by a soft loan that the public sector usually is responsible for. Options can be used in big projects like a telecommunication investment.L. 6. 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. The options in the plain vanilla category are treated with the Black-Scholes model. the public sector usually takes the responsibility for that risk.Neeraj Kumar Singh (Roll No. Sharing public private partnership This partnership means that the private and public sector share the risk for the project. which are plain vanilla and exotic options. for example by the Ministry of Communication: Science and Technology (2004-11-19).71 By.520751161) .S. 6.N.. . which is a model for pricing European options. This model was developed 1973 by Fisher Black.14 Public Private Partnership Merna & Njiru (2002) indicate that public private partnership could be divided into three different types of partnerships. dominant and independent. that the company owns. A soft loan is a loan with lower rates than an ordinary bank loan.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. Neftci (2004) describes that there are several more options but they usually are divided in two categories. a criteria for a successful self financed telecommunication company in a developing country is that there are already a telecommunication network in the country. 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.

2003).72 By. Government-owned telecommunication According to Hadi Salim (1995) this system leads to that the government has monopoly of the telecommunication market in the country.N.L..15 Domestic ways of financing telecommunication investments If a country is not interested in foreign investors for their telecommunication projects.3. 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. investments from foreign private company could be a big risk for the developing countries. Private sector investments have risen from 6. but with a big difference that the public sector also are involved.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. 2002) 6. The partnership is involving the government and one or more private sector companies. Private sector investments According to Kessides (2004). 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.S.2 billion USD in 1990 to 57. Principally is a public private partnership a form of privatization. there are some different options that could be successful.3 billion USD in 1998. a telecom service provider of India Independent public private partnership This partnership is used in projects with high risks. 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. In resent years it has reduced a bit. If the country instead chooses to concentrate on the private sector in the domestic market they will reduce the risk. The public sector in a developing country could be one part of financing a telecommunication network (Asia Trade Hub.Neeraj Kumar Singh (Roll No. Public sector investments This is a method that was used in Pakistan when they upgraded their telecommunication system in 1980.520751161) . When this method is used the public sector does direct financing investments in the project. (Merna & Njiru. 2004-10-28). As mentioned in the article by Hadi Salim there could be a problem with government owned telecommunication because the government is suspicious of technology. .

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

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

o Wholesale price index Here the change of price is measured at the wholesaler. 1. which in other words means that the money loosens its value and the price for different projects could reach unlimited values. Assign probabilities for every potential outcome for each regulatory scenario.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. . 3. One factor that can contribute to inflation is that the money supply in a specific country increases. 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.N.. Inflation Inflation is defined (Investorwords. cost structure and operational processes. The products that are chosen. are products that are bought by the typically consumer.75 By. o Producer price index This method compares the price incomes for different products to a producer at different time periods.S. There are a lot of different methods of measuring inflation and here follow a description of some of them.L. It is important that companies understand how the regulatory market model works and then try to lessen the effects of the regulatory risk. Quantify the financial impact for each regulatory scenario to the company.520751161) .02) gives the following statement that companies should follow. this could include revenue requirement. calculate the expected results and variance for each regulatory risk scenario. 2. Montgomery Research (2004-12. 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.Neeraj Kumar Singh (Roll No. o Consumer price index This method compares the prices of products at different time periods. Finally. 2004-12-02) as a sustained rise in the general levels of prices. o Commodity price index The price change of a selection of commodities is measured.

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)

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. a telecom service provider of India 6.L.N..520751161) .6 How financial development may promote growth .79 By.

Furthermore.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. The gradual opening up of the economy ensured steady growth even at a time when other countries were in the grip of massive slowdown. is responsible for the economic growth in India (Proctor & Olivier. a trend setter for other sectors to open up and follow the path of reform. 2004-11-26) The Indian economy is on the path of recovery. especially in the telecom sector which has been driven by transparent policies and better market conditions to attract foreign investments. 2002). Govt. India‘s move toward globalisation by progressive reforms.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. .” (Ministry of Finance.Neeraj Kumar Singh (Roll No. Considering the significance of its contribution and also the need to integrate with the global economy. 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. several policy initiatives have been taken by the government. a telecom service provider of India 6.520751161) ..S. of India. and therefore.N.L. It is one of the key drivers of economic growth and plays a vital role in the competitiveness of modern economies.80 By.

a telecom service provider of India A study by Contessi (2003) shows informal evidence.L.S. a result that contradicts earlier findings.81 By. 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) .N. . The result stems from a larger indirect impact of telecommunications in other sectors.Neeraj Kumar Singh (Roll No. The study showed that there seems to be larger growth effects from telecommunication development in developing countries than in developed countries. Correlation between teledensity and GDP per-capita (178 countries) An econometric study by Jacobsen (2003) analysed the relationship between telecommunication development and economic growth.

N.82 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.S. a telecom service provider of India .520751161) .Neeraj Kumar Singh (Roll No.

They show that in the period between 1990 and 1999. . a telecom service provider of India The above figures show the correlations Jacobsen (2003) made..Neeraj Kumar Singh (Roll No. The relationship between GDP and personal computers and between GDP and telecommunications investment is also large.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.N. while cellular telephones seem to have somewhat lesser correspondence with GDP.83 By. GDP is strongly correlated with main telephone lines.L.

. The data is gathered from the Internet. Financing ways developing countries prefer (42 developing countries) Strategies developing countries prefer (42 developing countries) . literature and articles.520751161) .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.Neeraj Kumar Singh (Roll No.L.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. a telecom service provider of India 6.N.7.84 By.

Services. & I. 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.N.85 By.S.520751161) .S.T.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 company offers vide ranging & most transparent tariff schemes designed to suite every customer.L. a telecom service provider of India Unit-7 B. IN Services viz. is a diverse telecom service provider. Prepaid calling card etc.P.L.S. expanding the network. BSNL is numero uno operator of India in all services in its license area.1 BSNL as an integrated telecom service provider BSNL being the oldest telecom player. if we take the legacy of DoT before its formation. It is niche in all verticals of telecom fields and is serving the nation by being with the nation. 7..N. .Neeraj Kumar Singh (Roll No.. D.P.S. 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.

520751161) .. 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 .Neeraj Kumar Singh (Roll No. BSNL offers different kinds of products suiting the different kind of people with different kind of need. a telecom service provider of India To fulfill the telecom service need of the nation.N. BSNL Mobile: Prepaid and Postpaid Unified Messaging WAP/ GPRS/ MMS 3G services 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. BSNL WLL: Post-paid fixed mobility Post-paid and Pre-paid with full mobility BSNL data card. BSNL Landline: Fixed Line Pre-paid (FLPP) BSNL PCO Phone plus services ISDN 2. NIC and EVDO 4.86 By.L.S. These various product offered by BSNL can be summarized as follows: 1.

Audio Conferencing 10. Intelligent Network Services (IN) 9. Data Communication HVNET RABMN INMARSAT . MPLS BASED VPN SERVICE 7. EPABX 15. Leased Line : Managed Leased Line Service(MLLN) Access link Services 8. Fleet Management Solution 13.. Inet 14. Video Conferencing 11. BSNL Managed Network Services 6.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) .L.87 By.S.Neeraj Kumar Singh (Roll No. BSNL Web Conferencing 12. a telecom service provider of India 5.

Expansion of 3m Broadband. include national and international longdistance services.1. 7.1 New Initiatives WiMAX: Tender Invited for 1000 BTS at Rural Block HQs covering 25000 village communities centers. The licences.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. IPTV: Launched in Three Cities viz. . Pune & Kolkata.88 By. The North African Tunisian country is set to issue new licenses for fixed line and basic mobile services. Bangalore. The PSU had already received in-principle board approval to enter the global market and bidding for Tunisia was one such step. BSNL chairman Mr Kuldeep Goyal had said the company would look at valuable buyout opportunities based on due diligence of the target company. 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.5 m GSM lines.2 Developmental Plans (2008-09) Expansion of 13.1. initially for 15 years. Moving aggressively on its overseas expansion plans. Expansion of 2 m WLL (CDMA) lines Introduction of 200K IP Transit Switch.Neeraj Kumar Singh (Roll No.520751161) .S.N. Addition of 1206 K TDM TAX Addition of 200 IDRs Satellite System for Inaccessible Stations.. BSNL has set up a separate international business division to explore telecom opportunities abroad. a telecom service provider of India 7. DTH Services: Planning‟s to launch this service is on the card.L. New Generation N/W: Is being deployed to meet future technology compatibility.

