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GTL Infrastructure Ltd (GIL)

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Telecom scenario in India

Growth of telecommunication in India is driven bywireless telephony

Explosive Growth

Current approx 85 million subscribers

Target by 2008 approx 250 million subscribers

Category C circles continue to witness the highest rate of

growth

*Feb 2006 data source COAI

Category B largely semi urban

Circle Monthly Growth*

Category C largely rural 8.40%

5.16%

Category A largely urban 5.03%

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Does shared infrastructure makes sense?

Operator Current Additional Planned

Tata Teleservices 4500 5000

Reliance Infocom 6000 10000Bharti 12000 20000

Hutch 8000 15000

Idea 2500 3500

Aircel 3500 5000

Spice 1500 2000

BSNL 15000 20000MTNL 1000 500

Source: Trade Magazines

Average sharing 20% 50%

Total sites after sharing 43200 40500

54000 81000Total

To reach the rollout targets, approx capex required in telecom

infrastructure alone is to the tune of US$ 20 Bn in next 3 years

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Does shared infrastructure makes sense?

Average Revenue Per User(ARPU) Rs.374 expected to be less than

Rs.200 (

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Shared Telecom Infrastructure

Third party - Infrastructure sharing will be more effective as the Telecom Operators

competition will not hamper co-operation.

High leverage of assets will ensure good early revenue streams and consequently the

ability to finance rapid roll-out

Independent

Infrastructure

Shared

Infrastructure

Operator A

Operator B

Independent

Infrastructure

Shared

Infrastructure

Operator A

Operator B

Telecom Infrastructure consists

of

Passive Infrastructure

Tower

Shelter

Foundation/Civil Work

Outdoor/Indoor

ElectricalPower Supply/DG sets

Optical Cables/Ducts

Active Infrastructure

Electronic Equipment

Antennas

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Benefits of Sharing

Sharing model provides cost, scale and time benefits to the

Telecom operators:

Conserves CAPEX and allows Telecom operators to enhance

coverage and penetration

Reduces OPEX and eliminates the need for Telecom Operatorsto manage the issues related with real estate and maintenance

Facilitates Telecom Operators to meet the mandated coverage

requirements in low density areas such as rural and suburban.

Saves Time to Market by providing an existing, telecom readyfacility, with consistent quality

Freeing of capital for core areas like technology and new

services

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To be considered as core infrastructuredevelopers

Extremely capital intensive

Attractive terms of investment needed to sourceequity/debt funding

Cost effective solutions to attract TelecomOperators

Challenges

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To extend Income Tax benefits under section80 - I A

Granting Infrastructure status under section 10-23(G) to developers of Telecom Infrastructure

as a separate entry under sec. 80-I A (4)

Extending benefits to developers without any loss

to the exchequer

Our Proposal

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The Income Tax Act under sec. 80-I A(4) (ii)extends Income tax benefits to:

1. The telecom operators who are developing their

own telecom infrastructure.

2. The developers of other infrastructure like roads,

ports,highways, water supply projects etc.

Government of India is committed to provideRural telephony at affordable prices

Justification

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Whilst prices of electronics as well as rate ofcustoms duty is coming down, prices of passive

infrastructure comprising of land, steel, cement etc.

is going up.

Income Tax rules allows each operator to claimdepreciation benefits on their capex. Common

network on shared basis thus would reduce overall

depreciation benefits. Shared infrastructure service provided to the

operators would generate additional service tax

revenue

Justification

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Benefits to the Revenue and economy Overall depreciation allowance by the

department will be reduced

Efficient use of capital in the economy

Additional service tax revenues

Benefits to the Consumers

Lower cost of operations to reduce tariffs Penetration in the rural areas as sharing is the

only viable alternative

Benefits

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Thank You