Key Findings of the Study:  More than 3-fold increase in subscribers since 2008  64.4% of the current subscribers are urban  Total wireless segment accounts for 933.7mn  Wireline accounts for a 3.2% of the overall market

1. Zinnov Management Consulting
Indian Telecom Market Overview – October 2012
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2. Agenda
1 Telecom Market Overview
2 Key Technology Trends and Partnerships
3 Government Regulations
2

3. Indian telecom industry is characterized by a large subscriber base, substantial tele-
density but low revenues per user (ARPU1)
Telecom Industry Landscape (July 2012) Global Comparison of
33.8
37.4 38.7 ARPUs (USD)
32.0 31.7 31
46.5
34
36
38 32.0
852 934
39
636
5.9 427 3.8
2.6 2.1 1.9
287
2008 2009 2010 2011 2012 8.3
28.3% 39.9% 56.6% 73.9% 79.6% 1.9
Wireless Subscribers (Million) Wireline Subscribers (Million)
GSM ARPU (USD) Revenue (USD Billion) Tele-density US UK China India
Large Subscriber • More than 3-fold increase in subscribers since 2008
Base • High tele-density of 79.6% in 2012 Indian telecom ARPUs
are amongst the
lowest worldwide
Urban
• 64.4% of the current subscribers are urban
Dominance
Note: 1Average Revenue per User 3
Source: TRAI

4. Focus on Mobile Value Added Services (MVAS) opportunities is necessitated by
declining share of voice in telecom ARPUs
Average Per User Spending on MVAS (USD)
86.7%
0.31 81.4% 78.6%
72.7%
0.34 0.39
0.48
1.50 1.44
2.04 1.27
27.3%
18.6% 21.4%
13.3%
2009 2010 2011 2012
Spending on Voice Spending on MVAS MVAS as a %age of ARPU Voice as %age of ARPU
Declining voice In an effort to
revenue straining
Declining voice Growing smartphone
compliment the
revenue straining
ARPUs Carriers increasingly Growing smartphone
adoption and
declining voice
ARPUs focusing on adding adoption & increasing
increasing mobile
However, per user revenues, carriers
value added services to internet penetration,
mobile internet
spending on MVAS
However, per user increasingly focusing
their portfolio to penetration further
further pushing
increasing on MVAS
spending both as a on adding value added
supplement revenues proliferationMVAS
pushing of value
percentage of ARPU
increasing services to their
added services
and as an absolute portfolio
Note: 4
Source: IAMAI

5. Indian MVAS market expected to move from the traditional SMS based services to
internet based and app based services
Indian MVAS Market Size (USD Bn) Revenue Share MVAS categories
10%
5.1 Emerging 7% 27% Current
60.4% 4.3 MVAS (37%) 5% MVAS (63%)
38.4% 7%
3.1
1.9 8% 14%
19.9%
17%
1 5%
2009 2010 2011 2012 (E)
CRBT News Reverse CRBT
Market Size (INR Bn) Y-o-Y Growth Rate SMS Based Games Education
Governance Health Mobile App
Growing at declining rate, Emerging MVAS categories are
Indian MVAS industry is dependent primarily on
expected to value ~USD 6.6 • Telecom infrastructure
billion in 2013 • Type of handset
Note: 1Caller Ring Back Tone 5
Source: IAMAI

