Transcript Slide 0

Passive Infrastructure Sharing
BSNL's Pitch Document
2009 | New Delhi
Wireless market is set to boom in the next 5 years
Growth will be heavily front-loaded with ~50% new adds in next two years
India wireless connections growth (past and projected)
Subscribers (Mn)
800
~50% of total
net adds during
2009-13
682
633
583
600
531
456
400
342
233
200
145
6
11
28
47
75
0
Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-081 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13
Heavily front-loaded growth in the wireless market has
necessitated faster time to market for all operators
Source: COAI, AUSPI, TRAI, Census data, literature survey, BCG analysis
1
The growing wireless space is likely to see intensified
competition in the next 2 years
New Licensees set to rollout services
In partnership
with Unitech
As SwanEtisalat
In partnership with
Shyam Telelink
Incumbent players on large scale
expansion mode
Expansion to
new circles
Launch of
GSM services
Expansion to
new circles
Launch of
GSM services
Increasing competition puts pressure on margins and
forces operators to lower their cost to serve
2
At the same time, wireless ARPU is projected to decrease
going forward
ARPU expected to decrease by ~7% p.a. over the next 5 years
Average ARPU
250
200
-7%
150
100
211
191
179
169
160
2011
2012
2013
50
0
2009
2010
Declining ARPUs will lead operators to reduce their cost to
serve to protect their margins
1. Includes all mobility revenues, including Enterprise wireless CUG
Source: TRAI, Literature survey, Analyst reports, BCG analysis
3
BSNL can help operators address the challenges of the
changing industry dynamics
Your Requirements
• Lower cost to serve
• Low cost of network rollout
• Low cost of network
operations
• Reduce upfront capex
investment
• Low upfront capital
commitment; opex model
• Enable faster time to market
• First to reach new subscribers
• First to reach potentially high
ARPU locations
Our Value Proposition
1• Low infrastructure rental fees and low pass-
through expenses
• Rentals lower than the market average
• Pre-existing anchor tenancy decreases
pass-through expenses
2• Nationwide presence
• Network across 21 circles
• Presence in dense urban as well as remote
rural areas
• Presence in circles that will see high
number of new subscribers
3• Ready for tenancy
• All towers ready for sharing
• Technologically compatible for all services
4
BSNL Infrastructure at a glance
Tower Portfolio
December 2009 - 38,000 towers
December 2013 - 87,500 towers
Type of Towers
GBT = 67%, RTT = 33%
Presence
21 Circles across India (except Delhi and Mumbai)
Current Tenancy
1.1 (with no external tenant)
Type of Coverage
Balanced 50-50 split between urban and rural BTSs
Financing of operations
All tower rollout funded through internal reserves
Our Brand Perception
Transparency in our billing and operations
5
1
Sharing BSNL's passive infrastructure will help operators
lower the cost of network roll-out and operations
Expenses borne by the operator while installing BTS
Typical costs for
own buildout
Cost of land
Cost of
passive
infrastructure
R&M cost
Energy costs
(diesel and
power)
Total cost
• Rs. 4-5 lakhs for site
space in a semi-urban
area
Hire from others2
• Rs. 5,000-10,000 as
site rental per month in
a semi-urban area
Hire from BSNL
• 50% savings vis-à-vis market
• Most BSNL sites are owned and
have no implied rental
• Rs. 25-30 lakhs for a GBT • Rs. 25,000 – 40,000 for • 10%-15% lower than the
industry leader
a GBT / month
• Included in passive infra rental
• Rs. 30,000 - 40,000 per
tower per year
• Included in passive
infra rental
• Rs. 60,000 - 80,000 per
month
• Rs. 60,000 - 80,000 per • 50% savings vis-à-vis market
month
• All BSNL sites have anchor tenant
which reduces energy costs
• Rs. 29-35 lakhs upfront
• Rs. 7.5 – 10 lakhs per
year
• No upfront investment
• Rs. 11 – 16 lakhs1 per
year
• No upfront investment
• 25% - 40% savings on annual
expenditure
1. Assuming 10% depreciation of land cost and capex to calculate yearly allocation of cost 2. Speciafically stands for independent IP with no anchor tenant
6
1
BSNL offers you the best value proposition in the market –
large number of towers across India at an affordable price
INDICATIVE
Low
Low
Quippo
Quippo
GTL
GTL
Passive
infra
rental/
slot
BSNL
Passive
infra
rental/
slot
BIL
BSNL
BIL
Indus
Indus
RTIL
High
High
Low
High
Number of towers
RTIL
Low
High
Number of circles in which IP
provides service
BSNL charges rentals comparable to the independent IP
but provides operator with bulk volume across India
Source: Based on current industry prices as received by BSNL in its EOI solicited for hiring towers from the market
7
2
BSNL has a strong nationwide coverage that extends across
urban and rural area
BSNL's network is present
in 21 Telecom Circles in
India (except Delhi and
Mumbai)
BSNL covers 55%-60% of
India's population
BSNL's network covers
602 districts (96% of all
districts) in India
BSNL covers ~75% of all
villages with more than
5,000 and ~48% of all
villages with more than
1,000 population
Operator can leverage the flexibility of an urban/rural
rollout as it's operations warrant
8
2
BSNL's extensive tower base will help you roll-out network in
target geographies faster
BSNL outpaces competition in terms of
capacity in high growth circles
No. of sharable towers
8,000
Competition
BSNL
Growth Growth criteria Circle Names
criteria (Net adds)
Very low
growth
Less than 5 mn
Jammu & Kashmir,
Himachal Pradesh, North
East, Chennai
Low
growth
Between 5-10 mn
Punjab, Orissa, Kerala,
Haryana, Assam,
Kolkata, Delhi, Mumbai
Medium
growth
Between 10-20 mn
Rajasthan, West Bengal,
Tamil Nadu, Karnataka
High
growth
Between 20-25 mn
Madhya Pradesh, UP
West, Maharashtra,
Gujarat, Andhra Pradesh
Very
High
growth
Greater than 25 mn UP East, Bihar
6,000
4,000
2,000
0
Very low
Low growth
Medium
High growth
Very high
growth circles
circles
growth circles
circles
growth circle
Note: Competition stands for WTTIL-Quippo in this illustration; Projected net adds based on income levels and teledensity between 2009-13
9
3
BSNL towers are "ready for occupancy"
~98% of towers have 1 or 2 BSNL BTS already installed; infrastructure already in place
Number of sharable towers by existing number of BSNL BTS
25,000
6,215
95
Number of sharable
towers with 2 BSNL
BTS
Number of sharable
towers with 3 BSNL
BTS
20,865
20,000
14,271
15,000
10,000
5,000
284
0
Number of sharable
towers with 0 BSNL
BTS
Number of sharable
towers with 1 BSNL
BTS
1. Old data used for 7 states, currently does not exclude USO towers
Note: Assumes that all BTS installed are GSM BTS.
Source: BSNL (Asset Validation Drive)
10
BSNL can be the choice infrastructure partner for your
organization
11