Connecting a continent with 802.16d
The Indian Experience
Prateek Pashine
June 16, 2008
©2008 Tata Communications, Ltd. All Rights Reserved.
Confidential & 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 forwardlooking 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
JAN 2008
compression on certain of the company’s communications services, failure to integrate strategic acquisitions and changes in 12
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.
Tata Communications :: WiMAX Journey
Confidential & Proprietary
1
An Introduction to
Tata
Communications
Broadband –
Current India
Perspective
Tata Communications :: WiMAX Journey
Confidential & Proprietary
WiMAX :: The
Answer
2
Tata Communications Leadership Landscape
Industry Leader
Customers
ƒ #1 global wholesale voice
State-of-the-art
Infrastructure
ƒ #1 global submarine cable
capacity
ƒ 200,000 route km global
network
ƒ 600 mobile operators
ƒ #1 intnl. long distance services
in India
ƒ 300 points of presence (PoPs)
ƒ #1 enterprise data services in
India
ƒ ~1M sq. feet of data center
space
ƒ 20+ terabit submarine capacity
ƒ 1,500 global carriers
ƒ “Fortune 1000” of India
ƒ 5,000+ SMEs in India
ƒ 500,000 Internet and
broadband subs
ƒ #1 Internet services in India
Tata Communications :: WiMAX Journey
Confidential & Proprietary
3
Our Strengths
India
Enablement
• #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
Global
Submarine &
IP Reach
• Owned cable network across the globe: $1Bn investment
• Tier-1 Global IP Network and leading ISP in India
• Unique assets and connectivity in Asia, Middle East, Africa
Integrated
Wholesale
Services
• #1 wholesale international voice provider
• Suite of voice, data, IP, signaling and outsourcing services
• Over 1500 carrier relationships including 600+ mobile
operators
Tata Communications :: WiMAX Journey
Confidential & Proprietary
4
Our Weaknesses & hence opportunities
Customer
Base
Last Mile
Network
No Legacy
voice
spectrum
• Business largely focused on Wholesale and Enterprise
• Legacy retail restricted to Dialup Internet
• No retail voice business
• Limited ownership of last mile
• Prohibitive cost of buried network
• No LLU
• No 2G / voice spectrum
• MMDS / LMDS spectrum available at 2.7 and 3.3 Ghz
Tata Communications :: WiMAX Journey
Confidential & Proprietary
5
The Broadband
opportunity in India
Prateek Pashine
June 16, 2008
©2008 Tata Communications, Ltd. All Rights Reserved.
Confidential & Proprietary
India: Strong Economic Fundamentals
Third Largest Economy by 2050(1)
With Highest Projected Growth Rate(1)
GDP (US$bn)
GDP CAGR (2005-2050E)
44,453
40,000
10%
35,165
8%
8.9%
7.5%
27,803
30,000
5.9%
6%
20,000
5.5%
4%
2.5%
6,673
10,000
6,074
5,870
3,782
3,603
3,148
0
1.8%
2%
0.9%
1.7%
1.3%
Increasing Per Capita Income(2)
France
Germany
Russia
Brazil
Japan
Increasing Household Disposable Income(3)
Per Capita Income (US$)
CAGR : 10%
1,140
1,200
Avg HH disposable income
Rupees (‘000)
500
CAGR
961
797
900
India
US
China
France
Germany
UK
Russia
Brazil
Japan
India
China
US
0%
UK
50,000
640
Urban
CAGR
4.6%
5.8%
3.6%
5.3%
2.8%
3.6%
All India
250
600
Rural
300
0
0
FY04
FY07
FY08E
FY10E
FY95
FY90
FY95
FY00
FY05
FY10E FY15E FY20E FY25E
(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
Tata Communications :: WiMAX Journey
Confidential & Proprietary
7
India: Favorable Demographic Shift
Favorable Shift in Income Profile (1)
Growing Work Force (15-59 yrs)(2)
% of
population
100%
7%
% of population
100%
1
4
1
1
2
8%
8%
9%
11%
12%
60%
63%
64%
64%
64%
35%
32%
29%
27%
25%
23%
FY 2001
FY 2006
FY 2011E
FY 2016E
FY 2021E
FY 2026E
8
75%
