overview of india telecom market

8/9/2019 Overview of India Telecom Market

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Telecom Circle

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y Indian mobile industry is the fastest growing across the world adding 15-20 million new subscribers every month

y 2nd largest market after China in terms of number of subscribers

y Crossed 500 million mobile subscriber mark in Dec,2009

y Fixed line subscription at 35 million which is shrinking

every month. The rest of the presentation would focus on mobile industry as it is the most significant part of Telecom Industry



y India is divided into 23circles and separatelicenses have been issued for each circle

y Division of circles mostly along the state boundaries

y Circles were categorized as Metros, A, B and C based

on the revenue potential of the circle when 1st set of auctions were held in 1995



1994Start of Cellular

operations

1999New Telecom

Policy

2000-01 3rd/4th Operator

Licenses

2003CDMA networks

launched

2004Calling Party

Pays (CPP)Introduced

2005Lifetime Validity

Products Issued

2008Fresh Licenses

issued to 6players

2009Tariff warsamongst

operators

2010 3G, BWA auctions



2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

CDMA - - - 6 10 17 41 57 84 95

GSM 3 6 10 22 37 59 105 172 258 415

-

100

200

300

400

500

600

CDMA

GSM

In millionSource: COA I, AUSPI



Operator Subscriber base

BSNL 28,446,969

MTNL 3,514,454

Bharti Aitel 2,928,254

Reliance Communications 1,152,237

Tata Teleservices 1,003,261

HFCL 165,978

Teleservices Limited 95,181

All India 37,306,334

The fixed line subscriber base is stagnant at 37million for last two years

The fixed line subscriber base is stagnant at 37million for last two years



y Gartner and other analy sts estimated Indian Handsetmarket size f0r 2009 between 1115-125 million

y Low cost handsets dominate with the average selling

price of $60-65y Nokia has the dominant market share followed

Samsung and LG

y Share of CDMA in handsets is on a decline after the

decision of Reliance and Tata to focus on GSM



y A s a result of separate licenses, there are few pan Indiaoperators. However, in the period 1999-2005, consolidation led to emergence of larger players

y

In 2007-08, new licenses were issued to new players taking total number of operators in each circle to as high as 13



GS

y Bharti Airtely Vodafone

y Ideay BSNL/MTNLy Aircely Reliancey Tatay Uninory Stely BPL

y Reliance

y

Tata Indicomy MTS

C



y India is currently the most competitive market in the world which has led to tariff wars

$1 = R s 45R s 1 = 100 p



y Revenue growth has got impacted significantly y The break-even point for new operators has increased

significantly

y

Increase in churn and Multiple SIMy It is estimated that only 50% of new subscriber addition

is actually new subscribers. Rest all are either churningfrom one network to another or are adding to MultipleSIM phenomena



26%

44%53%

63%

80%

73%

78%86% 91% 93% 96%

0%

20%

40%

60%80%

100%

120%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Prepaid as % of otal Subscribers

99% of new subscriber additions are in prepaid99% of new subscriber additions are in prepaid



1158

814731

503412

352 316 282 240

845

453328 288

193159 146 128 123

0

200

400

600

800

1000

1200

1400

2000 2001 2002 2003 2004 2005 2006 2007 2008

ARPU Cost/Sub

GSM ARPU & Cost data (R s)



56% Airtime (including roaming Airtime)

2%

Outroaming Airtime

5%Rentals

10% Activation & Processing Fees

1%Outroaming urc arge

10% VA Revenues2%

Ot er Revenues15%

Gross Interconnect Usage Revenue

Revenue Break-up as % of Gross Revenues

Source: P Benc marking report - 200

Net Service Revenue = 7 % of Gross Service RevenueNet Service Revenue = Gross Service Revenue Interconnection

Usage osts Outroaming Airtime

Net Service Revenue = 7 % of Gross Service RevenueNet Service Revenue = Gross Service Revenue Interconnection

Usage osts Outroaming Airtime



So rce: enc ar in re ort - 2

Net or o eratin ex enses ro ortion of costs increased from 36% in 2 5 to 51% in 2

Net or o eratin ex enses ro ortion of costs increased from 36% in 2 5 to 51% in 2

51. %

24. %

. %

1 .2%

6. %

A s % of otal Costs

Net orO eratin

osts

Sales &Mar etin

osts

Personnelosts

26.%

12. %

4. %

4. %

3.2%

A s % of et Rev



40.0%

11.0%16.0%

9.0%

4.0%

20.0%

PostpaidSMS

CLI

GPRS

Ringtones &

RingbackTones

36.0%

0.0%5.0%30.0

%

5.0%

24.0%

Prepaid



y Defense occupies chunk of spectrum and hence thereis scarcity of spectrum leading to poor quality of service

y

Mobile Number Portability y Plan to roll-out mobile number portability by middle of

2010

y The roll-out has been delayed for last two years due tooperational readiness and security issues



450 470 698 862

Known as 700MHz band

Identified by WRC-07 for IMT Entirely held by

defense

Known as 700MHz band

Identified by WRC-07 for IMT Entirely held by

defense

824 844 869 889

Known as 850 MHzband

Allocated to CDMA Entire band

available for mobile

Known as 850 MHzband

Allocated to CDMA Entire band

available for mobile

890 902.5 915 935 947.5 960

Known as 900 MHzBand

Allocated GSM All available

spectrum allocated to mobile services

Known as 900 MHzBand

Allocated GSM All available

spectrum allocated to mobile services

Paired With

Paired With Known as 450

UHF MHz Band Currently used for

Police & Security networks

Known as 450UHF MHz Band

Currently used forPolice & Security networks



2300 2400

Known as 2.3 GHzTDD band

Intended allocation for BWA

Known as 2.3 GHzTDD band

Intended allocation for BWA

Known as 2.6 GHz

band Part intended

allocation for BWA and part for mobileservices

Currently entire band is with defense

Known as 2.6 GHz

band Part intended

allocation for BWA and part for mobileservices

Currently entire band is with defense

2500 2690



Visit Telecom Circle to read interesting articles on Telecom and

Internethttp://www.telecomcircle.com

To download1. India Subscriber Database Circle-wise, operator-wise from

year 2000 on wards2. Circle-wise ARPU data for GSM networks3. Case stud y on how Indian Carriers make 40% EBIDTA

margins at 2 cents a minute

Visit http://www.telecomcircle.com/2009/06/india-telecom/

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overview of india telecom market

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