6. M-Health M-Governance M-Education M-Infotainment M-commerce M-Agriculture
Amidst visible traction for M-Governance in India, government pushed m-governance
framework to aid adoption
Many Indian states have initiated m-governance Government pushing directives to aid
practices primarily through SMS-based platform governance across richer delivery platforms
Kerala Bihar M-Governance Framework for Public Services
• M-governance used across • Web based monitoring
health, education, law, system at general admin Uniform pre-
agriculture, finance department using SMS One-Web approach
functions updates sent by relevant designated codes
to make websites
officers for mobile-based
mobile compliant
services
Gujarat Andhra Pradesh
• Municipal Corp using GPS Deployment of Adoption of open
• Rajkot Municipal Corp
using SMS for sending enabled phones to mobile apps for standards for
property tax alerts, remotely monitor cleaning public services platform agnostic
payment reminders, and of garbage bins
across depts. apps
vaccination alerts
Goa Creation of MSDG1, a shared technical e-
governance infrastructure for delivering
• ‘e-SMS Goa’ initiative aimed at easing the process of public services
information delivery to citizens through the use of mobile
Note: 1Mobile Services Delivery Gateway 6
Source: Ministry of Communications & Information Technology, Department of Information Technology; Press articles, State government websites

7. M-Health M-Governance M-Education M-Infotainment M-commerce M-Agriculture
Major telecom players are enabling mobile platform as a medium to impart
education
Educational firms • Edserv & Tata DoCoMo to offer IIT and AIEEE
• Educational firms partnering with telecom players
collaborating with to deliver education and expand their presence
prep material through ‘Tutor on Mobile’
telecos service
Telecos taking CSR • Aircel and MTS partnering with NGOs, such
• Telecom players partnering with NGO’s as a CSR as Concern India and Smile Foundation for
initiatives to impart initiative to deliver education underprivileged children educational
education initiatives
• Airtel imparts education through IVR which
Telecos delivering includes
• Delivering basic level of education using mobile as
• Sparsh- Education to adults
basic level education a medium • English speaking course & Children
stories
Expanding reach of • Reliance communication delivering
• Using mobile platform to expand the reach of interactive, real time courses of XLRI1 across
education through
classroom education (e.g. in rural areas) 105 cities
mobile network
Note: 1An Indian Business School 7
Source: Company websites; Press Articles

8. M-Health M-Governance M-Education M-Infotainment M-commerce M-Agriculture
Almost all leading telecom companies provide information and entertainment
related services
M-Infotainment is the largest contributor to overall MVAS revenue
Key Information Key Entertainment
Categories Categories
Sports Music and Video
• Live coverage & scores, results, analysis and reviews • Radio services round the clock
of sporting tournaments like CL T20, CB series etc. • Offers movies-on-demand service and Video-on-
demand portal
Travel Ringtones
• Information on flight, railways, taxis schedules and • Huge library of songs is available
fares • Templatize & personalize caller tune
News and Finance Content offering
• International , national and regional news • Indian mythological stories in different Indian
• Stock updates, foreign exchange rates alerts services languages
Note: 8
Source: Company websites; Press Articles

9. M-Health M-Governance M-Education M-Infotainment M-commerce M-Agriculture
Telecom carriers increasingly taking interest in m-commerce services as the
government aids through reforms
M- Microfinance Mobile wallet service M- Retailing
• Enables microfinance activities • Pay for a wide range of services • Retail players developing
through mobile phones and goods mobile compliant websites &
apps
• Focus on expanding reach
Use Case:
Use Case: Use Case: • Flipkart and Naaptol
• SBI with Ekoaspire & Oxigen • Allows users to load cash provide android Apps
Sahyog, is providing banking on their mobile devices to • SMS alerts for DoCoMo
& microfinance services in pay utility bills etc. subscribers on wide range
rural areas of product & services along
with discount benefits on
snapdeal
Government initiatives in M-commerce
• RBI increased mobile payment limit to INR 50,000 (~USD 1,000)
• RBI granting Semi-Closed Wallet1 licenses to telecos
• Creation of Interbank Mobile Payment Service (IMPS), by NPCI2 along with 6
Nationalized banks
Note: 1A mobile payment mechanism allowing users to load cash into their mobile phones; 2 National Payments Corporation of India 9
Source: Company websites; Press Articles

