1. Dynamics of Indian
Telecom Industry
Research Report
By
Jyothin Madari

2. Executive Summary
 Third largest telecom network in the world
 Fastest growing – Forecasted CAGR growth
rate of over 15.3% by the end of 2012
 Monthly additions of above 8 million
subscribers
 Growth impetus from wireless segment with
84% wireless and 16% wired
 National teledensity at 22%, rural teledensity
at 7%, while urban at 57%
 9 million Internet and 2.5 million broadband
subscribers
 Six major operators and eight minor operators
2

3. Future Outlook
 Need for massive investments in infrastructure
development – expected to require 330,000
network towers from the present 100,000
 Decrease in wireline subscriber base however
strong growth in mobile subscriber base
 Improvements in mobile quality of service, quick
service delivery, affordable pricing plans, and lower
handset costs.
 VAS* - Key revenue stream for mobile operators
 Broadband penetration is low => high growth
expected
 New Technologies paving the way for new services,
additional revenue streams and rural penetration
*
Value added-Service
3

4. Market Forces/Growth
Drivers
Service
Industry Specific Factors Providers
Subscribers Handsets
Infrastructure/ Younger
Equipment Population
Growth
Burgeoning
Growing
Middle
Urbanization
Class
Booming Rising
Knowledge Income Macro Economic Factors
Sector High GDP Levels
Growth
4

5. Market Size & Growth
 Currently valued at $100B
 Telephone coverage in India rose to 34.5% in
Jan ’09 from 33.23% in Dec ’08.
 Growth spurred by fall in tariffs and fall in
handset prices
 Wireless accounts for nearly 70% of the total
telephone subscriber base
 Total telecom subscribers growth rate during
quarter ending March 2009 – 11.68%
 Total wireline subscribers growth rate for
quarter ending March 2009 – 0.15%
5

6. Subscriber Base
Total Telecom Subscribers (Wireline+Wireless)*
Total Subscribers 429.72 Million
% Growth QoQ 11.68%
Urban Subscribers 309.43 Million (72%)
Rural Subscribers 120.29 Million (28%)
Overall Teledensity 36.98
Urban Teledensity 88.66
Rural Teledensity 14.8
*
All figures for March end 2009 6

7. Teledensity
160
140
135
120
100
(% )
80 81.06
66.39
60 58
48.52
40 39.45
33.23
26.88 26.22 25
20 20.74 18.31
12.74 9.46 13.13
7.02 8.95 5.38
0 1.57 1.73 1.83
2004 2005 2006 2007 2008 2008 (Dec) 2012
Urban Total Rural
7

8. Service Types
Fixed-line
Internet Subscribers Mobile
Broadband
8

9. ICT* Statistics
 Fixed Telephone lines per 100
inhabitants : 3.5
 Mobile subscribers per 100
inhabitants: 18.4
 Internet subscribers per 100
inhabitants: 0.8
 Broadband subscribers per 100
inhabitants: 0.22
*
Information and Communication Technology
9

10. Subscriber Base
(Fixed-line and Mobile)
600
Number of Subscribers (in millions)
500
400
300
462
200 325
229 250
192.87
150
100 100
40 39 39.42 38 37.9 37.75 37.96
0
2006 J un-07 J ul-07 Dec-07 Dec-08 J an-09 2010
Fixed-line Mobile
10

11. Subscriber Base
(Broadband and Internet)
16
Number of Subscribers (in millions)
14 13.54
12.85
12 11
10.4
10
8
8
6 6.22
6 5.45
5
3.87
4 3.1
2.34
2 1.35
0.18
0
2006
2005
2007
2008
(Dec)
(Dec)
(Mar)
(J an)
2007
2008
2009
Broadband I nternet
11

12. Fixed-line Telecom Market
Total Wireline Subscribers 37.96 Million
% Growth QoQ 0.15%
Urban Wireline Subscribers 27.38 Million (72.13%)
Rural Wireline Subscribers 10.58 Million (27.87%)
Village Public Telephones (VPT) 5.61 Million
Public Call Office (PCO) 6.20 Million
All figures for March end 2009 12

13. Operator wise Market
Share of Fixed-line Service
Urban Fixed-line Operators
MTNL
13.00%
Urban+Rural Fixed-line Operators
Other Other
Private Private
Operators 18.00%
13.29%
BSNL
MTNL 69.00%
9.41%
Rural Fixed-line Operators
Other
Private
0.35%
BSNL
77.30%
BSNL
99.65%
13

