TELECOMMUNICATION

For updated information, please visit www.ibef.org April 2018

Table of Content

Executive Summary……………….….…….3

Advantage India…………………..….……..4

Market Overview …………………….……..6

Recent Trends and Strategies …………..21

Growth Drivers…………………….............25

Opportunities…….……….......……………38

Success Stories…………….......…………42

Industry Associations……………...……...46

Useful Information……….......…………….48
 EXECUTIVE SUMMARY

Second-largest  With a subscriber base of nearly 1,175.01 million, as of January 2018, India accounted for the 2nd largest
subscriber base telecom network in the world

Third-highest number of  With 445.96 million internet subscriber, as of December 2017, India stands 2nd highest in terms of total
internet users internet users.

Most of the Internet  Mobile based Internet is a key component of Indian Internet usage, with 7 out of 8 users accessing internet
accessed through from their mobile phones

mobile phones  Since 2012, the share of time spent on watching videos on mobile devices has grown by 200 hours a year

 As of January 2018, urban tele-density stood at 164.19 per cent and rural tele-density at 56.63 per
Rising penetration rate
cent

Affordability and lower  Availability of affordable smartphones and lower rates are expected to drive growth in the Indian telecom
rates industry

Source: Telecom Regulatory Authority of India, Aranca Research

3 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

ADVANTAGE INDIA
 ADVANTAGE INDIA

 India is the world’s 2nd largest telecommunications market,  Telecom penetration in the nation’s rural market reached 56.63
with 1.175 billion subscribers as of January 2018 per cent, as of January 2018.

 With 70 per cent of the population staying in rural areas, the  India became the 2nd largest internet market in
rural market would be a key growth driver in the coming December 2014
years
 The government of India has introduced
Digital India programme under which all the
sectors such as healthcare, retail, etc. will
be connected through internet

ADVANTAGE
INDIA
 The government has been proactive in its
 The country has a strong
efforts to transform India into a global
telecommunication infrastructure
telecommunication hub; prudent
 In terms of telecommunication ratings, India regulatory support has also helped
ranks ahead of its peers in the West and Asia
 National Telecom Policy 2012 calls for
unified licensing, full MNP and free roaming

 The Government of India is soon going to come out with a

new National Telecom Policy 2018 in lieu of rapid
technological advancement in the sector over the past few
years.

Notes: MNP - Mobile Number Portability

Source: BMI (Business Monitor International) Report, Internet Mobile Association of India (IAMAI)

5 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

MARKET OVERVIEW
 THE TELECOM MARKET SPLIT INTO THREE
SEGMENTS

Telecom

Mobile (wireless) Fixed-line (wireline) Internet services

 Comprises  Consists of companies  Includes Internet Service

establishments that operate and Providers (ISPs) that
operating and maintain switching and offer broadband internet
maintaining switching transmission facilities to connections through
and transmission provide direct consumer and corporate
facilities to provide direct communications through channels
communications via landlines, microwave or
airwaves a combination of
landlines and satellite
link-ups

Source: Aranca Research

7 Telecommunication For updated information, please visit www.ibef.org

 TELECOM SUBSCRIBER BASE EXPANDS
SUBSTANTIALLY

 India is currently the 2nd largest telecommunication market and has Visakhapatnam
Growth in
port
total
traffic
subscribers
(million tonnes)
the 3rd highest number of internet users in the world.

 India’s telephone subscriber base expanded at a CAGR of 19.22 per 1,400 100
cent, reaching 1,194.58 million during FY07–17. Total subscriber 92.98 90.61
83.36
base stood at 1,175.01 million in January 2018. 79.38 90
1,200 78.7 77.58
 Tele-density (defined as the number of telephone connections for

1194.58
80

1175.01
74.02
every 100 individuals) in India, increased from 17.9 per cent in FY07 70.9

1058.86
1,000 70
to 90.61 per cent in FY18*.

996
951.34
60

898.02
800 52.7

846.32

846.32
50
600 37

621.28
40

26.2 30
400

429.72
18.3
20

300.49
200

FY07 205.86
10

0 0

FY13

FY16
FY08

FY09

FY10

FY11

FY12

FY14

FY15

FY17

*FY18
Telephone Subscriber (in million) Teledensity

Note: CAGR - Compound Annual Growth Rate; *Data till January 2018
Source: Telecom Regulatory Authority of India

8 Telecommunication For updated information, please visit www.ibef.org

 SURGING TELECOM REVENUES

 Indian telecom sector’s revenue grew at a CAGR of 7.31 per cent Visakhapatnam
Telecom Sector
port
Revenue
traffic (million
(US$ Billion)
tonnes)
from US$ 19.6 billion in FY06 to US$ 42.6 billion in FY17. During the
first half of FY18, gross revenues of telecom sector in India reached 2CAGR 7.31%
US$ 20.4 billion. 45
 Revenues from the telecom equipment sector are expected to grow

42.6
40

41.7
to US$ 26.38 billion by 2020.

40.8

39.2
39.1

38.8
 As per Union Budget 2018-19, Government of India is expecting a

37.7
35
58 per cent increase to Rs 48,661.42 crore (US$ 7.52 billion) in

33.3
33.2
32.1
telecom sector revenue. 30

25

23.3
20

20.4
19.6
15

10

1
FY 06

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

FY 13

FY 14

FY 15

FY 16

FY 17

FY 18
Note: CAGR - Compound Annual Growth Rate; FY – Indian Financial Year (April – March); Figures mentioned are as per latest data available, 1Up to September 2017, 2CAGR is till FY17
Source: Telecom Regulatory Authority of India, Aranca Research

9 Telecommunication For updated information, please visit www.ibef.org

 WIRELESS SEGMENT DOMINATES THE MARKET

 In January 2018, India’s telephone subscriber base reached Composition

Visakhapatnam
of telephone
port traffic
subscribers
(million tonnes)
(*FY18)
1,175.01 million.

