snldxsdnAnnual Expansion Report

1400 1347 1210 An overview. 1200 1120Types of Services 1000Level of Govt. participation. 800 600 Population (In Millions)Major Competitors. GDP (US$ ) 400S.W.O.T Analysis 200 220 194 188 116 113 66 50 61.6 74 87 90Scope of Investments. 32 23 0Questions.

An Overview India is the second most populous country in the world with the Overall GDP of $1.85 trillion (10th overall) Worlds largest democracy system with multi party model at its core. Indian telecom is the second largest in the world (behind china) on the basis of telephone users (Both fixed and wireless). The Industry grew over 30 times from 37 million users in 2001 to 960.09 million (Both fixed and wireless) in 2012. Fixed lines stood at 31.53 million in May 2012.

An Overview Total mobile phone active were at 929.37 million in 2012. Total Wireless Teledensity were at 79.37% in 2012. Total monthly additions were at 8.35 million by may 2012. (Both fixed and wireless lines). Fixed line rural density is at 33 % as of May 2012 Projected Wireless Teledensity is at 84%. The Industry in India is rapidly transforming into Next Gen Network through various telephone exchange, mobile switching centers and media gateways using optical fiber or microwave radios.

An Overview 1.18% of household in India have broadband access. There were 14.31 million internet users in India as of May 2012. Total ARPU for 2012 stood at $2.36 as compared to $46.50 in US Lowest mobile tariffs in India due to high competition. Total revenue generated in 2012 by telecom sector to be estimated upward of US$50 billion.

Types of ServicesTelephone 1000 926 900Broadband 800services 700 Telephone (In 600Broadcasting millions) 500 Internet (In millions) 400 329 Broadcasting (In millions) 300 200 99 100 19 20 44 37 0 10 0 1.1 14.3 0 1952 1991 2000 2012

Fixed Telephone

Types of Services Telephone (Fixed and Wireless). Fixed connections: - Based on copper or optical fibers. The cost per connections depend upon the regions with northern sectors being the cheapest. Besides adding future connections the introduction of FDI also adds to the demand for wired connections. Digitization in fixed lines were recently introduced. Bulk of the population rely on landline for their internet connections thus adding to the future demand. Interconnectivity charges to be paid to BSNL.

Fixed Continued With 31.6 million SHARE connections in India 0.16 following are the key 0.61 BSNL 0.07 players 4.04 MTNL BSNL 4.04 MTNL 10.49 BHARTI BHARTI TATA TATA 11.07 RELIANCE RELIANCE QUADRANT 68.86 QUADRANRT SISTEMA VODAFONE SISTEMA VODAFONE

WIRELESS

1000 WIRELESS 800Subscriber base of more than 929 600million. (second largest in world) USERS 400 REV ($BILLIONS)Estimated ARPU of $2.3 as compared to$46.32 in US. 200Cost per user fluctuates at $1.7 to $2.2. 0India has 7,36,354 base transreceiverstations . 20% of them can handle 3Gservices. 0.58% 0.34% 1.85% 0.53%India has 75 million Smartphone users. 0.17% MARKET SHARESmartphones will grow at a CAGR of over BHARTI 4.64%30% (US$18 billion) VODAFONE 7.26%Wireless handset service grew 16.7% in 20.58% RELIANCE2012 with revenues adding up to Rupees IDEA288,882 crore or US$ 64.4 billion. BSNL 8.66% TATA AIRCEL 16.88% UNINOR 10.93% SISTEMA MTNL VIDEOCON 12.77% LOOP 14.83% HFCL

Wireless Contd..Third highest Teledensity in world withbulk in urban areas, marked by highprospect of growth in rural areas.3G and broadband services were auctionedat US$19.2 billion in 2010.4G services have been slow to roll out dueto high price, unforeseen policies. Indiangovernment requires local operators topartner with global giants to ease theburden of the costs.Private sector hold 88.49% of the marketshare; whereas government held agenciesaccount for remaining 11.51%.High competition with at least 7 to 12companies in the same circle.GSM is the dominant form of technologywith around 80% and CDMA being at 20%of total wireless consumers base.Wireless alone generates revenue ofupwards US$31.6billion of estimatedUS$35.6 billion.Lowest ARPU among fellow nationsfostered by stiff competition and govt.regulation policies.

