Passive Infrastructure Sharing

BSNL's Pitch Document

2009 | New Delhi
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Dec-09 Dec-10 Dec-11 Dec-12 Dec-13
Subscribers (Mn)
Wireless market is set to boom in the next 5 years
Growth will be heavily front-loaded with ~50% new adds in next two years

Source: COAI, AUSPI, TRAI, Census data, literature survey, BCG analysis
India wireless connections growth (past and projected)
~50% of total
net adds during
2009-13
Heavily front-loaded growth in the wireless market has
necessitated faster time to market for all operators
2
The growing wireless space is likely to see intensified
competition in the next 2 years
New Licensees set to rollout services
Incumbent players on large scale
expansion mode
In partnership
with Unitech
In partnership with
Shyam Telelink
As Swan-
Etisalat
Expansion to
new circles
Expansion to
new circles
Launch of
GSM services
Launch of
GSM services
Increasing competition puts pressure on margins and
forces operators to lower their cost to serve
3
At the same time, wireless ARPU is projected to decrease
going forward
211
191
179
169
160
0
50
100
150
200
250
2009 2010 2011 2012 2013
-7%
Average ARPU
ARPU expected to decrease by ~7% p.a. over the next 5 years
Declining ARPUs will lead operators to reduce their cost to
serve to protect their margins
1. Includes all mobility revenues, including Enterprise wireless CUG
Source: TRAI, Literature survey, Analyst reports, BCG analysis
4
Lower cost to serve
Low cost of network rollout
Low cost of network
operations

Reduce upfront capex
investment
Low upfront capital
commitment; opex model

Enable faster time to market
First to reach new subscribers
First to reach potentially high
ARPU locations
BSNL can help operators address the challenges of the
changing industry dynamics
Your Requirements
Our Value Proposition
Low infrastructure rental fees and low pass-
through expenses
Rentals lower than the market average
Pre-existing anchor tenancy decreases
pass-through expenses

Nationwide presence
Network across 21 circles
Presence in dense urban as well as remote
rural areas
Presence in circles that will see high
number of new subscribers

Ready for tenancy
All towers ready for sharing
Technologically compatible for all services
1
2
3
5
BSNL Infrastructure at a glance
Transparency in our billing and operations
Presence
Our Brand Perception
Financing of operations All tower rollout funded through internal reserves
21 Circles across India (except Delhi and Mumbai)
Tower Portfolio
December 2009 - 38,000 towers
December 2013 - 87,500 towers
Current Tenancy 1.1 (with no external tenant)
Type of Coverage Balanced 50-50 split between urban and rural BTSs
Type of Towers
GBT = 67%, RTT = 33%
6
Rs. 5,000-10,000 as
site rental per month in
a semi-urban area

Rs. 25,000 40,000 for
a GBT / month

Included in passive
infra rental

Rs. 60,000 - 80,000 per
month


No upfront investment
Rs. 11 16 lakhs
1
per
year

Sharing BSNL's passive infrastructure will help operators
lower the cost of network roll-out and operations
Typical costs for
own buildout Hire from others
2

Cost of land
Cost of
passive
infrastructure
R&M cost
Energy costs
(diesel and
power)
Hire from BSNL
Rs. 4-5 lakhs for site
space in a semi-urban
area

Rs. 25-30 lakhs for a GBT


Rs. 30,000 - 40,000 per
tower per year

Rs. 60,000 - 80,000 per
month


Rs. 29-35 lakhs upfront
Rs. 7.5 10 lakhs per
year

50% savings vis--vis market
Most BSNL sites are owned and
have no implied rental

10%-15% lower than the
industry leader

Included in passive infra rental


50% savings vis--vis market
All BSNL sites have anchor tenant
which reduces energy costs

No upfront investment
25% - 40% savings on annual
expenditure
Expenses borne by the operator while installing BTS
1. Assuming 10% depreciation of land cost and capex to calculate yearly allocation of cost 2. Speciafically stands for independent IP with no anchor tenant
Total cost
1
7
BSNL offers you the best value proposition in the market
large number of towers across India at an affordable price
Low High
Number of towers
High
Low
Passive
infra
rental/
slot
Low High
Number of circles in which IP
provides service
High
Low
Quippo
GTL
Indus
RTIL
BIL
BSNL
GTL
Quippo
BIL
Indus
RTIL
BSNL
BSNL charges rentals comparable to the independent IP
but provides operator with bulk volume across India
Source: Based on current industry prices as received by BSNL in its EOI solicited for hiring towers from the market
Passive
infra
rental/
slot
1
INDICATIVE
8
BSNL has a strong nationwide coverage that extends across
urban and rural area
Operator can leverage the flexibility of an urban/rural
rollout as it's operations warrant
BSNL's network covers
602 districts (96% of all
districts) in India
BSNL covers 55%-60% of
India's population
BSNL covers ~75% of all
villages with more than
5,000 and ~48% of all
villages with more than
1,000 population
2
BSNL's network is present
in 21 Telecom Circles in
India (except Delhi and
Mumbai)
9
0
2,000
4,000
6,000
8,000
Very low
growth circles
Low growth
circles
Medium
growth circles
High growth
circles
Very high
growth circle
Competition
BSNL
No. of sharable towers
BSNL's extensive tower base will help you roll-out network in
target geographies faster

Note: Competition stands for WTTIL-Quippo in this illustration; Projected net adds based on income levels and teledensity between 2009-13
2
BSNL outpaces competition in terms of
capacity in high growth circles
Growth
criteria
Growth criteria
(Net adds)
Circle Names
Very low
growth
Less than 5 mn Jammu & Kashmir,
Himachal Pradesh, North
East, Chennai
Low
growth
Between 5-10 mn Punjab, Orissa, Kerala,
Haryana, Assam,
Kolkata, Delhi, Mumbai
Medium
growth
Between 10-20 mn Rajasthan, West Bengal,
Tamil Nadu, Karnataka
High
growth
Between 20-25 mn Madhya Pradesh, UP
West, Maharashtra,
Gujarat, Andhra Pradesh
Very
High
growth
Greater than 25 mn UP East, Bihar

10
95 6,215
14,271
284
20,865
0
5,000
10,000
15,000
20,000
25,000
Number of sharable
towers with 0 BSNL
BTS
Number of sharable
towers with 1 BSNL
BTS
Number of sharable
towers with 2 BSNL
BTS
Number of sharable
towers with 3 BSNL
BTS
1. Old data used for 7 states, currently does not exclude USO towers
Note: Assumes that all BTS installed are GSM BTS.
Source: BSNL (Asset Validation Drive)
Number of sharable towers by existing number of BSNL BTS
BSNL towers are "ready for occupancy"
~98% of towers have 1 or 2 BSNL BTS already installed; infrastructure already in place
3
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BSNL can be the choice infrastructure partner for your
organization