 In January 2018, the wireless segment (98.04 per cent of total

1.7% 0.3%
telephone subscriptions) dominated the market .

 Urban regions accounted for 56.67 per cent share in the wireless
telecom subscriptions in the country, while rural areas accounted for
the remaining share.

42.5%

55.6%

Urban Wireless Rural Wireless

Urban Wireline Rural Wireline

Source: Telecom Regulatory Authority of India; *Data till January 2018

10 Telecommunication For updated information, please visit www.ibef.org

 WIRELESS SUBSCRIPTIONS WITNESS ROBUST
GROWTH OVER THE YEARS

 During FY07-17, wireless subscriptions in the country increased at a Visakhapatnam

Wireless Subscription
port traffic (million
(in Million)
tonnes)
CAGR of 21.64 per cent, with the number of subscribers reaching to
1,170.2 million in FY17.
2CAGR 21.64%
 Wireless subscribers stood at 1,151.94 million in January 2018. 1,400

 As of January 2018, urban wireless teledensity stood at 159.39 while

rural wireless teledensity stood at 56.25 per cent. 1,200

1,170.18

1,151.94
 India is the world’s second largest smartphone market and is
expected to have almost 1 billion unique mobile subscribers by 2020.

1,058.90
1,000

969.80
943.90
919.00

868.00
800

812.00
600

584.00
400

392.00
261.00
200

FY07 165.00
0

FY08

FY12
FY09

FY10

FY11

FY13

FY14

FY15

FY16

FY17

*FY18
Note: CAGR - Compound Annual Growth Rate, 1FY18 data up to January 2018, 2CAGR is till FY17
Source: Telecom Regulatory Authority of India

11 Telecommunication For updated information, please visit www.ibef.org

 WIRELESS TELEDENSITY GROWS OVER THE YEARS

 The mobile segment’s teledensity surged from 14.6 per cent in FY07 Visakhapatnam
Growth inport
wireless
trafficteledensity
(million tonnes)
to 88.83 per cent in FY18*.

 GSM services continue to dominate the wireless market with a 98.92 100.0%
per cent share (as of March 2017); while CDMA services accounted
90.0%
for the remaining 1.08 per cent share.

91.08%

88.83%
80.0%

81.38%
77.27%
76.00%

75.43%
70.0%

70.90%
68.00%
60.0%

50.0%

49.70%
40.0%

33.70%
30.0%

20.0%

22.80%
14.60%
10.0%

0.0%

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

*FY18
Note: Teledensity - The number of telephone lines for every 100 people in a country, GSM - Global System for Mobile Communications, CDMA - Code Division Multiple Access
*Data till January 2018
Source: Telecom Regulatory Authority of India

12 Telecommunication For updated information, please visit www.ibef.org

 WHILE BHARTI AIRTEL DOMINATES WIRELESS
SEGMENT

 As of January 2018, Bharti Airtel was the market leader, with a 25.32 Access Service Provider-wise market share in terms
Visakhapatnam port traffic (million tonnes)
per cent share in the wireless subscription, followed by Vodafone of wireless subscribers (FY18)1
(18.56 per cent share).
30%
 The top 5 players in the sector include - Bharti Airtel, Vodafone, Idea,
Reliance Jio and BSNL – accounting for 85.06 per cent of the
25%
wireless subscribers in the country.

25.32%
20%

18.56%

17.16%
15%

14.62%
10%

9.40%

3.50%

3.02%
7.07%
5%

1.05%

0.31%
0%

Vodafone

BSNL

Aircel
Reliance Jio
Bharti Airtel

Idea

Telenor

Tata

Reliance

MTNL
Note: BSNL - Bharat Sanchar Nigam Limited, FY181 - Data till January 2018
Source: Telecom Regulatory Authority of India

13 Telecommunication For updated information, please visit www.ibef.org

 BSNL DOMINATES FIXED-LINE SEGMENT

 Total fixed-line subscription stood at 23.07 million, while teledensity Fixed-line segment subscription and teledensity FY181
reached 1.78 per cent due to wide usability of the wireless segment
as of January 2018. 45.00 3.60
3.40 3.30 4.00
40.00 3.10 3.50
 In FY18^, BSNL is the market leader with a 53.38 per cent share, 2.90

41.00
35.00 2.70

39.00

38.00
2.50 3.00

37.00

35.00
followed by Bharti Airtel (16.99 per cent) 30.00 2.30
2.12 2.06 2.50

32.00
1.90 1.78

30.00
25.00

28.00
 BSNL, MTNL and Bharti together account for 84.96 per cent of the

7.1
2.00

6.9

24.40
20.00

23.07
total fixed-line market in FY18*. 15.00 1.50
10.00 1.00
5.00 0.50
0.00 0.00

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18*
Fixed-line market share (FY18*)^

60%
50%

53.38%

16.99%

14.59%
40%
30%

8.06%

1.07%

0.87%

0.28%
4.75%
20%
10%
0%
BSNL

Bharti Airtel

Quadrant

Aircel
Tata

Reliance
MTNL

Vodafone
Note: BSNL - Bharat Sanchar Nigam Limited *Data till January 2018, ^In terms of number of subscribers
Source: Telecom Regulatory Authority of India

14 Telecommunication For updated information, please visit www.ibef.org

 NUMBER OF INTERNET SUBSCRIBERS INCREASING
AT A FAST PACE

 The number of internet subscribers in the country increased at a Visakhapatnam

Internet subscriptions
port traffic (million
(in Million)
tonnes)
CAGR2 of 41.62 per cent, with the number reaching 445.96 million in
December, 2017 from 8.6 million in 2006.
2CAGR 42.47%
 The number of internet subscribers in the country is expected to 500
double by 2021 to 829 million. Overall IP traffic is expected to grow
450
4-fold at a CAGR of 30 per cent by 2021.

