4. COBERTURA
4.1. TIPO Y RADIO DE COBERTURA
The information in this section has been obtained or derived from various sources including government publications and other public sources. Neither we, nor the BRLM nor any other person connected with the Issue or their respective legal, financial or other advisors have verified information provided in this section. Industry sources and publications generally state that the information contained therein has been obtained from sources and publications generally believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and accordingly investment decisions should not be based on such information.
OVERVIEW OF THE INDIAN ECONOMY
India, with a gross domestic product purchasing power parity of $5058 billion at the end of 2013 estimated, is the fourth largest economy in the world after the United States, China and Japan. (Source: Data for use of Deputy Chairman, Planning Commission, December 5, 2012) Barring fiscal year 2009, the economy has registered a growth of 8% and above during the period from fiscal year 2006 to fiscal year 2011. Growth of 6.53% has been achieved as on December 1, 2012(at constant 2004-05 prices). (Source: Data for use of Deputy Chairman, Planning Commission, December 5, 2012)
Real gross domestic product growth is expected to reach 5.37% in 2013. (Source: Data for use of Deputy Chairman, Planning Commission, December 5, 2012) India’s economic growth, reflected in increasing per capita income and a growing middle class population with greater disposable income, is helping in increasing the spend on mobile phones and entertainment and other value added services (“VAS”):
The figure below shows the per capita income of India on yearly basis from 2006 onwards:
(Source: Economic Survey 2011-12) THE INDIAN TELECOMMUNICATION SECTOR – AN OVERVIEW
The Indian telecommunication sector maintained the growth rate during the fiscal year 2012-2013 with quarter ended June 2012. There were 965.52 million connections at the end of June 2012 with 934.09 million wireless connections and is the one of the largest network in the world. The one billion mark also appears to be achievable. The penetration of internet and broadband has also improved with 23.01 million internet subscribers and 14.57 million broadband subscribers across the country. (Source: The Indian Telecom Services Performance Indicators, April-June 2012)
Per Capita Income (@ Factor Prices in INR),
2006-2007, 31,206
Per Capita Income (@ Factor Prices in INR),
2007-2008, 35,825
Per Capita Income (@ Factor Prices in INR),
2008-2009, 40,775
Per Capita Income (@ Factor Prices in INR),
2009-2010, 46,117
Per Capita Income (@ Factor Prices in INR),
2010-2011, 53,331
Per Capita Income (@ Factor Prices in INR),
2011-2012, 60,972
The telecom sector has witnessed a continuous rising trend in the total number of telephone subscribers. From 22.81 million telephone subscribers in 1999, the number increased to 951.34 million at the end of March, 2012. The total number of telephones stands at 965.52 million at the end of June 2012 showing an addition of 14.18 million during the period from March to June 2012. Wireless telephone connections have contributed to this growth as their number went up from 165.09 million in March 2007 to 919.17 million at the end of March 2012 and at the end of June 2012 it is 934.09. The wireline connections have however, declined from 40.77 million in March 2007 to 32.17 million in March 2012 and 31.43 million in June 2012. (Source: Annual Report 2012, DOT & The Indian Telecom Services Performance Indicators, January- March 2012, April-June 2012)
The table below shows the growth of wireline and wireless subscriber on yearly basis from March 2007 to June 2012: Type March’07 March’08 March’09 March’10 March’11 March ‘12 June ‘12
Wireline 40.77 39.41 37.97 36.96 34.73 32.17 31.43
Wireless 165.09 261.08 391.76 584.32 811.6 919.17 934.09
Total 205.87 300.49 429.73 621.28 846.33 951.34 965.09
Annual Growth (%) 44.88% 45.96% 43.01% 44.58% 36.22% 12.40% 1.44%
(Source: Annual Report 2012, DOT & The Indian Telecom Services Performance Indicators, January- March 2012, April- June 2012)
Wireline vs. Wireless
The growth of wireless services has been substantial, with wireless subscribers growing at a CAGR of 42.7% since 2007. Wireless has overtaken wire lines. The share of wireless phones has increased from 80.19% in 2007 to 96.74% in June 2012.