14. Mobile Telecom Market
Total Wireless Subscribers 391.76 Million
% Growth QoQ 12.93%
Urban Wireless Subscribers 282.05 Million (72%)
Rural Wireless Subscribers 109.71 Million (28%)
GSM Subscribers 297.26 Million (75.88%)
CDMA Subscribers 94.50 Million (24.12%)
All figures for March end 2009 14

15. Development and
Penetration
200
180
180
160
140
120
(millions)
105.4
100
85
80
58.5
60
44.2
37.4
40
22 19.1
20 10.5
6.4
10.9
3.1 5.05 0.8
0
2000 2001 2002 2003 2004 2005 2006 2007
GSM Subscriptions CDMA Subscriptions
15

16. Operator wise Total Market
Share of Mobile Service
Others
Aircel
2.99%
4.73%
Idea Bharati Airtel
8.96% 23.97%
Tata
9.93%
BSNL Reliance
13.31% 18.56%
Vodafone
17.55%
16

17. GSM vs. CDMA
Statistic* GSM CDMA
Share of Prepaid 94% 0.7%
Incoming Minutes of 249 192
Usage per subscriber per
month
Outgoing Minutes of 235 164
Usage per subscriber per
month
Outgoing SMS per 30 10
subscriber per month
ARPU# $4 $2
# Average Revenue Per User *March End 2009
17

18. Operator-wise Market
Share of GSM
BPL MTNL Aircel
0.73% 1.41% 6.22%
Vodafone
Reliance
23.13%
6.73%
Spice
1.39%
Idea Bharati
13.08% 31.60%
BSN L
15.71%
18

19. Operator-wise Market
Share of CDMA
BSNL Shyam Telelink
0.63% HFCL
5.76%
0.41%
MTNL
0.32%
Tata Teleservices
37.16%
Reliance
55.72%
19

20. Internet Service
Total Internet Subscribers (including Broadband) 13.54 Million
% Growth QoQ 5.30%
Broadband Subscribers 6.22 Million
Wireless Data Subscribers 117.82 Million
(i.e. through mobile handsets)
Total International Bandwidth owned by ISPs 209 GB
Total National Bandwidth owned by ISPs 174GB
All figures for March end 2009 20

21. Operator wise Market
Share of ISPs
Data Infosys Ltd.
You Telecom Pvt. Ltd. Hathway Cable &
Others 1.83%
1.47% Datacom Pvt. Ltd.
4.26% 2.50%
Tata Communications
Internet Services Ltd.
2.72%
Sify Technologies Ltd.
2.99%
Reliance
Communications
Infrastructure Ltd.
6.91%
BSN L Bharati Airtel Ltd.
53.62% 8.01%
MTN L
15.69%
21

22. Broadband Service
(>= 256 Kbps)
 Move into high-speed broadband
Internet access has been distinctly slow
 Broadband penetration still remains at
only around 0.2%
 Most of the local loops are owned and
operated by state owned service
providers, which pose a significant
bottleneck for Broadband penetration
 Broadband services account for only
25% of the total Internet subscriber
base
22

23. Technology wise Market Share of
Broadband Subscribers
6
5.364
Subscriber Base (in millions)
5
4
3
2
1
0.474
0.244 0.074
0.042 0.02
0
DSL Cable Ethernet Fiber Leased Line Other
Modem LAN
All figures for March end 2009 23

24. Operator wise Market Share of
Broadband Service Providers
Reliance Others
Sify Limited HFCL I nfotel Ltd
Communication 4%
2% 1%
I nfrastructure Ltd.
2%
You Telecom I ndia
Pvt. Ltd.
2%
Tata Communications
I nternet Services Ltd.
4%
Hathway Cable &
Datacom Pvt. Ltd.
4%
BSNL
57%
MTNL
11%
Bharati Airtel
13%
24

25. ARPU & Pricing Trend
 India has one of lowest mobile tariffs in
the world resulting in low ARPU
 ARPU have been on the decline since
2004 due to price wars and increased
competition in the mobile telecom
sector
 ARPUs continue to drop by 5% while
tariffs decrease further by 15%
 Low tariffs building margin pressure on
operators
25

26. Mobile Pricing/Tariffs
Mobile Tariffs in Absolute terms
0.25 0.23
0.22
0.2 0.19
0.17
0.16
0.15 Lowest in
USD
0.11 0.11 0.11 India
0.1 0.09
0.05 0.05
0.05 0.04
0.03
0.02
0
UK
I taly
I ndia
China
France
Belgium
Brazil
Taiwan
Pakistan
Malaysia
Thailand
Philippines
Hong Kong
Argentina
26

27. Mobile Pricing/Tariffs
 Tariff war has intensified in the
past few months and competition
has reached a new level
 The price war has spread to the
SMS segment as well, with
negative impact on operator
revenues
27

