Telecommunications Report July 2018

TELECOMMUNICATIONS
For updated information, please visit www.ibef.org July 2018

Table of Content
Executive Summary……………….….…….3
Advantage India…………………..….……..4
Market Overview …………………….……..6
Recent Trends and Strategies …………...16
Growth Drivers…………………….............21
Opportunities…….……….......……………30
Industry Associations……………...……...34
Useful Information……….......……………36
EXECUTIVE SUMMARY
Second-largest  With a subscriber base of 1,147.71 million, as of April 2018, India is the second largest telecom network in
subscriber base the world
Rising penetration rate  As of April 2018, urban tele-density stood at 156.48 per cent and rural tele-density at 56.68 per cent.
Third-highest number of  With 493.96 million internet subscribers, as of March 2018, India stands 2nd highest in terms of total internet
internet users users.
Affordability and lower  Availability of affordable smartphones and lower rates are expected to drive growth in the Indian telecom
rates industry
Source: Telecom Regulatory Authority of India, Aranca Research
3 Telecommunication For updated information, please visit www.ibef.org

Telecommunication
ADVANTAGE INDIA
ADVANTAGE INDIA
 India is the world’s 2nd largest telecommunications market,  Telecom penetration in the nation’s rural market reached 56.68
with 1,147.71 million subscribers, as of April 2018 per cent, as of April 2018.
 With 70 per cent of the population staying in rural areas, the  India became the 2nd largest internet market in
rural market would be a key growth driver in the coming December 2014
years
 The government of India has introduced
Digital India programme under which all the
sectors such as healthcare, retail, etc. will
be connected through internet
ADVANTAGE
INDIA
 The government has been proactive in its
 The country has a strong
efforts to transform India into a global
telecommunication infrastructure
telecommunication hub; prudent
 In terms of telecommunication ratings, India regulatory support has also helped
ranks ahead of its peers in the West and Asia
 National Telecom Policy 2012 calls for
unified licensing, full MNP and free roaming
 The Government of India is soon going to come out with a

new National Telecom Policy 2018 in lieu of rapid
technological advancement in the sector over the past few
years.
Notes: MNP - Mobile Number Portability

Source: BMI (Business Monitor International) Report, Internet Mobile Association of India (IAMAI)

Telecommunication
MARKET OVERVIEW
THE TELECOM MARKET SPLIT INTO THREE
SEGMENTS
Telecom
Mobile (wireless) Fixed-line (wireline) Internet services
 Comprises  Consists of companies  Includes Internet Service

establishments that operate and Providers (ISPs) that
operating and maintain switching and offer broadband internet
maintaining switching transmission facilities to connections through
and transmission provide direct consumer and corporate
facilities to provide direct communications through channels
communications via landlines, microwave or
airwaves a combination of
landlines and satellite
link-ups
Source: Aranca Research

TELECOM SUBSCRIBER BASE EXPANDS
SUBSTANTIALLY
 India is currently the 2nd largest telecommunication market and has Visakhapatnam
Growth in
port
total
traffic
subscribers
(million tonnes)
the 3rd highest number of internet users in the world.
 India’s telephone subscriber base expanded at a CAGR of 17.44 per 1,400 100
cent, reaching 1,206.22 million during FY07–18. 92.98 92.84
83.36 88.26
79.38 90
 Tele-density (defined as the number of telephone connections for 1,200 78.7 77.58
1206.22
1194.58
every 100 individuals) in India, increased from 18.3 per cent in FY07 74.02 80
1147.71
to 92.84 per cent in FY18. 70.9
1058.86
1,000 70
996
 Total telephone subscriber base and tele-density reached 1,147.71
951.34
60
898.02
million and 88.26 per cent, respectively, in April 2018. 800 52.7
846.32
846.32
50
600 37
621.28
40
26.2 30
400
429.72
18.3
20
300.49
200
FY07 205.86
10
0 0
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19*
Telephone Subscriber (in million) Teledensity
Note: CAGR - Compound Annual Growth Rate, FY19* - as of April 2018

Source: Telecom Regulatory Authority of India

WIRELESS SEGMENT DOMINATES THE MARKET
 As of April 2018, total telephone subscriber base of India reached Composition