ARPU IN US$ Wireless Contd. 50 46Voice services near saturation in urban 40 33areas; future growth possible by 30 26expanding data services and expansionin uncharted rural areas. 20 12 ARPU IN US$Telecom equipment requirement 10 2.3stood at 6.5% (US$14.3 billion) of the 0worlds requirement with most of itbeing imported.2G still to be a dominant force to bereckon with. (please see graph below). CONSUMER BASE (Millions)Mobile Equipment 1500 Break Up by 2015 1004 929 1000 5 CONSUMER BASE 2G 500 327 (Millions) 121 75 50 3G 0 45 4G LTE

BROADBAND SERVICES

No of Internet Users (In Millions) BROADBAND SERVICES 600 513Introduced in 1995.Current users at 14.82 million from 14.62 400 245 No of Internet Users (Inmillion. Increase of 1.37% Millions)Annual growth of 16.78% 200 121 101 81The global trend of offering internet as 0valued added services being followed in CHINA US INDIA JAPAN BRAZILIndia.Government mandated 256Kbps as arequirement, however India still ranks at NO OF CONNECTIONS (IN MILLIONS)110 in Internet speed. MARKET SHARE Bulk of these users are concentrated in 9.47urban areas, whereas rural areas have 10 N Olimited exposition. O155 Internet service providers in India. F 19.70% 5 C Internet services are slated for explosive 1.37 1.06 O Ngrowth in 2013with the advent of mobile 7.20% 0.68 0.37 N E NO OF CONNECTIONS (IN MILLIONS)payment services in India. User 9.30% 63.90% 0subscription rate to go over 20 million by2015. BSNLAbout 75% of the connections are BHARTIlandline based. MTNL OTHERS

BROADCASTING SERVICES

800 723 689 BROADCASTING 600 526Launched in 1952, deregulated in 1992. Comprises 399 355 356 NO OF TVS (INmore than 500 channels as of 2012. 400 MILLIONS) 199 199Employs 3 million people with over US$15 billion 186 156 VIEWERSin revenue. 200 70% of the revenues are generated by advertising 0and rest by subscriptions. TVS being promoted as part of the one of thevalue added services in this day and age by localoperators. ADVERTISING REVENUE (IN MILLIONS-2005 DATA)There are 552 million viewers with 462 million onsatellite subscription. $247.27 $236.36 $250.00With the onset of High Def services, ad revenues $181.82 $200.00have been further increased by 6.7%. $150.00 $120.91Regional channels could be set up for US$20million, whereas national channel could take $100.00 $54.55 ADVERTISING REVENUEUS$100 millions. $50.00 (IN MILLIONS-2005 DATAHeavily rely on revenues from Advertising $-(revenues generated by advertising in 2012 wereUS$4.91 billion).High competition due to large number ofoperators in various regions.