On the other hand, the share of wire line has steadily declined from 19.81% in 2007 to 3.26 % in June 2012. The pie chart below shows the ratio of wire line and wireless subscribers:
(Source: Annual Report 2012, DOT & The Indian Telecom Services Performance Indicators, April-June 2012)
Tele-density, which is an important indicator of telecom penetration, increased from 18.22% in March 2007 to 70.89% in March 2011 and 76.86% in December 2011. With the introduction of wireless phones in rural areas, there is increasing trend in rural tele-density. The Government is taking various measures under universal service obligation fund for expansion of mobile network in remote and rural areas. As the urban areas have got largely saturated, private service providers are also looking for further opportunities in rural areas. (Source: Annual Report 2012, DOT)
%age share of Wireline and Wireless Phones in March 2007, … %age share of Wireline and Wireless Phones in March 2007, …
Chart Title
share of %ageWireline and Wireless Phones in June 2012, … %age share of Wireline and Wireless Phones in June 2012, …
Chart Title
The table below shows the tele-density on yearly basis from March 2007 to June 2012:
(Source: Annual Report 2012, DOT & The Indian Telecom Services Performance Indicators, January- March 2012& April- June 2012)
The number of telephone subscribers in India increased from 951.34 million at the end of March 2012 to 965.52 million at the end of June 2012, registering a growth of 1.49% over the previous quarter as against 2.68% during the quarter ended March 2012. This reflects year-on-year (“Y-o-Y”) growth of 8.98% over the same quarter of last year. The overall tele-density in India has reached 79.58 as on June 30, 2012. Subscription in urban areas grew from 620.53 million at the end of March2012 to 621.76 million at the end of June 2012; however urban tele-density slightly declined from 169.55 to 169.03. Rural subscription increased from 330.82 million to 343.76 million, and rural tele- density increased from 39.22 to 40.66. Share of subscription in rural areas out of total subscription increased from 34.77% at the end of March 2012 to 35.60% at the end of June 2012. (Source: The Indian Telecom Services Performance Indicators, April-June2012).
Monthly average revenue per user (“ARPU”) for GSM service declined by 1.94%, from `97 in quarter ended March 2012 to `95 in quarter ended June 2012, with Y-o-Y decrease of 2.11% minutes of usage (“MOU”) per subscriber per month for GSM service remained almost at the same level as in the previous quarter i.e. 346. The outgoing MOUs (167) increased by 0.04% whereas incoming MOUs (178) declined by 0.19%. Monthly ARPU for CDMA full mobility service has been slightly declined by 0.50%, from `75.3 in quarter ended March 2012 to INR 74.9 in quarter ended June 2012. ARPU for CDMA has increased by 16.31% on Y-O-Y basis. (Source: The Indian Telecom Services Performance Indicators, April-June 2012)
The table below shows key trends for GSM and CDMA operators on quarterly basis from June 2010 to June 2012: Details Jun-10 Sep-10 Dec-10 Mar- 11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 GSM
Subscriber base (million) 527.62 578.49 641.73 698.37 737.33 761.20 785.97 814.06 831.86 Pre-paid (% to total base) 96.16 96.43 96.65 96.81 96.65 96.91 96.95 96.87 96.84
ARPU (INR)* 120.00 144.00 110.00 100.00 98.00 93.00 96.00 97.00 95.00
MOU* 411.00 368.00 359.00 349.00 344.00 331.00 332.00 346.00 346.00
SMS per month* 40.00 44.00 46.00 44.60 45.00 45.00 36.00 37.00 38.00
CDMA
Subscriber base (million) 107.88 109.22 110.46 113.22 114.36 112.42 107.88 105.11 102.24 Pre-paid (% to total base) 93.90 94.05 93.97 94.03 94.01 93.81 93.50 93.10 92.90
ARPU (INR)* 74.00 73.00 68.00 66.00 64.00 71.00 73.00 75.00 75.00 Urban Tele-Density, FY '07, 48.1 Urban Tele-Density, FY '08, 66.39 Urban Tele-Density, FY '09, 88.84 Urban Tele-Density, FY '10, 119.45 Urban Tele-Density, FY
'11, 156.94 Urban Tele-Density, FY '12, 169.55 Urban Tele-Density, Jun '12, 169.03
Rural Tele-Density, FY '07, 5.89 Rural Tele-Density, FY '08, 9.46 Rural Tele-Density, FY '09, 15.11 Rural Tele-Density, FY '10, 24.31 Rural Tele-Density, FY '11, 33.83 Rural Tele-Density, FY '12, 39.22
Rural Tele-Density, Jun '12, 40.66 Total Tele-Density, FY '07, 18.22 Total Tele-Density, FY '08, 26.22 Total Tele-Density, FY '09, 36.98 Total Tele-Density, FY '10, 57.74 Total Tele-Density, FY '11, 70.89 Total Tele-Density, FY '12, 78.66
Total Tele-Density, Jun '12, 79.58
Details Jun-10 Sep-10 Dec-10 Mar- 11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
MOU* 300.00 283.00 270.00 263.00 238.00 230.00 226.00 229.00 229.00
SMS per month* 13.00 15.00 29.00 33.00 15.00 15.00 14.00 16.00 22.00
(Source: The Indian Telecom Services Performance Indicators, April-June 2012, January-March 2012, October- December 2011, July-September-2011, April-June 2011, January-March 2011, October-December 2010, July-September 2010, April-June 2010)
* Figures pertain to per user per month.
