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    Price War In Telecom Sector

    In India

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    Telecom India DailyTM

    Topics

    The Journey so far!

    Where it stands today?

    What Next?

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    Telecom India DailyTM

    Organizational changes

    1854:A regular, separate department was opened, when

    telegraph facilities were thrown open to the public.

    Dr. O'Shaughnessy was the first Superintendent of Electric

    Telegraphs in India and later became the first DirectorGeneral.

    1914: World War I, Postal Department and the Telegraph

    Department were amalgamated under a single Director-

    General.

    1st April, 1950: In 1950 the number of Telephone Exchangesabsorbed from princely states was 196.

    The installed capacity of these 196 exchanges was 13,362

    lines with 11,296 working connections.

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    Telecom India DailyTM

    Organizational changes

    1981:Prime Minister Indira Gandhi signed contracts with ofFrance to merge with the state owned Telecom Company(ITI), in an effort to set up 5,000,000 lines per year.

    January 1985: two separate Departments for the Posts andthe Telecommunications were created.

    1986 : Mahanagar Telephone Nigam Ltd. (MTNL) wascreated.

    1989:The Telecom Commission was constituted. January 1997: Telecom Regulatory Authority of India (TRAI)

    was formed. 1st October 2000:Department created BSNL, a new entity to

    operate services in different parts of the country as a publicsector unit.

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    Telecom India DailyTM

    Policy Changes

    1986:Department reorganized the Telecommunication Circles

    with the Secondary Switching Areas as basic units.

    1994 : First National Telecom Policy was introduced and the

    sector was opened up for privatization. 1998: First tariff order issued in thus reforms effective from

    1998.

    1999 : The second National Telecom Policy was introduced to

    take the telecom sector to next level.

    2004 : The policy for Broadband was defined with the aim toincrease the internet penetration in India. Broadband was

    define initially as 128 Kbps which was later changed to 256

    kbps.

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    Telecom India DailyTM

    Market Changes

    1985: First mobile telephone service started on non-

    commercial basis in Delhi.

    1994 : India was divided into 20 telecom circles and today we

    have 23 circles categorized as Circle A, B & C. 1995: GSM entered India. Historic first cell phone-call was

    made by Mobile Net-joint venture between Telstra (Australia)

    & B.K. Modi group. First call was made by Jyoti Basu.

    1996: Tata Teleservices was the first to launch CDMA mobile

    services in India with the Andhra Pradesh circle. The sector was liberalized and private mobile operators began

    their journey.

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    Telecom India DailyTM

    Telecom Growth

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    Telecom India DailyTM

    Topics

    The Journey so far!

    Where it stands today?

    What Next?

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    Telecom India DailyTM

    Indian Telecom Statistics

    In d ia n T e l e co m S ta tis t ic s O c0

    T o t a l t e lep ho ne s u b s c rib er b as e .00000

    O v e r a ll T e le -d en s it y . %0000F ix ed -lin e u s er b a s e .0000

    W i re l es s u s e r b a s e

    ( G S M + C D M A + W L L ( F )) .0000

    G S M S u b s c rib e rs .00000

    C D M A S u bs c ri be rs .00000

    M o n th ly a d d it io n s ( W ire li

    W i re l es s ) .0000

    M o n th ly ad dit io ns (W i re l ine ) - .00 0

    M o n th ly ad d it io ns (W i re l e s s ) .0000B ro a d b a n d s ub s c r ib e r s .00

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    Telecom India DailyTM

    Existing Operators

    Service Providers Technology

    Bharat Sanchar Nigam Limited (BSNL) GSM, CDMA & Fixed Line

    Bharti Airtel Limited (Airtel) GSM & Fixed Line

    Reliance Communications Limited (RCOM) GSM, CDMA & Fixed Line

    Vodafone Essar Limited (Vodafone-Essar) GSM

    Idea Cellular Limited (Idea) GSM

    Tata Teleservices Limited (TTSL) GSM, CDMA & Fixed Line

    Tata Teleservices Maharashtra Limited (TTML) CDMA & Fixed Line

    Mahanagar Telephone Nigam Limited (MTNL) GSM, CDMA & Fixed Line

    Aircel Cellular Limited (Aircel) GSM

    Reliance Telecom GSM

    Loop Mobile Limited (Loop mobile) GSM

    HFCL Infotel Limited (HFCL) CDMA & Fixed Line

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    Telecom India DailyTM

    New PlayersName Operation Started

    Datacom Solutions Pvt. Ltd. Not Yet

    Etisalat DB Telecom Pvt. Ltd. Not Yet

    Loop Telecom Private Ltd. T.N., Orissa, Karnataka, Kerala

    Reliance Communications Limited GSM service launched in all new licensedareas.

