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Global Leadership – India can do it. Telecom

Global Leadership – India can do it. Telecom. Index. Telecom – Historical Development & Industry Overview India’s connection to Global Telecom Leadership Mobile leading Telecom growth in India India Telecom poised for Global Leadership – Why India can do it

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Global Leadership – India can do it. Telecom

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  1. Global Leadership – India can do it. Telecom

  2. Index • Telecom – Historical Development & Industry Overview • India’s connection to Global Telecom Leadership • Mobile leading Telecom growth in India • India Telecom poised for Global Leadership – Why India can do it • Reliance’s contribution to Indian Telecom’s Global leadership

  3. Telecom – Historical Development & Industry Overview

  4. Telecom Industry Overview • Telecom is considered a basic infrastructure industry, critical for and integral to a country’s growth • Various studies by World Bank & LBS suggest that increase in Teledensity leads to rapid growth in country’s GDP (US $1 investment in telecom leads to US$ 6 increase in GDP)

  5. Important Developments in Telecommunications • 1844 First telegraph message (between D.C. and Baltimore) • 1876 Bell patents the telephone; first telephone message • 1885 The Indian Telegraph Act • 1895 Guglielmo Marconi sends first radio-telegraph message • 1946 First Mobile Telephone Call • 1982 First cellular telephone system • 1994 National Telecom Policy (NTP 94) Announced by GoI • 1995 Mobile/Cellular Telephony begins in India • 1999 New National Telecom Policy Announced • 2003 Unified License Regime. India 13th in global ranking by cellular base up from 18th rank during the previous year. • 2005 Aug: India achieves 10% teledensity ahead of schedule. Target 250 Mn subs by 2007

  6. India’s connection to Global Telecom Leadership

  7. India’s connection to Global Telecom Leadership • JC Bose is credited with simultaneous invention of Telegraph, independent of Marconi of Italy • World’s 1st sea cable for telegraph messages was between India & England (Calcutta to London) • Among top-5 private Indian companies with over Rs. 1 Lakh Cr. Market Cap, two are telecom operators. Both are also among top-6 Asian Telecom operators

  8. Mobile leading Telecom growth in India

  9. Mobile leading Telecom growth in India Mobile exceeded Fixed Line base in FY 04-05.

  10. India – The mobile juggernaut rolls RCL – Soft launch on 28th Dec 02 and Commercial launch on May 1 2003 • Indian Mobile growth on a J curve • Reliance’s entry stimulates mobile market growth. • Subscriber numbers grown over 12 times in last 4 years. Indian mobile market at an inflection point

  11. India Telecom – Elements of Global Leadership & Why India can do it

  12. Why India Can achieve Global Leadership in Telecom • Size of New Subscriber Market • Innovation in Service Offerings • SMS Usage Leadership • Well structured Regulatory environment • Trained Technical & Managerial Manpower • At Forefront in adopting new technology • Operational efficiency to maintain profitablility • Government’s effort to reduce Digital Divide

  13. India – an Underserved Market & Potent Mix for explosive Telecom Growth • An underserved market. • Half a billion consuming class by 2007. • A historical 5-6 year lag vs. China - Current base to grow to 250mn by 2008 • Expected to add 6-7 million subs per month consistently. Current teledensity at only 18%

  14. India – an Underserved Market & Potent Mix for explosive Telecom Growth • Population : 1 billion (largest Democracy, 2nd most populous country) • Urban pop : 300 million in 5000+ towns • Rural pop : 700 million in 0.6 million villages • GDP : $3 trillion (4th largest economy in PPP terms) • Telephony : 190 million (top 5 in world)

  15. Indian Telecom – Net Adds Leader;Poised for phenomenal growth • India’s Historical 5-6 year lag to China • China, after peaking at 6 Mn, has come down to 5 Mn net adds pm • India has already overtaken China and reached nearly 7 Mn net adds pm • India destined to close the gap with China subs base

  16. Emerging Customer Segments • Mobile as Utility Tool leading to Emergence of newer customer segments, contributing to phenomenal growth: • Students • Housewives • Small Business Owners • Skilled Labour (ABCD category) • Quick connection for New Homes / Offices / Shops