130 5. STD and Highway) Total Number of Public Telephones STD Stations Number of STD Stations Transmission Systems as on 30.08 Transmission Systems Digital (Route kms) Coaxial Microwave UHF Optical Fiber (Route kms) 6.31.09.01.08 33.09.086 as on 30.430 45.08 3.09.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.09.09.09.641 as on 30.22. 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.09.024 50.269 Satellite Based Services (as on 30.120 as on 30.S.96.08 19. a telecom service provider of India As per the records found from the company sources.206 as on 30.08 5..08) MCPC-VSATs IDR Systems (2 Mb/ 8 Mb) 82 99/38 .89 By.22.08 46.182 as on 30.L.520751161) .Neeraj Kumar Singh (Roll No.60.N.

2009)   Total number of connections District Headquarters covered - 46.Neeraj Kumar Singh (Roll No.731 .896(out of 60.. a telecom service provider of India Mobile Services (As on 28.930(out of 1.77) 42.684.L.975 19.S.519) 74.02.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.90.N.971 55.240.049 618(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) - 2.520751161) .454(outof 54.90 By.

a telecom service provider of India Telex/Telegraph Offices Departmental Telegraph Offices Telecom Centers Combined Offices Bureau-Fax Centers 961 716 44.754 1427 .91 By.L..Neeraj Kumar Singh (Roll No.S.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.

Replacement of life expired. progressively all over the country (major cities have already been covered). Digital connectivity shall be made available to all the exchanges by 2007. Extensive use of Optical fiber System in the local. To provide Intelligent Network Services. To set up Internet Nodes progressively up to District headquarters level. analogue coaxial and radio systems. computerization etc. . a telecom service provider of India 7. Consolidation of the network and maintaining high quality of service comparable to International standards is the key aim of the Growth Plan.N. infrastructure and human resource should certainly.92 By. Objective of the plan are: The telephone connection shall be provided on demand and it shall be sustained. All the technologically obsolete analog exchanges will be replaced with digital exchanges. has revolutionized the very nature of the network. and from wireline to wireless.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.520751161) .. Upgrading existing STD/ISD PCOs to full fledged Public Tele-Info Centers (PTIC) for supporting Multi media capability and Internet Access. Junction and long distance network so as to make available sufficient bandwidth for the spread of Internet and Information technology.L. subject to demand. The shift in demand from voice to data domination.S. Introduction of latest telecom services like National directory enquiry. 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. size.Neeraj Kumar Singh (Roll No. The Network shall be made fully digital. Introduction of Wireless technology (Supporting Internet Access) and optical fiber technology in subscriber loop. ISDN services shall be extended to all the district headquarters. To provide digital transmission links up to all SDCAs.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.

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

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

. hilly and tribal areas of the country. a telecom service provider of India 7.S. Transform in a time bound manner. and the provision of high-level services capable of meeting the needs of the country's economy.4 Social Commitment BSNL is committed to provide quality Telecom Services at affordable price to the citizens of the remotest part of the Country. including the rural areas. Strive to provide a balance between the provision of universal service to all uncovered areas.N. Access to telecommunications is of utmost importance for achievement of the country's social and economic goals.520751161) . Availability of affordable and effective communications for the citizens is at the core of the vision and goal of the new Telecom policy 1999. Encourage development of telecommunication facilities in remote.. the telecommunications sector to a greater competitive environment in both urban and rural areas providing equal opportunities and level playing field for all players.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.95 By.Neeraj Kumar Singh (Roll No. BSNL is making all effort to ensure that the main objectives of the new Telecom Policy 1999 (salient points indicated below) are achieved.L.

S.520751161) . a telecom service provider of India 7.N.5 Summary of financial statement .L.Neeraj Kumar Singh (Roll No.96 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.

BSNL's valuation is much higher. Bharti Airtel. The valuation of India's largest telecom company was estimated by analysts to stand at over Rs4. the market valuation of Bharti Airtel is just around $37 billion.520751161) .000 crore by selling a 10% stake. which is valued just over $38 billion. Incidentally.000 crore by 2010 to expand its telecom infrastructure and operations . If BSNL does manage to raise Rs40.000 crore (around $100 billion). the $37-45 billion valuation is a fair one.. In financial yerar 2008-09.and third largest telecom companies.125 respectively the second. The plan was to divest 10 per cent through the IPO.16. The company has also committed to invest about Rs60. 342 crore and Reliance Communications (RCom) at Rs1.97 By. larger than the combined market capitalization of Bharti Airtel Rs1. According to analysts. a telecom service provider of India The BSNL board has cleared the company‘s proposed $10-billion listing. 10 million more than the country‘s largest private operator.00.00. a top BSNL official said that this was only the book value of the company and did not include its asset value.N.000 crore to expand its mobile and broadband networks.S.19. BSNL has about 81 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. the company would invest about Rs15. "If we include the asset value. This will catapult BSNL into the league of top telcos in the world in terms of market cap.00.Neeraj Kumar Singh (Roll No. the telco would be valued at Rs4.L. However. Industry analysts had estimated the BSNL to be valued at over Rs4.000 crore.000 crore.

L.Neeraj Kumar Singh (Roll No.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 8.98 By.S..N.520751161) .new 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. 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 .

Neeraj Kumar Singh (Roll No. . wireless operators need a well-balanced bundle of high-quality and attractive valueadded services.520751161) .L.S. a telecom service provider of India As voice becomes a commodity. service providers need new killer apps to boost ARPU and generate revenue across all customer segments. one of the keys to success in today's highly competitive telecommunications market.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..99 By.N. To deliver this.

I .520751161) .S.100 By. the great growth is ahead in this 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.L. Now the wireless market is on the growth trajectories of the business cycle in India.N. and there is significant portion of the population is still not having the access to the service.. 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.Neeraj Kumar Singh (Roll No.

according to Maravedis.101 By. "Total BWA/WiMAX revenues for 2008 totaled US$1.a 102% annual revenue increase despite the economic downturn that began affecting operator revenues in Q308.78 million in 2007 .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 2/3 of the World Population are not connecte 4G.Neeraj Kumar Singh (Roll No." . And quarter-onquarter growth reached a highly respectable 21%.82 billion.520751161) .S.N.. compared with US$898.5 million new subscribers last year. an analyst specializing in several sectors within telecoms.L. Broadband Wireless and WiMAX technologies attracted nearly 1.

enter broadband.N. a telecom service provider of India To say that India offers potential is a complete under-statement.. .S. enter WiMAX.102 By. Approximately 70% of Indian households have no access whatsoever to fixed lines.Neeraj Kumar Singh (Roll No. Enter wireless.520751161) .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.

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

ADSL2+. WCDMA.S. and implemented the access technologies like ADSL. CDMA2000.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. Fixed WiMAX. These technologies have tremendous potential to bring revolutionary effects.L. EVDO to access the broad rural market of India.104 By. As India GDP will grow faster. Now the companies are focusing on low cost services to access the customers in rural India. GSM. per capita income will be increased and purchasing power of the Indian customer will be increased. . MBMS will be successfully launched which will change the pattern of Indian economy significantly.520751161) . LTE.. EDGE. VDSL2. and feasibility of high end premium product like fiber. HSPA.N. a telecom service provider of India Different access technologies are available for implementation but all needs project feasibility on revenue and profit terms.

.” Consulting firm Ovum's latest report outlines three aspects that operators must consider in serving low ARPU users. A close connection between marketing and network operations is crucial to profitability in emerging markets.520751161) . flexible pricing and strong distribution networks. a profitable rollout strategy there should focus on covering the most attractive rural communities first. 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.L.N. such disconnect is more likely to produce the opposite challenge. 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.105 By. Only then can a service provider focus on driving up profitability through locally-focused promotions. several African operators are being warned by regulators to tone down their marketing. ." says Angel Dobardziev. while different markets require different approaches and considerations. public access phones and PCs to demonstrate the value of the services and aggregate demand." says Angel Dobardziev. With 70% of India's population in rural areas.S. as the pace at which they are building network capacity cannot meet with the heavy flow of new customers. "A number of emerging market operators face significant operational challenges at least partly due to a disconnect between marketing and network operations.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. For example. “Service providers must focus on tight marketing-operational alignment. Ovum's Emerging Markets Practice Leader. for instance.Neeraj Kumar Singh (Roll No. In the more sparse rural areas. optimized network costs.

where switching at the edge of the network is shifting towards the core. Each additional site generates incremental costs for equipment.N.520751161) .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). the first principle is to have as few cell sites as possible. operators must take the opposite approach to what is happening in mature markets. operational/business support systems (OSS and BSS).106 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. transmission and power. site.L. base station equipment and site costs. In low ARPU markets. They are: network design and rollout.S.Neeraj Kumar Singh (Roll No. partly because backhaul is becoming cheap and plentiful. service providers must adopt distributed network architectures. When designing network coverage for low ARPU areas. . More importantly. a telecom service provider of India 9. backhaul and transmission.. with base station clustering and local call switching. security.

