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ROA Holdings, INC.Report No. 090801

[email protected]

Copyright2010 ROA HOLDINGS, INC All Rights Reserved.

Indian Mobile Market Dynamics

and Forecast (2008-2013)

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Indian Mobile Market Dynamics and Forecast (2008-2013)

Table of Contents

3.1. The Rise of Indian Telecom Sector

3.2. The Government Factor

4.1. Regulation and Policy Reforms

5.1. Rural Mobile Telephony Analysis

7.1. Bharti Airtel

7.2. Tata Teleservices

7.3. Reliance Communication

7.4. BSNL

6.1. Mobile Subscribers

6.2. Mobile Penetration Rate

6.3. Technology Adoption

6.4. Spectrum Allocation

6.5. Tari Rate Analysis

6.6. Mobile Minutes of Use (MoU) Analysis

6.7. ARPU

6.8. CAPEX

6.9. Pre-Paid and Post-Paid

2. India at a Glance

1. Executive Summary

3. Indian Telecom Sector Overview

4. Indian Telecom Sector Policies

5. Indian Rural Mobile Telephony Overview

7. Current Players and Their Future Development

6. Indian Mobile Market Analysis and Forecast

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7.5. Loop Mobile (formerly BPL Mobile)

7.6. MTNL

7.7. Sistema Shyam Teleservices (SSTL)

7.8. Aircel

7.9. Vodafone

7.10. Idea Cellular

7.11. Ping Mobile (HFCL Infotel Ltd)

8.1. S Tel

8.2. Unitech Wireless8.3. ByCell Communication

8.4. Etisalat DB Telecom (formerly Swan Telecom)

8.5. Datacom Solutions

8.6. Virgin Mobile India

8. New Additions

9. Handset Market

10. Conclusions and Recommendations

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List of Figures

[Figure 1] Indias Telecom Circles and Key Facts

[Figure 2] Telecom Regulatory Framework in India

[Figure 3] Rural Mobile Telephony Growth Disparity with Urban

[Figure 4] Subscriber Growth Forecast including Teledensity, 2004-2013[Figure 5] Mobile Teledensity Growth Forecast including Teledensity,2004-2013

[Figure 6] GSM and CDMA Ratio and Growth Forecast 2004-2013

[Figure 7] Indias Mobile Tari Rates Compared with Other Countries

[Figure 8] GSM and CDMA MoU Comparison, 2007-2008

[Figure 9] GSM and CDMA ARPU Forecast, 2004-2013

[Figure 10] CAPEX Growth and Forecast, 2004-2013

[Figure 11] Pre-paid and Post-paid Forecast, 2004-2013

[Figure 12] Bharti Airtels Major Events by Value Chain

[Figure 13] Tata Teleservices Major Events by Value Chain

[Figure 14] Reliance Communications Major Events by Value Chain

[Figure 15] BSNLs Major Events by Value Chain

[Figure 16] Loop Mobiles Major Events by Value Chain

[Figure 17] MTNLs Major Events by Value Chain

[Figure 18] SSTLs Major Events by Value Chain

[Figure 19] Aircels Major Events by Value Chain

[Figure 20] Vodafones Major Events by Value Chain

[Figure 21] Idea Cellulars Major Events by Value Chain

[Figure 22] New Operators Presence across Various Circles

[Figure 23] Handset Distribution Channels in India

[Figure 24] Grey Market/Illegal Distribution of Handsets

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List of Tables

[Table 1] Indias GDP Comparison with its Neighbors, 2006-2008

[Table 2] Key Indian Telecom Regulatory Bodies

[Table 3] Other Key Indian Non-Prot Associations

[Table 4] FDI Snapshot on Indian Telecom Operators[Table 5] Policy Evolution Snapshot

[Table 6] Operator Tie-ups with Premier Institutes for Promoting Rural

Telephony

[Table 7] Market Snapshot, 2007-2008

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For 4 years the telecom industry in India has shown tremendous

growth with an average growth rate of 64.51%. In 2004 the

subscribers numbered 47.38 million, mainly high income users. By

the end of 2007, mobile phones have become accessible even to the

low income users and the number has increased to 341.31 million

by the end of 2008. The Indian mobile market continues to expand

with new entrants like Virgin Mobile in 2008, Loop Telecom in 2009,and the incumbent CDMA operators like Reliance and Tata moving

into GSM in 2009.The market is also expected to show a remarkable

growth with the latest addition of five more telecom players. The fact

that an average of between 8 and 10 million mobile subscribers were

added every month in India in the recent past shows the market

provides opportunities for telecom players. During 2008, more than

112 million subscribers were added, increasing the penetration from

20.31% to 29.76% in 2008.