The table below shows the number of wireless subscribers in India (GSM+CDMA) and subscriber of data services, as of June 30, 2012:
Operator Number of Subscribers (million) Bharti 187.30 BSNL 98.28 Vodafone 153.71 Unitech 45.58 Idea 117.16 Aircel 64.88 Reliance 154.60 Tata 80.23 Sistema 16.55 Videocon 5.58 Loop 3.15 MTNL 5.57 Etisalat 0.00 S Tel 0.00 HFCL 1.49 Total 934.08
(Source: Annual Report 2012, DOT & The Indian Telecom Services Performance Indicators, April-June 2012) MOBILE VALUE ADDED SERVICES (“MVAS”) – AN OVERVIEW
Telecommunications had traditionally been a voice communication service enabling two or more people to connect with one another. Any additional service enabling the subscriber to use the mobile phone for a host of purposes like sending short messages, pictures, play games, listen to music, read news headlines, astrology, get flight information, surf internet, mobile banking including mobile payments etc. Offered on telecom networks are value added services offered by value added service providers (“MVAS Providers”). In addition to benefiting consumers MVAS is likely to become a tool for additional revenue, service differentiation, and customer retention for service providers. (Source: The TRAI consultation paper on MVAS July 21, 2011)
The mobile value added services such as m-banking, m-governance, location based services etc., has assumed significance in recent times due to the rapid growth in wireless subscriber base. Consequently, the mobile phones have transformed into a persuasive medium to deliver information services spanning various usage areas such as governance, commerce, education and banking. Thus, m-powering is playing an instrumental role in bringing about empowerment to all strata of society by their delivery of services. (Source: Annual Report 2012, DOT)
Subscribe rs to Data Services (million), Jun-15, 346.67 Subscribe rs to Data Services (million), Sep-15, 373.84 Subscribe rs to Data Services (million), Dec-15, 431.37 Subscribe rs to Data Services (million), Mar-16, 448.89 Subscribe rs to Data Services (million), Jun-16, 460.84
While the computer and internet empowered urban India, it is the mobile which is impacting common man including in rural areas. Mobile phones are bridging the digital divide and make it possible medium for delivering a variety of services and content. The mobile platforms, world over, are being used to provide financial and banking services, tele- education and government services. Increasing proliferation of mobile services has also created a unique opportunity to deliver all kinds of utility MVAS to the masses through innovative applications. (Source: The TRAI consultation paper on MVAS July 21, 2011)
The MVAS ecosystem
The following are the broad stake-holder groups in this ecosystem: Content owner, application provider and mobile advertisers Technology enablers and content aggregator
Telecom service providers
Content delivery bodies: carriers and handset vendors Content consumers: subscribers/end users
MVAS can be delivered either on-deck or through the off-deck mode. In the on-deck mode, MVAS providers undertake the branding, marketing and selling of content/application through contractual agreements. These agreements are not governed by any policy framework. In the off-deck model, MVAS Providers sell contents directly to the subscribers. The content can be provided either through the operators’ portal or through their short code. MVAS Provider needs to integrate with multiple operators to be able to use the same short code to provide services to subscribers across carriers. However, carriers still often serve as the billing interface. (Source: The TRAI consultation paper on MVAS July 21, 2011)
MVAS market size and growth
Market size of MVAS is estimated to reach at ` 482 billion by the year 2015 from ` 28 billion at the end of the year 2006. MVAS is considered to be important tool for empowering the common man in India. Innovative and value added services like m-banking, m-education, m-governance, location based services etc., will be delivered to the common man, even in the remotest corners of the country.
