Connecting a continent with 802.16d The Indian Experience · PDF fileIndia #1 Internet...

©2008 Tata Communications, Ltd. All Rights Reserved.

Prateek PashineJune 16, 2008

Confidential & Proprietary

Connecting a continent with 802.16dThe Indian Experience

1Tata Communications :: WiMAX JourneyConfidential & Proprietary

Safe Harbor Statement

Certain words and statements in this presentation concerning Tata Communications and its prospects, and other statements including those relating to Tata Communications’ expected financial position, business strategy, the future development of Tata Communications’ operations and the general economy in India, are forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors, including financial, regulatory and environmental, as well as those relating to industry growth and trend projections, which may cause actual results, performance or achievements of Tata Communications, or industry results, to differ materially from those expressed or implied by such forward-looking statements. The important factors that could cause actual results, performance or achievements to differ materially from such forward-looking statements include, among others, failure to increase the volume of traffic on Tata Communications’ network, failure to develop new products and services that meet customer demands and generate acceptable margins, failure to successfully complete commercial testing of new technology and information systems to support new products and services, including voice transmission services, failure to stabilize or reduce the rate of price compression on certain of the company’s communications services, failure to integrate strategic acquisitions and changes in government policies or regulations of India and, in particular, changes relating to the administration of Tata Communications’ industry, and, in general, the economic, business and credit conditions in India. Additional factors that could cause actual results, performance or achievements to differ materially from such forward-looking statements, many of which are not in Tata Communications’ control, include, but are not limited to, those risk factors discussed in Tata Communications’ various filings with the United States Securities and Exchange Commission. These filings are available at www.sec.gov. Tata Communications is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements.

12 JAN 2008


An Introduction to Tata

Communications

Broadband –Current India Perspective

WiMAX :: The Answer


Tata Communications Leadership Landscape

State-of-the-art Infrastructure200,000 route km global network

300 points of presence (PoPs)

20+ terabit submarine capacity

~1M sq. feet of data center space

Customers1,500 global carriers

600 mobile operators

“Fortune 1000” of India

5,000+ SMEs in India

500,000 Internet and broadband subs

Industry Leader#1 global wholesale voice

#1 global submarine cable capacity

#1 intnl. long distance services in India

#1 enterprise data services in India

#1 Internet services in India


Our Strengths

• #1 International and Enterprise data services in India • Relationships with Top 2000 enterprises in India including

Fortune 500 companies• Best connectivity to India and expanded reach within

India Enablement

Global Submarine &

IP Reach

• Owned cable network across the globe: $1Bn investment• Tier-1 Global IP Network and leading ISP in India• Unique assets and connectivity in Asia, Middle East, Africa

Integrated Wholesale Services

• #1 wholesale international voice provider• Suite of voice, data, IP, signaling and outsourcing services• Over 1500 carrier relationships including 600+ mobile

operators


Our Weaknesses & hence opportunities

• Business largely focused on Wholesale and Enterprise• Legacy retail restricted to Dialup Internet• No retail voice businessCustomer

Base

Last Mile Network

• Limited ownership of last mile• Prohibitive cost of buried network• No LLU

No Legacy voice

spectrum

• No 2G / voice spectrum• MMDS / LMDS spectrum available at 2.7 and 3.3 Ghz




The Broadband opportunity in India


1.7%1.3%1.8%

5.5%5.9%

0.9%

2.5%

7.5%

8.9%

0%

2%

4%

6%

8%

10%

Chi

na US

Indi

a

Japa

n

Braz

il

Rus

sia

UK

Ger

man

y

Fran

ce

3,1483,6033,7825,8706,0746,673

35,165

44,453

27,803

0

10,000

20,000

30,000

40,000

50,000

Chi

na US

Indi

a

Japa

n

Braz

il

Rus

sia

UK

Ger

man

y

Fran

ce

GDP (US$bn) GDP CAGR (2005-2050E)

1,140

961797

640

0

300

600

900

1,200

FY04 FY07 FY08E FY10E

Per Capita Income (US$)

CAGR : 10%

Rural

All India

Urban

0

250

500

FY95 FY90 FY95 FY00 FY05 FY10E FY15E FY20E FY25E

Avg HH disposable incomeRupees (‘000)

