http://www.linkedin.com/pub/dir/ramakrushna/panigrahi

Competitor profiling

and

analysis

ByRamakrushna PanigrahiIndian Centre for Telecom & ManagementDate: 29th November, 2006

SWEDEN

THAILAND

HONG KONGINDIA

UK

REPUBLIC OFIRELAND

NORWAY

DENMARK

MACAU

ISRAELITALY

AUSTRIA

THE FUTURE IS HERE

COUNTRYHK (+ Macau)IndiaIsraelThailandGhana & SrilankaTOTAL

SUBSCRIBERS2.08

20.352.620.740.66

26.47All Figures in Million

THAILAND

AUSTRALIA

GHANAMACAU

VIETNAM

INDONESIA

SRILANKA

HTIL TOTAL SUBSCRIBERS : 26.5 mn

INDIA 77%

REST 23%

HTIL’s 3m new additions in 3rd Quarter, 2.8m came from India Best performing market remains India, followed by Israel

All Figures in Million

Asim Ghosh

MD

Director Operations(Delhi/ Punjab/ Haryana)

Director Operations(Karnataka/ Kerala/ AP)

Dir Operations (Gujarat/ Rajasthan/ ah & Goa)

CEO Chennai/ Tamilnadu

CEOUP (E) & (W)

CEOKolkata & ROB

VP Management Services Corporate

VP Corporate Finance

CFO

Director Technical Corporate

Head Legal Counsel

Corporate

Hutchison Essar Senior Management

Team

Sandip DasDeputy MD

Kolkata & ROB

Director operationsMumbai

Director IT *Corporate

Director Business Development Corporate

Director HRCorporate

Chief Marketing Officer Corporate

Sr. VP Service Delivery Corporate

Corporate

Hutchison Essar Senior Management Team

* Jointly report to MD

6.14.4

5.8

8.57.5

8.4

12.5 13.32 14

3.3

7.2

3.65.54

12.2211.7619.35

3.4

20.922.7

24.6

27.6

19.4

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005 2006

Indian

Economy

2000 2001 2002 2003 2004 2005 2006

GDP GROWTH PER CAPITA GDP(in Rs '000)

INFLATION(as %age of WPI) GDP(in Rs billion 000')

3.2

11.3 1.3

1.6 1.7 1.7 1.8 1.81.8

2.1

2.5

0

1

1

2

2

3

3

4

Indon

esia

Malays

iaInd

ia

Taiwan

Hong K

ong

avera

ge

Philipp

ines

Thaila

nd

Singap

oreKore

aChin

a

Vietna

m

%

Telecom spending as % of GDP

Area 3,166829 km2 Population 109 cr.7th largest country1/6th of world population

Service53.8%

Industry27.6%

Agriculture 18.6%

Economic indicators(refer definitions *)

TOTAL PER CAPITA ##

RS Billion Us $ Billion $ PPP Terms Rs US $ $ PPP Terms

GDP 27,600 599 3,036 25,356 550 2,789 6.18

National income 22,520 489 2,477 20,696 449 2,276 6.41

Net NDI* 25,971 563 2,856 23,860 518 2,624 6.55

Private income 25,296 549 2,782 23,240 504 2,556 6.73

Personal income 24,219 525 2,664 22,250 483 2,447 6.59

Personal DI** 23,585 512 2,594 21.667 470 2,383 6.57

DS of HS*** 5,799 126 638 5,328 116 586 9.77

## ANNUALIZED GROWTH RATE (1994-2004)

* / ** /*** Refer Backup Slides Source: Capitaline

Economic

Indicators

Cable TV  Network+Intern

et2%

Manufacturing & Consultancy

16%

Others3%

Basic Telephone

Service4%

Cellular Mobile Telephone

Service 26%

Holding Companies

48%

Year Wise actual Inflow of FDI in Telecom Sector (August '91 to March

'2004)( Rs in Million) YEAR 1996 1997 1998 1999 2000 2001 2002 2003 2004 Total

FDIINFLOW

7648 12451 17756 2126 2885 39709 10815 3014 874 99509

Sector Wise actual Inflow of FDI in Telecom Sector

(August '91 to March '2004)( Rs in Million)