10. M-Health M-Governance M-Education M-Infotainment M-commerce M-Agriculture
M-agriculture services finding traction with Indian farmers
• Key services includes
commodity prices, local
Grameen info, weather updates etc.
VAS • Multiple language support
M- agriculture services
• Accessible via voice
bridge the information portals, SMS, USSD1 and
gap between the Data
farmers and market
conditions
M-agriculture
initiatives
Bahtar
Fasal
Zindagi
• IVR based service available in 16 regional languages • Free SMS based platform offering real time price
information to Indian farmers about their crops
• Provides information related to weather, agriculture, mandi
rates, live stocks, health, rural finance, and education • Huge adoption with more than 20,000 farmers being
added every week
Note: 1Unstructured Supplementary Service Data 10
Source: Company websites; Press Articles

11. Telecom companies are also aggressively focusing on the fast growing data center
market in India (1/2)
Data Center Market & Distribution of Data Center Market in
Capacity in India India by Ownership, CY11
Data Center Market (USD bn)
5.7 Key Verticals:
Data Center Capacity (mn Sq. Ft.) • BFSI
• Manufacturing
4.2 Captive • Government
78% • Telecom
3.1
Third Party
Key Verticals:
4.0 22%
• Manufacturing
2.6 • IT-ITeS/ Telecom
1.7 • Healthcare
• Education
CY10 CY12 CY14 • Based on the demand preferences, the 3rd party datacenter market is
expected to grow rapidly as opposed to captive data centers
CIO Preference for Data • Lack of in-house skills, high investments, and long gestation periods pose
challenges for captive datacenters in India
Center (Survey Responses)
MNC with Can't Say Competitor DC Tier Cost Components Cost Share
datacenter 7% Tata Communications II/III Power 38%
outside India
7% Ctrls IV Maintenance 21%
Domestic MNC with
NetMagic III+
company with datacenter in Bandwidth 12%
datacenter in India Reliance IDC III+
India 50% Equipment 12%
My own Airtel III/III+
8% Facility 10%
datacenter Wipro III
28%
Sify III Manpower 7%
Note: 11
Source: Gartner; IDC; Company websites; Cyber media; mit.gov.in; Zinnov CIO survey 2010; Zinnov Analysis

12. Key telecom players have also created an extensive portfolio for cloud based services
Cloud/ Hosting Portfolio of Key Telecom Companies
Airtel Reliance Comm. Tata Comm.
ERP  
F&A 
Applications CRM 
(SaaS/ Hosted) HRM 
Web Collaboration  
Email   
IaaS/ Virtualized Infra.   
PaaS
Co-location   
Data Center Services
Managed Hosting   
• Vertical Specific Soln.
• Vertical Specific Soln. ofor Media & Entertainment
ofor Media & Entertainment oCore Banking Soln.
• Online Desktop (VDI) • On demand security
Other Key Offerings • On demand security
• On demand security
• Enterprise Mobility
• Hosted Contact Center • Hosted Contact Center
• Enterprise Mobility • Productivity Suites
• Enterprise Content Management
12
Source: Company websites, Primary interviews with key industry stakeholders; Zinnov Analysis

13. Accordingly, the telecom companies have also established key partnerships to build
cloud expertise
Key Technology Partners of Key Telecom Companies
Competitor Technology Partners (Software)
Savvis Ramco VeriSign
Airtel Microsoft Tally VMware
Symantec Software developers for mobility apps
Reliance Comm. Ramco Microsoft BigRock
Zoho SugarCRM Cisco
Tata Comm. SuccessFactors Microsoft Google
F-Secure
Hardware Partnerships Network Carrier Partnerships
Besides software partnerships, all competitors have formed All data center service providers have strategic alliances with
technology partnerships with most of the key hardware OEMs key network carriers (like Airtel, Reliance, BSNL, etc.) to
like HP, IBM, Cisco, Juniper, etc. provide connectivity options to their customers
13

