telecom summary presentation

8/9/2019 Telecom Summary Presentation

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1

Telecom


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2

KEY POINTERS TO UNDERSTAND THE TELECOM INDUSTRY

Regulatory and competitive factors that led to the high growth of

the telecom industry

Past dispute between GSM and CDM players and how it was

resolved!

"mportant operational metrics and trends in the operational

Metrics

Mar#et shares

Tower "nfrastructure $Trends%

&ow 'G and (S are going to impact the performance of the

Telecom players!

)hy consolidation is most li#ely in this industry!

*uture outloo#


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'

Pre 1995

Govt Monopoly

Tele+density was less than ,-

1995 - 1998

Sector opened up for the .rst time to private players

/ut the tele+density did not increase $only 0122 mn customers were

added in the ' years3 of which half were in Mumbai and Delhi1

This is due to4*i5ed licensing structure

less competition $only 6 players were allowed per circle%


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7

1998-2003

8icensing structure was changed to revenue sharing model

7 competitors were allowed per circle

Subscriber base increased to ,'1' mn

2003 - 2009

Golden period for the industry

Govt1 implemented CPP

)ith more subscribers3 cost came down

Telcos had both revenue and pro.t growth


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2009 - 2013

Price wars

9egative regulatory environment $6G scams3 (odafone

retrospective ta5es%

Pro.tability reduced and debts increased

Slowdown in subscriber additions due to saturation1


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2013 ONWARDS

Competition in the mobile services space has been less intense

during the last ,2 months3 compared to earlier years1Post the release of the verdict on licence cancellations3 many

operators $such as :tisalat3 S+Tel and 8oop Mobile ;e5cept Mumbaiuantum of free?discounted minutes o@ered to subscribers3

have regained pricing power to an e5tent1

Als !"e #r#r!$% & re'e%(es &r) *+!+ ser'$,es +%* 3

s(.s,r$.ers "+s .ee% $%,re+s$%/

This has aided an improvement in their realisations since the .rst

half of 60,'+,71


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All I%*$+ ).$le s(.s,r$.er .+se


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MAOR REASONS OR ROWTH SLOW DOWN IN SUSCRIERADDITIONSR$s$%/ !ele-*e%s$!4The rising tele+density is one of the very many reasons for the

fall in subscriber growth1

The wireless tele+density has risen rapidly over the past few

years1De,l$%e $% !"e (se & )(l!$#le SIM ,+r*s

The softening competitive intensity in the sector has led to a

reduction in the use of multiple S"M cards3 thereby impacting the

net additions1/esides3 the implementation of M9P in "ndia empowered the

subscribers to switch operators without having to change their

numbers1


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M*er+!e /r!" $% r(r+l %e! +**$!$%s

The rural wireless tele+density3 at 72- per cent3 is still on the

lower side implicating a huge un+tapped potential in the rural and

semi+urban mar#ets1Despite this3 the growth in rural net additions has been moderate1

)hile the cost of servicing subscribers in the rural areas is very

high3 the stringent veri.cation norms also impact the new

subscriber additions is these areas3 as rural subscribers may not

have all the relevant subscriber veri.cation documents1

MAOR REASONS OR ROWTH SLOW DOWN IN SUSCRIERADDITIONS


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MAOR REASONS OR ROWTH SLOW DOWN IN SUSCRIERADDITIONS

De+,!$'+!$% & $%+,!$'e s(.s,r$.ers $% 2012-13

"n 60,6+,' the subscriber base declined drastically1

The subscriber base plunged from A,A16 million in March 60,6

to 2B12 million in March 60,'1

=perators undertoo# large+scale deactivation of inactive

subscribers from their networ#s1

This deactivation will enable operators to increase their focuson high verage Revenue Per nit $RP% subscribers1

T" !$ & !$ $ l . $. " $ ! 86 9


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T"e #r#r!$% & +,!$'e $reless s(.s,r$.ers "+s r$se% ! 869#er ,e%!$% Se#!e).er 2013 &r) 771 #er ,e%! $% Se#!e).er 2012$%/ ! !"e )+ss$'e s(.s,r$.er ,le+%-(# *%e .4 #er+!rs.ACTIE SUSCRIER ASE

A re*(,!$% $% ,)#e!$!$'e $%!e%s$!4 &ll$%/ e:$! & &e


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INDUSTRY REENUES

A re*(,!$% $% ,)#e!$!$'e $%!e%s$!4 &ll$%/ e:$! & &e#er+!rs +%* +%$%,re+se $% !"e s"+re & re'e%(es &r) *+!+ ser'$,es +$*e* !"e'er+ll $%,re+se $% /r!" +&!er 2012


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Re!(r% % ,+#$!+l e)#l4e* ;RCE< & T# 3 #l+4ers

ROCE "+s ,)e *% *r+s!$,+ll4 &r) 2007-08


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RURAL OPERATIONS = LESS PROITALE

ROCE "+s ,)e *% *r+s!$,+ll4 &r) 2007-08

n important reasons of decreasing pro.tability apart from price wars

is !"e e:#+%s$% & r(r+l s(.s,r$.er .+se

Pro.tability of rural operations as a standalone business unit is +,0

per cent lower than that in urban areas due to following reasons4

8ower RP from rural subscribers

&igh 9etwor# Running CostRural "ndia is not only deprived of ade>uate grid

power but also the >uality of power supply$fre>uent Euctuations and phase shifts% is poor1

Conse>uently3 service providers have to largely ban# onDG sets3 which signi.cantly increase the 9=C1