    S Tel Ltd. Not Yet

    Sistema Shyam Teleservices T. N., Kerala, Kolkata, West Bengal and Bihar.

    Tata Teleservices Limited Chennai, Karnataka, Kerala, Orissa, T.N.,Andhra Pradesh

    Unitech Wireless Pvt. Ltd. Not Yet

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    Telecom India DailyTM

    M & As (1998-2005)

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    Telecom India DailyTM

    M & As (2005-2008)

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    Telecom India DailyTM

    Market Statistics 2008-09Category Revenue

    (Bn)Revenue (Bn)Growth (%)

    FY 2007-08 FY 2008-09 y-o-y

    Fixed line 266.92 246.49 -7.6

    Wireless 766.08 952.71 24.4

    NLD 97.32 144.32 48.2

    ILD 115.32 150.00 30

    Broadband 53.59 75.00 39.9

    VSAT 6.00 6.50 8.3

    RadioTrunking

    0.38 0.40 5.2

    TOTAL 1305.61 1575.42 20.7

    T e l e c o m S e r v i c e s P e r f 0 0

    .000

    .0

    .999

    00

    .0 .9.000 .00

    .00

    .00 0

    .000

    .000

    .0.0.00- .0

    .00 0

    .00

    - .0 0 00

    .0 0

    .000 0

    .000 0

    .000 0

    .000 0

    .0000 0

    .0000 0

    F ix e d l i n eW i r e l e s s N L D I L D B r o a d b a n dV S A T R a d i o

    T ru n k in

    Re

    venue

    Bn

    F Y -0 0 0 00 0F Y -0 0 0 00 0G r o w t

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    Telecom India DailyTM

    New Initiatives

    Reasons for high growth are changes or initiatives taken in

    the recent years.

    1. One Indian Plan launched in 2006 heated up the price war inIndia.

    2. New Licenses given by Government in 2008 added up in

    ongoing competition 120 new licenses awarded.

    3. Lowest tarrifs in the world with local calls reaching 10

    paise/min and STD tarrifs dropping to 50 paise/min from hightarrifs of 17 Rs/min in 1994

    4. Reduction in Handset prices has made mobile a common

    weapon tool.

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    Telecom India DailyTM

    Topics

    The Journey so far!

    Where it stands today?

    What Next?

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    Telecom India DailyTM

    Market Forecast - 2012

    Total subscribers to reach 700 million.

    Wireless users will reach 640-650 million.

    Fixed line will dwindle around 45-50 million.

    Telecom services revenue will reach 54 USD billion. Rural sector will be the key driver with potential of increasing

    tele-density from 15 % today to 40% in coming years.

    Data revolution to be fuelled by 3G & WiMAX with 25-30

    million 3G subscribers and WiMAX touching user base of 8-10

    million.

    Internet users to reach 45 million; Broadband users to reach

    25-30 million and Mobile internet users to reach 196 million.

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    Telecom India DailyTM

    Challenges for Operators

    0

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    J u n '0 0S e p '0 0D e c '0 0M a r '9 9J u n '0 0S e p '0 0D e c '0 0M a r '9 9J u n '0 0S e p '0 0D e c '0 0M a r '9 9

    s.

    G S M A R P UC D M A

    Falling ARPUDecline in Tariffs

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    Telecom India DailyTM

    Innovation will be key

    New Innovative ideasand services will hold thekey for telecom operatorsto generate revenue and

    sustain in this competitivemarket. Convergence of Mobile,

    fixed line & internet willgive rise to new services.

    Fixed Line will be saved

    by Broadband, IPTV andVoIP services.

    Mobile will see newtechnologies like 3G, 4G(LTE) and WiMAX.

    Mobile VAS will evolve with new technologies

    and an operator with good service portfolio will

    command the market

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    Telecom India DailyTM

    Thanks!

    Sources DOT

    TRAI COAI & AUSPI

    Ernest & Young

    IMRB

    BDA

    Telecom India Daily (internal research)

    ..open internet