India Mobile Series

Growth Opportunities in Indias Telecom Market: Separating the Wheat from the Chaff
December 2010 Author: Ramesh Balakrishnan Founder and Principal, Next On Mobile

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About Next On Mobile

Next On Mobile is a research, advisory and consulting practice providing strategic insight to networked enterprises that leverage the mobile channel to deliver consumer services, enable enterprise collaboration and transact commerce in the era of personalized mobile communications. We deliver value to our clients through intense industry research and consulting; focusing on emerging technologies, market trends and opportunities which will determine the pathways for a mobile centric future. Our approach to the mobile industry is characterized by four major vision elements - Next Innovation, Next Growth Markets, Next Practices and Next Inclusion. We provide research and consulting services to various stakeholders in the mobile ecosystem including mobile operators, application developers, venture investors, mobile enterprises and device makers among others.

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Founder and Principal

Ramesh Balakrishnan is the Founder and Principal Consultant at Next On Mobile. Ramesh has more than 13 years of industry experience in the global communications and software industries. His range of experience spans the complete spectrum of the telecom ecosystem, with in-depth subject matter expertise in telecom services and Mobile Communications software. During his career he has worked with the leaders in the Communications industry including a subsidiary of Bell Canada, Amdocs, Critical Path, Tanla Mobile and Tech Mahindra (Mobile Division JV with Motorola). His research interests are focused on: NFC based contactless payments and commerce, New Mobile Champions and the future mobile world order, Mobile Healthcare, Canadian Mobile Landscape, India Market Trends, Mobile OSS/BSS, Mobile Video, Mobile Content and Applications among others. He is an Associate member of ACT Canada (Canadas Payment Industry Trade Body) and a member of the Acumen Fund Toronto Micro Finance Forum. He is a frequent speaker at industry conferences including the Telemanagement Forum 2008 in Orlando and the 3G Summit 2010 in New Delhi, India. Ramesh has a B.S.in Electrical Engineering from Anna University, Chennai, India and an International MBA from the University of Memphis. Ramesh is also a CFA Level 3 Candidate.

All product and service names mentioned in this document are the property of their respective owners. Copyright 2010 by Next On Mobile. All rights reserved.

Next On Mobile
56, Pexton Avenue Richmond Hill ON L4E 4Y4 Canada http://www.nextonmobile.com P: 905 223 6801 M: 647 994 2267 Email: ramesh@nextonmobile.com 72/3, Harrington Road Chetpet Chennai, 600031 India M: +91 7871434826

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Disclaimer and legal notices

This report does not constitute professional advice. The information in this report has been obtained or derived from sources believed by Next On Mobile to be reliable but Next On Mobile does not represent that this information is accurate or complete. Any opinions or estimates contained in this report represent the judgement of Next On Mobile at this time and are subject to change without notice. Readers of this report are advised to seek their own professional advice before taking any course of action or decision, for which they are entirely responsible, based on the contents of this report. Next On Mobile neither accepts nor assumes any responsibility or liability to any reader of this report in respect of the information contained within it or for any decisions readers may take or decide not to or fail to take. Next On Mobile does not promote or endorse specific companies, products, services.

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Questions Answered in this Report

What are the key emerging trends in the Indian telecom space? What is the role of wireless broadband in driving future growth? What are the key challenges in driving services adoption among users, especially in rural markets?

How are 3G services likely to develop in terms of consumer segments (enterprise, rural, consumer)? What business models are being adopted by operators? How has the industry evolved in the past few years? What are the key opportunities for players in the value chain? What are the most promising software platform and applications opportunities in the coming years? What are the strategic options for a new entrant?

Audience
Network Equipment Manufacturers Independent Software Vendors Content Aggregators Media Companies Systems Integrators Content and Applications Developers

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Table of Contents

Questions Answered in this Report............................................................................................... 5 Audience ....................................................................................................................................... 5 Table of Contents ......................................................................................................................... 6 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 Background ........................................................................................................................ 9 Industry Structure ........................................................................................................ 13 Telecom Ecosystem ...................................................................................................... 14 Regulatory Ecosystem .................................................................................................. 15 Fixed Line Voice Infrastructure.................................................................................... 16 Mobile 2G Infrastructure .............................................................................................. 16 Internet, Cable and Broadband Infrastructure ............................................................ 17 Investment Scenario..................................................................................................... 18 Industry Trends ................................................................................................................ 19 New ARPU Growth from Data....................................................................................... 20 Mobile Penetration in Rural India ................................................................................ 20 Mobile Money and Payments ........................................................................................ 20 Low cost Smart Phones ................................................................................................ 21 Penetration of Mobile/Fixed Broadband...................................................................... 21 Outsourcing and Cloud Models ..................................................................................... 21 Rise of Mobile Video Usage .......................................................................................... 22 App Stores and Rich Media Content ............................................................................. 22 Mobile Infrastructure Software .................................................................................... 22 Growth in Enterprise Mobility ...................................................................................... 22

3. Market Outlook ....................................................................................................................... 23 3.1 3.2 3.3 3.4 Industry Size ................................................................................................................. 23 Subscriber Projections ................................................................................................. 23 Mobile Data Subscribers ............................................................................................... 24 ARPU Trends ................................................................................................................. 24

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3.5

Operator Market Share ................................................................................................. 25 Mobile Services Market Share ................................................................................ 25 Fixed Line Services Market Share .......................................................................... 27 Consumer ............................................................................................................... 28 Enterprise Segments .............................................................................................. 30

3.5.1 3.5.2. 3.6 3.6.1 3.6.2 3.7

Market Segments .......................................................................................................... 28

Market Analysis............................................................................................................. 31

3.7.1. Network .................................................................................................................... 31 3.7.2. Software Platforms ................................................................................................... 31 3.7.3. Telecom Towers........................................................................................................ 31 3.7.4. Devices...................................................................................................................... 31 3.7.5. Content and Applications ......................................................................................... 32 4. Network ............................................................................................................................... 32 4.1 4.2 4.3 4.4 4.5 4.6 5.1 5.2 5.3 Internet and Broadband Usage in India........................................................................ 32 State of Broadband Roll out ......................................................................................... 33 Broadband for All Vision Agenda for the Future........................................................ 34 3G Roll-out ................................................................................................................... 35 4G BWA (Broadband Wireless Access) .......................................................................... 36 Cable Networks ............................................................................................................ 36 Role of Software Platforms in Cost Competitiveness .................................................. 37 Vendor Selection .......................................................................................................... 38 Software Platforms: Market Opportunities Assessment............................................... 42 Content Aggregation, Engagement, App Stores and Monetization........................ 42 Mobile Marketing, Off-Deck Content Aggregation & Management........................ 44 Mobile Commerce & Payments .............................................................................. 46 Mobile Application Stores ...................................................................................... 48 Mobile Advertising ................................................................................................. 49 Mobile Messaging, Social Address Book, Social Networks and UGC....................... 50 Mobile Enterprise.................................................................................................. 51 Mobile Video/TV .................................................................................................... 52

5. Software Platforms................................................................................................................. 37

5.3.1 5.3.2 5.3.3 5.3.4. 5.3.5. 5.3.6. 5.3.7 5.3.8.

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5.4

Vendor Success Factors ................................................................................................ 53

6. Indian Operators..................................................................................................................... 55 7. Telecom Towers ..................................................................................................................... 59 7.1 7.2 8. 8.1 8.2 9. Infrastructure Sharing Models ...................................................................................... 60 Market Opportunity Mapping........................................................................................ 61 Device Market Share..................................................................................................... 63 Device Trends ............................................................................................................... 64

Devices................................................................................................................................. 62

Content and Applications .................................................................................................... 66 10.1 10.2 10.3 Network Equipment Vendors........................................................................................ 69 Systems Integrators ...................................................................................................... 71 Communications Software Vendors.............................................................................. 73 Market Engagement ......................................................................................................... 77 Market Entry Strategies................................................................................................ 77 Strategic Options for Market Entry .............................................................................. 78 Canadian Success: Case Studies ................................................................................... 81 Next Practices.................................................................................................................. 84 Outward M&A of Indian Telecom Software Vendors .................................................... 84 Conclusions and Recommendations ................................................................................. 85

10. Vendor Profiles ..................................................................................................................... 69

11. Business Models .................................................................................................................... 75 12. 12.1 12.2 12.3 13. 13.1 14.

Bibliography ................................................................................................................................ 86

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1.0 Background
One of the biggest success stories of India`s stunning rise over the past decade has been the growth of the ICT sector in general and the telecommunications industry in particular. Indias Telecom industry is one the fastest growing in the world today and is projected to grow at a feverish pace over the next decade and beyond. At a macro level, this growth is being driven by a booming economy, a growing urban population, a rapidly expanding middle class and increasing teledensity because of Government mandated service penetration into rural markets. A major theme for the Government`s development agenda is based on `Inclusive Growth` the need to deliver the fruits of economic growth and development to large cross sections of India`s under privileged and reduce poverty. Telecommunications will play a major role in realizing the Government`s vision to roll out inclusion in connectivity, inclusion in information access, financial inclusion, mobile health inclusion for millions of Indians. It will play an increasingly significant role in serving as a critical link in implementing other vital initiatives including the Government`s ambitious Unique Identification Authority of India (UIDAI) program to provide biometric identity cards to more than 600 Million Indian citizens over the next five years. Double Digit Economic Growth The Telecommunications industry is one of the few bright spots in an otherwise sputtering global economy. Despite a slow down after the global economic crisis in late 2008, Indias economic recovery is well under way, with annual economic growth scaling 8.5%. The International Monetary Fund is projecting FY2010 real GDP growth to touch 9.7% (Krishnan, 2010). With rising domestic demand, rebound in exports post the 2008 global meltdown and increasing spending on infrastructure growth, India`s economy is projected to grow by double digits starting in 2012 (K.Jha, 2010). According to a recent Global Economic forecast `The Super Cycle Report 2010` published by Standard Chartered Bank, India will become the third largest economy in the world by the year 2020. It`s GDP is slated to grow to $9.6 Trillion by the year 2020 and $30.3 Trillion by the year 2030. In 2010, India`s economy stood in 12th place at $1.3 Trillion. Most analysts predict that if infrastructure bottlenecks are removed and governance is improved, India`s economic growth could climb up to as high as 12% GDP growth per annum for several decades.

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Fig 1: GDP Leadership Trends

Source: IMF, Standard Chartered Bank `The Super Cycle Report`, 2010

Growing Urbanization With increasing urbanization of India`s population, investment in telecom infrastructure is expected to accelerate in the coming decades. A Study by Mckinsey Global Institute predicts that 68 cities in India will have a population of 1 Million by the year 2030 and more than 70% of economic output will be generated by India`s urban population by the same year. This drive towards increased urbanization is expected to create a huge reservoir of demand for modern communications and internet services in Indias cities and towns.

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Fig 2: Population Change Worldwide (2010-2030)

Source: U.N, Standard Chartered Bank

Fig 3: Indias Urbanization Trends

Source: Mckinsey Global Institute

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Expanding Middle Class Indias rapid economic progress is unleashing a new middle class with rising spending power. By most estimates, India has at least a 100 Million strong consumer base that is expanding rapidly. This new middle class is younger, richer and technology savvy. It is demanding new consumer devices, electronic gadgets, software applications and above all, access to a Broadband connection. Rural Service Penetration A vast majority of Indias population (700 Million) which lives in villages and small towns has lagged behind in technology adoption because of the digital divide. However, the widespread availability of competitively priced handsets and mobile services in remote villages, prudent Government policy and rising rural incomes has boosted teledensity to 27% (Ram Kumar, 2010) in these markets. The telecom industry is now beginning to pay serious attention to this market segment at the bottom of the pyramid.

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1.1

Industry Structure

Indias telecommunications market is divided into four major categories that are referred to as circles (equivalent of MSA`s - Metropolitan Service Areas in the context of North America). The circles are Metros, Circle A, Circle B and Circle C. The three largest Indian cities of Delhi, Mumbai and Kolkata are categorized as Metros and the 28 Indian states and two of the seven Union territories fall under either one of the Circle categories making up a total of 22 circles across the country. Mobile services are not offered in five union territories because of their remote location, tribal population and on national security grounds.

Fig 4: Indias Telecom Circles

Image Source: Department of Telecommunications, Government of India

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Operators manage sales operations in each of these circles as a profit centre and have created regional hubs in each of the major regions of the country. Each hub is headed by a regional manager who is responsible for sales, collections, marketing campaigns, customer service, customer acquisition and retention and new service introduction. Operators were granted licenses to operate in each of these circles. There are two license categories Unified Access Service and Cellular Mobile Service. UAS license allows operators to provide both wireline and wireless services while the latter category allows operators to only provide mobile services in a given circle. Using 2G licenses (frequency spectrum) mobile operators provide voice and 2.5G GPRS data services. However, capacity issues have plagued operators for a long time. In 2010, the Government granted 3G and 4G Broadband Wireless Access (BWA) licenses to existing as well as new operators to ease the capacity problem and also offer next generation data services. Operators pay a percentage of their revenue as license fee to the Government and also remit a portion of their revenues towards the Universal Service Obligation Fund (USOF). The USOF is disbursed towards the provisioning of services in rural markets that are plagued by poor connectivity.

