TELECOM INDUSTRY - INDIA

1. Executive Summary:
While the global economic downturn has adversely affected almost all the industry
sectors, the Telecom Industry stands out as an exception. Large investments have
been planned in the sector during the ensuing year on the back of rapid pace of
subscriber additions, introduction of new technologies such as 3G, Wi-Max,
Internet Protocol Television (IPTV) etc. and Re1gulator driven initiatives. All
major players in the industry are banking with us and 88% of the exposure of the
sector is in the CAG portfolio.
While the sector is on a growth trajectory, the declining Average Revenue per User
(ARPUs), increasing Minutes of Usage (MoUs) and introduction of Mobile
Number Portability (MNP) etc are expected to affect the Sector margins.
The increasing competition, with the presence of 9-10 number of players in one
circle (highest in the world), is bound to tigger new initiatives in the near future.
However, the break even period for new players is expected to be around 6-7
years.
While the outlook for the existing service providers will be positive, it is expected
to be neutral for new service providers, in view of the stiff competition they would
face from the established players.
The outlook for the Telecom Equipment Manufacturers is expected to be neutral
on account of increase in imports to meet the high demand as also sharing of
network infrastructure.
2. Industry Overview:
The Indian Telecom industry is one of the fastest growing sectors in the country.
The Industry, unlike others, was not hit to a great extent by the recent slowdown in
the economy. Telecom Service Providers are the main drivers of the Telecom
Industry whereas equipment manufacturers witness uncertainties as the orders for
transmission towers and other hardware are spread out unevenly over time.
Large investments are being planned in infrastructure to enable rollout of services
in hitherto uncovered areas and to enhance capacities. The number of telephone
connections in the country (mobile and landline) crossed 429 million in March

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Telecom Industry: India 2009
2009, as against 300 million in March 2008, registering a growth of 43%. The
overall tele-density has reached 37% in March 2009 as against 26% in March
2008.
The Industry has also witnessed the entry of global players such as Telenor, Swan,
and NTT DoCoMo indicating that substantial growth potential exists, which is also
evident from the fact that India has been adding more than 10 million subscribers
every month.

3. Industry structure:
The Telecom Industry consists of two segments;
 Telecom Service Providers
 Telecom Equipment Manufacturers
4. Telecom Service Providers:
Telecom Services can be divided into the following segments:
i. Wireless Segment consisting of Global System for Mobile
Communications (GSM) & Code Division Multiple Access (CDMA)
(Mobile)

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Telecom Industry: India 2009
 ii. Wireline Segment (Fixed Line)
iii. Internet and Broadband Segment
For purposes of allocation of Spectrum, India is divided into 22 Circles
consisting of 4 Metropolitan areas and 18 Non-Metro areas. These areas have
been classified into three categories – A, B and C, on the basis of revenue
generating potential with the Category-A Circle having the highest revenue
potential.
Categories of Circles
Metros Chennai, Delhi, Kolkata, Mumbai
Category A Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Tamilnadu.
Category B Haryana, Kerala, Madhya Pradesh, Punjab, Rajasthan, Uttar
Pradesh (East)
Category C Assam, Bihar, Himachal Pradesh, Jammu & Kashmir, North
East, Orissa

India added 15.64 million mobile subscribers in March 2009, and set the global
record for adding the maximum number of users in a single month.
According to the Telecom Regulatory Authority of India (TRAI), the Mobile
Segment accounts for close to 92% of the country’s Telecom market. The total
mobile base stood at 452.90 million by end May 2009.
Major Players: Bharti-Airtel, Vodafone-Essar, Idea, Aircel, RCom, Tata
Telecommunication, BSNL, MTNL, Swan, Telecor
4.1 Key Developments:
 Department of Telecom (DoT) has initiated the process of imposing
penalties on Telecom Operators for violating Subscriber Verification
Norms. Operators have to pay a penalty of Rs.2,000 for each subscriber
taken on without proper identification document.
 The Defence Services have demanded that a portion of 3G spectrum
should be reserved for their communication needs. DoT has decided to
have an ‘exclusive band’ for the Defence Services with commercial users
allowed access to the civilian band only.
 DoT has modified the rollout obligations for new Telecom Operators.
The new entrants need to roll out services within one year from the date
of allotment of Spectrum, as against within a year of getting the licence.
The amount of penalty for delay has also been reduced. New Entrants
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Telecom Industry: India 2009
 would earlier have had to pay a total of over Rs.51 crs. in penalties by
April, 2009. However, with the modified obligation the penalty would
now be Rs.2.6 crs. payable by July 2009.
 DoT is partnering with Private Telecom Operators to set up wireless
broadband infrastructure in rural areas. Companies selected through the
competitive bidding route will get financial support from the Universal
Service Obligation (USO) Fund.
4.2 Regulatory Initiatives and Policies
TRAI, facilitates rollout of new technologies and applications, keeps check
on tariffs, allocates spectrum and recommends improvement to the
Government and Industry alike.

