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Telecom Industry
High on Opportunity
March 2005
Telecom
India - An Overview
Market and Growth Potential
Players
Opportunities
Why India?
Contact in India
March 2005
Telecom
Population
Over 1 bn
States/UTs
35
Geographical Area
3.3 mn sq kms
Languages recognised
22
Business language
English
Per Capita Income**
US$ 534
GDP**
US$ 650 bn
**(at factor cost & at current prices)
1USD=43.54 INR (as on July 4, 2005)
March 2005
Source:CSO Statistics
India - Fast pace Growth
 Largest democracy
 4th largest economy by PPP index
 6th largest energy consumer
 ForEx reserves skyrocket from US$ 42 bn (2001) to
US$ 133 bn (February, 2005)
 GDP growth to continue between 6-8%
 3rd largest economy by 2050: Goldman Sachs
 Leading in IT & ITES
 Oil & Gas and Biotechnology sunrise industries
March 2005
India - Leading the world
 Hero Honda - largest manufacturer of motorcycles
 Moser Baer - among the top three media manufacturers
in the world
 Pharmaceutical Industry - 4th largest in world
 Walmart, GAP, Hilfiger sources more than
USD 1bn worth apparel from India
 100 Fortune 500 have set R&D facilities in India
including GE, Delphi, Eli Lilly, HP, Heinz and Daimler
Chrysler
March 2005
Telecom
India - An Overview
Market and Growth Potential
Players
Opportunities
Why India?
Contact in India
March 2005
Life Cycle Stage of Indian Telecom

State regulated
firms

Strategy heavily
influenced by
Government and
Regulators



Corporate values
based on public
interest
Limited customer
choice
Identity crisis
Rumblings
Equilibrium


Technological
advances lead to
substitutes

Traditional
assumptions
challenged

Competitors
find niche or die
out
Niche players evolve
/ Call-back operators
provide service

Marketing and
sales focus

Industry settles

Greater
emphasis on
shareholder
value

Regulators formed

Competition begins

An argument for
‘Strategic
Partnerships’



Regulator vs
Provider conflict
Increasing
competition

Losing key
competencies
Focus on
customer
satisfaction
Threats of
privatisation
National Telecom
Policy, 1994
Upto
1994
1994
New Telecom
Policy, 1999
19951996
1997
1998
1999

