Industry note on Telecom Sector in India

By Group 15:

Mukesh Kumar Yadav (031/02) R Vishal (038/02) Tejinder Ammla (055/02) Yogesh Taak (065/02)

Regulation and Government Policy

LIRNEasia's Telecommunications Regulatory Environment (TRE) index, which summarises stakeholders' perception on certain TRE dimensions, provides insight into how conducive the environment is for further development and progress. The most recent survey was conducted in July 2008 in eight Asian countries, including Bangladesh, India, Indonesia, Sri Lanka, Maldives, Pakistan, Thailand, and the Philippines. The tool measured seven dimensions: i) market entry

ii) iii) iv) v) vi) vii)

access to scarce resources interconnection tariff regulation anti-competitive practices universal services quality of service, for the fixed, mobile and broadband sectors

The results for India, point out to the fact that the stakeholders perceive the TRE to be most conducive for the mobile sector followed by fixed and then broadband. Other than for Access to Scarce Resources the fixed sector lags behind the mobile sector. The fixed and mobile sectors have the highest scores for Tariff Regulation. Market entry also scores well for the mobile sector as competition is well entrenched with most of the circles with 45 mobile service providers. The broadband sector has the lowest score in the aggregate. The low penetration of broadband of mere 3.87 against the policy objective of 9 million at the end of 2007 clearly indicates that the regulatory environment is not very conducive.

Evolution
1851 First operational land lines were laid by the government near Calcutta 1881 Telephone services introduced in India 1883 Merger with postal system 1923 Formation of Indian radio Telegraph Company 1932 Merger of ETC and IRT into Indian Radio and Cable Communication Company 1947

Nationalization of all foreign telecommunication companies to form the posts, telephone and telegraph, a monopoly run by the governments ministry of communications

1985 Department of telecommunication established, an exclusive provider of domestic and long-distance services that would be its own regulator 1986 Conversion of dot into two wholly government owned companies the VSNL for international telecommunication and MTNL for services in metropolitan areas 1997 Telecom regulatory authority created

Telecommunication in India

In August 1995, Chief Minister of West Bengal, Shri Jyoti Basu ushered in the cell phone revolution in India by making the first call to Union Telecom Minister Sukhram. Sixteen years later 4th generation services were launched in Kolkata.

With a subscriber base of more than 929 million, the Mobile telecommunications system in India is the second largest in the world and it was thrown open to private players in the 1990s. GSM was comfortably maintaining its position as the dominant mobile technology with 80% of the mobile subscriber market, but CDMA seemed to have stabilised its market share at 20% for the time being. By May 2012 the country had 929 million mobile subscribers, up from 350 million just 40 months earlier. The mobile market was continuing to expand at an annual rate in excess of 40% coming into 2010. The country is divided into multiple zones, called circles (roughly along state boundaries). Government and several private players run local and long distance telephone services. Competition has caused prices to drop and calls across India are one of the cheapest in the world. The rates are supposed to go down further with new measures to be taken by the Information Ministry. In September 2004, the number of mobile phone connections crossed the number of fixed-line connections and presently dwarfs the wire line segment by a ratio of around 20:1. The mobile subscriber base has grown by a factor of over a hundred and thirty, from 5 million subscribers in 2001 to over 929 million subscribers as of May 2012. India primarily follows the GSM mobile system, in the 900 MHz band. Recent operators also operate in the 1800 MHz band. The dominant players are Airtel, Reliance Infocomm, Vodafone, Idea cellular and BSNL/MTNL. There are many smaller players, with operations in only a few states. International roaming agreements exist between most operators and many foreign carriers. The government allowed Mobile number portability (MNP) which enables mobile telephone users to retain their mobile telephone numbers when changing from one mobile network operator to another. India is divided into 22 telecom circles.

Number of Subscribers
India has the fastest growing telecom network in the world with its high population and development potential. Airtel, Idea, Reliance, Tata Docomo, BSNL, Aircel, Tata Indicom, Vodafone, MTNL, and Loop Mobile are other major operators in India. However, rural India still lacks strong infrastructure. India's public sector telecom company BSNL is the 7th largest telecom company in world. Telephony introduced in India in 1882. The total number of telephones in the country stands at 960.9 million, while the overall teledensity has increased to 79.28% as of May 31st, 2012 and the total numbers of mobile phone subscribers have reached 929.37 million as of May 2012. The mobile tele-density has increased to 76.68 % in May 2012. In the wireless segment, 8.35 million subscribers were added in May 2012. The wire line segment subscriber base stood at 31.53 million. Indian telecom operators added a staggering 227.27 million wireless subscribers in the 12 months between Mar 2010 and Mar 2011 averaging at 18.94 million subscribers every month. To put this into perspective, China which currently possesses the world's largest telecommunications network added 119.2 million wireless subscribers during the same period (March 2010 - March 2011) averaging 9.93 million subscribers every month (a little over half the number India was adding every month). So, while India might currently be second to China in the TOTAL number of mobile subscribers, India has been adding nearly twice as many subscribers EVERY month until March 2011. Mobile teledensity increased by almost 18.4 percentage points from Mar 2010 and Mar 2011 (49.60% to 67.98%) while wire line subscriber numbers fell by a modest 2.2 million. This frenetic pace of monthly subscriber additions means that the Indian mobile subscriber base has shown a year on year growth of 43.23%. According to recent reports, India was purported to overtake China to become the world's largest mobile telecommunications market by the year 2013. It was also predicted that by 2013, the teledensity will shoot up to 75% and the total mobile subscriber base would be a colossal 1.159 billion.