 The Cabinet Committee on Economic Affairs (CCEA) has adopted new

guidelines for computation of foreign equity holding in Indian
companies. The new norm is expected to allow companies to raise the
level of foreign investment and which will benefit all such companies
that have touched their Foreign Direct Investment (FDI) ceiling.
 FDI is permitted to the extent of 100% through the automatic route in
Telecom Equipment Manufacturing while the ceiling in Telecom
Services has been raised to 74 %.
 Unified Access Licensing is being introduced for telecom services on a
pan-India basis.
 DoT has proposed an additional one-time charge for spectrum held
beyond 6.2 MHz (for GSM Operators) and 5 MHz (for CDMA
Operators), which would impact negatively on GSM Operators but would
be neutral for CDMA Operators.
 The Government is implementing a program for connecting 66,822
hitherto uncovered villages under the Bharat Nirman Programme. The
Government also intends to invest Rs.10,000 crs. in setting up 1.12 lakh
Community Service Centres in rural India to provide broadband
connectivity.
 DoT has allowed passive infrastructure sharing among operators, which
includes sharing of physical sites, buildings, shelters, towers, power
supply and battery backup. They have also allowed sharing of active

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Telecom Industry: India 2009
 infrastructure which presently has been limited to Antenna, Feeder Cable,
Node B, Radio Access Network and Transmission systems. Sharing of
spectrum has not been permitted.
 TRAI has slashed the termination fee paid by operators by 33%, which
will help Telecom companies reduce their Local as well as National Long
Distance (NLD) tariffs by upto 20%.
4.3 3G Services
India will shortly join the list of more than 100 countries that offer full-fledged
3G services. 3G is expected to facilitate the implementation of important
e-initiatives such as e-governance, e-education, and tele-medicine to name a
few. 3G will also be instrumental in alleviating the severe spectrum crunch
being faced by many operators, especially in the metros and big cities, where
there is not enough 2G spectrum to fuel aggressive growth. 3G could also
facilitate the delivery of far more cost-effective voice services because of its
higher voice capacity.
In India, 3G handset proliferation would be the single biggest driver of 3G
services, at least in the preliminary phase, as it would widen the target base for
3G service providers. Currently, 2-3% of the total handsets in the market are
capable of accessing 3G services and approximately 8% of incremental
handsets sold every month are 3G enabled.
The reserve price for an all India licence for 3G is expected to be around
Rs.4,000 crs At this price, the Government could garner at least Rs.30,000 crs.
from their auctions. The Industry would also require substantial level of
investments for driving their 3G allocation programme.
The nine-member ‘Empowered’ Group of Ministers (EGoM) headed by the
Finance Minister is slated to take a final call on the various outstanding and
unresolved issues (Reserve Price, Number of Blocks to be auctioned). 3G
spectrum auctions is now expected to take place in Oct/Nov ’09 at the earliest.
The 3G subscriber base is expected to reach 90 million by 2013 with revenues
touching Rs.80,000 crs, and would account for 46% of the total wireless
revenues. Furthermore, 3G availability would help in solving the problem of
low broadband penetration in India.
MTNL (in Delhi and Mumbai under the brand “Jadoo”) and BSNL has already
launched 3G services and are tying up with Internet Protocol TV (IPTV)

