Second-largest subscriber base. Third-highest number of internet users. Most of the Internet accessed through mobile phones. Rising penetration rate

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3 Second-largest subscriber base With a subscriber base of nearly 933 million by the end of FY14, India has the secondlargest telecom network in the world Third-highest number of internet users With million internet subscriptions, India stood third-highest in terms of total internet users in 2013 Most of the Internet accessed through mobile phones Mobile based Internet is a key component of Indian Internet usage, with seven out of eight users accessing Internet from their mobile phones Rising penetration rate Urban teledensity stood at per cent and rural teledensity at per cent as of March 2014, up from 87.1 per cent and 23 per cent, respectively, in March 2009 Affordability and lower rates Availability of affordable smartphones and lower rates are expected to drive growth in the Indian telecom industry Source: Telecom Regulatory Authority of India, Planning commission, Aranca Research

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5 2014* Number of subscriber: 933 million Growing Robust demand India is the world s second-largest telecommunications market, with 933 million subscribers as of March 2014 With 70 per cent of the population staying in rural areas, the rural market would be a key growth driver in the coming years High ratings The country has a strong telecommunication infrastructure In terms of telecommunication ratings, India ranks ahead of its peers in the West and Asia Advantage India Attractive opportunities Telecom penetration in the nation s rural market is expected to increase to 70 per cent by 2017 from 41.0 per cent as of March 2013 India is expected to become the second-largest internet market in 2014 Policy support The government has been proactive in its efforts to transform India into a global telecommunication hub; prudent regulatory support has also helped National Telecom Policy 2012 proposes unified licensing, full MNP and free roaming FY16E Number of subscriber: 1.2 billion Source: BMI (Business Monitor international) Report, Aranca Research, Internet & Mobile Association Of India(IAMAI) Notes: * figure for 2014 is up to March 2014; MNP - Mobile Number Portability; E - Estimates (2016E - Estimates for 2016)

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7 Mobile (wireless) Comprises establishments operating and maintaining switching and transmission facilities to provide direct communications via airwaves Telecom Fixed-line (wireline) Consists of companies that operate and maintain switching and transmission facilities to provide direct communications through landlines, microwave or a combination of landlines and satellite link-ups Internet services Includes Internet Service Providers (ISPs) that offer broadband internet connections through consumer and corporate channels Source: Aranca Research

8 India is currently the second-largest telecommunication market and has the third highest number of internet users in the world India s telephone subscriber base expanded at a CAGR of 24.1 per cent to 933 million over FY Growth in total subscribers Teledensity (defined as the number of telephone connections for every hundred individuals) increased from 18.3 in FY07 to 75.2 in FY In March 2014, total telephone subscription stood at 933 million, while teledensity was at FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Telephone subscribers (Millions) Teledensity- (RHS) Source: Telecom Regulatory Authority of India, Aranca Research Note: CAGR - Compound Annual Growth Rate

9 Indian telecom sector s revenue grew 13.4 per cent to USD64.1 billion in FY12 Wireless and wireline revenues (USD billion) Wireless and wireline revenue increased at a CAGR of 10.4 per cent to USD39.1 billion over FY CAGR: 10.4% Revenues from the telecom equipment segment stood at USD23.5 billion in FY12 compared to USD23.4 billion in FY FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Source: Telecom Regulatory Authority of India, Aranca Research Note: CAGR - Compound Annual Growth Rate

10 India s telephone subscriber base reached 933 million in March 2014 The wireless segment (96.9 per cent of total telephone subscriptions) dominates the market, while the wireline segment accounts for the rest Composition of telephone subscribers (2014*) 1% 2% Urban Wireless Urban regions account for 59.5 per cent of telecom subscriptions, while rural areas constitute the remaining 40% 57% Rural Wireless Urban Wireline Rural Wireline Source: Telecom Regulatory Authority of India, Aranca Research Note: 2014* - Data as of March 2014

11 During FY07-14, wireless subscriptions increased at a CAGR of 27.5 per cent to million Wireless subscriptions (in million) In FY14, while urban wireless teledensity stood at , rural wireless teledensity stood at CAGR: 27.5% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Source: Telecom Regulatory Authority of India, Aranca Research Note: CAGR - Compound Annual Growth Rate