1.2

Telecom Ecosystem

The Indian telecom value chain comprises a wide range of players who play a critical role in the smooth evolution of the ecosystem. The contours of the ecosystem are constantly expanding with interest in the digital consumer emanating from adjacent industries like Financial Services, Healthcare and Retail. Prominent players in the ecosystem include the following: Operators, Cable TV Providers, Satellite DTH Providers, Independent Software Platform Vendors, Network Equipment Makers, Device Manufacturers, Mobile Content Providers, Applications Developers, Portal Providers, Broadcasters, Content Aggregators, Banks and Micro Finance Institutions (MFI), Retailers and Healthcare Providers Operators continue to maintain a `pole position` in the overall value chain. They own millions of customer relationships, control nationwide distribution channels, have forged partnerships with content providers, wield considerable industry influence and command formidable financial muscle. While they have held sway over the industry in the era of voice services and the formative years of mobile data connectivity and value added services, it remains to be seen if they will continue to exert the same level of influence in the era of the mobile internet and 3G services. Major Internet

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players including the likes of Google, Yahoo and Microsoft are yet to make a concerted push into the mobile market and await the arrival and the widespread availability and use of mobile data. Meanwhile, emerging companies in the retail and banking and micro finance verticals are in the early stages of building strong consumer franchises and leveraging the power of real time analytics and the mobile channel to create profitable customer relationships.

1.3

Regulatory Ecosystem

The Indian Telecom industry has been steadily deregulated since the late 90s with the pace and direction of deregulation accelerating since the 2G license regime was installed in 2004. Since fixed line infrastructure in the country is vastly under developed, the Government has focused attention on the mobile sector with impetus for investment, growth and competition. India`s telecommunications industry is regulated by the Telecom Regulatory Authority of India (TRAI). It is an agency that functions under the auspices of the Department of Telecommunications (DOT). The TRAI is currently working on formulating a mass Broadband deployment strategy after the conclusion of an extensive industry consultation process. While the TRAI is responsible for industry consultation and policy formulation and recommendation, the DOT, which is the arm of the Government, is responsible for enunciating telecom policy, allocating and licensing spectrum and setting industry direction. There are quite a few regulatory barriers to industry consolidation which explains why there are 14 mobile operators who offer services in different parts of the country and 7 national operators who offer services in all 22 circles. Current rules do not permit any operator to purchase more than 10% stake in another operator in the same circle. However, new changes being contemplated will allow two or more companies to merge their operations within each circle which has 6 operators or more, but will not be allowed to enjoy more than 30% market share after the merger. Operators will also be permitted to retain excess spectrum after an acquisition and become eligible for a refund in circles where they were allocated additional spectrum during the auction process. Though the regulatory barriers are falling, industry consolidation is unlikely to unfold anytime in the near future. This is because large national players have sufficient spectrum from the 3G auctions and have well

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established operations in the major circles and do not see a need for acquiring another player in the same circle. The introduction of Mobile Number Portability in November 2010 is expected to foster intense competition and increase churn. Many Indian subscribers use multiple SIMs from more than a single operator and recharge/top-up their accounts at the thousands of small mobile retail outlets and mom and pop stores across the country.

1.4

Fixed Line Voice Infrastructure

Indias dilapidated fixed line infrastructure, the high cost of rolling out retrofits and laying new copper and fibre network infrastructure in new residential towns and the need to deal with a complex web of right of way issues in cities have discouraged operators from investing in fixed telecom broadband networks. There are fewer than 40 Million copper lines in a country of a billion plus people. With the rapid growth in mobile subscriptions, a large number of older fixed voice subscribers are cutting the chord in favour of mobile connections. Except for the two state-owned incumbent operators - BSNL and MTNL, private operators have shown little interest in supporting fixed line telecom voice services due to unfavourable cost economics and declining demand for fixed voice services. As in other developed telecom markets of the world, investments in fixed line residential voice services are experiencing a secular decline and this trend is expected to continue into the future.

1.5

Mobile 2G Infrastructure

While investments in fixed line voice services have suffered a serious decline for various reasons spelt above, mobile infrastructure has grown exponentially over the past decade. As of September 2010, India reported 685 Million mobile subscribers with surging growth in both urban and rural markets. An average of 17 - 18 Million new subscribers are being activated on mobile networks (GSM and CDMA) every month the highest in the world - making India the second largest mobile market (in terms of subscribers) in the world after China. The mobile telecom market is brutally price competitive. With falling prices, declining ARPU (Average Revenue per User) continues to pose a major challenge to the long term health of operators. New licensees compete aggressively to win

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customers by offering deeply discounted prices for voice services. In the short term, incumbent operators are willing to sacrifice margin in favour of boosting volume growth and retaining market share. With mobile penetration reaching 80-90% in large urban centres, operators are also turning their attention to new rural users who yield much lower ARPU, in many cases, as low as $2-3/month. In the long run, it is inevitable that mobile voice pricing will attain equilibrium levels, led by market forces and industry consolidation in the long run. With aggregate nationwide market penetration hovering around 60%, there is still headroom for growth in basic voice services in less penetrated markets across the length and breadth of the country. Moreover, in urban markets, network congestion and call drop off are major issues that have plagued operators for many years. The recent allocation of spectrum for 3G networks is expected to ease some of the capacity issues faced by operators and improve service quality. Though the primary motive behind 3G services is to launch high speed mobile data services, voice services and SMS will continue to play an important role in the overall operator product mix. However, as the overarching story of Indian telecom shifts to 3G and 4G Broadband Wireless Access (BWA), the discourse about mobile services is likely to turn towards the launch of 3G services in 2011.

1.6

Internet, Cable and Broadband Infrastructure

While the growth of the Internet is taken for granted in many parts of the world, Internet growth in India has been quite disappointing. Individual users of Dial-up and Fixed Broadband services and the overall penetration of fixed Internet is still low by international standards. According to the Internet and Mobile Association of India (IAMAI), as of 2010, there are 52 Million Internet users and 10 Million Broadband users. DSL roll out has been limited to the major urban centres and fixed Broadband speeds offered is limited to 256Kbps in many cases, though data speeds being offered is constantly rising. Moreover, Indias cable TV network infrastructure is still largely fragmented and under financed. As a result, Cable Broadband is deployed sporadically across the country. In recent years the push toward industry consolidation and the transformation of Cable networks in the organized sector could be a harbinger of change in the long run. Infrastructure bottlenecks in the major cities combined with right of way issues, delays in obtaining permits from the local city bureaucracy have all conspired to keep Broadband Internet penetration to one of the lowest in the world. Fibre infrastructure is still deployed predominantly in the long haul and there are no major plans for wide scale deployment of FTTC (Fibre to the Curb)/ FTTH (Fibre to the Home).

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The Cable MSO (multiple systems operator) industry is going through rapid changes as the era of digitization is finally beginning to have an impact on the industry. India`s Cable networks provide services to 85 Million homes. Large Cable MSOs are now consolidating and organizing themselves for investment led growth in a market which was highly fragmented only a few years ago. Leading MSOs include companies like Digi Cable, In2Cable, Hathway, Wire and Wireless Limited, SCV Network and DEN Networks. There is vast scope for consolidation with thousands of small cable operators spread out across the country. Future investments in this space will enable the deployment of two way digital cable and Interactive TV, Broadband Internet and other multimedia services.

1.7

Investment Scenario

India has relaxed investment by foreign firms in the telecom operator sector by allowing up to 74% equity investment, with the rest of the 26% to be mandatorily in the hands of a local company. This has encouraged many global players to enter the market. This includes Vodafone, Maxis (Malaysia), DoCoMo (Japan), Sistema (Russia), Etisalat (U.A.E) and Telenor (Norway) to enter the India market. Telenor has invested $431.3 Million in Uninor, its local mobile arm while Sistema has invested $660 Million in MTS. Maxis (Malaysia), Singtel (Singapore) and Vodafone (U.K.) have been operating in India for many years. While foreign investors have shown interest in investing in the Indian market, Indias largest operator and market leader Bharti Airtel acquired the African Telco Zain Groups African mobile operations for $10.7 Billion, making it the largest acquisition by an Indian firm. Bharti Airtel already operates networks in Srilanka and Bangladesh besides its home market in India. In mid-2010, Indias Reliance Industries acquired Infotel, a 4G Licensee for $1.32 Billion to establish a foothold in the 4G Broadband Wireless Access (BWA) market. The investment climate for telecom investments in both the equipment and services space is expected to remain vibrant as the Government pushes for domestic equipment and handset manufacturing as key priorities for future growth in this important sector.

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2.0 Industry Trends

Indias communications, media and entertainment industries are slated for exponential growth over the next decade. With a young demographic, greater educational attainment, higher literacy and the growth of private English language instruction, Indias appetite for western style information, entertainment and communications services is growing rapidly. This section deals with the core industry trends that will propel the engine of growth over the next decade and beyond. The Top 10 trends that are shaping the future of the Indian telecommunications industry are highlighted below.
Fig 5: Trends Shaping Indian Telecom

1 2 3 4 5 6

FALLING VOICE ARPU; GROWTH IN 3G DATA ARPU INCREASING MOBILE PENETRATION IN RURAL INDIA INCREASE IN USAGE OF MOBILE BANKING, PAYMENTS AND MONEY TRANSFER INCREASING PENETRATION OF LOW COST SMART PHONES INCREASING PENETRATION OF MOBILE AND FIXED BROADBAND EMPHASIS ON OUTSOURCING AND CLOUD MODELS

7 8 9 1 0
Source: Next On Mobile; Fig 3: India Telecom Trends

RISE OF MOBILE VIDEO USAGE APP STORES AND USAGE OF RICH MEDIA CONTENT RISING SPEND ON MOBILE INFRASTRUCTURE SOFTWARE GROWTH IN ENTERPRISE MOBILITY

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2.1

New ARPU Growth from Data

The growing appetite for data connectivity is being driven by Indias need to transform itself into an information society. While voice ARPU is on the decline, the launch of 3G and 4G networks will drive data traffic and revenue since data connectivity packages cost more and yield higher revenue per user.

2.2

Mobile Penetration in Rural India

More than 70% of India population lives in villages and rural areas where farming and production of low level handicrafts make up the bulk of economic activity. A large cross section of the farming community lives and works on small farms and needs access to timely information about weather, crop prices, agriculture information etc. Rural market penetration of mobile services is expected to rise with new network build outs in rural areas, the launch of mobile data services, availability of low cost smart handsets and user interfaces that are suited to the needs of less literate users of mobile services. India Post, the countrys postal agency is becoming the central transaction node for promoting financial inclusion. The more than 7000 post offices and 2000 administrative offices are now being IT enabled and modernized to provide a whole host of services including savings accounts, postal life insurance and social payment distribution systems besides offering traditional postal services.

2.3

Mobile Money and Payments

The huge success of mobile money transfer, mobile payments and mobile financial services for the unbanked in markets like Kenya provides hope that similar success can be achieved in large unbanked markets like India. By leveraging the mobile channel and existing distribution modes to extend mobile financial services to large segments of the population who are denied access to bank accounts, operators are in a unique position to dominate the mobile money space. Moreover, the widespread roll out of smart cards to more than 600 Million Indians that would serve as Unique IDs under the Aadhaar project is expected to unleash new opportunities for newly minted entrepreneurs eager to offer new mobile financial services to rural consumers. Several banks, state Governments, oil marketing companies are working towards accelerating the process of financial inclusion as registrars and enrolment agencies in the Aadhaar project.

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2.4

Low cost Smart Phones

The smart phone is at the heart of the mobile Internet revolution. In many advanced markets, more than 25-30% of the user base has migrated to Smart Phones. In India less than 2% of the user base enjoys the Mobile Internet on Smart Phones. As prices of chipsets (Mediatek) fall, smart phones with capabilities like Qwerty Keyboard, DualSIM, 2MP Camera, Wi-Fi etc will be available for $100 or less. More and more users will be able to afford smart phones as price points drop below $100 driving demand for a new category of low end Smart Phones with advanced features that are taken for granted by most high end users today.

2.5

Penetration of Mobile/Fixed Broadband

The Indian Government has made a policy declaration that the next decade will be the decade of Broadband roll out across the country. The stated objective is to reach 100 Million 3G subscriber connections by 2015 (Sivarama Krishnan, Siddharth Vishwanath , 2010). While DSL and Cable Broadband connectivity will grow somewhat slower, mobile Broadband connectivity will become more widespread. The imminent launch of 3G services soon to be followed by 4G Broadband Wireless Access will fuel the growth of Broadband into the next decade and beyond.

