Future Of Indian Telecom

Aegis LeadCap Research and Consulting Aegis LeadCap Research and Consulting

Birds Eye View

Beyond Voice: Future of Indian Telecom

Compiled ByAegis LeadCap Research and Consulting

Aegis LeadCap Research and Consulting

Executive Summary

India is 2nd largest telecom players among emerging economies with 800 million mobile subscribers. Almost 100 million Indians have access to internet with 40% among them accessing internet via mobile phones. The numbers are predicted to go three times higher by 2015. India’s mobile handset market is expected to grow by 25 % in volume this year to reach.

India telecom revenues is primarily driven by voice which constitutes to 90% of total revenues leaving only a smaller portion for data. Aegis LeadCap Research & Consulting predicts that in next 5 years share of revenue from voice will reduce down to 60% from its current state of 90%. Most prominent value add services which drives data revenues include games, location based services, video calls, mobile adverts, music and mobile TV. It is also estimated that value added services in India will generate Rs 55,000 Cr by 2015.


Introduction India is the 2nd largest among emerging telecom economies with a subscriber base close to 800 million. In spite of the dynamic growth of the user base, the declining ARPU is a great opportunity for Indian mobile service providers.

Revenue from voice on mobile phone will perform the same way as the revenue from the landline currently while the revenue from data mobile data is key to the growth.

Aegis LeadCap Research & Consulting predicts that in next 5 years the share of revenue from voice will reduce down to 60% from its current state of 90%. The revenue from data will witness steep rise similar to the developed markets like Europe having data revenues of close to 50% and still increasing.

With Advance features like video calling, full length music track downloads, mobile internet, mobile tv, email&faxes with attachment,mms has truly change the way of communication.


Continued..

Social networking has outspokenly become the new age media for communication with 30 million users in India. 60% of the total 700Mn global user base is captured by Face book , where other players like LinkedIn, MySpace & many more amount to 40%.

Mobile banking is commonly used service in Urban India. Currently 43 Million urban Indians are using this service. Cell phone has been more than a cell phone for years, but soon it could take on an entirely new role — standing in for all of the credit and debit cards crammed into wallets.

Mobile TV is also emerging as a key service driven by its mass market appeal and intuitive usage. 60% of TV users will prefer watching the same content on the mobile. It is predicted that there will be 12 million subscribers by end of 2011 India.

Industry estimates that 8 billion mobile apps were downloaded in 2010 and 44 billion mobile apps would be downloaded by 2016. Thus the mobile phone is now much more than just a communication device - more like remote control for your life.


Indian Telecom- Voice and Data Revenue

Mobile Value Added Services – The Game Changer

Comparison of Indian telecom with other telecom geographies

Challenges and Opportunities

Forecast

Recommendations

Scope


5th largest telecom network in the world.

2nd largest among emerging economies.

The total wireless subscriber base stood at 791 million on 31st March 2011.

The number of Broadband connections on 31st March 2010 was 8.77 million compared to 6.22 million as on 31st March 2009.

The gross revenue of the industry for the year 2009-10 was 31.5Bn$ which is about 3.7% increase over the last year.

Bharti Airtel and Vodafone are the leading operators in India with Rs.1,57760Mn and Rs. 86,5062.56Mn as on Dec 2010.

Source: TRAI.gov.in

Indian Telecom


Voice and Data Minutes

Source: National Regulators/ITU/Operators


International Data Revenue


Challenges Opportunities

How to bring Fortune at the bottom of the Pyramid?

Data Monetization

Data Traffic Growth is Faster Than Revenue.

Compensation with Data Services

Declining of ARPU Designing Low energy/renewable power

Regulatory Issues New Government /Private investments

Telecom Power

Understanding Customer Preference on VAS

Inadequate Infrastructure

Challenges and Opportunities


Mobile Value Added Services


There are 100 million Internet Users in India and 40 Million Internet Users in INDIA access through their mobile phones.

BWA spectrum in India has generated Rs. 1.06 trillion for the Government Exchequer.

300 Million Users in India by 2015.

24 Million Rural Internet Users by Dec-2011.

Total Mobile Broadband Users in India as on 7 March 2011 are 11.21Million.

The total investment related to mobile broadband services is expected to be of Rs 500 billion for 2010-15.

Source: Google India and Ericssion India,2011

Mobile Internet


Source: www.dreamgrow.com and Economic Times

Social Networking

It is the fastest mode of communicating news, like recently when President of USA announced the death of Osama Bin Laden, 15 minutes later there were over 6 Million tweets & thousands of blogs.

