Telecom market in India - November 2006

November 13, 2006 Mumbai www.sterliteoptical.com
- Pankaj Khanna
Telecommunications
Market in India

Agenda
- Telecommunications Market in India
Agenda
- Telecommunications Market in India
• The World – Shrinking into a global village
• India Today
– a Thought Collage
– at an Inflexion Point
• India’s Telecom Evolution – a Revolution
– The Telecommunication Landscape
– Voice to Video: the Data Trajectory
• Another Revolution on the cards
– A fresh Business Model required?
– Convergence: Next Step in the Evolution
– Drivers: Key Growth Elements
• The Wire and Cable Industry

• The World – Shrinking into a global village
• India Today
– a Thought Collage
– at an Inflexion Point
• India’s Telecom Evolution – a Revolution
– The Telecommunication Landscape
– Voice to Video: the Data Trajectory
• Another Revolution on the cards
– A fresh Business Model required?
– Convergence: Next Step in the Evolution
– Drivers: Key Growth Elements
• The Wire and Cable Industry

The World is Flat (Tom Friedman)
… the leveling of the economic world
has “accidentally made Beijing,
Bangalore and Bethesda next-door
neighbors” …
… these flatteners converged around
the year 2000, and created a flat
world: a global, fiber-connected,
web-enabled platform for multiple
forms of sharing knowledge and work
…
The World
– A Global Village
The World
– A Global Village

The World
– Economic Growth while coming closer
The World
– Economic Growth while coming closer
USA
- 300 mn
$ - 41,399
- 195 mn
- 51 mn
Japan
- 127 mn
$ - 30,615
- 92 mn
- 25 mn
China 2005 2000
- 1313 mn 1262 mn
$ - 7,198 3,870
- 450 mn 85 mn
- 46 mn N/A
India 2005 2000
- 1103 mn 1016 mn
$ - 3,320 2,420
- 90 mn 4 mn
- 2 mn N/A
Source: Wikipedia, CIA
Legend
- Population, 2005
$ - GDP per capita (PPP, 2005, USD)
- Mobile Subscriber Base (2005)
- Broadband Subscriber Base (2005)
All developed economies have over 65% Mobile & 12% Broadband penetration.
India and China are among the fastest growing Telecom and Internet Markets.
Ergo, rapid economic development and cross border trade is facilitated by
boundary-less Telecom and Internet Infrastructure growth.

India Today
– A Thought Collage
India Today
– A Thought Collage
"Our (India and US) relationship has never been better. We will work together. There
is no limit to what we can achieve." - George W Bush, President, United States
• Per capita consumption of many necessities
still low = huge market potential !
• FDI is needed in infrastructure:
- USD 75 bn in the power sector
- USD 25 bn in telecommunications
- USD 50 bn in airports, seaports & Roads
"India is on its way to becoming IT,
manufacturing kingdom of the world."
- Mr Yasukuni Enoki,
Japanese Ambassador to India
Young Indian engineers, men and women, walk briskly from building to building,
dangling ID badges. One looked like he could do my taxes. Another looked like she
could take my computer apart. And a third looked like she designed it!
"India has evolved into one of the
world's leading technology centres."
- Mr Craig Barrett,
Chairman, Intel Corporation
“We came into India wanting to make it
a hub for all the products that we are
producing there including the supplier
base. I'm pleased with the progress.”
- Mr Leif Johansson,
President and CEO, AB Volvo

India Today
– At an Inflexion Point
India Today
– At an Inflexion Point
23
52
17
27
58
21
0%
20%
40%
60%
80%
100%
Workforce GDP
Services Industry Agriculture
Source: Economy Watch, Wikipedia, CRU
India
Rank by GDP (PPP) (2005) 4
Area (in sq. km.) 3287263
Population Density 338
GDP per capita, PPP (2005, USD) 3253
Tele-density (2005) 15
Broadband Penetration (2005) 0.14
Fiber Usage (2005, in '000s fkm) 2907
Fiber / Area 0.9
Fiber / Person 0.003
Explosion in middle class with higher literacy and technical aptitude awareness.
Emergence of highly educated young workers with greater disposable incomes.
Boom in Industry & Services sector; Growing Government spending on Infrastructure
Ergo, India is a long-term Growth Story, at the cusp of Change.
China Japan US
2 3 1
9598086 377873 9629091
137 336 31
6727 31638 41200
58 134 130
3.5 20 17
15030 8335 18500
2 22 2
0.01 0.07 0.06