2.6

Outsourcing and Cloud Models

Indias reputation as a low cost provider of mobile services has been enabled to a large extent by the early and pioneering decision of Indian operators to outsource their network and operations and business and customer support services. Outsourcing of non-core assets have allowed operators to focus on marketing, product development, new product introduction, distribution and brand. The advent of cloud computing business models offers new opportunities for vendors to reinvent the traditional outsourcing model.

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2.7

Rise of Mobile Video Usage

India is one of the largest emerging markets for mobile entertainment and mobile video is likely to be a key component of the growth in consumption of mobile media and entertainment. Mobile Video and Mobile TV usage will rise steadily with the roll out of 3G and 4G networks.

2.8

App Stores and Rich Media Content

Over the past few years, Mobile application stores and the consumption of rich media content have been growing exponentially in advanced markets. Internet companies like Google, Microsoft, and device makers like Blackberry and Samsung and independent app store white label vendors like GetJar are making a concerted push for new innovative applications.

2.9

Mobile Infrastructure Software

Indias mobile data network evolution is still at a nascent stage. As Indias data network evolves over the next decade, there is a gaping hole in the mobile software components that are fundamental elements in the efficient delivery of advanced mobile data services. These infrastructure software elements include billing, charging, service fulfillment, video and media gateways, messaging gateways, content management systems, mobile data optimization, mobile data management, and mobile service delivery platforms among others.

2.10 Growth in Enterprise Mobility

As technology advances lead to improved and more reliable networks, sophisticated mobile applications, web 2.0 tools, smarter devices, higher bandwidth and falling storage prices, an enterprise social media and mobility strategy is a key imperative in transforming into a connected enterprise. Indias large, medium and small enterprises are ripe for leveraging enterprise mobility platforms and applications to improve productivity, foster collaboration and focus on the mobile channel and social media to accelerate the transformation of their enterprise into collaboration based next generation enterprise with the ability to leverage social knowledge to drive their business.

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3. Market Outlook
3.1 Industry Size

The telecommunications industry in India is worth $43 Billion, with mobile services constituting the lion`s share of the revenues. Mobile services are also the fastest growing segment among the revenue growth engines of the industry.
Fig 6: India Telecom Industry Revenues

Revenue Metrics Fixed Line Revenues Mobile Revenues Long Distance Revenues Broadband Revenues Industry Size
Source: Voice and Data, July 2010, Gartner Research

Fig. in Billion (2009-10) $4 $30 $7 $1.8 $43

According to Pyramid Research, Indias telecommunications service industry is slated to grow to $72 Billion by the year 2015. While Voice revenues are expected to grow by a Cumulative Annual Growth Rate (CAGR) of 8.1%, data services revenue will grow by 27.3%. Mobile Value Added Services (including SMS) contributed 10-12% of total industry revenues in 2009.

3.2

Subscriber Projections

India is the second largest telecom market in the world after China. As of Sep 2010, there were 721 Million mobile and fixed subscribers. Total mobile subscribers stands at 685 Million. According to Pyramid Research, mobile subscribers in India are expected to grow to 1.2 Billion by 2015. Total market penetration stands at 64%.

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Fig 7: India Telecom Subscribers

Subscriber Metrics Total Telecom Subscribers (Mobile and Fixed) Mobile Fixed line Broadband Mobile Data (GPRS) Cable TV DTH TV

Fig. in Million (Sep 2010) 721 685 36 10 149 85 25

Source: Next On Mobile, Voice and Data (July 2010), Cable Quest

Fixed line subscribers are declining as more and more consumers cut the chord in favour of mobile usage. Though Broadband penetration is extremely low at 10 Million, this figure is expected to grow to 100 Million by 2015 and possibly to 200 Million by the year 2020.

3.3

Mobile Data Subscribers

While Indias mobile voice subscriber base has skyrocketed over the past decade, the use of mobile phones for accessing and using data services has languished. Only 20% of mobile subscribers have used data services and less than 10-15% use data services on a regular basis. Only 2% of mobile subscribers use Smart Phones though the rate of growth in Smart Phone usage is steadily increasing. A major obstacle to adoption of mobile data services has been the prevalence of high data tariffs. With the introduction of 3G services in December 2010, operators are planning to drastically cut data rates and introduce tiered pricing to encourage data usage. As Smart Phone adoption rises, more and more vendors and operators are gearing up to bring innovative applications to market by launching application stores, enabling developers to build high quality apps and also providing them with a payment platform to monetize their applications. Global mobile platforms - Google (Android), Blackberry and Nokias MEEGO are investing in creating local market ecosystems to spur innovation and drive adoption for mobile data services.

3.4

ARPU Trends

In keeping with global trends, for many years, mobile voice ARPU has been on a steady decline in the Indian market. Pricing has somewhat stabilized after another round of competitive price wars in 2009 and 2010. ARPU levels that were in the $8-10

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range three years ago have fallen to $4-5 in recent years. However, falling prices have been offset by growing subscriber numbers as more and more consumers at the bottom of the pyramid can now afford mobile phones. With the arrival of 3G services on the horizon and increasing uptake for Smart Phones, operators hope to improve ARPU from data services by selling a whole slew of compelling content and mobile applications to data savvy consumers. As operators pour money into next generation 3G networks, the ARPU uplift from data services is a key imperative for profitable growth and service innovation.
Fig 8: Revenue per Minute

Source: Telecom Regulatory Authority of India

3.5

Operator Market Share

3.5.1 Mobile Services Market Share The Indian telecom services market is extremely crowded with as many as 14 mobile operators vying for market share in one of the most fiercely competitive mobile markets in the world. Reliance Communications and Tata Teleservices provide services on both CDMA and GSM networks. The Top 7 mobile operators command almost 95% market share. For most new entrants, it will be an uphill battle to establish their foot print and expand their business in the long run. To acquire market share, they will have to invest in a vast distribution network of sales agents, advertise their services aggressively, provide low cost customer service, attract new consumers

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India Mobile Series

through aggressive pricing, reduce churn and build a sustainable customer base. With customer churn running as high as 30%, more than 90% of users seeking preference for pre-paid services, low level of customer loyalty, higher customer acquisition costs, poor retention strategies and a highly competitive market environment, the logical remedy should lie in market consolidation. At the moment however, market consolidation looks unlikely unless the new entrants can bolster their balance sheets to become attractive takeover targets and regulatory requirements at the circle level in terms of market concentration rules are relaxed. For the large established players, market consolidation will give them the pricing power necessary to boost profitability and invest in nationwide 3G and prepare ground for further investments in 4G systems and networks.
Fig 9: Mobile Operator Market Share
Operator Subscribers in Millions (Sep 2010) % Share

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Bharti Airtel Reliance Communications (GSM and CDMA) Vodafone India Tata Teleservices (Indicom + DoCoMo) Idea + Spice BSNL Aircel Uninor - Telenor MTS India MTNL Videocon Loop Mobile STEL - Batelco Etisalat Total

143.3 117.0 115.5 80.0 79.0 72.7 46.5 11.3 6.0 5.0 4.5 2.9 1.6 0.06 685.36

20.9% 17.0% 16.9% 11.7% 11.5% 10.6% 6.8% 1.65% 0.08% 0.07% 0.07% 0.04% 0.02% 100%

Source: MediaNama, CIOL, Indian Express http://www.medianama.com/2010/10/223-sep-2010india-added-over-12-4-m-gsmconnections-rcom-adds-2-m/; http://www.indianexpress.com/news/RCom-adds-2mn-subscribers-in-Sept/699102; http://www.medianama.com/2010/09/223-mtsindia-has-200000-data-card-subs-q2-11-loss-106-7-million/; http://www.ciol.com/News/News/News-Reports/Tata-Tele-crosses-80-mnsubscriber-base/142270/0/

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3.5.2. Fixed Line Services Market Share Under continued pressure from wireless, the fixed line market segment has been on a steady decline. The wireline subscriber base as of March 2010 stands at 36.96 Million. The market leader in this segment is BSNL, the state owned operator which has dominated the market by virtue of its monopolistic position in the market. Private sector players like Airtel, Reliance and Tata have been cautious in enhancing their investment exposure to the fixed line market owning to the huge cost involved in constructing a parallel copper and fibre infrastructure to reach millions of existing and new homes across the country. It is unlikely that the complexion of the fixed line market will witness any substantial change in the near or long term or attract new investments in Broadband i.e. DSL or FTTH technology. This means the industry is braced for increasing dependence on Wireless Broadband as the most viable and cost effective vehicle for increasing Broadband penetration.
Fig 10: Fixed line Services Market Share (Total Subscribers: 36.96 Million) Name of Operator BSNL MTNL Tata Teleservices Reliance Communications Tata Communications Bharti Airtel Others
Source: Cybermedia Research

Market Share 75.3% 9.5% 1.8% 3.2% 1.4% 8.3% 0.6%

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3.6

Market Segments

Indias telecom services market is a highly fragmented, non-monolithic entity. About 75% of users reside in urban centres while the rest reside in rural markets. The market is segmented into multiple categories as profiled below - Consumer, Small and Medium Enterprise, Large Enterprise and Government 3.6.1 Consumer Urban/Youth Segment The Urban/Youth segment (15-25 Years of age) is the most vibrant and dynamic among the many different market segments within the mobile landscape. These consumers are primarily concentrated in the large Tier 1 and fast urbanizing cities of New Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Pune, Ahmadabad and Bangalore. Extraordinarily brand conscious Likely users of Fixed Internet and Broadband Urbane and Suave Interested in Video, Music and Multimedia Higher than average voice users Mobile email users Blend in with global fashion trends Users of mobile apps and content Have a modern outlook towards life Active on social networks and communities Share rising aspirations for earning more, spending more, saving and growing careers Interested in enhancing personal lifestyle Likely to be smart phone users Urban Adults The Urban/Adult segment (25-40 Years of age) comprises of young executives, housewives, factory workers and others who belong to the pre-liberalization era (born before the year 1991). This is the single largest age group among all mobile users. Primarily voice and SMS users

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Brand Conscious Look for Value brands Higher than average voice users Users of social networks Potential users of m-education tools

Semi-Urban Youth This segment of mobile users can be found in the Tier 2 towns and cities that are now seeing rising incomes from increased economic activity. Video and music lovers Increasing disposable income Rising aspirations for a better life Likely Feature Phone/High end Phone user Spend conscious Seek value brands Looking to emulate their more urbanized counterparts living in large cities Aspiring for more educational opportunity

Rural Youth This segment of the population is the most interesting market segment as they constitute the vast majority of job seekers and entrepreneurs who are migrating to urban centres in search of jobs and partake in the booming economic growth. They are the products of the demographic dividend and the so called Youth Bulge. Brand Conscious Want to follow other influencers Semi-literate Increasing disposable Incomes Looking for Intuitive User Interfaces in accessing services Information Needy Crop Prices, Weather News etc Interested in watching video on mobile phones Users of Government programs for guaranteed employment Generation migrating from agriculture to industry

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Other characteristics of mobile users in India: About 75% of the users reside in urban centres and the rest in rural areas of the country. Among active users, 50% of users reside in both urban and rural centres. For rural youth, the mobile device is the most important choice for mobile entertainment. The typical Indian rural user has studied only up to high school and has been educated partly or completely in the local vernacular. 3.6.2 Enterprise Segments Large Enterprise Indias telecom revolution has contributed to the growth of a more globalized business environment. In turn, this connectedness is driving the need for faster and cheaper business communications: Global connectivity to link offices and employees across the globe Integrated voice, data and mobility communications services and solutions Domain expertise in industry verticals IP Connectivity Enterprise mobility for employees Heavy users of SMS for customer service, employee communications, marketing promotion Mobile email and applications Access to Enterprise applications (CRM, SFA, BI) Social media and enterprise collaboration
Small and Medium Enterprise

Mobile e-mail Enterprise SMS for customer service Users of pooled voice plans Data card users

Government

e-Governance m-payments land record management auto license issuance permits

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3.7

Market Analysis

There are five major spend categories in the Indian market that are critical from a supplier perspective. Each of these market categories are analyzed and explored in more detail in the following sections. 3.7.1. Network As India begins the much delayed roll out of 3G services in December, deployments of 3G and WiMAX networks will generate a profitable user base over the next 5 years, according to Maravedis and Tonse Telecom. Accumulated 3G enabled data subscriber base (notebooks, modems and dongles) will reach 40 million by 2015; 4G subscriber base including 802.16e and TD-LTE adopters will reach 33 million subscribers in 2015 and in the next five years, the 4G infrastructure market will reach an accumulated US$ 1.5 billion. 3.7.2. Software Platforms India`s software platforms and applications market is estimated to be $1.0 -1.6 Billion (3-5% of India`s telecom services industry of $43 Billion, which is based on a global norm for such estimates). As India`s telecom market continues to grow rapidly over the next 5 years, the market size for software platforms and services is estimated to reach almost $3 Billion by 2015. 3.7.3. Telecom Towers Telecom Towers present a $2 Billion market opportunity. Investment opportunities exist in new and renewable energy efficient power sources and energy management capabilities. Players in the Telecom towers space are evaluating new optimization technologies, outsourcing practices and tower management services. 3.7.4. Devices The device market is changing in complexion rapidly as a slew of local players are emerging on the scene. While they are yet to challenge the large established vendors Nokia, LG, Samsung and Sony Ericsson, they have ignited a new wave of competition in the hotly contested market for consumer device mind share. Android devices are

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being rolled out and Blackberry from RIM has announced 1 Million users in India which amounts to 2% of its global Smartphone shipments. 3.7.5. Content and Applications India is a major market for domestically produced filmed entertainment content and mobile applications including sports (cricket being the most popular sport). The Indian Mobile Data Services market is worth $2-3 Billion, growing at a CAGR of 15-20%.

