This document summarizes the state of the telecom industry in India since 2008. Key points include: - Tariffs crashed by 40% since 2008 as consumers resisted high prices and companies offered heavy discounts. - The 2010 spectrum auction secured government finances but increased debt for companies. - TRAI's new proposed auction prices could help revive an industry that has struggled since 2008. However, the telecom sector only contributes 2.2% to India's GDP. - Rising debt levels and underperformance of stock prices indicate the industry remains stressed despite hopes that lower auction prices and reforms may boost growth.

1. GOD SAVE THEM

2. INTRODUCTION
• Since 2008 , India became the world's most competitive market
for telecom industry
• Tariffs crashed in the consecutive years by 40%
• Consumers not willing to pay high tariffs (heavy discounts).
• In 2010, Govt auctioned bids for spectrum in 3G services
(Insignificant Amount Offered – Ex BSNL)
• Govt secured its finances – Companies suffered debts.

4. WAKE-UP CALL
The Telecom Regulatory Authority of India's (Trai) proposal
on new spectrum auction prices (Drastic Fall) can bring back the
lustre to an industry that has been in the dumps since 2008,
• Government meets the fiscal deficit by making sure that more
bidders turn up and the entire spectrum available for auction is
sold.
• Telecoms Minister Kapil Sibal, said “country would require at
least $10 billion in the next five years to revive growth in
telecoms”.
• Ex: Vodafone, Telenor etc benefit from the removal of restrictions
on foreign direct investments.

5. Baseline Data
• Most ‘‘Stressed’’ sector after the auction for 2G
spectrum
• 2G spectrum bids were worth Rs.9,400 crore
• Four times less than what the govt. expected
• Resulted in cancelling of permits for circles(2008)
• Only five companies bid(1.25 MHZ)
• Bharti bid for just one slot And Vodafone bid 14 circles
• Idea, videocon & telenor were bidding to get their
licenses back

6. Out of 22 circles;
> No bids for 4 circles( Delhi, Mumbai)
> Bihar above reserve price(9%)
> 17 others at reserve price
• Payment option -only third upfront & rest in installments
over 10 yrs(9% int)
• No payment for the ones whose licenses were cancelled(3
yrs)
• Change in the model of Payment to higher upfront fees

8. RECENT VARIATIONS
• Indian telecom contributes only 2.2% to the GDP
• Shift from traditional model to modern model-where in now
there is upfront fees to be paid
• Upfront payment taken to meet the fiscal deficit to some extent
• All telecom stocks except Idea Cellular have underperformed
this year
• Companies see the future to be prospective Eg:Telenor

9. IMPACT
• Tata Docomo started a price war with 1p/sec scheme.
• All 13 operators took to lower tariffs.
• TataDocomo started the trend but it was Uninor that pushed the
tariffs to rock bottom.
• Consolidation will bring about a change. Consolidation in the mind
of the customers and physical consolidation.
• In the end there will be no more than half a dozen players standing.
• With reduced competition and more control over tariffs, data usage
will take off.

10. • New target markets are considered as the hot spot for buying
circle Eg:Uttar Pradesh
Rising Tide Of Debt for Telecom Operators(Rs.)
0.83Tr
08-09
1.24Tr.
09-10
1.6Tr.
10-11
1.86Tr.
11-12
?
12-13

12. CONTD. . . .
• Data is witnessing strong growth across industry.
• Reduced competition and control over tariffs will result in
higher data charges.
• Airtel has put all its might into driving data usage.
• Information on their devices-track URLs searches by
customers- suggest sites

13. Airtels Wall of Pride

14. • Brekke- 90% of the revenue in India is from
voice.
• Handset shift to 3G will take time.
• Kapania says data needs content, device and
service provider.
• Data is a new need that the customer need to feel.

15. Coming battle in Telecom sector- 900 MHz
• 900 MHz band -renewal from next year.
• The government plans to end the monopoly of this efficient
spectrum.
• Level the ground for newer operators like Reliance Jio,
Videocon and Telewings.
• Loss of Rs.25000 cr and fresh investment of 1 trillion
• 900 Mhz band is 1.5 times efficient than 1800 MHZ band –
can provide both 3G and 4G services-less capital
expenditure.

16. THANK YOU
Presented By :
II Batch ‘ B ‘
GROUP 4