It is forecast that the number of subscribers could reach as high

as 868.47 mill ion reaching at 69.35% penetration by 2013.

Our estimated compound annual growth rate (CAGR) of mobile

subscribers from 2008 to 2013 is 20.54%.

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ROA HOLDINGS ISSUE REPORT


1. Executive Summary

India Mobile Market 2009 - 2013

Source: Optimus, ROA Holdings

4.45%

6.93%

12.98%

20.31%

29.76%

40.87%

49.92%

57.99%

62.54%

69.35%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

0

100

200

300

400

500

600

700

800

900

1000

Dec - '04 Dec - '05 Dec - '06 Dec - '07 Dec - '08 Dec - '09E Dec - '10E Dec - '11E Dec - '12E Dec - '13E

Subscribers

inmillions

India Mobile Market 2009 - 2013

ETC

Aircel

Idea

Tata

BSNL

Vodafone

Reliance

Bharti

Teledensity

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The revenues of the telecom industry continued to show robust

growth with wireless market growing at 9.91%. The revenue stood at

USD 7.36 billion for the second quarter ending in September 2008. In

April 2008, India overtook US as the second largest wireless market.

The entrance of new players has increased the competit iveness

causing the tariff rates to hit an all time low. This has allowed mobile

services to penetrate into the low income population attracting more

potential users.

India embraces both GSM and CDMA technologies. The government

has recently opened its doors for deploying 3G technology as well.

The next generation network (NGN) backbone has begun developing

in India. Mobile Number Portability (MNP) is on government agenda

and is likely to be implemented by the end of September 2009. The

next few years are likely to witness a rapid expansion of the Indian

mobile market not only in terms of subscribers but also in technology

and services.

Mobile operators are continuing to upgrade their technology and have

started providing an increasing array of sophisticated services. The

content service segment is growing at a rapid pace. It is believed to

speed up further in the future and become the most lucrative part of

the market.

The Indian handset market is segmented. As the country has a

wide gap between the rich and the poor, the handset market varies

accordingly. While the low end handsets are sold in high volumesnationwide, the high-end handsets are mainly sold in the major cities.

Along with the rapid growth in the mobile service market, the Indian

handset market is coming into prominence.

In the context of overall economic situation, even during the global

economic downturn, the Indian economy is slated to grow at around

7% in 2009-10. It implies tremendous opportunities for international

as well as domestic investments. Agriculture, manufacturing and

services have been the traditional fundamental pillars of the Indian

economy. The service sector has been the forerunner of rapid

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growth contributing approximately 54% of the GDP in 2008. IT &

telecommunication fall under the booming service sector umbrella.

Indias robust telecom infrastructure is a result of a controlled and

phased growth coupled with strong policies. The phase began by

allowing FDI and privatization. To ensure fair play and benefit to the

consumer, the government appointed an independent regulator called

Telecommunication Regulatory Authority of India (TRAI) in 1997. A

judicial body called TDSAT also exists to adjudicate disputes related

to service providers. The role of TRAI is to regulate the telecom

business in India. With over 300 million mobile subscribers, India has

the necessary maturity of business landscape and infrastructure in

place to support further growth.

India has one of the largest numbers of mobile operators among the

emerging markets. Most of the domestic players have significant

foreign investments. For example, Telekom Malaysia owns around

40% stake in Spice Telecom, one of the oldest mobile operators in

India with approximately 4 million subscribers. Similarly, SingaporeanSing Tel owns about 30% stake in Bharti Airtel, Indias leading mobile

operator.

The subscriber base in the rural areas is quite low in India, about 13%

as of May 2009.The service providers are eyeing rural India as the

next area of growth. The government has put regulatory mechanisms

in place to encourage rural telephony. Rural mobile teledensity is

expected to reach about 36.25% by 2013.

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