Visakhapatnam
of telephone
port traffic
subscribers
(million tonnes)
(FY18)
1,147.71 million. Out of the total, wireless subscriber base accounted
for 98.03 per cent or 1,125.07 million subscribers. 0.3%
 Urban regions accounted for 56.19 per cent share in the wireless
telecom subscriptions in the country, while rural areas accounted for
the remaining share.
43.61%
54.41%
Urban Wireless Rural Wireless Urban Wireline Rural Wireline

WIRELESS SUBSCRIPTIONS WITNESS ROBUST
GROWTH OVER THE YEARS
 During FY07-18, wireless subscriptions in the country increased at a Visakhapatnam

Wireless Subscription
port traffic (million
(in Million)
tonnes)
CAGR of 19.62 per cent, with the number of subscribers reaching
1,183.41 million in FY18. Wireless subscriptions during April 2018
^CAGR 19.62%
stood at 1,125.07 million.
1,400
 As of April 2018, urban wireless tele-density reached 151.78 per cent
while rural wireless tele-density reached 56.31 per cent.
1,200
1,183.41
1,170.18
1,125.07
1,058.90
1,000
969.80
943.90
919.00
868.00
800
812.00
600
584.00
400
165.00
392.00
261.00
200
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19*
Note: CAGR - Compound Annual Growth Rate, ^CAGR is up to FY18, *As of April 2018

WIRELESS TELEDENSITY GROWS OVER THE YEARS
 The wireless segment’s teledensity surged from 14.6 per cent in Visakhapatnam
Wireless port
teledensity
traffic (million
in Indiatonnes)
FY07 to 91.09 per cent in FY18. The figure stood at 86.52 per cent in
April 2018. 100.0%
 GSM services continue to dominate the wireless market with a 99.64
90.0%
per cent share (as of March 2018), while CDMA services accounted
91.09%
91.08%
86.52%
for the remaining 0.36 per cent share.
80.0%
81.38%
77.27%
76.00%
70.0%
72.94%
70.90%
68.00%
60.0%
50.0%
49.70%
40.0%
33.70%
30.0%
20.0%
22.80%
14.60%
10.0%
0.0%
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19*
Note: Teledensity - The number of telephone lines for every 100 people in a country, GSM - Global System for Mobile Communications, CDMA - Code Division Multiple Access, FY19* - as
of April 2018

SURGING TELECOM REVENUES
 Indian telecom sector’s revenue grew from US$ 19.50 billion in FY06 Visakhapatnam
Telecom Sector
port
Revenue
traffic (million
(US$ Billion)
tonnes)
to US$ 39.49 billion in FY18.
 Revenues from the telecom equipment sector are expected to grow

to US$ 26.38 billion by 2020. 45
40
41.69
41.69
40.93
40.29
39.49
39.14
38.79
37.64
35
33.32
33.02
32.05
30
25
23.30
20
19.50
15
10
FY 06
FY 07
FY 08
FY 09
FY 10
FY 11
FY 12
FY 13
FY 14
FY 15
FY 16
FY 17
FY 18
Note: CAGR - Compound Annual Growth Rate, FY – Indian Financial Year (April – March)
Source: Telecom Regulatory Authority of India, Aranca Research

STRONG GROWTH IN BROADBAND DRIVES
INTERNET ACCESS REVENUES
 Wired broadband subscriptions in the country witnessed an increase Wired

Visakhapatnam
broadband
port
subscriptions
traffic (million
(in tonnes)
million)
at a CAGR of 17.31 per cent during FY07–18 to reach 17.95 million.
Subscriptions stood at 17.97 million, as of April 2018.
^CAGR 17.31%
 Total number of broadband subscriptions stood at 419.79 million, at 25
the end of April 2018.
20
20.44
18.24
17.97
17.95
15
15.52
15.10
15.00
14.90
13.40
10
10.90
7.80
5
5.50
3.10
0
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19*
Note: CAGR - Compound Annual Growth Rate, ^CAGR is up to FY18, FY19* - up to April 2018
Source: Telecom Regulatory Authority of India;

NUMBER OF INTERNET SUBSCRIBERS INCREASING
AT A FAST PACE
 The number of internet subscribers in the country increased at a Visakhapatnam

Internet subscriptions
(in Million)
tonnes)
CAGR of 42.69 per cent during FY06-FY18 to reach 493.96 million in
2017-18.
CAGR 42.69%
 The number of internet subscribers in the country is expected to 600
double by 2021 to 829 million. Overall IP traffic is expected to grow
4-fold at a CAGR of 30 per cent by 2021.
500
493.96
400
422.19
342.65
300
302.35
251.59
200
164.81
100
22.86
19.67
16.18
13.54
11.09
9.27
6.94
0
FY15
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY16
FY17
FY18
Note: CAGR - Compound Annual Growth Rate; BSNL - Bharat Sanchar Nigam Ltd, IP – Internet Protocol
Source: Telecom Regulatory Authority of India, Business Monitor International