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Telecom Industry: India 2009
 providers to provide content for 3G services. MTNL is looking to tap its 15,000
IPTV subscribers in Delhi and Mumbai for 3G services.
4.4 Mobile Number Portability:
The implementation of Mobile Number Portability (MNP) would give
subscribers the liberty to switch operators while retaining the same call number.
DoT has awarded licences to Syniverse and Telecordia, for the launch of this
service which will be done in a phased manner, starting with the metros and a
few category 'A' circles during the third quarter of 2009-10.
The large mobile operators will be more susceptible to competition in the
implementation of MNP as compared to the relatively new players. Large
players will witness a 1.5-2.0% increase in their churn rates, resulting in a
contraction in operating margins on a pan-India level by about 250-300 basis
points (bps). On the other hand, a new entrant managing to garner 10% of this
subscriber churn by weaning them away from incumbent operators could
achieve an EBITDA break-even in 6-7 years as compared to earlier estimates of
8-9 years.
4.5 Competition:
The industry is witnessing stiff competition with the entry of new players and
with each Circle comprising of more than 10 players which is one of the highest
concentrations anywhere in the world. The industry is also likely to witness a
variety of marketing and product service strategies as new entrants try to gain a
foothold by launching value added services to take on the strength of the
established players. As stated earlier the implementation of Mobile Number
Portability (MNP) will give new licencees an opportunity to attract subscribers
of other operator networks, provided they are able to deliver Quality of Service
(QoS) and content.
DoT and TRAI have enforced a three-year lock-in period, whereby new
entrants cannot sell equity. This would help to prevent the entry of not so
serious Operators into the Telecom Industry.
Of the 9 companies that were issued 121 licenses, the 6 new entrants are
Unitech Wireless, Swan Telecom, S Tel, Loop Telecom, Datacom and Shyam
Telelink. These companies have been allotted spectrum in most of the Circles
and are now in the process of entering into alliances with either Foreign or
Domestic players.

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Telecom Industry: India 2009
 Operators Snapshots
Operator Promoter(s) No. of Start up Spectrum
Licensed (No. of Circles)
Circles
Unitech Wireless Unitech 22 21
Swan Telecom Dynamix Balwas 13 13
Group
Datacom Videocon 22 17
Loop Telecom Essar Group, BPL 21 13
Mobile
Shyam Telelink Shyam Group, 22 22
(Russia Based
Sistema)
S Tel Skycity Foundations, 6 6
Telecom Investments
More particulars about the new operators are furnished in Annexure I
4.6 Value Added Services (VAS)
Venture Capitalist firms such as Canaan Partners, Draper Fisher Juvertson,
Helion, and Nexus India are looking to fund innovation in services such as
mobile payment options, advertising, voice-based SMS and Satellite Video
Streaming. Mobile Value Added Services (VAS) is estimated to be a
Rs.3,500 crs. market with a 20% y-o-y growth and which is likely to touch
Rs.15,000 crs. by 2012.
VAS were valued at Rs.5,700 crs. in June 2008, and is expected to grow rapidly
at a CAGR of 70% to touch Rs. 9,400 crs. by June 2009. Currently, VAS in
India accounts for about 10% of the operator's revenue which is expected to
reach 18% by 2010.
4.7 Growth Drivers:
Growth in mobile services has been driven by a sharp fall in subscription costs
and rising incomes which have increased the affordability of mobile services.
The following are the major factors which are expected to drive the growth of
the industry:
Decreasing Cost of Subscription: The cost of life-time prepaid cards has
fallen from Rs.999 to Rs. 99. The availability of low denomination pre-paid
vouchers, bundled offerings and other product innovations have made mobile
services affordable in semi-urban and rural markets. Moreover, with increasing
competition in the mobile handset manufacturing segment, the cost of an entry
level handset has fallen considerably.