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‖.520751161) . .107 By.L.Neeraj Kumar Singh (Roll No..S. Unified OSS removes some of the bottlenecks associated with best-of-breed OSS solutions. that: "With carriers focusing more on reducing opex and capex.N. 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.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 the same way that budget airlines generate their profits by ensuring higher aircraft utilization. If there isn't an agent nearby to serve rural users locally. Meanwhile.L. Angel Dobardziev explains: "operators must price their services to ensure optimum network utilization and profitability.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. getting the phone initially is less a challenge than topping it up regularly. This is an approach that operators need to consider for the next wave of low ARPU users." 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. and even to agree that commissions would not be paid if the subscriber left the network within a certain period.2 Price to optimize network utilization Transparency and simplicity in pricing are essential for low ARPU users.. particularly those based in remote rural areas.N. and as a result top up their phones by small amounts more frequently. locally and in small enough amounts that they can afford.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. service providers need to weave shared-access voice and data services into their marketing strategies. Typically. these users earn small sums of money frequently (often daily). Carefully optimized selection.108 By. operators will be missing out on significant revenues. To these users. .S. Bharti Airtel's Public Call Offices and BSNL‘s Rural broadband package to Common Service Centre. "Some emerging market operators in Asia and Africa have managed to reduce their dealer commissions to US$1. incentives and promotional support for the network of agents and airtime resellers are an essential element of an operator's marketing strategy.520751161) ." says Dobardziev. 9. a telecom service provider of India 9. such as BSNL‘s Village Public Telephone.Neeraj Kumar Singh (Roll No.

S. 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.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..N.109 By. a telecom service provider of India Flexibility in design keeps the scope of improvement and expansion.520751161) .L. . that reduces the cost and expedite the sales process of future services.

S.110 By. 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. technology dependent solutions. Unified OSS focuses on simplification through pre-integration.L. to streamline and adopt the rapid changes in telecom operations.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. consolidation of operational data and centralised workflow spanning end-to-end operational processes.L.520751161) ." . a telecom service provider of India A comprehensive service delivery platform of B.N..Neeraj Kumar Singh (Roll No. from SLA management to field-force logistics.S. It avoids costly one-off.

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

N.N.Neeraj Kumar Singh (Roll No. with costs driven down faster than in any other market. was initially a wire line operator and later came into wireless market. India is expected to see the world's lowest end-to-end cost for WiMAX services. Its operational margins are being hit by higher cost of its operation. For the severely under-served Indian broadband market. demand for wireless broadband connectivity continues across all sectors: retail. Sridhar Pai. B.. With the implementation of 4G. using these new technology.L. Wire-line business is a capital intensive field with long break-even time.L. SMEs and large enterprises alike.112 By. 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. and being a niche player in all front. WiMax technology and by going wireless it can improve on margin front and expand its business rapidly.S.520751161) . Prior presence in rural market.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. can give it an edge to launch its operations rapidly. 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. together with low cost devices and a vibrant ecosystem.‖ Tonse Telecom CEO. SOHO. The resulting ecosystem and opportunities will make India a dream destination for vendors and investors.

B.L. Tata Teleservice.Neeraj Kumar Singh (Roll No. In this process. 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. 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.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.L. B.113 By.N.S. Here we take the case of largest public sector telecom operator. for the comparison of their performance in telecom sector. Both public and private players have contributed significantly in the Indian telecom growth. Vodafone.. Idea. and lagest private sector telecom operator.520751161) . contemplating the opening up of all the segments of the telecom sector for private sector participation. After this a number of private players have been emerged and invested heavily in the Indian telecom sector.S.N.S.N.L. . formed from DoT being a public sector telecom operator. Airtel. We can name few major operators as Airtel.

S. around 2. Airtel being a private player is outpacing the public sector enterprises.. Airtel has added 31.L.114 By.S.S.N.94m customer in 2008-09 in comparison to B.N. Customer Market Share percentage is shrinking year by year.S. B.L.520751161) . and thus fulfilling the objectives of NTP-99.3m. .5 times more.N. due to private players aggressive growth. Airtel has largest subscriber among all players and B.Neeraj Kumar Singh (Roll No. is at the forth place in customer market share.L‘s 12. 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.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.L.

a telecom service provider of India 10.S.L.1 Airtel as a private telecom service provider .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..520751161) .115 By.

520751161) .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..116 By.L. a telecom service provider of India 10.1 Airtel Performance Indicator .1.Neeraj Kumar Singh (Roll No.

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.520751161) ..2 Airtel Segment investment and contribution .Neeraj Kumar Singh (Roll No. a telecom service provider of India 10.1.L.117 By.

Neeraj Kumar Singh (Roll No.118 By.N. Airtel has maintained his financial growth despite lowering ARPU with increased volume of customers.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. .. the operators have to churn out the customers rapidly. Airtel is beating all the expectation and has been evolved as a strong player in Indian telecom arena. To subsidize the effect. It is showing the example for the others to follow. 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.520751161) .

Fixed 2.Neeraj Kumar Singh (Roll No. Billed /Del/Month (Basic services)(upto March 2008) 2. a telecom service provider of India 10.2 10.53%) 4.S. Billed /Cell/Month (Cellular) (upto March 2008) 10.) = 31297816/39209432 ( 79.2.L.N.41%) =4579023/70117895 (6.82%) ‖ ‖ = 36683137/199182293 (18.51%) B.)) =72559976/308509620 (23.2 1. 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.281.N. and poor operational efficiency. WLL MARKET SHARE : : : (Based on Figures of Private Operators provided by ERU Cell of DOT) (BSNL/(PSU+PVT.2.357. OVERALL MARKET SHARE): (BSNL/(PSU+PVT. GSM 3.53 Rs.S.119 By.520751161) . All these are due to slow growth in customer addition.1 Performance parameters of BSNL FINANCIAL PARAMETERS : : Rs. .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..12 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.Neeraj Kumar Singh (Roll No. 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 .120 By.S.N.L.520751161) J A K rl C hn R K & K tk TN aj A ..

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.121 By.Neeraj Kumar Singh (Roll No.N. 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 .S.520751161) .

Neeraj Kumar Singh (Roll No.520751161) .122 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..L. 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 .

520751161) NE-I Chn HP Har WB TN .L.123 By.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. 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) .N.

41 380.86 390.02 -53.15 -13. TAMIL-NADU CHHATTISGARH HARYANA GUJARAT BIHAR ASSAM KERALA PUNJAB M.66 -17.94 349.E.68 Last Yr.77 -7.-II Total 438.(EAST) U.75 159.75 372.P.E. 28.42 322.44 280.L.32 275. Yr.E.57 -96.59 -24.14 -52.09 369.28 159.P.95 -93.29 208.89 300.93 260.07 269.38 399.S.P.29 260..88 317. UTTRANCHAL A.96 337. ORISSA WEST BENGAL N.47 -58.27 322.01 376.90 -14.89 244.19 304.32 Variation from last year (%) -15.91 -20.61 -1.P.) February 2009 Achievement Name of the Unit A&N A.18 410.60 ARPU in Descending order CHENNAI CALCUTTA A&N MAHARASHTRA U.57 -56.93 256.14 -20.(WEST) KARNATAKA JHARKHAND J.60 -15.75 361.88 366.28 -38.34 -93.46 315.78 -85.02 -41.08 -13.60 -39.93 306.P.18 372.29 -21.51 326.30 -87.76 -86.03 449.00 Variation from last year (Rs.83 -8.93 337. J.76 361. CHHATTISGARH MAHARASHTRA N.96 412.06 287.72 317.89 358.19 220.06 307. a telecom service provider of India Average Revenue per DEL per month (Rs.76 402.07 -3.46 244.94 226.Neeraj Kumar Singh (Roll No.45 -13.67 244.39 -56.76 -32. ASSAM BIHAR JHARKHAND GUJARAT HARYANA H.48 531.93 -72.48 226.(EAST) H.30 -22.-I U.P.70 -17.14 -30.40 -60.75 410.14 -10.18 304.E.89 -14.N.74 423.10 -240.12 269.27 352.19 438.21 -12.15 344.P.08 349.20 316.48 306.28 227.88 397.27 244.12 338. 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.72 280.87 -54.73 366. & K.08 439.53 369.73 307.83 -21.42 352.68 .19 267.P.-II ORISSA PUNJAB RAJASTHAN TAMIL-NADU U.52 -39.72 208.91 -49.P.P.02.13 -35.00 266.27 256.00 -43.67 307.) -69.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.95 230.27 -19.88 307.96 220. & K.32 -11.31 -13. KARNATAKA KERALA M.30 -12.67 -25.07 287.44 315.94 358.520751161) .88 227.124 By. RAJASTHAN N. 28.86 -117.06 292.53 438.13 -55.02.47 -37.(WEST) UTTRANCHAL WEST BENGAL CALCUTTA CHENNAI Total Target Curr.-I N.72 338.