14. Agenda
1 Telecom Market Overview
2 Key Technology Trends and Partnerships
3 Government Regulations
14

15. There is mature adoption of IT across the entire value chain of the telecom vertical
Telecom Value Chain
Subscription
Telecom Network Network Content
& Devices1 Subscribers
Infrastructure Equipment Operator Portals
Resellers
Bharti Airtel Company Outlet
GTL - Nokia-Siemens
Vodafone Dealers Facebook
Infrastructure Huawei
Reliance Comm. Blackberry Rediff
Indus Towers Ericsson
TTSL2 Huawei App stores
Tata Quippo Alcatel Lucent
Sun Direct UTStarcom
Core IT Network Enterprise Partner Customer
Requirements Management Management Management Management
ICT Solutions Across Processes
•Fault Management •Finance & Accounting •Partner Network •Service Activation
•Config. Management •HR Management •Revenue and Billing
•Account Management •Sales & Operation •Supply Chain Management
•Performance Planning Management •Customer Analytics
Management •Facility Management •Revenue Fraud •Contacts Centers/Call
•Security •DBMS3 Management Centers
Customer Portals/Customer Support (B2C/B2B)
Supply Chain Management
Enterprise Resource Planning
VAS Management
Network Solutions Data Warehousing and Business Intelligence
OSS/BSS
Note: 1Devices include mobile handsets, modems, routers, set top boxes, etc.; 2Tata Teleservices Ltd.; 3Database Management System 15
Source: Zinnov Analysis

16. However, Indian telecom firms face various challenges in the adoption of IT
Lack of clarity on Uncertain government
consumer preferences regulations
Predictability of future
Management issues in
IT requirements is
PSUs
difficult
Challenges
in IT
Adoption
Falling ARPUs affecting High operation costs in
profit margins remote areas
Note: 16
Source: Primary Interviews with the CIOs; Zinnov Analysis

17. IT spending of the Indian Telecom vertical has grown at a rate of 14.3 per cent in
FY12
IT Spending in Telecom, USD billion IT Spend Distribution
Hardware BPO
2.4 39.5% 24.8%
2.1
Services
Software 29.7%
6.0%
FY11 FY12
IT Budget as a Per cent of Revenues Percentage Outsourcing
5% to 6%
70%
3% to 4%
67%
FY07 FY12 FY07 FY12
Note: 17
Source: Nielsen Domestic IT-BPO Study 2010; Primary Interviews with Stakeholders in the Indian IT ecosystem; Zinnov’s Survey of 100 Indian CIOs across Verticals (2010); Zinnov Analysis

18. Telecom companies are spending on upgrading their technologies and in better
management of business processes
Upgrading Legacy Infrastructure
Platform Integration
Managing Partner Network
IT Adoption
Trends in
Telecom
vertical
Implementing Security Solutions
New Infrastructure for Datacenter/Network
Expansion
Private Cloud Adoption
Note: 18
Source: Primary Interviews with the CIOs; Zinnov Analysis

19. Supply side companies are launching a host of initiatives to come up with better
solutions for the telecom vertical
Strategic partnerships to
develop customized solutions
New business models
Tech Mahindra entered into an alliance with
Quality outsourcing work is done out of Microsoft to offer customizable BI solutions
large city centers while voice-based call to telecom service providers
centers are operated out of tier II and
tier III cities. E.g.. Aditya Birla Minacs
and Hinduja Global Solutions
Key Initiatives
Acquiring firms for capacity
Taken by the expansion
Supply Side
Establishing telecom specific OnMobile Global Ltd. acquired Dilithium
research centers Networks Inc. to get access to Dilithium’s
extensive patent portfolio and enrich its
offerings in 3G video mobile services
Wipro and Nokia Siemens Networks
have established dedicated centers and
testing labs for 3G and other telecom
specific technologies
Encouraging innovation and
training ecosystem
VerSe Innovation Pvt. Ltd.
partnered with OnMobile
Note: 19
Source: Primary Interviews with the CIOs; Zinnov Analysis