4. Network
Indias telecom network infrastructure growth over the past decade has unleashed a revolution in telecom services across the country. The Indian Government has declared investments in Broadband networks as a strategic priority over the next decade to foster socio-economic prosperity and development and a core aspect of the Governments inclusive growth strategy. Investments in Broadband networks will involve a multitude of network architectures, network standards, business models and pricing mechanisms. It is also noteworthy that Wireless Broadband will play a major role in driving demand for Broadband services and bandwidth will continue to be precious commodity in a resource starved market like India for many years to come. Indias Mobile Telecom Equipment market was worth $10 Billion in 2009. According to Gartner, the telecom equipment market is growing at 8.5% and is expected to reach $23.5 Billion by the year 2014. Though the Government has recently auctioned 3G and 4G Broadband Wireless Access (BWA) spectrum licenses, demand for new spectrum will continue to rise as millions of first time users of the Internet are expected to join the Broadband revolution. While investment in Broadband networks will drive demand for consumer services, there is a dearth of investment in mobile back haul networks, long haul fibre networks and enterprise networks.

4.1

Internet and Broadband Usage in India

Although the Indian mobile telecom market has grown by leaps and bounds, Indias Internet industry has witnessed a lukewarm growth trajectory. In a country of a Billion

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people, there are only 52 Million Active Internet users as of 2009 according to research provided by the e-Tech Group, based on a study commissioned by the Internet and Mobile Association of India (IAMAI). There are 87 Million PC Users in a potential user base of 217 urban dwellers. There are close to 150 Million users of GPRS based data services users in the country and even amongst that user base only 20% or less are regular users of data services.

Several factors have contributed to the slow growth of the Internet in the Indian context: Non-affordability of connected devices (PC, Tablets, Smart Phones) Non-availability of locally developed Internet content Internet adoption limited to a few early adopters in urban enclaves and urban centres Low penetration of DSL and Cable Modem infrastructure (low number of 2- way network passed homes) English literacy limited to 10% of the population Poor web design and lack of focus on high quality content rendering Lack of mobile local language content Slow roll out of 3G and 4G networks

4.2

State of Broadband Roll out

DSL has been the most widely deployed Broadband technology around the world because it involves utilizing existing infrastructure and rewiring existing Central offices without having the need to dig up trenches in city streets. Every country in the world has grown its national telecom network infrastructure through sustained investments in DSL and in select markets like the United States and Canada, in addition to DSL; Cable Modem technology is widely adopted because of the maturity of existing cable networks. Based on the pace of Broadband roll-out in India over the last 6 years (stemming from the Broadband Policy of 2004), and the history of slow Broadband roll outs in other markets, policy makers, operators and content providers have to contend with and surmount multi-dimensional roll out related issues. First, the poor state of the current fixed line infrastructure and the inability to deploy DSL on a large scale is a major impediment to quick and rapid roll out of Broadband services. Second, since the current wireline network only supports 36 Million fixed line connections and since

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these connections are predominantly owned by state owned companies and are in bad shape, it is hard to justify a business case for pouring more investments into DSL. Moreover, a case for leveraging high cost fibre based technologies to facilitate ultraBroadband connectivity for more bandwidth intensive applications like Broadcast Video, entertainment; Multi-player gaming etc is yet to be made. Finally, since the private sector dominates the market, major operators are disinterested in rolling out networks in remote villages due to the poor quality of subscribers. In the longer run, as affluence in urban centres grows, in more lucrative Metro and Urban markets, FTTC could be the technology of choice in enabling a connected society and unleashing a digital future that can be embraced by all Indians.

4.3

Broadband for All Vision Agenda for the Future

Fig 11: Broadband Adoption in India

Affordable Internet Devices Local Mobile and Internet Content Demographic Dividend

e-Government

Broadband Adoption

Multimedia

Affordable Bandwidth

Schools/eEducation

e-Payments/UID

Source: Next On Mobile

The Government of India has identified mass scale Broadband deployment as a major strategic imperative over the next decade, dubbed The Broadband Decade. More affordable (sub $100) network-enabled Tablet style devices are being designed and manufactured in India for the mass market by companies like Novatium. The

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devices will assume many form factors including smart phones, smart tablet computers among others. Rural Broadband is being promoted through directed investments in rural broadband funds that are instituted and managed by the USOF. This fund is disbursed through a open RFP process to local IT entrepreneurs to establish, manage and operate networks in small communities all across the country. The definition of what constitutes the baseline in terms of minimum data speed is being reviewed every 2 years and will be steadily upgraded over the next 10 years to reach speeds of 3MBPS, 5MPBS and beyond. Tiered Broadband is now a major component of the tariff plans being offered by Broadband service providers so various market segments (heavy users vs. light users) could choose the most appropriate pricing plan that matches their usage patterns and disincentives are built in so a few heavy users do not turn into bandwidth hogs.

4.4

3G Roll-out

In May 2010, the Department of Telecommunications of the Government of India conducted a 3G auction that led to the licensing of spectrum to operate 3G networks across the country. Seven mobile operators paid $15 Billion to license new spectrum in 71 blocks to roll out 3G services across all 22 circles. The State Owned operators - BSNL and MTNL who own 3G spectrum (being directly controlled by the Government they did not participate in the auction and were granted spectrum earlier) offer 3G services today, but take up rates have been poor due to low key marketing and lack of awareness. BSNL now offers 3G services in 22 circles and MTNL in 2 circles. BSNL has reported a total usage base of 1.3 Million subscribers and MTNL has about 0.5 Million subs. Several operators also provide data card services to laptop users and there are 3 Million data card users as well. According to Edelweiss securities, the number of 3G users is likely to rise from 67 Million in 2012 to 194 Million by 2015. Though the arrival of 3G services have been heralded by a lot of industry buzz about the limitless possibilities that lie ahead, the road to growth of the 3G mobile data market is likely to be a bumpy one. Since the central lesson gleaned from other global mobile markets suggest that there is no killer application in the 3G world like voice was to the world of 2G, the scenario in India is unlikely to be different from the global 3G experience. In the short term, operators

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will struggle to define their 3G services portfolio, determine the right price points for service adoption and drive demand for a plethora of advanced multimedia data services. A list of operators and their network partners is presented below:
Fig 12: Operators and 3G Network Partners Operator Tata DoCoMo Idea Reliance Communications(13 Circles) Bharti Airtel (12 Circles) Tata Teleservices Vodafone India (9 Circles) Aircel
Source: Next On Mobile

Network Partner NSN in 4 Circles; Huawei in 5 Circles ZTE Ericsson (16 Circles), NSN (3 Circles) and Huawei (3 Circles) Huawei in 5 out of 9 circles Ericsson, NSN Ericsson

4.5

4G BWA (Broadband Wireless Access)

As the evolution of Broadband deployment gathers pace and 3G networks are being rolled out with a phased introduction of services across all 22 circles, the market is already gearing up for the launch of 4G Broadband. In May 2010, several operators including Qualcomm, Infotel, Airtel, Aircel, Tikona Digital Networks and Augere Networks paid $8.6 Billion for 4G Broadband Wireless Access licenses. Operators plan to roll out 4G services in 12-18 months. State owned BSNL is implementing ambitious plans for its WIMAX network in the 2.5GHz band and has deployed more than 1600 base stations in 22 circles across the country. Reliance Industries and Ericsson are testing LTE-TDD 4G networks for roll out services in all 22 circles.

4.6

Cable Networks

Cable TV reaches millions of homes in India, including remote rural markets. Two-way Cable networks could bring Cable Modem based High Speed Internet service to major metros, cities and Tier 2 towns across the country. Currently the Cable industry in India is too fragmented to make this happen. Modernizing the Cable TV network would involve billions of dollars, large scale players with financial capacity to fund high bandwidth networks to offer a slew of information, communications and

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entertainment services. The Cable TV industry offers immense scope for Cable TV operators to justify investments in Convergence and IP technologies to provide local telephony services, wireless services and other information and entertainment services.

5. Software Platforms
This section deals with the role that Communications software and other enterprise software platforms that are required to operate manage and generate revenues play in enhancing the competitiveness of telecom operators in the Indian market.

5.1

Role of Software Platforms in Cost Competitiveness

A major competitive advantage for Indian operators is their ability to operate a systems infrastructure at a cost point that is lower than the operational costs in most advanced economies of the world. Apart from deploying low cost network infrastructure, software platforms play a major role in enhancing their competitiveness. How are they able to operate at such low costs, yet maintain service levels to their subscribers? To better illustrate the point and explore the aforementioned question, a quick comparison of the key operational metrics of two of the largest telecom service providers in India and Canada is provided below. Bell Canada is Canadas largest Integrated Communications Company and Airtel is Indias market leader in the Communications space. Both are integrated telecom players with similar businesses Mobility, Broadband, Enterprise and DTH. Both these companies have national footprints and both companies emerged out of a highly regulated environment. Fig 13: Operational Metrics: Bell Canada Vs Airtel Cost and Revenue Attributes Mobile Subscribers Operating Revenue Operating Income Operating Margin Bell Canada 7 Million $4.52 Billion $ 869 Million 19.22% Airtel 200 Million $3.33 Billion $1.04 Billion 31.2%

Source: Bell Canada Q32010 Financial Statements; Airtel Q22011 Financial Statements

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While the cost competiveness of Indian operators cannot entirely be attributable to the role of low cost software platforms, it is fair to assume that software platforms play a major role in improving operational efficiencies and add new revenue streams to their existing revenue engines.

5.2

Vendor Selection

The table below depicts a description of the software platforms that form the key IT infrastructure elements in a telecom operators environment and their primary function in improving business performance.
Fig 14: Software Platforms in the Operator Environment

Type of Software
Communications Software Infrastructure

Description of Systems
Service Delivery Platform, Multimedia Content Delivery Gateways, Mobile Email Gateway/Middleware, Platform for Enterprise Mobility, Inter-Carrier Messaging Gateway, Mobile Internet Gateway, Video and multimedia Transcoding and streaming engine among others. BSS or Business Support Systems - Billing and Charging systems, Payment Systems, M-Commerce systems Customer Care and Revenue Assurance Systems. Service Activation, Provisioning, Service management and network inventory management among others. HR, CRM and Self Care, ERP, BI software that are required to operate and manage customers and employees of an operator at the corporate level. Network Management Systems, Network Planning Software, Network Optimization Software. Revenue producing, revenue enhancing and user experience software including

Primary Functions
These systems form part of the core software infrastructure that play a vital role as service delivery middleware, adaptation and network abstraction layers. These systems are the primary revenue enabling engines for the operator. These systems are the primary service orchestration engines for the operator. These are strategic systems at the application level that drive organizational goals and objectives. These systems are network layer systems that support network management. These systems create new revenue engines at the

Revenue Management and Assurance Operational Support

Enterprise Software Applications Network Operations Application Layer

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Content store, VAS Platforms, mobile applications, mobile analytics, messaging software, mobile advertising delivery engine, content discovery software, applications personalization and recommendation software, operator specific user interface among others. Device Software Device operating systems, device protocol stacks, device management and OTA.

application layer by delivering new consumer services.

These systems are device layer software systems that are either sourced from device or OS vendors by operators to customize and personalize devices.

Source: Next On Mobile

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Fig 15: Vendor selection for Software Platforms

Type of Software
Communications Software Infrastructure

Vendor Selection Process

The operator looks for a proven technology vendor who can deliver best of breed solution at an affordable price. Typical vendor selection follows a due diligence process through an RFI phase culminating in an RFP. If the solution implementation is Stand Alone and light on integration, the operator would work directly with the vendor without the need for a Systems Integrator (SI).