12 The mobile segment s teledensity surged 5x from 14.6 per cent in FY07 to per cent in FY14 GSM services continue to dominate the wireless market with an 91.5 per cent share (March 2013); CDMA accounts for the remaining 8.5 per cent FY07 FY08 FY09 FY10 Growth in wireless teledensity 14.6% 22.8% 33.7% 49.6% FY11 FY12 FY13 FY % 76.0% 70.9% 72.94% Source: Telecom Regulatory Authority of India, Aranca Research Notes: Teledensity - The number of telephone lines for every 100 people in a country, GSM - Global System for Mobile Communications, CDMA - Code Division Multiple Access

13 Bharti Airtel is the market leader, with a 22.7 per cent share of total subscription, followed by Vodafone (18.4 per cent share) The top five players Bharti Airtel, Vodafone, Idea, Reliance, and BSNL account for over 79 per cent of the total subscribers Wireless market share in terms of total subscribers (FY14) 7.8% 7.0% 1.0% 1.5% 3.9% 22.7% Bharti Airtel Vodafone Idea Relaince BSNL 10.5% 12.3% 15.0% 18.4% Aircel Tata Telewings Sistema Others Source: Telecom Regulatory Authority of India, Aranca Research Note: BSNL - Bharat Sanchar Nigam Limited

14 Total fixed-line subscription stood at 28.5 million, while teledensity reached 2.3 per cent due to wide usability of the wireless segment in FY14 BSNL is the market leader with a 65 per cent share, followed by MTNL (12.4 per cent) BSNL, MTNL, and Bharti together account for 89 per cent of the total fixed-line market Fixed-line segment subscription and teledensity (FY14) Fixed-line market share (FY14) % 1.1% 4.4% BSNL % 2.7% 1.8% 0.9% 0.0% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Wireline subscription (Millions) Wireline teledensity-rhs 11.8% 12.4% 5.4% 64.9% MTNL Bharti Tata Reliance Others Source: Telecom Regulatory Authority of India, Aranca Research Note: BSNL - Bharat Sanchar Nigam Limited

15 The number of Internet subscribers increased at a CAGR of 60.8 per cent to 239 million in 2013 from 8.6 million in 2006 Internet subscriptions (in million) 239 CAGR: 60.8% * Source: Telecom Regulatory Authority of India, Business Monitor International, Aranca Research Notes: * - Including Internet Access by Wireless Phone Subscribers, CAGR - Compound Annual Growth Rate; BSNL - Bharat Sanchar Nigam Ltd

16 Total internet service providers revenues expanded at a CAGR* of 12.2 per cent to USD2.2 billion over Total internet service providers revenues in USD billion CAGR*: 12.2% Source: Telecom Regulatory Authority of India, Aranca Research Notes: CAGR - Compound Annual Growth Rate, *CAGR has been calculated in Indian Rupee Terms

17 Broadband subscription increased at a CAGR of 27.7 per cent during FY06 14 Wired broadband subscriptions (in million) CAGR: 27.7% FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Source: Telecom Regulatory Authority of India, Aranca Research Notes: CAGR - Compound Annual Growth Rate 2013* - Data as of March 2013

18 BSNL has the largest share (27.5 per cent) of the total broadband market Market break-up by broadband subscriptions (wired and wireless) (FY14) Bharti Airtel has the second-largest share (20.3 per cent) of the broadband market By the end of March 2014, the top five broadband service providers accounted for per cent of the market share 11.5% 16.9% BSNL 27.5% Bharti Idea Reliance 11.9% 11.9% 20.3% Vodafone Others Source: Telecom Regulatory Authority of India, Aranca Research Notes: BSNL - Bharat Sanchar Nigam Ltd; MTNL - Mahanagar Telephone Nigam Ltd

19 Company Ownership Presence Mahanagar Telephone Nigam Ltd (MTNL) Government (56.3 per cent), Life Insurance Corporation (18.8 per cent) Fixed-line and mobile telephony (in Delhi and Mumbai), data and Internet Bharat Sanchar Nigam Ltd (BSNL) Government (100 per cent) Fixed-line and mobile telephony (GSM outside Delhi and Mumbai), data and Internet in 22 circles Reliance Communications ADAG Group (approximately 67.9 per cent) Mobile (CDMA) and broadband Bharti Airtel Vodafone India Bharti Group (43.6 per cent), Pastel Ltd (14.8 per cent), Indian Continent Investment (6.7 per cent) Vodafone (84.5 per cent), Piramal Enterprises (11.0 per cent) Broadband and mobile (GSM) in 22 circles Broadband and mobile (GSM) in 22 circles Source: Companies websites, Bloomberg, Aranca Research