445.96
422.19
400

350

342.65
300

302.40
250

267.00
239.00
200

150

100

25.30
22.40
18.70
15.20
12.90
10.40
50

8.60
0

1
FY15
FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY16

FY17

FY18
Note: CAGR - Compound Annual Growth Rate; BSNL - Bharat Sanchar Nigam Ltd, Internet live stats, 1As of December 2017, 2CAGR is till FY17
Source: Telecom Regulatory Authority of India, Business Monitor International, Aranca Research Including Internet Access by Wireless Phone Subscribers,

15 Telecommunication For updated information, please visit www.ibef.org

 STRONG GROWTH IN BROADBAND DRIVES
INTERNET ACCESS REVENUES

 Broadband subscription in the country witnessed an increase at a Wired

Visakhapatnam
broadband
port
subscriptions
traffic (million
(in tonnes)
million)
CAGR of 17.48 per cent during FY07–17 to reach 18.2 million.
Number of broadband subscriptions in January 2018 stood at 17.87
^CAGR 17.48%
million. 25

20

20.44

18.24

17.87
15

15.52
15.10
15.00

14.90
13.40
10

10.90
7.80
5

5.50
3.10
0
FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18*
Note: CAGR - Compound Annual Growth Rate, *Data till January 2018, ^CAGR is till FY17
Source: Telecom Regulatory Authority of India;

16 Telecommunication For updated information, please visit www.ibef.org

 BHARTI ACCOUNTS FOR MAJOR SHARE IN
BROADBAND SUBSCRIPTIONS

 As of January 2018, Reliance Jio accounted for the largest share of Market break-up by broadband subscriptions
Visakhapatnam port traffic (million1 tonnes)
44.54 per cent in the total broadband market (wired and wireless) of (wired and wireless) FY18
India

 Bharti Airtel accounted for the 2nd largest share of 19.84 per cent in
the country’s broadband market (wired and wireless), during the
5.48%
same period 5.77%

9.87%

44.54%

14.50%

19.84%

Reliance Jio Bharti Airtel Vodafone

Idea BSNL Others

Notes: BSNL - Bharat Sanchar Nigam Ltd, 1Data till January 2018
Source: Telecom Regulatory Authority of India

17 Telecommunication For updated information, please visit www.ibef.org

 KEY COMPANIES IN THE MARKET

Company Ownership Presence

Government (56.3 per cent), Life Fixed-line and mobile telephony (in
Mahanagar Telephone Nigam Ltd (MTNL)
Insurance Corporation (18.8 per cent) Delhi and Mumbai), data and Internet

Fixed-line and mobile telephony (GSM

Government
Bharat Sanchar Nigam Ltd (BSNL) – outside Delhi and Mumbai), data and
(100 per cent)
Internet in 22 circles

ADAG Group
Reliance Communications Mobile (CDMA) and broadband
(approximately 59.00 per cent)

Bharti Group (45.48 per cent), Pastel

Broadband and mobile (GSM) in
Bharti Airtel Ltd (14.79 per cent), Indian Continent
22 circles
Investment (6.65 per cent)

Vodafone (84.5 per cent), Piramal Broadband and mobile (GSM) in

Vodafone India
Enterprises (11.0 per cent) 22 circles

Source: Companies’ websites, Bloomberg

18 Telecommunication For updated information, please visit www.ibef.org

 EMERGENCE OF TOWER INDUSTRY

 A surge in the subscriber base has necessitated network expansion covering a wider area, thereby creating a need for significant investment in
telecom infrastructure

 To curb costs and focus on core operations, telecom companies have been segregating their tower assets into separate companies. For example:
Reliance Communications has decided to finalise a deal to sell its stake in Reliance Infratel. The value of the deal is around US$3.68 billion

 Creating separate tower companies has helped telecom companies lower operating cost and improve capital structure; this has also provided an
additional revenue stream

 Inspired by the success seen by Indian players in towers business, most of the operators around the world are replicating the model

 To reduce the carbon footprint for telecom infrastructure, including mobile towers, on 1st January, 2017, TRAI (The Telecom Regulatory Authority
of India), announced to bring consultation paper, that will review the issues related to carbon footprint.

Emergence of Tower Industry

Focus on Segregation
Higher tower of towers
Rising operating sharing to into
competition cost and reduce separate
debt burden costs companies

Source: Aranca Research

19 Telecommunication For updated information, please visit www.ibef.org

 PORTER’S FIVE FORCES FRAMEWORK ANALYSIS

Threat of Substitutes

 Hardly any threat of substitute

products as there is no substitute
available in the market

Bargaining Power of Suppliers Competitive Rivalry Bargaining Power of Buyers

 High bargaining power of suppliers as
there are just a few suppliers in the
sector
 High cost of switching suppliers
 Customers’ low switching cost and  Low switching cost and mobile
price sensitivity are increasing number portability give customers
competition among players high bargaining power
 High exit barriers are also intensifying  Customers are price sensitive
competition
 There are around 6 to 7 players in
each region, leading to intense
competition

Threat of New Entrants

 Strict government regulations

 Extremely high infrastructure setup
Positive Impact cost
Neutral Impact  Difficulty in achieving economies of
scale
Negative Impact

Notes: VoIP – Voice Over Internet Protocol

Source: Aranca Research

20 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

RECENT TRENDS
AND STRATEGIES
 NOTABLE TRENDS IN THE INDIAN TELECOM SECTOR
… (1/2)