Revenue Management and Assurance

Vendor selection follows an intensive RFP process through Systems Integrators who play the role of Prime Integrator. Vendors work with a single SI or all SIs who are active in a particular operator account. For Revenue Assurance solutions, the operator engages a business consultant or a Systems Integrator as a prime vendor to study the leakage problem. Vendor selection depends on the appropriateness of the solution to address the problem and

Operational Support

The operator looks for a proven technology vendor, but would bring in SIs to respond to RFPs.

Enterprise Software and Applications

Vendor selection follows an intensive RFP process through Systems Integrators who play the role of Prime Integrator. Operators prefer their network equipment partner to supply network management and network optimization solutions. However they are open to working with ISV who offers unique solutions to problems.

Network Operations

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Application Layer

Operators are open to working with a large number of independent players in this space and often make decisions very quickly due to the need to generate revenues (Time to Revenue).

Device Software

Operators work very closely with the device vendors in this area. But Indias GSM operators focus less on this aspect because they do not bundle or sell devices as part of their services. CDMA vendors (Reliance, MTS, Tata Teleservices)

Source: Next On Mobile

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5.3

Software Platforms: Market Opportunities Assessment

This section provides a detailed analysis of the opportunities for Canadian ISVs operating in the mobile software platforms and applications space. The comments, analysis and the views expressed are to be seen not only in the context of the market opportunity in India, but also from a global perspective. The trends that are shaping the Indian market are largely dependent on domestic factors, consumer preference for appropriate technology solutions, differences in the pace of technology adoption and monetization models that are unique to the Indian market. 5.3.1 Content Aggregation, Engagement, App Stores and Monetization
Fig 16: Content and Applications Market

No 1.

Attributes Market Definition

Description Carrier walled gardens/WAP portals and App Stores/Malls that provide non-messaging data service revenues for operators (Typically referred to as ONDECK content) Operators are building their own branded app stores by leveraging white label platforms. The market is in a state of flux as operators face new competition from OEM and independent app stores. With the proliferation of Smart Phones and powerful browsers, operators would have to compete with open platforms and applications for consumer mind share.

2.

Trends

Market Size

New app stores and app store malls will replace traditional operator walled gardens though many app stores offer free applications. The paid applications market is gearing up for growth as carrier billing and charging systems for mobile applications are being rolled out more aggressively across multiple content and applications platforms.

4.

Products Required

Content Management & Billing platform with full integration to operator network and provided as a managed services offering App Store Platforms

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5.

Growth Potential

Traditional ringtones, games, wall papers, music, Ringback Tones market growth is stagnant and in some cases declining. Operators are always on the lookout for exciting new content and applications for their app stores. Revenue share with content providers is typically 20% of retail billed revenue. Indian operators typically retain 70-80% of retail revenue. Content Management System vendors, App Store White Label Vendors and content aggregators Amdocs/QPASS, Motricity, Wider Than (RBT), Quickplay Media (Video Clips), IMI Mobile, On Mobile (RBT and Reverse RBT), Rock Entertainment, GetJar, Flypp from Infosys

6.

Revenue Stream

7.

Market Players

8. 9.

Business Model Entry Barriers

Platform (Managed Services/Mobile Cloud) + Support Domestic Competitors Work directly with operators. Games, Utility Apps, Productivity Apps, Entertainment Apps, Wallpapers, Ringtones, Weather, News, Music etc New app stores will gradually erode the value of traditional paid content offered over WAP (Wireless Application Protocol) traditional store fronts, as free content and apps are now available through iTunes and other vendor specific app stores.

10. Entry Strategy 11. Content Services offered 12. Market Inhibitors/Threats
Source: Next On Mobile

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5.3.2 Mobile Marketing, Off-Deck Content Aggregation & Management

Fig 17: Mobile Marketing and off-deck Content

No 1.

Market factors Market Definition

Description Content is sold Direct to Consumer with operator involvement limited to approving the content as per carrier defined guidelines and billing for the content (Typically referred to as OFF-DECK content). Enterprises and brands conduct mobile marketing campaigns by leveraging mobile marketing and messaging platforms; Mobile channels include primarily SMS but also WAP and now the mobile web.

2.

Trends

Operators are reviewing their audit mechanisms and revamping content approval processes/guidelines. The advent of new App Stores is a serious threat to the growth prospects of the traditional off-deck market as new services players (GAMBEYs) like Apple, Google, Blackberry, Yahoo, E-Bay and Microsoft are reinventing the off-deck category through their Open Platform D2C initiatives. Market for mobile marketing campaigns - $10-20 Million. Premium Paid Content - $ 40- 50 Million. Content Management, Messaging & Billing platform with full integration to operator network (SMSC, WAP Gateway, and MMSC) and provided as a managed services offering to content providers. Mobile Marketing and Promotion Platform Content sold through D2C websites, short codes (PSMS) based opt-in and carrier billing and charging mechanisms.

3. 4.

Market Size Product Offering

5.

Growth Potential

Traditional off deck ringtones market is stagnant and a declining market with poor prospects. The Mobile marketing market is growing and could potentially reach $50-100 Million over the next 5 years.

6.

Revenue Stream

Vendor revenue share is typically 60-70% of billed revenue.

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7. 8. 9. 10.

Market Players Business Model Entry Barriers Entry Strategy

Air2Web, Single Point, Tanla Mobile, Value First, 2ERGO India. SAAS based business model. There are as many as 10-12 off-deck aggregators. Very little room for more players in a highly crowded market. This is a sunset opportunity for new entrants who want to play the role of Content and messaging aggregator Many of the lower rung players in this space do less than $1M/year. Wallpapers, Ringtones, Weather, News Subscriptions, Quiz, Participation TV, Competitions and Promotions. App Stores pose a serious threat to this business model.

11. 12.

Content Services offered Market Inhibitors/Threats

Source: Next On Mobile

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5.3.3 Mobile Commerce & Payments

Fig 18: Mobile Commerce and Payments

No 1.

Market factors Market Definition

Description Mobile Commerce includes both digital good and nondigital good transaction processed and billed through the mobile device and an accompanying backend commerce infrastructure. Mobile Commerce may be categorized as follows - mobile banking, mobile coupons, mobile ticketing, mobile wallet, mobile payments (NFC based, Mobile P2P) etc.

2.

Trends

Most operators are currently in early stage trials with mobile coupons, mobile ticketing type of applications. Mobile Banking is now widely available in the India market through large Banks (ICICI, HDFC and other large public sector banks). Operators, Banks and Merchants are all vying for pole position, so technology standards have been slow to evolve. But NFC is slow to be rolled out as device manufacturers position themselves as services companies.

3.

Market Size

M-Commerce (both digital and physical goods, micro payment and macro payment) could be potentially worth billions of dollars. Mobile Wallet Platform. Mobile Banking Platform and Mobile Money Transfer Platforms. Mobile NFC Platform.

4.

Product Offering

5. 6.

Growth Potential Revenue Stream

Huge growth potential, but timing for hockey stick growth curve still uncertain. % of transaction value, platform license fee, professional services and support.

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7.

Market Players

Gemalto, Nokia, Obopay, mchek, Jigrahak, IDRBT, Atom Technologies, and Visa. SAAS based business model. Huge investment in market trials with no guaranteed ROI Market Timing Risk Adoption Risk Lack of payment standards (Mobile Payment Forum of India and National Payments Corporation of India are working on standards) Poorly grown ecosystem 1. Partner with local, global players (ex. Obopay) 2. Engage with multiple players and partners in the ecosystem 3. Build internal capability to work with retail, media and financial services verticals 4. Gain market visibility 5. Develop more proto types and participate, speak at trade shows 6. Solution with a focus on India market opportunity Coupons, Wallet, Banking, Money Transfer, M-payments etc. Slow pace of market evolution, lack of sizeable revenue opportunity given the nascent stage of the market.

8. 9.

Business Model Entry Barriers

10. Entry Strategy

11. Services offered 12. Market Inhibitors/Threats

Source: Next On Mobile

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5.3.4. Mobile Application Stores

Fig 19: Mobile Application Stores

No
1.

Market factors
Market Definition

Description
Mobile App Stores involve the next generation of content and downloadable apps with mobile WEB capabilities, HTML 5, native client apps and the rapid integration of new services with carrier content billing. With the gradual collapse of the walled garden model, operators are once again focusing their investments on reinvigorating their content and media portfolio. Many operators will co-opt stores from Android, and Blackberry) and work with the likes of Infosys, Amdocs, Comverse, Getjar and Handango to build their own app stores. Some operators are likely to deemphasize their own app stores while working aggressively to promote 3rd party app stores to sell new apps.

2.

Trends

3.

Market Size

Apple iTunes has no local presence in India. Android has plans to launch an Indian version of the Android market place. (Timing TBD). Blackberry App World, Microsoft and Nokia Ovi are planning to expand their market presence. Operators dominate the app store landscape.

4. 5. 6. 7. 8. 9.

Product Offering Growth Potential Revenue Stream Market Players Business Model Entry Barriers

App storefronts on the WEB, WAP, HTML, Downloadable clients. Immense growth potential for paid apps, free app, freemium apps, and advertising funded apps. % of transaction value for paid apps. Getjar, Android, MSFT, Ovi, Blackberry. SAAS based business model. Existing players Involvement of large behemoths like Nokia, Blackberry and Android Need for an App storefront platform Application store as a white label offering for other 3rd parties who are interested in launching an app storefront of their own. Mobile Apps, Downloadable Content. Poor demand for paid mobile applications as consumers warm up to widespread availability of free applications.

10. 11. 12.

Entry Strategy Services offered Market Inhibitors/Threats

Source: Next On Mobile

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5.3.5. Mobile Advertising

Fig 20: Mobile Advertising

No Market factors
1. Market Definition

Description
Enabling technologies and aggregation platforms for brands, enterprises and media channels to reach their end-users through the mobile channel. Mobile enterprises and brands are seeking to leverage every possible mobile channel including SMS Short codes, 2D Bar codes, WAP, MMS, and HTML etc.

2.

Trends

Bar code marketing; Mobile Coupons; NFC based smart poster marketing and interactive advertising; Short code marketing; Campaigns involving marketing promotions, loyalty etc. Huge growth opportunity. Campaign management platform, bar code registry, coupon redemption systems etc. Immense growth potential Mobile ad spend projected to grow to several billion dollars by 2013. Mobile ad spending by brands, spending on marketing campaigns, loyalty programs. Komli, VELTI, InMobi, Google, Yahoo Core campaign management platforms, ad server platform vendors, campaign management and creative agency services, ad campaign business operations. Lack of sales channel Dominance of large mobile advertising platform and other core technology vendors Understanding requirements of domestic consumer brands Leverage campaign manager platform and engage more aggressively with brands through marketing agencies, The focus of offerings should be on the mobile marketing ecosystem and not on operators.

3. 4. 5. 6. 7. 8.

Market Size Product Offering Growth Potential Revenue Stream Market Players Supplier Services offered Entry Barriers

9.

10.

Entry Strategy

11. 12.

Services offered

Ad inserts, Ad delivery, Analytics More advanced ad delivery engines, advanced analytics driven contextual advertising

Market Inhibitors/Threats Source: Next On Mobile

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5.3.6. Mobile Messaging, Social Address Book, Social Networks and UGC Fig 21: Mobile Messaging No
1.

Market factors
Market Definition

Description
The market includes end user mobile services like P2P SMS, MMS, email, IM, mobile social address book, social networks, UGC, twitter. Unified Communications; Unified Messaging/Converged Messaging experiences; Social Community and mobile social media. Huge potential for growth Platforms and enabling technologies for messaging services, social networking/UGC and social e-reading. Messaging volumes will continue to increase over the next several years. Need for connectivity to consumer oriented community and social media will drive demand for new UI, converged messaging etc. Primarily from license and product maintenance/support. Openwave, Comverse, Nokia, Ericsson, Acision, Synchronica, Huawei, SEVEN, GOOD Technology, Microsoft, Syniverse, Neustar. SMSC, MMSC, MOBILE email, IM and UGC platforms. There are too many well established infrastructure and platform vendors in this space with years of investment in new product development and R&D. Work directly with operators as well as with Systems Integrators SMS, MMS, e-mail, Aggregation Converged messaging platforms

2. 3. 4. 5.

Trends Market Size Product Offering Growth Potential

6. 7. 8. 9. 10. 11. 12.

Revenue Stream Market Players Supplier Services offered Entry Barriers Entry Strategy Services offered Market Inhibitors/Threats

Source: Next On Mobile

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5.3.7 Mobile Enterprise

Fig 22: Mobile Enterprise

No
1.

