Dynamics of Indian Telecom Industry 2009 v8

8/14/2019 Dynamics of Indian Telecom Industry 2009 v8

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Dynamics of IndianTelecom Industry

Research ReportBy

Jyothin Madari


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Executive Summary Third largest telecom network in the world Fastest growing Forecasted CAGR growth

rate of over 15.3% by the end of 2012

Monthly additions of above 8 millionsubscribers

Growth impetus from wireless segment with84% wireless and 16% wired

National teledensity at 22%, rural teledensity

at 7%, while urban at 57% 9 million Internet and 2.5 million broadband

subscribers Six major operators and eight minor operators


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Future Outlook Need for massive investments in infrastructuredevelopment expected to require 330,000network towers from the present 100,000

Decrease in wireline subscriber base however

strong growth in mobile subscriber base Improvements in mobile quality of service, quick

service delivery, affordable pricing plans, and lowerhandset costs.

VAS* - Key revenue stream for mobile operators

Broadband penetration is low => high growthexpected New Technologies paving the way for new services,

additional revenue streams and rural penetration

* Value added-Service


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Market Forces/Growth

Drivers

Subscribers

Infrastructure/Equipment

Burgeoning

MiddleClass

BoomingKnowledge

Sector High GDPGrowth

RisingIncomeLevels

GrowingUrbanization

YoungerPopulation

Handsets

ServiceProviders

Growth

Macro Economic Factors

Industry Specific Factors


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Market Size & Growth Currently valued at $100B Telephone coverage in India rose to 34.5% in

Jan 09 from 33.23% in Dec 08. Growth spurred by fall in tariffs and fall in

handset prices Wireless accounts for nearly 70% of the total

telephone subscriber base

Total telecom subscribers growth rate duringquarter ending March 2009 11.68%

Total wireline subscribers growth rate forquarter ending March 2009 0.15%


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Subscriber BaseTotal Telecom Subscribers (Wireline+Wireless)*

Total Subscribers 429.72 Million

% Growth QoQ 11.68%

Urban Subscribers 309.43 Million (72%)

Rural Subscribers 120.29 Million (28%)

Overall Teledensity 36.98Urban Teledensity 88.66

Rural Teledensity 14.8

* All figures for March end 2009


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Teledensity

20.74 26.88

39.4548.52

66.39

81.06

135

7.02 8.9512.74

18.3126.22

33.23

58

1.57 1.73 1.835.38

9.46 13.13

25

0

20

40

60

80

100

120

140

160

2004 2005 2006 2007 2008 2008 (Dec) 2012

(%)

Urban Total Rural


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Service TypesFixed-line

Mobile

Broadband

Internet Subscribers


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ICT

*

Statistics Fixed Telephone lines per 100

inhabitants : 3.5

Mobile subscribers per 100inhabitants: 18.4

Internet subscribers per 100

inhabitants: 0.8 Broadband subscribers per 100

inhabitants: 0.22

*

Information and Communication Technology


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Subscriber Base

(Fixed-line and Mobile)

40 39 39.42 38 37.9 37.75 37.96

100

150192.87

229 250

325

462

0

100

200

300

400

500

600

2006 Jun-07 Jul-07 Dec-07 Dec-08 Jan-09 2010

NumberofSubscribers(inmillions)

Fixed-line Mobile


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Subscriber Base

(Broadband and Internet)

0.18

1.35

2.343.1

3.87

5.456.22

5

6

8

10.411

12.8513.54

0

2

4

6

8

10

12

14

16

2005

2006

2007

2007

(Dec)

2008

(Jan)

2008

(Dec)

2009

(Mar)

Numbe

rofSubscribers(

inmillions)

Broadband Internet


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Fixed-line Telecom MarketTotal Wireline Subscribers 37.96 Million

% Growth QoQ 0.15%

Urban Wireline Subscribers 27.38 Million (72.13%)

Rural Wireline Subscribers 10.58 Million (27.87%)