 The green telecom concept is aimed at reducing carbon footprint of the telecom industry through lower
energy consumption
Green Telecom
 Tata has invested around US$16.38 million to convert its 10,000 base stations from indoor to outdoor to
reduce energy consumption and carbon footprint across its 20 telecom circles in India so far

 There are over 62,443 uncovered villages in India; these would be provided with village telephone facility with
subsidy support from the government’s Universal Service Obligation Fund (thereby increasing rural
Expansion to Rural teledensity)
Markets
 As of January 2018, the rural subscriber base accounted for 42.76 per cent of the total subscriber base,
thereby fuelling growth across the sector

 The most significant recent developments in wireless communication include BWA technologies such as
WiMAX and LTE
Emergence of BWA
 In March 2018, Bharti Airtel its VoLTE services in Kolkata while Vodafone launched VoLTE services in Jaipur
Technologies and Jodhpur.

 Reliance Jio, has launched 4G services across pan- India as on December 2015

 IoT is the concept of electronically interconnected and integrated machines, which can help in gathering and
Internet Of Things (IOT) sharing data. The Indian Government is planning to develop 100 smart city projects, where IoT would play a
vital role in development of those cities.

Notes: BWA - Broadband Wireless Access, TRAI - Telecom Regulatory Authority of India
Source: Aranca Research

22 Telecommunication For updated information, please visit www.ibef.org

 NOTABLE TRENDS IN THE INDIAN TELECOM SECTOR
… (2/2)

 Vodafone and Idea, India's second and third largest operators have decided to merge.
Consolidation
 Airtel’s acquisition of Tata Teleservices’ mobile business was given approval in November 2017.

 In 2017, Vodafone disclosed its plans to invest US$1,310 million to upgrade and expand Vodafone India
network coverage and US$655 million to upgrade its technology centre
Rising investments
 In February 2017, Japanese Telecom company - Docomo, re-invested US$ 1.18 billion in Tata Telecom, to
gather a stake of 26.5 per cent in the company.

Outsourcing non-core  As part of the recent outsourcing trend, operators have outsourced functions such as network maintenance,
activities IT operations and customer service

 Digital transactions reached an all-time high of 1.11 billion in January 2018 with mobile banking transactions
reaching 102.6 million.

 In March 2017, the government set a target of achieving 25 billion digital transactions for banks with the help
Mobile banking
of PoS machines, transactions enabled and merchants, which have been added in firms

 In March 2017, Samsung launched its mobile payment service, Samsung Pay, to facilitate smooth payment
at retail outlets, instead of using mobile wallets, credit or debit cards.

Notes: NPCI - National Payment Corporation of India

Source: ’Searching for New Frontiers of growth: Indian Banks’- PwC, Aranca Research, Reserve Bank of India

23 Telecommunication For updated information, please visit www.ibef.org

 STRATEGIES ADOPTED

 Players are using innovative marketing strategies to succeed in this sector. For example,

Marketing strategy • In August 2015, Idea Cellular launched new campaign “Get idea and dance”

• Airtel launched new ad campaign “Airtel myPlan Family”

 Players differentiate themselves by providing different services to customers. For example,

• In 2015, Airtel India launched a mobile app “Wynk Movies”, it is a library that includes videos and movies
Differentiation
• In November 2015, Vodafone launched “Choose Your Number” facility where prepaid and post paid
customers get numbers of their own choice

 Players price their products very carefully due to the price sensitive nature of customers and high competition
in the sector. Players generally go for price war. For example,

• In December 2016, Micromax launched low cost 4G Volte Smartphones, with a pre-activated Reliance Jio
Sim offer of free voice calls and data. These smartphones are launched in the range of US$67.21 to
US$114.57

Pricing strategy • In September 2016, Reliance Jio 4G network plans have been launched. Free domestic voice calls have
been offered by Jio. No charge or deduction of data would be done for making voice calls to any network
across the country. Also, the company has offered cheaper data plans and tariff plans ranging
from US$2.28 to US$76.37 per month. As of October 2016, the company’s subscriber base had crossed
16 million customers

• In March 2017, CAT S60 smartphone was launched in India for US$ 966.81. The phone is loaded with a
thermal camera that can see through smoke and can be used in extreme temperatures.

Notes: CDMA – Code Division Multiple Access, GSM - Global System for Mobile Communication
Source: Company websites, Aranca Research

24 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

GROWTH DRIVERS
 SECTOR BENEFITS FROM RISING INCOME, GROWING
YOUNG POPULATION

Increasing
Growing demand Policy support
Growing demand investments

Higher real
Reduction in
income and Higher FDI inflows
license fee
changing lifestyles

Inviting Resulting in

Growing young Relaxed Increasing M and

population FDI Norms A activity

Encourages
Increasing MOU
firms to expand
and data usage
to rural areas

Note: FDI - Foreign Direct Investment, MOU - Minutes of Use per month and per subscriber, M&A - Mergers and Acquisitions

26 Telecommunication For updated information, please visit www.ibef.org

 RISING INCOME FUELS DEMAND FOR TELECOM
SERVICES

 Incomes have risen at a brisk pace in India and will continue rising Visakhapatnam
Rising per capita
portincome
traffic (million
in India tonnes)
(US$)
given the country’s strong economic growth prospects.
2,000
 Nominal per capita income recorded a CAGR of 4.36 per cent from
2011-12 to 2016-17.

