T e l e c o m m u n i c at i o n s

December 2008

www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Contents
• Telecom Industry Overview
• Telecom An Investment Attracting Sector
• Regulatory Framework and Its Impact
• Emerging Trends in Telecom Market
• Major Players in Telecom Sector
• Growth Avenues

 www.ibef.org
 Telecom Industry
Overview

www.ibef.org

 Te l e c o m In d u stry Ov e rview
December 2008

Indian Telecom Industry – A Lucrative Option

Facts
• Total telecom subscribers – 325.79 million (June 2008)
• Tele density – 28.33 per cent (June 2008)
• Q
 uarterly addition of mobile subscribers (April–June
2008) – 25.80 million
• T
 elecom subscribers annual growth rate (2007–08)
– 44.79 per cent
• One of the biggest telecom markets in the world
• Average Revenue Per User (ARPU) for GSM (June
2008) – US$ 5.6

Source: Exchange rate as on 30 June 2008; Average exchange rate for the year 2007–08; Voice&Data;

 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Indian Telecom Industry – A Lucrative Option

Facts
• More GSM subscribers than fixed line subscribers
• T
 elecom equipment market (2007–08) –
US$ 23,699 million
• Handset market (2007–08) – US$ 5,962 million
• Expected mobile subscriber base (2010) – About
500 million (i.e., more than one phone for every
household)

Source: Exchange rate as on 30 June 2008; Average exchange rate for the year 2007–08; Voice&Data;

 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Telephony services (mobile and basic) and

Internet services dominate the Indian telecom services

• T
 he Indian telecom industry generated revenues Revenues of Indian Telecom Industry: 2002-10
of approximately US$ 32 billion in 2007–08 with a 2009-10 (E) 43
2006-07
growth rate of 60 per cent in 2007–08 over 2006–07. 20
2005-06 15

• It witnessed a CAGR of approximately 29 per cent 2004-05 11

from 2002–03 to 2007–08. 2003-04 10

2002-03 9

• T
 he CAGR is expected to stabilise at 16 per cent 0 10 20 30 40 50
between 2007–08 and 2009–10. US$ billion

Sources: Average exchange rate for the year 2007–08; TRAI Report

 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Telephony services (mobile and basic) and

Internet services dominate the Indian telecom services

• Indian telecom services sector can be divided Telecom Services in India

predominantly into basic, mobile and Internet Internet
PMRTS
services. It also comprises smaller segments, such as VSATs

radio paging services,Very Small Aperture Terminals Radio Paging

GMPCS
(VSATs), Public Mobile Radio Trunked Services Basic Services
(PMRTS) and Global Mobile Personal Communications Mobile Services

by Satellite (GMPCS).
• T
 he mobile services in India are growing more than
basic wireline services.

Source:TRAI

 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Private players account for highest subscriber base growth

in the basic telephony services segment

Basic Services Market Share of Basic Services Segments

in India (2007–08)
• B
 asic services include fixed wireline and wireless in
local loop (WLL-fixed).
12%
• F ixed wireline services hold a major market share
of 88 per cent in basic services.

88%

n Fixed n WLL (F)

Source:TRAI

 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Private players account for highest subscriber

base growth in the basic telephony services segment

• G
 overnment-owned Bharat Sanchar Nigam Ltd. Market Share of Wireline Service Operators
in India (2007–08)
(BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL)
are the two largest operators in the wire line BSNL
79
82
segment, whereas Bharti Airtel Ltd. is the leader in
wireless segment. MTNL 9
9

• MTNL has presence in Delhi and Mumbai, whereas Other

11
Private
BSNL covers the rest of the country. Players
9

0 10 20 30 40 50 60 70 80 90
• T
 hough private players, such as Bharti Airtel and Percentage
n As of 30 June, 2007 n As of 30 June, 2008
Reliance, have registered notable growth, BSNL
still dominates the segment in terms of wire line
subscriber base.