EMERGENCE OF TOWER INDUSTRY
 A surge in the subscriber base has necessitated network expansion covering a wider area, thereby creating a need for significant investment in
telecom infrastructure
 To curb costs and focus on core operations, telecom companies have been segregating their tower assets into separate companies. For example:
Reliance Communications has decided to finalise a deal to sell its stake in Reliance Infratel. The value of the deal is around US$3.68 billion
 Creating separate tower companies has helped telecom companies lower operating cost and improve capital structure; this has also provided an
additional revenue stream
 Inspired by the success seen by Indian players in towers business, most of the operators around the world are replicating the model
Emergence of Tower Industry
Focus on Segregation
Higher tower of towers
Rising operating sharing to into
competition cost and reduce separate
debt burden costs companies

Telecommunication
RECENT TRENDS
AND STRATEGIES
NOTABLE TRENDS IN THE INDIAN TELECOM SECTOR
… (1/2)
 The green telecom concept is aimed at reducing carbon footprint of the telecom industry through lower
energy consumption
Green Telecom
 Tata has invested around US$16.38 million to convert its 10,000 base stations from indoor to outdoor to
reduce energy consumption and carbon footprint across its 20 telecom circles in India so far
 There are over 62,443 uncovered villages in India; these would be provided with village telephone facility with
subsidy support from the government’s Universal Service Obligation Fund (thereby increasing rural
Expansion to Rural teledensity)
Markets
 As of April 2018, the rural subscriber base accounted for 43.90 per cent of the total subscriber base, thereby
fuelling growth across the sector
 The most significant recent developments in wireless communication include BWA technologies such as
WiMAX and LTE
Emergence of BWA
 In March 2018, Bharti Airtel its VoLTE services in Kolkata while Vodafone launched VoLTE services in Jaipur
Technologies and Jodhpur.
 As of May 2018, BSNL is expected to launch its 4G services soon.
 IoT is the concept of electronically interconnected and integrated machines, which can help in gathering and
sharing data. The Indian Government is planning to develop 100 smart city projects, where IoT would play a
Internet Of Things (IOT) vital role in development of those cities.
 Reliance Jio has partnered with Samsung Electronics to set up a nationwide Internet of Things (IoT) network.
As of May 2018, trials for the service have already begun at a few locations.
Notes: BWA - Broadband Wireless Access, TRAI - Telecom Regulatory Authority of India

NOTABLE TRENDS IN THE INDIAN TELECOM SECTOR
… (2/2)
 Vodafone and Idea, India's second and third largest operators have decided to merge.
 Airtel’s acquisition of Tata Teleservices’ mobile business was given approval by Competition Commission of
Consolidation
India (CCI) in November 2017. As of May 2018, the deal is awaiting multiple regulatory approvals including
those from National Company Law Tribunal and Department of Telecommunications.
 In 2017, Vodafone disclosed its plans to invest US$1,310 million to upgrade and expand Vodafone India
network coverage and US$655 million to upgrade its technology centre
Rising investments
 The upcoming National Telecom Policy 2018 has envisaged attracting investments worth US$ 100 billion in
the telecommunications sector by 2022.
Outsourcing non-core  As part of the recent outsourcing trend, operators have outsourced functions such as network maintenance,
activities IT operations and customer service
 Digital transactions reached an all-time high of 1.11 billion in January 2018 with mobile banking transactions
reaching 102.6 million.
Mobile banking  In March 2017, the government set a target of achieving 25 billion digital transactions for banks with the help
of PoS machines, transactions enabled and merchants, which have been added in firms
 As of May 2018, nearly 400 banks have been permitted to provide mobile banking services in India.
 Reliance Jio Infocomm is going to expand its optical fibre network to over 1,100 cities under its JioGigaFiber
Investments in optical brand. The network is undergoing beta trials as of July 2018.
fibre network
 Bharti Airtel is planning to launch 6,000 new sites and 2,000 km of optical fiber in Gujarat in 2018-19.
Notes: NPCI - National Payment Corporation of India

Source: ’Searching for New Frontiers of growth: Indian Banks’- PwC, Aranca Research, Reserve Bank of India