20 Green telecom The green telecom concept is aimed at reducing carbon footprint of the telecom industry through lower energy consumption TRAI initiated a consultation process in May 2010, requesting inputs from firms across the telecom value chain to provide recommendations on green telecom s framework and implementation Expansion to rural markets There are over 62,443 uncovered villages in India; these would be provided with village telephone facility with subsidy support from the government s Universal Service Obligation Fund (thereby increasing rural teledensity) In March 2014, the rural subscriber base accounted for 40.5 per cent of the total subscriber base, thereby fuelling the sector s growth Emergence of BWA technologies The most significant recent developments in wireless communication include BWA technologies such as WiMAX and LTE WiMAX is expected to have attracted around 8 to 10 million subscribers Reliance Jio, the only operator which bagged 4G spectrum in all 22 circles, is planning an aggressive 4G launch across the country by 2014 Source: Aranca Research Notes: BWA - Broadband Wireless Access, TRAI - Telecom Regulatory Authority of India

21 Telecom Finance Commission The Telecom Commission (TC) is likely to set up a Telecom Finance Corporation (TFC) for channelling funding for telecom projects at competitive rates in order to facilitate investment in the sector Rising investments To boost local research and manufacturing of telecom products, the government has proposed an investment of USD32.2 billion in three phases: i) USD9.2 billion to the Telecom Research and Development Fund, ii) USD4.6 billion for the Telecom Entrepreneurship Promotion Fund, and iii) USD18.4 billion to the Telecom Manufacturing Promotion Fund during the 12 th Five-Year Plan Outsourcing non-core activities As part of the recent outsourcing trend, operators have outsourced functions such as network maintenance, IT operations, and customer service Mobile banking In October 2013, 7.7 million mobile banking transactions were reported, up 75 per cent from a year ago Availability of affordable smartphones, along with a rise in the security level of mobile transactions, is expected to boost growth of transactions conducted via phones Source: Aranca Research, Reserve Bank of India

22 A surge in the subscriber base has necessitated network expansion covering a wider area, thereby creating a need for significant investment in telecom infrastructure To curb costs and focus on core operations, telecom companies have been segregating their tower assets into separate companies Creating separate tower companies has helped telecom companies lower operating cost and improve capital structure; this has also provided an additional revenue stream Emergence of tower industry Rising Competition Higher operating cost and debt burden Focus on tower sharing to reduce costs Segregation of towers into separate companies Source: Aranca Research

23 Growing need for towers and a rise in tower sharing have led to emergence of independent telecom tower companies (ITTCs) along with the telecos-owned Tower companies Indus Towers is the largest player, with 120,000 towers, followed by BSNL (61,622 towers) Ownership of towers (2010) Market share of tower companies in 2010 (based on towers owned) Indus Tower Limited 32.2% 28% Bharat Sanchar Nigam Limited 15.2% Telcos owned Reliance Infratel Limited 15.2% 72% ITTC Viom Networks Limited Bharti Infratel Limited 11.2% 9.7% GTL Infrastructure Limited 9.5% Others 7.0% Source: Aranca Research

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25 Competitive Rivalry Customers low switching cost and price sensitivity are increasing competition among players High exit barriers are also intensifying competition There are around 6 to 7 players in each region, leading to intense competition Threat of New Entrants (Low) Threat of New Entrants Substitute Products Strict government regulations Extremely high infrastructure setup cost Difficulty in achieving economies of scale The risk of substitute products is low due to lack of viable substitutes, specially for voice services Bargaining Power of Customers (High) Competitive Rivalry (High) Threat of Substitute Products (Low) Bargaining Power of Suppliers High bargaining power of suppliers as there are just a few suppliers in the sector High cost of switching suppliers Bargaining Power of Customers Low switching cost and mobile number portability give customers high bargaining power Customers are price sensitive Bargaining Power of Suppliers (High) Source: Aranca Research Note: VoIP Voice Over Internet Protocol