19
58%
50%
80%
41
32
25%
0%
60%
43
0-14 yrs
40%
15-59 yrs
>60 yrs
Increasing Literacy(3)
36
% literate population
54
75
80
20%
70
35
55
60
22
50
40
0%
43
36
30
FY 2005
FY 2015E
Deprived (<Rs. 90,000 pa)
Seekers (Rs. 200,000-500,000 pa)
Globals (>Rs. 1,000,000 pa)
FY 2025E
Aspirers (Rs. 90,000-200,000 pa)
Strivers (Rs. 500,000 - 1,000,000 pa)
20
10
0
FY 1981
FY 1991
FY 2001
(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
Tata Communications :: WiMAX Journey
Confidential & Proprietary
FY 2011E
8
India – Huge Internet Potential
Population 1.2 billion
Phone
Connections
300 million
Total
Total Population
Population
Urban Population
Addressable
Addressable Urban
Urban
population
population
People
People with
with Phone
Phone (Wireline/
(Wireline/
Wireless)
connections
Wireless) connections
Cable/
Cable/ Internet/
Internet/ Broadband
Broadband
Connections
Connections
300+ million
Cable
Connections
80 million
Internet
User
70 million
Fixed
Connections
40 million
Internet
Connections
9.2 million
Broadband
Connections
4 million
Provisioning
ddressable market
aaddressable
Provisioningofofwireless
wirelesstechnology
technologywould
wouldenable
enableconversion
conversionofofaddressable
marketinto
intosubscribers
subscribers
Tata Communications :: WiMAX Journey
Confidential
Source : TRAI, IAMAI, Management estimates (Estimates for September 2007)
& Proprietary
9
India – Huge Internet Potential…
• Poor infrastructure & support
Current
Impediments
for growth
•
•
•
•
• High Buried Access Costs
• Very low wireline penetration
•
•
Wireless to be
the technology
for choice
No LLU
Legacy network with long loop lengths
Unorganized cable infrastructure with poor network
2G + services in the country
• 200 months of ARPU as Capex
• Limited green-field deployment
Limited spectrum for BWA
Limited content offering – restricted utility for access
• 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
Wirelessisisthe
thebest
besttechnology
technologyto
todrive
driveinternet
internetgrowth
growthininIndia
India
Tata Communications :: WiMAX Journey
Confidential & Proprietary
10
Bypassing Legacy – the India Way
Voice Services: Digital mobile is 8X of fixed lines
ƒ GSM introduced in 1995 and CDMA-1X in 2003
ƒ No analog. No standards issues
Pay TV Services: Satellite leading the
introduction of digital TV
ƒ Analog cable prevalent since mid nineties
ƒ Government mandates “conditional access” in
metros
ƒ Satellite (DTH) services achieve 5% share in a
year… 3 new players entering the market
Broadband ???
Tata Communications :: WiMAX Journey
Confidential & Proprietary
11
Wire(d)less WIMAX to the fore!!
Tata Communications :: WiMAX Journey
Confidential & Proprietary
12
WiMAX – First off the Blocks
3G - Policy yet to be finalized
ƒ Spectrum to be auctioned to 3-4 players
ƒ Greater impact on voice economics rather than data services
WiMAX – Available now
ƒ
ƒ
ƒ
ƒ
ƒ
ISPs using 3.3GHz spectrum for WiMAX roll-out
At least 3 networks being built in all large towns
Best spectral efficiencies
Already a 4G technology – OFDMA today
Cost of CPE soon becomes indirect
Promising
Promisingtechnology
technologyoption
option --need
needcatalyst
catalystto
tofuel
fuelthe
thedeployment
deployment
Tata Communications :: WiMAX Journey
Confidential & Proprietary
13
WiMAX in India – Current Scenario
•
Regulatory
Scenario
Deployment
status
•
•
•
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
•
•
•
•
•
•
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
Tata Communications :: WiMAX Journey
Confidential & Proprietary
14
WiMAX in India –
Tata Communications takes the lead!!!
