Indian Telecom Sector Abhijeet Sangle9300 Vaibhav Sancheti9300 Pravin Gondhale9355 Abhijeet Sangle9300 Vaibhav Sancheti9300 Pravin Gondhale9355

India is the second largest telecom market in the world. Fastest growing market in the world (in terms of new users addition). Growth opportunities driven by strong growth fundamentals, increasing urbanisation, rising income levels and favourable demographics. The majority of new customers likely to come from the rural areas with inadequate basic infrastructure and limited or no connectivity. Fiercely competitive market. Tariffs rates offered are one of the cheapest in the world. 2 Introduction

3 Mobile subscribers (share of the world) Source: India Telecom 2010, KPMG

4 Services Offered ServicesTelephony Wire line (Landline) WirelessGSMCDMA/WLLDTHIPTV High Speed Data Access Broadband Wireless Access (BWA) Wired Access

The Urban consumer demands high speed internet connectivity, audio video streaming, navigation and location maps, music downloads, gaming, m-commerce, IPTV and mobile TV The Rural consumer demands lower tariffs for voice calls, value added services like information about market and commodity prices, weather updates 5

6 YearMarch 2006March 2007March 2008March 2009March 2010October 2010 Broadband Users Wire line Users Wireless Users (Users in Millions) Source: TRAI Press Releases User Base

7 Growth/Contraction in Services

8 Teledensity 1 (%) Source: 1: KMPG India Telecom Report, : TRAI, The Indian Telecom Services Performance Indicators Quarterly Reports

9 Global wireless ARPU comparison (2009) Source: India Telecom 2010, KPMG

10 Regulatory Environment

11 Key Players Mobile Service Providers Vodafone, Idea, Bharti Airtel, Reliance, Tata/DOCOMO, BSNL/MTNL, Aircel, Uninor/Spice, Others (Loop, HFCL, Sistema (MTS), Stel, Videocon, Etisalat) Wireline Telephone Service Provider BSNL/MTNL Bharti Airtel Reliance, Tata DTH DishTV, Tata Sky Airtel, Reliance ADAG Videocon, Sun Network Prasar Bharti IPTV* MTNL (Delhi) Airtel (Chandigarth) (On Experimental Basis) Broadband Wireless Access (BWA) BSNL/MTNL Reliance Ind. Ltd. MTS, Airtel

StrengthsWeaknesses Volatile regulatory environment. Fiercely Competitive Environment. Hence low tariff rates  Low profitability OpportunitiesThreats Untapped Landscape National teledensity at ~ 53% with Rural teledensity at ~ 24%; New Technologies and Paradigms 3G and BWA Triple Play services with IPTV and DTH platforms. Digital Media Exchange (DMX) for the 4th screen – Cinema Value Added Services (VAS) Global Economic Environment Increased Competition Corruption 12 SWOT Analysis of Indian Telecom Sector

13 Bharti Airtel Ltd.

14 Sr. No.Operator Year March 2008March 2009March 2010October Bharti Airtel23.74%23.97%21.84%20.70% 2Reliance17.54%18.55%17.53%16.89% 3Vodafone16.90%17.55%17.26%16.70% 4BSNL + MTNL16.98%14.45%12.76%12.18% 5Tata9.32%8.97%11.29%11.44% 6Idea9.19%9.93%10.92%10.76% 7Others6.33%6.58%8.41%11.33% Total100.00% Market Share of Cellular Operators

Mobile Service Telemedia Services – Under telemedia services, Bharti Airtel provides broadband, data and fixed line telephone. Digital TV Services Enterprise Services Passive Infrastructure Services 15 Business Segments

16 Revenue Spilt by Offerings (in Rs. Millions) Mobile Services3,25,7173,04,1882,18,697 Tele-media Services (Incl. DTH)34,19433,42628,615 Enterprise Services84,38683,41757,683 Passive Infrastructure Services70,08250,9136,023 Business Segments

17 Business Model Customer Acquisition and Retention Brand Building Marketing Selling & Distribution

18 Business Model Network operations and management Ericcson (in 14 license service areas) Nokia Siemens (in 7 license service areas) a 3-year $724 million contract. IT Management IT infrastructure management, Operational Support Services (OSS), Billing Support Services (BSS), implementation, deployment of new IT services. $750 million in a 10-year contract with IBM Customer Relationship Management IBM-Daksh EDS-Mphasis Strategic Outsourcing Model

19 3G and BWA 3G: Secured licenses for 13 circles for a total consideration of about Rs. 12,000 Cr. (Appox.) BWA: have acquired spectrum in four circles - Karnataka, Punjab, Kolkata and Maharasthra for a total consideration of just over Rs. 3,000 Cr. Financing: – Debt Rs Cr. (Approx.) – Rest Internal Cash

20 Zain Africa Acquisition and its Impact What Bharti Gets? Pros: Reach to 15 African Countries. Zein Africa is No.1 in 10 markets, ranking 2nd in another four. Added 42 millions of subscriber base. Combined user base over 180 million. 7 th largest mobile company in the world by user base. One of the fastest growing region for telecom sector in the world. Cons: Zain’s African operations have posted a loss of $111 million in nine months ended September Loss making markets like Uganda and disputed assets of Nigeria (for which Bharti is yet to pay.) Direct competition with African Biggie ‘MTN’.

21 Zain Africa Acquisition and its Impact (Amounts in Billion USD)

Debt raised from a consortium of foreign banks and State Bank of India. – Lead-arranger and lead-advisor Standard Chartered Bank committing the highest amount -- $1.3 billion. – Followed by $0.9 billion by Barclays. – The rest of the co-advisors -- ANZ, BNP, Bank of America-Merrill Lynch, Credit Agricole CIB, DBS, HSBC, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation -- have allocated $600 million each. – SBI has given Loan of around $ 1 billion in Rupees. Loan Tenure 6 Years Interest Rate: (Floating) LIBOR basis points (Approx. 2.5% ) Debt/Equity Ratio raised to 1.3 (Q Consolidated Results) from earlier Zain Africa Acquisition Financing

23 Financials

24 Thank You