Total Social Media users in India are about 30.3Million, where Indian web users spend three hours per month on social sites.

Total Face book users in India crossed 25 Million as at 30th April 2011 with a revenue of 1.8Bn$ revenue.

60% of the total 700Mn global user base is captured by Face book , where other players like LinkedIn, MySpace & many more amount to 40%.

Forecast of Face book- 3Bn$ by end of 2011. Operators Revenue is increasing with more usage of bytes.


Today’s 3G/IP video calling application platforms enables the most advanced interactive, premium rate 3G Video Chat and Social Networking services.

Video will be using major portionof Future Data Band Width(66%)

Mobile Video Traffic will double every year between 2010 – 2015.

Global Mobile Video Calling Revenue to surpass $1 Billion by 2015.

Source: CISCO Global Mobile Traffic Data,2010

Video Calling


Mobile TV is emerging as a key service driven by its mass market appeal and intuitive usage. Surveys have found 40–60% of European mobile phone users to be interested in receiving TV on their mobile phone paying 8-12 Euros per month.

The penetration of mobile phones is 50% more than TV.

TV Broadcasting will be replaced by Mobile TV pages in near future.

60% of TV users will prefer watching the same content on the mobile.

It is predicted that there will be 12 Million subscribers by end of 2011 India.

Source: www.pwc.com/india & social media.com

Mobile TV


Reliance, TATA Docomo, Vodafone, MTNL are providing Mobile TV services on 3G Phone.

Bharti Airtel and Tata Tele Services are launching mobile TV.

Vodafone gives access close to 75 unique channels @ Rs 3/Day for one channel and Rs.150 per month for all Channels.

LOOP Mobile in conjunction with Mumbai IPL Team has started telecasting IPL at the cost of Rs 5/day.

Continued..


I -phone and I- pads are the real game changers. Both have increased the data usage in a significant manner.

I- Pad has captured 8% of the total PC market, So as the Samsung galaxy tab sales are very high.

I –phone demands high quality content like high definition pictures, videos and graphics.

The data download has doubled after the entry of tablets.

Mobile Device

Source: www.pwc.com/india,TOI


Your mobile is now much more than just a communication device - more like remote control for your life. smart Phones and 3G Tablets.

Spice will launch devices in the range of Rs 5,000 to Rs 10,000,with Android apps.

Samsung launches thinnest 4G Smartphone, infuse 4G.

Reliance Info Tel is coming up with a affordable 4G Tablet worth Rs8000-Rs10000 for their new mobile broadband service.

Low cost tablet-pc is offered by Ministry of HRD, India.

Continued..


2 million mobile applications available globally under various categories such as communications, games, productivity, etc.

Nokia Ovi Store attracts 5 million downloads a day, 40,000 apps available in Ovi Store recently launched Pocket Parrot interpreter in your pocket with on-the-go translation tools.

Alcatel-Lucent introduced a touch screen Android phone priced at $129 on a pay-as-you-go contract

Apps

Source: www.penn-olson.com


A report released by ABI Research estimates that 44 billion mobile apps would be downloaded by 2016. This might seem enormous -- 8 billion mobile apps were downloaded in 2010, according to ABI -- but entrepreneurs and venture capitalists in Silicon Valley feel it is a gross under estimation.

3,300 Android powered mobile devices were sold daily (in 2010). That figure is expected to go up to 10,000 in 2011.

Continued..


User Generated Content:1. Pictures2. Graphics3. Videos

Organization Generated Content 1. Infotainment: UTV Bloomberg, NDTV2. Entertainment:Balaji Tele Films3. Education: AEGIS launched first online MBA program on 3G Tablet.4. Health: Fortis, Apollo Hospitals

Mobile Content


Continued.. Forecasts of this market to reach $4.9 billion in 2015.

User Generated Content is majorly responsible for Data traffic.

Mobile music is the most demanded entertainment service by the Indian consumers with ring back tones.

Vodafone offers subscription-based music streaming services for INR 50 per month ($1.09), with 40,000 songs, and 30 music channels in nine languages.

Ovi Store is focusing on providing localized content to users and offers Indian users with a choice of 3.5 million tracks.

Gaming on mobile phones, such as Zapak, ibibo,and India games launching mobile based gaming platforms providing users access to multiple games.

.