METRO

A CIRCLE

B CIRCLE

C CIRCLE

Industry Overview

Telecom Subscribers - Country wise December 2005China743

USA360

Ind125

Rus130

Germany134

Japan 153

0

200

400

600

800

mn.

sub

scri

bers

Source: International Telecommunications Union (ITU),

India - Aug 2006165 mn. subs

Expected to overtake US by 2008

Know the other and know yourself:

Triumph without peril.Know Nature and know the

Situation: Triumph completely.

Sun Tzu (~360 B.C.)

* Based on excerpts from Worldwide Wireless Data Trends 2006 - a mid year update. Datacomm research

Penetration Circle Wise

Revenue growth

910

11

15

19.5

0

5

10

15

20

2002 2003 2004 2005 2006

$ B

illio

n

Subscriber growth

CAGR -22%

India could potentially be a USD 40 bn - USD 45 bn telecom market by FY 2010…

Indian Brand Equity Foundation

Indian Service industry (FY 2005-06)

TOTAL REVENUE : Rs 67,523 Crores

Regulatory % age of revenue

11%

10%

36%

30%

Industry Overview

Continued ……

Subscriber growth

4453

76

98

164

0

60

120

180

2002 2003 2004 2005 Aug-06

Teledensity 14.8 (Aug 2006)

CAGR -40%

Source: www.voicendata.comTelecom regulatory Authority of India (TRAI)Year indicates financial year ending March

Regulatory charges

% age of revenue

Service tax, GST 10% + GST

License Fee 5 – 10%

Spectrum Charge 2 ~ 6%*

USO Included in license fees

Total Regul.. charges 17%~26% + GST

*Backbone spectrum charges extra GST–Goods & Service Tax

Source: TRAI

20%43%

29%

67%

Falling tariffs have led to exponential subscriber growthIndustry

OverviewContinued ……

Reasons for Falling tariffsUnified Access Services Licensing Regime (which led to the growth of

CDMA operators),Calling party paysA lower access deficit charge from 30% to 5% of revenueReplacement of high fixed entry fee with revenue-sharing feeFurther reductions in revenue sharing in 2001 and 2003.Massclusivity, one for all services.

ARPU(Rs Per Month during Quarter ended June 30,2006)

CIRCLE POST-PAID

PRE-PAID

BLENDARPU

Circle A 660 275 343

Circle B 511 286 319

Circle C 580 328 374

Metro 758 287 406

All India 643 286 352

Priv SPs 686 273 345

BSNL/MTNL 544 324 370

Industry Overview

Continued ……

Average quarterly decline of 3.1% in ARPU in the past three years. Despite the decline,quarterly revenues have risen by an average of

15% during the period.

Clearly, subscribergrowth MOU have more

than compensated for thedecline in ARPU.

Telecom sector targets announced by Government of India250 million subscribers by 2007500 million subscribers by 201020 million broadband subscribers by 2010Mobile access to all villages with population more than 5,000 by 2006Mobile access to all villages with population of more than 1,000 by 2007

Sector Overview –Fixed line

37422006

4316109 38776081591071 355652 270832 188756

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

BSNL TATA MTNL BHARTI RELIANCE HFCL SHYAMHerfindahl-0

BSNL TATA MTNL BHARTI RELIANCE HFCL SHYAM

Subscriber Growth - Mobile vs Fixed

4141

434238

123

52

7 13 34

0

35

70

105

140

2002 2003 2004 2005 2006

Mn

. su

bsc

ribe

rs

Fixed (mn. subs) Mobile (mn. subs)

Fixed Mobile Crossover achieved in 2004

A commonly accepted measure of market concentration. < 1,000 competitive; 1,000-1,800 moderately concentrated; 1,800 or >highly

concentrated marketplaceHHI = s1^2 + s2^2 + s3^2 + ... + sn^2 (where sn is the market share of the ith firm).