India’s Evolution –
The Telecommunication Landscape
India’s Evolution –
The Telecommunication Landscape
Prices
Mobile Outgoing tariff at 50¢ a min.
Handsets more than $ 800.
Outgoing tariff at 1.8 ¢ a min.
Sub 50 dollar handsets available.
Regulator No regulator / No policies till 1994.
Independent regulator – TRAI
Appellate Tribunal – TDSAT
Industry Bodies – TEMA, ISPAI, AUSPI
Penetration Phones < 3% till March ’00.
Over 13% in June 2006.
Still < 1% Internet penetration.
Competition Monopoly of Govt. Service
Providers.
Top Market Shares of Private
operators. Healthy Competition.
Technology High Resistance to new technology.
Test-bed of cutting edge research.
IPTV, FTTx, WiMAX, IPv6, WCDMA
trial deployments started.
Viewpoint Only a communication medium.
An Emerging Industry.
Early Technology Adopters
Prosper.
Then Now

Cell-phone
Communication
Voice Chat
Mid 1990s
SMS / Text Msg
Early 2000s
MMS/Streams/Games
2005+
IT and ITES Call Center
2000-2003
Data Processing
2003+
Video/Image Processing
2005+
Meetings /
Communication
Telephone /
Physical Meeting
Video Phone
Video Conferencing
2005+
VOICE DATA VIDEO
Trajectory –
Data-Intensive Services
Trajectory –
Data-Intensive Services
Entertainment
Radio
Pre 1980s
Broadcast TV
1980’s
IPTV
2007
Internet / Chat
Late 1990s

Business Case –
Telecom in India
Business Case –
Telecom in India
Population
GDP per capita
Urban Disposable Income
Power, Education & Communication
Connectivity ‘for everyone’ planned
by the Indian Government
Equipment Prices
Cost of Services per User
Bandwidth & Licensing Costs
Tele-density & Internet Penetration
have spurted each time Consumer
Eqpt. or Service costs are reduced
Operators sell multiple services &
constantly evolve new applications to
grab larger share of subscribers wallet
3G & Broadband affecting MB/user
Data to Voice ratio in ARPU
High-speed networks (fiber) reqd
Semi-urban & Rural Connectivity
increasing Market size but Business
Models need to be re-worked
Infrastructure Sharing / Growth
 Regional Content Development
No-frills, need-based eqpt uptake

Business Case –
Telecom in India
Business Case –
Telecom in India
Current (per month)
Telephony (Basic)
Internet
CATV
Telephony (Cellular)
e-Education
e-Medicine
Video Phone / Conference
Gaming
IPTV / Program
(video)-on-demand
~ USD 7
~ USD 5
~ USD 6
~ USD 8
--
--
--
--
--
~ USD 26
Bandwidth per user: Kbps Mbps
Future (per month)
< ~ $ 15 - $ 25
Nearly 10 million Households pay >$25 per month (4% of Income) currently.
Opportunity to target 90 million households if prices drop less than $20 p.m.

Convergence –
Next Step in the Evolution
Convergence –
Next Step in the Evolution
Voice Data Video
Broadcast
Video
Stream
Telcos
Cellular
ISPs
CATV
Broadband
BSNL / MTNL/
Reliance/ Airtel
/ TTSL…
Sify / VSNL...
Hathway…
Incumbents realize Power of Broadband.
EarlierNow
Hence, migrating to offer Complete Basket of Services.

Infrastructure:
• Pan-India Optical Networks.
• SEZ’s for IT and Telecom.
• Construction boom.
• ‘Power/Telecom for all’.
Technology:
• Urban deployments for 3G, IPTV,
FTTx, WiFi, Gaming.
• Rural connectivity through fiber,
Wi-MAX, VSATs.
• Bio-tech, Nanotech, ITES have
encouraged indigenous R&D
Drivers –
Key Growth Elements
Drivers –
Key Growth Elements
Government:
• Long-term development road-map.
• Encouraging foreign participation for R&D.
• Tax holidays for emerging technologies.
• More Public-Private partnerships.
Consumer:
• Increasing Awareness of Global Trends.
• Social networking, IM & Gaming are retail drivers
for 3G & Broadband.
• Data Sourcing to Knowledge based industry.
• Price & Promotions to be differentiators.
Roadmap divided into 3 phases: 2007, 2012, Vision 2020.
Consumer Knowledge will lead to quick uptake of Global Technologies
High Speed Networks will be vital for accelerating growth and vice-versa.

