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March 2005 Telecom Industry High on Opportunity

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March 2005 Telecom India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

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March 2005 Telecom Population States/UTs Geographical Area Languages recognised Business language Per Capita Income** GDP** Over 1 bn 35 3.3 mn sq kms 22 English US$ 534 US$ 650 bn **(at factor cost & at current prices) 1USD=43.54 INR (as on July 4, 2005) Source:CSO Statistics

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March 2005 India - Fast pace Growth Largest democracy 4th largest economy by PPP index 6th largest energy consumer ForEx reserves skyrocket from US$ 42 bn (2001) to US$ 133 bn (February, 2005) GDP growth to continue between 6-8% 3rd largest economy by 2050: Goldman Sachs Leading in IT & ITES Oil & Gas and Biotechnology sunrise industries

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March 2005 India - Leading the world Hero Honda - largest manufacturer of motorcycles Moser Baer - among the top three media manufacturers in the world Pharmaceutical Industry - 4th largest in world Walmart, GAP, Hilfiger sources more than USD 1bn worth apparel from India 100 Fortune 500 have set R&D facilities in India including GE, Delphi, Eli Lilly, HP, Heinz and Daimler Chrysler

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March 2005 Telecom India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

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March 2005 Equilibrium Rumblings Identity crisis Refocus Dynamiccompetition 2001 1999 1998 1995- 1996 1997 1994 2000 2002 2003 Upto1994 National Telecom Policy, 1994 New Telecom Policy, 1999 2004 Unified Licensing Regime State regulated firms Strategy heavily influenced by Government and Regulators Corporate values based on public interest Limited customer choice Threats of privatisation Fully adjusted marketplace No distinction between incumbents and challengers Wide range of customer choice Normal market forces apply Industry consolidates Mobile fixed crossover Technological advances lead to substitutes Niche players evolve / Call-back operators provide service Regulators formed Competition begins An argument for Strategic Partnerships Traditional assumptions challenged Marketing and sales focus Regulator vs Provider conflict Increasing competition Losing key competencies Competitors find niche or die out Industry settles Greater emphasis on shareholder value Focus on customer satisfaction Foreign Promoter Exits Bell Canada, British Telecom, Millicom, Shinawatra, Swisscom, Telecom Italia, Telekom Malaysia, Telia, Telstra, Vodaphone Indian Promoter Cash-Outs HFCL, Max, RPG, Usha Foreign Promoter Exits Firsy Pacific, TIW, Vodaphone Indian Promoter Exits RPG, Escorts Life Cycle Stage of Indian Telecom

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March 2005 Revenue to increase 3 times in the next 5 years Current teledensity of 8.8 % set to increase to 20% in the next 5 years beating Government targets by 3 years Growth rate about 2.5 million subs per month Mobile subscriber base has surpassed the fixed lines Indian telecom on the cusp of paradigm shift

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March 2005 Telecom Market 7th largest telecom network in the world Telecom network growth rate30% Fixed lines (Dec, 2004)44.76 million Wireless connections (Dec, 2004)48 million Size (2003)US$ 9 billion 2010 (projected)US$ 23 billion

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March 2005 Telecom Services Market Share in total revenue of Wireline servicesto fall from half to 30% Wireless services to rise to half Data revenue to rise from 2% to 8% Over next 5-8 years

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March 2005 Switching Infrastructure Switching capacity of 60 million fixed network BSNL MTNL Other Private Operators As on September 2003

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March 2005 Transmission Infrastructure Optical fibre base 0.5 million route km Microwave base 0.15 million route km

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March 2005 Telecom Infrastructure - Enormous Scope Urban teledensity18.2% Rural teledensity1.5% High on Growth Bound to spread into rural India

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March 2005 Rising Teledensity & Telephone Subscribers India is targetting 250 million users by 2007 India needs $30 billion to meet a target of one phone for every five people by 2010 Total telecom revenues expected to almost triple from US$ 9 billion in 2002 to US$ 23-25 billion by 2007.

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March 2005 Telecom Equipment Market Telecom equipment market size US$ 19.4 billion Telecom handset market US$ 8.4 billion size 2004 - 08 (estimated)

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March 2005 Subsciber base : Almost 1.5 million wireless subscribers added every month The Mobile Market GSM37.37 mn CDMA 11mn Number of networks(GSM)70 Number of cities covered(GSM) 2000

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March 2005 Telecom India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

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March 2005 Service Providers GSM service providers Bharti BSNL Hutch IDEA BPL Spice Escotel Aircel Reliance MTNL Hexacom CDMA service providers Tatas Reliance HFCLShyam

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March 2005 Telecom India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

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March 2005 India - An attractive and lucrative destination (1991-2003) FDI in Telecom US$ 2 billion 20% of total FDIrelated to telecom

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March 2005 Huge Demand Potential Low teledensity levels indicate a huge untapped market.

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March 2005 Invest in India Intra-Circle and Acquisition Guidelines provides increasing opportunities for investor stakes

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March 2005 India outshining China In the 9th year of wireless operation China 6.8 million India 28 million India Vs China in comparable years of service In millions

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March 2005 Telecom India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

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March 2005 India Advantage India -an emerging destination for software, IT enabled services and tourism Share of the services sector in GDP to rise to 60% by 2020

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March 2005 Demographic Advantage Working age population to rise to 65% Urban population to rise to 40% 30-40 mn people join middle class every year By 2020

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March 2005 National Telecom Policy (NTP) - 1999 Impact of NTP-99 on mobile subscriber uptake Migration from fixed to revenue share license fee regime Liberalised long distance sector

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March 2005 FDI limit increased from 49% to 74%. India needs US $30 bn to increase tele-density to 20% by 2010 100% FDI permitted under automatic route in the manufacturing sector Virtually complete deregulation Unified Access Service License Interconnection Usage Charge (IUC) Broadband Policy announced. Targets 20 million broadband subscribers by 2010. Exemption from customs duty for import of MSCs(Mobile Switching Centres) Policy Advantage

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March 2005 Telecom India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

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March 2005 Contact in India Confederation of Indian Industry 249 -F, Sector 18 Udyog Vihar Phase IV Gurgaon 122015 Haryana, India Tel 0091 124 5014060-67 Fax 0091 124 5014080/5013874 E mail sabyasachi.patra@ciionline.org