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27 Marketing strategy Players are using innovative marketing strategies to succeed in this sector. For example, Vodafone launched a very successful ZooZoo ad campaign Bharti Airtel is using celebrity power for endorsements Differentiation Players differentiate themselves by providing different services to customers. For example, Reliance Communication offers both CDMA and GSM mobile services and has launched All Share Post-paid Plan which offers group or family members free sharing of voice and data on a single bill Bharti Airtel launched HD gaming for smartphones, and introduced a rural portal the first ever portal to cater to the rural segment Pricing strategy Players price their products very carefully due to the price sensitive nature of customers and high competition in the sector. Players generally go for price war. For example, Reliance offered 3G services at 2G price and others followed suit Tata Docomo introduced one paisa per second plan, which was followed by other players in the sector Source: Company websites, Aranca Research Notes: CDMA Code Division Multiple Access, GSM - Global System for mobile communication

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29 Growing demand Policy support Increasing investments Higher real income and changing lifestyles Inviting Reduction in license fee Resulting in Higher FDI inflows Growing young population Relaxed FDI Norms Increasing M&A activity Increasing MOU and data usage Encourages firms to expand to rural areas Notes: FDI - Foreign Direct Investment; MOU - Minutes of Use per month and per subscriber; M&A - Mergers and Acquisitions

30 E 2014E 2015E 2016E 2017E 2018E Increasing income has been a key determinant of demand growth in the telecommunication sector in India The IMF estimates nominal per capita income to expand at a CAGR of 9.6 per cent over (USD1414.1) 2,100 1,800 1,500 Rising per capita income in India (USD) 31% 21% The IMF forecasts income to expand at a CAGR of 5.7 per cent to USD1,869.3 during , % 1% 300-9% GDP per capita, current prices Growth Source: IMF, Aranca Research Notes: CAGR - Compound Annual Growth Rate, E-Estimate

31 The emergence of an affluent middle class is triggering demand for the mobile and internet segments A young, growing population is aiding this trend (especially demand for smartphones) Indian residents shifting from low to high income groups (%) Million Household,100% Globals (> ) Strivers ( ) Seekers ( ) Aspirers ( ) Deprived (<1657) Source: McKinsey Quarterly Report, Aranca Research

32 The Mobile Value Added Services (MVAS) industry is forecasted to expand at a CAGR of 30.9 per cent to USD9.5 billion by 2015 from USD1.1 billion in 2007 MVAS revenues (in USD billion) The share of non-voice revenues, which currently stands at around 10 per cent of telecom operators revenues, is estimated to rise to more than 30 per cent in the next five to seven years CAGR: 30.9% A decline in the prices of smartphones and data subscription rates is likely to drive demand for MVAS E 2013F 2014F 2015F Source: Wipro Technologies, The Internet and Mobile Association of India, Aranca Research Notes: CAGR - Compound Annual Growth Rate; MVAS - Mobile Value-Added Services E Estimate, F - Forecast

33 Minutes of usage of dial-up Internet access increased at a CAGR of 19 per cent to 411 in 2010 from 205 in 2006 Internet - dial up access MOU (per month per subscriber) 411 CAGR: 19.0% Source: Telecom Regulatory Authority of India, Aranca Research Notes: MOU - Minutes of Use, CAGR - Compound Annual Growth Rate

34 In terms of telecom ratings, India competes primarily with China, Indonesia and the Philippines In terms of country risks, India has an edge over the Philippines, Pakistan, Bangladesh, Laos, Cambodia, Thailand, Vietnam and Sri Lanka Telecom industry rewards Country rewards Telecom industry risks Country risk Telecom rating India China Indonesia Philippines Pakistan Bangladesh Laos Cambodia Thailand Vietnam Sri Lanka Source: BMI, Aranca Research, Note: Explanation of the indicators given under appendix

