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the indian cellular industry current status opportunities ahead

2. CONTENTS. GROWTH OF WIRELESS WORLDWIDE STATUS OF INDIAN TELECOMSTATUS OF REGULATION IN INDIAN TELECOMFUTURE GROWTH OPPORTUNITIES. 3. . Subscribers in Million. Year Ended December. On an average GSM net additions are about 1 million subscribers everyday.Growth of GSM subscribers in 2005 achieved 276.8 million, exceeding in 9 months the CDMA all-time global subscribers figure of 273.5 million. .

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the indian cellular industry current status opportunities ahead

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    1. THE INDIAN CELLULAR INDUSTRY CURRENT STATUS & OPPORTUNITIES AHEAD

    2. 2 CONTENTS

    3. 3

    4. 4 STATUS OF INDIAN TELECOM

    5. 5 INDIA - TELECOM UNLEASHED! 5th largest network in the world 2nd largest among emerging economies 3 million new mobile phone subscribers added every month Fixed Mobile Crossover achieved in October05. 125 state-of-the art Networks (GSM + CDMA) on Air Services in about 4000 cities & towns and 60,000 villages. Over 68 million mobile subscribers (GSM + CDMA) end October 2005 GSM running at 80% new subs.

    6. 6 INDIAN TELECOM LANDSCAPE

    7. 7 MOBILE MAJOR CONTRIBUTOR TO TELE DENSITY

    8. 8 IMPRESSIVE GROWTH PERFORMANCE OF CELLULAR INDUSTRY

    9. 9 CONTINUOUSLY IMPROVING AFFORDABILITY

    10. 10 INDIA/ CHINA COMPARABLE YEARS OF SERVICE

    11. 11 INDIA VERSUS CHINA FUTURE POTENTIAL

    12. 12

    13. 13 MAJOR POLICY INITIATIVES THAT HAVE FUELLED GROWTH

    14. 14 MAJOR POLICY INITIATIVES IN 2005

    15. 15 NEXT MAJOR REFORM NTP 2005/06

    16. 16 FUTURE GROWTH OPPORTUNITIES

    17. 17 FUTURE GROWTH DRIVERS

    18. 18 INDIAS MASSES WILL FUEL THE MOBILE REVOLUTION Mobile has fast moved from a class service to a mass service for the common man fuelled by continuously falling tariffs, increased coverage, customized service offerings The real revolution will come from the continuous growth of the low income group market New & innovative use by a varied customer base has made mobile services the key plank for infrastructure & economic development

    19. 19 Cost of the handsets - Greatest barrier to wider adoption of cellular services Acute need for ultra low cost handsets. Efforts made to lower entry barrier. Emerging Market Handset Initiative (EMHI) launched by GSM Association Phase 1 - unveiled a sub USD 40 handset, Phase 2 - to bring costs down below USD 30 Single chip cellphone solution launched by TI will also contribute to make available increasingly affordable mobile handsets to consumers. For Indian market cost of handsets needs to be reduced to the level of USD 10-15. Low cost handsets with latest features cost effective phones required. Micro financing - as done by Gramin bank is required. NEED TO LOWER ENTRY BARRIER FOR CONSUMERS

    20. 20 REVENUES FROM VALUE ADDED SERVICES

    21. 21 REVENUES FROM VAS Revenue from the VAS segment is growing at the rate of 30 to 40 percent annually. At present, this segment accounts for 10 to 13 percent of the total revenue of a service provider, - Tim DeLuca Smith, Communications Manager, SmartTrust. Market for mobile VAS is currently about USD 85 million and it is expected to grow around 800 million by 2010. - Arun Gupta, CEO Mauj Telecom Mobile entertainment market estimated at USD 133 million by March 2006. Daily downloads of around 1 million ringtones and ringback tones. average cost: Rs 9 per ringtone. During festive season the figures increase sharply.. This Diwali -a six fold increase in value added service downloads, over a normal day. Delhi circle alone saw 8.5 million SMSs being exchanged on Diwali day as against 5.5 million last year.

    22. 22 OPPORTUNITIES TO BE EXPLORED Introduction of new Revenue Streams Data & Value Added Services Content Development Including vernacular platforms Expeditious introduction of 3G services To address issues of low cost voice as well as data services. Mobile Broadband required for India With HSDPA, many prospects are likely to come in.

    23. 23 DATA THE NEW FRONTIER Voice will increasingly become a commodity, real revenues will come from data. In 2003, Mobile Data Services accounted for 5.4% of cellular revenues-most of this from SMS traffic. Going forward, data revenues expected to touch USD 3.2 Billion by 2008 representing 20.5% of the total cellular revenues of USD 15.61 Billion in that year .Gartner Research Reality game shows like KBC2, Fame Gurukul, Indian Idol, Deal Ya No Deal, etc have massive reach and generate high revenues. For example, Bhartis tie up with KBC2 show sees an average 700k SMS and 1.4 mn calls per day. On an annualized basis, this works out to over USD 5mn in revenues and USD 3mn in EBITDA just from one TV show. Hutch also has a tie up with MTV for a chat show and travel series.

    24. 24 GROWTH OF DATA MARKET

    25. 25 CONTENT DEVELOPMENT

    26. 26 CONTENT DEVELOPMENT

    27. 27 EXPEDITIOUS INTRODUCTION OF 3G 3G will facilitate higher speed & data throughputs, enable delivery of wide range of multimedia services. Expeditious introduction of 3G both relevant & important for India as: Higher voice capacity of 3G spectrum (4x-5x) can Ease spectrum constraint in metros & other big cities. Serve as an ideal platform to deliver low cost voice telephony as it is far more cost effective on a per erlang basis than 2G. A valuable tool to reach out into rural areas to achieve the broadband objectivesand to undertake key social initiatives such as E-Education, Tele medicine, etc. Enhance Indias competitiveness in ITES / BPO segment. Hi-speed data capabilities will fulfill the content rich mobility experience demanded in urban & metropolitan markets. In China, 3G has been pushed off due to TD-SCDMA & IPR issues Opportunity for India to march ahead of China.