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Telecom Industry: India 2009
 Favourable Regulatory Environment: The Government’s Telecom Policy
initiatives have been growth-oriented and forward looking. Various incentives
such as increase in foreign investment limits to 74%, implementation of the
Unified Access Licensing Regime (UASL), availability of the Universal
Service Obligation (USO) fund for enabling expansion in rural areas and
introduction of MNP have led to the proliferation of mobile services in the
country.
IPTV and DTH –Direct-to-Home (DTH) industry revenues are expected to be
around Rs.12,500 crs by 2013. In the near future, consolidation of DTH
services would take place along with increased interest in Internet Protocol
Television (IPTV), Streaming Video on Demand, Interactive Games etc.
Low Penetration Levels: The Indian wireless industry, with a 33%
penetration, is only second to China in terms of number of subscribers. Most of
this growth has come from urban India where penetration is close to 60%, while
it is less than 15% in rural markets. This does present the industry with an
opportunity for growth. (Exhibit 1)

Exhibit 1: Telecom Subscriber Base: Growth Estimations

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Telecom Industry: India 2009
 4.8 Rural Telephony:
With over 50% of net additions emanating from rural markets, this has become
a focus point for the industry. As ARPUs (Average Revenue per User) when
compared to global levels are lowest in India, volume growth is the main
revenue driver for the industry. The Universal Service Obligation (USO)
Subsidy Support Scheme would enable sharing of wireless infrastructure in
rural areas with around 18,000 towers slated to come up by 2010.
However, increasing penetration in rural markets, may not see commensurate
growth in revenue. A higher-than-expected decline in ARPU and MoU could
also hit margins.
4.9 Average Revenue per user (ARPU):
With the rapid pace of subscriber additions, the industry is also characterised by
declining ARPU (Exhibit 2). Industry wide GSM and CDMA ARPUs have
declined (since 2004) at an annual rate of 12% and 20%, respectively. The
decline can be attributed to customer friendly policy initiatives by the
Regulators, intensifying competition, reduction in Local and NLD call charges,
a rising share of pre-paid subscribers and a majority of new additions being
from the low income groups.

(Exhibit 2)

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Telecom Industry: India 2009
 4.10 Minutes of Usage (MoUs):
MoUs have increased from 442 in FY’07 to 508 in FY’09 but are expected to
fall to 469 in FY’10 and stablise at that level as more low usage customers
come on board, (Exhibit 3).
(Exhibit 3)

With the consistent fall in ARPUs, Telecom Operators have shifted their focus
to increasing the Minutes of Usage (MoU) and stabilising the Average Revenue
Per Minute (ARPM) (Exhibit 4).
(Exhibit 4)

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Telecom Industry: India 2009
 4.11 Industry Financials (Major Players):

For the quarter ending March 2009

Income Sales PBDIT PAT PBDIT/Income PAT/Income
Company Rs. Crs. G% Rs. Crs. G% Rs. Crs. G% Rs. Crs. G% Mar 08 % Mar 09 % Mar 08 % Mar 09 %
Bharti Airtel 9049.7 21.5 9016.8 21.6 3569.6 24.5 2075 15.8 38.5 39.4 24.1 22.9
Reliance communication 3753.6 8.6 3172.7 -8.2 1676.4 30.9 982.8 102.6 37 44.7 14 26.2
Idea Cellular 2832.5 42.7 2832.5 42.7 763.4 13.1 304.3 9.4 34 27 14 10.7
MTNL 1287.2 -11.2 1085.2 -7.5 126 -74.1 -83.3 33.5 9.8 12 -6.5
Tata Communication 1273.2 43.1 886.9 3.7 564.3 204.1 302.4 429.7 20.9 44.3 6.4 23.7
Tata Teleservices 508.2 10.6 536.4 17.7 120.2 1.4 -39.2 25.8 23.7 -11.4 -7.7
GTL 422.9 13.6 412 10.7 75.5 26.7 26.7 -0.9 16 17.9 7.2 6.3
(Source: CMIE)