Market factors
Market Definition

Description
The market includes platforms, professional consulting services, application development and IT services for enabling and mobilizing enterprise application users. Major enterprises and SME is rapidly mobilizing their application suite; Enterprise mobility moving beyond enterprise email; Workforce, field force management solutions need systems integration expertise for rapid time to market and time to revenue for the enterprise. Systems Integration services, Immense growth potential. Primarily from SI, Software/Middleware development projects. Large consulting firms, Telcos with enterprise mobility practice. Consulting, Professional services, advisory services, systems integration and implementation services, applications development services etc. Accenture, CGEY and internal Telco Enterprise Sales teams. Identify technology partners and build a team of enterprise mobility practice specialists in verticals like Retail, Financial Services, Airlines, and Transportation etc. Focus on major enterprise platforms Sybase 365, Blackberry, Microsoft, Oracle etc. This is an opportunity that offers immense potential, but would take a many years to build domain expertise and the right talent and capabilities.

2.

Trends

3. 4. 5. 6. 7. 8.

Market Size Product Offering Growth Potential Revenue Stream Market Players Services offered

9. 10.

Entry Barriers Entry Strategy

11. 12.

Services offered Market Inhibitors/Threats

Enterprise mobile e-mail, social enterprise collaboration. Lack of solid ROI models for enterprise mobility in the Indian context.

Source: Next On Mobile

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5.3.8. Mobile Video/TV

Fig 23: Mobile Video/TV

No Market factors
1. 2. Market Definition Trends

Description
The platform to provide end to end mobile video and TV services for mobile subscribers. Bandwidth availability is becoming more abundant for mobile video delivery with the launch of 3G networks to be followed by 3.5G HSPA, HSPA + and LTE/WIMAX. Mobile Video Streaming servers, Mobile Video Analytics, Mobile Video content adaptation, Media Gateways and Content Transcoding. Free video services on the Internet are moving to the world of mobile YouTube, Hulu Advertising funded mobile video Paid mobile video and mobile TV New mobile video-centric Personal TV devices New Spectrum allocation during the next phase of spectrum auctions for bandwidth intensive Mobile TV Revenue sharing by operators with content providers, Broadcast studios, content providers for Premium Content Mimobi TV (Apalya Technologies QCOM), ROK Entertainment, Jigsee, IMI Mobile, On Mobile. Premium and Freemium Content Delivery Model; Some ad funded content. Lack of Premium Content Partners Lack of Broadcaster Partnerships Knowledge of operator data network architectures and inner workings Partnerships Working directly with operators for Go To Market and billing system integration Mobile video, Mobile TV, Video clips Lack of bandwidth for Video, Poor quality of video delivery

3. 4. 5.

Market Size Product Required Growth Potential

6. 7. 8. 9.

Revenue Stream Market Players Business Model Entry Barriers

10.

Entry Strategy

Services offered Market Inhibitors/Threats Source: Next On Mobile

11. 12.

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5.4

Vendor Success Factors

In order for Canadian software vendors to succeed in India, an India-centric Software Strategy is the most predominant prerequisite for long term success in the market place. The key elements of an India-centric strategy would include the following attributes: Product Strategy Canadian software vendors need to build a product portfolio that can be `localized` and suitable for adoption in the India market. They should invest in a product localization initiative with a CTO at the helm to capture a greater share of the fast growing India market. Focus on the most essential product features in a software solution without all the bells and whistles. Indian product suite should be `light on features and functionality (only the must haves and minimal nice to haves), but `heavy on robustness, scalability, reliability and high availability. Local Solutioning A local India centric solution strategy team with local market, network and systems knowledge and a professional services team that can customize the product with the necessary services expertise to suit the needs of individual operators is a critical imperative for sustainable success in the market place. The vendor should leverage its local technology talent and expertise to customize the Canadian solution set for the India market. Canadian vendors should leverage their more than 10 years of implementation, consulting and delivery experience in working with 3G operators around the world by establishing a Pre-Paid and Emerging markets experience centre and Centre of Excellence in India. Such an initiative will establish thought leadership in this space and spur solution innovation for the Indian 3G services market which is expected to grow rapidly in the coming decade. Companies like Redknee have been pioneers in taking this route to the Indian market entry. Managed Services They have also imbibed exceptionally prudent asset thin managed services based sourcing approach to their entire systems infrastructure and IT needs without compromising on sovereignty or strategic flexibility of their systems. Canadian vendors should develop expertise in building managed services models for the Indian

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market. New cost models for delivering low cost managed services should be developed using cloud computing principles. Partnering Canadian software vendors already partner with the major equipment vendors globally. They needs to be selective in working with local partners and services firms since these firms also compete with them in the OSS and BSS Systems Integration market. Pricing Strategy Since the Indian market can only support an ARPU of $4-5, it is important for Canadian software vendors to adopt a pricing approach and strategy that can adapt to local market needs. Getting pricing right is a key ingredient in winning deals. Autonomy to Local Teams In any emerging market, it is important to defer greater autonomy to local teams so they can take quick action to resolve conflict situations stemming from major customer issues. It also fosters local leadership talent that goes on to build long lasting customer relationships.

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6. Indian Operators
This section provides an overview of Indias telecom operators and profiles the major operators who play a significant role in driving the mobile telecommunications industry. Fig 24: Operator Revenues Revenues (2009-10) Billions Bharti Airtel $9.90 BSNL $7.60 Vodafone India $5.50 Reliance Communications $5.20 Idea $2.50 Tata Communications $2.60 Tata Teleservices $1.60 Aircel $1.10 MTNL $0.80 Source: Voice and Data, Sep 2010 Name of Operator

Bharti Airtel Fig 25: Bharti Airtel: Key Highlights Business Portfolio Unique Proposition Non Voice Services Market Presence 3G Roll out Consumer Mobile, Enterprise, DTH, Integrated Telco, Broadband Brand Image, Market Leader 12% of total revenues India, Africa. Bangladesh, Srilanka December 2010

Source: Next On Mobile

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Reliance Communications
Fig 26: Reliance Communications: Key Highlights

Business Portfolio Unique Proposition Non Voice Services Market Presence 3G Roll out

Consumer Mobile, Enterprise, DTH, Integrated Telco, Broadband, Global IP Network Innovator, Price Leader, Offer both CDMA and GSM services GetJar platform with 65,000 free applications; MSFT Hosted Infrastructure platform IPTV Services Nation-wide Data Card based Internet Broadband India December 2010

Source: Next On Mobile

Tata Teleservices
Fig 27: Tata Teleservices: Key Highlights

Business Portfolio Unique Proposition Non Voice Revenues Market Presence 3G Roll out

Consumer Mobile, Enterprise, DTH, Integrated Telco, Broadband Partnership with Japans NTT DoCoMo, Provide services under both Tata Indicom and DoCoMo brands Push email, Rural VAS, Photon Mobile TV India November 2010

Source: Next On Mobile

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Idea
Fig 28: Idea: Key Highlights

Business Portfolio Unique Proposition Non Voice Revenues Market Presence 3G Roll out

Consumer Mobile in all 22 circles nationwide Pure play mobile operator; App store powered by Spice Digitals Mobstore to be launched 12% India Q1 2011

Source: Next On Mobile

BSNL
Fig 29: BSNL: Key Highlights

Business Portfolio Unique Proposition Non Voice Revenues Market Presence 3G Roll out

Consumer Mobile, Enterprise, Integrated Telco, Broadband State Owned with a social consciousness; First to launch 3G Services; Major foray into WIMAX for 4G 20% of total revenues; Mobile TV, High Speed Mobile Internet India Available Today

Source: Next On Mobile

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Vodafone India
Fig 30: Vodafone India: Key Highlights

Business Portfolio Unique Proposition Non Voice Services Market Presence 3G Roll out

Consumer Mobile Global Brand in India; First operator to launch Apple iPhone 4, Launched app store with 10,000 downloads Pan-India December 2010

Source: Next On Mobile

Aircel Fig 31: Aircel: Key Highlights Business Portfolio Unique Proposition Non Voice Revenues Market Presence 3G Roll out Consumer Mobile Unlimited Internet Plan, Daily Internet Plan Pocket Express Mobile app store front; 7% of total revenues India Likely in Q1 2011

Source: Next On Mobile

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7. Telecom Towers
As Indias mobile subscriber base has grown over the past decade, its voracious appetite for new telecom towers to house the Microwave Antennas, Base Terminal Stations and other microwave electronics (multiplexers, cell sites, switches, BTS, radios, microwave dishes) that are required to provide subscriber coverage for voice and data services have grown exponentially. Telecom towers now form part of the critical backbone infrastructure that is required to foster sustainable growth of telecom service coverage over the long term. Starting in 2005, operators have spun off their tower properties into independent companies that can operate as independent businesses with their own growth plans. Several tower infrastructure companies have emerged from this disaggregation exercise that has also spawned tower construction, structure optimization, power management, planning and deployment as a specialized activity. There are more than 350,000 towers in operation in the market today and this figure is expected to rise to 554,000 by the year 2015 (Singh, 2010). Todays tower operators support up to 4 tenants per tower. Tower infrastructure specialist companies like Bharti Infratel, GTL Infrastructure, Viom Networks (formerly Quippo and WTTIL) and Indus Towers have introduced site sharing/collocation models that are structurally optimized for maximum load carrying capacity taking into account zoning issues, public opposition to building new towers and other local regulations. More than ever, telecom tower infrastructure companies are instituting major steps to utilize existing towers structures through antenna height optimization by increasing their heights, strengthening of towers making them healthier, site quality audits and better power management so they could maximize the revenue potential of each tower. By most estimates, Indias intensive tower based power consumption results in more than 5.3 million tons of green house gases. GTL Infrastructure, a major tower player has estimated the need to spend close to $500 million on power management solutions in the next few years.

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Fig 32: Tower Companies

Source: Edelweiss

7.1

Infrastructure Sharing Models

There are several infrastructure sharing models in the context of the India market that needs to be understood for any new player entering the market. The industry which has traditionally depended on passive infrastructure sharing models is moving rapidly towards active infrastructure sharing as innovative new sharing models are becoming more common in practice. A synopsis of the models that in vogue in the India market today is illustrated in the diagram below:
Fig 33: Infrastructure Sharing Models

Model Network Sharing

Prime Functions This would enable multiple operators to share capacity on the network elements that constitute access and/or core networks

Current Status To be pursued with the introduction of 3G and BWA

Site Sharing/Collocation

This model enables Currently in operation operators to collocate their network equipment on the same tower This model enables Currently in Operation.

Mobile Virtual Network

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Operator

operators without their own network infrastructure ride on the coattails of other networks This model enables the sharing of spectrum that has been allocated across various operators for optimally utilizing the spectrum This model provides the roaming capability for an operator without network presence across the whole circle

The only MVNO in India is Virgin Mobile India which shares the network with Tata Teleservices To be pursued in future

Spectrum Sharing

Intra-circle roaming

Currently in operation

Source: Next On Mobile

7.2

Market Opportunity Mapping

The telecom towers market opportunity is summarized in the table below. The major investment opportunity for foreign investors is in the power generation and management segment. This is because operators spend close to $1.5 Billion on diesel supplies per year.
Fig 34: Telecom Towers Market Opportunity

Market Players Telecom Towers

Products Required Solar-DG hydrid solutions, Fuel cells, Fast-charging batteries, solar energy, fuel saver catalysts, CNG, energy storage platforms, DC Diesel Generators

Primary Drivers Power and energy management, Moving towards renewable energy sources

Major Target Prospects Bharti Infratel, Viom Networks (Formerly QuippoWTTIL), GTL Infrastructure

Market Potential ($ Billions) $ 2 Billion

Source: Next On Mobile

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8.

Devices

Indias mobile device market is entering an exciting new phase as upstart local competitors at the low end and the mid tier range of handsets begin to challenge large multi-national incumbents like Nokia, LG and Samsung. The device market which was traditionally dominated by Nokia with a commanding 70% of the market is losing out to nimble footed local competitors like Maxx Mobile and Micromax. Taking advantage of cheap chipsets from Taiwanese companies like Mediatek, drastic cuts in import duties and a sharper focus on consumer needs, these new upstart companies have carved out 17.5% of the market for handset shipments in the January-March 2010 quarter according to IDC India. The industry shipped 36 Million handsets during the period January-March 2010 Sales from mobile handsets reached $6-6.5 Billion in 2009. According to most estimates about 45% of the handsets sold are in the price range of Rs 6000- Rs 15,000 ($150 - $300) About 50% of all handsets sold are in the price range of $50-$100 About 2% of the handsets shipped are Smart Phones which are the above the $300 price point. The new upstarts shipped almost 2 Million handsets in the same quarter. Indias Annual handset shipment market is expected to touch 295 Million per year by 2012. Nokia, LG and Samsung have domestic manufacturing plants to produce handsets for the local market while the new local players largely import handsets from China using the Mediatek platform.

