project report - neetish sen

8/14/2019 Project Report - Neetish Sen

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LOVELY PROFESSIONAL UNIVERSITYDEPARTMENT OF MANAGEMENT

Report on Summer Training

TO KNOW THE POTENTIAL BUYERS

FOR

WIMAX

Submitted to Lovely Professional University

In partial fulfillment of the

Requirements for the award of Degree of

Master of Business Administration

Submitted by:

NEETISH SEN

Roll No.-R1803A21

M.B.A. 3rd sem

DEPARTMENT OF MANAGEMENT

LOVELY PROFESSIONAL UNIVERSITY

PHAGWARA

(YEAR)-2008-10

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ACKNOWLEDGEMNT

It is my proud privilege to express my sincere gratitude to all those who help me directlyor indirectly in completion of this project report. I am greatly indebted to TATA

COMMUNICATIONS INTERNET SERVICES LTD who gives me this opportunity. I

am also greatly indebted to Mr. RAVI KAPOOR & Mr. VIJIT AGGRAWAL for their

support, guidance and valuable suggestions by which this work has been completed

effectively and efficiently. These all contributions are of immense value.

I owe thanks to Mr. AJAY, Mr. DHEERAJ and Mr. RISHI for providing the required

data to complete this project. Without which it is not possible to complete the project.

Last but not least I am indebted to those entire people who indirectly contributed and

whom this work should not have been possible. Endeavor has been made to make the

project error free yet I apologies for the mistakes.

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Certificate

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Executive Summary

I am thankful very much to Tata Communications and Mr. Ravi Kapoor ( Area manager)

for providing me management summer training. Under his guidance I learn about market

and feel that theoretical part is too different from practical market.

My topic for the summer training was to know the potential customer for the launch of

mobile WimaX and to gain the experience of handling team doing survey on the field.

WimaX has the best distance range, the best data rate, the biggest range of frequency ofall Internet access technologies. Wimax physical layer uses OFDM to avoid as most aspossible interferences, efficient modulation to have a long distance range, a good

correction codeLPDC that has been used only in the last decade. In fact, WimaX is based on the latesttechnologies and algorithms and has the quality to become a common access to Internetall over the world.WiMAXs technology could be the root of next mobile phone generation, the 4G. Thistechnology could rely on very high standards of quality and also good mechanisms ofdata protection that make it a stable technology for the future. The high distance rangecan provide connectivity anywhere and anytime for mobile users, that will be fullyconnected to Internet

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Index

Topic page no.

1. Telecom industry in India 6

2. History of Telecommunication 7

3. Major Telecom Players 17

4. About Tata Communications 26

5. About Tata Group 32

6. Achievements 37

7. Financial Statement 44

8. WiMaX 47

9. Marketing Research 54

10 . Questionnaire 57

11. Recommendation For Wimax 62

12. Bibliography 63

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Telecom Industry in India

The telecom industry is one of the fastest growing industries in India. India has nearly200 million telephone lines making it the third largest network in the world after Chinaand USA. With a growth rate of 45%, Indian telecom industry has the highest growth ratein the world.

History of Indian Telecommunications started in 1851 when the first operational landlines were laid by the government near Calcutta (seat of British power). Telephoneservices were introduced in India in 1881. In 1883 telephone services were merged withthe postal system. Indian Radio Telegraph Company (IRT) was formed in 1923. Afterindependence in 1947, all the foreign telecommunication companies were nationalized toform the Posts, Telephone and Telegraph (PTT), a monopoly run by the government's

Ministry of Communications. Telecom sector was considered as a strategic service andthe government considered it best to bring under state's control.

The first wind of reforms in telecommunications sector began to flow in 1980s when theprivate sector was allowed in telecommunications equipment manufacturing. In 1985,Department of Telecommunications (DOT) was established. It was an exclusive providerof domestic and long-distance service that would be its own regulator (separate from thepostal system). In 1986, two wholly government-owned companies were created: theVidesh Sanchar Nigam Limited (VSNL) for international telecommunications andMahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.

In 1990s, telecommunications sector benefited from the general opening up of theeconomy. Also, examples of telecom revolution in many other countries, which resultedin better quality of service and lower tariffs, led Indian policy makers to initiate a changeprocess finally resulting in opening up of telecom services sector for the private sector.National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensiveroadmap for the Indian telecommunications sector. In 1997, Telecom RegulatoryAuthority of India (TRAI) was created. TRAI was formed to act as a regulator tofacilitate the growth of the telecom sector. New National Telecom Policy was adopted in1999 and cellular services were also launched in the same year.

Telecommunication sector in India can be divided into two segments: Fixed Service

Provider (FSPs), and Cellular Services. Fixed line services consist of basic services,national or domestic long distance and international long distance services. The stateoperators (BSNL and MTNL), account for almost 90 per cent of revenues from basicservices. Private sector services are presently available in selective urban areas, andcollectively account for less than 5 per cent of subscriptions. However, private servicesfocus on the business/corporate sector, and offer reliable, high- end services, such asleased lines, ISDN, closed user group and videoconferencing.

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Cellular services can be further divided into two categories: Global System for MobileCommunications (GSM) and Code Division Multiple Access (CDMA). The GSM sector

is dominated by Airtel, Vodfone-Hutch, and Idea Cellular, while the CDMA sector isdominated by Reliance and Tata Indicom. Opening up of international and domestic longdistance telephony services are the major growth drivers for cellular industry. Cellularoperators get substantial revenue from these services, and compensate them for reductionin tariffs on airtime, which along with rental was the main source of revenue. Thereduction in tariffs for airtime, national long distance, international long distance, andhandset prices has driven demand.

The telecom sector is also afflicted by a number of restraints. These include:

Sluggish pace of reform process.

Lack of infrastructure in semi-rural and rural areas, which makes it difficult tomake inroads into this market segment as service providers have to incur a hugeinitial fixed cost.

Limited spectrum availability.

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 since1991, more than 5.5 percent is spent on it . The initial phase of telecom reforms

began in 1984 with the creation of Center for Department of Telematics (C-DOT) fordeveloping indigenous technologies and private manufacturing of customer premise

equipment. Soon after, the Mahanagar Telephone Nigam Limited (MTNL) and VideshSanchar 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. Ofthese, 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 ensurea 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

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of private investments in both telecom equipment and manufacture and provision oftelecom 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 balancedand fair manner. TRAI has been vested with powers to ensure its independence fromthe 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 theregulator 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 serviceproviders, protecting consumers through monitoring of service quality and ensuring

compliance to license conditions, setting service targets and pricing policy for alloperators and service providers.

Further changes in the regulatory system took place with the TRAI Act of 2000 that

aimed at restoring functional clarity and improving regulatory quality. TRAI canframe regulations and can levy fees and charges for telecom services as deemed

necessary. The regulatory body also has a separate fund (called the TRAI GeneralFund) to facilitate its functioning. To fairly adjudicate any dispute between licensor

and licensee, between service provider, between service provider and a group ofconsumers, a separate disputes settlement body was set up called Telecom Disputes

Settlement and Appellate Tribunal (TDSAT).

Telecommunications is the transmission of data and information between computers

using a communications link such as a standard telephone line. Typically, a basictelecommunications system would consist of a computer or terminal on each end,

communication equipment for sending and receiving data, and a communicationchannel connecting the two users. Appropriate communications software is also

necessary to manage the transmission of data between computers. Someapplications that rely on this communications technology include the following:

Electronic mail (e-mail) is a message transmitted from one person to anotherthrough computerized channels. Both the sender and receiver must have access to

on-line services if they are not connected to the same network. E-mail is now one ofthe most frequently used types of telecommunication.

Facsimile (fax) equipment transmits a digitized exact image of a document overtelephone lines. At the receiving end, the fax machine converts the digitized data

back into its original form.

Voice mail is similar to an answering machine in that it permits a caller to leave avoice message in a voice mailbox. Messages are digitized so the caller's message canbe stored on a disk.