Telecom Circle Delhi Gujarat & Daman & Diu Haryana Himachal Pradesh Jammu and Kashmir Karnataka Kerala & Lakshadweep Kolkata Madhya Pradesh & Chhattisgarh Maharashtra & Goa (excluding Mumbai ) Mumbai North East Orissa Punjab Rajasthan Tamil Nadu(including Chennai)

Wireless Subscriber base in mm (May 12) 42.95 54.32 23.00 7.41 6.57 56.63 34.51 25.25 53.30 71.00 35.93 8.76 26.27 31.17 49.52 78.96

Uttar Pradesh(East) Uttar Pradesh(West) & Uttarakhand West Bengal (Excluding Kolkata)

77.74 55.12 46.79

Market Share of Players

Services Offered
With the growth of telecom services, telecom equipment and accessoriesmanufacturing has also grown in a big way. Indian Telecom sector, like any other industrial sector in the country, has gone through many phases of growth and diversification. Starting from telegraphic and telephonic systems in the 19th century, the field of telephonic communication has now expanded to make use of advanced technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. 4G was recently launched in Kolkata by Airtel. Day by day, both the public players and the private players are putting in their resources and efforts to improve the telecommunication technology so as to give the maximum to their customers.

Company analysis and strengths of companies

Here is an analysis of the top Indian companies in the telecom sector Bharti Airtel

Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. The BhartiGroup has a diverse business portfolio and has created global brands in thetelecommunication sector. Airtel comes from Bharti Ai rtel Limited, Indias largestintegrated and the first private telecom services provider with a footprint in all the 22 telecom circles. Bharti Airtel since its inception has been at the forefront of technology and has steered the course of the telecom sector in the country with its world class products and services. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBUs) - Mobile Services, Airtel Tele media Services& Enterprise Services. The mobile business provides mobile & fixed wireless services using GSM technology across 22 telecom circles while the Airtel Tele media Services business offers broadband & telephone services in 95 cities and has recently launched India's best Direct-to-Home (DTH) service, Airtel digital TV. The Enterprise services provide end-to-end telecom solutions to corporate customers and national & international long distance services to carriers. All these services are provided under the Airtel brand. They also offer an integrated suite of telecom solutions to their enterprise customers, in addition to providing long distance connectivity both nationally and internationally. They have recently forayed into media by launching their DTH and IPTV Services. All these services are rendered under a unified brand "Airtel". The company also deploys, owns and manages passive infrastructure pertaining totelecom operations under its subsidiary Bharti Infratel Limited. Bharti Infratel owns 42%of Indus Towers Limited. Bharti Infratel and Indus Towers are the two top providers of passive infrastructure services in India. Company shares are listed on The Stock Exchange, Mumbai (BSE) and The National Stock Exchange of India Limited (NSE). It is the largest cellular service provider in India, with over 187.30 million subscribers at the end of June 2012.

!dea

In 2000, Tata Cellular was a company providing mobile services in Andhra Pradesh. When Birla-AT&T brought Maharashtra and Gujarat to the table, the merger of these two entities was a reality. Thus Birla-Tata-AT&T, popularly known as Batata, was born and was later rebranded as IDEA. Then Idea set sights on RPGs operations in Madhya Pradesh which was successfully acquired, helping Batata have a million subscribers, and the licence to be the fourth operator in Delhi was clinched. In 2004, Idea (the company had by then been rechristened) bought over the Escorts groups Escotel gaining Haryana, Uttar Pradesh (West) and Kerala and licences for three more UP (East), Rajasthan and Himachal Pradesh. By the end of that year, four million Indians were on the companys network. In 2005, AT&T sold its investment in Idea, and the year after Tatas also bid good bye to pursue an independent telecom business. And Idea was left only with one promoter, the AV Birla group. Modis joint venture partner, Telekom Malaysia, invested Rs 7,000 crore for a 14.99% stake in Idea. Just around then, Ideas subsidiary, Aditya Birla Telecom sold a 20% stake to US-based Providence Equity Partners for over Rs 2,0000 crore. Idea's subscriber base as at the end of August 2011 according to the statistics, is totalling to 98,441,714 or 16.09% (approx.) of the total mobile connections in India. Idea leads all other telecom operators in India in the MNP race, with a net gain of 1,031,380 subscribers as on 31 August 2011. Idea also leads all other competitors in having the most active subscriber base, scoring highly on the VLR statistics. Visitor Location Register (VLR) is basically a temporary database of the subscribers who have roamed into the particular area, which it serves. Each base station in the network is served by exactly one VLR; hence a subscriber cannot be present in more than one VLR at a time.