Source:TRAI

 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Reduction in tariffs have led to a constant reduction in the Average Revenue

Per User (ARPU). The gradual decline in ARPU, remains well supported by the
increase in subscriber base.
• T
 he ARPU for GSM service in India is much higher ARPU in India
10
than that for CDMA service. The ARPU per month

US$ per month

8 7.1 6.6 6.5 6.6
5.7
for GSM services has declined from US$ 7.1 in June 6
4 4.9 4.4
2007 to US$ 5.6 in June 2008, while that for CDMA 2
4.1 3.9 3.3

services have fallen from US$ 4.9 to US$ 3.2 during 0

Q2’07 Q3’07 Q4’07 Q1’08 Q2’08

the same period. GSM CDMA

• T
 he Minutes of Usage (MoU) for GSM has been rising
as compared to that for CDMA. The MoUs for CDMA MoU per subscriber per month in India

service has declined from 462 in June 2007 to 354 in 600 505

MoU (per subscriber per month)

464 493
June 2008, whereas that for GSM has increased from 500 476 462
400 462
476 to 505 during the same period. 300
413
375 364 354
200
100
0
Q2’07 Q3’07 Q4’07 Q1’08 Q2’08
GSM CDMA

Source: TRAI Report; and exchange rate as on 30 June 2007 and 30 June 2008, respectively

10 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

The mobile subscriber base in India is likely to reach

500 million by 2010.

• T
 he subscriber base grew to 325.79 millions on June Telecom Subscriber Base in India
2008, registering a growth of approximately 45 per 2008 325.79

cent over last year. The subscriber base grew at a 2007 225.01

CAGR of 43.6 per cent from June 2004 to June 08. 2006 153.42

2005 104.22
• T
 eledensity in India is still low in India as compared 2004 76.53

to that in some countries. As on June 2008, India had 0 50 100 150 200 250 300 350

a teledensity of 28.33 per cent as compared to the Subscribers in million

previous year’s figure of 19.86 per cent.

Teledensity in India
30
25 28.33
19.86

Per cent
20
15 13.96
10 9.61
7.04
5
0
2004 2005 2006 2007 2008

Source:TRAI

11 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Private players account for highest subscriber base

growth in the basic telephony services segment

• Wireless services have led to a significant growth Market Share* of Wireless** Operators in India
(as of June 2008)
in the Indian telecom industry.
• Currently, there are 12 players–Bharti Airtel,Vodafone, 1%
2% 1%
Reliance, Tata Teleservices, Idea, Aircel, Spice, BSNL, 4%
24%
MTNL, BPL, HFCL and Shyam Telelink–active in 9%

this segment.
9%

• As compared with 2006–07, the subscriber base of

most wireless service providers has increased leading
to an increase in their revenues. 15%
18%

• T
 he subscriber base of Bharti Airtel, a leader in this 17%
market, increased from 42.70 million in 2006–07 to
69.38 million in 2007–08, followed by Reliance (50.79 n Bharti n Reliance n Voda fone
million subscribers) and Vodafone (49.20 million n
n
BSNL
Aircel
n Idea
n Spice
n TATA
n MTNL
subscribers). n Others

Source:TRAI

12 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

India is one of the few countries in the world to have more GSM subscribers
than fixed-line subscribers.

GSM preferred to CDMA segment by a large margin in Indian Mobile Service Market Share
(as on June 2008)
terms of subscriber numbers.

26% 74%

n CDMA n GSM

Source:TRAI

13 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

GSM preferred to CDMA in number of additions to subscriber base

• B
 harti Airtel has the largest market share in the GSM segment. During 2007–08, out of the total subscriber base
of 212.51 million, the private players accounted for more than 80 per cent, whereas, the public sector operators
(BSNL and MTNL) accounted for the remaining share (20 per cent).
• Reliance Communications dominates the Indian CDMA mobile services segment with a subscriber base of 42.71 million.

Market Share GSM Service Providers Market Share CDMA Service Providers
(as on June 2008) (as of June 2008)
0.38% 0.45% 0.15%
1%
2%
2% 6.17%
4%
6%
32.65%

13%

35.41%

57.44%
18%

23.5%

n Bharti Airtel n Vodafone n BSNL n Reliance n Tata Teleservices n BSNL

n Idea n Aircel n Reliance n MTNL n HFCL n Shyam Telelink
n Spice n MTNL n BPL

Source:TRAI

14 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Various other services emerged by leveraging the telecom services industry