Videoconferencing involves the use of computers, television cameras, and

communications software and equipment. This equipment makes it possible to

conduct electronic meetings while the participants are at different locations.

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The Internet is a continuously evolving global network of computer networks thatfacilitates access to information on thousands of topics. The Internet is utilized by

millions of people daily.

Actually, telecommunications is not a new concept. It began in the mid-1800s with

the telegraph, whereby sounds were translated manually into words; then the

telephone, developed in 1876, transmitted voices; and then the teletypewriter,developed in the early 1900s, was able to transmit the written word.

Since the 1960s, telecommunications development has been rapid and widereaching. The development of dial modem technology accelerated the rate during the

1980s. Facsimile transmission also enjoyed rapid growth during this time. The 1990s

have seen the greatest advancement in telecommunications. It is predicted thatcomputing performance will double every eighteen months. In addition, it has been

estimated that the power of the computer has doubled thirty-two times since WorldWar II (With row, 1997). The rate of advancement in computer technology shows no

signs of slowing. To illustrate the computer's rapid growth, Ronald Brown, formerU.S. secretary of commerce, reported that only fifty thousand computers existed in

the world in 1975, whereas, by 1995, it was estimated that more than fifty thousandcomputers were sold every ten hours (U.S. Department of Commerce, 1995).

Deregulation and new technology have created increased competition and widenedthe range of network services available throughout the world. This increase in

telecommunication capabilities allows businesses to benefit from the informationrevolution in numerous ways, such as streamlining their inventories, increasing

productivity, and identifying new markets. In the following sections, the technologyof modern telecommunications will be discussed.

Progress of reforms

a.) Private Participation in Telecom - For the provision of basic services, the entirecountry was divided into 21 telecom circles, excluding Delhi and Mumbai (Singh et.

al. 1999). With telecom markets opened to competition, DoT and MTNL were joinedby private operators but not in all parts of the country. By mid-2001, all six of the

private operators in the basic segment had started.

After a recent licensing exercise in 2002, there exists competition in most service

areas. However, the market is still dominated by the incumbent. In December 2002,the private sector provided approximately 10 million telephones in fixed, WLL

(Wireless Local Loop) and cellular lines compared to 0.88 million cellular lines inMarch 1998 (DoT Annual Report, 2002). 72 per cent of the total private investment

in telecom has been in cellular mobile services followed by 22 per cent in basicservices. After the recent changes, the stage is now set for greater competition in

most service areas for cellular mobile Over time, the rise in coverage of cellularmobile will imply increased competition even for the basic service market because of

competition among basic and cellular mobile services.

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b.) Teledensity and Village Public Phones (VPTs) - India's rapid population increasecoupled with its progress in telecom provision has landed India's telephone networkin the sixth position in the world and second in Asia (ITU). The much publicized

statistic about telecom development in India is that in the last five years, the linesadded for basic services is 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. As Dossani (2002) argues, the comparison of teledensity ofIndia with other regions of the world should be made keeping in mind theaffordability issues. Assuming households have a per capita income of $350 and are

willing to spend 7 percent of that total income on communications, then only about1.6 percent of households will be able to afford $30 (for a $1000 investment per

line).

Teledensity has risen to 4.9 phones per 100 persons in India compared to the

average 7.3 mainlines per 100 people around the world. Although, the coverage isstill much higher in urban areas - 13.7 in urban areas compared to1.4 in rural areas,

the government has made efforts to connect villages through village publictelephones (VPT) and Direct Exchange Lines (DEL). This coverage increased from 4.6

lakhs in March 2002 to 5.10 lakhs in December 2002 for VPT and from 90.1 lakhs inMarch to 106.6 lakhs in December 2002 for DELs. BSNL has been mainly responsible

for providing VPTs; more than 84 percent of the villages were connected by 503610

VPTs with private sector also providing 7123 VPTs .

The overall telecom growth rate is likely to be high for some years, given theincrease in demand as income levels rise and as the share of services in overall GDP

increases. The growth rate will be even higher due to the price decrease resultingfrom a reduction in cost of providing telecom services. A noteworthy feature of the

growth rate is the rapid rate at which the subscriber base for cellular mobile hasincreased in the last few years of the 1990s, which is not surprising in view of the

relatively lower subscriber base for cellular mobile.

c.) Foreign Participation India has opened its telecom sector to foreign investorsup to 100 percent holding in manufacturing of telecom equipment, internet services,

and infrastructure providers (e-mail and voice mail), 74 percent in radio-pagingservices, internet (international gateways) and 49 percent in national long distance,

basic telephone, cellular mobile, and other value added services (FICCI, 2003). Since1991, foreign direct investment (FDI) in the telecom sector is second only to power

and oil - 858 FDI proposals were received during 1991-2002 totaling Rs. 56,279crores (DoT Annual Report, 2002). Foreign investors have been active participants

in telecom reforms even though there was some frustration due to initial dithering bythe government. Until now, 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 fixedservice operators. For instance, during the period 1991-2001, about 44 percent of

the FDI was in cellular mobile and about 8 percent in basic service segment. Thistotal FDI includes the categories of manufacturing and consultancy and holding

companies

d.) Tariff-setting - An essential ingredient of the transition from a protected marketto competition is the alignment of tariffs to cost-recovery prices. In basic telecom for

example, pricing of the kind that prevailed in India prior to the reforms, led to a highdegree of cross-subsidization and introduced inefficient decision-making by both

consumers and service-providers. Traditionally, DoT tariffs cross-subsidized the costs

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of access (as reflected by rentals) with domestic and international long distanceusage charges (Singh et. al. 1999). Therefore, re-balancing of tariffs - reducing

tariffs that are above costs and increasing those below costs - was an essential pre-condition to promoting competition among different service providers and efficiency

in general.

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.Subsequently, it conducted periodic reviews and made changes in the tariff levels, if

necessary. Re-balancing led to a reduction in cross-subsidization in the fixed servicesector. Cost based pricing, a major departure from the pre-reform scenario, also

provides a basis for making subsidies more transparent and better targeted to

specific social objectives, e.g. achieving the USO.

e) Service Quality - One of the main reasons for encouraging private participation inthe provision of infrastructure rests on its ability to provide superior quality ofservice. In India, as in many developing countries, low teledensity resulted in great

emphasis being laid on rapid expansion often at the cost of quality of service. One of

the benefits expected from the private sector's entry into telecom is an improvementin the quality of service to international standards. Armed with financial and technical

resources, and greater incentive to make profits, private operators are expected to

provide consumers value for their money. Telephone faults per 100 main lines camedown to 10.32 and 19.14 in Mumbai and Delhi respectively in 2002-03 compared to

11.72 and 26.6 in 1997-98 (Figures 6 and 7). Quality of service was identified as animportant reform agenda and TRAI has devised QOS (Quality of Service) norms that

are applicable across the board to all operators (Singh et. al. 1999).

Pre reform period and Telecommunication in India

Before 1990's Telecommunication services in India were complete government

Monopoly - the Department of Telecommunication (DoT). Government also retainedthe rights for manufacturing of Telecommunication equipments. MTNL and VSNL

were created in the year 1986.Early 1990's saw initial attempts to attract private

investment. Telecommunication equipment manufacturing was deli censed in theyear 1991.

A notable revolution has occurred in the telecom sector. In the pre reforms era, this

was entirely in the hands of the central government and due to lack of competition,the call charges were quite high. Further, due to lack of funds with the government,

the government could never meet the demand for telephones. In fact, a personseeking a telephone connection had to wait for years before he could get a telephone

connection. The service rendered by the government monopoly was also very poor.Wrong billing, telephones lying dead for many days continuously due to slackness on

the part of the telecom staff to attend to complaints, cross connections due tofaulty / ill maintained telephone lines, obsolete instruments and machinery in the

telephone department were the order of the day in the pre reforms era.

