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Investing in Indian Telecom

Laxmi G Vulpala

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Investing in Indian Telecom

India - An Overview

Why India?

Telecom Market and Growth Potential

Opportunities for investments

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India –An Overview

Population

States/Union Territories

Geographical Area

Business language

GDP - per capita (PPP):

GDP (PPP)

Over 1 billon

35

3.3 million sq km

English

US $3,400 (2005 est.)

US $3.699 trillion (2005 est.)

Source: CIA Fact bookSource: CIA Fact book

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4th largest economy by PPP index

6th largest energy consumer

GDP growth to continue between 6-8% in the

last decade

Projected to be 3rd largest economy by 2050:

Goldman Sachs

Why India –Macroeconomic Impetus

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Why India –Demographic Impetus

Working age population of India ( ages 15-64) set to increase to 882 million by 2020.

Working

age

population

to rise

to 65%

India’s urban population expected to rise to 40 per cent from the current 28 per cent by 2020

Urban

population

to rise

to 40%

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Why India - Government Telecom Policy

Virtually complete deregulation.

Specified imports related to telecom infrastructure were exempted from basic customs duty

Foreign Direct Investment up to 74 per cent permitted.100% FDI permitted under automatic route in the manufacturing sector

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Market and Growth Potential• Revenue expected to increase 3 times in the next 5 years

• Current teledensity of 8.8 % set to increase to 20% in the next 5 years

•Growth rate about 5 million subscribers per month

Source: TRAI (Telecom Regulatory Authority of India)Source: TRAI (Telecom Regulatory Authority of India)

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Market and Growth Potential

7th largest telecom network in the worldSize (2003) US$ 9 billion

2010 (projected) US$ 23 billionTelecom network growth rate 30% Fixed lines (Dec, 2004) 44.76 million Wireless connections (Dec, 2004) 48 millionUrban teledensity 18.2%Rural teledensity 1.5%

Source: TRAI (Telecom Regulatory Authority of India)Source: TRAI (Telecom Regulatory Authority of India)

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Market and Growth Potential

Country/ Market TeledensityIndia 8.50%China 32%Malaysia 57%USA/Japan 115-120%

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Market and Growth Potential

0

5

10

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China India

India Vs China in comparable years of service

In the 9th year of wireless operationChina(1996) 6.8 millionIndia(2002) 28 million

Source: TRAI (Telecom Regulatory Authority of India)Source: TRAI (Telecom Regulatory Authority of India)

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Opportunities for investmentsForeign Direct Investment (FDI)

•Bharti Tele-Ventures, a large private telecom player offering varied telecom services and the largest GSM cellular operator,currently has foreign partners holding a combined stake of 55 % in the company; these include SingTel(with 28.4%), Vodafone (with 10%) •Hutchison Whampoa has a 53 per cent stake in Hutchison Telecom, the second largest GSM cellular operator in India.•AT&T Wireless has a 33.3 per cent stake in Idea Cellular while France Telecom holds a 26 per cent stake in BPL Mobile.

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Questions?Questions?

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