indias telecom success story

8/6/2019 Indias Telecom Success Story

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Indias TelecomSuccess Story


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NTP 99 - new telecom policy

Focus on creating an environment which enables continued attraction ofinvestment in the sector and allows creation of communication

infrastructure by leveraging on technological development.

Targets revised:

Telephone on demand by 2002 teledensity of 7% by 2005 and 15% by 2010. Encourage development of telecom in rural areas with suitable affordable tariff

structure to raise rural teledensity from 0.4% to 4% by 2010.

Internet access in all District Headquarters (DHQs) by 2000.

High speed data and multi-media capability using technology including ISDN

to all towns with a population greater than 200,000 by 2002.

Universal Service Obligation defined to provide voice and low speed data

services to all uncovered villages.


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Role of private sector in the early years

17 44

20 51

23 57

30 19

35 35

37 2940 23

36 02

28 39

22 79

18 68

14 88

5 53 58

1 881 20 88

0 34

14 54

17 8

21 59

26 51

32 44

34 73

0

5

10

15

20

25

30

35

40

45

1997 1998 1999 2000 2001 Dec-01

De and To a GSM Mob e W e ne


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2001: the turning point

Policy announced for additional licenses in Basic and obile Services

(Jan 2001).

Entry fee:

Basic Services: US$ 0.2mn US$ 25.5mn (+ Bank uarantees = 4

times entry fee for rollout obligations)

S obile Services (4th Operator bid): US$ 0.2mn US$ 45mn

License fee (revenue share) reduced from provisional 15% to 12%, 10%

& 8%.

Limited obility allowed to Basic Services (CD A spectrum allotted to

BSOs). Rollout Obligations to cover Urban / Semi-Urban / Rural areas in equal

proportion.

New licenses awarded in Jul - Sep 2001 : Basic (25), S obile (17).


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2001: Mobile revolution triggered

3.58

0.05

4.8

0.08

6.43

0.1

8.53

0.15

10.53

0.23

0

2

4

6

8

10

12

Mar

'01

Sep

'01

Mar

'02

Sep

'02

Dec

'02

GSM Mobile WLL(M)

CD A WLL( ) launched in

limited manner in few

circles.

Tariff for S cellular

mobiles reduced.

Existing Operators expand

service coverage.

3rd & 4th S Operator

networks rollout - further

tariff reductions.

Newly licensed BSOs roll

out networks for WLL( )

on CD A.


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Tariff & Interconnection Regulations

ovement towards cost-based tariffing.

Tariffs closely regulated by TRAI between 1999-2002.

Interconnection Usage Charges established on the principles of

work done termination charges introduced.

Calling Party Pays (CPP) for mobile tariffs free incoming calls

ushered in.

Access Deficit Charges (ADC) for cost-minus fixed line services.

Forbearance allowed recently on all tariffs (except rural fixed line).


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0

1020

30

40

50

60

70

80

90

Pre 1999 1999-00 Oct-00 Jul-02 Mar-03 Current

NLD ILD

Long Distance Peak rate tariffs Rs / min)

0

2

4

6

8

10

1214

16

Pre 1999 1999-00 Oct-00 May-01 Jul-02 May-03

Fixed Line GSM Mobile

Local Call Tariffs (Rs / min)

Increased competition leads to tariff reduction andaffordable services


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2003: Mobile boom has begun

0

0.5

1

1.5

2

2.5

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2002 2003

Total Additions2002: 5.15 mn

2003: 17.49 mn


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Growth drivers

Declining entry costs and falling tariffs have lowered the bar in

terms of affordability coupled with branding and advertising.

High percentage of population owning two-wheelers are

prospective mobile telephone users.

Upper middle class that spends 6% of its income on telecom

services.

India lags behind other Asian economies (approx. 10 years) -

therefore India is poised for growth.


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2003 : CDMA gains acceptance

0

1

2

3

4

5

6

7

Dec-02 Mar-03 Jun-03 Sep-03 Dec-03

0

5

10

15

20

25

CDM Mobile CDM %

6 mn CDMA mobil phones

22%o tot l mobile marketshare

Service coverage in over 1100towns


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Unified Licensing introduced

Unified Access (Basic & Cellular) Service License (UASL) introduced (Nov

2003) as a first step towards Unified Licensing Regime.

Technology neutral and allows provisioning any kind of service.

4th Cellular S license used as benchmark.

BSOs offering WLL( ) allowed migration to UASL - additional entry feeequivalent to 4th Cellular bid.

Rollout obligations to cover 50% DHQs in 3 years.

License fee reduced w.e.f 1.4.2004 by 2% across the board for all access

licensees.

Rural telephony to be covered under Universal Service Obligation.

Intra-circle ergers & Acquisitions recommended by TRAI - competition not

to be compromised, S P to be checked.

Spectrum pricing and allocation guidelines to be reviewed, present

allocations to continue.


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Future Investments

0

2

4

6

8

10

12

14

2003 2004 2005 Total

Wireline Mobile Backbone Total

US$ bn

* arket Analysts' Estimates


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Revenue Projections

0

2

4

6

8

10

12

14

16

2004 2005 2006 2007

Fixed Mobile N D ILD Data

US$ bn



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Projections : Fixed & Mobile *

0

10

20

30

40

50

60

70

80

90

2003 2004 2005 2006 2007

Fixed GSM CDMA

Millions



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Teledensity - Urban vs Rural

0

5

10

15

20

25

30

35

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Ur n Rur T t


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indias telecom success story

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