28. ARPUs are falling
Effective margin/ min 2005 Effective Margin/ min 2006
1.6 1
0.9 0.08
1.4 0.25
0.8
1.2
0.7
1 0.6
0.8 0.5 0.95
1.5
0.87
0.6 1.25 0.4
0.3
0.4
0.2
0.2 0.1
0 0
Cost per Margin Effective Cost per Margin Effective
minute rate per minute rate per
minute minute
28

29. VAS (Value – added Services)
 More Lucrative for operators and content
providers as some VAS at 14c make more
money than voice at 3c–4c.
 VAS include,
 SMS, Ring tones, Caller tones
 Internet Data Access
 Mobile Commerce
 On-demand Music, Videos, Animation clips
 Contests/Voting
 Gaming
 Enterprise products (Email, Office, etc.)
 New Alerts/Match Scores
29

30. VAS Forecast and Growth
Forecast 2009-2010
VAS
Revenues $10 Billion
2006
Parties involved Media content
VAS providers, mobile
operators, aggregators,
Revenues $500 million (this banks, Enterprises
includes texting)
Parties involved Media content
providers, Mobile
operators and
aggregators
30

31. Leading VAS and mobile
application service providers
Mauj.com
Hungama
Indiagames
Mobile
VAS
OnMobile IMImobile
Mobile-2-Win
31

32. Telecom Administrative
Framework
 Total of 22
circles
 4 Metros
 5 ‘A’ Circles
 8 ‘B’ Circles
 6 ‘C’ Circles
 Each circle has
LDCAs (Long
Distance Charging
Areas) and SDCAs
(Short Distance
Charging Areas)
32

33. Telecom Regulatory
Bodies
Government of India
Ministry of Communications &
Information Technology
Timely policy and regulatory
intervention
has ensured that Sector
development has stayed on track.
TDSAT DoT TRAI
State owned Private
operators Operators
License Fees/
Spectrum Charges
33

34. Regulatory Bodies – Key
Responsibilities
Agency Key Responsibilities
Department of Telecommunications  Policy Formulation, licensing, wireless
spectrum/frequency management
(DoT)  Enforcement of wireless regulatory measurement
 Standardization/validation of equipment, R&D, etc.
Telecom Regulatory Authority of India  Mandate for Tariffs, Interconnection, Standards for
quality of service
(TRAI)  Recommendatory: Licensing Timing, terms &
conditions, License revocation, competition
facilitation, etc.
Telecom Disputes Settlement & Appellate Adjucation and disposal of disputes between service
providers and/or a group of consumers
Tribunal (TDSAT)
34

35. Upcoming Technologies
and Growth Areas
 3G
 WiMax
 Network Infrastructure
 Telecom Equipment Exports
 Handsets
35

36. 3G
 MTNL and BSNL have launched 3G
services
 Other Private players are yet to
obtain licenses
 Expensive affair for operators to
upgrade to 3G
 3G equipment upgrades will be
high
36

37. WiMax
 The total base station equipment
market is estimated to be between
$50 million and $120 million for
WiMax
 Projected total WiMax connections
by 2012: 6.9 million
37

38. Network Infrastructure
 The industry needs to add
additional capacity to sustain
growth
 Continuing trend towards import of
telecom equipment
 Shared Wireless infrastructure like,
share tower services, help reduce
operator costs by 15-18%
38

39. Telecom Equipment
Exports
45000
40000
35000
(in Rs. Crore)
30000 Exports fueled by local
25000 Telecom equipment
20000 manufacturers
15000
10000
5000
0
2006 2007 2008 2012
(Projected)
39

40. Handsets – Market Share
GSM LG Motorol
Others
4.40% a
Total (GSM+CDMA) 7.30%
7.80%
Sony- Others Sony-
Erricson 8.40% Erricson
6.80%
8.90%
Samsung LG
9.50% 14.40% Nokia
Samsun 62.60%
g
9.00%
Motorola
7.20%
Others CDMA LG
11.50% 47.60%
Nokia
Samsung
53.70% 11.20%
Nokia
24.30%
40
Motorola

41. Feedback/Questions

42. Sources/References
 Capacity Building Workshop on information Society
Statistics, 2007
 Future Trends in Indian Telecom, 2005
 Mobile Services to Mobilize Indian Telecom Sector, 2008
 Indian Telecom Sector, www.mas.net.in
 Indian Telecom Analysis, Report Summary, 2009
 Experiences in Telecom Sector Regulation in India, 2008
 Indian Broadband Wireless and WiMax Market Analysis
& Forecasts 2007-2014, 2007
 Indian Telecom Statistics Forecast, 2003-2007
42