  17. Drivers of Growth • 44% population < 19 years; 75% literate • Working population to grow from 485 mn to 615 mn by 2010 • 21 mn professionals and 90 mn graduates/ post graduates by 2010 • 500 mn consuming class by 2007 Changing demographics • Unified licence provides unprecedented flexibility to operators in optimising costs and services by leveraging technology and economies of scale • Introduction of calling party pays (CPP) regime Government Policies Low Entry Barrier • Drop in the handset prices … lowering the entry barrier… Lowering Tariffs… Increasing affordability

  18. Innovation in Service Offerings • 1st Prepaid in GSM & CDMA was launched in India along with simultaneous launch in one more country • Innovative tariffs & service bundling – unparalleled in world • Innovative Value Added Services & Useful Applications LOW PER CAPITA INCOME & LIMITED CREDIT UNIVERSE LED TO SERVICE INNOVATIONS

  19. SMS Usage Leadership • India is the leading SMS user, followed probably by Philippines • In North America, SMS is becoming popular only recently. • Many sms-based VAS offerings • Least intrusive, tele-voting, information, contests, etc. TEXTING IS FIRST NON-VOICE APPLICATION PREPARING THE USERS FOR NEWER PPLICATIONS

  20. Well structured Regulatory environment • India has one of the best structured Regulatory Environment – DoT, TRAI, TDSAT • India has moved from over-regulated to light-touch environment • Smooth migration from 2 operator to 4 operator to 6 operator scenario is Exemplary.

  21. At Forefront in adopting new technology • India quickly adopted CDMA – 1X directly in 2003, while many countries moved up gradually from lower versions . • Earlier, India commenced cellular services with GSM Digital Service whereas other countries began with Analog Technologies LATEST TECHNOLOGY ADOPTION HELPED AND CREATED A LARGE TECHNICAL MANPOWER BASE – ENVY OF WORLD

  22. Technical & Managerial Knowhow – Uniquely Indian • Substantial talent pool of Technical & Managerial manpower. • Sales / Marketing Professionals needed to be innovative for economy – conscious segments. • Above two, created a cohesive & integrated Indian Telecom Management Philosophy. • Notwithstanding equity-structure, Indian Telcos run by Indians • By contrast, Indians are running 2 top global Telecom companies – Vodafone (UK); Orange (France) THE BOTTOM OF PYRAMID – UNIQUE STRENGTH

  23. Operational efficiency to maintain profitablility • Inspite of running at lowest tarrifs per minute, Indian telecom cos continue to run profitable operations with increasing EBITDA margins • Using scale benefits to achieve cost & operational efficiency for higher profitability • Indian cost-structures & ingenuity has led to best-in-world efficiencies INDIAN BUSINESS MODEL IS ADAPTABLE IN MOST COUNTRIES

  24. Rural Communications • Govt. of India &Regulatory bodies are making efforts that Telephony does not remain an urban phenomenon • USO Scheme for offering Rural telephony, has helped to increase roll-out of rural telephony services by operators • Reliancce has simultaneously focussed on both Voice & Data services in rural/ semi-urban areas • Usage of modern communication by fisher-folk, farmers & small traders is catching up NATION IS COMMITTED TO ELIMINATE DIGITAL DIVIDE

  25. Individual Companies Can Catalyse Sectoral Growth – Reliance Story

  26. Mobile Market Composition: (Pre – Reliance Entry) • Limited Coverage • 29 states • 4 licensees per state. Some operational since 10 years • No pan India integrated & convergent player • Mobile services limited to top 500 towns & high-income individuals • Limited Features & High Cost • 2G networks. Only voice & SMS. Limited data & No video • High entry cost & call charges • Receiving party pays for incoming calls • Sub-standard Customer Service offered to subscribers • Low Mobile Penetration: at 1.2% compared to China at 16% in 2002 Essentially under-served market

  27. Mobile Market - Changing Scenario (Post – Reliance Entry) RCL’s launch did the following to transform the Indian Mobile Market: • Increased Network Coverage to even smaller towns & villages • Reduce Entry Costs: (The legendary Rs. 501 Monsoon Hungama Scheme) • Reduce Tariffs & affordability of mobile/telecom service (STD Call @ Post Card rate - 40p/min!) • Enhance Customer Service to subscribers

  28. Taking mobility to the masses * Balance over 36 months Reliance led a dramatic drop in tariffs making mobile phones an affordable mass product.

  29. INDIA HAS DONE IT. IN TELECOM. CAN DO EVERYWHERE!

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