LEVEL OF GOVERNMENT PARTICIPATION

GOVERNMENTThe Government of India allowed FDI in 250 250telecom in 90s with the launch of Comparison of subscriber base in relation to Tariffeconomic revival program.At present 74%-100% FDI is allowed in 3Gor less spectrums. Up to 49% is allowed in 2004G spectrum. 200 190The formation of NTPs (National telecom 180policies)helped in better foreigninvestment flows in India. Current NTP2012 is released for the fiscal year. 150TRAI (Telecom Regulatory Authority ofIndia) was establish in 1997 to oversee day TARIFFto day operations related with Telecom SUBSCRIBERSsector. 100TDSAT (Telecom Disputes SettlementAppellate Tribunal) was formed in the year2000 to assist with ranging disputes among 70operators in Telecom sector.With the auction of 3G services TRAI 50 40 45helped Indian government earn over US$19 35billion. 20 20 25 16 16The subscriber base exploded with the 8 5 5 4 3.5 3 2.7 2onset of NTP 99. Please see chart for 1.7 0references 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Government Continued..The current government allows operatorsto provide fixed and wireless line under WPC-one license. SPECTRUM MANAGMENTThe government launched USO TRAI Independent Regulator(Universal service obligation) along withNTP 99 to widen the reach of telecom and DoT- Indian Telecom Industry Frameworkincrease Teledensity. License and frequency Pricing policy and execution to be management TDSATapproved by TRAI and DOT. Handles Disputes among operatorsInterconnectivity charges among GoT-IT Handles Ad-operators are also to be approved by TRAI Hoc Issuesand DoT.NTP-2012 incorporates framework forincreasing the availability of spectrum fortelecom services including triple playservices (voice, video and data) for whichbroadband is the key driver. Integred Fixed Line BSNL ILD Players Private CDMA Reliance GSM Players Bharti / Vodafone / VSNLThrough the NTP-2012, DoT is floating MTNL TTSL Idea/BSNL/Airceltenders that requires 24 fibreOFN(optical fiber network) of 350,000 miles;this project will further boost theinterconnectivity between rural and urbanareas.

Per the NTP 2012, Govt of India is rapidly developing its communicationabilities and is leaving no stone unturned.Following are the main excerpts: -Increase rural Teledensity from the current level of around 39 to 70 by the year 2017 and 100 by theyear 2020.Provide affordable and reliable broadband-on-demand by the year 2015 and to achieve 175 millionbroadband connections by the year 2017 and 600 million by the year 2020 at minimum 2 Mbpsdownload speed and making available higher speeds of at least 100 Mbps on demandSimplify the licensing framework to further extend converged high quality services across thenation including rural and remote areas. This will not cover content regulation.Reposition the mobile phone from a mere communication device to an instrument of empowermentthat combines communication with proof of identity, fully secure financial and other transactioncapability, multi-lingual services and a whole range of other capabilities that ride on them andtranscend the literacy barrier.Strive to create One Nation - One License across services and service areas.Achieve One Nation - Full Mobile Number Portability and work towards One Nation - FreeRoaming.

10-THE INDIAN TELCOME TIMELINE 3g Auctioned 2008 3G policy announced, spectrum auction awaited. 2006 Number Portability was proposed 2005- Measures to boost rural Teledensity. FDI limit was also increased from 49 to 74% 2004 Intra circle merger guidelines was established. Broadband 2004 policy was formulated 2003 Calling party pay was implemented. Unified license regime was introduced. 2002 CDMA services launched. 2000-BSNL was established / Reduction of license fees / ILD services opened. 1999 NTP 99 was launched 1997 TRAI established 1994 NTP Formulated 1992 PVT companies allowed in VAS

PRESENT TELECOM MARKET SHARE Indian Telecom (Includes phone, broadband and broadcasting subscriptions) in 2012 12% 23% AIRTEL 5% IDEA VODAFONE15% 10% RELIANCE BSNL 12% 10% TATA OTHERS

MAIN COMPETITION

Established in 1995 by Sunil Bharti Mittal. Itgenerated US$14.49 billion in revenue for 2012with overall total assets of US$31.85 billion.Its PPS (price per share is) US$5.82.Currently operates in 20 countries. Offering2G, 3G and 4G services.Focuses on B2C (Business to customer) and $16.00B2B (Business to Business) segments. $14.20 $14.00Fourth largest telecom company in the worldwith 261 million subscribers worldwide and $12.00183.6 million in India alone. $11.20Offers various diversified services such as $10.00 STOCK PRICESbroadband, phone (fixed and wireless), TVsubscription services, Airtel money $8.00 TOTAL REVENUE (IN $7.27 BILLIONS)(Ecommerce platform ) $6.45 $6.24 $6.00Has a business strategy of outsourcing its $5.78operations to IBM and Ericsson thus further $4.00reducing its call rate to Rupees 1 or $0.02 /minute. $2.00 $- 2010 2011 2012