Indian OFC Market Size
2.2 1.9 1.5 2.0 2.3 2.5
-
0.5
1.0
1.5
2.0
2.5
3.0
2001-2 2002-3 2003-4 2004-5 2005-6 2006-7 (e)
inmillionfkm
Indian Copper Cable Market Size
5
6 7 8
12
14 14
17
20
26
29
27
14
7
6
7 7
0
5
10
15
20
25
30
'90-91 '93-94 '96-97 '99-00 '02-03 '05-06
inmillionpairs
(CRIS-INFAC, Telecom Cables Review)
Projects initiated in New Infrastructure Areas utilizing Fiber to increase Market Size
The Wire and Cable Industry
Right of Way Owners growing Market Size
The Wire and Cable Industry
Right of Way Owners growing Market Size

What Next
… All these will drive Fiber usage …
What Next
… All these will drive Fiber usage …
• Applications - Growth in e-Commerce
– Urban: Online Banking, Audio/Video, Gaming
– Rural : ‘e-Choupal’, e-Education, e-Medicine
• Media - Wireless AND Wireline
– Fiber and DSL for Data-Intensive Applications
– WiMAX and 3G for Mobility
• Regulation – Increasingly User Centric
– Price is vital to increase Usage & Penetration
– Technology Adopters follow Global Trends
• Availability -
– Urban: 3G, IPTV, Broadband demand growing
– Rural : Public-Private Partnerships common
• Equipment –
– Carrier: India is key market for Global Vendors
– Enterprise: SME to drive growth in future
– Consumer: Lower Prices will boost Market Size
“Er… it started with buying a cell phone”
Source: IMAI
Source: Cartoonstock

Thank YouThank YouThank YouThank You

India –
Demographics
India –
Demographics
• Capital – New Delhi
• Area – 3 mn sq.km
• Popn. Density - 329 /sq.km
• GDP (PPP) - $ 3.63 trillion
• Growth rate – over 9 %
• Workforce - 497 million
• Literacy Rate - 60 %
• Age Structure - < 14 yrs (31 %)
- 15-64 yrs (64 %)
- > 65 yrs (5 %)
Go-to-Market Case:
• Population – 1.1 billion (July 2006e)
• Middle class consumers – 300 million (Mar 2006e)
• Fixed lines – 41 million (Sept 2006)
• Mobiles – 129 million (Sept 2006)
• Number of TV Sets – 105 million (July 2006)
• Cable TV – 70 million (July 2006)
• PC penetration – 19 million (July 2006)
• Internet subscribers – 8.4 million (Sep 2006)
• Broadband subscribers – 1.8 million (Sep 2006)
Source: Economy Watch, Wikipedia, TRAI, IMAI

India – Poised for Growth
The Story so far …
The Story so far …
3320
1500
2000
2500
3000
3500
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
GDP
900
950
1000
1050
1100
1150
GDP per capita PPP, USD
Population in millions
Source: www.indexmundi.com
40
11
4
0
1500
3000
4500
6000
7500
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
0
5
10
15
20
25
30
35
40
45
Broadband subscribers ('000s)
Internet subscribers ('000s)
B'band charges / month (USD)
Source: TRAI, DoT
3.8
13.3
4.4
1.8
2.9
0
30000
60000
90000
120000
150000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
0
2
4
6
8
10
12
14
Mobile subscribers
('000s)
Total Telephony
subscribers ('000s)
Mobile charges /
min (US cents)

Others
1%
Asia-Pac
8%
Europe
23%
Americas
68%
Indian IT Exports
2005-2006 - $ 18 billion
Source: NASSCOM
5064 9499
7973
11107
442 467
0
2000
4000
6000
8000
10000
12000
Internet Mobile Fixed
inmillionUSD
2004-05 2005-06
122 12736
223
262
24
0
50
100
150
200
250
300
e-Advertising E-travel B2C e-Com
inmillionUSD
2004-05 2005-06
1342 2382 5709
1756
3568
6453
0
1000
2000
3000
4000
5000
6000
7000
Enterprise Phones Carrier
inmillionUSD
2004-05 2005-06
Telecom Equipment and Integration Services
2005-2006 - USD 12 billion
The Story in Numbers …
The Story in Numbers …
Telecom Services Revenues
2005-2006 - USD 20 billion
Online Business-2-Customer Revenues
2005-2006 - USD 300 million
Source: Voice & Data, eStatsIndia, IAMAI

Telecom market in India - November 2006

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