STRATEGIES ADOPTED
 Players are using innovative marketing strategies to succeed in this sector. For example,
Marketing strategy • In August 2015, Idea Cellular launched new campaign “Get idea and dance”
• Airtel launched new ad campaign “Airtel myPlan Family”
 Players differentiate themselves by providing different services to customers. For example,

Differentiation  Bharti Airtel has already partnered with Amazon Prime and Hotstar and is expected to tie up with Netflix to
offer free subscription to Netflix’s content on its mobile customers.
 Players price their products very carefully due to the price sensitive nature of customers and high competition
in the sector. Players generally go for price war. For example,
• In December 2016, Micromax launched low cost 4G Volte Smartphones, with a pre-activated Reliance Jio
Sim offer of free voice calls and data. These smartphones are launched in the range of US$67.21 to
US$114.57
Pricing strategy • In September 2016, Reliance Jio 4G network plans have been launched. Free domestic voice calls have
been offered by Jio. No charge or deduction of data would be done for making voice calls to any network
across the country. Also, the company has offered cheaper data plans and tariff plans ranging
from US$2.28 to US$76.37 per month. As of October 2016, the company’s subscriber base had crossed
16 million customers
• In March 2017, CAT S60 smartphone was launched in India for US$ 966.81. The phone is loaded with a
thermal camera that can see through smoke and can be used in extreme temperatures.
Notes: CDMA – Code Division Multiple Access, GSM - Global System for Mobile Communication
Source: Company websites, Aranca Research

KEY COMPANIES IN THE MARKET
Company Ownership Presence
Government (56.3 per cent), Life Fixed-line and mobile telephony (in
Mahanagar Telephone Nigam Ltd (MTNL)
Insurance Corporation (18.8 per cent) Delhi and Mumbai), data and Internet
Fixed-line and mobile telephony (GSM

Government
Bharat Sanchar Nigam Ltd (BSNL) – outside Delhi and Mumbai), data and
(100 per cent)
Internet in 22 circles
ADAG Group
Reliance Communications Mobile (CDMA) and broadband
(approximately 59.00 per cent)
Bharti Group (45.48 per cent), Pastel

Broadband and mobile (GSM) in
Bharti Airtel Ltd (14.79 per cent), Indian Continent
22 circles
Investment (6.65 per cent)
Vodafone (84.5 per cent), Piramal Broadband and mobile (GSM) in

Vodafone India
Enterprises (11.0 per cent) 22 circles
Source: Companies’ websites, Bloomberg

Telecommunication
GROWTH DRIVERS
SECTOR BENEFITS FROM RISING INCOME, GROWING
YOUNG POPULATION
Increasing
Growing demand Policy support
Growing demand investments
Higher real
Reduction in
income and Higher FDI inflows
license fee
changing lifestyles
Inviting Resulting in
Growing young Relaxed Increasing M and

population FDI Norms A activity
Encourages
Increasing MOU
firms to expand
and data usage
to rural areas
Note: FDI - Foreign Direct Investment, MOU - Minutes of Use per month and per subscriber, M&A - Mergers and Acquisitions

RISING INCOME AND GROWING RURAL MARKET
FUELS DEMAND FOR TELECOM SERVICES
Indian residents shifting from low to high income groups (%)

GDP per capita at current prices* (US$)
Million Household, 100%
3,500 209.10 266.50 267 304.80

100%
44.0% 31.0% 30.7% 18.0%
3,273.85
3,000 90%
3,006.54
80%
46.0%
2,762.31
2,500 70%
2,538.82
45.0% 45.3%
60%
2,334.14
2,000 2,134.75
50% 42.0%
1,982.70
40%
1,749.16
1,500
1,638.76
1,610.36
1,485.60
1,481.56
30% 20.0%
1,000 20%
15.0% 15.0%
10% 8.0% 11.0%
500 6.0% 2.0% 6.4%
3.0% 1.5% 2.6% 5.0%
0%
2005 2016 2017 2025F
0 Elite(>US$ 30800) Affluent(US$ 15400-30800)
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Aspirers(US$ 7700-15400) Next billion(US$ 2300-7700)
Strugglers(<US$ 2300)
 Incomes have risen at a brisk pace in India and will continue rising given the country’s strong economic growth prospects.
 GDP per capita of India is expected to grow at a CAGR of 7.47 per cent from US$ 1,481.56 in 2012 to US$ 3,273.85 in 2023.
 Increasing income has been a key determinant of demand growth in the telecommunication sector in India
 The emergence of an affluent middle class is triggering demand for the mobile and internet segments
 A young, growing population is aiding this trend (especially demand for smart phones.
Notes: CAGR - Compound Annual Growth Rate, *Estimates after 2013
Source: IMF World Economic Outlook Database April 2018