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8.1

Device Market Share

Fig 35: India Device Market Share

Player
Nokia Motorola Samsung LG Sony Ericsson Maxx Mobile Micromax Mobile Karbonn Spice Others

Market Share
54% 1.6% 9.2% 10% 3.6% 4.7% 4% 3% 3.9% 9.6%

Source: IDC India, Outlook Business, Sep 2010, Forbes India, Sep 2010

Others brands include established brands like Blackberry, HTC, Haier and other local Brands including Wynn Telecom, Zen Mobile, Lemon Mobile, Olive, Lava Mobile etc. In the high end Smart Phone segment in which Blackberry, Nokia and Apple have established themselves as top end brands, sales volumes amount to less than 720,000 devices per quarter. In contrast, in most advanced markets, Smart Phone sales make up more than 25% of device shipments in a quarter. Globally, the devices business is subjected to unpredictable forces, as device makers encounter head winds in terms of judging pesky consumer trends, hitting the right chord with immaculate product design and sticking to new product release schedules and India is no different in this regard. The Indian mobile device market is becoming extremely competitive with established incumbents being challenged by local players. It is unclear if the challengers can establish a foot hold and consolidate their market position for the long haul. A lot will depend on the ability of the newer players to focus their attention on changing consumer trends, adapt to the ever changing universe of mobile OS, perfecting the supply chain and accelerating domestic manufacturing and investing in building a brand equity.

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8.2

Device Trends

Unlike most advanced markets where operators bundle devices with service plans, in India, GSM operators are not involved in the device supply chain. For the most part, devices are sold through thousands of retail distribution outlets, stockists and distributors. This section deals with the prominent trends that are shaping the fast growing Indian device market over the next few years. New Models The Indian market is flooded with new handset models and more than 30-40 new models are introduced every quarter. Power of the Brand About 1 in 5 mobile users indulge in lifestyle based upgrade of their mobile handset. Attributes that matter to them include price, brand, functionality, quality, aesthetics and features. The importance of brand as a prime purchase attribute is consistently ranked as # 2 in the hierarchy of consumer needs. Distribution Since mobile devices are sold predominantly through retail distribution outlets, handset makers pay a lot of attention to price, product availability, advertising, dealer margin, product range, brand, after sales service/support and customer service. RIMs Blackberry is distributed across more than 2000 points of sale across the country. Feature Phones As more and more features get packed into the mobile handset, feature phones today look a lot different from those that were available in the market just a year ago. Today, even a mid-range local brand in the Indian market is feature rich with multimedia capabilities.

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Fig 36: $100 Feature Phone Handset

Dual SIM Card Wi-Fi Stereo QWERTY 4GB Micro SD Card

Source: Forbes India, Sep 2010

Mini USB 3.2MP Dual Mode

Smart Phones As consumers demand innovative new features that can support high end content and applications, the demand for Smart Phones is expected to rise over the next five years, albeit from a low user base of less than 1Million per quarter. As 3G services become more widely available and the industry gears up for investments in 4G/LTE/BWA networks, Smart Phones could potentially make up 20 -25% of all handsets sold in the market.

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9.

Content and Applications

In the Indian context, the market for mobile content and applications until now has largely been restricted to operator walled gardens and has been network centric. The types of mobile content was primarily limited to mobile games, wall papers, ring tones, ring back tones, A2P SMS content and a some popular short code services. Operators play a formidable role in the content value chain and demand up to 80% revenue share from application developers and content providers. Since global players like Google, Nokia, Microsoft, RIM and other white label app store vendors are yet to develop a robust domestic ecosystem and a fully supported developer community, operators will continue to dominate the mobile content and applications ecosystem. Operators like Airtel, Aircel and Vodafone have launched app stores based on thirdparty white label application store platforms and are investing in evolving their more traditional content management platforms into next generation applications stores. Airtel has reported more than 2.5 Million app downloads in the first 30 days of launching its app store with 75% of these downloads being paid content and Vodafone India has reported launching more than 800 applications with 15% free downloads. As the adoption of 3G services gain traction, mobile content and applications will play a crucial role in heralding a new era in the growth of mobile data services. The Indian mobile content ecosystem offers immense opportunities for vendors to offer unique solutions to solve the following problems that operators and other sellers in the mobile content space encounter as they step into the world of 3G. Need for innovative, easy and flexible mobile payment tools for the purchase of digital goods over mobile phones Mobile ad funded content and applications and free applications Content discovery tools that will allow for consumers to locate applications through clicking on a few icons and locating the content of their choice with easy navigability of user interfaces Personalization of content and applications through context-aware tools and analytics Systems that would enable developers to circumvent and in some cases step over the minefield of problems they face from technology fragmentation, OS fragmentation and device fragmentation With the rapid growth of new chipsets and platforms from Intel Atom, Mediatek and other low cost platforms, the tipping point for large scale Smart Phone adoption in markets like India may finally be on the horizon, leading to

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further reduction in application development costs and spawning new business models Vendor led India Centric application stores with content and applications developed for the Indian consumer is around the corner, further accelerating the pace of innovation in creating new application categories UGC/Social Networking, Utility, Entertainment and Sports, Productivity among others Content for low end phones will continue to attract attention as vendors focus their application development efforts on SMS based mass market applications The table below depicts various mobile applications and the state of maturity each of them have attained with respect to consumer adoption. With the advent of 3G applications and the launch of application stores from the various mobile operators, the market is expected to steadily mature over the next decade, leading to increased adoption of data services.

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Fig 37: VAS Applications Maturity Profile No 1. 2. 3. 4. 5. 6. 7. 8. 9 10. 11. 12. 13. 14. 15. Type of Application Mobile email Mobile Video and TV C-RBT Ringtones Mobile Music Mobile Social Networking SMS P2P Mobile Games SMS A2P Mobile Banking Mobile Micro Finance Mobile Payments Mobile Marketing Mobile Advertising Video Calling Maturity Level

Source: Next On Mobile

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10. Vendor Profiles

This section profiles some of the leading vendors to the Communications industry who operate in India. The vendors have been Network Equipment Systems Integrators Enterprise Software Communications Software

10.1 Network Equipment Vendors

The following Network Equipment vendors who are active in Indias Telecom market have been profiled Huawei Technologies, ZTE, Ericsson, Nokia Siemens Networks and Alcatel Lucent.
Fig 38: Network Equipment Vendor Profiles

Name of Company

Description of Activities in the India Theatre

Huwaei is a major player in the India market with customers including Reliance, Tata, BSNL, Airtel, MTNL and Aircel. It employs more than 2000 people and does sales of close to $1 Billon. The companys R&D centre in Bangalore is the largest outside China. Huawei has a strategic relationship with Reliance Communications in network expansion with a long-term cooperation agreement signed in 2007 worth over $200 million. Huawei has a contract with Idea Cellular to deliver managed services for its NGN network and has been chosen as a managed services partner by Aircel. Tata Teleservices, for its southern states has a contract for design, deployment, and management of its GSM network, MPLS network, and SDP with Huawei. Uninor, in October 2009, signed a deal for $ 225 million for the design, deployment, and management of the operator's new GSM mobile network in India.

1.

Huawei Technologies

2.

ZTE

ZTE is another Chinese vendor with a major

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presence in India for more than 10 years. Its customers include Reliance Communications among others. ZTE hosts a National Networks Operations Centre in India to provide managed services to its customers. 3. Ericsson Ericsson has a major presence in India through Global Service Delivery centre, Global Network Operations Centre, VAS Multimedia Software development centre and its SI Competence Centre. Its customers include Airtel, Aircel, Tata, MTNL, Vodafone India and Reliance. NSN is a leading supplier of telecom network equipment and software to the Indian market with customers including Idea, Airtel, Vodafone India and Aircel. The company operates an R&D centre in India as well as a Global Networks Operations Centre. NSN signed a $700 million deal with Bharti Airtel in February 2010 for network planning, implementation and project management, and system integration for base station sites in different states. Nokia Siemens Networks also (NSN) signed a deal with Vodafone India in October 2010 to supply, implement and manage its 3G network in India. Nokia Siemens Networks will run Vodafone India's 3G network for three years under a managed services contract in various states. ALU has a long history of operating in India. It employs more than 4500 people in India including researchers at Bell Labs. ALU operates JVs with several entities in India: an R&D JV with CDOT for Broadband Wireless, a Managed Services JV with Reliance and a Managed Services JV to manage Airtel Broadband networks.

4.

Nokia Siemens Networks

5.

Alcatel Lucent

Source: Next On Mobile

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10.2 Systems Integrators

The following Systems Integrators who are active in Indias Telecom market have been profiled - IBM, Tech Mahindra, Wipro, HP/EDS, Infosys, IBM, Accenture, TCS, HCL Technologies, and Aricent. Fig 39: Systems Integrator Profiles Name of Company 1. IBM Description of Activities in the India Theatre IBM is a leader in Indias telecom outsourcing market. It signed a landmark agreement with Bharti Airtel worth $750 Million for managing the operators IT services and followed that up with a similar agreement with Vodafone and with Aircel. IBM also signed a 7-year contract with Idea Cellular in October 2009 to provide a Service Delivery Platform (SDP). IBM now manages around 300 million subscribers in India by providing support to the country's top telecom operators. HP has had a long standing presence in the Indian market. HP sells hardware, IT services, and enterprise computers and has also established a major R&D facility in India. Hewlett Packard (HP) signed a deal with Aircel in April 2010 to manage IT operations. The contract involves supplying billing, customer management, and database maintenance services. 3. Tech Mahindra Tech Mahindra is a large telecom focused SI with a global customer base. In India, Tech Mahindras customers include Airtel, Etisalat among other operators. Tech Mahindra offers a complete suite of IT services including BPO, Systems Integration, VAS, Infrastructure Management, Application Maintenance and Development.

2.

HP/EDS

4.

Infosys

Infosys is a global technology services firm and one

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of Indias largest IT services providers. Infosys has recently stepped up its India Business Development with the establishment of an India Business Unit. The company has announced the deployment of its Flypp mobile application development and content store platform at Aircel to support that operators mobile app store. Infosys is also involved in IT enabling Airtels 3 Screen strategies to bring digital consumers content across multiple platforms Mobile, Broadband and TV. 5. Wipro Wipro Technologies is a Global Consulting, System Integration and Outsourcing company. Wipro works closely with major software vendors including Oracle to bring new VAS services to market by leveraging the Oracle SDP platform. The VAS offering is targeted towards operators to accelerate VAS roll out. Wipro works with two Telcos in India Aircel and Uninor.
Source: Next On Mobile

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10.3 Communications Software Vendors

The following communications software vendors who are active in Indias Telecom market have been profiled - Amdocs, Comverse, Comviva, On Mobile, Acision, Telcordia, Motricity, Redknee and Subex.

Fig 40: Communications Software Vendor Profiles Name of Company Description of Activities in the India Theatre

1.

Amdocs

Amdocs provides customer innovation systems to the communications industry. It employees about 20% of its global work force in India (~3500 employees) to support its global operations. Amdocs customers in India include Reliance Communications among others. Comverse supplies billing, VAS platforms and customer care solutions to services providers. In India, Bharti Airtel has deployed Comverses Kenan Billing and Order Management Systems to integrate multiple legacy billing systems. Bharti also selected Comverse SMS Router network to optimize network performance in January 2009. Oracle has a presence in India, building relationships with suppliers like Mahindra Satyam, and having won contracts from Indian telecom service providers. Oracle works closely with such SIs as Infosys, etc. In February 2009, Aircel selected and implemented the complete Oracle Communications Service Suite. Tikona Digital Networks, a next generation wireless broadband service provider in India implemented Oracle EBusiness Suite Release and Oracle Communications Suite and other products to support the companys roll out residential and enterprise broadband. Oracle provides Bharti Airtel with services including: Oracle Financials and Oracle Human Resources Management systems (HRMS) and the CRM module of

2.

Comverse

3.

Oracle

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4.

Comviva

the Oracle E-Business Suite. Comviva (formerly Bharti Telsoft) is an ISV that provides VAS software platforms for mobile messaging, Ringback Tones (RBT), mobile payments. The company manages hundreds of VAS network nodes in a managed services model for Bharti Airtel. Besides a large presence in the India market, it has operations in the middle east and Africa. OnMobile is a provider of VAS software platforms and services to service providers. Based in India, OnMobile Acision is a provider of billing, messaging and content management software to service providers. Acision recently signed a deal with Tata Teleservices in February 2010 to provide billing software. Telcordia is a provider of operating support systems, Mobile Number Portability Platforms systems for services providers. In India, Telcordia was recently confirmed as one of the two MNP providers that will manage and support the MNP database for operators. Also, Telcordia signed a 5year multi-million dollar contract with Unitech Wireless (Uninor) in June 2009 for customer management solutions (incl. real-time charging). Motricity is a provider of mobile content management solutions to service providers. In India, Motricity signed a software deal with Reliance Communications in October 2010. The software lets wireless carriers get their users onto the Internet via mobile devices such as cell phones and will be used for Reliance's mobile data services business. Redknee is a provider of billing, messaging and mobile money solutions to service providers globally. In India, Redknee has signed a deal with Loop Mobile to provide real-time charging and billing systems.