Village Public Telephones (VPT) 5.61 Million

Public Call Office (PCO) 6.20 Million

All figures for March end 2009


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Operator wise Market

Share of Fixed-line ServiceUrban+Rural Fixed-line Operators

BSNL

77.30%

MTNL

9.41%

Other

Private

Operators

13.29%

Urban Fixed-line Operators

BSNL

69.00%

Other

Private

18.00%

MTNL

13.00%

Rural Fixed-line Operators

Other

Private

0.35%

BSNL

99.65%


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Mobile Telecom MarketTotal Wireless Subscribers 391.76 Million

% Growth QoQ 12.93%

Urban Wireless Subscribers 282.05 Million (72%)

Rural Wireless Subscribers 109.71 Million (28%)

GSM Subscribers 297.26 Million (75.88%)

CDMA Subscribers 94.50 Million (24.12%)



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Development and

Penetration

3.1 5.0510.5

2237.4

58.5

105.4

180

0.86.4

10.919.1

44.2

85

0

20

40

60

80

100

120140

160

180

200

2000 2001 2002 2003 2004 2005 2006 2007

(millions)

GSM Subscriptions CDMA Subscriptions


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Operator wise Total Market

Share of Mobile ServiceBharati Airtel

23.97%

Reliance18.56%

Vodafone

17.55%

BSNL13.31%

Tata

9.93%

Idea

8.96%

Aircel

4.73%

Others

2.99%


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GSM vs. CDMA

Statistic* GSM CDMAShare of Prepaid 94% 0.7%

Incoming Minutes ofUsage per subscriber permonth

249 192

Outgoing Minutes ofUsage per subscriber permonth

235 164

Outgoing SMS persubscriber per month

30 10

ARPU# $4 $2

# Average Revenue Per User *March End 2009


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Operator-wise MarketShare of GSM

BPL

0.73%

Bharati

31.60%

BSNL

15.71%

Idea

13.08%

Spice

1.39%

Vodafone

23.13%Reliance

6.73%

Aircel

6.22%

MTNL

1.41%


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Operator-wise MarketShare of CDMA

Reliance

55.72%

Tata Teleservices

37.16%

HFCL

0.41%

MTNL

0.32%

Shyam Telelink

0.63%BSNL

5.76%


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Internet Service

Total Internet Subscribers (including Broadband) 13.54 Million

% Growth QoQ 5.30%

Broadband Subscribers 6.22 Million

Wireless Data Subscribers

(i.e. through mobile handsets)

117.82 Million

Total International Bandwidth owned by ISPs 209 GB

Total National Bandwidth owned by ISPs 174GB



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Operator wise MarketShare of ISPs

MTNL

15.69%

BSNL

53.62%

Bharati Airtel Ltd.

8.01%

Reliance

Communications

Infrastructure Ltd.

6.91%

Sify Technologies Ltd.2.99%

Tata Communications

Internet Services Ltd.

2.72%

Hathway Cable &

Datacom Pvt. Ltd.

2.50%

You Telecom Pvt. Ltd.

1.47%

Data Infosys Ltd.

1.83%Others

4.26%


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Technology wise Market Share ofBroadband Subscribers

5.364

0.474 0.2440.042 0.02 0.074

0

1

2

3

4

5

6

DSL Cable

Modem

Ethernet

LAN

Fiber Leased Line Other

Sub

scriberBase(inm

illions)



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Operator wise Market Share ofBroadband Service Providers

BSNL

57%

Bharati Airtel

13%

You Telecom India

Pvt. Ltd.

2%

Sify Limited

2%

Tata Communications

Internet Services Ltd.

4%

MTNL

11%

Hathway Cable &

Datacom Pvt. Ltd.

4%

HFCL Infotel Ltd

1%

Reliance

Communication

Infrastructure Ltd.