Herfindahl-Hirschman Index or HHI

HHI FIXED = 6230

Sector Overview –Wireless

20357200

10363546

8435405

3804225

2437922

2196965

1045301

62004

29661

HUTCH

IDEA

TATA

AIRCEL

MTNL

SPICE

BPL

HFCL

SHYAM

HHI wireless 1635.42

27061349

25979332

23532080

0 5000000 10000000 15000000 20000000 25000000 30000000

BHARTI

RCVL

BSNL

Sector Overview –Wireless

Continued …….

Geographical distribution of India wireless subscribers, July 2006 India wireless market shares, July 2006

Reform thrust on independent

regulation,competition & investment

facilitation

Pre-reform Partial Deregulation Further Deregulation

Pre-1994 1994-1999 1999 - 2002

MTNL -Mumbai and Delhi; DTS elsewhere

No mobile service

NLD - DoT

4 private fixed service providers with less than 1% market share

2 GSM mobile players in each circle

13 players start

Licenses converted to revenue sharing

Private sector share less than 5% in revenue terms

Competition in NLD and ILD

4 mobile operators /

Calling Party Pays

CDMA launch

3-6 operators in each circle

Intra-circle merger guidelines

Unified Licensing

Take-off

2002 onwards

per/ BSNL ILD - VSNL

13 players start mobile service

4 mobile operators / circle

FDI - 49 %

Unified Licensing

FDI - 74% 2005

2001199919981995-1996

19971994 2000 2002 2003Upto1994

National Telecom Policy, 1994

New Telecom Policy, 1999

2004

Unified Licensing Regime

TRAI has moved to “competition regulation” from “cost-plus protections”.Pradeep Baijal(Former Chairman TRAI)

Principles of network regulation always said that once level playing field is established in a network, the regulator should allow market forces and competition to take over.

TRAI’s Recommendations

2006Number portabilityConvergence

2005Unified LicensingQuality of Service regulationRural Telephony

TRAI’s Recommendations

Independent regulation has been a critical factor

in growthMature regulatory regime and an enabling

policy framework already in place

Rural Telephony

2004Intra-circle merger guidelinesInternet / broadband penetration

2003Calling Party Pays RegimeUnified Access LicensingReference Interconnect Order

2002ILD opened to competitionInternet Telephony allowed.Reduction in License fees

Recent domestic & cross-border M&A

Industry Trends > Consolidation> Increasing Foreign Investment> Tariff Innovation> Progressive regulation> Growth driven by mobile/ penetration still low> Heavy Infrastructure Investment

TELECOM VALUE CHAIN

EV NO

ASP

SP

CP

OEM 2

SI

3PAP

NI

OEM 1

CP

CA

EU

MVNO

PORTER’SFIVE FORCES

DETERMINING SEGMENT

STRUCTURAL ATTRACTIVENESS

SUPPLIER

PO

TE

NT

IAL

E

NT

RA

NT

S

BUYERS

INDUSTRY COMPETITORS

Proprietary learning curve Economies of scale Capital requirements Brand identity Switching costs Expected retaliation Proprietary products

Supplier concentrationImportance of volume to supplier Differentiation of inputs Switching costs of firms Threat of forward integration

“The Elephant is on the dance floor……and the Band is playing a Mobile Tune……Get on that dance floor with the Indian Elephant”!!!NEIL GALLOWAYHead of Asian TelecomABN AMRO BANK, December 2003

SU

BS

TIT

UT

ES

Bargaining leverage Buyer volume Buyer information Brand identity Price sensitivity Product differentiation Substitutes available

Switching costs of adopters Buyer propensity to substitute Relative price performance of substi-tutes