Today, there are many players in the telecom sector. The ultimate beneficiary has

been the consumer. Prices of services in this sector have fallen drastically.

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Telephone connections are today affordable to everyone and are also easilyavailable. Gone are the days, when one had to wait for years to get a telephone

connection. The number of telephone connections which was only 2.15 million (fixedlines) in 1981 increased to 5.07 million(fixed lines) in 1991. Today (as in 2003),

there are 54.62 million telephone connections of which 41.33 million are fixed linetelephone connections, 12.69 million are cellular mobiles and the remaining 0.60

million are WLL telephones1. Wireless in Local Loop (WLL) telephones and cellularmobile telephones were unknown in India a few years ago. Cell phones charges have

come down so much that today one can see even a common man going around witha cell phone in his hand. The private companies are giving various incentives to

attract customers, a situation which is entirely opposite to the conditions prevailingin the pre reforms era when one had to wait for years to get a telephone connection.

The first step toward deregulation and beginning of liberalization and private sector

participation was the announcement of National Telecom Policy 1994.NTP 1994 , forthe first time, allowed private/foreign players to enter the 'basic' and the 'new

cellular mobile section. FDI up to 49% of total equity was also allowed in these

sectors. The policy allowed one private service provider to compete in basic serviceswith the incumbent DoT in each DoT internal circle. It allowed duopoly in cellular

mobile services in each circle. As part of the implementation of the NTP 94, licenseswere issued against license fees through a bidding process. This policy initiated the

setting up of an independent regulatorthe Telecom Regulatory Authority of India(TRAI), which was established in 1997. The main objective of TRAI is to provide an

effective regulatory framework to ensure fair competition while, at the same time,protect the interest of the consumers.

Liberalization and reforms in Telecom sector since early 1990's till date are

briefed below:

1991-92:

1. On 24th July 1991, Government announced the New Economic Policy.

2. Telecom Manufacturing Equipment license was delicensed in 1991.3. Automatic foreign collaboration was permitted with 51 per cent equity by the

collaborator.

1992-93:

Value added services were opened for private and foreign players on franchise orlicense basis. These included cellular mobile phones, radio paging, electronic mail,

voice mail, audiotex services, videotex services, data services using VSAT's, andvideo conferencing.

1994-95:

1. The Government announced a National Telecom Policy 1994 in September 1994.

It opened basic telecom services to private participation including foreigninvestments.

2. Foreign equity participation up to 49 per cent was allowed in basic telecomservices, radio paging and cellular mobile. For value added services the foreign

equity cap was fixed at 51 per cent.3. Eight cellular licensees for four metros were finalized.

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1996-97:

1. TRAI was set up as an autonomous body to separate the regulatory functions from

policy formulations and operational functions.2. 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. An agreement between Department of Telecommunication (DoT) and financialinstitutions to facilitate funding of cellular and basic telecom projects.4. 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.5. Internet Policy was finalized.

1998-99:

FDI up to 49 per cent of total equity, subject to license, permitted in companies

providing Global Mobile Personal Communication (GMPC) by satellite services.

1999-00

1. National Telecom Policy 1999 was announced which allowed multiple fixedServices operators and opened long distance services to private operators.

2. TRAI reconstituted: clear distinction was made between the recommendatory andregulatory functions of the Authority.

3. DOT/MTNL was permitted to start cellular mobile telephone service.4. To separate service providing functions from policy and licensing functions,

Department of Telecom Services was set up.

5. A package for migration from fixed license fee to revenue sharing offered toexisting cellular and basic service providers.

6. First phase of re-balancing of tariff structure started. STD and ISD charges were

reduced by 23 per cent on an average.7. Voice and data segment was opened to full competition and foreign ownership

increased to 100 per cent from 49 per cent previously.

2000-01:

1. TRAI Act was amended. The Amendment clarified and strengthened therecommendatory power of TRAI, especially with respect to the need and timing of

introduction of new services provider, and in terms of licenses to a servicesprovider.

2. Department of Telecom Services and Department of Telecom operationscorporatized by creating Bharat Sanchar Nigam Limited.

3. Domestic long distance services opened up without any restriction on the numberof operators.

4. Second phase of tariff rationalization started with further reductions in the longdistance STD rates by an average of 13 per cent for different distance slabs and ISD

rates by 17 per cent.

5. Internet Service Providers were given approval for setting up of InternationalGateways for Internet using satellite as a medium in March 2000.

6. In August 2000, private players were allowed to set up international gateways via

the submarine cable route.7. The termination of monopoly of VSNL in International Long Distance services was

antedated to March 31, 2002 from March 31, 2004.

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2001-02:

1.Communication Convergence Bill, 2001 was introduced in August 2001.2. Competition was introduced in all services segments. TRAI recommended opening

up of market to full competition and introduction of new services in the telecomsector. The licensing terms and conditions for Cellular Mobile were simplified to

encourage entry for operators in areas without effective competition.

3. Usage of Voice over Internet Protocol permitted for international telephonyservice.

4. 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 forthe units commencing their operations on or before 31st March 2003. These

concessions were also extended to internet services providers and broadbandnetworks.

5. Thirteen ISP's were given clearance for commissioning of international gatewaysfor Internet using satellite medium for 29 gateways.

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

7. National Long Distance Service was opened up for unrestricted entry with theannouncement of guidelines for licensing NLD operators. Four companies were issued

Letter of Intent (LOI) for National Long Distance Service of which three licenses havebeen 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 with17 fresh licenses issued to private companies in September/October 2001. The cell

phone providers were given freedom to provide, within their area of operation, alltypes 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 connectionin urban, semi-urban and rural areas.

11. Disinvestment of PSU's in the telecom sector was also undertaken during theyear. 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 alsodisinvested.

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

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

14. TRAI recommended deregulating regulatory intervention in cellular tariffs, whichmeant that operators need no longer have prior approval of the regulator for

implementing tariff plans except under certain conditions.

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 detailedaccounting and financial system to be maintained by telecom service providers.

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2003-04

1. Unified Access Service Licenses regime for basic and cellular services wasintroduced in October 2003. This regime enabled services providers to offer fixed and

mobile services under one license. Consequently 27 licenses out of 31 licensesconverted 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 Paysregime in voice telephony segment.

3. The Telecommunication Interconnection Usage Charges Regulation 2003 was

introduced on 29th October 2003 which covered arrangements among serviceproviders for payment of Interconnection Usage Charges for Telecommunication

Services and covered Basic Service that includes WLL (M) services, Cellular MobileServices, and Long Distance Services (STD/ISD) throughout the territory of India

4. The Universal Service Obligation fund was introduced as a mechanism fortransparent 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 alltelecom operators.

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

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 unifiedlicensing 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 hadbeen 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 onISD calls and by 61 per cent on STD calls which were applicable from 1st February

2005.

2005-2006

1. Budget 2005-2006 cleared a hike in FDI ceiling to 74 per cent from the earlierlimit 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.

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3. BSNL and MTNL launched the 'One-India Plan' with effect from 1st March 2006which enable the customers of BSNL and MTNL to call from one end of India to other

at the cost of Rs. 1 per minute, any time of the day to phone.4. TRAI fixed Ceiling Tariff for International Bandwidth, Ceiling Tariff for higher

capacities reduced by about 70 per cent and for lower capacity by 35 per cent.5. Regulation on Quality of Service of Basic and Cellular Mobile Telephone Services

2005 introduced on 1st July 2005.6. BSNL announced 33 per cent reduction in call charges for all the countries for

international calls.7. Quality of Service (Code of Practice for Metering and Billing Accuracy) Regulation

2006 introduced on 21st March 2006.