STRONG POLICY SUPPORT CRUCIAL TO THE
SECTOR’S DEVELOPMENT … (1/3)
To compensate the  In August 2017, TRAI directed operators to have a call-drop rate of not greater than 2 per cent.
consumers in case of  The policy measures of TRAI have had positive impact. Call-drops in the country have decreased from 0.94
call drop per cent in 2016 to 0.52 per cent in March 2018.
 In 2015, Telecom Regulatory Authority of India made regulations to amend the Standards of quality of
Standards of quality
wireline (telephone service) and cellular mobile telephone services. These regulations has been laid down to
wireline and wireless
ensure better and effective compliance with the quality of service regulations and to protect the interest of the
services customers
 FDI cap in the telecom sector has been increased to 100 per cent from 74 per cent; out of 100 per cent, 49
Relaxed per cent will be done through automatic route and the rest will be done through the FIPB approval route
FDI norms  FDI of up to 100 per cent is permitted for infrastructure providers offering dark fibre, electronic mail and voice
mail
 In May 2017, Microsoft India signed a Memorandum of Understanding with the Telcom Sector Skill Council
(TSSC) to encourage skill development through “Project Sangam”.
Skill Development  In a major push for Prime Minister Narendra Modi's 'Skill India' mission, Microsoft's Indian-born CEO Satya
Nadella launched a Cloud hosted platform named as "Project Sangam" to help the government not only train
but also assist people get jobs via professional networking website LinkedIn, which was acquired by the
company last year.
Notes: FDI - Foreign Direct Investment, FIPB - Foreign Investment Promotion Boar
Source: TRAI, Aranca Research

 In February 2018, TRAI passed the Telecommunication Tariff (63rd amendment) order, according to which,
Telecommunication
telecom firms are free to give promotional offers to customers as long as the offers are transparent, non-
Tariff Order
predatory and non-discriminatory.
 The Department of Information Technology intends to set up over 1 million internet-enabled common service
centres across India as per the National e-Governance Plan
Set up internet
 On 8th August 2016, the Telecom Regulatory Authority of India (TRAI) made the 10th amendment to the
connections
TCPR (Telecom Consumers Protection Regulations) permitting telecom companies to offer data packs
having maximum validity of 365 days
 In January 2015, the Government of India recommended reduction in license fees of telecom operators by 6
Reduction in license per cent, telecom operators currently pay 8 per cent of adjusted gross revenue as licence fee
fees  The issuance of several international and national long-distance licenses has created opportunities and
attracted new companies into the market
 In May 2017, the central government announced the Phased Manufacturing Programme (PMP) to promote
Make in India domestic production of mobile handsets. This initiative will help in building a robust indigenous mobile
manufacturing ecosystem in India, and incentivise large scale manufacturing.
Notes: USOF - Universal Service Obligation Fund; OFC - Optical Fibre Cable, WiMAX - Worldwide Interoperability for Microwave Access Telecommunications

 The USOF is expected to extend ﬁnancial support to operators providing services in rural areas and
Financial support
encourage active infrastructure sharing among operators
 The prescribed limit on spectrum would be increased from 6.2MHz to 2x8 MHz (paired spectrum) for GSM
technology in all areas other than Delhi and Mumbai, where it will be 2x10MHz (paired spectrum)
Enhanced spectrum limit  Telecom players can, however, obtain additional frequency; there will be an auction of spectrum subject to
the limits prescribed for the merger of licenses
 In January 2018, the government revised cap on spectrum holding from 25 per cent to 35 per cent.
Telecommunication
 In 2015, telecom authority issued this order mandating every DTH operator to specify the tariff for supply and
amendment order for
installation of the customer premises equipment. DTH operator should specify the refundable security
broadcasting and cable deposit, installation charges, monthly rental charge and activation
services
 In May 2017, the Ministry of Telecommunication launched the Indian Mobile Congress 2017 (IMC 2017), the
first and biggest platform in the country to bring all the stakeholders together from Telecom, Internet and
Indian Mobile Congress
Mobility ecosystem along with ICT players, app developers, innovators and start-ups. The event concluded
successfully and witnessed over 35,000 participants.
Notes: USOF - Universal Service Obligation Fund; OFC - Optical Fibre Cable