The graph below shows the estimated market size of MVAS:
*Estimated asd, 2006, 28 asd, 2007, 47 asd, 2008, 75 asd, 2009, 98 asd, 2010, 122 asd, 2012, 214 asd, 2015*, 482
(Source: The TRAI recommendation on Application Services May 14, 2012 & Press release dated December 07, 2011 India Telecom 2011 “M-Powering India” Press Information Bureau, accessed on January 08, 2013)
In India, SMS, ringtones and caller ring back tones constitute bulk of the value added services provided by mobile telecom service providers presently. There are innumerable value added services like gaming, video and audio streaming, stock quotes, news, cricket, tele-voting, chatting, astrology, which add value to the basic telecom services. Each service differs in content, cost and demand and is customised for different segment of consumers. (Source: The TRAI consultation paper on MVAS July 21, 2011)
Application Service
Presently, the application services market in India is centred on entertainment, music and sports (mainly cricket).The socio-economic structure is changing with enhanced emphasis on newer applications and networking. Apart from simple applications like e-mail, instant messaging, educational information, text chat etc., the focus is shifting to applications like video download, advertisements, gaming, video chat, e-education, e-health, e-governance, and social networking. (Source: TRAI Recommendations on Application Services, May 14, 2012)
Many advanced applications were not possible due to lower speed offered by 2G networks. With the proliferation of 3G and BWA services, users are getting abundance of application services developed by independent ASPs with plethora of business models and technical implementations. Accessing the internet on mobile devices, downloading music, video, pictures, playing games and even sending multimedia messages is extensively used by the customers. Service convergence such as voice with mobile television, device convergence at the user end and network convergence at core will also facilitate the rapid adoption of application services by the consumers. (Source: TRAI Recommendations on Application Services, May 14, 2012)
The chart below shows the comparison between the growth of wireless subscribers and revenue of telecom service providers:
(Source: TRAI Recommendations on Application Services, May 14, 2012)
Presently many new and innovative application services are being offered on wireline and these services continue to evolve with changing technologies. There is a need to define the term application services, which was earlier termed as value added services. According to some stakeholders the definition of application services or value added service in existing licences is flexible and allows the access service provider to innovate and launch new applications and services. (Source: TRAI Recommendations on Application Services, May 14, 2012)
A typical value chain of the application services, provided through telecommunications platform, encompasses content creators/providers, mobile advertisers, aggregators, technology enablers, telecom service providers and end users or subscribers. Content, application aggregation and provision of technology platform is usually performed by a single entity. It is also to be noted here that in the value chain of application services, telecom service providers are very big entities in comparison to the content and application providers, content aggregators most of whom are essentially small and medium sector enterprises. Mobile handset manufacturers have also started playing an important role in the application services value chain. Advertisers are also looking for higher delivery of marketing activities through applications platform. (Source: TRAI Recommendations on Application Services, May 14, 2012) The figure below shows the application service value chain:
(Source: TRAI Recommendations on Application Services, May 14, 2012) Mobile banking
Mobile phones as a medium for extending banking services have off late been attaining greater significance. The rapid growth in users and wider coverage of mobile phone networks have made this medium an important platform for extending banking services to customers. With the rapid growth in the number of mobile phone subscribers in India, banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services. Some banks have started offering information based services like balance enquiry, stop payment instruction of cheques, transactions enquiry, and location of the nearest automatic teller machine/branch etc. Banks offering mobile banking service must ensure that customers having mobile phones of any network operator is in a position to avail of the service. The reserve bank of India has recognised the role of another important stakeholder the mobile network operator as technology service provider in the process of encouraging mobile banking in India. The mobile network operators are expected to play the role of a technology service provider while banks are expected to provide banking services. The USSD platform offers a common gateway to customers of all banks to easily access and use mobile banking services. The major advantage of USSD is that the interbank mobile payment system could become accessible even through low end handsets. (Source: ‘Mobile banking transactions in India - Operative Guidelines for Banks’, RBI accessed on January 8, 2012)