Fully adjusted
marketplace

No distinction
between
incumbents and
challengers

Wide range of
customer choice

Normal market
forces apply

Industry
consolidates

Mobile fixed
crossover
Unified Licensing
Regime
2000
Foreign Promoter Exits – Bell Canada,
British Telecom, Millicom, Shinawatra,
Swisscom, Telecom Italia, Telekom
Malaysia, Telia, Telstra, Vodaphone
March 2005
Dynamic
competition
Refocus
Indian Promoter Cash-Outs –
HFCL, Max, RPG, Usha
2001
2002
2003
2004
Foreign Promoter Exits
– Firsy Pacific, TIW,
Vodaphone
Indian Promoter Exits
– RPG, Escorts
Indian telecom– on the cusp of paradigm shift
• Revenue to increase 3 times in the next 5 years
• Current teledensity of 8.8 % set to increase to 20% in the next 5 years beating
Government targets by 3 years
• Growth rate about 2.5 million subs per month
• Mobile subscriber base has surpassed the fixed lines
250.0
23-25
199
Total
200.0
Mobile
Revenues
150.0
164
138
130
108
100.0
9
93
50.0
10
28
5.0
-
0.0
2002
March 2005
20.0
10.0
48
50
25.0
15.0
78
72
30.0
2003
2004
2005E
2006E
2007E
Telecom Market
 7th largest telecom network in the world
Size (2003)
2010 (projected)
US$ 9 billion
US$ 23 billion
 Telecom network growth rate
30%
 Fixed lines (Dec, 2004)
44.76 million
 Wireless connections (Dec, 2004)
48 million
March 2005
Telecom Services Market
% Contribution to Telecom Service Revenue FY
2003
Wireline
12%
3%
GSm
CDMA
46%
18%
Domestic Long
Distance
International Long
Distance
2%
19%
Data
Share in total revenue of
Over next
5-8 years
Wireline services
to fall from half to 30%
Wireless services
to rise to half
Data revenue
to rise from 2% to 8%
March 2005
Switching Infrastructure
Other Private
Operators 16%
MTNL 10%
74% BSNL
Switching capacity of
fixed network
60 million
As on September 2003
March 2005
Transmission Infrastructure
Optical fibre base
0.5 million route km
March 2005
Microwave base
0.15 million route km
Telecom Infrastructure - Enormous Scope
Urban teledensity
18.2%
Rural teledensity
1.5%
High on Growth
Bound to spread into rural India
March 2005
Rising Teledensity & Telephone Subscribers
Sot
• India is targetting 250 million users by 2007
• India needs $30 billion to meet a target of one phone for every five people
by 2010
• Total telecom revenues expected to almost triple from
US$ 9 billion in 2002 to US$ 23-25 billion by 2007.
March 2005
Telecom Equipment Market
2004 - 08 (estimated)
Telecom equipment market size
Telecom handset market
size
March 2005
US$ 19.4 billion
US$ 8.4 billion
The Mobile Market
•Subsciber base :
•GSM
•CDMA
Almost 1.5 million wireless
subscribers added every month
37.37 mn
11mn
 Number of networks(GSM)
70
Number of cities covered(GSM) 2000
March 2005
Telecom
India - An Overview
Market and Growth Potential
Players
Opportunities
Why India?
Contact in India
March 2005
Service Providers
Hutch
Reliance
Bharti
BSNL
GSM
service
providers
BPL
IDEA
Hexacom
Aircel
Spice
Escotel
MTNL
Tatas
Reliance
CDMA
service
providers
HFCL
March 2005
Shyam
Telecom
India - An Overview
Market and Growth Potential
Players
Opportunities
Why India?
Contact in India
March 2005
India - An attractive and lucrative destination
Sectorwise inflow of Telecom FDI in %
0%
0%
4%
Basic Telephone Service
Cellular Mobile Telephone Service
Radio Paging Service
24%
E-Mail Service
VSAT Service
Cable TV Network+Internet
Satellite Telephone Service
Radio Trunking Service
51%
Manufacturing & Consultancy
1%
Holding Companies
1%
0%
2%
Other Value Added Services
Automatic Route
1%
0%
16%
(1991-2003) FDI in Telecom
20% of total FDI
March 2005
US$ 2 billion
related to telecom
Huge Demand Potential
Country/ Market Teledensity
India
8.50%
China
32%
Malaysia
57%
Korea
116%
Low teledensity levels indicate a huge untapped market.
March 2005
Invest in India
Intra-Circle and Acquisition Guidelines
provides increasing opportunities
for investor stakes
March 2005
India outshining China
India Vs China in comparable years of service
30
China
India
25
20
In millions
15
10
5
0
1
2
3
4
5
6
7
8
In the 9th year of wireless operation
China
6.8 million
India
28 million
March 2005
9
Telecom
India - An Overview
Market and Growth Potential
Players
Opportunities
Why India?
Contact in India
March 2005
India Advantage
India -an emerging destination for software, IT enabled
services and tourism
Share of the services sector in GDP to rise to 60% by
2020
March 2005
Demographic Advantage
By 2020
Working
age
population
to rise
to 65%
March 2005
Urban
population
to rise
to 40%
30-40 mn
people
join
middle
class
every
year
National Telecom Policy (NTP) - 1999
Migration from fixed to revenue share license fee regime
Liberalised long distance sector
Impact of NTP-99 on mobile subscriber uptake
March 2005
Policy Advantage
 FDI limit increased from 49% to 74%.
 India needs US $30 bn to increase tele-density to 20% by 2010
 100% FDI permitted under automatic route in the
manufacturing sector
Virtually complete deregulation
 Unified Access Service License
 Interconnection Usage Charge (IUC)
 Broadband Policy announced. Targets 20 million broadband
subscribers by 2010.
 Exemption from customs duty for import of MSCs(Mobile
Switching Centres)
March 2005
Telecom
India - An Overview
Market and Growth Potential
Players
Opportunities
Why India?
Contact in India
March 2005
Contact in India
Confederation of Indian Industry
249 -F, Sector 18
Udyog Vihar Phase IV
Gurgaon 122015
Haryana, India
Tel 0091 124 5014060-67
Fax 0091 124 5014080/5013874
E mail [email protected]
March 2005