1,874.90
1,800
 Increasing income has been a key determinant of demand growth in

1,750.60
the telecommunication sector in India 1,600

1,617.30
1,600.90
 The IMF estimates nominal per capita income in India to expand at a

1,514.80

1,504.50
1,400
CAGR of 4.94 per cent during FY10–FY19
1,200
 Per capita income in the country is estimated at US$1,611.40 in
FY17.
1,000

800

600

400

200

FY12

FY13

FY14

FY15

FY16E

FY17F
Notes: CAGR - Compound Annual Growth Rate, F – Forecast, E - Estimate
Source: IMF

27 Telecommunication For updated information, please visit www.ibef.org

 INCREASING INCOME AND GROWING RURAL
MARKET – DEMAND DRIVERS

 The emergence of an affluent middle class is triggering demand for Indian residents shifting from low to high income groups (%)
Visakhapatnam port traffic (million tonnes)
the mobile and internet segments Milion Household, 100%
209.10 266.50 304.80
 A young, growing population is aiding this trend (especially demand
100%
for smart phones) 44.0% 31.0% 18.0%
90%

80%
46.0%
70%
45.0%
60%

50% 42.0%

40%

30% 20.0%

20% 15.0%

10% 11.0%
8.0%
3.0% 1.5% 6.0% 2.0% 5.0%
0%
2005 2016 2025F

Elite(>30800) Affluent(15400-30800)
Aspirers(7700-15400) Next billion(2300-7700)
Strugglers(<2300)

Notes: Income distribution is calculated in constant 2015 dollars; $1=65. Because of rounding, not all percentages add up to 100. F – Forecast, Mobile Users Come of Age’ February 2011
Source: BCG

28 Telecommunication For updated information, please visit www.ibef.org

 INCREASING INTERNET REVENUES AND
SUBSCRIPTIONS

 The Mobile Value Added Services (MVAS) industry has expanded at Visakhapatnam
MVAS revenues
port traffic
(in US$
(million
Billion)
tonnes)
a CAGR of 29.26 per cent to US$11.08 billion by 2016 from US$1.1
billion in 2007
CAGR 29.26%
 The share of non-voice revenues, which currently stands at around 16
15.10
10 per cent of telecom operators’ revenues, is estimated to rise to
more than 30 per cent in the next 5 to 7 years 14
 A decline in the prices of smartphones and data subscription rates is
likely to drive demand for MVAS 12
11.08
9.98
10

7.80
8

6.20
6
4.9
4.2
4 3.2

1.7 1.9
2
1.1

0
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017E
Notes: CAGR - Compound Annual Growth Rate, MVAS - Mobile Value-Added Services, E - Estimate, F - Forecast
Source: Wipro Technologies, IAMAI – Internet And Mobile Association of India, Aranca Research

29 Telecommunication For updated information, please visit www.ibef.org

 STRONG POLICY SUPPORT CRUCIAL TO THE
SECTOR’S DEVELOPMENT … (1/3)

To compensate the  In October 2015, Telecom Regulatory Authority of India announced an amendment for Telecom Consumer
consumers in case of Protection Regulations 2012 according to which mobile service operators have to provide compensation to
call drop the users in case of call drop.

 In 2015, Telecom Regulatory Authority of India made regulations to amend the Standards of quality of
Standards of quality
wireline (telephone service) and cellular mobile telephone services. These regulations has been laid down to
wireline and wireless
ensure better and effective compliance with the quality of service regulations and to protect the interest of the
services customers

 FDI cap in the telecom sector has been increased to 100 per cent from 74 per cent; out of 100 per cent, 49
Relaxed per cent will be done through automatic route and the rest will be done through the FIPB approval route
FDI norms  FDI of up to 100 per cent is permitted for infrastructure providers offering dark fibre, electronic mail and voice
mail

 In May 2017, Microsoft India signed a Memorandum of Understanding with the Telcom Sector Skill Council
(TSSC) to encourage skill development through “Project Sangam”.

Skill Development  In a major push for Prime Minister Narendra Modi's 'Skill India' mission, Microsoft's Indian-born CEO Satya
Nadella launched a Cloud hosted platform named as "Project Sangam" to help the government not only train
but also assist people get jobs via professional networking website LinkedIn, which was acquired by the
company last year.

Notes: FDI - Foreign Direct Investment, FIPB - Foreign Investment Promotion Boar
Source: TRAI, Aranca Research

30 Telecommunication For updated information, please visit www.ibef.org

 STRONG POLICY SUPPORT CRUCIAL TO THE
SECTOR’S DEVELOPMENT … (2/3)

 In 2015, TRAI passed the telecommunication tariff (16th amendment) order, according to which, every service
Telecommunication
provider should offer a special roaming tariff plan to its prepaid and post-paid customers and on payment of
Tariff Order
fixed charge for special roaming tariff plan national roaming should be free

 The Department of Information Technology intends to set up over 1 million internet-enabled common service
centres across India as per the National e-Governance Plan
Set up internet
 On 8th August 2016, the Telecom Regulatory Authority of India (TRAI) made the 10th amendment to the
connections
TCPR (Telecom Consumers Protection Regulations) permitting telecom companies to offer data packs
having maximum validity of 365 days

 In January 2015, the Government of India recommended reduction in license fees of telecom operators by 6
Reduction in license per cent, telecom operators currently pay 8 per cent of adjusted gross revenue as licence fee
fees  The issuance of several international and national long-distance licenses has created opportunities and
attracted new companies into the market

 In May 2017, the central government announced the Phased Manufacturing Programme (PMP) to promote
Make in India domestic production of mobile handsets. This initiative will help in building a robust indigenous mobile
manufacturing ecosystem in India, and incentivise large scale manufacturing.