8ower Tower sharing in rural areas


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SM S CDMA


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s GSM was the more widespread technology worldwide3

regulators decided to adopt GSM as the technology in

"ndia1

"n 600,3 permissions were given to provide limited

mobility services based on code division multiple access

$CDM% technology1

8imited mobility is provision of mobile services within a

short distance calling area $SDC% and has reduced

features compared to cellular services1

nder limited mobility service3 the important Froaming

feature is not available1

SM AND CDMA= OERIEW


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SM AND CDMA= DIERENTIAL LICENCE EE

CDM players paid lesser fees as there was no roaming and

certain other services1

Due to this their calling rates were low1

Till 600'3 separate licences were given for GSM and

CDM $CDM is a limited mobility service%1

T"e /'er%)e%! !"(/"! !"+! !"ese 2 se/)e%!s

ere *$s!$%,! +%* "e%,e * %! ,)#e!e $!" e+,"

!"er


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SM AND CDMA= DIRECT COMPETITIONThe limited mobility services however were more or less

competing directly with fully mobile services1L$)$!e* ).$l$!4 ser'$,es ,)#e!e* +l)s! *$re,!l4$!" ).$le ser'$,es % +,,(%! & ! re+s%s=

>rs! %l4 + s)+ll #r#r!$% & !"e).$le s(.s,r$.ers (se* r+)$%/

ser'$,es +%*se,%* %e & !"e #er+!rs #r'$*e*&e+!(res l$?e ,+ll &r+r*$%/ "$,"e@e,!$'el4 res(l!e* $% !"e s(.s,r$.er/e!!$%/ r+)$%/ &+,$l$!4

s the licence fees paid by CDM players wassubstantially lower than that of GSM players3 they couldo@er cheaper rates1GSM players were in a highly disadvantageous position1This led to a dispute and litigation between the erstwhilecellular service roviders and the basic service roviders1


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SM AND CDMA= UASL

The disputes resulted in operators3 particularly GSMoperators3 holding bac# their investment plans and thus

hampering the growth of the industry1

Subse>uently3 to put an end to this dispute3 the

Telecommunications Regulatory uthority of "ndia $TR"%

introduced the ni.ed ccess Service 8icence $S8% in

9ovember 600'3 wherein the licence fee are same for any

type of technology1


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Ke4 O#er+!$%+l Me!r$,s


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H:I =P:RT"9G M:TR"CS

Pre+paid vs Post paid

GSM (s CDM

RP

Minutes of sage

Subscriber Mar#et share

Revenue Mar#et Share

:5clusive owned vs shared towers

Share of (S

PROPORTION O PRE PAID S POST PAID


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PROPORTION O PRE-PAID S POST-PAID

SM S CDMA


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SM S CDMA


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M$%(!es & (s+/e "+s .ee% /r+*(+ll4 $%,re+s$%/ +&!er


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MINUTES O USAE

/ / 4 /Se#!e).er 2011 *(e ! re)'+l & $%+,!$'e s(.s,r$.ers&r) #er+!r %e!r?s

MOU= SHORT-TERM TRENDS

;OERALLue value proposition to

their subscribers3 particularly their high+RP subscribers1


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CRITICAL ACTORS OR 3 SUCCESS

Spectrum *ees

/uilding 'G infrastructure

Cost of 'G enabled handsets

(ariety of services o@ered through 'G

(ernacularisation or regionaliKation

Revenue model from (S

O#er+!rs +re +ls +//ress$'el4 #(s"$%/ &r AS !"r(/"#r)!$%s .(%*le* *+!+ #l+%s +%* $%,re+s$%/ %().er &


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ARESSIE PUSH OR AS

#r)!$%s .(%*le* *+!+ #l+%s +%* $%,re+s$%/ %().er &,ell-s$!es

=perators have been trying to increase subscriber adoption of these

services through4

Mar#eting L promotional strategies for creating awareness

among subscribers about the availability and a@ordability of such

services1Continuous addition and e5pansion in the number of cell+sites3

particularly 'G /TS $cell+sites%3 for enhancing their o@erings1

/undling of branded smart+phones with data plans3 as done by

"dea Cellular3 for e5ample1

Recently3 Reliance Communications and /harti irtel also

o@ered bundled data plans for two years on the purchase of

D+!+ (s+/e "+s .ee% s"$%/ + !re)e%*(s $%,re+se 'er!"e l+s! ,(#le & 4e+rs


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DATA USAE TRENDS

!"e l+s! ,(#le & 4e+rs

S"+re & D+!+ $s $%,re+s$%/ +)%/ %%-'$,e re'e%(es"$le )ess+/$%/ $s ,)$%/ *%


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SHARE O DATA IN NON-OICE REENUES

"$le )ess+/$%/ $s ,)$%/ *%

(r l+r/e #er+!rs s+ !"e$r 3 s(.s,r$.er .+se +l)s!*(.le* .e!ee% Se#!e).er 2013 +%* Se#!e).er 2013


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NUMER O 3 SUSCRIERS

*(.le* .e!ee% Se#!e).er 2013 +%* Se#!e).er 2013

S"+re & re'e%(es &r) AS $s e:#e,!e* ! $%,re+se ! 9$% 2012-13 ! 252 $% 2017-18


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AS AS O WIRELESS REENUES

H$/" s#ee* $%!er%e! $ll .e !"e .$//es! se/)e%! $% !"e"$/" .+%*$*!" ser'$,es .(! $*e AS +%* M(s$, AS $ll


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//r &+s!

HIH ANDWIDTH SERICES= MARKET POTENTIAL

Ser'$,e Re'e%(es ;$% Rs %

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