08 90.71 81.67 69.66 94.26 94.75 92.71 60.E.E. GUJARAT UTTRANCHAL RAJASTHAN H.N.P.57 93.62 Circle N.79 98.02 56.75 73.520751161) .35 91.45 96.(WEST) CALCUTTA UTTRANCHAL HARYANA RAJASTHAN H.P.92 94.77 72.19 91.82 93.125 By.-II CHENNAI KERALA GUJARAT PUNJAB TAMIL-NADU KARNATAKA A. & K.69 .P.88 90.73 70.(WEST) HARYANA ORISSA M.P.-I BIHAR N.10 84.P.. MAHARASHTRA U.52 91. a telecom service provider of India Status of Collection Efficiency Descending Order as on February 2009 Target ---> 99. N.74 96.28 92.E.Neeraj Kumar Singh (Roll No. & K.96 76.00% Target ---> 90. ORISSA J.00% Target ---> 97.42 93.07 63.P.03 85.S.58 81.49 91.77 89.-I ASSAM BIHAR JHARKHAND Total 3rd Month 154.(WEST) ORISSA A&N M.37 94.P.35 59.08 97.39 95.P. MAHARASHTRA WEST BENGAL CALCUTTA J. A&N WEST BENGAL CHHATTISGARH U.P.28 87. U.55 91.42 93.75 83.33 89.03 87.67 88.90 90. M.30 92. UTTRANCHAL HARYANA U.(EAST) N.97 96.47 90.84 95.P.P.77 81.-II Total 6th Month 98.06 68.61 91.-II BIHAR Total 2nd Month 96.31 84.E.43 91.62 96.17 81.79 88.50 81.(EAST) ASSAM JHARKHAND N. & K.71 83.E.92 84.P.43 89.42 96.(EAST) ASSAM J.13 94. CHHATTISGARH WEST BENGAL U.58 94.76 27.36 73.-I JHARKHAND N. A&N CHHATTISGARH U.04 93.45 88.E.00% Circle CHENNAI KERALA TAMIL-NADU KARNATAKA PUNJAB A.57 95.L.27 77.39 91.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.48 93.85 86.88 92.P.46 88.36 Circle CHENNAI GUJARAT KERALA TAMIL-NADU PUNJAB KARNATAKA CALCUTTA MAHARASHTRA A.71 73. RAJASTHAN H.57 91.89 85.59 40.P.21 64.P.89 84.

E.42 96.2.88 Target-> Collection Efficiency of lowest 3 circles as on 28.06 68.71 60.E.76 27. (%) 72.62 3rd Month -> 97% CIRCLE Chennai Kerala Gujarat C. (%) 56.S.E.74 96. a telecom service provider of India Collection Efficiency of top 3 circles as on 28.L. (%) 97.N.42 3rd Month -> 97% CIRCLE Assam Bihar Jharkhand C.520751161) .09 6th Month Target -> 99% CIRCLE NE-I Bihar NE-II C... (%) 98.21 64.Neeraj Kumar Singh (Roll No.79 98.L. (%) 96.26 CIRCLE Chennai Gujarat Kerala Target 2nd Month 90% C.57 95.S.59 40.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.N.55 CIRCLE Jharkhand NE-II Bihar Target 2nd Month 90% C.126 By.79 Target-> As per Auditor General of India report.07 63.2.97 96. (%) 69.2009 6th Month Target -> 99% CIRCLE Chennai Kerala Tamilnadu C. the total arrears of revenue is over Rs4030.37 94.E.E. .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.

.127 By.S.L.Neeraj Kumar Singh (Roll No. a telecom service provider of India .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.

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. . 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.L. and this is evolving the better picture of India.. Its financing need is too big that government can‟t alone do the magic.S. Magic lies in public-private partnership. a telecom service provider of India Indian Telecom market is a big cake and both public and private can share it.128 By.Neeraj Kumar Singh (Roll No.N.

Entry fee and net worth requirements have been reduced. Policy on Mobile Number Portability (MNP) & 3G to be announced shortly. Government has simplified NLD and ILD license norms and lowered entry barriers.1 Opportunities India is the fifth largest Telecom services market in the world.S. GSM & CDMA technologies. New entrants given 3 years to set up infrastructure. The telecom subscriber base has grown at about 40% p. FIPB approval is required for foreign investment exceeding 49% in all telecom services. . Mobile operators have deployed both CDMA (62 million users) and GSM (189 million users) wireless networks (February 2008).L. Policy on Active Infrastructure Sharing to be announced shortly. Highlights are An independent regulator – the Telecom Regulatory Authority of India (TRAI). Revenue-share model for licenses issued by the Government for telecom services in India. Public sector has over 27% subscriber market share. Industry grew by about 22% in FY 2007 over FY 2006.129 By. Universal Access Service License (UASL) recently issued to 5 new players.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. down from over 90% in 2000 & Private companies have added subscribers at a CAGR of 80% since 2000. In India 74% to 100% FDI is permitted for various telecom services. .520751161) . US$23 billion revenues in FY 2007..39 million fixed lines and 251 million wireless . The Indian telecom market has both public and private sector companies participating. 290 million subscribers . 100% FDI is permitted in telecom equipment manufacturing India has a telecom policy that aims to encourage private and foreign investment.N. a telecom service provider of India Unit-11 Telecom Investment opportunities and Potential In India 11.(February 2008).a. Wireless segment subscriber base grew at 62% p. over the last 4 years. Unified access licenses are available for providing telecom services on a pan-India basis in both. Value added service features constitute about 10% of revenue (2% in 2001).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. Lucent.Neeraj Kumar Singh (Roll No. data and broadcasting services Devices like the mobile handset.. projected growth of 27% p.N. Siemens.L. and consumer premise equipments etc.130 By.low tariffs.S. 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. Nokia. modem. LG.2 Potential Favourable demographics and socio-economic factors leading to high growth: Growth of disposable income combined with changes in lifestyle Increasing affordability . Ericsson are all investing in India . WIMAX etc. Applications/software for voice. to reach 500 million subscribers by March 2010.a. set top box. 3G. gaming console.520751161) . Alcatel. a telecom service provider of India India is expected to be among the fastest growing telecom markets in the world. Elcoteq. Over 8 million new users are added every month – mostly in wireless 11.

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)

Example of secondary data are information that are documented in books. companies financials. Telecom statistics of different research analysts.2 Secondary data Problems can however occur.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. 12.3 Source critique When you are using secondary data it is important that you have a critical behavior to the literature.L. tape recordings and information that are available in other electronic forms. 12. To achieve the data necessary to accomplish the purpose of this project mainly secondary data has been collected through mainly internet domains. The main reason for this is that many articles are written by personal reflections. articles in newspaper and magazines etc.Neeraj Kumar Singh (Roll No.N. government‘s reports and literature on the subject.S. social and economic indicators.520751161) . But we have also used other sources to learn more about this subject. estimates of consulting firms. The secondary data in this project are government of India telecom growth figures. To avoid this kind of information our ambition is to have as much scientific literature as possible. a telecom service provider of India 12.. .2 Data collection methods Data can be collected in different ways depending on if it is primary.2. like internet.or secondary data that is to be collected. World bank reports.134 By. as it can be difficult to find relevant material. It can also be difficult to value the quality and usefulness of the found material. articles. investment estimate. .