Founded in 1995, currently head byKumar Mangalam Birla.Had an overall revenue of US$2.8 billion.Total Assets of US$5.34 billion in 2011.Subscriber (Wireless) base set at 97million subscriber.Current 3G service provider in 11 circles.Ideas ARPU stood at US$2.2 for the year2012. P rHas a 3G subscriber base of 3.7 million i Price per share (US$) cuser. e Average share price US$ 1.9. $2.00 p eOverall employees at 6489 in 2012 rExtensive operational infrastructure in $1.50 sIndia. h a $1.00Involved in PAN-India network for its 3G r edistribution to its subscribers. $0.50 (Offers wireless services as of 2012. U S $- 2010 2011 2012 Price per share (US$)

Came into existence in the year 2000 by MARKET SHARE IN WIRELESS, BROADBAND ANDdiverging DoT (department of telecom was WIRELESSdivererged into BSNL)Generated revenues worth US$5.08 billion in 10.932012.BSNL has the largest 3G network in India.Additionally, BSNL 3G services usually covernot only the main town/city but also theadjoining suburbs and rural areas as well. As ofnow BSNL has 3G services in 826 cities across 68.89India. WIRELESSWireless subscriber base of 97.7 million.Broadband share of 9.7 million subscription 63.89 BROADBANDFixed line share of 68.8 % at 24.2 millionsubscribers. FIXED LINETotal operational assets are based at US$21.41billion.Net income based at US$1.61 billion (incurredlosses in 2012)

VODAFONE Global Coverage as of 2012Vodafone revenue for 2012 at US$5.2 billion.Vodafone is a successor to Essar + Hutchcollaboration.operational profit margin increased to 28.4 percent as a result of increasing operatingefficiency, based on scale and lower customeracquisition cost.Vodafone annual ARPU at US$3.26 in 2012.Has 141 million wireless subscribers.Vodafone India is a subsidiary of VodafoneGlobal.Vodafone paid US$2.6 billion (the secondhighest. Vodafone India Revenue (in US$ Billions)amount in the auctions) for spectrum in 10circles. The circles it will provide 3G in are 8 6.6Delhi, Kanpur, Gujarat, Haryana, Kolkata, Maharashtra & Goa, Mumbai, Tamil Nadu, Uttar 5.3Pradesh (East) and West Bengal. 6 4.9Vodafone also operates 3G services inKerala, Andhra Pradesh and Uttar Pradesh Vodafone India(West) through an agreement with Idea and in 4 Revenue (in US$Karnataka through an agreement with Airtel. Billions)This gives Vodafone a 3G presence in 13 out of22 circles in India 2 0 2010 2011 2012

Ranks among the top 5 telecommunicationscompanies in the world by number ofcustomers in a single country.Headed by Anil Dhirubhai Ambani.Generated revenues to the tune of US$2.02billion in 2012.Has total assets worth US$14.65 billionGenerated net income of US$28.39 millionin 2012.Has 28000 employees on its payroll.The company has established a pan-India, next-generation, integrated (wirelessand wire line), convergent (voice, data andvideo) digital network that is capable ofsupporting services spanning the entire $3.00 $2.91communications value chain, covering over24,000 towns and 600,000 villages. $2.02Reliance Big TV offers its 1.7 million $2.00 $1.65 $1.34 $1.49 $1.27customers DVD-quality pictures on over 200 Reliance Stock Comparisonchannels using MPEG-4 technology. $1.00 Reliance RevenueReliance Communications paid US$1.8billion for 3G spectrum in 13 circles. $- 2010 2011 2012