Radio Paging Services
Radio paging services were launched in India in 1995.
These services, however, could not compete well
with cellular services in general and SMS technology
in particular and is shrinking continuously. At present,
all but four radio paging service providers have been
marginalised in the Indian market.
Very Small Aperture Terminals (VSATs)
At present, there are 9 VSAT service providers in India
including BSNL, Bharti Airtel, Hughes Communication
and HCL Comnet. The number of subscribers of VSAT
services increased on a quarterly basis by 8,473 to
89,868 in June 2008. The market for VSAT services
registered a 10.41 per cent growth for the quarter
ending June 2008. Hughes Communication is the market
leader, with a market share of 30 per cent, followed by
HCL Comnet with 27 per cent.
Source:TRAI

15 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Various other services emerged by leveraging the telecom services industry

Public Mobile Radio Trunked Services (PMRTS)
PMRTS services have been showing a negative growth.
PMRTS’ subscriber base decreased by 2.99 per cent
during the quarter ending June 2008. High license fee
for this service leaves low margin for services providers,
thereby inhibiting its growth. In India, 12 operators
are offering this service to total of more than 35,000
subscribers.
Global Mobile Personal Communication by
Satellite (GMPCS)
GMPCS2 services were launched in India in 1999. These
services allow a subscriber to communicate with others
from any point on earth through a hand-held terminal.
Moreover, the telephone number remains unchanged,
irrespective of the subscriber’s location. Iridium India
Telecom Limited is the pioneer in GMPCS services in
India. The Government of India has restricted foreign
equity participation in this segment to 74 per cent.
Source:TRAI
16 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Despite a slow penetration rate, Internet services segment

embodies huge growth potential in India

• In India, there has also been significant growth in the Internet Subscribers: 2000-2008
subscriber base for wireless internet, which stood 14

Internet Subscriber (in million)

at 75.97 million for the year 2007–08 with mobile 12 11.66
10 9.22
internet penetration at 1.8 per cent. More than 56 per 8 6.94
cent of Indian mobile subscribers own a web-enabled 6
3.42 3.64 4.55 5.55
4 3.04
handset at present. 2
0
• T
 he total number of Internet subscribers increased at 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

a CAGR of approximately 21.17 per cent from 2000–

01 to 2007–08.

Source:TRAI

17 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Despite a slow penetration rate, Internet services

segment embodies huge growth potential in India

• T
 he total number of internet subscribers grew from Top Five Internet Service Providers
by Market Share (as on June 2008)
9.22 million in June 2007 to 11.66 million in June
2008, primarily attributed to an increase in broadband
4.84%
subscriber base from 2.42 million in June 2007 to 4.38 7.07%
million at the end of June 2008.
7.47%
• B
 SNL is the biggest player in this market with 5.94
million subscribers, followed by MTNL, Bharti Airtel, 50.96%
Reliance and Sify Technologies. 16.49%

• Internet services can also be accessed through mobile

phones (CDMA and GSM). Bharti Airtel is the leader
in wireless Internet operators with a market share of
approximately 24 per cent. n BSNL n MTNL n Bharti Airtel
n Reliance n Sify

Source:TRAI

18 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

The sales for GSM-based handsets have been growing in India

as compared to CDMA-based handsets

• T
 he handset market in India, consisting of mobile and Mobile Handset Market in India
fixed handsets, registered a growth of 33 per cent with 2007-08 5,761

the sales volume of 95.6 million over 2007–08. 2006-07

4,750
2005-06 3,231
• T
 he expansion of wireless networks and an increase in 2004-05 1,966
subscriber base, both in urban and rural areas, led to a 2003-04 1,610

boost in the sale of mobile handsets across India. The 0 1,000 2,000 3,000 4,000 5,000 6,000

mobile handsets sale grew by 12 per cent and that of VALUE US$ million

fixed handsets declined by 41 per cent over 2007–08.

• Out of the total number of handsets sold in 2007–08,
68.3 million were based on GSM technology and the
remaining (27.3 million) on CDMA. The sales for GSM
handsets grew by 34 per cent as compared to 28 per
cent for CDMA phones.