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. India. makes such a task almost impossible. In many regions of the world. Unfortunately. has been dubbed the ―digital divide‖ and until comparatively recently no viable solutions to bridging this divide presented themselves. As an example. . Wireless base stations can be self-powered by a variety of methods. the problem has remained largely unresolved. a telecom service provider of India Unit-13 Analysis Access to modern communications is a basic requirement for economic growth and social harmony. This gap between the telecommunications ―haves‖ who have easy access to services such as the Internet and the telecommunications ―have nots‖ who do not. 13. particularly electrical power. 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. The lack of existing infrastructure.Neeraj Kumar Singh (Roll No. put communications on a par with water and energy in terms of importance. without the need to lay cables.N. That access to communications is an essential precursor for economic activity and growth is not in dispute. regardless of the type of terrain. With wireless technology these problems are easily resolved.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 drawing up a list of the ten key goals for national growth.520751161) ..L. Wireless networks have the capability to cover large areas.135 By. 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. such as Africa. some twenty five years after the Maitland Report for the United Nations identified the importance of ensuring universal access to communications. increased employment and created new wealth. so important are communications deemed that the Indian Government.S. anyone within the coverage area of the base station with a suitable terminal can gain access to modern digital voice and data communications services. And there is no need to provide an individual wired connection to each household. China and South America.1 The benefits of wireless The reason that so many people remain unconnected to any kind of communications network is simple.

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

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

as well as fixed networks such as ISDN and DSL.. The access networks connected to the common core will include 3G.4 Enter WiMAX Cellular alone. WiMAX is based on the IEEE 802. the overall picture of what will come beyond 3G in the 2010/2012 timeframe is already clearly outlined. WLAN. work is already ongoing to create the next generation.5 Looking to the future The global wireless industry is constantly looking to the future. WiMAX is a standards-based wireless technology for providing high-speed. working to develop the next generation of wireless technology. 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.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. . 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. last-mile broadband connectivity to homes and businesses and for mobile wireless networks. a telecom service provider of India 13. 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. 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 developing a new radio interface can take up to ten years it is obvious that.Neeraj Kumar Singh (Roll No. Although there is still much detailed R&D still to be carried out.520751161) . even as 3G reaches maturity and alternative solutions such as WiMAX become more widely deployed. WiMAX offers a wireless alternative to cable and DSL broadband access.16-2004 specification for wireless high-speed Internet access promoted by the WiMAX Forum. 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.L. may not be the answer to delivering the right service mix and operators need to look at other wireless technologies as well. Instead mobile networks will have multiple wireless accesses connected via a unified multimedia IP network. however. The WiMAX specifications have now been evolved to support nomadic users and a new standard is being defined for mobile WiMAX users. 13. Within the next few years mobile networks will move away from having a core network accessed through a single air interface. GSM/GPRS/EDGE.N.138 By. The alternative wireless technology attracting the most interest these days is WiMAX (Worldwide Interoperability for Microwave Access). WiMAX.S.

Thailand and China and around a tenth that of some Western European operators. Malaysia. as this off-sets low ARPU. February 2008) forecasts that residential broadband will grow faster than revenue. This low ARPU is offset by potential for customer growth. This is doubly important because operators in emerging . are critically important when maintaining services over such a geographical extent.. While the opportunity for customer growth is clear. as in Eastern Europe. 13.N. 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. one Indian operator is achieving a ratio of 1:1750. The estimated ARPU in India is around US$8 per month.1 billion population lives in rural areas with tele-density of around 2%. Operators in emerging markets need OSS that helps them ―go live‖ with services quickly and manage the transition from low to high revenue services. Simply put. despite network availability and a consumer base demanding higher value services. the legacy OSS cannot efficiently. often delivering many functions simultaneously. rapidly and reliably deliver the order-to-cash process. only slightly lower than Indonesia. India covers 3 million km2 and 70% of the 1. and ARPUs are low. a telecom service provider of India 13.S. automation and intelligent management of manual activities.6 Streamlining Telco‟s process efficiency Most operators in emerging markets must contend with comparatively low ARPU.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. Some operators in Asia are achieving ratios of staff to subscribers that are almost half that of counterparts in Western Europe and North America.L.520751161) . some operators in emerging markets achieve tens of millions of subscribers within a few years.139 By.Neeraj Kumar Singh (Roll No. as the service is still relatively new. monthly growth of one million subscribers being fairly common. Expansion can be extremely rapid. For operators in emerging markets the key is in accessing their large. Operators in Eastern Europe and CIS are challenging their legacy platforms as they experience demand for broadband services. an OSS must take the strain of a rapidly expanding customer base. often rural populations that typically have low tele-density. leading to operational efficiency. the Philippines. 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. at a CAGR of 27%. the OSS must support consumer demands to rapidly transition from low to high revenue services. This rapid increase in subscriber numbers or service revenue is often essential for the business plan. thus supporting business models based on rapid growth and high customer subscription. Where the subscriber base already exists. For example. Many operators are replacing legacy with new OSS.7 Growing pains In emerging markets. OSS Observer (Emerging Markets Outlook.

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

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

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

143 By.N.. services and manufacturing continues at about 10-12% p. From strong double-digit figures of the past few years.520751161) .S. according to Pyramid.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. and steady demand from both the corporate sector and consumers for innovative. Primary drivers will include the increased demand from small and medium-sized enterprises. according to IDC. 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. 13. a telecom service provider of India consumer base and one of the world‘s largest markets for manufactured goods and services. accounting for nearly 40% of total fixed line revenue worldwide. Growth in key sectors like infrastructure. Purchasing and owning a mobile phone will continue to be a worldwide obsession. Revenues from broadband services will leap from US$137bn this year to US$207bn in 2011. according to Pyramid Research. particularly in Asia. converged electronic devices with Internet access. global PC shipments will grow by just 4. Average revenue per subscriber will decline in the period. Sales growth of the PC will slow over the forecast period. continued network equipment and service upgrades across the business sector. a US telecom consultancy. as operators compete more aggressively for customers on price. but the rate of growth will moderate from nearly 10% this year to 5% in 2010. the US IT consultancy.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 growth will be driven by emerging markets and Western Europe where penetration levels are lower.a. .Neeraj Kumar Singh (Roll No.L.3% per annum between 2007 and 2011.

As a result. According to Celent. 35% of online banking households will be using mobile banking in 2010. The vast majority will be web-linked products and services. according to Pyramid.S. online services —as opposed to traditional software with its endless upgrades – will offer continued opportunities for innovative start-ups. Fixed-line telecoms revenue.L.. In the first quarter of 2007. Sales of these goods will dampen the growth in demand for the traditional PC.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. up from 1% now.Neeraj Kumar Singh (Roll No. a telecom service provider of India Price competition will remain keen in the years ahead.0 initiatives.N. the Japanese were more likely to be using their phone than their PC to connect to the internet. . will be more than three times that of mobile voice revenue over the forecast period. 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. 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. with income from broadband and other internet services making up for the rapidly declining sales of fixed line voice service. 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. By early 2007. will remain flat over the next five years. online work environments. according to Pyramid. The IT and telecom sectors‘ drive to innovate will continue to be backed by its strong commitment to research and development (R&D). already outnumber conventional handsets in Japan and are growing quickly in other developed economies. signed a deal with ABC to offer full episodes of major prime-time shows streamed directly to subscribers mobile phones. but telecom service providers are taking the plunge nonetheless. there will be increased reliance on network availability and dependability. which have high-speed internet connections. will convince more managers to trade in their carry-on luggage for the latest video conferencing systems. companies will continue to launch tempting new products for both the business and consumer market. Rising concerns about the impact of air travel. On the demand side. At the same time. which create a platform for collaborative. stem severe profit erosion for the most efficient players. The growth in revenues from data downloads (video. Forecasts for mobile TV are varied. from about 11% in 2006. however. ranging from internet radios to Internet Protocol TV (IPTV) and mobile phones equipped for banking. Web 2.144 By. Sprint Nextel. for example. TV and social networking. such as the environment. music included) for mobiles. the third largest US mobile service provider. and is expected to hit US$224bn in 2011. 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.520751161) . the increased popularity of on-demand. 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. net-enabled devices. This growth will be driven by more than the purchase of the latest music video. Third generation (3G) phones. Deals like these underline the rapidly changing environment for telecom service operators. as traditional PC-based tasks move to smaller. will gain traction in a wider circle of industries. According to Pyramid Research.