BSNL Bharat Sanchar Nigam Limited is a state-owned telecommunications company headquartered in New Delhi, India. It is the largest provider of fixed telephony and fourth largest mobile telephony provider in India, and is also a provider of broadband services. However, in recent years the company's revenue and market share plunged into heavy losses due to intense competition in Indian telecommunications sector. BSNL is India's oldest and largest communication service provider (CSP). It had a customer base of 95 million as of June 2011. It has footprints throughout India except for the metropolitan cities of Mumbai and New Delhi, which are managed by Mahanagar Telephone Nigam (MTNL).

Subscriber Growth
The following table illustrates the gradual increase in mobile subscriber additions (in millions) in India since January 2002.

Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Annual Addition (in millions) 5.23 17.49 19.49 27.86 64.14 85.27 113.26 178.25 227.12 148.32

Reference
1. 2. www.wikipedia.org www.trai.gov.in

Mobile phone user distribution by Metro and by Circles

Latest State Wise Mobile Users in India -2012 (Figures till 2012) are as follows (Source : Cellular Operators Association of India) No. of Mobile Users Till January 2012 8,589,731 8,340,459 2,698,690 4,585,267 2,364,118 759,210 27337475 3240766 6,002,506 2,793,532 3,714,218 2,818,843 1,202,151 469,909 980,278 1,424,832 22,647,035 4,400,664 3,248,707

City/Circle Metros Delhi

Operators Bharti Airtel Vodafone Essar MTNL IDEA Aircel Ltd Etisalat DB Telecom Loop Mobile Vodafone Essar MTNL Bharti Airtel IDEA Aircel Limited Etisalat DB Telecom Videocon Uninor Aircel Cellular Ltd Bharti Airtel

Delhi Mumbai

Mumbai Chennai

Vodafone Essar BSNL Chennai Kolkata Bharti Airtel Vodafone Essar BSNL Aircel Cellular Ltd IDEA Uninor Loop Mobile Videocon

Kolkata All Metros A Circle Maharashtra Vodafone Essar IDEA Bharti Airtel BSNL Aircel Limited Etisalat DB Telecom Uninor Loop Mobile Videocon Vodafone Essar IDEA Bharti Airtel

2,213,517 1625378 11,488,266 3,801,989 4,445,740 2364543 1,776,039 1,210,597 1,698,321 2,348 2,966 15,302,543 76,775,319 12,659,140 14,972,162 9449972 5805799 1,205,671 35,051 4,080,333 357 13,681 48,222,166 15,761,617 7,713,978 6814699

Gujarat

BSNL Etisalat DB Telecom Videocon Uninor Aircel Limited Loop Mobile A.P. IDEA Bharti Airtel Vodafone Essar BSNL Aircel Limited Uninor Etisalat DB Telecom Videocon Bharti Airtel IDEA (Spice Comm.) Vodafone Essar BSNL Aircel Limited Uninor Etisalat DB Telecom Videocon Loop Mobile Vodafone Essar

Karnatka

T.N.

3,881,473 32,712 1,234,333 3,052,199 591428 73 39,082,512 9,623,900 17,900,408 6784329 8,739,849 1,957,801 3,142,932 34868 10,934 48,195,021 15,278,989 5,528,696 6614514 6,291,725 1,731,093 1,823,105 29,712 11,987 618 37,310,439 10,021,991

Aircel Limited BSNL Bharti Airtel IDEA Uninor Etisalat DB Telecom Videocon A Circle B Circle Kerala IDEA Vodafone Essar Bharti Airtel BSNL Aircel Limited Uninor Etisalat DB Telecom Videocon IDEA (Spice Comm.) Bharti Airtel BSNL Vodafone Essar Etisalat DB Telecom Aircel Limited Loop Mobile Uninor