Notes: USOF - Universal Service Obligation Fund; OFC - Optical Fibre Cable, WiMAX - Worldwide Interoperability for Microwave Access Telecommunications
Source: TRAI, Aranca Research

31 Telecommunication For updated information, please visit www.ibef.org

 STRONG POLICY SUPPORT CRUCIAL TO THE
SECTOR’S DEVELOPMENT … (3/3)

 The USOF is expected to extend financial support to operators providing services in rural areas and
Financial support
encourage active infrastructure sharing among operators

 The prescribed limit on spectrum would be increased from 6.2MHz to 2x8 MHz (paired spectrum) for GSM
technology in all areas other than Delhi and Mumbai, where it will be 2x10MHz (paired spectrum)

 Telecom players can, however, obtain additional frequency; there will be an auction of spectrum subject to
Enhanced spectrum limit
the limits prescribed for the merger of licenses

 As of October 2016, telecom operators like Vodafone and Tata Teleservices purchased spectrum worth US$
1.51 billion and US$ 0.34 billion, respectively, from the government

Telecommunication
 In 2015, telecom authority issued this order mandating every DTH operator to specify the tariff for supply and
amendment order for
installation of the customer premises equipment. DTH operator should specify the refundable security
broadcasting and cable deposit, installation charges, monthly rental charge and activation
services

 In May 2017, the Ministry of Telecommunication launched the Indian Mobile Congress 2017 (IMC 2017), the
first and biggest platform in the country to bring all the stakeholders together from Telecom, Internet and
Indian Mobile Congress
Mobility ecosystem along with ICT players, app developers, innovators and start-ups. The event concluded
successfully and witnessed over 35,000 participants.

Notes: USOF - Universal Service Obligation Fund; OFC - Optical Fibre Cable
Source: TRAI, Aranca Research

32 Telecommunication For updated information, please visit www.ibef.org

 NATIONAL TELECOM POLICY - 2012

‘Broadband for all’ with

a minimum download
speed of 2Mbps

Increase rural Liberalisation of

teledensity from 39 to spectrum and
70 per cent by 2017, convergence of
and 100 per cent by network, services and
2020 National Telecom devices
Policy - 2012

Unified licensing,
Aims at a ‘One Nation-
delinking of spectrum
One license’ regime with
from license, online real-
no roaming charges and
time submission and
nation wide number
processing
portability

Source: Digital Dawn, KPMG Report 2013

33 Telecommunication For updated information, please visit www.ibef.org

 Process of M2M Roadmap Formulation

Firming up of issues and

Input from consultative
viewpoints through Seminars and Workshops
committee and working
Questionnaire to on M2M
groups
Stakeholders

Consultation with Industry

Input from various TEC
bodies (COAL, FICCI,
committees on different
AUSPI, ASSOCHAM)
issues
/Other Stakeholders

Policy and Regulatory

Draft roadmap and open Committee Inputs from DeitY and
consultation through web Industry stakeholders on
draft documents

National Telecom M2M Roadmap

Source: Digital Dawn, KPMG Report 2013

34 Telecommunication For updated information, please visit www.ibef.org

 FOREIGN INVESTMENTS FLOWING IN … (1/2)

 Cumulative FDI inflows into the telecom sector over April 2000 – Cumulative
Visakhapatnam
FDI inflows into
porttelecommunication
traffic (million tonnes)
(US$ million)
December 2017, totalled to US$ 30.08 billion.

 During this period, FDI into the sector accounted for a share of 8.18
35,000
per cent of total FDI inflows into the country.

30,000

30,082
25,000

23,946
20,000

18,382
17,058
15,000

14,163
12,856
12,552
10,000

10,589
9,872
5,000

FY16
FY10

FY11

FY12

FY13

FY14

FY15

FY17

FY18*
Source: Department of Industrial Policy and Promotion (DIPP); * Data as of December 2017

35 Telecommunication For updated information, please visit www.ibef.org

 FOREIGN INVESTMENTS FLOWING IN … (2/2)

 In March 2017, Vodafone announced its merger with Idea Cellular to become India’s biggest telecom operator. The merger will result in a
customer base of 400 million, nearly 35 per cent market share and is expected to complete in 2018.

 NTT Communications has acquired a Virtual Network Operator – International Long Distance (VNO-ILD) license in India. This license will allow
NTT Com to add Arcstar Universal One International Network Services in its brand. The company will be using their ICT solutions to help
enterprise customers build its ICT environment for business expansion in India.

Foreign investment in India

Target Acquirer Acquisition price (US$ million) Division acquired

Ascend Telecom
IDFC Alternatives (2017) 54.29 33 per cent stake
Infrastructure Pvt. Ltd.
Telenor Bharti Airtel (2017) N/A Infrastructure and Contracts
Videocon
Telecommunications
Bharti Airtel (2016) 660 100 per cent stake
Ltd-1800 MHz spectrum in 6
circles
Bharti Airtel's operations in
Orange SA (2016) 900 100 per cent stake
Burkina Faso and Sierra Leone
MTS Reliance Communication (2015) 736.98 8 – 10 per cent stake
Augere Wireless Bharti Airtel (2015) 21.3 100 per cent stake
Increases stakes to 32.34 per
Bharti Airtel SingTel(2013) 302
cent
Bharti Airtel Qatar Foundation Endowment(2014) 1,260 PE deal – 5 per cent stake
Vodafone International Holdings
Vodafone India Ltd 1,641 Increases stakes to 100 per cent
(2014)
Ascend Telecom Ascend Telecom Infrastructure Pvt Ltd 54.29 33 per cent stake
Notes: M&A - Merger and Acquisition, PE - Private Equity
Source: Thomson Banker, Deal Tracker, Grant Thornton, Aranca Research

36 Telecommunication For updated information, please visit www.ibef.org

 EXPANSION AND GROWTH STRATEGIES OF LEADING
PLAYERS

 Bharti Airtel Ltd, India's largest telecom operator, has decided to buy Tikona Digital Networks Pvt Ltd’s 4G
Bharti Airtel and Tikona
business for approximately Rs 1,600 crore (US$ 248.43 million), which includes its broadband wireless
Digital Networks
access spectrum as well as 350 cellular sites in five telecom circles.