35 Reduction in license fees The Government of India plans to cut license fees by up to 33 per cent for operators that cover services for more than 95 per cent of the residential areas in a calling circle The issuance of several international and national long-distance licenses has created opportunities and attracted new companies into the market Abolishment of roaming charges In May 2012, the Union Cabinet declared to abolish roaming charges and allow mobile number portability even outside designated circles (without having to pay extra charges) Two GSM operators already announced free roaming packs in July 2013, whereas some are in the process of offering free roaming services to customers Relaxed FDI norms FDI cap in the telecom sector has been increased to 100 per cent from 74 per cent; out of 100 per cent, 49 per cent will be done through automatic route and the rest will be done through the FIPB approval route FDI of up to 100 per cent is permitted for infrastructure providers offering dark fibre, electronic mail and voice mail Notes: FDI - Foreign Direct Investment; FIPB - Foreign Investment Promotion Board

36 Allowed the use of WiMAX In August 2008, the Department of Telecommunication (DoT) allowed operators to use WiMAX networks as an alternative to cable and DSL to offer voice services This would enable faster delivery of wireless broadband services Set up internet connections The Department of Information Technology intends to set up over 1 million internetenabled common service centres across India as per the National e-governance Plan Expansion to rural areas The USOF identified 5,000 villages, and is in the process of developing a scheme to connect them through wireless broadband It also intends to provide 888,832 broadband connections in rural areas by 2014 The USOF plans to strengthen the OFC network in rural and remote areas Notes: USOF - Universal Service Obligation Fund; OFC - Optical Fibre Cable; WiMAX - Worldwide interoperability for Microwave Access Telecommunications

37 Financial support The USOF is expected to extend financial support to operators providing services in rural areas and encourage active infrastructure sharing among operators Enhanced spectrum limit The prescribed limit on spectrum would be increased from 6.2MHz to 2x8 MHz (paired spectrum) for GSM technology in all areas other than Delhi and Mumbai, where it will be 2x10MHz (paired spectrum) Telecom players can, however, obtain additional frequency; there will be an auction of spectrum subject to the limits prescribed for the merger of licenses Relaxing M&A norms The government recently revised the M&A guidelines for the telecom sector; it raised the limit on the market share of a merged entity in a circle to 50 per cent from 35 per cent earlier The final draft guidelines stated that it would allow companies to trade spectrum and retained the clause that would make the companies pay for spectrum beyond a prescribed limit if it was acquired after paying the entry fee and not through auction In December 2013, the Empowered Group of Ministers (EGoM) approved the mergers and acquisitions guidelines Notes: USOF - Universal Service Obligation Fund; OFC - Optical Fibre Cable

38 Broadband for all with a minimum download speed of 2Mbps Increase rural teledensity from 39 to 70 per cent by 2017, and 100 per cent by 2020 National Telecom Policy Liberalisation of spectrum, and convergence of network, services and devices Aims at a One Nation- One license regime with no roaming charges and nation wide number portability Unified licensing, delinking of spectrum from license, online real-time submission and processing Source: Digital Dawn, KPMG Report 2013, Aranca Research

39 Cumulative FDI inflows into the telecom sector over April 2000 February 2014 amounted to USD13 billion During this period, FDI into the sector accounted for 6 per cent share of total FDI inflows into the country Cumulative FDI inflows into telecommunication (USD million) 11,137 11,441 13,030 FDI inflow stood at USD174 million for April 2013 February 2014 and USD304 million for April 2012 Mar ,475 9,140 4, ,102 2,363 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14* Source: Department of Industrial Policy & Promotion, Aranca Research Note: FY14* - Data mentioned is from April 2013 Feb 2014

40 In 2013, total inbound and outbound deal value in telecommunication was USD1.9 billion and USD365 million, respectively In 2013, total value of PE deals in telecommunication was USD1.26 billion Foreign investment in India Target Acquirer Acquisition price (USD million) Division acquired Bharti Airtel Qatar Foundation Endowment 1,260 PE deal 5 per cent stake Vodafone India Ltd Vodafone International Holdings 1,641 Increases stakes to 100 per cent Bharti Airtel SingTel 302 Increases stakes to per cent Wireless Business Svcs Pvt Ltd Bharti Airtel 914 Entire business Bharti Airtel Qatar Foundation (2013) 1,300 Stake Qualcomm India Pvt Ltd Bharti Airtel Ltd (2012) 165 Broadband wireless access Zain s African operations Bharti Airtel Ltd (2010) 11 Entire business Radiacion Kavveri Telecom Products Ltd (2011) 27.5 Telecom unit Kavveri Telecom Products Ltd Investor Group (2010) Tata AutoComp Mobility Trimble Navigation Ltd (2010) Eduexel Infotainment Ltd Discovery Infoways Ltd (2010) Source: Thomson Banker, Deal Tracker, Aranca Research Notes: M&A - Merger and Acquisition, PE - Private Equity