NATIONAL TELECOM POLICY - 2012
‘Broadband for all’ with

a minimum download
speed of 2Mbps
Increase rural Liberalisation of

teledensity from 39 to spectrum and
70 per cent by 2017, convergence of
and 100 per cent by network, services and
2020 National Telecom devices
Policy - 2012
Unified licensing,
Aims at a ‘One Nation-
delinking of spectrum
One license’ regime with
from license, online real-
no roaming charges and
time submission and
nation wide number
processing
portability
Source: Digital Dawn, KPMG Report 2013

FOREIGN INVESTMENTS FLOWING IN … (1/2)
 FDI inflows into the telecom sector during April 2000 – March 2018 FDIVisakhapatnam
inflows into telecommunication
(US$
tonnes)
million)
totalled to US$ 30.16 billion.
 During this period, FDI into the sector accounted for a share of 35,000
nearly 8 per cent of total FDI inflows into the country.
30,158
30,000
25,000 23,946
Cumulative from April 2000 6212

20,000 18,382
17,058
5564
15,000 14,163 1324
12,552 12,856 2895
10,589 1307
304
10,000 1963
717
5,000
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
Annual FDI Inflow
Source: Department of Industrial Policy and Promotion (DIPP)

FOREIGN INVESTMENTS FLOWING IN … (2/2)
 In March 2017, Vodafone announced its merger with Idea Cellular to become India’s biggest telecom operator. The merger will result in a
customer base of 400 million, nearly 35 per cent market share and is expected to complete in 2018.
Foreign investment in India
Target Acquirer Acquisition price (US$ million) Division acquired

Increase in stake to 48.90 per
Bharti Airtel Singtel (2018) 411.02
cent
Ascend Telecom
IDFC Alternatives (2017) 54.29 33 per cent stake
Infrastructure Pvt. Ltd.
Telenor Bharti Airtel (2017) N/A Infrastructure and Contracts
Videocon
Telecommunications
Bharti Airtel (2016) 660 100 per cent stake
Ltd-1800 MHz spectrum in 6
circles
Bharti Airtel's operations in

Orange SA (2016) 900 100 per cent stake
Burkina Faso and Sierra Leone
MTS Reliance Communication (2015) 736.98 8 – 10 per cent stake
Augere Wireless Bharti Airtel (2015) 21.3 100 per cent stake
Increases stakes to 32.34 per
Bharti Airtel SingTel(2013) 302
cent
Bharti Airtel Qatar Foundation Endowment(2014) 1,260 PE deal – 5 per cent stake
Vodafone International Holdings
Vodafone India Ltd 1,641 Increases stakes to 100 per cent
(2014)
Ascend Telecom Ascend Telecom Infrastructure Pvt Ltd 54.29 33 per cent stake
Notes: M&A - Merger and Acquisition, PE - Private Equity
Source: Thomson Banker, Deal Tracker, Grant Thornton, Aranca Research

Telecommunication
OPPORTUNITIES
OPPORTUNITIES ACROSS SEGMENTS IN THE
INDUSTRY … (1/2)
Increasing mobile subscribers Untapped rural markets Rising internet penetration
 The number of wireless subscribers in  By April 2018, rural tele-density  Internet penetration is expected to
India reached 1.148 billion, by April reached 56.68 per cent, growing from grow steadily and is likely to be
2018 43.05 per cent as of March 2016 bolstered by government policy
 Of the total subscribers, around 56.10  Rural wireless tele-density in the  Number of broadband subscribers
per cent subscribers are from urban country increased to 56.31 per cent by reached 419.79 million at the end of
areas and the rest (43.90 per cent), March 2018 from 50.88 per cent as of April 2018
from rural areas March 2016.
 To encourage cash economy, Indian
government announced to provide free
Wi-fi to more than 1000 gram
panchayats.
Source: KPMG, TRAI, Aranca Research

OPPORTUNITIES ACROSS SEGMENTS IN THE
INDUSTRY … (2/2)
Development of telecom Growth in MVAS and cloud Growing Cashless