 In January 2016, Vodafone India launched its 4G network services in Kolkata and Kozhikode (Kerala)
following its successful implementation in other parts of Kerala such as Kochi and Thiruvananthapuram
Vodafone India 4G
launch, Reliance Jio 4G  In September 2016, Reliance Jio launched 4G services across India, at comparatively cheaper rates. The
company had targeted to acquire 100 million customers by March 2017. In addition to the existing plan India
launch
2300 MHz spectrum and 1800 MHz in 14 circles, during the auction in 2016, Jio invested over US$1,527.7
million to acquire 1800 MHz spectrum in 6 circles and 800 MHz spectrum in 10 circles

 Vodafone India has entered into an agreement with Walmart India to make payments using M-Pesa mobile
Mobile wallet by wallet services. Under this agreement, Vodafone M-Pesa will offer safe, secure and convenient transactions
Vodafone and on placing an order with Walmart India, Vodafone M-Pesa agent will reach out to customer and cash in
into his M-Pesa account

 In January 2017, gaming accessories and console manufacturer - Razer acquired Nextbit, to foray into the
New Entrant in the smartphone market of India. China based companies such as Xiaomi, One Plus, OPPO, Huawei, etc. have
also launched their smartphones in India.
Smartphone Market
 Domestic Players such as Micromax, Karbonn and Lava are the top 3 budget smartphone companies in India

Notes: M&A - Merger and Acquisition

Source: Thomson Banker, Deal Tracker, Aranca Research

37 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

OPPORTUNITIES
 OPPORTUNITIES ACROSS SEGMENTS IN THE
INDUSTRY … (1/2)
Increasing mobile subscribers
 The number of wireless subscribers in
India reached 1.152 billion, by
January 2018
 Of the total 1,175.01 million
subscribers as of January 2018,
around 57.24 per cent subscribers are
from urban areas and the rest (42.76
per cent), from rural areas
Source: KPMG, TRAI, Aranca Research
39 Telecommunication
Untapped rural markets
 By January 2018, rural tele-density
reached 56.63 per cent, growing from
43.05 per cent as of March 2016
 By January 2018, rural wireless tele-
density in the country increased to
56.25 per cent, while, the urban
wireless tele-density reached 159.39
per cent during the same period
For updated information, please visit www.ibef.org
Rising internet penetration
 Internet penetration is expected to
grow steadily and is likely to be
bolstered by government policy
 Number of broadband subscribers
reached 378.10 million at the end of
January 2018
 To encourage cash economy, Indian
government announced to provide free
Wi-fi to more than 1000 gram
panchayats.
 OPPORTUNITIES ACROSS SEGMENTS IN THE
INDUSTRY … (2/2)

Development of telecom Growth in MVAS and cloud Growing Cashless

infrastructure
 TRAI has made several
recommendations for the
development of telecom
infrastructure, including tax
benefits and recognising
telecom infrastructure as
essential infrastructure
Telecom equipment market
computing
 The Indian Mobile Value-
Added Services (MVAS)
industry is expected to row
at a CAGR of 18.3 per cent
during the forecast period
2015–2020 and reach US$
23.8 billion by 2020.
 Telecom equipment market
was estimated to be US$20
billion in FY16*
 It is anticipated to reach
US$ 30 billion by 2020
 Under Digital India
programme, ‘every Indian
has a smartphone by 2019’
programme implemented
 India’s smartphone market
grew 14 per cent year-on-
year to a total of 124 million
shipments in 2017.#
Transactions
 In order to overcome the
cash related problems being
faced by people, due to
demonetisation, Paytm
launched a service through
which consumers and
merchants can pay and
receive money instantly,
without an internet
connection
 This has enabled non-
smartphone users to go
cashless

Notes: VAS - Value-Added Services, NTP - National Telecom Policy, FY16* - as per latest data available, #As per IDC
Source: Press Information Bureau, Government of India, Aranca Research

40 Telecommunication For updated information, please visit www.ibef.org

 MOBILE APPLICATION MARKET: FAST GROWING
SEGMENT

 The mobile app market is estimated around US$ 245.6 million in Number
Visakhapatnam
of App downloads
port traffic
in(million
India (intonnes)
billions)
2015

 India’s downloads of apps grew nearly 215 per cent between 2015
and 2017. 25

 India overtook USA to reach the second position in terms of number

of app downloads in 2017.
20
 The segment’s growth is expected to be driven by increasing mobile

20.10
connections and availability of low-range smartphones

 Over 100 million apps are downloaded every month across different 15
platforms such as iOS, Blackberry, Nokia and Android

 As of May 2017, Whatsapp users in the country spend 50 million

minutes on chatting through WhatsApp video call feature each day. 10
The app is available in 10 Indian languages, and more than 50
different languages globally.

7.70
5

6.00
3.5
0

2017 E
2015

2016

2020 F
Notes: E – estimated, F – Forecast, *As per latest data available
Source: Gartner, Deloitte, Assorted News Articles, Aranca Research

41 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

SUCCESS STORIES
 VODAFONE: INDIA’S THIRD-LARGEST MOBILE
OPERATOR … (1/2)

 Established in 1994, Vodafone is one of India’s leading mobile Visakhapatnam

Revenues
port (US$
trafficbillion)
(million tonnes)
operators, with more than 209 million customers as of FY17

 Vodafone's revenues from India increased at a CAGR of 5.84 per cent CAGR 5.84%
to US$75.4 billion during FY08–17. 8

7.4
7

6.7

6.7

6.5
6

6.2
5.9

5.9
5

4.9
4.4
4

3.9
3

0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Notes: CAGR - Compounded Annual Growth Rate

Source: Company website

43 Telecommunication For updated information, please visit www.ibef.org

 VODAFONE: INDIA’S THIRD-LARGEST MOBILE
OPERATOR … (2/2)

 Vodafone’s customer subscription increased at a CAGR of 14.66 per Visakhapatnam

Total subscribers
port traffic(million)
(million tonnes)
cent to 209 million during FY08–FY17. The total wireless subscriber
base of Vodafone stood at 209.06 million in March 2017. 2CAGR 14.66%
 Wireless subscriber base of Vodafone rose 0.60 per cent month-on- 250

month to 213.81 million in January 2018 from 212.53 million in

December 2017.