41 ZTE enters into agreement with Calyx ZTE Telecom India, the wholly owned subsidiary of China s ZTE Corp, entered into an exclusive agreement with Pune-based Calyx Group to market and distribute products across India ZTE plans to enter the Indian smartphone market with five models priced at USD It also plans to introduce tablet PCs in the Indian market after the smartphone launch Reliance Jio Infocomm and Vodafone To tap growth in broadband technologies and infrastructure expansion, Reliance Jio Infocomm and Vodafone entered into an agreement to build and maintain an 8,000 km submarine telecom and data cable system The system is expected to be operational by 2014 and would connect six countries through landing points in Oman, the UAE, India (Mumbai and Chennai), Sri Lanka, Malaysia and Singapore Mobile wallet by Vodafone Vodafone India and ICICI Bank launched M-Pesa, a service for mobile money transfer and payment The service would allow customers to transfer money to any mobile phone in India, debit and deposit funds, withdraw cash from designated outlets, pay bills, and shop at select merchant establishments. M-Pesa would be available across India in the next months Source: Thomson Banker, Deal Tracker, Aranca Research Note: M&A - Merger and Acquisition

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43 Increasing mobile subscribers Untapped rural markets Rising internet penetration The number of wireless subscribers is expected to reach approximately 1.2 billion by 2016 Of the total subscribers, around 55 per cent are likely to be from urban areas and the rest from rural areas (45 per cent) The rural teledensity is expected to reach 70 per cent by 2017 and 100 per cent by 2020 from per cent as of March 2014 Internet penetration is expected to grow steadily and is likely to be bolstered by government policy The current broadband penetration rate is 1.5 per cent and is likely to be 9.4 per cent by 2015 The country is expected to feature among the top 10 broadband markets by 2013 Source: KPMG Report 2013, Aranca Research

44 Development of telecom infrastructure Growth in MVAS and Cloud computing Telecom equipment market Telecom infrastructure is expected to increase at a CAGR of 20 per cent to 571,000 towers during TRAI has made several recommendations for the development of telecom infrastructure, including tax benefits and recognising telecom infrastructure as essential infrastructure The Indian Mobile Value- Added Services (MVAS) industry is expected to reach USD9.5 billion by 2015 from USD4.9 billion in 2012 The Indian cloud computing market is expected to reach USD1.08 billion by 2015 The production of electronic and related equipment totalled USD19.8 billion in FY12 It is anticipated to reach USD52.0 billion by 2020 NTP 2012 is likely to fuel further growth with its Broadband for all schemes and policies to increase rural penetration Source: Press Information Bureau, Government of India, Aranca Research Notes: VAS - Value-Added Services, NTP - National Telecom Policy

45 The mobile application (app) market is expected to expand at a CAGR* of 70.4 per cent to USD100 billion during The mobile app market is estimated to increase 9.4 per cent to USD22.1 billion in 2013 from USD20.2 billion in 2012 Mobile app market size (USD billion) CAGR: 70.4% 100 The segment s growth is expected to be driven by increasing mobile connections and availability of low-range smartphones Over 100 million apps are downloaded every month across different platforms such as ios, Blackberry, Nokia, and Android F Source: Gartner, Aranca Research Notes: CAGR - Compounded Annual Growth Rate, *CAGR is calculated in INR terms, F - Forecast

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47 Set up in 1995, Bharti Airtel is India s largest mobile operator with presence in all of India s 22 circles It is the country s leading mobile operator, with a customer base of more than million as of March 2013, and the world s fourth-largest telecom operator Revenues increased at a CAGR of 25.9* per cent from USD4 billion in FY07 to USD14.2 billion in FY14 Major segments (FY14) Revenues (in USD billion) 2.2% 0.3% Mobile service India 1.9% 5.5% 4.2% Mobile service Africa 6.8% 29.2% 50.0% Airtel Business Tower Infrastructure Telemedia Digital TV Mobile service South Asia Others CAGR: 25.9*% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Source: Company website, Aranca Research Notes: CAGR - Compound Annual Growth Rate, *- CAGR is calculated in INR terms