5.

On Mobile

6.

Acision

7.

Telcordia

8.

Motricity

9.

Redknee

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10. Subex

Subex is a provider of revenue assurance and service activation solutions for global services providers. IBM and Subex signed a deal with Idea Cellular in August 2010 to implement ROC (Revenue Operations Centre) for interconnect billing.

Source: Next On Mobile

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11. Business Models

While it is a well know fact that Indian IT services providers have emerged as leaders in global outsourcing, what is not so well known is that Indian operators like Airtel pioneered the outsourcing of network services, IT services and call centre services. Except for core business functions like sales, marketing and new product development, Indian operators outsource all non-core functions to third party specialists. Typically, they outsource network services to large global equipment vendors, IT services to IT providers and Call centre services to Business Process Outsourcing (BPO) specialists. A list of core principles that Indian operators apply to their business philosophy is summarized below: When investing in networks, software or procuring services, Indian operators have a preference for Opex based pricing models rather than Capex based investments. Only in very rare instances are they willing to work with vendors on a license model (perpetual license or a monthly per subscriber license model) Pricing for outsourcing services is based on the managed services model and the vendor is expected to supply the data centre and all associated software and support Indian operators are interested in cloud computing and some are investing in the infrastructure as part of their enterprise service offering Cloud computing is still very much at a conceptual framing stage and it could take a few years for commercial deals to emerge; However, all major players in the IT space are formulating their cloud strategies and positioning themselves for the future Pricing models need to be tailored to the realities of the Indian market where ARPU has dipped to as low as $4.50/month. A good benchmark for pricing would be as follows - India pricing is typically 20% of the price for a similar solution in the Canadian market unless the solution is a proprietary product or a network solution that is unique in addressing the market need Support needs to be provided sometimes in the local language using local assets Product needs to be customized and localized to meet operators in the Indian market even if the core product is developed in Canada Operators would like to deal with an Indian face who can speak the local language

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12. Market Engagement

India is among one of the biggest telecom market opportunities in the world. However, it is also the most complex and difficult market to enter for a variety of reasons - cultural factors, business practices that are often at odds with Western business practice, lengthy business decision making process, the peculiarities of Government policies, infrastructure issues among many others. It is important that Canadian companies entering the market devise a market entry strategy that is in congruence with their market objectives short, medium and long term.

12.1 Market Entry Strategies

For the most part, Canadian telecom companies that are interested in entering India are small start ups or mid level companies with limited resources and capital. They also have shorter time frames for demonstrating success in the market. With more than 14 operators in the market, hundreds of ISVs in the telecom ecosystem and a complex purchasing process. 1. Medium to Long Term Commitment It is imperative that firms that are committed to enter the India market plan for a 4-5 year time horizon for achieving success and building a sustainable revenue stream. In some cases, it may take longer to 2. Defining Market Entry Objectives It is absolutely important to define high level objectives prior to performing due diligence on the market opportunity. If the objective is long term growth (0-5 year horizon), it is imperative that a pre-defined and phased evolution of the objectives and growth mode is communicated to the team.

3. Selecting the right team It is critical to select the right team with the right capability set, values, relationships and deep industry connections to execute the strategy. If need be, involve the local team in the strategy formulation process once a strawman is ready prior to

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recruitment. It is never advisable to recruit a team and then handover the objectives of market entry to the local team without a formal agreement on the entry strategy with the corporate executive home team. 4. Managing expectations While it is generally true that the Indian telecom market is due for explosive growth over the next decade, it is also important to evaluate each market opportunity on its own merit rather than be swayed by general euphoria of growth. 5. Patience is virtue New entrants are often frustrated by slow pace of progress in winning deals. It is important to be patient in dealing with operators and partners as the key to winning in the long term depends to a large extent on winning the trust of decision makers and influencers. 6. Partner Selection For many first time market entrants pursuing a partner strategy, a major hurdle to claiming initial success is the ability to be able to select a suitable local partner who is trustworthy and successful in clinching the initial deal. Successful companies are clear about why they should partner, whom they should partner with and spend time in studying the partner prior to joining hands to achieve common objectives and seek win-win propositions while approaching and taking advantage of market opportunities. 7. Organizing a Field Team The success or failure in the market will be determined by the quality of the field team, the chemistry among its core members, prior success in the market and building a solid team orientation for attaining long term success.

12.2 Strategic Options for Market Entry

This section deals with the various market entry modes that are available to a new market entrant, the pros and cons of adopting each of these strategies and the conditions under which each one of these strategies can be successful.

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Fig 41: Market Entry Modes Entry Mode Go it alone Pros Entrant is a large player in its home market Cons Strategic Imperatives Too risky, time Market space is at consuming and a nascent stage of expensive option for growth in the small players Product Life Cycle Huge upfront costs and Time to market issues recruitment of local team, training, set up costs etc Entrant possesses the financial strength/ power to address the long term opportunity Entrant has plans to tap into local talent pool and build a centre of excellence for technology in India Entrant has long terms plans for local product design and development to address the India market opportunity Entrant is a global player with substantial technical resources to support India market operation The addressable market space represents a large and growing

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market opportunity that needs long term commitment for success Global Channel Partner (NEM, ISV, SI) Ex., Ericsson, NSN, Huawei, Accenture, Oracle, IBM OEM product that Little to no control can be bundled with or visibility into Partner solution sales pipeline Need to address immediate market requirement Short term investment time horizon Cost effective market entry Tap into Partners global resources Joint Venture Local or International Partner Partners share similar world view of the market opportunity Each partner brings unique strengths to the table Have a 3-5 year time commitment Entrant faces formidable entry barriers Tap into immense Lack of partner commitment Ideal strategy to test waters prior to developing strategies for indepth market penetration

Local Partner as a

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Channel Partner Ex., Wipro, Mahindra Satyam, TCS, Infosys, Local ISV

local market knowledge of the partner Leverage Partner Sales relationships Faster Time to Market Accreditation in Partner Program

Ability to address strategic deals Source: Next On Mobile

12.3 Canadian Success: Case Studies

Canadian companies should leverage several strengths and exploit competitive advantages that are unique to Canada. Strong Technology Edifice IP/Patents Product Culture Global solution deployment Experience

This section delves into the successful strategies adopted by five Canadian players who have established themselves in the Indian Telecom market. While RIM and CGI are large players in North America, companies like Redknee and iSee Media are smaller software vendors and Wesley Clover is a master distributor of computer hardware and software. Fig 42: Canadian Case Studies Company RIM Business Description Research In Motion (RIM), is the designer and manufacturer of the BlackBerry Smartphone, and creates software for businesses and the operating system that allows the BlackBerry Smartphone India Strategy Work closely with operators Create massive distribution channel working with more than 2000 dealers and distributors across India Establish local operations aimed

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Wesley Clover

Redknee

to provide mobile access to email, IM, apps, media file and the Internet. Wesley Clover Communication Solutions (WCCS) deploys technology solutions from around the world into the India marketplace. WCS operates with pan-India presence, including Gurgaon and sales and post-sales support in Tier 1 cities across India. In 2008 WCCS acquired Punebased software engineering services company Telesoft, with the goal of providing India-specific feature development. The India team in Pune develops software products and features for leading product companies from North America. WCCS is a subsidiary of TaraSpan Inc, Canada's technology industry leader for the acceleration of market entry into India. Redknee provides wireless and wireline operators with real-time, end-to-end solutions that address the entire subscriber life cycle. Provisioning, rating, charging and billing, to launching new personalized services and enhancing customer care,

at long term growth Invest for the long haul Localization Leading edge technology solutions tailored to Indian market need Distributor and Value-added reseller of Canadian technology solutions Product based solution and local services, support

iSee Media

Iseemedia Inc is a mobile wireless software solutions company with a portfolio of content adaptation, interactive streaming and media

Work with Local SI as well as use direct channel to sell solutions Local Professional services team to build solutions for India market Use low cost Indian talent pool to serve other markets across Asia Pacific Build small base of R&D talent to work with HQ teams on core products of the future Use local talent pool to provide global technical support for products and services Work directly with Indian operators to sell solutions

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CGI

server technologies for use in mobile wireless applications. Iseemedia products include iseedocs and iseemail mobile wireless applications. iseeMedia is now a part of Synchronica Plc. CGIs operations in India, which began in 1991. The company operates centers of excellence in Mumbai, Bangalore and Hyderabad as part of the global delivery model. This model offers onshore, near shore and offshore capabilities. CGIs state-of-the-art delivery centers in India provide clients with high-end software design and development, application maintenance, business process services and infrastructure management. Working with marquee clients across the United States, Canada and Europe, our India centers have particular expertise within the following areas

Tap into local talent pool to establish low cost global delivery model Outsource North American client operations to India

Dragonwave

DragonWave is a provider of highcapacity packet microwave solutions for next-generation IP networks. DragonWaves point-topoint packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies and enterprises to meet their increasing bandwidth requirements. DragonWaves products include wireless network backhaul, leased line replacement, last mile fibre extension and enterprise networks. Source: Next On Mobile

Joint Venture strategy with a local Indian company HFCL to pursue opportunities in India Long term investments in local manufacturing JV Partner takes the lead in the domestic venture with core technology elements being provided from HQ

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13. Next Practices

Over the course of the past decade, Indian operators have been primarily focused on growing their domestic subscriber base. Early entrants like Bharti Airtel, Essar and Tata Teleservices have grown into major players in India supporting millions of mobile subscribers. Bharti Airtel in particular has emerged as a leader in the industry in many respects: It has built formidable brand equity in the market, introduced compelling new service offerings for consumers, adopted cost control through innovative cost sharing models with suppliers through outsourcing of the network and billing/customer care models and generated profits by running a lean organization. Having achieved enormous success in conceiving, managing and operating a low cost mobile operator business model, Bharti Airtel is transplanting this model to the global stage. In April 2010, Bharti Airtel acquired Zain, a Pan-African operator for $10.4 Billion to enter the African market which resembles the low ARPU India market.

13.1 Outward M&A of Indian Telecom Software Vendors

Indian software services vendors have globalized their footprint and operations around the globe. India`s software exports industry now exceeds $50B per year. Increasingly, India`s mobile software and telecom software product vendors are stepping out of India to pursue growth opportunities in advanced markets including strategic acquisitions. Fig 43: M&A of Indian Vendors Name of Company On Mobile Target Voxmobili, Telisma, Dilithium Networks Rationale Acquire strategic technology expertise and IP Expand into Europe, Latam and NA IMI Mobile WIN Plc European and UK expansion strategy Gain foothold with marquee clients in mobile entertainment

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Tanla Solutions Megasoft Subex

Openbit BCG BT Exact, Syndesis

Enter the global mobile payments space Enter North American pre-paid solutions market Establish itself as a Tier 1 OSS and BSS vendor to global operators

Source: Next On Mobile

14. Conclusions and Recommendations

Canadian companies should focus on the following core ideas that govern the market opportunity in India. They should strive to build products and services that adhere to these principles to be successful players in the market. Low cost Innovation The Indian market adopts innovation, but does so at lower price points than advanced economies. Mass market affordability The target solution/service should be affordable for a large section of the Indian consumer base Local product design and development Unless the solution involves licensing of an advanced technology that is to be deployed as an OEM, the solution should be locally customized and with passage of time, should be locally designed and developed. Exploiting local talent While India offers a large resource pool of talent, it is important to invest in capability building and career development/training for employees because both these aspects are highly valued by employees Sustaining market momentum/Time to Revenue Suppliers need to have the patience to generate market momentum and reduce Time to Revenue. Local Partnership Partnering with the right local or global company is the key to

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Sensitivity to regional disparities and differences India is a vast market with stark differences in levels of development and disparities in growth. It is important to recognize this fact and shape strategies accordingly. Focus on ROI (Return on India) Market commitment, staying power, a clear eyed long term strategy, partnering with the right organizations, securing quick wins and building the right local sales organization are pre-requisites for success.

Bibliography
K.Jha, L. (2010, June 23). India to clock double digit growth by 2012: FM. Retrieved October 20, 2010, from Livemint: http://www.livemint.com/articles/2010/06/23151303/India-to-clock-double-digitgr.html Krishnan, U. (2010, October 7). India 2010 Economic Growth Raised to 9.7%, More Than Expected, IMF Says. Retrieved October 20, 2010, from Bloomberg : http://www.bloomberg.com/news/2010-10-06/imf-raises-india-2010-economicgrowth-forecast-to-9-7-on-consumer-demand.html Ram Kumar, A. (. (2010). Indian Telecom Sector . New Delhi: Department of Telecommunications, Government of India . Singh, R. (2010, September ). New Dimension: Co-Location of antennas on existing towers is being touted as an attractive way to save capital and operational expenses . Voice and Data , pp. 62-66.

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