Bharti Airtel, the largest Telecom Operator accounting for nearly 50% of the
total industry sales, increased sales by 22% during the quarter ended March
2009. A dip in other expenses aided the faster 24% growth in PBDIT. The
Company reported a robust 16% PAT growth. While, the company’s PBDIT
margin expanded by 90 basis points, its PAT margin contracted by 120 basis
points during the quarter.
Reliance Communications total income increased by 9% despite showing a
8% drop in sales. Other Income increased by Rs.564 crs. by way of finance
charges with increase in PAT by 102% to Rs.983 crs. over the same period.
Idea Cellular’s sales grew by a 43%. Subscriber acquisition and servicing
expenditure increased by 25%, with network costs more than doubling to
Rs.704 crs and Regulatory Charges increasing by almost 50 % to Rs.811 crs.
This has resulted in a muted 13.1% PBDIT growth at Rs.763.4 crs. A sharp
45% increase in depreciation expenses restrained PAT growth to 9%.
Detailed Players profile is furnished in Annexure II

4.12 Key Concern Areas:

 Spectrum allocation: Spectrum is a scarce resource and is critical for the

rapidly increasing the subscriber base of Telecom Operators. Additional
spectrum is always required by the both existing and new players for
maintaining the service quality and catering to the increasing subscriber
base. Delay in allocation or non availability of spectrum would result in
poor quality of service and become a major constraint to expansion.
 Price wars: The decrease in rates for voice calls directly affect the
profitability of the Sector leading to declining ARPUs. A move by one or

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Telecom Industry: India 2009
 more operators to increase subscriber base by reducing tariffs would
result in price wars across the Sector.
 License fee: Indian Telecom Operators have to apportion a substantial
part of their revenues to meet taxes levied by the Regulatory Authority.
The Regulators are presently looking to increasing the charge on
spectrum beyond 6.2 MHz. This increase is bound to adversely affect the
margins of Operators.
4.13 Investments Outlay:
 Unitech Wireless backed by Telenor Norway has announced a Telecom
Infrastructure Project with an investment Rs.10,000 crs. spread over 3
years. The Company plans to initially roll out in eight circles.
 Idea Cellular has announced an infrastructure development project in
Orissa, involving a cost of Rs.1,000 crs. The Company had also
announced a Rs.1,000 crs. GSM Expansion Project in Tamil Nadu.
 Tata Teleservices intends to go in for a Rs.1,000 crs. GSM expansion
project.
 MTNL is adding 150 additional towers to its existing network of 600
towers in Mumbai and another 90 towers in the satellite township of Navi
Mumbai by March 2010.
 Bharat Sanchar Nigam Ltd. (BSNL) announced a Rs.650 crs. 3G Mobile
Services & Telecom project to be launched in Bangalore. The company
also announced a project to launch Wimax, IPTV and 3G services in
Kerala.
 Bharti Airtel announced a multi-state Transceiver Station Project for
setting up 1,00,000 base transceiver stations across India by December
2009. This investment in infrastructure will support the Company’s plan
to roll out value added services such as high speed internet and mobile
e-commerce in rural areas.

4.14 Outlook:
 With 10 million subscriber additions a month, the Telecom Sector
continues to maintain its growth momentum. With the launch of 3G and
Wi-max services the industry is expected to reach new levels in coming
future.

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Telecom Industry: India 2009
  The Telecom User base is expected to touch 700 million by 2013 as
Operators cover the untapped rural areas. The mobile subscriber base is
expected to grow at a CAGR of 18% from 2007 to 2013, reaching a
penetration rate of 53% by end-2013.
 In India, 3G service revenues will amount to over Rs.75,000 crs by 2013,
accounting for 46% of the total wireless service revenue. 3G mobile
subscribers in India are expected to number over 90 million by 2013,
forming 12% of the overall wireless base. 3G devices are expected to
bring in revenues of Rs.53,000 crs. with the high price handsets segment
contributing to 59% of annual sales revenue.
 New entrants will be weighed down by challenges relating to brand
building; as they do not have the mindshare that industry heavyweights
such as Bharti Airtel and Vodafone have served. They also face
distribution, spectrum availability and other operational challenges which
would make it harder for them to compete with the established operators.
Nevertheless, new entrants are pressing ahead and are looking to invest
about Rs.10,000 crs. in the second and third quarter of FY’10.
 Going forward, the industry will witness consolidation and acquisition.
Idea Cellular acquired Spice Telecom in July 2008 and Bharti Airtel is in
talks with MTN South Africa with a view to becoming a Multi-National
Telecom conglomerate.
 Companies in the process of shifting focus to rural areas would have to
provide quality services at lower costs and offer better value added
services to sustain growth.
 The outlook for the year 2009-2010 is positive for the established and
existing players while remaining neutral for new entrants due to
challenges and risks perceived. However, investment will continue come
in, even as other sectors of the economy continue to be adversely affected
by the slowdown.
5. Telecom Equipment Manufacturers
India, being the world's fastest-growing telecom market, is also making steady
progress in telecom equipment manufacturing. Continuous capacity additions
by the existing players and network rollouts by new players have made India a
telecom destination for global telecom vendors.