Source:VoicenData.com,TRAI

19 www.ibef.org
 Te l e c o m In d u stry Ov e rview
December 2008

Nokia, Sony Ericsson, Samsung, and Reliance mobile phones are most popular
across the country

• Nokia continues to dominate the handsets market. Market Share of GSM and CDMA Handset
Manufacturers: 2006–07
Its market share increased from 53.6 per cent in
1.20% 1.00%
2006–07 to 62.5 per cent in 2007–08. Sony Ericsson
has the second highest market share (12.8 per cent) 3.50%
5.00%
in 2007–08.
6.20%

• LG, Motorola, ZTE and Haier witnessed a decline in 6.20%

their market share in 2007–08 as compared to that in 62.50%
2006–07. 12.80%

n Nokia n Sony Ericsson n Samsung

n LG n Motorola n ZTE
n Huawei n Haier n Others

Source:Voice & Data

20 www.ibef.org
 TELECOM – AN IDEAL
INVESTMENT SECTOR

www.ibef.org
21
 Te l e c o m – In v e st m e nt Attr ac tin g Sec to r
December 2008

India – An Ideal Investment Destination

• World’s largest democracy
• Independent judiciary
• Skilled and competitive labour force
• F ifth-largest telecom network in the world; second-
largest among the emerging economies after China
• On an average, approximately 8 million users are
added per month, making India the world’s fastest
growing wireless services market
• Liberal Foreign Investment Regime: FDI limit increased
from 49 per cent to 74 per cent; the rural telecom
equipment market also open to large investments
• Among the countries offering the highest rates of
return on investment

Source:TRAI

22 www.ibef.org
 Te l e c o m – In v e st m e nt Attr ac tin g Sec to r
December 2008

India – An Ideal Investment Destination

• T
 he large untapped potential in India’s rural markets
revealed by 9.21 per cent teledensity in rural markets
as compared to the national level of 28 per cent.
• T
 he government promoting telecom manufacturing by
providing tax sops and establishing telecom-specific
Special Economic Zones
• F ully repatriable dividend income and capital invested
in telecom equipment manufacturing

Source:TRAI

23 www.ibef.org
 Te l e c o m – In v e st m e nt Attr ac tin g Sec to r
December 2008

Since India’s telecom sector trails that of other Asian economies

by about 10 years, growth is a certainty.

• India is currently the second-largest mobile market in Proposed Investments By Telecom Companies
the world in terms of mobile subscribers. In India (US$ Billion)

• T
 he Indian telecom market generated revenues of BSNL 1.3
Idea 2.4
approximately US$ 32 billion in 2007–08. Further, Reliance 5.7
the industry is expected to register a CAGR of Aircel 5

approximately 16 per cent from 2007-08 to 2009–10 Quippo Telecom Infrastructure

(QTIL)
3

and scale to US$ 43 billion by 2010. Vodafone 6

• It is also expected that by 2012, fixed line revenues

will reach US$ 12.2 billion and mobile revenues will
reach US$ 39.8 billion.
• Several foreign companies are making large
investments in India..

Source:TRAI

24 www.ibef.org
 Regulatory Framework
and its Impact

www.ibef.org
25
 Reg u l ato ry F r a m e wo r k and i ts I mpact
December 2008

Regulatory framework provides level-playing field for all operators

• T
 he Department of Telecommunications (DoT) of the
Government of India is the main governing body for
the industry
• T
 elecom Regulatory Authority of India (TRAI) assists
the Government of India to take timely decisions and
introduce new technologies
• T
 he Telecom Disputes Settlement and Appellate
Tribunal (TDSAT) was also established in the same
year.

Source: Regulate Online, Fitch Report and TRAI

26 www.ibef.org
 Reg u l ato ry F r a m e wo r k and i ts I mpact
December 2008

Indian Telecom Industry Framework

WPC
Spectrum Management
TRAI
DoT Independent Regulator
Indian Telecom
Licensor and Frequency Industry
Management for Telecom Framework TDSAT
Disputes Settlement Body
GoT–IT
Handles Ad–hoc Issues

Integrated Fixed Line Private CDMA GSM Operators

ILD Players
BSNL Reliance Hutch/VodafoneAirtel/
MTNL VSNL TTSL BhartiIdea/Spice

Source: Regulate Online, Fitch Report and TRAI

27 www.ibef.org
 Reg u l ato ry F r a m e wo r k and i ts I mpact

Regulatory framework provides level-playing field for all operators

Unified Access Licensing Regime (UALR)
The establishment of the UALR (2003) eliminated
the need for separate licences for different services.
This regime allowed players to offer both mobile and
fixed-line services under a single licence after paying
an additional entry fee. The regime does not take into
account the national and international long-distance
services and Internet access services.
Between February and March 2008, DoT granted 120
new licences to provide Unified Access Services to
various companies, including Datacom Solutions Pvt.
Ltd., Aska Projects Ltd., Swan Telecom Pvt. Ltd., Loop
Telecom Pvt. Ltd. and S Tel Ltd.