Wireless Industry5-Force Analysis

SUPPLIER POWERNetwork Operator

POWERMany

MARKET ENTRYNetwork OperatorInfrastructure ProviderDevice ManufacturerApplication ProviderContent Provider

ENTRYHard

DifficultDifficult

EasyEasy

BUYERSNetwork Operator

POWERStrong

COMPETITIONNetwork Operator

RIVALRYIntenseNetwork Operator

Infrastructure ProviderDevice ManufacturerApplication ProviderContent Provider

ManyIntenseIntense

WeakStrong

Network OperatorInfrastructure ProviderDevice ManufacturerApplication ProviderContent Provider

StrongWeak

StrongStrongStrong

SUBSTITUTESVoice n data N/WNetwork ComponentsCell PhonesApplicaion & Content

NUMBERMany

FewMany

Few

Network OperatorInfrastructure ProviderDevice ManufacturerApplication ProviderContent Provider

IntenseIntenseIntense

WeakStrong

33,918

36,090

39,500

35,000

36,000

37,00038,000

39,000

40,000

5,003

8,003

11,663

0

2,000

4,000

6,000

8,000

10,000

12,000

2003-04 2004-05 2005-06

2,701

4,365

6,837

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2003-04 2004-05 2005-06

1,663

2,262

2,966

1,500

2,000

2,500

3,000

Revenue Trends of Service Providers

60%

45.7%

9.5%31.1%

61.6%

56.6%

33,918

31,000

32,000

33,00034,000

35,000

2003-04 2004-05 2005-06

2,707

5,387

11,288

0

2,000

4,000

6,000

8,000

10,000

12,000

2003-04 2004-05 2005-06

0

500

1,000

2003-04 2004-05 2005-06

698

1,347

2,575

0

500

1,000

1,500

2,000

2,500

3,000

2003-04 2004-05 2005-06

6.5%

99%

109.6%

93%

91.2%

36%

Reach of Mobile Service Providers

Company Cumulative Investment

Mar 06 (Rs crore)

No of retailers as of Mar 2006

No of cities/town Techno.. Circle

Mar 06 Mar07*

Bharti 15,923 400,000 4,000 5,200 GSM 23

Hutch NA NA NA NA GSM 16

Reliance 14,799 255,000+ 3,824 5,200 GSM,CDMA 23

BSNL NA NA 5,000 7,000 GSM,CDMA 21

Idea 7,700 125,000 1,944 3,888 GSM 11

Tata Tele 10,000+ NA 2,500 4,000 GSM 20

NA stands for not available *forecast

Marketing

V&D Estimates CyberMedia Research

Telecom 35%

Financial 15%

Media & Ent 15%

AUTO 15%

FMCG's 15%

CATEGORY SPENDS 2004 CATEGORY SPENDS 2005

Source: Ogilvy

Telecom 35%

Financial 15%

Media & Ent 15%

AUTO 15%

FMCG's 15%

Subscriber growth comparison:

Operator wise

Subscriber growth comparison:

Operator wiseContinued….

Sound Management & Good understanding Of the consumer market

Strong marketing arm: 900 showrooms & 4000 multi-brand outlet

Enterprise solution arm focusing on business usersFinancially stable. Cash profit this year Rs 4,095 Cr up 46% last year

SWOT Analysis: Bharti Airtel

By 2010 Airtel will be the most

Poor customer care as it is outsourced

Poor Corporate player, seen more as a consumer segment player

Vision

Spectrum constraint: With growing base, the pressure to serve on limited spectrum will affect QoS

By 2010 Airtel will be the most admired brand in India:

Loved by more customers Targeted by top talent Benchmarked by more business GOING GLOBAL: Venturing

attractive overseas market

Decreasing ARPU trend in industry

Sunil B MittalCMD

President JMD

Head Corp Comm

Corp Dir Bus Delivery

JMD & CFO

Corp Dir Chair Office

Corp Dir All & CSR

Director Finance & Business

Integration

Director IT & Innovation

Director Networks

Director marketing & Communication

CTO

President’s office Strategy & Monitoring

Joint President Broadband &

telephone Services

Joint President Enterprise services

Bharti Airtel Senior Management Team

Corp Dir All & CSR

Corp Dir Alliance

Corp Dir HR

Corp Dir Gen Counsel & Company

Secy

Chief of Compliance & IA

Director CSD

Director HR

Director Legal & Regulatory

Director Supply Chain

services

CEO & Dir Corporate

Ex Director Carriers

Joint President Mobility

Ex Director (North)

Ex Director (South)

Ex Director (West)

Ex Director (East)

Bharti Airtel Senior Management Team

Established brand name

SAVES INTERCONNECT CHARGES Optical fiber backbone, which can carry inter & intra circle traffic

Large fixed line subscriber base

Large cash reserves helps in funding cellular investment

Disadvantage of being an INCUMBANT operator

Long and Constrained Decision making process: Political Considerations

SWOT Analysis:BSNL

Subscriber growth is slowing downDisadvantage of possessing a Legacy system

Image of a state owned operator

LARGE FIXED LINE SUBSCRIBER BASE : Can be tapped for second phone/multiple phone

Strong presence in B and C circle which market promising high growth potential.

Network capacity constraint which can hamper growth

Possible clash interests :use of GSM & CDMA services

Threat from private players

Fixed mobile convergence will change BSNL fortune

Deregulation of the sector and exposed to heavy competition

RCOM is the fastest growing wireless company in Asia by

No financial support following the ownership settlementYet to be profitable

High patent fees paid to QualcommHigher handset subsidy.

SWOT Analysis:Reliance

Faster implementation of projects

Integrated operator: Fixed /LD/CDMAAggressive roll out to capture market share and create an entry barrier

Offering VAS to it's customer's almost free of cost or with nominal charges.

Global Roaming remains a challenge for CDMA operators

Aggressive capex allocation for a large GSM expansion plan

wireless company in Asia by EBITDA and EPS

PCOs a high ARPU, high entry barrier business

Planned GSM expansion will pay off

CDMA technology risks

Possible clash interests :use of GSM & CDMA services

Handset subsidies a major profit dragSecond hand handset market in CDMA

SWOT Analysis:IDEA

Subscriber growth peaking up month by month

Now have a Stable ownership.

Strong local branding

Don't have PAN INDIA presence, only strong in Maharashtra circle

Targeting to women segment offering differentiated services

Rule of Three is true for any industry.

Intense Competition from 3 major private operator Bharti, HUTCH and Reliance

Attractive Indian market with monthly addition of over 5 million subscribers

Can improve on market share till the penetration reaches 40% i.e. up to 2011

SWOT Analysis:TATA indicom

Strong brand name

Under the able leadership of visionary Ratan TATA

Strong financial capability of the group to plough in money into telecom

Don't have PAN INDIA presence, only strong in Maharashtra circle

We will strive to be the preferredpartner to our customers by providing

appropriate and cost-effective communication

solutions.

Rule of Three is true for any industry.

Vision

Can improve on market share till the penetration reaches 40% i.e. up to 2011

Attractive Indian market with monthly addition of over 5 million subscribers

Intense Competition from BSNL and Reliance in CDMA platform

Decreasing ARPU

www.auspi.comwww.coai.comwww.worldfactbooks.comwww.wikipaedia.orgwww.voicendata.comwww.trai.gov.inwww.ibef.org

Reliance infocomm’s strategy and impact on the Indian mobile telecommunication scenario

BIBLIOGRAPHY

MEDIA@LSE – paper by Sangeetha VergheseA Value Chain Perspective on the Economic Drivers of Competition in the Wireless Telecommunications Industry By Scott C. Constance & Jeffrey R. GowerMacquarie:India Telecom Sector Report_Initiating Coverage_29Aug06

Thank you !