Telecom equipment market
infrastructure computing Transactions
 TRAI has made several  The Indian Mobile Value-  Telecom equipment market  In order to overcome the
recommendations for the Added Services (MVAS) was estimated to be US$ 20 cash related problems being
development of telecom industry is expected to row billion in FY16* faced by people, due to
infrastructure, including tax at a CAGR of 18.3 per cent demonetisation, Paytm
 It is anticipated to reach
benefits and recognising during the forecast period launched a service through
US$ 30 billion by 2020
telecom infrastructure as 2015–2020 and reach US$ which consumers and
essential infrastructure 23.8 billion by 2020.  Under Digital India merchants can pay and
programme, ‘every Indian receive money instantly,
has a smartphone by 2019’ without an internet
programme implemented connection
 India’s smartphone  This has enabled non-
shipments grew 14 per cent smartphone users to go
year-on-year to a total of cashless
124 million units in 2017.
Smartphone shipments
during the first quarter of
2018 stood at 30 million
units.#
Notes: VAS - Value-Added Services, NTP - National Telecom Policy, FY16* - as per latest data available, #As per IDC
Source: Press Information Bureau, Government of India, Aranca Research

MOBILE APPLICATION MARKET: FAST GROWING
SEGMENT
 During the first quarter of 2018, India became the world’s fastest- Number
Visakhapatnam
of App downloads
port traffic
in(million
India (intonnes)
billions)
growing market for mobile applications.
 The mobile app market is estimated around US$ 245.6 million in

2015. 25.00
 India’s downloads of apps grew nearly 215 per cent between 2015
and 2017.
20.00
 India overtook USA to reach the second position in terms of number
20.10
of app downloads in 2017.
 The segment’s growth is expected to be driven by increasing mobile 15.00

connections and availability of low-range smartphones
 Over 100 million apps are downloaded every month across different
12.11
platforms such as iOS, Blackberry, Nokia and Android 10.00
6.51
5.00
0.00
2016
2017
2020 F
Notes: E – estimated, F – Forecast, *As per latest data available
Source: Gartner, Deloitte, Assorted News Articles, Aranca Research

Telecommunication
KEY INDUSTRY
ORGANISATIONS
INDUSTRY ORGANISATIONS
Association of Unified Telecom Service Providers of India

Association of Competitive Telecom Operators (ACTO)
(AUSPI)
Address: B-601, Gauri Sadan 5, Hailey Road, New Delhi – 110 001, Address: 601, Nirmal Tower, 26, Barakhamba Road, Connaught Place,
India New Delhi – 110 001, India
Tel: 91 11 23358585 Tel.: 91 11 43565353 / 43575353
Fax: 91 11 23327397 Fax: 91 11 43515353
Website: http://www.auspi.in/ E-mail: info@acto.in
Website: www.acto.in
Internet and Mobile Association of India (IAMAI) Cellular Operators Association of India
Address: F-36, Basement, East of Kailash, New Delhi – 110 065, India Address: 14, Bhai Vir Singh Marg, Sector 4, Gole Market, New Delhi –
Tel: 91 11 46570328 110001, India
E-mail: kalyan@iamai.in Tel: 91 11 2334 9275
Website: www.iwww.iamai.in E-mail: contact@coai.in
Website: www.coai.com

Telecommunication
USEFUL
INFORMATION
APPENDIX
BMI telecoms business environment ratings
 Industry rewards: it considers average revenue per users, number of subscribers, subscriber growth, and number of operators
 Country rewards: it considers urban/rural split, age range, GDP per capita, US$
 Industry risks: it considers regulatory independence
 Country risk: it rates the country on short-term external risk, policy continuity, legal framework corruption
 Telecom ratings: overall rating of the above indicators

GLOSSARY
 BWA: Broadband Wireless Access
 CAGR: Compound Annual growth rate
 DoT: Department of Telecommunication
 FDI: Foreign Direct Investment
 FTTH: Fibre To The Home
 FY: Indian Financial Year (April to March)
 IMF: International Monetary Fund
 INR: Indian Rupee
 IPTV: Internet Protocol Television
 M&A: Mergers and Acquisitions
 MoU: Minutes of Use per month and per subscriber
 MPEG: Moving Picture Experts Group
 OFC: Optical Fibre Cable
 TRAI: Telecom Regulatory Authority of India
 USOF: Universal Service Obligation Fund
 US$: US Dollar
 VAS: Value-Added Services
 WiMAX: Worldwide Interoperability for Microwave access telecommunications
Wherever applicable, numbers have been rounded off to the nearest whole number