Tata Communications :: WiMAX Journey
Confidential & Proprietary
15
Market needs | WiMAX in India
Businesses
Consumers
ƒ Supplement Fiber roll-out in major
metros
ƒ Primary access mechanism for
Broadband
ƒ Expand access reach (~ E1) to all
major business towns
ƒ Provide reliable 1Mbps experience
+ content/apps
ƒ Current Status: >35 towns
ƒ Current Status: 1 city
ƒ March 2009: 115 towns
ƒ March 2009: 15 cities
Tata Communications :: WiMAX Journey
Confidential & Proprietary
16
Bangalore :: Retail WiMax Roll out Details, India’s first ALL CITY coverage of
WiMAX
ƒ
ƒ
ƒ
ƒ
ƒ
Launched with 132 BTS in Dec 2007, currently 158
Most sites back hauled on Fibre
3.3 Ghz, 12 Mhz, 3 Mhz/sector, 4 sectors
85% of the city covered
Outdoor SS – truck roll required
ƒ Introduced 3rd party SS to work with the BTS
ƒ Arguably the first network in WiMax d to have fully interoperable 3rd party SS
ƒ
ƒ
ƒ
ƒ
SS installed at between 3 to 8 mtrs height
ARPU of $25 + a month – almost 3 times the industry average
Over 7,000 customers installed in first 4 months!!
6 other cities ready to go Live in coming quarter
Tata Communications :: WiMAX Journey
Confidential & Proprietary
17
Bangalore coverage
City divided based on Business requirement in to 5 clusters
ƒ Cluster 0 – Corporate – Downtown
ƒ Cluster 1 – SME
ƒ Cluster 2,3&4 – Residential
Design Assumptions
ƒ
ƒ
ƒ
ƒ
Cell edge – QAM16
Building edge coverage
90% Probability of service by area
Area of coverage approx 300 Sq Km
Tata Communications :: WiMAX Journey
Confidential & Proprietary
18
Bangalore – City Clusters
Cluster 1
Cluster 0
Cluster 2
Cluster 4
Cluster 3
Tata Communications :: WiMAX Journey
Confidential & Proprietary
19
Overall Coverage
Tata Communications :: WiMAX Journey
Confidential & Proprietary
20
Our Experience
3.3 Ghz 16 d deployment
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Subscriber Station height a key factor for feasibility
Outdoor and Semi-Outdoor Coverage is not an issue
Full Outdoor SS will definitely give better coverage.
Limited Indoor Coverage –Indoor penetration loss is high in 3.3Ghz
Spectral Efficiency of 2 bits/Hertz/Seconds – 6 mbps per sector
IOT with different SS vendors
Tata Communications :: WiMAX Journey
Confidential & Proprietary
21
Sample Pictures - BTS & SS
Tata Communications :: WiMAX Journey
Confidential & Proprietary
22
Not letting the lack of spectrum in the “standard” bands affect Wimax rollout
Tata Comm. Action
Forum Support
Yes, we can give
you “d” equipment
at 3.3
Deploys/deploying
largest “d” network
3.3GHz profile
Yes we will publish
IOT and share data
for HL integration
Tata Comm places
orders with
independent vendors
with full integration
Publish
integration/IO
standards beyond
just MAC/PHY in “d”
3.3 e yes but at 5
Mhz >> 3.3 e at 3Mhz
also
RFQ floated and trials
commenced in 3.3e
Create 3 Mhz profile
Industry Reactions
“What is 3.3 Ghz
Wimax??!!!”
What do you
mean by
independent CPE
in “d” ?
3.3 e!!! – come
back after “don’t
know how many
months”
Tata Communications :: WiMAX Journey
Confidential & Proprietary
23
Crystal Gazing, India market….circa 2013
ƒ
ƒ
ƒ
ƒ
ƒ
Largest WiMAX subscribers will be in India :: ~ 30 mn BB subscibers
WiMAX contributing to 60+% of all Broadband connections
5-6 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
selection
ƒ Quad band SS available at USD 20
Tata Communications :: WiMAX Journey
Confidential & Proprietary
24
Tata Communications – Taking Broadband to the masses with Wimax
Tata Communications :: WiMAX Journey
Confidential & Proprietary
25
Thank you
Prateek Pashine
June 16, 2008
©2008 Tata Communications, Ltd. All Rights Reserved.
Confidential & Proprietary