1. India’s Telecoms, Internet, Telcos & Broadband By DR T.H. CHOWDARY Director: Center for Telecom Management and Studies Fellow: Tata Consultancy Services Chairman: Pragna Bharati (intellect India ) Former: Chairman & Managing Director Videsh Sanchar Nigam Limited & Information Technology Advisor, Government of Andhra Pradesh T: +91(40) 6667-1191(O) 2784-6137& 2784-3121® F: +91 (40) 6667-1111 hanuman.chowdary@tcs.com Talk at IETE, Hyd: 17 May 2014 * Unless otherwise specified data as of 30 Sept 2013 * Source: COAI & TRAI

2. Telephones as of March 2014 Total: 933 mln ( 0.11% increase over Feb) Mobiles: 904.31 mln Wire line: 28.69 mln Urban (wireless): 58.90% Rural (wireless): 41.10% Wireless Teledensity: 72.94% Wired Teledensity : 2.29% Composite Teledensity: 75.23% thc_ctmsS709_May20142

3. Gainers & Losers Gainers CompanyIdeaVodafoneBharati Nos (mln)2.242.221.90 Losers CompanyRComBSNLTataTele Loss7 mln185,491147,736 CompanyMTNLLoop Loss134,91440,294 thc_ctmsS709_May20143

4. The Telecoms Overview Prepaid : 96.07% Monthly ARPU: P-Telcos BSNL/MTNL Post paidRs. 472 Rs. 393 Pre-paidRs. 98 Rs. 71 Outgoing Minutes of usage (MOU)/month - 182 mnts -do- SMS/sub/month -29 mnts Average ARPU (GSM): Rs. 109 Intrastate -79%; Interstate-20% Intl-0.2%; mnts usage 13 cos provide mobile Internet for 188 mln subscribers thro’ cell phones Market share of above: Bharati-26.38; Vodafone-22.59; Idea-19.59; reliance-15.15;Aircel-7.56; Rest 8 cos – 8.73 thc_ctms4S709_May2014

5. The Telecoms Overview 14 Telcos provide cell phone services: 6* operate in all states; rest in some states ( of these Tata Tele does not operate in Assam & NE) Cell phones: 870.58 mln ( 3.79% down compared to Sept 2012) Teledensity(wireless): 70.63 ( down from 71.08) BSNL share of Telephones: 15% Rural Subscribers: 357 mln BSNL share of Rural Subs. : 11.16 Out of 28 mln wire line subs ( down from a peak of 45 mln in 2004) : 86% are BSNL’s Reliance lost :9.47 mln between Oct 12 & Sept 13; Tata Tele : 1.06 mln ; BSNL: 0.65 mln SMS per sub per month -29 thc_ctms5S709_May2014

6. The Telecoms Overview Average Revenue per mnt of Cell cos. – 51 paise Gross Revenues of Telcos QII /2012-13 = Rs. 57, 453 cr Licence Fees : Rs. 3105; Spectrum usage charge : Rs.1477 cr Public Telephones in Villages: 5,90,000 Public telephones (urban) : 10,90,000 Total Internet Subs.: 210.38 mln Broadband : 15.35 mln Subs. who access Internet thro mobiles: 188.20 ml Private satellite channels: 784 F.M.Radio stations: more than 800 thc_ctms6S709_May2014

7. Growth of Mobile Phones in India (Figs. In Mln) 20002002200320042005 26133452 20062007200820092010 99165261392584 201120122013Sept 2013March 2014 812919868871907 thc_ctms7S709_May2014

8. Stunning additions During the 3 yrs ending march 2009, 2010 & 2011, we were adding 11 mln,16mln,19 mln telephones per month respectively. When NTP was announced in 1994, we had, after 109 yrs of telephony in the country just 10 mln phones! With a teledensity 1 phone per 100 people. Now, we have 72 phones/ 100 people Reason for this phenomenal out come: End of government monopoly, private companies, new technology, competition & regulation. thc_ctms8S709_May2014

9. % of mobile connections according to generation CountryS.KoreaMalaysiaChinaIndia 2G47%48%73%88 3G53%48%27%12 4GNil4%NilNil* India ‘s 3G subs. are a mere 12% ; India’s 4G – zero; DOT has to be pro-active * nominally launched thc_ctms9S709_May2014

10. Price/MHZ/Pop of 1800 MHZ CountryGermany ItalyPortugal US$0.003 0.0280.058 CountrySweden UKIndia US$0.016 0.0120.361 The price of spectrum in India is 120 times more than in Germany, 30 times that in UK, 23 times that in Sweden, 12 times more than in Italy & 6 times more than in Portugal *This high cost for spectrum is a gift (?) of the UPA government to aam admis in India! thc_ctms10S709_May2014