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Telecom Industry: India 2009
 Network sharing has taken many forms, ranging from passive sharing of cell
sites and towers to sharing of Radio Access Networks (RANs) and other active
elements. Passive infrastructure sharing however, is most common due to the
relative technical and commercial simplicity. There has also been a surge in
demand for equipment such as batteries, towers, shelters and cables. However,
the active infrastructure equipment industry has not grown at same pace.
Companies such as Motorola, Nokia Siemens Networks (NSN) and Ericsson
have been importing components in bulk to meet demand. Tower sharing has
come under focus in recent times, which process has given rise to bilateral
barter arrangements. However, this has further evolved into a system whereby
independent tower companies are jointly owned by telecom operators. Tower
sharing, has led to significant reduction in costs. However, synergies that were
expected from tower sharing are yet to be realised with the average number of
operators per tower presently at 1.3 as against the target of 1.8 (the ratio in the
US is 2.5)
5.1 Outlook:
 Passive infrastructure sharing will be an attractive option for operators as
there is need to garner resources to face imminent 3G auctions.
 Rentals and number of tenants are likely to decrease further emphasising the
need for higher occupancy ratios. Tower companies will have to resort to
repositioning themselves as integrated service providers in order to remain
competitive.
 Industry is expected to see investments of about Rs.5,200 crs. in tower
infrastructure through 2012. The number of towers expected to rise by 60%
with 350,000 towers in place by 2012 having a tenancy ratio of 1.8-1.9
operators per tower.
 In the above scenario of falling income, increased competition and subdued
capital expenditure, the outlook for the segment would be neutral.

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Telecom Industry: India 2009
 Annexure I

Swan Telecom:
Swan Telecom was the first of the new licensees to divest a part of its stake to a
strategic foreign telecom player. Emirates Telecommunications Corporation
(Etisalat), had bought a 45% stake in Swan for US$900 million. The remaining
55% is held by Dynamix Balwas Group, a Mumbai based Real Estate and
Hospitality business group.
Swan has approval to offer both National and International Long Distance
(NLD and ILD) services, as also to operate as an Internet Service Provider. The
Company offers the complete array of Telecom Services- from mobile to fixed
line, carry voice, data and internet services.
Swan has entered into strategic alliance with BSNL to utilise the later’s network
to roll out its own services. The tie-up includes Swan using BSNL’s leased lines
and its fibre optic backbone; routing NLD traffic through the state owned
operator’s network; intra- and intercircle roaming arrangements and
cooperation in planning infrastructure expansion. The company holds spectrum
for 13 circles and plans to roll out usuage by July-August 2009.
Unitech Wireless:
Unitech Wireless has also offloaded a 60% stake to Norway’s Telenor for
US$1.2 billion. Unitech has received spectrum to operate in 21 out of 22
Circles. The Company is setting in motion the first phase offering services in 13
Circles by mid 2009. The Company is planning to invest Rs. 15,000-20,000 crs.
in the next three years.
Datacom:
The Company was allotted the spectrum early but could not utilise the
advantage due to controversy between the promoter Videocon and Mahendra
Natha Group. The Company has downsized its Orissa operations and hopes to
launch the services in other Circles by end of 2009.
Loop Telecom:
Loop Telecom have obtained licences for providing mobile services in 21
Circles and has received the start-up spectrum in 13 circles. The company is
under debate related to Essar’s direct stake of 9.9%, However, the Company is

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Telecom Industry: India 2009
 in process of establishing network to roll services at an investment of US$2-2.5
billion, to be raised through various options including debt and equity.
Shyam Telelink:
Shyam Telelink has the licence to launch the services across the country and
has successfully launched CDMA mobile services in Rajasthan. The Company
will follow up with the launch of services, South India, followed by the North
and the East. It is planning to invest US$1.5 billion in 2009 for network
rollouts.
S Tell:
S Tell is a Chennai based Telecom company promoted by Skycity Foundations
and Mauritius based Telecom Investments. The company has spectrum for 6
Circles.