28 www.ibef.org
 TELECOMMUNICATION
Reg u l ato ry F r a m e wo r k and i ts I mpact
December 2008

Regulatory framework provides level-playing field for all operators

Universal Service Obligations (USO)
The USO policy was implemented along with NTP ’99
to widen the reach of telephony services in rural India.
All telecom operators are bound to contribute
five per cent of their revenues to this fund. This system
was put in place to bridge the wide gap between
urban and rural teledensity, bringing it down from the
current 31 per cent. Initially, only basic service providers
were under the purview of USO. Later, its scope was
expanded to include mobile services also. Although it
increases the cost burden for telecom companies, USO
helps in building the telecommunication infrastructure in
rural areas.

29 www.ibef.org
 Reg u l ato ry F r a m e wo r k and i ts I mpact
December 2008

Important regulations and their impact on the Indian telecom industry

Unified Access Service License Regime (UASL) Impact of Policy Change on Indian Telecom Industry
16 250

cellular tariff (cents per minute)

• T
 he establishment of the UALR (2003) eliminated

number of subscribers (million)

200
12
the need for separate licences for different services. Telecom 150
8 Tariff Order
This regime allowed players to offer both mobile and WLL WLL UASL
100
4 CPP Removal of ADC
fixed-line services under a single licence after paying NTP’99
Lowering of ADC 50

0 0
an additional entry fee. The regime does not take into 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

account the national and international long-distance Total Cellular Subscribers Cellular Tariff

services and Internet access services.

• B
 etween February and March 2008, DoT granted
120 new licences to provide Unified Access Services
to various companies, including Datacom Solutions
Pvt. Ltd., Aska Projects Ltd., Swan Telecom Pvt. Ltd.,
Loop Telecom Pvt. Ltd. and S Tel Ltd.Universal Service
Obligation (USO)

Source: Regulate Online, Fitch Report and TRAI

30 www.ibef.org
 TELECOMMUNICATION
December 2008

Important regulations and their impact on the Indian telecom industry

Universal Service Obligations (USO)
The USO policy was implemented along with NTP ’99
to widen the reach of telephony services in rural India.
All telecom operators are bound to contribute
five per cent of their revenues to this fund. This system
was put in place to bridge the wide gap between
urban and rural teledensity, bringing it down from the
current 31 per cent. Initially, only basic service providers
were under the purview of USO. Later, its scope was
expanded to include mobile services also. Although it
increases the cost burden for telecom companies, USO
helps in building the telecommunication infrastructure in
rural areas.

31 www.ibef.org
 Reg u l ato ry F r a m e wo r k and i ts I mpact
December 2008

Important regulations and laws passed

DoT is the main body formulating laws and

regulations for the Indian telecom industry.

ILD services Intra-circle

were opened to merger guidelines Measures to
BSNL was competition Number
Private players Independent were established boost rural
established portability
were allowed regulator, TRAI, Calling Party telephony
by DoT was proposed
in Value Added was established Go-ahead Pays (CPP) was
(pending)
Services to CDMA implemented
technology
1994 1999 2002 2003 2004 2005 2008

1992 1997 2000 Internet 2006

telephony
initiated Unified Access
Broadband Policy 2004
Reduction Licensing (UASL) 3G policy
National was formulated—
NTP-99 led of license regime was FDI limit was announced,
Telecom targeting 20 million
to migration introduced
Policy
fees subscribers by 2010 increased from 49 spectrum
from high-cost to 74 per cent auction
(NTP) was fixed licence Reference
formulated Interconnect awaited
fee to low-
cost revenue order was
sharing regime issued
Source: TRAI; 2) Fitch Report ILD-International Long Distance