214.01
 Gujarat, Uttar Pradesh, Maharashtra and West Bengal together 200

209.00
204.60
account for over 45 per cent of the total customer base

183.00
 Vodafone Group plans to invest heavily in the establishment of a fibre-

167.00
optic network in India 150

153.00
148.00

147.00
 Vodafone has launched 4G services in Delhi, Kolkata, Karnataka and
Kerala in February 2016. In May 2016, the company also planned to

124.00
cover four circles of Gujarat, Haryana, UP (East) and West Bengal
100

91.00
61.00
50

0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY181

Note: 1Up to January 2018, 2CAGR is up to FY17

Source: Company website; CAGR - Compounded Annual Growth Rate

44 Telecommunication For updated information, please visit www.ibef.org

 MOBILE NUMBER PORTABILITY: A PARADIGM SHIFT
IN INDIAN TELECOM

 Mobile Number Portability (MNP) in India was introduced in November Visakhapatnam

Number of MNP
portrequests
traffic (million
(in million)
tonnes)
2010

 MNP allows subscribers to change their mobile service provider while 400
retaining their old mobile number

 The portability service was made available for both postpaid and 350
prepaid customers as well as on both GSM and CDMA platforms

344.59
 The implementation of MNP has brought a slew of benefits for 300
customers in terms of better plans and offers

272.67
 MNP requests in India increased to 344.59 million at the end of 250
January 2018
200

209.13
150

153.85
117.01
100

50

0
FY14 FY15 FY16 FY17 FY18*

Source: TRAI Report,*Data till January 2018

45 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

KEY INDUSTRY
ORGANISATIONS
 INDUSTRY ORGANISATIONS

Association of Unified Telecom Service Providers of India

Association of Competitive Telecom Operators (ACTO)
(AUSPI)

Address: B-601, Gauri Sadan 5, Hailey Road, New Delhi – 110 001, Address: 601, Nirmal Tower, 26, Barakhamba Road, Connaught Place,
India New Delhi – 110 001, India
Tel: 91 11 23358585 Tel.: 91 11 43565353 / 43575353
Fax: 91 11 23327397 Fax: 91 11 43515353
Website: http://www.auspi.in/ E-mail: info@acto.in
Website: www.acto.in

Internet and Mobile Association of India (IAMAI) Cellular Operators Association of India

Address: F-36, Basement, East of Kailash, New Delhi – 110 065, India Address: 14, Bhai Vir Singh Marg, Sector 4, Gole Market, New Delhi –
Tel: 91 11 46570328 110001, India
E-mail: kalyan@iamai.in Tel: 91 11 2334 9275
Website: www.iwww.iamai.in E-mail: contact@coai.in
Website: www.coai.com

47 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

USEFUL
INFORMATION
 APPENDIX

BMI telecoms business environment ratings

 Industry rewards: it considers average revenue per users, number of subscribers, subscriber growth, and number of operators

 Country rewards: it considers urban/rural split, age range, GDP per capita, US$

 Industry risks: it considers regulatory independence

 Country risk: it rates the country on short-term external risk, policy continuity, legal framework corruption

 Telecom ratings: overall rating of the above indicators

49 Telecommunication For updated information, please visit www.ibef.org

 GLOSSARY

 BWA: Broadband Wireless Access

 CAGR: Compound Annual growth rate

 DoT: Department of Telecommunication

 FDI: Foreign Direct Investment

 FTTH: Fibre To The Home

 FY: Indian Financial Year (April to March)

 IMF: International Monetary Fund

 INR: Indian Rupee

 IPTV: Internet Protocol Television

 M&A: Mergers and Acquisitions

 MoU: Minutes of Use per month and per subscriber

 MPEG: Moving Picture Experts Group

 OFC: Optical Fibre Cable

 TRAI: Telecom Regulatory Authority of India

 USOF: Universal Service Obligation Fund

 US$: US Dollar

 VAS: Value-Added Services

 WiMAX: Worldwide Interoperability for Microwave access telecommunications

Wherever applicable, numbers have been rounded off to the nearest whole number

50 Telecommunication For updated information, please visit www.ibef.org

 EXCHANGE RATES

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year INR INR Equivalent of one US$ Year INR Equivalent of one US$

2004–05 44.81 2005 43.98

2005–06 44.14 2006 45.18

2006–07 45.14 2007 41.34
2007–08 40.27
2008 43.62
2008–09 46.14
2009 48.42
2009–10 47.42
2010 45.72
2010–11 45.62
2011 46.85
2011–12 46.88
2012 53.46
2012–13 54.31
2013 58.44
2013–14 60.28
2014 61.03
2014-15 61.06

2015-16 65.46 2015 64.15

2016-17 67.09 2016 67.21

2017-18 64.45 2017 65.12

Source: Reserve bank of India, Average for the year

51 Telecommunication For updated information, please visit www.ibef.org

 DISCLAIMER

India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation
with IBEF.

All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced,
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This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the
information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a
substitute for professional advice.

Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do
they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation.

Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any
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52 Telecommunication For updated information, please visit www.ibef.org