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Telecom Industry: India 2009
 Annexure II
Bharat Sanchar Nigam Ltd
Bharat Sanchar Nigam Ltd (BSNL) is a public sector undertaking, wholly-owned
by the Government of India. It was formed in October 2000 through the
corporatisation of DoT.
BSNL provides telecom services throughout the country, except Delhi and
Mumbai. The services provided by the company include Fixed Line, GSM mobile,
CDMA mobile, National Long Distance, International Long Distance, Internet,
MPLS-based virtual private network (VPN) services, ISDN, Leased Lines,
Intelligent Network, Telex/Telegraph and Electronic Private Automatic Branch
Exchange (EPABX) services.
At the end of March 2009, BSNL had a total of 29.35 million subscribers for its
fixed services, representing about 78 per cent of the total fixed services subscriber
base in the country. However, it is facing stiff competition from private mobile as
well as fixed players, which has hampered its fixed services subscriber growth. At
the end of March 2009, BSNL had 46.7 million GSM mobile subscribers across 20
circles having risen from 36.2 million in March 2008. 3G Mobile Services were
commercially launched by BSNL in February 2009, in 11 cities namely Agra,
Ambala, Jalandhar, Jaipur, Dehradoon, Shimla, Lucknow, Ranchi, Durgapur,
Haldia and Patna. The initial subscription cost to avail the 3G services offered by
the Company was Rs 300.
Mahanagar Telephone Nigam Ltd
Mahanagar Telephone Nigam Ltd (MTNL) was set up by the Government in 1986
to provide telecom services in Delhi and Mumbai. Telecom services in these two
cities, the highest revenue-generating service areas in the country, were previously
under the purview of the Department of Telecommunications. The government
holds a 56.2% stake in the company.
MTNL provides basic telephone services, post paid GSM cellular services under
the Dolphin brand, pre paid GSM cellular services under the Trump brand, CDMA
mobile services under the Garuda brand and Internet services. The other services
provided by the company are Digital Network Service, Intelligent Network
Service, Leased Line Service and Telex Service.

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Telecom Industry: India 2009
In December 2008, MTNL announced the launch of its 3G services in the Delhi
Circle and later in the Mumbai Circle with prepaid plans ranging from Rs. 250 to
Rs. 2500.
Bharti Airtel Limited
Bharti Airtel Limited is an integrated telecom service provider, providing all types
of services namely fixed, mobile, ILD NLD, VSAT, Internet and network
solutions. The company was incorporated in July 1995, is India’s largest telecom
service provider with presence in all the 22 circles of the country and a market
share of 24.5% of total wireless market. Airtel has an aggregate subscriber base of
more than 100 million customers as on 31st May, 2009 of which 99.5 million are
for GSM services.
The company was the first one to launch ‘lifetime validity’ scheme in the prepaid
segment, with one-time charge of Rs. 999. The company then pioneered the
‘lifetime validity’ scheme by slashing one time charges to Rs 495 and then to Rs.
199. In anticipation of increasing competition, Bharti Airtel further slashed the
lifetime prepaid rates to Rs. 99 w.e.f January, 2009.
Airtel has initiated merger talks with MTN, one of the major telecom operators in
South Africa.
Vodafone-Essar group
Vodafone-Essar group, earlier Hutchison-Essar group, provides GSM-based
mobile services in 16 circles of the Country and is the third largest player in the
industry. The company went through a major transformation phase, where
Vodafone Limited, a leading UK-based telecommunications services provider,
acquired a controlling stake of 67% in the Hutchison-Essar group for an enterprise
value of US$18.8 in February 2007. The remaining stake is held by the other
partner, Essar Ltd.
At the end of March 2009, the Vodafone-Essar group had 68.77 million
subscribers, with a market share of 17.6%.
Idea Cellular Ltd
Idea Cellular's antecedents date back to 1995, when the Aditya Birla Group and
AT&T (through Birla AT&T - Maharashtra, Gujarat) and the Tata Group (through
Tata Cellular- Andhra Pradesh) came together to set up cellular networks. The
company then called Birla AT&T Communications Ltd, started offering cellular
services in the Gujarat Circle in January 1997 and in the Maharashtra Circle in