Even with the strong growth rates forecast.N. . according to Wireless. well below that of other major emerging markets such as China (46%) Brazil (69%) and Russia (111%). and 39% for Asia. a telecoms consultancy. Given the relative ease of setting up a mobile phone network. under-investment. Asia. will handsomely outpace the developed world in IT spending over the next five years. In South Africa. The buoyant economies of India and China will be the major reason for this erosion.S. excluding Japan. will jump from US$734bn to US$875bn in the same period. The research shows clear digital divide between rich and poor will remain for the next five years at least. software and services in Asia. Even so.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. 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. developing countries will continue to show the fastest growth rates of mobile phone subscriptions globally. excluding Japan. a telecom service provider of India By contrast. Africa. this scenario is already playing out – three players MTN. However. these two regions and Japan will account for 83% of IT spending in 2007 but this will slip to 79% in 2011. China and India alone will account for more than 55% of the IT spending in the region. That is because the fixed-line infrastructure in many poorer countries remains woefully undeveloped due to inefficiency. We forecast that growth in purchases of IT equipment. the penetration of mobile phones in the Middle East and Africa will reach only 54% by the end of the forecast period. recorded a 46% increase in mobile customers in 2006. The Economist Intelligence Unit forecasts that India will see the number of mobile subscriptions rise by an annual average of 27. but there will be some reduction in their domination of the sector. according to Pyramid.145 By. According to the EIU forecasts. will run at about 8-9%. The number of subscribers could rise faster as economic growth accelerates. The leading economies of the developed world – Japan. Vodacom and Cell C battled so hard for customers that mobile penetration hit 75% in 2006.Neeraj Kumar Singh (Roll No. global mobile phone service revenues. In addition to the sheer convenience of the mobile phone for customers in wealthy nations.520751161) . the handset has taken on a surprisingly strong role in the developing world.. excluding Japan.5% over the next five years to reach 390m by 2011. our forecasts show that India‘s penetration will still be just 33% by the end of the forecast period. with mobile phone revenues outstripping fixed-line voice revenues by more than 320% in 2011. competition continues to drive down prices and new service packages are offered. for example. and growth is expected to remain in double digits for the next two years. the main risks to this forecast are on the upside. well above the rate of worldwide growth for the forecast period.

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

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

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

mv Ministry of Finance.edu/fic/0402.520751161) . Derivative & Commodity Exchanges: http://www.nic. a telecom service provider of India International Association of Financial Engineers: http://www. of India: http://indiabudget.un.L.worldbank.investorwords.org International Labour Organisation: http://www.S.. Andy: http://fic.com OECD: http://www.in/es2001-02/chapt2002/chap94.org OECD(2002).org World Bank (2000a). The World Bank Institute: http://www.org/framework/pages/es.itu.exchange-handbook.utilitiesproject.ifc.oecd.Science and Technology: http://www.pdf Pacific Telecommunications Council: http://web.org UNDP (2001).org International Telecommunication Union: http://www.mcst.telecomweb.ilo.ptc.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.org International Finance Corporation: http://www.com The Handbook of World Stocks.org/dataoecd/16/14/1835738.Quantlets: http://www. Govt.worldbank.wharton.net Millenium Development Goals. http://www. http://www.gov.oecd.co.worldbank.pdf Montgomery Research: http://www.com LOCREGIS: http://www.org Telecomweb: http://www.developmentgoals.iafe.pdf Methods and Data .org Investorwords: http://www.pdf .infodev.org/projects/internet/010toolkit/afpt1.N.html UN. "Creating a Development Dynamic.Neeraj Kumar Singh (Roll No.upenn.com Kuritzkes.quantlet.org/wbi The World Bank Group: http://www.149 By. Final Report of the Digital Opportunity Initiative": http://www.org Ministry of Communication .org World Bank: http://www. "Internet Economic Toolkit for African Policy Makers": http://www.opt-init.locregis.uk."Measuring the Information economy": http://www.

Economic Survey. Berthelemy. East Asian Executive Reports. Annual Report 2002-2003.Neeraj Kumar Singh (Roll No. New Delhi.N. Aristomene (1996). N. Robert (1994). "That old Gandhi magic".520751161) . Oxford Economic Papers. Oxford Bulletin of Economics and Statistics. University of Minnesota. & Collins. "Economic Growth. Gerald. Center for Research on Economic Development and Policy Reform. Ernst. 1997. November 27. "Rural poverty and agricultural performance in post-independence India". Financing infrastructure in developing economies: Benefits". Annual Reports of the Department of Telecommunications.150 By. 2006). Arvind (2004). (1999). New Delhi Department of Telecommunications "Indian Telecommunication Statistics: Policy Framework. Ross (2002). Carkovic.S. Ministry of Communications and Technology and the Telecom Regulatory Authority of India (TRAI)–various issues. "State level performance under economic reforms in India" Working Paper No. . Business Standard: August 22. Stanford University Department of Telecommunications. The Economist. Bosworth. Ministry of Communications.L. ―Defining Financial Engineering‖. Clive & Rich. Economic Research Unit (Statistics Wing). "India in the 1980s and 1990s: A Triumph of Reforms". & Ngoc-Nga Pham. (1994). M.. Ahluwalia. Maria & Levine. Financial Engineering News. "Capital Flows to DevelopingEconomies: Implications for Saving and Investment".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. Susan M. Joe (1998). MS. Jean-Claude & Varoudakis.2 Articles TRAI (March 20. 2007 Panagariya. Barry P. a telecom service provider of India 15. "Does Foreign Direct Investment Accelerate Economic Growth?". Recommendations on Issues relating to Broadcasting and Distribution of TV channels. Brookings Institution. Status and Trends". Convergence Clubs and the Role of Financial Development". Bell. 96. Ministry of Communication and Information Technology. 2001.

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

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

Basic Telephone Service Mean the collection. 3G 3G is the third generation of telecommunication hardware standards and general technology for mobile networking. 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. i. superseding 2. 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.153 By. 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.e. 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.e.L. .Neeraj Kumar Singh (Roll No. rental/local call charges. it is the total revenue divided by the number of subscribers..520751161) . AGR (Adjusted Gross Revenue) The amount of annual income that a person or company has after various adjustments for income or corporation tax purposes.5G.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. 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. It is based on the International Telecommunication Union (ITU) family of standards under the IMT-2000. carriage. i. ADSL (Asymmetric Digital Subscriber Lines) Is a form of DSL.S. a data communications technology that enables faster data transmission over copper telephone lines than a conventional voiceband modem can provide. This would be the means to subsidize the below cost tariffs. it is asymmetric. ADC (Access Deficit Charges) Access Deficit Charge (ADC).N.

simply.N. 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. . BWA (Broadband Wireless Access) Broadband Wireless Access (BWA) systems utilize base stations to provide broadband voice. rural housing.L. The network can be that of any of the wireless communication technologies like GSM. which use CDMA as an underlying channel access method.S. data. 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. node B (in 3G Networks) or. 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. rural electrification and rural telecommunication connectivity. BTS is also referred to as the radio base station (RBS). WAN. 3G and wireless LAN which can even be combined in one single device to ensure seamless operation. CDMA.520751161) . but efforts are intensively continuing to deliver ubiquitous broadband network access by deploying adequate radio technologies like Metropolitan Area Networks.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. For discussion of the LTE standard the abbreviation eNB for enhanced node B is widely used. the base station (BS). The most common example of BWA is wireless LAN. WLL. UEs are devices like mobile phones (handsets). action is proposed in the areas of irrigation. Broadband Wireless Access (BWA) technologies provide broadband data access bay wireless means to consumer and business markets. WiFi. road. WLL phones. Under Bharat Nirman. WiFi and WiMAX gadgets etc. WiMAX etc. and video to businesses or homes. It offers an alternative to the wired "last-mile" access links.Neeraj Kumar Singh (Roll No..154 By. rural water supply. It should not be confused with the mobile phone standards called cdmaOne and CDMA2000 (which are often referred to as simply "CDMA"). computers with wireless internet connectivity.

The Telecommunication Network research group at IIT Madras is playing a key role in incubating CEWiT. with a direct membership of over 5.L. 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. A part of creative financing is microfinance. or is to be.S.. Instead.000 companies from around 300 national and regional sectoral associations.300 companies from the private as well as public sectors. CII is an Indian business association. 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. of Information Technology in partnership with the Indian telecom industry.Neeraj Kumar Singh (Roll No.N. It is a research organisation established by the Indian government‘s Dept. the calling party pays for those calls.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. CII The Confederation of Indian Industry: Founded in 1895. conveyed by means of a telecommunication system which is designed or adapted to be capable of being used while in motion. The Cellular Mobile Telephone Service refers to transmission of voice or non-voice messages over licensee‘s network in real time only. Cell Broadcast is permitted only to the subscribers of the service.520751161) .155 By. Creative financing Is where the seller provides the financing for the purchase of a property. 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. This Service does not cover broadcasting of any messages voice or non-voice. . however. including SMEs and MNCs and indirect membership of over 80.