11th plan (2007-2012)

FDI in Telecom sector has increased in recent years with value of 81.62 billion withshare of 10% in total inflow during January 2000 to June 2005. This is mainly in

telecom services and not in telecom manufacturing sector. Therefore, it is essentialto enhance the prospect for inflow of increased funds. The NTP 1999 sought to

promote exports of telecom equipments and services. But till date export of telecomequipment remains minimal. Most of the state-of-the-art telecom equipments

including mobile phones are imported from abroad. There is thus immense potentialfor indigenous manufacturing in India. Certain measures like financial packages,

formation of a telecom export promotion council, creation of integrated facilities fortelecom equipment through SEZ and encouraging overseas vendors to set up

facilities in India, are required for making India a hub for telecom equipmentmanufacturing and attract FDI. The telecom sector has shown robust growth during

the past few years. It has also undergone a substantial change in terms of mobileversus fixed phones and public versus private participation. The following table and

discussions from the report of the working report on the telecom sector for the 11th

plan (2007-2012)will show the growth of telecom sector since 2003:

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Major Players:

-State owned companies (BSNL and MTNL)

-Private Indian owned companies (Reliance Infocomm, Tata Teleservices,)

-Foreign invested companies (Vodafone-Essar, Bharti Tele-Ventures,Escotel, Idea Cellular, BPL Mobile, Spice Communications)

BSNL

On October 1, 2000 the Department of Telecom Operations, Government of India

became a corporation and was renamed Bharat Sanchar Nigam Limited (BSNL).

BSNL is now Indias leading telecommunications company and the largest public

sector undertaking. It has a network of over 45 million lines covering 5000 towns

with over 35 million telephone connections.

The state-controlled BSNL operates basic, cellular (GSM and CDMA) mobile, Internet

and long distance services throughout India (except Delhi and Mumbai). BSNL will beexpanding the network in line with the Tenth Five-Year Plan (1992-97). The aim is to

provide a telephone density of 9.9 per hundred by March 2007. BSNL, which became

the third operator of GSM mobile services in most circles, is now planning to

overtake Bharti to become the largest GSM operator in the country. BSNL is also the

largest operator in the Internet market, with a share of 21 per cent of the entire

subscriber base

BHARTI

Established in 1985, Bharti has been a pioneering force in the telecom sector with

many firsts and innovations to its credit, ranging from being the first mobile service

in Delhi, first private basic telephone service provider in the country, first Indian

company to provide comprehensive telecom services outside India in Seychelles and

first private sector service provider to launch National Long Distance Services in

India. Bharti Tele-Ventures Limited was incorporated on July 7, 1995 for promoting

investments in telecommunications services. Its subsidiaries operate telecom

services across India. Bhartis operations are broadly handled by two companies: the

Mobility group, which handles the mobile services in 16 circles out of a total 23

circles across the country; and the Infotel group, which handles the NLD, ILD, fixed

line, broadband, data, and satellite-based services. Together they have so fardeployed around 23,000 km of optical fiber cables across the country, coupled with

approximately 1,500 nodes, and presence in around 200 locations. The group has a

total customer base of 6.45 million, of which 5.86 million are mobile and 588,000

fixed line customers, as of January 31, 2004. In mobile, Bhartis footprint extends

across 15 circles.

Bharti Tele-Ventures' strategic objective is to capitalize on the growth opportunities

the company believes are available in the Indian telecommunications market and

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consolidate its position to be the leading integrated telecommunications services

provider in key markets in India, with a focus on providing mobile services.

MTNL

MTNL was set up on 1st April 1986 by the Government of India to upgrade thequality of telecom services, expand the telecom network, introduce new services and

to raise revenue for telecom development needs of Indias key metros Delhi, the

political capital, and Mumbai, the business capital. In the past 17 years, the company

has taken rapid strides to emerge as Indias leading and one of Asias largest telecom

operating companies. The company has also been in the forefront of

technology induction by converting 100% of its telephone exchange network into the

state-of-the-art digital mode. The Govt. of India currently holds 56.25% stake in the

company. In the year 2003-04, the company's focus would be not only consolidating

the gains but also to focus on new areas of enterprise such as joint ventures for

projects outside India, entering into national long distance operation, widening the

cellular and CDMA-based WLL customer base, setting up internet and allied services

on an all India basis.

MTNL has over 5 million subscribers and 329,374 mobile subscribers. While the

market for fixed wireline phones is stagnating, MTNL faces intense competition from

the private playersBharti, Hutchison and Idea Cellular, Reliance Infocommin

mobile services. MTNL recorded sales of Rs. 60.2 billion ($1.38 billion) in the year

2002-03, a decline of 5.8 per cent over the previous years annual turnover of Rs.

63.92 billion.

RELIANCE INFOCOMM

Reliance is a $16 billion integrated oil exploration to refinery to power and textiles

conglomerate (Source: http://www.ril.com/newsitem2.html). It is also an integrated

telecom service provider with licenses for mobile, fixed, domestic long distance and

international services. Reliance Infocomm offers a complete range of telecom

services, covering mobile and fixed line telephony including broadband, national and

international long distance services, data services and a wide range of value added

services and applications. Reliance IndiaMobile, the first of Infocomm's initiatives

was launched on December 28, 2002. This marked the beginning of Reliance's visionof ushering in a digital revolution in India by becoming a major catalyst in improving

quality of life and changing the face of India. Reliance Infocomm plans to extend its

efforts beyond the traditional value chain to develop and deploy telecom solutions for

India's farmers, businesses, hospitals, government and public sector organizations.

Until recently, Reliance was permitted to provide only limited mobility services

through its basic services license. However, it has now acquired a unified access

license for 18 circles that permits it to provide the full range of mobile services. It

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has rolled out its CDMA mobile network and enrolled more than 6 million subscribers

in one year to become the countrys largest mobile operator. It now wants to

increase its market share and has recently launched pre-paid services. Having

captured the voice market, it intends to attack the broadband market.

TATA TELESERVICES

Tata Teleservices is a part of the $12 billion Tata Group, which has 93 companies,

over 200,000 employees and more than 2.3 million shareholders. Tata Teleservices

provides basic (fixed line services), using CDMA technology in six circles:

Maharashtra (including Mumbai), New Delhi, Andhra Pradesh, Tamil Nadu, Gujarat,

and Karnataka. It has over 800,000 subscribers. It has now migrated to unified

access licenses, by paying a Rs. 5.45 billion ($120 million) fee, which enables it to

provide fully mobile services as well.The company is also expanding its footprint, and has paid Rs. 4.17 billion ($90

million) to DoT for 11 new licenses under the IUC (interconnect usage charges)

regime. The new licenses, coupled with the six circles in which it already operates,

virtually gives the CDMA mobile operator a national footprint that is almost on par

with BSNL and Reliance Infocomm. The company hopes to start off services in these

11 new circles by August 2004. These circles include Bihar, Haryana, Himachal

Pradesh, Kerala, Kolkata, Orissa, Punjab, Rajasthan, Uttar Pradesh (East) & West

and West Bengal.

VSNL

On April 1, 1986, the Videsh Sanchar Nigam Limited (VSNL) - a wholly Government

owned corporation - was born as successor to OCS. The company operates a network

of earth stations, switches, submarine cable systems, and value added service nodes

to provide a range of basic and value added services and has a dedicated work force

of about 2000 employees. VSNL's main gateway centers are located at Mumbai, New

Delhi, Kolkata and Chennai. The international telecommunication circuits are derived

via Intelsat and Inmarsat satellites and wide band submarine cable systems e.g.

FLAG, SEA-ME-WE-2 and SEA-ME-WE-3.

The company's ADRs are listed on the New York Stock Exchange and its shares arelisted on major Stock Exchanges in India. The Indian Government owns

approximately 26 per cent equity, M/s Panatone Finvest Limited as investing vehicle

of Tata Group owns 45 per cent equity and the overseas holding (inclusive of FIIs,

ADRs, Foreign Banks) is approximately 13 per cent and the rest is owned by Indian

institutions and the public. The company provides international and Internet services

as well as a host of value-added services. Its revenues have declined from Rs. 70.89

billion ($1.62 billion) in 2001-02 to Rs. 48.12 billion ($1.1 billion) in 2002-03, with

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voice revenues being the mainstay. To reverse the falling revenue trend, VSNL has

also started offering domestic long distance services and is launching broadband

services. For this, the company is investing in Tata Telservices and is likely to

acquire Tata Broadband.