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March 1997. In 2000, the company decided to merge with Tata Cellular and
subsequently acquired RPG Cellcom, the cellular operator in Madhya Pradesh. The
merged entity of Birla AT&T and Tata Cellular was renamed Birla Tata AT&T
Communication Ltd in May 2001. In May 2002, the name of the company was
again changed to Idea Cellular Ltd.
After the group acquired the 48% holdings from the Tata group, the Tatas
completely exited from the company. Aditya Birla Nuvo Ltd and its subsidiaries
acquired 15% of the 48% holdings while Birla TMT Holdings Pvt. Ltd acquired
the balance. With this the combined holdings of the Aditya Birla Group companies
increased to 98.3%.
In July 2008, Idea Cellular acquired a 40.8% stake in Spice Communications at a
price of Rs.2,176 crs. This will help the company gain a foothold in the Punjab and
Karnataka circles, where Spice has a combined subscriber base of around
4.5 million. The current market share of the company is 11.5% as on April 2009.
Reliance Communications Ltd
Reliance Communications Limited (RCom) is an integrated pan Indian telecom
operator and a part of Anil Dhirubhai Ambani Group (ADAG). It offers fixed
wireless services based on CDMA technology, CDMA and GSM mobile services,
Wireline, ILD, NLD, Internet, and Data services. The company became the first
CDMA operator to offer International roaming facility to its subscribers.
The company provides mobile services in all 23 circles across the country, where
it provides CDMA based mobile services in 21 circles (expect Assam and North
East) and GSM based mobile services in eight circles. The company also provides
fixed services, in 21 circles across the country
RCom has the second largest subscriber base with a market share of around 19%.
The company launched the GSM services in January 2009 and added a record
number of subscriber in the first month of its GSM launch.
Tata Teleservices Ltd. (TTSL)
TTSL provides a whole bouquet of services under the Tata Indicom brand. Its
services include Basic Telephone, Internet (broadband as well as dial-up) and NLD
services. The Telephone services include common wireline as also fixed wireless
telephones and CDMA mobile services.
As of March 2009 the company had 381,610 fixed line subscribers as compared to
322,618 in March 2008. While the total mobile subscriber base stood at

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Telecom Industry: India 2009
28.2 million, having risen from 19.7 million as of March 2008. They have a of 7%
market share at the end of March 2009.
Aircel
The Aircel Group, providing GSM based mobile services, is a joint venture
between Maxis Communications Berhad of Malaysia and Apollo Hospital
Enterprise Ltd of India, with Maxis Communications holding a majority stake of
74%. Aircel commenced operations in 1999 and is the leading player in Tamil
Nadu. Aircel bagged the pan India licences and launched its services in various
circles in 2008.
The company launched operations in Kerala, Karnataka, Delhi, Uttar Pradesh (E),
Uttar Pradesh (W) and the Andhra Pradesh Circles in 2008-09. Aircel also
launched its operations in the Mumbai circle in April 2009. With this launch,
Aircel Cellular is now present in 16 circles across the country.
The company’s total mobile subscriber base stood at 18.5 million subscribers in
March 2009 having risen from 10.6 million subscribers at the end of the previous
year with a market share of 4.7%.

Market Share of Major Mobile operators as of April

2009 (%)
Others
Airtel
5%
Vodafone 25%
19%

Tata
BSNL
9%
12%

Idea
11%
R Com
19%

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Telecom Industry: India 2009