17467670 7,481,418 10,017,951 2,018,098 1,677,247 31,915 1,179,228 49,895,518 222,705,656 7,402,840 5,825,894 3501206 6,572,750 2,415,121 722,923 12,907 238,083 26,691,724 5,194,458 6926186 4684810 4,454,905 18,440 873,883 147 319

Punjab

Haryana

IDEA Vodafone Essar Bharti Airtel BSNL Etisalat DB Telecom Videocon Aircel Limited Loop Mobile Uninor IDEA Bharti Airtel BSNL Vodafone Essar Aircel Limited Uninor Etisalat DB Telecom Loop Mobile Videocon Vodafone Essar BSNL Bharti Airtel IDEA Aircel Limited Uninor

U.P.(W)

U.P.(E)

22,153,148 3,431,364 4,343,430 2275808 2968127 15,171 852,165 583,521 93 205 14,469,884 9,995,876 6,625,502 4564944 9,464,037 2,038,307 4,560,885 47,133 8 8827 37,305,519 14559374 9739987 14,019,449 7,054,244 2,365,414 7,054,485

Etisalat DB Telecom Videocon Rajasthan Vodafone Essar Bharti Airtel BSNL IDEA Etisalat DB Telecom Aircel Limited Loop Mobile Videocon Uninor IDEA Bharti Airtel BSNL Vodafone Essar Etisalat DB Telecom Aircel Limited Videocon Loop Mobile Uninor BSNL Bharti Airtel Vodafone Essar Dishnet Wireless

M.P.

W.B. & A & N

50,246 16,722 54859921 9,409,930 13768431 5,526,435 3,762,139 35,987 1,405,751 400 10,570 383 33,920,026 13,315,056 9,602,627 4,355,040 3,790,520 78190 834,563 1,158,819 270 883 33,135,968 3,481,079 9,034,631 11,618,854 3,062,163

IDEA Uninor Videocon B Circle C Circle H.P. Bharti Airtel BSNL IDEA Dishnet Wireless Vodafone Essar STel Videocon Uninor BSNL Bharti Airtel Dishnet Wireless ABTL (IDEA) Vodafone Essar STel Uninor Etisalat DB Telecom Videocon Loop Mobile BSNL

1,975,171 3,640,447 20,152 32,832,497 255368687 1777668 1,677,735 429,235 693,185 422,962 454924 79,015 61 5,534,785 5,638,904 16,816,652 5,082,942 5,476,438 5,799,023 2,029,624 4,571,564 41,222 20299 364 45477032 4,177,445

Bihar

Orissa

Bharti Airtel Dishnet Wireless Vodafone Essar IDEA STel Uninor Loop Mobile Videocon Assam BSNL Bharti Airtel Dishnet Wireless Vodafone Essar IDEA STel Loop Mobile Uninor Bharti Airtel BSNL Dishnet Wireless Vodafone Essar IDEA STel Loop Mobile Uninor

N.E.

6,003,168 2,759,507 2,514,974 976,758 833,665 1347034 966 10,670 18624187 1,499,315 3,565,349 3,704,649 1,951,967 287,682 79,992 325 127 11,089,406 2,194,615 1,410,938 2,371,230 916493 191,918 32,083 41 51 7,117,369

J&K

BSNL Bharti Airtel Dishnet Wireless Vodafone Essar IDEA Uninor

C Circle

938,529 2,026,209 1,575,250 685,929 162,560 40 5,388,517 93231296

All India Additions in January telecom regulations and the 2G scam.. loopholes Milestones in the sector over the last decade bsnl 4G and future of telecom and value added services

January 2012 648080958 8443849

Spectrum allocation and pricing Define terms specific to this sector Revenue for companies segment and state wise, margins Problems faced by industry players Marketing strategies of companies

Future regulation and tax impications of Vodafone case.. entry of foreign players in the industry
Technical parttower business Bandwidth, frequenxy how calls are made. Technical stuff.. Network and services. Huawei, siemesnt, cisco etc After this, we have 3g, voip etc After this Airtel and other companies.. market share and players at each level.. How did each company start.. bsnl, reliance, bharti etc Industry analysis .. porters etc Compare companies.. all data.. 1. Bahrti Airtel Performance at a glance 2. Reliance Communications Performance at a glance Vodafone India Performance at a glance 3. Segmentation of Wireless Services (as on 31st March 2011) Concentration of Telecom Sector 4. Market Share of Wireless Subscribers (as on 31st March 2011)

5. Market share of Wireline Service Providers (as on 31st March 2011) 6. Market Share of Rural Wireless Subscribers (as on 31st March 2011) Market share of Rural Wireline Service Providers (as on 31st March 2011) Subscriber Base of Wireless (GSM and CDMA) Services from 31st March 2006 to 31st March 2011 http://www.telecomindiaonline.com/indian-telecom-market-report-2011-12.html