VODAFONE

Vodafone Essar is the Indian subsidiary of Vodafone Group and commenced operationsin 1994 when its predecessor Hutchison Telecom acquired the cellular license forMumbai. The company now has operations across the country with over 78.68 millioncustomers**.

Over the years, Vodafone Essar, under the Hutch brand, has been named the MostRespected Telecom Company, the Best Mobile Service in the country and the Most

Creative and Most Effective Advertiser of the Year.Vodafone is the worlds leading international mobile communications group withapproximately 315 million proportionate customers as at 30 June 2009. Vodafonecurrently has equity interests in 31 countries across five continents and around 40 partnernetworks worldwide. For more information, please visit www.vodafone.comThe Essar Group is a diversified business corporation with a balanced portfolio of assetsin the manufacturing and services sectors of Steel, Energy, Power, Communications,Shipping Ports & Logistics, and Projects. Essar employs more than 50,000 people acrossoffices in Asia, Africa, Europe and the Americas.

.IDEA

Indian regional operator IDEA Cellular Ltd. has a new ownership structure and grand

designs to become a national player, but in doing so is likely to become a thorn in

the side of Reliance Communications Ltd. IDEA operates in eight telecom circles, or

regions, in Western India, and has received additional GSM licenses to expand its

network into three circles in Eastern India -- the first phase of a major expansion

plan that it intends to fund through an IPO, according to parent company Aditya Birla .

Company Name Market Cap in Crores

Bharti Airtel 108066.23

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Reliance Communications 32683.44

Idea Cellular 14368.92

Tata Communications 13181.25

Tata Teleservices 4393.06

Spice Communications 4136.13MTNL 4044.6

Telecom Policy Environment

Indian telecommunications today benefits from among the most enlightened

regulation in the region, and arguably in the world. The sector, sometimes

considered the poster-boy for economic reforms, has been among the chief

beneficiaries of the post-1991 liberalization. Unlike electricity, for example, where

reforms have been stalled, telecommunications has generally been seen as removed

from mass concerns, and thus less subject to electoral calculations. Market-

oriented reforms have also been facilitated by lobbying from Indias booming

technology sector, whose continued success of course depends on the quality ofcommunications infrastructure.

Despite several hiccups along the way, the Telecom Regulatory Authority of India

(TRAI), the independent regulator, has earned a reputation for transparency and

competence. With the recent resolution of a major dispute between cellular and fixed

operators (see below), Indian telecommunications, already among the most

competitive markets in the world, appears set to continue growing rapidly.

While telecom liberalization is usually associated with the post-1991 era, the seeds

of reform were actually planted in the 1980s. At that time, Rajiv Gandhi proclaimed

his intention of leading India into the 21st century, and carved the Department of

Telecommunications (DOT) out of the Department of Posts and Telegraph. For a timehe also even considered corporatizing the DOT, before succumbing to union

pressure. In a compromise, Gandhi created two DOT-owned corporations:

Mahanagar Telephone Nigam Limited (MTNL), to serve Delhi and Bombay, and

Videsh Sanchar Nigam Limited (VSNL), to operate international telecom services. He

also introduced private capital into the manufacturing of telecommunications

equipment, which had previously been a DOT monopoly.

These and other reforms were limited by the unstable coalition politics of the late

1980s. It was not until the early 1990s, when the political situation stabilized, and

with the general momentum for economic reforms, that telecommunications

liberalization really took off. In 1994, the government released its National

Telecommunications Policy (NTP-94), which allowed private fixed operators to takepart in the Indian market for the first time (cellular operators had been allowed into

the four largest metropolitan centers in 1992). Under the governments new policy,

India was divided into 20 circles roughly corresponding to state boundaries, each of

which would contain two fixed operators (including the incumbent), and two mobile

operators.

As ground-breaking as NTP-94 was, its implementation was unfortunately marred by

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http://www.rcom.co.in/http://www.ideacellular.com/http://www.tatacommunications.com/http://www.tatateleservices.com/http://www.spiceindia.com/spice/aboutus.asphttp://www.mtnl.net.in/http://www.rcom.co.in/http://www.ideacellular.com/http://www.tatacommunications.com/http://www.tatateleservices.com/http://www.spiceindia.com/spice/aboutus.asphttp://www.mtnl.net.in/


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regulatory uncertainty and over-bidding. A number of operators were unable to live

up to their profligate bids and, confronted with far less lucrative networks than they

had supposed, pulled out of the country. As a result, competition in Indias telecom

sector did not really become a reality until 1999. At that time the governments New

Telecommunications Policy (NTP-99) switched from a fixed fee license to a revenue-

sharing regime of approximately 15%. This figure has subsequently been lowered (to10%-12%), and is expected to be reduced even further over the coming years. Still,

India continues to derive substantial revenue from license fees ($800 million in

2001-2002), leading some critics to suggest that the government has abrogated its

responsibilities as a regulator to those as a seller.

Another, perhaps even more significant, problem with Indias initial attempts to

introduce competition was the lack of regulatory clarity. Private operators

complained that the licensor the DOT was also the incumbent operator. The

many stringent conditions attached to licenses were thus seen by many as the DOTs

attempt to limit competition. It was in response to such concerns that the

government in 1997 set up the telecom Regulatory Authority of India (TRAI), the

nations first independent telecom regulator.

Over the years, TRAI has earned a growing reputation for independence,

transparency and an increasing level of competence. Early on, however, the

regulator was beleaguered on all fronts. It had to contend with political interference,

the incumbents many challenges to its authority, and accusations of ineptitude by

private players. Throughout the late 1990s, TRAIs authority was steadily whittled

away in a number of cases, when the courts repeatedly held that regulatory power

lay with the central government. It was not until 2000, with the passing of the TRAI

Amendment Act, that the regulatory body really came into its own. Coming just ayear after NTP-99, the act marks something of a watershed moment in the history of

India telecom liberalization. It set the stage for several key events that have enabled

the vigorous competition witnessed today.

Some of these events include:

The corporatization of the DOT and the creation of a new state-owned telecom

company, Bharat Sanchar Nigam Ltd (BSNL), in 2000;

The opening up of Indias internal long-distance market in 2000, and the

subsequent drop in long-distance rates as part of TRAIs tariff rebalancing

exercise; The termination of VSNLs monopoly over international traffic in 2002,

and the partial privatization of the company that same year, with the Tata

group assuming a 25% stake and management control;

The gradual easing of the original duopoly licensing policy, allowing a

greater number of operators in each circle;

The legalization, in 2002, of IP telephony (a move that many believe

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was held up due to lobbying by VSNL, which feared the consequences on

its international monopoly);

The introduction in 2003 of a Calling Party Pays (CPP) system for cell

phones, despite considerable opposition (including litigation) by fixed

operators;

And, more generally, the commencement of more stringentinterconnection regulation by TRAI, which has moved from an inter-

operator negotiations-based approach (often used by the stronger

operator to negotiate ad infinitum) to a more rules-based approach.

All of these events have created an impressive forward-momentum in Indian

telecommunications, resulting in a vigorously competitive and fast-growing sector.

India has also suffered from its fair share of regulatory hiccups. Many operators

(mobile players in particular) still complain about the difficulties of gaining access to

the incumbents (BSNL) network, and the governments insistence on capping FDI in

the telecom sector to 49% (a move made in the name of national security) limits

capital availability and thus network rollout. In addition, ISPs, who were allowed into

the market under a liberal licensing regime in 1998, continue to hemorrhage money,

and have been pleading with the government for various forms of relief, including

the provision of unmetered phone numbers for Internet access. Despite initially

impressive results, the growth of Internet in the country has recently stalled, with

only 8 million users. Broadband penetration, too, remains tiny.