32 www.ibef.org
 KEY TRENDS IN THE
TELECOM INDUSTRY

www.ibef.org
33
 E m ergi ng Tr e n d s i n T e l e com Mar ket
December 2008

MERGERS AND ACQUISITIONS (M&A)

The market is witnessing several M&A activities that
are resulting in consolidations in the industry. This trend
has assisted companies in expanding their reach in
the Indian telecom market to offer better services to
customers.
Source:TRAI and Grant Thornton India
Recent Mergers and Acquisitions in the Indian
Telecom Industry
Etisalat – Swan Telecom
Emirates Telecommunications Corp. acquired 45 per
cent stake in Swan Telecom Pvt. Ltd. by paying US$ 900
million.
NTT DoCoMo – Tata Teleservices
NTT DoCoMo, the Japanese phone company bought
26 per cent stake in Tata Teleservices by paying US$ 2.7
billion.
RCom – Yipes Holdings
Reliance Communications Ltd. acquired US-based Yipes
Holdings Inc., a leading provider of Ethernet services in
US for US$ 300 million.
Idea – Spice
Idea Cellular acquired 48.2 per cent stake in Spice
Communications in order to expand its services in
Punjab.

34 www.ibef.org
 E m ergi ng Tr e n d s i n T e l e com Mar ket
December 2008

FDI in the Indian Telecom Sector

The Indian government allows FDI of up to 74 per cent, FDI in Telecommunication Sector
subject to licensing and security requirements, in the 2008-09 (till July 08) 315

following categories: 2007-08 1261

2006-07 478
• Basic and cellular services 2005-06 624

• National/international long distance 2004-05 129

2003-04 116
• Value-added services such as PMRTS and GMPCS
0 300 600 900 1200 1500

• Radio paging service US$ million

• Internet services (providing service gateway)

• Infrastructure providers (Category-II)

Source:TRAI and Grant Thornton India

35 www.ibef.org
 E m ergi ng Tr e n d s i n T e l e com Mar ket
December 2008

FDI in the Indian Telecom Sector

The Indian government allows FDI of up to 100 per cent
in the following categories:
• Manufacturing of telecom equipment
• Internet services (not providing international
gateways)
• Infrastructure providers providing dark fibre, right of
way, duct space, tower (IP Category-I)
• Electronic Mail
• Voice Mail

Source:TRAI and Grant Thornton India

36 www.ibef.org
 Growth Avenues

www.ibef.org
37
 G rowth Av e n u e s
December 2008

India presents a host of opportunities for telecom companies

3G Services Enterprise
Telecom Services 3G

The Indian government plans to auction the spectrum

for 3G services by inviting bids from domestic as well Rural
Telephony
WiMAX

as foreign players. The 3G spectrum is among the major Growth

Avenues

investment opportunities and is expected to attract Value Added Infrastructure

Services Sharing
investments worth US$ 8–10 billion during 2008–11.
Virtual Private Managed
Network Services

International and foreign players can enter this segment

through joint-ventures with Indian companies with
a stake of not more than 74 per cent. They will also
have to pay an additional entry fee of US$ 328 million
to acquire Unified Services Access Licence (USAL).
Companies such as AT&T and NTT DoCoMo are
planning to enter in this sector.

Source:TRAI, CII-Yankee Study

38 www.ibef.org
 G rowth Av e n u e s
December 2008

India presents a host of opportunities for telecom companies

Worldwide Interoperability for Microwave Access
(WiMax)
WiMax has been one of the most significant
developments in wireless communication in the recent
past. Since this mode of communication provides
network access in inaccessible terrains at a speed of
more than 4 Mbps, it is expected to be a major factor
in driving telecom services in India, especially the
wireless services. Thus, it will lead to the increased use
of telecom services, Internet, value added services and
enterprise services.

Source:TRAI, CII-Yankee Study

39 www.ibef.org
 G rowth Av e n u e s
December 2008

India presents a host of opportunities for telecom companies

Managed Service
Managed service is another segment that is attracting
telecom companies. On account of the rapidly growing
subscriber base, service providers find it difficult to
manage their infrastructure and network. In such
cases, they completely or partially outsource their
infrastructure or network management operations.
Virtual Private Network
Virtual Private Network is a private data network that
provides connectivity within closed user groups (CUG)
via public telecommunication infrastructure. It is similar
to leasing/owning lines and yet getting exclusive access.

