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Association of Basic Telecom Operators welcomes H.E.

Ambassador David Gross, US Coordinator for International Communications & Information Policy; Mr Michael Gallagher, Assistant Secretary, Department of Commerce & accompanying US Delegation.
5th February 2004 : New Delhi

India s Telecom Success Story

NTP 99 - new telecom policy


Focus on creating an environment which enables continued attraction of investment 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


45 40
36 02 40 23 37 29 35 35 30 19 32 44 28 39 23 57 20 51 22 79 18 68 14 88 14 54 17 8 21 59 26 51 34 73

35 30 25 20 15 10 5
0 34 0 88 12 1 88 17 44

3 58

55

0 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 (Jan 2001). Entry fee: Basic Services: US$ 0.2mn US$ 25.5mn (+ Bank times entry fee for rollout obligations) S uarantees = 4 obile Services

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

License fee (revenue share) reduced from provisional 15% to 12%, 10% & 8%. Limited BSOs). obility allowed to Basic Services (CD A spectrum allotted to

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


12 10
0.15

0.23

CD A WLL( ) launched in limited manner in few circles. Tariff for S cellular mobiles reduced.

8
0.1

6 4 2 0 Mar '01
0.05

0.08 8.53 6.43 4.8 3.58

10.53

Existing Operators expand service coverage. 3rd & 4th S Operator networks rollout - further tariff reductions.

Sep '01

Mar '02

Sep '02

Dec '02

GSM Mobile

WLL(M)

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).

Increased competition leads to tariff reduction and affordable services


Long Distance Peak rate tariffs Rs / min)
90 80 70 60 50 40 30 20 10 0 Pre 1999 1999-00 Oct-00 Jul-02 M ar-03 Current

NLD

ILD

Local Call Tariffs (Rs / min)


16 14 12 10 8 6 4 2 0 Pre 1999 1999-00 Oct-00 May-01 Jul-02 May-03
Fixed Line GSM Mobile

2003: Mobile boom has begun


Total Additions
2.5

2002: 5.15 mn 2003: 17.49 mn

1.5

0.5

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

2002

2003
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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


7 6 5 4 3 2 5 1 0 Dec-02 Mar-03 Jun-03 Sep-03 CDM % Dec-03
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25
6 mn CDMA mobil phones 22% o tot l mobile market share Service coverage in over 1100 towns

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15

10

CDM Mobile

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 fee equivalent 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
US$ bn 14 12 10 8 6 4 2 0 2003 Wireline
* arket Analysts' Estimates

2004 Mobile

2005 Backbone

Total Total
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Revenue Projections
US$ bn 16 14 12 10 8 6 4 2 0 2004 Fixed
* arket Analysts' Estimates

2005 Mobile

2006 N D ILD Data

2007
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Projections : Fixed & Mobile *


Millions

90 80 70 60 50 40 30 20 10 0 2003 2004 2005 2006 2007

Fixed
* arket Analysts' Estimates

GSM

CDMA

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Teledensity - Urban vs Rural


35 30 25 20 15 10 5 0 1997 1998 1999 2000 Ur n 2001 2002 Rur 2003 2004 T t
16

2005

2006

2007

ab o@ab oonline.ne www.ab oonline.ne

References / Credits: Indian Telecommunications Statistics, 2002 ICICI Securities Report, 2002 organ Stanley Report, 2003 J TRAI Reports

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