Unified Licensing

But perhaps the biggest and, until recently, most intractable regulatory problem

has been the drawn-out battle over limited mobility telephony. This imbrogliobegan in 1999, when MTNL sought permission from TRAI to provide CDMA-based

WLL services with limited mobility. GSM cellular operators were soon up in arms,

arguing that limited mobility was simply a backdoor entry into their business.

Moreover, fixed operators had paid lower license and spectrum fees than cellular

ones; were not required to pay access charges for cell-to-fixed calls (unlike their

cellular counterparts); and, amidst accusations of cross-subsidization, were charging

considerably lower rates than the cellular operators.

The resulting conflict dragged on in the courts and in the political arena for years.

Fixed operators including new entrants Reliance and Tata Teleservices claimed that

they were being prevented from providing a cheap service that would drive

penetration and be of benefit to the common man; cellular players bitterly opposedwhat they perceived as unequal regulatory treatment for two kinds of operators who

were in fact offering the same service. The real victim, of course, was the Indian

telecommunications market, which suffered from investor perceptions of regulatory

confusion and operator in-fighting. In late 2002, for example, thousands of mobile

users in New Delhi were for a time cut off from the fixed-line network when MTNL

shut down interconnection for cellular companies. (MTNL later attributed the incident

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to a technical snag.)

It was not until late 2003 that the issue was finally resolved, under considerable

government pressure, when cellular operators agreed to withdraw their many cases

against the fixed-line operators. Fixed operators would in effect be allowed to enter

the mobile business; in return, the government granted cellular players several

concessions, including lower revenue-share arrangements estimated to total over$210 million. Perhaps most notably, the government announced its intention to

adopt a unified access licensing regime, which would in the future provide a single,

technology-neutral license for fixed and cellular operators. The hope is that this

new license category will prevent a repeat of the recent controversy, and allow new

technologies to enter the Indian market without requiring a wholesale rewrite of

licensing laws.

MARKET TRENDS

The telecoms trends in India will have a great impact on everything from the humble

PC, internet, broadband (both wireless and fixed), cable, handset features, talking

SMS, IPTV, soft switches, and managed services to the local manufacturing and

supply chain.

This report discusses key trends in the Indian telecom industry, their drivers and the

major impacts of such trends affecting mobile operators, infrastructure and handset

vendors.

Higher acceptance for wireless services

Indian customers are embracing mobile technology in a big way (an average of four

million subscribers added every month for the past six months itself). They prefer

wireless services compared to wire-line services, which is evident from the fact that

while the wireless subscriber base has increased at 75 percent CAGR from 2001 to

2006, the wire-line subscriber base growth rate is negligible during the same period.In fact, many customers are returning their wire-line phones to their service

providers as mobile provides a more attractive and competitive solution. The main

drivers for this trend are quick service delivery for mobile connections, affordable

pricing plans in the form of pre-paid cards and increased purchasing power among

the 18 to 40 years age group as well as sizeable middle class a prime market for

this service.

Some of the positive impacts of this trend are as follows. According to a study, 18

percent of mobile users are willing to change their handsets every year to newer

models with more features, which is good news for the handset vendors. The other

impact is that while the operators have only limited options to generate additional

revenues through value-added services from wire-line services, the mobile operators

have numerous options to generate non-voice revenues from their customers.

Some examples of value-added services are ring tones download, coloured ring back

tones, talking SMS, mobisodes (a brief video programme episode designed for

mobile phone viewing) etc. Moreover, there exists great opportunity for content

developers to develop applications suitable for mobile users like mobile gaming,

location based services etc. On the negative side, there is an increased threat of

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virus spread through mobile data connections and Bluetooth technology in mobile

phones, making them unusable at times. This is good news for anti-virus solution

providers, who will gain from this trend.

MERGERS

Demand for new spectrum as the industry grows and the fact the spectrum allocation

in done on the basis of number of subscribers will force companies to merge so as to

claim large number of subscribers to gain more spectrum as a precursor to the

launch of larger and expanded services. However it must also be noted that this may

very well never happen on account of low telecom penetration.

Constraints:

Slow pace of the reform process .

It would be difficult to make in-roads into the semi-rural and rural areas

because of the lack of infrastructure. The service providers have to incur a

huge initial fixed cost to make inroads into this market. Achieving break-even

under these circumstances may prove to be difficult.

The sector requires players with huge financial resources due to the above

mentioned constraint. Upfront entry fees and bank guarantees represent a

sizeable share of initial investments. While the criteria are important, it tends

to support the existing big and older players. Financing these requirements

require a little more liberal approach from the policy side.

Problem of limited spectrum availability and the issue of interconnection

charges between the private and state operators.

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About Tata Communications

Tata Communications is a leading global provider of a new world of communications.With a leadership position in emerging markets, Tata Communications leverages itsadvanced solutions capabilities and domain expertise across its global and pan-Indianetwork to deliver managed solutions to multi-national enterprises, service providers andIndian consumers.

The Tata Global Network includes one of the most advanced and largest submarine cable

networks, a Tier-1 IP network, with connectivity to more than 200 countries across 400PoPs, and nearly 1 million square feet of data center and colocation space worldwide.

Location

The companys headquarters is in Mumbai, India, and it has significant internationaloperations in New Jersey, Montreal, Singapore and London. It has offices in 80 citiesacross 40 countries. Tata Communications' depth and breadth of reach in emergingmarkets includes leadership in Indian enterprise data services, leadership in globalinternational voice, and strategic investments in operators in South Africa (Neotel), SriLanka (Tata Communications Lanka Limited), Nepal (United Telecom Limited), andsubject to approval by the Chinese government, China (China Enterprise

Communications).Tata Communications is a leading global provider of telecommunications solutionsserving the voice, data and next-generation service needs of carriers, enterprises andconsumers in over 30 countries.

Earlier known as Videsh Sanchar Nigam, the company became a part of the Tata Groupin 2002. In 2008, VSNL, VSNL International, Teleglobe, Tata Indicom Enterprise

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Business Unit, VGSL and CIPRIS were brought under one global brand name TataCommunications. The company is now the number one global international wholesalevoice operator and India's largest provider of international long distance, enterprise dataand internet services in India.

Tatas global network spans five continents and comprises major ownership in over200,000 km of territorial network fibre and subsea cable capacity. The company has atrans-Atlantic and trans-Pacific data transfer capacity of 1 trillion bits per second, aglobal MPLS network and the worlds largest VoIP network.

Areas of business

The company extends its global reach to over 200 countries and territories with more than300 PoPs and more than one million square feet data centre space worldwide.Its portfoliocovers:

Global voice solutions

Carrying over 20 bn minutes of traffic annually, the company's customer base includesover 1500 carriers, mobile operators and ISPs. It provides value-added services such asinternational toll free calls and account calling in addition to domestic and internationallong distance calls. Services include:

Voice termination services Mobile Direct VoIPLinkTM Global calling cards truerootsTM

Global data solutionsThe company serves the connectivity needs of global enterprises and service providerswith solutions such as virtual private networks, global ethernet, managed data networkservices, leased lines, etc. The company also offers customised industry specific solutionsand is the leading provider of bandwidth and IP connectivity. Services include:

Global transmission services Global IP and VPN services Managed services Mobility services Transformation services

Joint ventures, subsidiaries, associates

Tata Communications Lanka offers wholesale, enterprise and retail solutionswhich include international voice services, international IP bandwidth for internetservice providers, international private lease circuit, MPLS-based global VPNservices, corporate voice services and their global calling card.

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Tata Communications Banking InfraSolutions (TCBIL) offers solutions thatcater to the banking industry which include ATM services, card issuance andmanagement, end-to-end point of sale acquiring and hosted core banking.