Source:TRAI, CII-Yankee Study

40 www.ibef.org
 G rowth Av e n u e s
December 2008

India presents a host of opportunities for telecom companies

Enterprise Telecom Services
Telecom service providers are increasingly targeting
enterprises by providing them dedicated services. Some
of the key services include VoIP, dedicated telecom
communication systems; IT infrastructure-enabled
unified communication services, etc. This segment is
expected to witness major developments as the demand
for enhanced telecom infrastructure is increasing along
with the growth in the information and communication
technology (ICT) industry.

Source:TRAI, CII-Yankee Study

41 www.ibef.org
 G rowth Av e n u e s
December 2008

India presents a host of opportunities for telecom companies

Value-Added Services Value-Added Services in India (2007–08)

The VAS industry in India generated revenue of US$ 4%

1.2 billion in 2007–08 and is expected to reach US$ 4.0 10%

billion by 2015.
17%
Major growth drivers for VAS in India 44%

• Increasing focus on localisation and availability of

content in local languages 25%

• D
 evelopment of M-Commerce applications, such as
booking tickets and making bill payments
• Availability of mobile TV and development of shows,
n Person to Person SMS n Ringtone Download
n Person to Application & Application to Person SMS
n Games & Data n Others (MMS etc.)

films, etc., for the same

Source:TRAI, CII-Yankee Study and IMRB Report

42 www.ibef.org
 G rowth Av e n u e s
December 2008

India presents a host of opportunities for telecom companies

• Availability of complete subscriber data has helped
in reaching niche audience leading to a growth in
advertising revenue through M-Marketing
• D
 evelopment of video-based applications, such as
video SMS and podcasts

Source:TRAI, CII-Yankee Study and IMRB Report

43 www.ibef.org
 G rowth Av e n u e s
December 2008

Value-Added Services and Rural Telephony

hold large market potential in India

Rural Telephony Urban-Rural Disparity in India

60
• Under the Bharat Nirman Programme, the 57.7

50 49
government will invest US$ 2 billion, from 2008

Teledensity (%)
40 38
to 2009, to set up about 100,000 community
30 26.2
service centres in rural areas to provide broadband 21.3
28.3

20 19.9
connectivity. 10.4
12.2 14.3 12.9
10 7.0 9.1 9.2
8.2 3.6 4.3 5.1

• With the teledensity in rural areas at less than 10 per 0

2.9
0.7 0.9 1.2 1.5 1.7 1.7 1.9 5.0

cent against the national teledensity of approximately 2000 2001

Urban
2002 2003 2004

Rural
2005 2006 2007

Total
2008

28 per cent, there seems to be huge untapped

potential for mobile phone penetration in rural India.

Source:TRAI, CII-Yankee Study and IMRB Report

44 www.ibef.org
 TELECOMMUNICATION
December 2008
DISCLAIMER
This presentation has been prepared jointly by the India
Brand Equity Foundation (“IBEF”) and Evalueserve.com
Pvt. Ltd., EVALUESERVE (‘authors’).
All rights reserved. All copyright in this presentation
and related works is owned by IBEF and the Authors.
The same may not be reproduced, wholly or in part in
any material form (including photocopying or storing
it in any medium by electronic means and whether or
not transiently or incidentally to some other use of this
presentation), modified or in any manner communicated
to any third party except with the written approval of
IBEF.
 This presentation is for information purposes only.
www.ibef.org
45
While due care has been taken during the compilation
of this presentation to ensure that the information
is accurate to the best of the Author’s and IBEF’s
knowledge and belief, the content is not to be
construed in any manner whatsoever as a substitute for
professional advice.
 The Author and IBEF neither recommend or endorse
any specific products or services that may have been
mentioned in this presentation and nor do they assume
any liability or responsibility for the outcome of
decisions taken as a result of any reliance placed in this
presentation.
Neither the Author nor IBEF shall be liable for any
direct or indirect damages that may arise due to any act
or omission on the part of the user due to any reliance
placed or guidance taken from any portion of this
presentation.