STRENGTH LENSERTHREATS S.W.O.T WEAKNESES ANALYSIS OPPURTUNITY

STRENGTHS Global ARPU @ $29.98 Largest telecom infrastructure in the world Annual global Wireless subscribers at 335 (US$108.98 Billion) million. 2012 Global sales pegged at US$42.56 Largest OFN facility in the world (annual billion. production @ 400,000 miles) Net Income in 2012 @ US$8.9 US$100.62 billion in cash flow reservesProviding time tested Value added services Annual stock price for 2012 at US$22.56 Extensive dealership network in over 89in 29 nations nations Global impressive brand imageGlobal Operational costs down by 2.9% Merger /Acquisitions in over 89 nations Robust research and developmentPioneer in GPS technology department (Annual patent fees revenue Overall global penetration @ 66% in from various organizations at US$2.9 subscriber base. Billion)

wE AK NE SE S

Our global presence and strong financials allow us to compete with the competition in India. The key to generate profit will be lower costs and quality service atAdvent of acquisition or merger canlower cost of entry in Indian scenario.TRAI and DoT are efficient telecom Wireless market in metros is saturatedregulators as compared with agencies but rural areas is majorly untapped.in other countries . Approx 67% of the population lives in rural areas. This vast market has aMobile Broadband is slow to pick up; potential of another $8.9 billion inour global pioneer position withdiscounted value added service could value added services. OPPORTUNITYbe beneficial factor Manufacturing telecom equipment is our forte that India has so less to offer.The relative young generation of the Further $6.8 billion can be generatedpopulous also adds to the lucrative by manufacturing telecom equipment.market of the smart phones. The introduction of FDI in various sectors in particular Retail would boost the demand for wire line based broadband. The potential market is estimated to be $8.9 billion in 2013.

The presence of a coalition in the federal government structure creates policy paralysis in the Indian scenario (important decisions impacting economic growth and welfare are difficult to pass due to the vested interests of various political parties and groups) Developing own telecom infrastructure will be a challenge as to get the laws passed will take considerable time and would be met with opposition from the competition.Cut throat competition in India is the biggest The 2G scam in 2008 brought out thethreat (Reliance, Tata , BSNL have incurred vulnerability of the security of foreignloses due to loss-$1.9 billion combined in investment in India. The reversal order byrevenue and rising costs). Supreme court of India incurred losses inGlobal financial scenario (India seems to have billions of dollars on various Multi nationaldodged the 2008 crises bullet but is telecom carriers. Although lobbying in illegal inexperiencing slower growth in 2012). India but on the other hand very little or nothing is accomplished without lobbying. THREATS

INVESTMENT IN INDIA? WHY NOT!!Yes, the political situation in India is very delicate and fragile. Lobbying is illegal and a necessary evil. India has the lowest ARPU and cut throat competition. But we shouldnt forget this lucrative market because of these following reasons: - Second most populous country in the world with overall disposable income per person at $1,326 annual. An upcoming younger generation eager to get their hands on a Smartphone (an estimated $18 billion dollar market in next 2 years we pioneered with Apple and introduced I-phone to the world, a similar wind in India could add at least give us $6 billion of that share.) We are known leaders in the telecom equipment manufacturing; India relies on the imports of the telecom equipment. By setting up a production plant we can bank on to capturing at least $4 billion of the $6.5 billion equipment market in India. Our strong financials and global presence can help us manage our losses for first five years as we catch on with the competition and dig in for the long haul. (With the full nationwide thrust we are expecting to incur $656 million in losses in the first year with an increment of 12.8% every other year). Losses would be generated into profits by eliminating local carriers and capitalizing on the vast untapped rural network. Losses would also include getting spectrum licenses in all circles thus setting up our infrastructure (cell towers, OFN). We wouldnt have to pay hefty interconnectivity charges to any carriers except BSNL. This would help us on saving on operational costs. Indias growing economy needs more faster network, we are leaders in innovation and pioneers in establishing new technology through time place tested measures. Our overall global assets @ $110.89 billion would come in handy in the Indian Market.

UPON REQUEST ----Rohan krishan