Tata Communications Transformations Services delivers end-to-endoutsourcing services for global carrier and telecommunications customers.

Neotel (South Africa) provides a range of value-added voice and data services forbusinesses, wholesale network operators, providers and consumers using its pure-IP next generation network.

Tata Communications Internet Services serves over 4,50,000 customersoffering services like broadband, Wi-Fi, dial up and a bouquet of value-addedservices such as entertainment-on-demand, interactive education, net telephony,PC security and website hosting.

KEY MEMBERS

Srinath Narasimhan

Managing Director & CEO, Tata Communications

Srinath Narasimhan is the Managing Director and CEO of Tata Communications(formerly VSNL), part of the $62.5 billion Tata Group.

Mr. Srinath has over 20 years experience within the Tata Group, having held variouspositions in project management, sales and marketing, as well as significant corporatefunctions in several Tata companies. Mr. Srinath has been responsible for spearheadingnew projects in high-technology areas such as process automation and control, computersand telecommunications and was an instrumental figure early in the launch of the TataGroup's CDMA services.

Mr. Srinath previously served as Executive Assistant to the Chairman for Tata Industries,a position he held until 1992. He worked with a strategic team to set up Tata InformationSystems, which later became Tata IBM. Throughout his tenure here, he accepted anumber of assignments in sales and marketing.

In 1998, Mr. Srinath returned to Tata Industries as General Manager, Projects and workedwith Tata Teleservices in this capacity for a year. In 1999, he moved to Hyderabad asChief Operating Officer responsible for all the operations of Tata Teleservices. In late

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2000, Mr. Srinath took over as Chief Executive Officer of Tata Internet Services, aposition he held until February 2002, when he moved to VSNL as Director (Operations).He subsequently became Executive Director for VSNL.

In 2006, Mr. Srinath was honored with the Telecom Asia 'CEO of the Year'award in

recognition of his role in transforming VSNL from a domestic monopoly to a majorglobal telecommunications company in just four years. During this time, VSNL'sbusiness model was reinvented and the company entered several new businesses, both inIndia and abroad.

Mr. Srinath holds a degree in Mechanical Engineering from the Indian Institute ofTechnology, Chennai and an MBA from the Indian Institute of Management, Kolkata,specializing in marketing and systems.

Vinod Kumar

President and COO, Tata Communications

As President of Global Data & Mobility Solutions for Tata Communications, part of the$62.5 billion Tata Group, Mr. Kumar is responsible for expanding Tata Communications'roadmap and charter into the global communications market. Enhancing the servicecapabilities and customer-facing activities in strategic markets beyond the shores ofIndia, in a nutshell, sums up his mandate.

In addition to heading these strategic initiatives, Mr. Kumar is also responsible for theWholesale Data, Global Mobile and International Enterprise lines of business, and formeeting the company's ambitious targets. Mr. Kumar is also a Director on the Board ofTata Communications Limited.

Mr. Kumar has a wide range of cross-functional experience in the telecommunicationsindustry. He also has an impressive track record in developing business strategies andcreating fast growth organizations.

He was previously Senior Vice President of Asia Netcom, responsible for all aspects ofgenerating top-line growth, including strategy formulation, product marketing and sales.He was actively involved in all aspects of the financial restructuring and eventual assetsale of Asia Global Crossing to China Netcom, resulting in the formation of AsiaNetcom.

In 1999, Mr. Kumar joined WorldCom Japan as Chief Executive Officer. Prior to that, heheld various senior positions at Global One in the United States and Asia where he had

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major responsibilities in market management, sales, marketing, product management,multinational account management, and operations.

Mr. Kumar graduated with honors in Electrical and Electronic Engineering at the BirlaInstitute of Technology and Science in India.

Michel Guyot

President, Global Voice Solutions, Tata Communications

Michel Guyot is President, Global Voice Solutions for Tata Communications, part of the$62.5 billion Tata Group. In this position, he is responsible for worldwide Voiceactivities for the group, encompassing the management of domestic voice operations inIndia.

Mr. Guyot has over 25 years of international telecommunications experience and has helda number of key executive positions. Prior to taking on his current position, Mr. Guyotwas Teleglobes Vice-President of International Markets, responsible for the companysInternational Sales organization and commercial activities for Europe, the Middle East,Africa and Asia-Pacific. Among other positions, Mr. Guyot has also served asTeleglobes Executive Director of Marketing as well as Vice-President Europe.

He played a leading role when Teleglobe moved to a competitive environment in Canadaand was a key member of the executive team during the 2002 restructuring process aswell as during the integration process with Tata Communications.

Mr. Guyot is Chairman of the Board of Directors for the Telecommunications ExecutiveManagement Institute of Canada, and has served as the Canadian Representative andCouncil Member for Canada at the Commonwealth Telecommunications Organization.

He holds a Bachelor of Commerce Degree from Lcole des Hautes EtudesCommerciales, Universit de Montral, and is a member of the Certified GeneralAccounting Association of Canada.

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Our People

Our global office holds talent from six continents. Our vast pool of expertise in thecommunications and technology sectors embody our commitment to conduct ethical andsustainable business. Tata Communications continues a tradition of developing anddeploying innovative solutions for existing and emerging markets worldwide. Ourinternational team reflects the dynamic and diverse market Tata Communications serves.

Our Values

Service and business at Tata Communications is guided by a commitment to ethical andresponsible conduct.

Integrity: Trust travels

We must conduct our business fairly, with honesty and transparency. Everythingwe do must stand the test of public scrutiny.

Understanding: Open the world

We must be caring, show respect, compassion and humanity for our colleaguesand customers around the world, and always work for the benefit of thecommunities we serve.

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Flexibility: Act agile

We work to create, design and grow in an environment that supports our customersand people with adaptive thinking and action.

Excellence: Go the distance

We must constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide.

Unity: Journey as one

We must work cohesively with our colleagues across the Group and with our

customers and partners around the world, building strong relationships based ontolerance, understanding and mutual cooperation.

Responsibility: Advance life

We must continue to be responsible, sensitive to the countries, communities andenvironments in which we work, always ensuring that what comes from thepeople goes back to the people many times over.

Tata Communications introduced virtualized Unified Threat Management (vUTM) forthe first time in India. This firm is the first service provider in India to offer its customersvirtual UTM which integrates critical security functions including firewall, intrusiondetection and prevention, anti-virus, anti-spam, and Web content filtering as part of itsManaged Security Services portfolio. Tata Communications has partnered with Fortinet,a pioneer and leading provider of UTM solutions, as the technology supplier for itsvUTM service.

This companys vUTM customers can now look forward to increased network securitywithout having to invest in expensive on-premise security hardware. vUTM delivers the

features of a fully integrated multi-threat security UTM device in the network cloud,enabling tremendous savings in recurring operational costs related to equipmentmaintenance as well as reducing administration complexities.

Businesses that depend on the Internet for operations are struggling to balance the needto adequately address security issues with budget realities, said Adam Rice, VicePresident of Global Managed Security Services for Tata Communications. TataCommunications vUTM service changes the whole cost equation by eliminating the cost

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of customer premise equipment and providing monitoring and management services toenhance the security value beyond what many enterprises are accustomed to. Fororganizations with remote locations requiring secure Internet connectivity, our vUTMservice delivers high value and very low cost of ownership.

vUTM is targeted at customers who require a secure Internet gateway with a preferencefor a hosted security appliance instead of a self-procured and locally installed firewall intheir premises. The physical hardware based on Fortinet security technology is logicallypartitioned into multiple virtual domains with each domain serving as a distinct firewallwith unique policies for that respective customer.

Commenting on the launch of vUTM services in India, Neenu Kumar, Research Analyst,ICT Practice, Frost & Sullivan said, Tata Communications vUTM offering is welltimed to meet the explosive growth in demand in Indias network security market, whichgrew nearly 50% last year to approximately USD $160 million. UTM solutions are acost-effective, integrated approach for security companies networks as security threats

continue to increase in scope and sophistication, and knowledgeable IT staff continues tobe scarce and increasingly expensive.

