Welcome. . . to the world of

TELECOM

Break Ground. . .The history of telecommunication began with the use of smoke signals and drums in Africa, the Americas and parts of Asia. In the 1790s the first fixed semaphore systems emerged in Europe however it was not until the 1830s that electrical telecommunication systems started to appear.

In india, it started with innovation from Modi telstra ‘mobile net’. The company was a joint venture between Inida’s Modi group and australian telecom giant telstra. At present the company has been acquired by Bharti airtel ltd and is part of the Airtel brand.

Evolution . . . 18th Century – It was all started by Chappe Brothers in France when they established the first commercial semaphore systems between two locations near Paris. The idea was then backed up by Napoleon, spreading it around in the cities of France, Italy, Germany and Russia. This was the time when CODE BOOKS were introduced. The last operational semaphore system went out of business in 1860.

1876 - Alexander Graham Bell invents the telephone.

1877 - Western Union has first telephone line in operation between Somerville, MA and Boston.

1878 - First telephone directory, New Haven, CT, and had 21 listings.

1881 - Mr. Eckert who ran a telephone company in Cincinnati said he preferred the use of females to males as operators. "Their service is much superior to that of men or boys. They are much steadier, do not drink beer nor use profanity, and are always on hand." 1892 - Amon Strowger, discovered “Necessity is the mother of Invention.”

1914 - Underground cables link Boston, NYC and Washington.

1925 - Bell Telephone Laboratories founded. 1.5 million dial telephones in service out of 12 million phones in service.

1935 - First telephone call around the world. About 6700 telcos in operation.

1937 - Bell introduces the Model 300 improved handset.

1958 - AT&T introduces datasets (modems) for direct connection.

1960 - AT&T installs first electronic switching system in Morris, IL. There are now 3299 telephone companies.

February 1996 - Congress passed the 1996 Telecommunications Act which requires FCC to develop 80 new rulemakings within a six-month period leading to increased competition is all aspects of telecommunications. "Central-offi ce implemented coin phones"

Native History. . . July 1935 – India’s first cellular service was first introduced in West Bengal by Modi Telstra's MobileNet service.

1992 – Pvt. Players were allowed in Value Added Services.

1994 – National Telecom Policy was Formulated.

1997 – Independent regular, TRAI, was established.

1999 - NTP-99 led to migration from high-cost fixed license fee to low-cost revenue sharing regime.

2000 – BSNL was established by DOT.

2002 – IILD services was opened to competition.

2003 – CPP was implemented. 2003 – UASL was introduced.

2004 – Intra circle merger guidelines were established.2004 – Broadband Policy 2004 was formulated.

2005 – Attempted to boost rural telephony. 2006 – Number portability was proposed. 2007 – Decision on 3G service.

Past and Present. . .

AP telcomAadinath telecomAircelAirtelASC Enterprises LtdBANGALORE TELECOMBSNLBPLCommon southVodafoneIdeaRelianceShyam telecomTata teleservicesVSNL

The 7 Players. . .The Big Boys of Indian Telecom

Players PresenceSubscribe

r Base(Mn)

Promoters

Bharti Airtel Pan India 74.78 Manoj Kohli

Reliance Communication

Pan – India 54.91 Anil Dhirubhai Ambani

Vodafone Essar 17 Circles 52.76 Vittorio Colao

BSNL 21 Circles 38.49Govt

subsidiary

Idea Cellular 12 Circles 29.28

Tata Teleservices Pan – India 29.18Own

subsidiary

Aircel 10 Circles 13.13 Rohit Chandra

Why Mad rush for telecom?Large number of additions in telecom subscribers

Low teledensity (depicting large untapped potential)

TelecomAdvantage

225.21206

140.398.4

7653

19.9

5.17.0

9.112.8

18.3

0

50

100

150

200

250

2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 (asof June2007)

Sub

scrib

ers

(in m

illion

)

0

4

8

12

16

20

24

Tel

eden

sity

(in

per

cent

)

Telecom Subscriber Base Teledensity

Declining Tariff. . . Rising Revenue. . .

Rapid Growth . . .

Emanating players. . .Players What’s with them

DATACOM Videocon subsidiary.

UNITECH New estate with primary biz being real estate.

SISTEMA Russian operator, hold a stake in shyam telecom.

SWAN TELECOM Etisalat picked 45% stake here.

RELIANCE COMM Looking at Pan – India, Gsm Operation.

TATA TELESERVICESLooking at Pan – India, Gsm Operation.

Reasons for affray. . . Luring stats - Average growth of 7.9% (2002 – 2008).

Falling handset prices.

Demand for VAS and Broadband services among Youths.

Rising Income Level.

Rapid Urbanization.

Methods Espoused to Beat the Heat. . .

Airtel – Focus on core competencies and outsource the rest.

Reliance – Provide telecommunication services at a price of Post card.

Vodafone – Growth at any Price.

Tata Teleservices - provides existing Tata users who have completed 6 months of usage to upgrade to a better cellphones.

Aircel – selects INTEC to support market growth.

Professionals Speaks. . .

“We knew the market would grow, but certainly not to as large as it today”.

“It must be said that between 1995 and 2000, the viability of the sector was not fully established”.

“We have succeeded in putting in place a unique business model in India”.

“Compared to the other countries, India has three times the number of operators with one – third the spectrum per operator”.

“Indian mobile operators through sustained investments have covered a large population. With the world’s lowest tariffs, a subscriber can be perfectly mobile at around Rs. 60/month”.

“Tele – density in India is still significantly lower than China which implies greater potential going forward”.

“The potential size of the Indian market has given us economies of scale, leading to an ‘Indian model’ of pricing across infrastructure and devices”.

“The challenge of the day is to roll out telecom services in rural areas in a most cost – effective manner”.

“The ARPU is at around Rs. 225 today and it could well fall to around Rs. 120 over the next few years”.

Sustainable? ? ?

Regulation and Compliance.

Entry of 4-5 Players.

Capital for Expansion.

Attracting and managing talent and intellectual capital.

Management of Strategic Partnership.

Inappropriate processes and systems to support exponential business growth experienced over past 4-5 years.

Forecasting returns from technology and infrastructure investments.

Privacy and security risks

Contain and reduce costs

Manage consolidation and mergers & acquisition

Erudition. . .COAI – Cellular operations association of India.

TRAI - Telecom Regulatory Authority of India.

DOT – Department of Telecom.

IILD - Impurity Induced Layer Disordering.

CPP – Calling Part Pays.

UASL – Unified Access Licensing.

ARPU – Average Revenue per User.

We are open for DISCUSSION. . .

Presented By:

Ishant Agarwal