48 Bharti Airtel had over million subscribers as of FY14 Total subscribers (million) The total subscriber base expanded at a CAGR of 34.5 per cent to million from 37.1 million over FY07 14 Bharti Airtel has a mobile subscriber base of 200 million in India CAGR: 34.5% Bharti Airtel plans to buy optical network gear from Ciena Communications Inc to expand capacity of its i2i undersea cable network that connects India to Singapore The company has expansion plans in Africa to tap the huge growth potential It became the first Indian telco to offer 4G service on mobile phones FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Source: Company website, Aranca Research Note: CAGR - Compounded Annual Growth Rate

49 Established in 1994, Vodafone is one of India s leading mobile operators, with more than 167 million customers as of March 2014 In August 2008, Vodafone introduced Apple s iphone to the Indian market Vodafone's revenues from India increased at a CAGR* of 23.2 per cent to USD7.4 billion over FY Revenues (USD billion) CAGR: 23.2*% FY07 FY08 FY09 FY10 FY11 FY12 FY13 Source: Company website, Aranca Research Notes: CAGR - Compounded Annual Growth Rate, * - CAGR is calculated in Indian Rupee term

50 Vodafone s customer subscription increased at a CAGR of 22.7 per cent to 167 million during Total subscribers (million) In March 2014, Vodafone s subscriber base stood at 167 million Gujarat, Uttar Pradesh, Maharashtra, and West Bengal together account for over 45 per cent of the total customer base CAGR: 22.7% Vodafone Group plans to invest heavily in the establishment of a fibre-optic network in India Vodafone plans to invest USD million by 2015 to purchase 3G equipment * Source: Company website, Aranca Research Notes: 2014* represents data till March 2014, **CAGR - Compounded Annual Growth Rate

51 Mobile Number Portability (MNP) in India was introduced in November 2010 Number of MNP requests (in millions) MNP allows subscribers to change their mobile service provider while retaining their old mobile number 114 The portability service was made available for both postpaid and prepaid customers as well as on both GSM and CDMA platforms The implementation of MNP has brought a slew of benefits for customers in terms of better plans and offers Jan-12 Jan-13 Jan-14 Source: TRAI Report, Aranca Research

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53 Association Of Unified Telecom Service Providers Of India (AUSPI) B-601, Gauri Sadan 5, Hailey Road, New Delhi , India Tel: Fax: Website: Association Of Competitive Telecom Operators (ACTO) 601, Nirmal Tower, 26, Barakhamba Road, Connaught Place, New Delhi , India Tel.: / Fax: info@acto.in Website: Internet & Mobile Association Of India (IAMAI) F-36, Basement, East of Kailash, New Delhi , India Tel: kalyan@iamai.in Website:

54 BMI telecoms business environment ratings Industry rewards: it considers average revenue per users, number of subscribers, subscriber growth, and number of operators Country rewards: it considers urban/rural split, age range, GDP per capita, USD Industry risks: it considers regulatory independence Country risk: it rates the country on short-term external risk, policy continuity, legal framework corruption Telecom ratings: overall rating of the above indicators

55 BWA: Broadband Wireless Access CAGR: Compound Annual Growth Rate DoT: Department of Telecommunication FDI: Foreign Direct Investment FTTH: Fibre to the Home FY: Indian Financial Year (April to March) IMF: International Monetary Fund INR: Indian Rupee IPTV: Internet Protocol television M&A: Mergers and Acquisitions MoU: Minutes of use per month and per subscriber MPEG: Moving Picture Experts Group

56 OFC: Optical Fibre Cable TRAI: Telecom Regulatory Authority of India USOF: Universal Service Obligation Fund USD: US Dollar VAS: Value-added Services WiMAX: Worldwide Interoperability for Microwave Access Telecommunications Wherever applicable, numbers have been rounded off to the nearest whole number

57 Exchange rates (Fiscal Year) Exchange rates (Calendar Year) Year INR equivalent of one USD Year INR equivalent of one USD * Average for the year * - from January to March 2014

58 India Brand Equity Foundation ( IBEF ) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Aranca and IBEF s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.