The difficulties in recruiting and retaining skilled IT security staff make outsourcing to anMSSP a logical and cost-effective option for small, medium, and large enterprises thatrecognize the challenges of blocking the security threats that threaten network-basedbusiness operations.

Tata Communications vUTM service is fueled by four Fortinets FortiGate-5140 carrier-class security systems, which provide a complete suite of security functions at multi-gigabit performance. Each FortiGate-5140 chassis-based system provides virtual domains

(VDOMs), allowing Tata Communications to manage hundreds of customers from onehardware platform and isolate the security services offered to each customer.

With its new virtual UTM service offering, Tata Communications addresses anincreasing demand from enterprises to benefit from true value added services from theirtelco providers, said Patrice Perche, vice president of EMEA at Fortinet. OurFortiGate-5000 systems provide unique virtualization capabilities and carrier-gradesecurity that go beyond other security solutions. By leveraging our virtualized securitytechnology, Tata Communications will be able to offer strong and flexible security thatcan scale to the current and future needs of its customers, thereby increasing theprofitability of their managed security service.

Customers can rely on a single service provider for Internet and security, and have theservice provider take care of the equipment as well. This enterprise-class securitysolution is well suited to secure remote offices of large organizations as it provides asingle solution for comprehensive protection and enables the IT organization (or anMSSP) to centrally manage policies.

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Initially, Tata Communications plans to offer the service in India only to existing IAS(Internet Access Services formerly ILL) customers. This service will be extended toManaged Hosting and Co-location customers in India as well as other regions in the nearfuture.

Using state-of-the-art technology, processes and tools, Tata Communications globalsupport team of industry veterans manage and monitor both premise-based and network-based security solutions 247x365. Backed by aggressive, performance-based ServiceLevel Agreements (SLAs), this firms Managed Security Services support customers inIndia and overseas.

Tata Group Profile

Tata is a rapidly growing business group based in India with significant internationaloperations. Revenues in 2007-08 are estimated at $62.5 billion (around Rs251,543 crore),of which 61 per cent is from business outside India. The Group employs around 350,000people worldwide. The Tata name has been respected in India for 140 years for its

adherence to strong values and business ethics.The business operations of the Tata Group currently encompass seven business sectors:communications and information technology, engineering, materials, services, energy,consumer products and chemicals. The Group's 27 publicly listed enterprises have acombined market capitalisation of some $60 billion, among the highest among Indianbusiness houses, and a shareholder base of 3.2 million. The major companies in theGroup include Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power,Tata Chemicals, Tata Tea, Indian Hotels and Tata Communications.

The Group's major companies are beginning to be counted globally. Tata Steel became

the sixth largest steel maker in the world after it acquired Corus. Tata Motors is amongthe top five commercial vehicle manufacturers in the world and has recently acquiredJaguar and Land Rover. TCS is a leading global software company, with delivery centresin the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Tea is thesecond largest branded tea company in the world, through its UK-based subsidiaryTetley. Tata Chemicals is the world's second largest manufacturer of soda ash. TataCommunications is one of the world's largest wholesale voice carriers.

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In tandem with the increasing international footprint of its companies, the Group is alsogaining international recognition. Brand Finance, a UK-based consultancy firm, recentlyvalued the Tata brand at $11.4 billion and ranked it 57th amongst the Top 100 brands inthe world. Businessweek ranked the Group sixth amongst the "World's Most InnovativeCompanies" and the Reputation Institute, USA, recently rated it as the "World's Sixth

Most Reputed Firm."Founded by Jamsetji Tata in 1868, the Tata Group's early years were inspired by thespirit of nationalism. The Group pioneered several industries of national importance inIndia: steel, power, hospitality and airlines. In more recent times, the Tata Group'spioneering spirit has been showcased by companies like Tata Consultancy Services,India's first software company, which pioneered the international delivery model, andTata Motors, which made India's first indigenously developed car, the Indica, in 1998 andrecently unveiled the world's lowest-cost car, the Tata Nano, for commercial launch byend of 2008.

The Tata Group has always believed in returning wealth to the society it serves. Two-thirds of the equity of Tata Sons, the Tata Group's promoter company, is held byphilanthropic trusts which have created national institutions in science and technology,medical research, social studies and the performing arts. The trusts also provide aid andassistance to NGOs in the areas of education, healthcare and livelihoods. Tata companiesalso extend social welfare activities to communities around their industrial units. Thecombined development-related expenditure of the Trusts and the companies amounts toaround 4 per cent of the Group's net profits.

Going forward, the Group is focusing on new technologies and innovation to drive itsbusiness in India and internationally. The Nano car is one example, as is the Eka

supercomputer (developed by another Tata company), which in 2008 is ranked theworld's fourth fastest. The Group aims to build a series of world class, world scalebusinesses in select sectors. Anchored in India and wedded to its traditional values andstrong ethics, the Group is building a multinational business which will achieve growththrough excellence and innovation, while balancing the interests of its shareholders, itsemployees and wider society.

Tata Group Commitment

From customer to community, the Tata Group invests in resources for the variousmarkets and communities it serves. The Tata Group's philanthropic trusts and globalcommunity initiatives develop and sustain services that promote health and education,leadership and technical training, and arts and sports programs.

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Conducting good business is always good for business. To best serve our customers, wemust advance our commitment to corporate sustainability (CS). Our principles ofCorporate Sustainability are based on the premise of creating collective value forenhancing human, natural, social and financial capital. It seeks to demonstrateaccountability to all stakeholders, and communicates a fundamental belief in the

equilibrium of people, planet and profit. We believe that connecting with initiatives that

greatly impact people and the environment enriches the lives of others and the lives ofour employees.

To leave a positive mark on the world, Tata Communications believes we must grow andnurture new resources for our communities while protecting and conserving our existingresources.

Grow and NurtureAdvancing life is about more than technology, it requires individual investment in thecommunities in which we live and conduct our business. Our global team at TataCommunications rolls up its sleeves to participate in initiatives that nurture and sustainpeople and the environment.

Protect and Conserve

To truly give back, Tata Communications believes we must also work toward "takingless."Our commitment to developing "green technology" initiatives that conserve energy isunwavering. These initiatives enable our customers worldwide to leverage our

communications solutions to reduce their company's carbon footprint.

Key Initiatives

Health and Wellness

Our global team participates in initiatives aimed at providing outreach and care tohomeless children and children living with HIV and AIDS.

Literacy and Education

Opening a new world of communications begins by opening up access to a world ofinformation and opportunity. Our company, along with six other companies in the TataGroup, offers children from low-income families the opportunity to read and own theirown books. Tata Communications and First Book donate thousands of new books to helpcultivate the imaginations of low-income children.

Sustainable Livelihood

Apart from health and education initiatives, Sustainable Livelihood is one of the

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important focus areas of our Community Outreach Programme. It aims at building trust,imparting skills, creating capacities and improving the quality of life for communitiesacross the globe. The delivery model is based on multi-stakeholder partnerships withnational governments and non-profit organizations to identify beneficiaries, providevocational training and implement sustainable income generating mechanisms for the

socio-economically disadvantaged.

Environmental Clean-up Projects

Recognizing the importance of protecting nature, employee volunteers participate inenvironmental clean-up initiatives with children. The project enables our team to connectwith and educate young people about the vital need to protect our environment.

CO2 Emissions Reduction

Helping customers to decrease their reliance on business travel reduces CO2 emission

rates. The Tata Communications Telepresence Exchange service leverages technology toprovide companies with a virtual meeting space that is a cost-effective andenvironmentally responsible alternative to business travel. A growing number ofenterprises leverage our Telepresence Exchange service to conduct virtual businessmeetings and reduce company costs and CO2 emission rates.

KEY ACHIEVEMENTS

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project report - neetish sen

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