Mobile bank then is simple - the phone becomes the branchand this model is thus very appealing to new financial service

providers looking to get to market rapidly without the burden of physical infrastructure investments.

Cell phone has become a more than a cell phone for years, But soon it could take an entirely new-role- standing in for Credit & debit cards crimmed into wallets.

Source: www.pwc.com/india,TOI

Mobile Money


43 Million urban Indians are using this services. ICICI 17.75 Million users, HDFC 9.1 Million users & SBI 6.13 Million users.

Usage Unique Uses in Millions

Used mobile banking 43.70

Checking A/c balance 39.97

View Last 3 transaction 28.15

Status of Cheque 21.06

Payment Reminder 20.92

Request Cheque Book 19.11

Mobile Bank


Forecast- Mobile Bank

Mobile Banking penetration.

Push information Services.

Mobile Bill Presentment & payment (MBPP).

Nokia places chips in cell phones allowing Citi debit & credit to make payments by waving the cell phone at stores.

Source: Juniper Research ,2011


Mobile VAS market to generate over RS 55,000 Cr by 2015 –

PWC.

Internet in rural India is set to rise by 98 per cent to touch 24

million in December 2011- IAMAI.

India’s mobile handset market is expected to grow by 25 % in

volume this year to reach 210 million units- Cyber Media

Research.

India expects revenue of about 130 billion rupees ($2.9 billion)

from the sale of bandwidth to telecom companies next financial

year.

Forecast


Citations Teltech report from PWC Consultancy TRAI Annual Report 2010 KPMG Telecom Report Juniper Research-2011 Mobile Broad Band Outlook -2015-PWC Google India and Ericsson India,2011 Telecom India –Online www.penn- olson.com report 2011 and Social Med CISCO Global Mobile Traffic Data,2010 www.Dream Grow and Economic Times National Regulators/ITU/Operators:2011

Contact: Mr. V. P. Chandan, Director, Aegis

[email protected]

Vidyadhar Prabhudesai Ashutosh Pandey Purushotham Srinivasa Lead Consultant- Lead Cap Ventures [email protected] [email protected] [email protected] +91 9769831145 +91 9769831157 +91 7738043885


Annexure

Generation Definition Throughput Technology

1st Ana log 14.4kbps AMPS,NMT,TACS

2ndDigital Narrowband based

on circuit data14.4kbps TDMA,GSM,CDMA

2.5 Packet Data171.2kbps(peak)

GPRS20-40kbps

3Digital Broadband Packet

Data

3.1Mbps(peak)CDMA2000, 1XRTT,

EVDO,

500-700kbps UMTS, EDGE

3.5 >2MbpsUpto 3.6 to 7.2Mbps(peak)

HSPA14.4Mbps(peak) 1-3 Mbps

4Digital Broadband Packet

Data all IP Based very high throughput

100-300Mbps(peak) WiMax, LTE

3-5Mbps,100+Mbps(Wi-Fi) Wi-Fi(Metro)


Technical Overview

Imp Parameters 3G 4G

Driven by Voice driven data was add on Converged data & voice

Frequency Band 2.1GHz 2.3-2.4GHz

FEC Turbo Codes Concatenated Codes

Data Throughput 3.1Mbps3 to 5Mbps but potential estimate of

100-300Mbps

Services & Apps CDMA 2000,UMTS,EDGE etc Wimax,LTE & Wi-Fi

Analogy Standard TV HDTV

Bandwidth 5-20MHz 5-20MHz

N/W architecture Wide area cell basedHybrid-Integration of W-LAN, Wi-Fi, Bluetooth,

Wide area VoIP

Switching design Circuit & packet Packetized voice & data

Access tech W-CDMA,1xRTT,EdgeOFDMA,MC-CDMA/VSF-OFCDM and VSF-

CDMA

IP Protocol -IP4.0 Protocol -IPv6

RAN Latency Between 50ms-100ms Less than 10ms


Data Technologies


Disclaimer This publication has been prepared for general guidance on matter of interest only, and does

not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty is given as to the accuracy or completeness of the information contained in publication and to the extent permitted by law, Aegis Consulting and Research wing of Aegis School of Business, its member, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequence of you or anyone else acting , or refraining to act on the information contained in this publication or for any decision based on it.

© October 2010 by Aegis School of Business and Telecommunication. All rights reserved. Unauthorized use of the material without written permission is strictly prohibited and leads to legal action.

Future Of Indian Telecom

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