CAGR CAGR

4.6%

3.6%

2.8%

5.8%

5.3%

3.6%

Third Largest Economy by 2050Third Largest Economy by 2050(1) (1) With Highest Projected Growth RateWith Highest Projected Growth Rate(1)(1)

Increasing Per Capita IncomeIncreasing Per Capita Income(2) (2) Increasing Household Disposable IncomeIncreasing Household Disposable Income(3) (3)

India: Strong Economic Fundamentals

(1) Source : Industry Research; currency translated using 2003 US $ rate(2) Source: Street research & RBI website(3) Source: McKinsey Report: The ‘Bird of Gold’ dated May 2007


India: Favorable Demographic ShiftFavorable Shift in Income Profile Favorable Shift in Income Profile (1) (1)

Increasing LiteracyIncreasing Literacy(3)

Growing Work Force (15Growing Work Force (15--59 yrs)59 yrs)(2)(2)

35% 32% 29% 27% 25% 23%

64% 64% 64%

9% 11% 12%

63%60%58%

8%8%7%

0%

25%

50%

75%

100%

FY 2001 FY 2006 FY 2011E FY 2016E FY 2021E FY 2026E

% of population

0-14 yrs 15-59 yrs >60 yrs

54

35

22

41

43

36

4

19

32

1 1821

0%

20%

40%

60%

80%

100%

FY 2005 FY 2015E FY 2025E

Deprived (<Rs. 90,000 pa) Aspirers (Rs. 90,000-200,000 pa)Seekers (Rs. 200,000-500,000 pa) Strivers (Rs. 500,000 - 1,000,000 pa)Globals (>Rs. 1,000,000 pa)

% literate population

3643

55

75

0

10

20

30

40

50

60

70

80

FY 1981 FY 1991 FY 2001 FY 2011E

% of population

(1) Source: Mckinsey Report May 2007 (Income levels are at real 2001 prices) (2) Source: The National Commission On Population May 2006 (3) Source: India stats website; 2011 rate is India’s 10th Economic Plan objective


Total PopulationTotal PopulationTotal Population

Addressable Urban population

Addressable Urban Addressable Urban populationpopulation

People with Phone (Wireline/ Wireless) connections

People with Phone (Wireline/ People with Phone (Wireline/ Wireless) connectionsWireless) connections

Cable/ Internet/ Broadband Connections

Cable/ Internet/ Broadband Cable/ Internet/ Broadband Connections Connections

Population 1.2 billion

Phone Connections300 million

Cable Connections

80 million

Fixed Connections

40 millionInternet Connections

9.2 million Broadband Connections

4 million

Internet User

70 million

India – Huge Internet Potential

Urban Population

300+ million

Provisioning of wireless technology would enable conversion of addressable market into subscribersProvisioning of wireless technology would enable conversion of aProvisioning of wireless technology would enable conversion of addressable market into subscribersddressable market into subscribers

Source : TRAI, IAMAI, Management estimates (Estimates for September 2007)


India – Huge Internet Potential…

Current Impediments

for growth

• Poor infrastructure & support• No LLU• Legacy network with long loop lengths• Unorganized cable infrastructure with poor network• 2G + services in the country

• High Buried Access Costs • Very low wireline penetration• 200 months of ARPU as Capex• Limited green-field deployment

• Limited spectrum for BWA• Limited content offering – restricted utility for access

Wireless to be the technology

for choice

• Far superior roll-out mechanism with the advantage of existing infrastructure of wireless telecom players

• Spectrum auction likely in near term – Transforming the Indian industry • Potentially large coverage and faster expansion

Wireless is the best technology to drive internet growth in IndiaWireless is the best technology to drive internet growth in India


Bypassing Legacy – the India Way

Voice Services: Digital mobile is 8X of fixed lines GSM introduced in 1995 and CDMA-1X in 2003No analog. No standards issues

Pay TV Services: Satellite leading the introduction of digital TV

Analog cable prevalent since mid ninetiesGovernment mandates “conditional access” in metrosSatellite (DTH) services achieve 5% share in a year… 3 new players entering the market

Broadband ???


Wire(d)less WIMAX to the fore!!