11. Debt of Telcos (in crores) 2008-092010201120122013 Rs. 82,7261,23,7751,59,9551,85,7202,50,000 Banks are shy of further exposure thc_ctms11S709_May2014

12. Universal Service Fund ( Levied as 5% of Telco revenues) Year200920102011 Levy7,3387,6807,960 Used2,2603,1804,140 The unused Rs. 13,398 crores could be used to fund R&D put broadband Internet in universities & colleges. It will fund the Rs. 20,000 cr broadband optical fiber connecting over 250,000 panchayats thc_ctms12S709_May2014

13. The total industry profit/ Loss over the last 7 years ( Rs. Crores) Year2012201120102009 (Loss)/Profit(3745)(10,958)414012,575 Year200820072006 (Loss)/Profit 17,72215, 7519,965 1)Figures exclude BSNL & MTNL losses of about Rs. 12,000 cr for each of the last 3 years 2)Note the declining profits thc_ctms13S709_May2014

14. 12 th Plan (2012-17) Investment In the 12 th Plan period 2012-13 to 2016-17, telecoms would require an investment of Rs.9,43,899 crores! When industry as a whole is making losses and when their debt is already Rs. 2,50,000 cr where will the investments come from? thc_ctms14S709_May2014

15. Government levies on Telcos CountryChinaMalaysiaIndia Service Tax3%5%12.36 Licence feeNil0.5%8% Spectrum usage charge * 0.5%Nil(2 to 6)% USFNil1%5% Total3.5%6.5%30%+ + including octroi, stamp duty & levies on Towers * This is atrocious because Telcos paid outright huge amounts in spectrum auctions (eg. Rs. 60,000 cr for 3G in 2010) thc_ctms15S709_May2014

16. Contribution of Telecom sector to GDP 1980-811990-912000-012011 0.7%0.791.94.0 The contribution of the IT sector is 8% together ICTs information sector contribute 12% to India’s GDP In the developed OECD countries, it is 10! thc_ctms16S709_May2014

17. Urban & Rural Wireless teledensity as of July 2012 Year20092010201120122013 Urban72112150163144 Rural2823333842 Number of cell towers 4,50,000 Consume 2 bln liters of diesel/year thc_ctms17S709_May2014

18. Great Events in Telecom in India 1947: Foreign owned Telcos in Mumbai/Ahmedabad, Madras & Calcutta were nationalised 1985: Telecoms separated from posts & DOT created 1986: VSNL & MTNL created 1991 : Telecom equipment manufacture thrown open to private sector 1992: Private companies licenced to provide value added services ( e-mail, Fax, voice mail, radio paging, video conference & cell phone services in Metros thc_ctms18S709_May2014

19. Great Events in Telecom in India 1994: 1 st National Telecom Policy (NTP-94) 1995: Mobile telephone licences to P-Telcos 1997: TRAI created 1998: P.M’s National task Force on IT & Software –Internet service monopoly abolished 1999: NTP’99 Telcos Migrated to revenue Sharing thc_ctms19S709_May2014

20. Great Events in Telecom in India 2000: – TDSAT created – NLD & ILD demonopolised – DOT’s telecom services constituted into BSNL 2003: Calling party only pays 2003: Unified Access Service licences: Technology neutrality 2004: Broad Band Policy Mobiles outnumber land lines (45 mln) 2005: FDI raised from 26% to 74% Licenecs to be issued w/o limit (scams-friendly) thc_ctms20S709_May2014

21. Great Events in Telecom in India 2008: Cell Towers allowed to be shared 2008: Access deficit charge on Telcos ( P-Telos subsidy to BSNL) abolished 2010: RBI accords infrastructure status to cell towers – 3G & BB spectrum auctions 2011: 144 P-telcos licences cancelled in light of 2G scam 2011: Akash Tablet @ Rs. 2000 launched thc_ctms21S709_May2014

22. GSM spectrum licenced to operators CountryIndiaDenmarkEU AverageFrance MHZ50-60118.492.6138.5 CountryGermanyItalySpainSweden MHZ6572.7100.692 CountryUKUSA MHZ82.275.96 * India gives lowest spectrum for the largest number of Telcos! thc_ctms22S709_May2014

23. No of GSM operators in different countries CountryFranceSpainUKHolland No3345 CountryGermanyChinaIndia No428-12 * More licences, more money-making permit-licence-quota in DNA of Nehruvian “Socialism” thc_ctms23S709_May2014

24. Dhanyawad: Thank You thc_ctms24S709_May2014