20. OSS/BSS Partnerships have evolved in Indian Telecom Industry
OSS Solution Tata Bharti Vodafone Reliance Idea Comments
• Market share of Ericsson
Prepaid
increased with acquisition of
Charging
Telcordia
• CRM solutions also being
CRM
provided by Elitecore
Fraud • Subex gained market share
Management with new fraud management
contracts
Revenue • Near universal uptake in both
NA NA
Assurance the segments
• Solutions from Amdocs and
Mediation NA
CSG are also popular
• Solutions from Oracle and
Order
Elitecore also being used by
Provisioning
other carriers
Business • Almost all carriers using
NA NA
Intelligence Cognos BI solution
Interconnect • Elitecore gained market share
Billing with new projects
Note: 20
Source: Voice & Data

21. Telecom carriers in India have multiple partners who help them operate key aspects
of their business
Telecom Equipment & Network Infrastructure IT and Software Requirements
• Prominent infrastructure providers are currently active in 3G • Partnerships with IT and software companies for technology
and 4G rollouts infrastructure, and solutions, such as billing, business
• Inter carrier partnerships for passive tower sharing intelligence, cloud services, and others
+ +
+ +
Telecom
Partnerships
Customer Support in India Value Added Services
• Partnerships with Business Process Outsourcing (BPO) • Partnerships with content generators, aggregators, and
companies to run their customer care operations portals, for delivery of value added services
+ +
+ +
+
Note: 21
Source: Company websites; Press Articles

22. Going forward IT demand in the telecom vertical will continue to grow at a CAGR of
14.2 per cent primarily due to the introduction of new services by telecom players
7.1 Expected IT
Spending in
Telecom Vertical,
4.0
2.8 USD billion
FY13E FY15E FY20E
Rising subscriber base creating demand
The Future of Indian Telecom
Data based services is increasing
Introduction of 4G in India Sustainable
Growth
Increased adoption of smart phones and new age devices
National Telecom Policy
Note: 22
Source: PwC Mobile Broadband Outlook Report 2015; Zinnov Analysis

23. Agenda
1 Telecom Market Overview
2 Key Technology Trends and Partnerships
3 Government Regulations
23

24. Indian telecom industry is regulated by an independent body called Telecom
Regulatory Authority of India (TRAI)
• Established in 1997 as an independent body for regulation of telecom services in India, TRAI separated the
regulatory function from policy-making and operation, which continued to be under the purview of the DoT
Facilitating
competition
Ensuring technical and promoting
efficiency Protecting interest
compatibility and
effective inter-
of telecom service
connection consumers
Recommending
license terms and Monitor the quality
ensuring of service
compliance
Telecom Levying fees as
Recommending
Regulatory may be
introduction of new Authority of India determined by
service provider (TRAI) regulations
Note: 24
Source: TRAI

25. Evolution of Indian telecom regulatory framework
Pre-Liberalization Scenario Establishment of TRAI New Telecom Policy (NTP-99)
• Aimed at regulating telecom • Affordable communication for citizens
• 1984 – Private Sector • Provision of universal service to all uncovered areas,
services
allowed only in telecom including rural areas
• Separated the regulatory
equipment manufacturing • Convergence of IT, media, telecom and consumer
function from policy-making
• 1985: Department of electronics
and operation from DoT
Telecommunication (DoT) • Build manufacturing capabilities and strengthen R&D
established • Efficiency and transparency in spectrum management
1991 1994 2000
1984 1997 1999
Liberalization Policy National Telecom Policy Developments After 2000
• Private sector participation (NTP-94)
in provision of value added • Facilitated the emergence of • Establishment of BSNL; privatization of VSNL
system(VAS) such as cellular Internet services in India • 2002: Establishment of Universal Service
and paging services • Specific targets announced to be Obligation Fund to finance subsidies for rural
achieved by 1997 areas
• Paved way for the entry of the • 2003: Introduction of Unified Access Licensing
private sector in telephone services (UASL) regime
• 2005: Increase in FDI limits from 49% to 74%
• 2006: Proposal for mobile number portability
Note: 25
Source: D&B

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