The table below provides the bank wise data of volume in mobile banking transactions from June 2012 to November 2012:
Banks June ’12 July ’12 August ’12 September ’12 October ’12 November ’12
State Bank of India 2577383 2,762,262 2,748,885 2,751,449 3,001,041 3,087,845
ICICI Bank Ltd. 311,745 340,167 358,688 429,771 561,339 671,739 Axis Bank Ltd. 230,112 265,777 323,038 336,143 406,109 445,778 Content owner/ Application provider
Aggregator Technology enabler Telecom
service provider End user Mobile handset manufacturer
Banks June ’12 July ’12 August ’12 September ’12 October ’12 November ’12 CITI Bank 67,980 53,497 50,593 67,734 133,614 167,527 HDFC Bank Ltd. 58,333 52,667 49,870 52,319 60,748 61,077 Bank of Baroda 20,304 23,291 26,872 26,515 28,644 29,950 Canara Bank 1,929 1,882 20,295 3,817 3,532 5,800 Other Banks 169,288 206,147 389,985 229,866 242,178 251,155
(Source: Bank wise volumes in mobile transactionsJune-2012, July-2012, August-2012, September-2012, October- 2012, November-2012, RBI)
The table below provides the bank wise data of value in mobile banking transactions from June 2012 to November 2012:
(` in lacs)
Banks June ’12 July ’12 August ’12 September ’12 October ’12 November ’12
ICICI Bank Ltd. 11,503.14 12,515.50 12,591.13 14,853.00 17,306.24 20,001.67 State Bank of India 11,283.00 11,992.97 12,174.66 14,772.17 18,157.87 18,065.89
Axis Bank Ltd. 2,415.01 3,575.34 4,479.09 5,037.19 5,697.26 6,167.29 CITI Bank 3,131.24 2,956.54 3,493.38 3,386.76 5,044.58 5,814.47 Bank of Baroda 307.13 351.75 388.31 469.67 566.29 597.12 HDFC Bank Ltd. 305.58 293.92 232.89 179.99 190.61 142.46 Canara Bank 103.27 81.34 111.64 96.92 110.85 172.77 Other Banks 1,622.70 2,029.79 2,015.18 2,249.49 2,691.03 2,933.81
(Source: Bank wise volumes in mobile transactions June-2012, July-2012, August-2012, September-2012, October- 2012, November-2012, RBI)
Mobile governance
A strategy and its implementation to leverage available wireless and new media technology platforms, mobile phone devices and applications for delivery of public information and services to citizens and businesses. The mobile governance framework of Government of India aims to utilize the massive reach of mobile phones and harness the potential of mobile applications to enable easy and round-the-clock access to public services, especially in the rural areas. The framework aims to create unique infrastructure as well as application development ecosystem for m- Governance in the country. (Source: The Gazette of India, Framework for mobile governance, Ministry of Communications & Information Technology January 2012). Various channels, such as voice, text (e-mail and SMS), general packet radio service, USSD, SIM toolkit, cell broadcast, and multimedia messaging service will be incorporated to ensure that all users are able to access and use the mobile based services. Bihar government has leveraged mobile technology in state which utilizes the omnibus features of mobiles for the reporting and monitoring of public service delivery on the ground level by using a simple SMS. (Source:
http://bpsm.bih.nic.in/bpsmnewweb/webpages/home.htm, accessed on January 08, 2013) The m-governance project
being implemented by the Kerala state information technology mission involves the utilization of all kinds of wireless and mobile technology services, applications and devices for governance. The M-Governance project in Kerala is a comprehensive mobile governance project aimed at enabling the 90 government departments and m-powering the people. The mobile governance service delivery platform of Kerala has the following components (a) e-SMS (b) multimedia messaging service gateway (c) out bound voice diallers (d) Bluetooth kiosks (Source:
http://www.itmission.kerala.gov.in/ accessed on January 08, 2013)
Numerous mobile governance programs have been launched by varied departments of government of India through mobile applications. For the effective implementation of these program government has established mobile electronic governance service delivery gateway (“MSDG”).The purpose of setting up the MSDG is to provide a one-stop ecosystem for enabling the delivery of various electronic government services through mobile devices in an efficient manner with minimum effort for the participating government departments and agencies. MSDG will also help in