2%

Others

4%


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ARPU & Pricing Trend

India has one of lowest mobile tariffs inthe world resulting in low ARPU

ARPU have been on the decline since2004 due to price wars and increasedcompetition in the mobile telecomsector

ARPUs continue to drop by 5% whiletariffs decrease further by 15% Low tariffs building margin pressure on

operators


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Mobile Pricing/TariffsMobile Tariffs in Absolute ter

0.230.22

0.19

0.17 0.16

0.11 0.11 0.11

0.09

0.05 0.050.04

0.030.02

0

0.05

0.1

0.15

0.2

0.25

Belgium

Italy

UK

France

Brazil

Philippines

Taiwan

Argentina

Malaysia

HongKong

Thailand

Pakistan

China

India

USD

Lowest inIndia


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Mobile Pricing/Tariffs

Tariff war has intensified in thepast few months and competition

has reached a new levelThe price war has spread to the

SMS segment as well, with

negative impact on operatorrevenues


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ARPUs are falling

Effective margin/ min 2005

1.25

0.25

1.5

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Cost per

minute

Margin Effective

rate per

minute

Effective Margin/min 2006

0.87

0.08

0.95

0

0.1

0.2

0.3

0.4

0.5

0.6

0.70.8

0.9

1

Cost per

minute

Margin Effective

rate per

minute


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VAS (Value added Services)

More Lucrative for operators and contentproviders as some VAS at 14c make moremoney than voice at 3c4c.

VAS include, SMS, Ring tones, Caller tones Internet Data Access Mobile Commerce On-demand Music, Videos, Animation clips Contests/Voting Gaming Enterprise products (Email, Office, etc.) New Alerts/Match Scores


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VAS Forecast and Growth

VAS

Revenues $500 million (thisincludes texting)

Parties involved Media contentproviders, Mobileoperators andaggregators

VAS

Revenues $10 Billion

Parties involved Media contentproviders, mobileoperators, aggregators,banks, Enterprises

2006

Forecast 2009-2010


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Leading VAS and mobileapplication service providers

Indiagames

OnMobile

Mobile-2-Win

IMImobile

HungamaMobile

Mauj.com

VAS


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Telecom AdministrativeFramework

Total of 22circles 4 Metros 5 A Circles 8 B Circles 6 C Circles

Each circle hasLDCAs (LongDistance ChargingAreas) and SDCAs(Short DistanceCharging Areas)


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Telecom RegulatoryBodies

Government of India

Ministry of Communications &

InformationTechnology

TDSAT DoT TRAI

State ownedoperators

PrivateOperators

License Fees/Spectrum Charges

Timely policy and regulatoryinterventionhas ensured that Sectordevelopment has stayed on track.


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Regulatory Bodies KeyResponsibilities

Agency Key Responsibilities

Department of Telecommunications(DoT)

Policy Formulation, licensing, wirelessspectrum/frequency management

Enforcement of wireless regulatory measurement

Standardization/validation of equipment, R&D, etc.

Telecom Regulatory Authority of India(TRAI)

Mandate for Tariffs, Interconnection, Standards forquality of service

Recommendatory: Licensing Timing, terms &conditions, License revocation, competitionfacilitation, etc.

Telecom Disputes Settlement & AppellateTribunal (TDSAT)

Adjucation and disposal of disputes between serviceproviders and/or a group of consumers


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Upcoming Technologiesand Growth Areas

3G

WiMax

Network Infrastructure

Telecom Equipment Exports

Handsets


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3G

MTNL and BSNL have launched 3Gservices

Other Private players are yet toobtain licenses

Expensive affair for operators to

upgrade to 3G 3G equipment upgrades will be

high


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WiMax

The total base station equipmentmarket is estimated to be between

$50 million and $120 million forWiMax

Projected total WiMax connections

by 2012: 6.9 million


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Network Infrastructure

The industry needs to addadditional capacity to sustain

growth Continuing trend towards import of

telecom equipment

Shared Wireless infrastructure like,share tower services, help reduceoperator costs by 15-18%


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Telecom EquipmentExports

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

2006 2007 2008 2012

(Projected)

(inRs.

Crore)

Exports fueled by localTelecom equipment

manufacturers


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Handsets Market Share

Total (GSM+CDMA)

Others

8.40%

Sony-

Erricson

6.80%

Samsung9.50%

Nokia

53.70%

LG14.40%

Motorola

7.20%

GSMOthers

7.30%

Sony-

Erricson

8.90%

Samsun

g

9.00%

LG

4.40%

Motorol

a

7.80%

Nokia62.60%

CDMAOthers11.50%

Nokia

24.30%

Samsung

11.20%

LG

47.60%


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Feedback/Questions


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Documents

Dynamics of Indian Telecom Industry 2009 v8