WiMAX – First off the Blocks3G - Policy yet to be finalized

Spectrum to be auctioned to 3-4 playersGreater impact on voice economics rather than data services

WiMAX – Available nowISPs using 3.3GHz spectrum for WiMAX roll-outAt least 3 networks being built in all large townsBest spectral efficienciesAlready a 4G technology – OFDMA todayCost of CPE soon becomes indirect

Promising technology option - need catalyst to fuel the deploymentPromising technology option - need catalyst to fuel the deployment


WiMAX in India – Current Scenario

Regulatory Scenario

• Spectrum available in the 3.3 GHz band • 6 players with 12 Mhz• 1 player with 14 Mhz

• CPE cannot be sold to subscribers• Royalty for BTS and for every CPE on an annual basis• 2.x GHz auction expected in FY 2008-09

Deployment status

• Operators migrating from MMDS/LMDS at 3.3 Ghz to WiMAX• Largely for Enterprise; also for Retail• Tata Communication: Launched services in 35 Cities for Enterprise• Launched its services in Bangalore with 7 K active subs • Aircel and Reliance: Offer to enterprises has been rolled out in 8-10 cities • Others trialing WiMAX gear


WiMAX in India –Tata Communications takes the lead!!!


Market needs | WiMAX in India

Businesses

Supplement Fiber roll-out in major metros

Expand access reach (~ E1) to all major business towns

Current Status: >35 towns

March 2009: 115 towns

Consumers

Primary access mechanism for Broadband

Provide reliable 1Mbps experience + content/apps

Current Status: 1 city

March 2009: 15 cities


Bangalore :: Retail WiMax Roll out Details, India’s first ALL CITY coverage of WiMAX

Launched with 132 BTS in Dec 2007, currently 158Most sites back hauled on Fibre3.3 Ghz, 12 Mhz, 3 Mhz/sector, 4 sectors85% of the city coveredOutdoor SS – truck roll required

Introduced 3rd party SS to work with the BTS Arguably the first network in WiMax d to have fully interoperable 3rd party SS

SS installed at between 3 to 8 mtrs heightARPU of $25 + a month – almost 3 times the industry averageOver 7,000 customers installed in first 4 months!!6 other cities ready to go Live in coming quarter


Bangalore coverageCity divided based on Business requirement in to 5 clusters

Cluster 0 – Corporate – DowntownCluster 1 – SMECluster 2,3&4 – Residential

Design AssumptionsCell edge – QAM16Building edge coverage90% Probability of service by areaArea of coverage approx 300 Sq Km


Bangalore – City Clusters

Cluster 4

Cluster 3

Cluster 2

Cluster 1

Cluster 0


Overall Coverage


Our Experience 3.3 Ghz 16 d deployment

Subscriber Station height a key factor for feasibilityOutdoor and Semi-Outdoor Coverage is not an issueFull Outdoor SS will definitely give better coverage.Limited Indoor Coverage –Indoor penetration loss is high in 3.3GhzSpectral Efficiency of 2 bits/Hertz/Seconds – 6 mbps per sector IOT with different SS vendors


Sample Pictures - BTS & SS


Not letting the lack of spectrum in the “standard” bands affect Wimax rollout

Tata Comm. Action Forum Support Industry Reactions

Yes, we can give you “d” equipment at 3.3

3.3GHz profileDeploys/deploying largest “d” network“What is 3.3 Ghz

Wimax??!!!”

What do you mean by independent CPE in “d” ?

Yes we will publish IOT and share data for HL integration

Publish integration/IO standards beyond just MAC/PHY in “d”

Tata Comm places orders with independent vendors with full integration

3.3 e!!! – come back after “don’t know how many months”

3.3 e yes but at 5 Mhz >> 3.3 e at 3Mhz also

Create 3 Mhz profileRFQ floated and trials commenced in 3.3e


Crystal Gazing, India market….circa 2013

Largest WiMAX subscribers will be in India :: ~ 30 mn BB subscibersWiMAX contributing to 60+% of all Broadband connections5-6 networks each having 60/70 Mhz spectrum 700 Mhz, 2.3, 2.5 and 3.3 Ghz networks live 3 Mhz, 5 Mhz and 10Mhz profiles deployed in India – adaptive channel size selectionQuad band SS available at USD 20


Tata Communications – Taking Broadband to the masses with Wimax




Thank you

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