1. Telecoms, Internet, Broadband - Hope and Despair 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_ctmsS710_May20142

3. Internet & Broad Band Internet subscribers : 210.36 mln Broadband : 15.35 mln Subscribers who access Internet thro’ mobiles: 188.20 mln thc_ctms3S710_May2014

4. Gainers & Losers Gainers CompanyIdeaVodafoneBharati Nos (mln)2.242.221.90 Losers CompanyRComBSNLTataTele Loss7 mln185,491147,736 CompanyMTNLLoop Loss134,91440,294 thc_ctmsS710_May20144

5. We are adding per month 2007-082008-092009-102010-112011-12 8m10 m16m19m9m Intense competition Raja Licences Supreme Court cancelled 144 licences thc_ctms5S710_May2014

6. Speeds of Data Transmission 2G3G4G5G* 256 KBPS1MBPS10MBPS1GBPS thc_ctms6S710_May2014

7. % of mobile connections according to generation CountryS.KoreaMalaysiaChinaIndia 2G47%48%73%88 3G53%48%27%12% 4GNil4%Nil India ‘s 3G subs. are a mere 12% ; India’s 4G – zero; DOT has to be pro-active thc_ctms7S710_May2014

8. 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_ctms8S710_May2014

9. 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_ctms9S710_May2014

10. 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_ctms10S710_May2014

11. 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_ctms11S710_May2014

12. 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_ctms12S710_May2014

13. 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_ctms13S710_May2014

14. 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_ctms14S710_May2014

15. 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_ctms15S710_May2014

16. Friend or Foe Govt. Against ( Companies & users) 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_ctms16S710_May2014

17. Prohibitions 3G Inter circle Roaming VOIP for long ISP (1998) NLD & ISD (2000) (year when prohibition lifted) thc_ctms17S710_May2014

18. Penalties (on roll-out/provision default) Rural telephones 3G & 4G Roll out Tax claims ( Vodafone, Uninor, Bharti) Retrospective excess spectrum holding charges at currently determined rates ( after auctions) thc_ctms18S710_May2014

19. Impositions Refarming ( on renewal) ( move from 900MHZ to 1800 MHZ) thc_ctms19S710_May2014

20. Witholding Universal Service Fund Broadband to Panchayat (OF connectivity work given to PSUs only) Application of Telegraph Act to BTS locations thc_ctms20S710_May2014

21. DOT’s Duty Raise & increase revenue to Government? Or Nurse Health of Telcos & Reduce price for service & Increase Affordability thc_ctms21S710_May2014

22. Dhanyawad: Thank You thc_ctms22S710_May2014