    28. 28 INDIAS PATH TO MOBILE BROADBAND

    29. 29 HSDPA MOBILE BROADBAND

    30. 30 SPECTRUM FOR 3G Indias Spectrum Policy (NFAP-2002) earmarks ITU identified 2.1GHz band for 3G services. 2.1GHz band globally harmonized & technology neutral; will facilitate harmonious evolution of both GSM & CDMA to 3G Adherence to 2.1GHz band for 3G will ensure interference free coexistence & growth of both GSM and CDMA operators & give the Indian subscribers the benefits of economies of scale (lower tariffs), seamless roaming interoperability of systems, etc Consideration of the US PCS 1900 MHZ band plan, as being demanded by CDMA operators has several adverse implications for India, both in existing as well as future services.

    31. 31 INDIA MUST ALIGN WITH INTERNATIONAL SPECTRUM ARRANGMENTS Spectrum the critical asset For most governments spectrum is a scarce and valuable national asset Massive investment decisions rest on stability of spectrum policy And as an operator-led organisation (660 operator members, 1.1 billion customers across 200+ countries), the GSMA is totally perplexed by the proposal currently before the Indian government. In most countries spectrum policy focuses on: minimising wastage to maximise users encouraging the adoption of the most efficient technologies harmonising spectrum use with neighbours to enjoy economies of scale and minimise interference in border areas India has already licensed the 1800 MHz band (CLICK) India has previously reserved the globally harmonised IMT 2000 3G band. (CLICK) However this latest proposal calls for this 3G spectrum to be allocated to 2G technology This proposal is incomprehensible because it will: maximise wastage and limit usage call for the deployment of a niche 2G technology when a highly efficient 3G technology is being widely deployed in this band create interference for current and future users within India, let alone in border areas. Spectrum the critical asset For most governments spectrum is a scarce and valuable national asset Massive investment decisions rest on stability of spectrum policy And as an operator-led organisation (660 operator members, 1.1 billion customers across 200+ countries), the GSMA is totally perplexed by the proposal currently before the Indian government. In most countries spectrum policy focuses on: minimising wastage to maximise users encouraging the adoption of the most efficient technologies harmonising spectrum use with neighbours to enjoy economies of scale and minimise interference in border areas India has already licensed the 1800 MHz band (CLICK) India has previously reserved the globally harmonised IMT 2000 3G band. (CLICK) However this latest proposal calls for this 3G spectrum to be allocated to 2G technology This proposal is incomprehensible because it will: maximise wastage and limit usage call for the deployment of a niche 2G technology when a highly efficient 3G technology is being widely deployed in this band create interference for current and future users within India, let alone in border areas.

    32. 32 US PCS BAND CANNOT BE CONSIDERED FOR INDIAIS DISRUPTIVE & HAS SEVERAL ADVERSE IMPLICATIONS Spectrum the critical asset For most governments spectrum is a scarce and valuable national asset Massive investment decisions rest on stability of spectrum policy And as an operator-led organisation (660 operator members, 1.1 billion customers across 200+ countries), the GSMA is totally perplexed by the proposal currently before the Indian government. In most countries spectrum policy focuses on: minimising wastage to maximise users encouraging the adoption of the most efficient technologies harmonising spectrum use with neighbours to enjoy economies of scale and minimise interference in border areas India has already licensed the 1800 MHz band (CLICK) India has previously reserved the globally harmonised IMT 2000 3G band. (CLICK) However this latest proposal calls for this 3G spectrum to be allocated to 2G technology This proposal is incomprehensible because it will: maximise wastage and limit usage call for the deployment of a niche 2G technology when a highly efficient 3G technology is being widely deployed in this band create interference for current and future users within India, let alone in border areas. Spectrum the critical asset For most governments spectrum is a scarce and valuable national asset Massive investment decisions rest on stability of spectrum policy And as an operator-led organisation (660 operator members, 1.1 billion customers across 200+ countries), the GSMA is totally perplexed by the proposal currently before the Indian government. In most countries spectrum policy focuses on: minimising wastage to maximise users encouraging the adoption of the most efficient technologies harmonising spectrum use with neighbours to enjoy economies of scale and minimise interference in border areas India has already licensed the 1800 MHz band (CLICK) India has previously reserved the globally harmonised IMT 2000 3G band. (CLICK) However this latest proposal calls for this 3G spectrum to be allocated to 2G technology This proposal is incomprehensible because it will: maximise wastage and limit usage call for the deployment of a niche 2G technology when a highly efficient 3G technology is being widely deployed in this band create interference for current and future users within India, let alone in border areas.

    33. 33 WAY FORWARD IF Reachability issues are addressed, Cost of Service is brought down & Entry Barrier is lowered, Alternative data revenue streams are identified & Appropriate technology roadmap is followed THEN Accelerated mobile subscriber growth is sure to follow.

    34. 34 CONCLUSION The Elephant is on the dance floor.. .and the Band is playing a Mobile Tune Get on that dance floor with the Indian Elephant!!! Neil Galloway Head of Asian Telecom ABN-AMRO BANK

    35. 35 THANK YOUtvram@coai.in

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