. Factory outlet Also called an outlet shop. available for use. DTS (Department of Telecommunication Services) 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). Dark Fiber In fiber optic communications.520751161) .E1 level means a primary PCM bandwidth of 2. usually a small market with short operating history.N.Neeraj Kumar Singh (Roll No. is a shop supposedly selling goods direct from the factory at a discount. 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. DTH (Direct to Home) DTH is defined as the reception of satellite programmes with a personal dish in an individual home.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. DEL (Direct Exchange Line) Means a telephone connection between the subscriber‘s terminal equipment and the terminal exchange..048 Mb/s. Any other calls would be rejected. dark fiber or unlit fiber (or fibre) refers to unused fibers.L. 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. Emerging markets It is a financial market of a developing country.156 By.

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. GNI (Gross national income) Gross national income (GNI) comprises the total value produced within a country (i. equal to total consumer.e.Neeraj Kumar Singh (Roll No.157 By. By doing this.. GDP (Gross Domestic Product) Is the total market value of all goods and services produced in a country in a given 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. together with its income received from other countries (notably interest and dividends).N. investment and government spending. plus the value of exports. FICCI Federation of Indian Chambers of Commerce and Industry: Set up in 1927. 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. Foreign Investment Promotion Board (FIPB) has been able to give a major boost to the Indian economy. its gross domestic product).S. 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 the establishment of an enterprise by a foreigner.L. .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. minus the value of imports.520751161) . 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. it is a business association with over 1. less similar payments made to other countries.

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

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

data and applications processed by platform to a customer via Television. . cable modem or dedicated high-speed interconnects.Neeraj Kumar Singh (Roll No. PDA. ITU The International Telecommunication Union is the second-oldest international organization still in existence (the oldest being the Rhine Commission). 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. Switzerland. Its main tasks include standardization. DSL. established to standardize and regulate international radio and telecommunications. next to the main United Nations campus.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. 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. or IAP) is a company that offers its customers access to the Internet. Cellular. Audio.160 By. ISUP Means Integrated Service Digital Network (ISDN) User Part ITES Given the proximity of BPO to the information technology industry. ISP (Internet Service Providers) An Internet service provider (ISP. 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. 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. It is one of the specialized agencies of the United Nations. and Mobile TV terminal with STB module or similar device.N.. It was founded as the International Telegraph Union in Paris on 17 May 1865. such as dial-up. and has its headquarters in Geneva. also called Internet access provider. controlled and secured delivery of a considerable number of multimedia contents such as Video.S.L. The ISP connects to its customers using a data transmission technology appropriate for delivering Internet Protocol datagrams. allocation of the radio spectrum. it is also categorized as an information technology enabled service or ITES.

It is what you can find as local condition and make it to your advantage.161 By. carriage and delivery of switched bearer telecommunication service over a long distance network i.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. . payment services. For example. 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..S. a network connecting different Short Distance Charging Areas (SDCAs). Microfinance Is the provision of a broad range of financial services such as deposits. MPLS is well suited to the task as it provides traffic isolation and differentiation without substantial overhead. MPLS-VPN MPLS VPN is a family of methods for harnessing the power of Multiprotocol Label Switching (MPLS) to create Virtual Private Networks (VPNs).. people that has a higher education. and insurance to poor and low-income households and their micro enterprises.Neeraj Kumar Singh (Roll No.L. more labor and so on. 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.520751161) .N. money transfers. loans. in a certain city you can find more capital. in rural India.e. MARR (Multi Access Radio Relay) Access technology used to provide V. Local component Is a factor that you can find locally in an area.T. National Long Distance National Long Distance Service means picking up.

databases. store. data. microwave nets. interactive services. wire. text.162 By. and therefore the term "all-IP" is also sometimes used to describe the transformation towards NGN. it encompasses a wide range of interactive functions. like it is on the Internet. process. It was a telecommunications policy buzzword. 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. compact disks. video. which was popularized during the Clinton Administration under the leadership of Vice-President Al Gore. 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. NII includes more than just the physical facilities (more than the cameras. fax. and images. scanners. . user-tailored services. and printers) used to transmit. saving foreign exchange.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. optical fiber transmission lines.Neeraj Kumar Singh (Roll No. switches. 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. and display voice. computers. seamless web of public and private communications networks. monitors. NIXI (National Internet Exchange of India) The National Internet Exchange of India is the neutral meeting point of the ISPs in India. interoperable hardware and software. keyboards. which may include various types of tele services defined by ITU. televisions. It also improves the Quality of Services for the customers of member ISPs. and multi media etc. This enables more efficient use of international bandwidth. telephones. NII (National Information Infrastructure) The National Information Infrastructure (NII) was the product of the High Performance Computing and Communication Act of 1991.N. cable. such as voice. data.L. It was a proposed. and consumer electronics to put vast amounts of information at users' fingertips. Its main purpose is to facilitate exchange of domestic Internet traffic between the peering ISP members. by avoiding multiple international hops and thus reducing latency. advanced.520751161) . satellites. fax machines. The general idea behind NGN is that one network transports all information and services (voice. data. video and audio tape. switches.. computers.S. NGNs are commonly built around the Internet Protocol.

to become effective from 1st April.Neeraj Kumar Singh (Roll No. 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. 1999 (NTP-99) was approved on 26th March. OFC (Optical fiber cable) An optical fiber cable is a cable containing one or more optical fibers. it was reformed into the Organisation for Economic Co-operation and Development by the Convention on the Organisation for Economic Co-operation and Development. In common usage. contemplating the opening up of all the segments of the telecom sector for private sector participation. Later. its membership was extended to non-European states. NTP-99 laid down a clear roadmap for future reforms. In 1961. 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.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. to help administer the Marshall Plan for the reconstruction of Europe after World War II.L.520751161) .163 By. OCDE) is an international organisation of 30 countries that accept the principles of representative democracy and free-market economy. Most OECD members are high-income economies with a high HDI and are regarded as developed countries. equal-access basis. 1999. or a person of Indian origin who resides outside India.S. OECD The Organisation for Economic Co-operation and Development (OECD) (in French: Organisation de coopération et de développement économiques. 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. Other terms with the same meaning are overseas Indian and expatriate Indian. 1999. It originated in 1948 as the Organisation for European Economic Co-operation (OEEC). a person of Indian origin who is born outside India.Non Resident Indian A non-resident Indian (NRI) is an Indian citizen who has migrated to another country. The ONA concept consists of three integral components: >Basic serving arrangements (BSAs) >Basic service elements (BSEs) >Complementary network services . a telecom service provider of India NRI. led by Robert Marjolin of France.N..

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. A point of presence was a location where a long-distance carrier could terminate services and provide connections into a local telephone network.164 By. a telecom service provider of India PCO A Public call office (PCO) is a telephone facility located in a public place in India. routers. These cards are usually sold in USD amounts or by number of minutes.S. POPs are also located at Internet exchange points and colocation centres. service of prescribed quality and grade of service in a non-discriminatory manner.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. Point of Presence (PoP) A point-of-presence (POP) is an artificial demarcation point or interface point between communications entities..Neeraj Kumar Singh (Roll No. ISPs typically have multiple POPs. 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.L. 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.N. on demand. sometimes numbering in the thousands. 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) (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. ATM switches and digital/analog call aggregators.520751161) . It is a physical location that houses servers. service of prescribed quality and grade of service in a non-discriminatory manner. . An Internet point of presence is an access point to the Internet.

R&D The phrase research and development (also R and D or. i. These schemes are sometimes referred to as PPP or P3. more often. including knowledge of man. managed and run by the Government of India.S. Pro-poor growth Compares changes in the incomes of poor people with respect to changes in the incomes of the nonpoor. .520751161) .N. PSTN Means the Public Switched Telephone Network. 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. citing clearance of all wireless installations in the country etc. refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge. formulation of the frequency allocation plan.Neeraj Kumar Singh (Roll No. to sort out problems referred to the committee by various wireless users. Growth is "pro-poor" if the incomes of poor people grow faster than those of the population as a whole. making recommendations on the various issues related to International Telecom Union (ITU). Public Sector Company (PSU) Public Sector Undertaking a company (majority) owned. R&D). 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.e. inequality declines.165 By. SACFA (Standing Advisory Committee on Radio Frequency Allocation) SACFA makes the recommendations on major frequency allocation issues. culture and society. QOS Means Quality of Service. and the use of this stock of knowledge to devise new applications..L. according to the Organization for Economic Co-operation and 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.