EXCHANGE RATES
Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)
Year INR INR Equivalent of one US$ Year INR Equivalent of one US$
2004–05 44.95 2005 44.11
2005–06 44.28
2006 45.33
2006–07 45.29
2007 41.29
2007–08 40.24
2008 43.42
2008–09 45.91
2009 48.35
2009–10 47.42
2010–11 45.58 2010 45.74
2011–12 47.95 2011 46.67

2012–13 54.45 2012 53.49
2013–14 60.50
2013 58.63
2014-15 61.15
2014 61.03
2015-16 65.46
2015 64.15
2016-17 67.09
2017-18 64.45 2016 67.21
Q1 2018-19 67.04 2017 65.12
Source: Reserve Bank of India, Average for the year

DISCLAIMER
India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation
with IBEF.
All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced,
wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or
incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval
of IBEF.
This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the
information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a
substitute for professional advice.
Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do
they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation.
Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any
reliance placed or guidance taken from any portion of this presentation.

Telecommunications Report July 2018

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TELECOMMUNICATIONS

For updated information, please visit www.ibef.org July 2018

Market Overview …………………….……..6

Recent Trends and Strategies …………...16

Source: Telecom Regulatory Authority of India, Aranca Research

3 Telecommunication For updated information, please visit www.ibef.org

 The Government of India is soon going to come out with a

Notes: MNP - Mobile Number Portability

5 Telecommunication For updated information, please visit www.ibef.org

Mobile (wireless) Fixed-line (wireline) Internet services

 Comprises  Consists of companies  Includes Internet Service

Source: Aranca Research

7 Telecommunication For updated information, please visit www.ibef.org

Note: CAGR - Compound Annual Growth Rate, FY19* - as of April 2018

8 Telecommunication For updated information, please visit www.ibef.org

 As of April 2018, total telephone subscriber base of India reached Composition

Urban Wireless Rural Wireless Urban Wireline Rural Wireline

Source: Telecom Regulatory Authority of India

9 Telecommunication For updated information, please visit www.ibef.org

 During FY07-18, wireless subscriptions in the country increased at a Visakhapatnam

10 Telecommunication For updated information, please visit www.ibef.org

11 Telecommunication For updated information, please visit www.ibef.org

 Revenues from the telecom equipment sector are expected to grow

12 Telecommunication For updated information, please visit www.ibef.org

 Wired broadband subscriptions in the country witnessed an increase Wired

13 Telecommunication For updated information, please visit www.ibef.org

 The number of internet subscribers in the country increased at a Visakhapatnam

14 Telecommunication For updated information, please visit www.ibef.org

Emergence of Tower Industry

Source: Aranca Research

15 Telecommunication For updated information, please visit www.ibef.org

 As of May 2018, BSNL is expected to launch its 4G services soon.

17 Telecommunication For updated information, please visit www.ibef.org

Notes: NPCI - National Payment Corporation of India

18 Telecommunication For updated information, please visit www.ibef.org

• Airtel launched new ad campaign “Airtel myPlan Family”

 Players differentiate themselves by providing different services to customers. For example,

19 Telecommunication For updated information, please visit www.ibef.org

Company Ownership Presence

Fixed-line and mobile telephony (GSM

Bharti Group (45.48 per cent), Pastel

Vodafone (84.5 per cent), Piramal Broadband and mobile (GSM) in

Source: Companies’ websites, Bloomberg

20 Telecommunication For updated information, please visit www.ibef.org

Growing young Relaxed Increasing M and

22 Telecommunication For updated information, please visit www.ibef.org

Indian residents shifting from low to high income groups (%)

3,500 209.10 266.50 267 304.80

23 Telecommunication For updated information, please visit www.ibef.org

24 Telecommunication For updated information, please visit www.ibef.org

25 Telecommunication For updated information, please visit www.ibef.org

26 Telecommunication For updated information, please visit www.ibef.org

‘Broadband for all’ with

Increase rural Liberalisation of

Source: Digital Dawn, KPMG Report 2013

27 Telecommunication For updated information, please visit www.ibef.org

Cumulative from April 2000 6212

Source: Department of Industrial Policy and Promotion (DIPP)

28 Telecommunication For updated information, please visit www.ibef.org

Target Acquirer Acquisition price (US$ million) Division acquired

Bharti Airtel's operations in

29 Telecommunication For updated information, please visit www.ibef.org

Increasing mobile subscribers Untapped rural markets Rising internet penetration

Source: KPMG, TRAI, Aranca Research