Steady State Growth Is traditional economic theory that growth rates of different countries would converge towards a natural rate. 1999. 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. Telecommunication Tariff Order (TTO) 1999 The Telecommunication Tariff Order. 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. Therefore. Tele-density Is main lines per 100 inhabitants.166 By. 2000.Neeraj Kumar Singh (Roll No. the implementation of tariff re-balancing was specified in three phases. 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.S.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) . The first phase was implemented on 1st April.L. 1997 by TRAI (Amendment) Act. . The second phase was scheduled to be implemented with effect from 1st April.. 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. 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. 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.

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

Data rates typically range from narrowband[vague] up to 4 Mbit/s. polling or RFID data. The USO Fund was established with the fundamental objective of providing access to ‗basic‘ telegraph services. VAS(Value-Added Services) Means such services as may be available over a Telecommunications System in addition to Voice Telephony or Data Services. Internet telephony. and broadband phone. a telecom service provider of India is organized around three main pillars: Economic Growth. USOF (Universal Service Obligation Fund ) The Indian Telegraph (Amendment) Act.12. voice over broadband (VoBB). on-the-move (utilising phased array antennas) or mobile maritime communications. Conflict. or broadband data (for the provision of Satellite Internet access to remote locations.L.2006 as the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act. USL (Universal Service Levy ) Universal Service Levy (USL). and Trade. VSATs are also used for transportable. Global Health. 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). 1885 to enable provision of all types of telegraph services.Neeraj Kumar Singh (Roll No. 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed in December 2003. Agriculture. and Humanitarian Assistance. 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.S. broadband telephony. is a percentage of the revenue earned by the operators under various licenses. Democracy. and specifically those services listed as "Value-Added Services" in the Regulations or Orders. .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. an Act has been passed on 29.168 By. or SCADA)..N. Subsequently. VoIP or video). VSAT (A Very Small Aperture Terminal) Is a two-way satellite ground station with a dish antenna that is smaller than 3 meters. 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. Most VSAT antennas range from 75 cm to 1. g VSATs are most commonly used to transmit narrowband data (point of sale transactions such as credit card. Other terms frequently encountered and synonymous with VoIP are IP telephony.2 m.520751161) .

from point-to-multipoint links to portable and fully mobile internet access.520751161) . The services provided on this pair of wire are called wire-line services. which was formed in June 2001 to promote conformity and interoperability of the standard.L. including licensing and caters for the needs of all wireless users (Government and Private) in the country. 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". the pair of wires from the central switch office to a subscriber's home is called a subscriber loop. New Technology Group (NTG) and Standing Advisory Committee on Radio Frequency Allocation (SACFA). The technology provides up to 3 Mbit/s broadband speeds without the need for cables.. WiMax WiMAX. resulting in continuation of service during most commercial power outages. .16 standard (also called Broadband Wireless Access). WPC is divided into major sections like Licensing and Regulation (LR). The name "WiMAX" was created by the WiMAX Forum.169 By.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. 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. created in 1952. The technology is based on the IEEE 802. meaning ‗Worldwide Interoperability for Microwave Access‘. 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. 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.S. a telecom service provider of India VPT(Village Public Telephone) Telephone connections provided in rural villages. Wire-line In the United States. is the National Radio Regulatory Authority responsible for Frequency Spectrum Management. is a telecommunications technology that provides wireless transmission of data using a variety of transmission modes.

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.L.Neeraj Kumar Singh (Roll No. a telecom service provider of India Unit-17 Appendix 17.520751161) .170 By..1 Basic Information of Indian economy and social structure .S.

520751161) . 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.Neeraj Kumar Singh (Roll No.N.2 Financial Statement of BSNL .S.171 By.L.

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6 22.258.2 1.9 217.376.8 841.1 225.6 39.143.824.3 351.9 22.5 1.6 2.9 1.3 4.071.668.113.247.5 175.1 3.6 52.3 49.3 23.4 21.7 239.5 1.0 1.1 648.954.1 1.0 2.4 1.3 23.0 8.0 543.2 1.5 252.0 1.1 2.3 2.2 9.7 17.S.4 5.5 26.200.8 45.2 1.1 1.4 1.0 475.2 3.6 1.520751161) .5 23.7 (a) 60 countries covered by the Economist Intelligence Unit‟s industry service.587.4 11. a telecom service provider of India 17..1 1.7 26.186.503.0 11.028.3 10. Source: Economist Intelligence Unit.Neeraj Kumar Singh (Roll No.4 57.217.178 By.2 144.3 532.L.8 32.7 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) 931.4 159.3 126.0 23.7 1.8 29.0 68.1 198.0 19.6 585. .7 20.8 60.3 212.5 15.150.174.1 21.6 1.4 World telecoms and technology industry 2002 2003 980.4 13.8 55.9 265.970.114.3 415.6 1.8 159.073.N.030.1 926.1 284.8 22.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 2.6 24.5 107.7 7.1 18.482.5 762.5 20.289.2 23.8 1.8 2.

S.5 Tele-density Picture In India .. a telecom service provider of India 17.Neeraj Kumar Singh (Roll No.179 By.N.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.

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 2.520751161) .180 By.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 1.000) (Per 1.S.000 live births) (Years) (Million) Value 1..065 28 25 8 68 65. a telecom service provider of India 17.880 28 (US$ Bn) Value 652 .Neeraj Kumar Singh (Roll No.L.000) (Per 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.N.

000 people) 41 (per 1.520751161) .) 94 (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) 206.4 88 73 13 0..L.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 63.000 people) 83 (per 1.N.000 people) 10 (per 1.S.Neeraj Kumar Singh (Roll No.000 people) 7 (per 1.140 22.000 people) 16 (per Mn people) (% to GDP) 120 0.85 .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.000 people) 55 (per 1.3 (per 1.181 By. 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.

644 450 (% to GDP) 31 (Ave.00 Inflation.5 16 3 5..) ($ Bn on 28/7/05) 10.8 External debt Unit Total Debt outstanding Debt service ratio ($ Bn) (%) Value 113. % ’04-05) Value 3.N.8 25 107 143 44.5 5.3 .L. 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.Neeraj Kumar Singh (Roll No.6 18. 2005 ($ Bn) (%) ($ Bn ($ Bn) ($ Bn) (Rs.182 By.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.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./ per US$) Value 79 0.

(%) Value 26.L.5 8 16.1 .N.7 0.5 8. 2004-05 Source: Statistical Outline of India 2004-05. CMIE.5 1. Economic Survey of India 04-05.183 By..2 Poverty Unit Population below poverty line Note: Data generally relate to the latest available period.800 3. TSMG.S.000 population) (% to GDP) ($) (Mn) (Mn) Value 99 61 1.Neeraj Kumar Singh (Roll No. a telecom service provider of India Social sector indicators Unit Gross enrolment ratio in primary schools Adult literacy Labour cost per worker in manufacturing Education expenditure (Public) Physicians Health expenditure (Public) Health expenditure per capita Conventional contraceptive users Overall pill users (%) (%) ($ per year) ( % to GDP) (per 1.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) .

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a telecom service provider of India.. India. is my original work and not submitted for the award of any other degree.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. No:520751161 .520751161) .S. diploma. fellowship.L. Place: Date: (Neeraj Kumar Singh) Reg.Neeraj Kumar Singh (Roll No.193 By. 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.‖ submitted in partial fulfillment of the requirements for the degree of Masters of business Administration to Sikkim-Manipal University.N..S. or any other similar title or prizes.N.

L. a telecom service provider of India.S.L.194 By. Internal Examiner External Examiners (Srikanta Ghosh) M.Neeraj Kumar Singh (Roll No.” is approved and is acceptable in quality and form.520751161) .N. 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.B.A.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. (Finance & Marketing) . a telecom service provider of India Examiner‟s Certification The project report of Mr Neeraj Kumar Singh...N.

A. 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.L. Medical and technological sciences by Mr.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.195 By. Neeraj Kumar Singh..( Finance & Marketing ) . diploma. 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.L.No.” submitted in partial fulfillment of the requirements for the degree of „Masters of Business Administration‟ of Sikkim-Manipal University of Health.N.N.S.S. fellowship or other similar titles or prizes and that the work has not been published in any journal or Magazine.:520751161 Certified (Srikanta Ghosh) M..520751161) .B.Neeraj Kumar Singh (Roll No. Reg.

Neeraj Kumar Singh (Roll No. a telecom service provider of India Project Examination Marks Statement for MBA IV Semester (Revised) University: Sikkim Manipal University Status: Date of Examination: Roll. 1) Internal Examination Signature with Date 2) External Examiner Signature with Date Name: Srikanta Ghosh 520751161 Name: Centre In Charge stamp with signature . Name Internal Evaluator No.196 By.520751161) . 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.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..

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