Not-rated

RCVL
Leveraging the power of scale and technology

Analyst: B Srinivas Rao

Srinivas@enam.com (+91 22 5554 7613)

March 3, 2006
1
Table of contents
Slide No.

 Current shareholding structure 3

 Investment summary 5

 RCVL v/s Bharti 7

 RCVL Valuation:
„ Valuation benchmarked to Bharti 12
„ DCF valuation of current business 13

 Consumer Broadband
„ Revenue opportunity 14
„ Valuation 15

 Valuation Comparison 16

 Appendix 19

2
Current share holding structure
63%
ADAG 37% Public

RCVL
1224mn shares

45% 45% 35.6%

55%
RCIL RIC RTL
(Public –28.3%) 46% (Public - 41.4%) (Public – 22.5%)

64.4%
9%

Economic Interest
in B RCIL RIC RTL
Of 

ADAG 55%+37%*45% = 71.7% 9%+55%*46%+37%*45%+37%*45%*46% = 58.6% 64.4% +37%*35.6% = 77.5%

Public 63%*45% = 28.3% 63%*45%+63%*45%*46% = 41.4% 63%*35.6% = 22.5%

 Reliance Communication Infrastructure (RCIL) holds the entire network excluding the mobile
network. This is leased to RIC on an IRU basis

 Reliance Infocom (RIC) holds the CDMA mobile business and the assets of FLAG/FALCON

 Reliance Telecom (RTL) holds the the GSM mobile assets and business

3
Consolidation will lead to dilution
 Promoter Group (ADAG) has indicated that structure will collapse into a single
entity
„ ADAG would have to exchange its shares in RCIL, RIC and RTL into those of RCVL.

 The relative valuation of RCIL and RIC will determine the increase in shares of
RCVL and the potential dilution for the public.
„ We have attributed 20% of the equity value of entire Infocom business to RCIL- the infrastructure
company
„ We estimate ADAG shareholding at 61% on an expanded equity of around 1988mn shares
„ Valuation of Reliance Telecom will have minimal impact due to its low value

 RCVL has declared a proforma

ADAG Public Total no. of shares (mn)
3QFY06 net profit of Rs 3.1bn
15% 61% 39% 1955
This includes 100% of profits of RCIL,

Value share
„

RCVL (%)
of RCIL in
20% 61% 39% 1988
RIC and RTL 25% 62% 38% 2022
30% 63% 37% 2057
35% 63% 37% 2094

4
Investment Summary
 RIC has been conceived to enable 3 revolutions: Wireless, Enterprise broadband
and Consumer broadband
„ Mobile business uses a fraction of the capability and capacity of the network
„ Enterprise broadband and consumer broadband will unleash its full potential

 The relative valuation of RCIL and RIC will determine the increase in shares of
RCVL and the potential dilution for the public.
„ We have based our analysis on a expanded equity base of 1988mn shares

 Valuation of existing business (wireless, long distance and enterprise)

benchmarked to Bharti – we estimate a base case value of around $10.5bn
„ This translates into a share price of Rs 237 (assuming 1988m shares)

 Potential upside from Consumer broadband (CBB) is around $4bn (base case)
„ This is based on assumptions for addressable market and RCVL market share
„ This translates into a share price of Rs 91 (assuming 1988m shares)
„ We realize that CBB opportunity carries significant execution risk and use a discount rate of 25%

 Our forecasts for RCVL (FY07E): Revenue - Rs 161bn ($4.4bn), EBIDTA - Rs 46bn
($1bn)

 Our medium term target price for RCVL is Rs 340-350 per share

5
Reliance Infocomm: the story so far….
High
Valuations rise as
co. prove abilities
in establishing
dominant position

Marketing
prowess &
Infocomm has successfully demonstrated the largest CDMA collections
deployment in the world. Organizational
Valuation

FL offerings scale-up
with Globalization
Innovative broadband
Large scale
handset and Cable services
capacity built Billing system
tariff plans Gaming & VOD
up v/s flaws
CDMA v/s modular roll- Bad debt
GSM battle out Regulatory
problems
Product High upfront issues:
Largest CDMA
superiority investments roaming
deployment in
v/s network could strain the world
effects B/S

Low

Technology Financing Execution Customer Customer New Scalability

risk risk risk acquisition retention risk services risk
risk

Present stage
Source: ENAM Research

6
Wireless: lagging Bharti by a year
Wireless revenues Wireless EBIDTA Gross ARPU
25,000 10,000 40 600
(Rs.mn) (Rs.mn) (%) (Rs.mn)
35 500
20,000 8,000
30
400
15,000 6,000 25
20 300
10,000 4,000 15 200
5,000 10
2,000 100
5
0 0 0 0
1QFY06 2QFY06 3QF06 1QFY06 2QFY06 3QF06 1QFY06 2QFY06 3QF06
Bharti RCVL EBIDTA - Bharti EBIDTA - RCVL Bharti RCVL
OPM - Bharti (RHS) OPM - RCVL (RHS)

 Compared to Bharti, RCVL’s

„ Gross ARPU and net ARPU is at a 12% and 19% discount in 3QFY06
„ However MoU at 547mins is 33% higher
„ Overall, revenue per minute is lower by 34%

 Accounting treatment of handset revenues and subsidy not clear

„ We believe there is a ‘cash’ subsidy of around Rs 800-1000 even on the entry-level handset
„ We have not been able to consolidate the potential revenue from handset sales with the
wireless revenues

7
Enterprise broadband (EBB) needs to scale rapidly
Revenue  RCVL needs to significantly ramp up
7,000
6,000
(Rs.mn) its EBB business
5,000 „ RCVL has a technological edge in this
4,000 business which it needs to translate into
3,000
tangible financials
2,000
1,000
0
 Currently operational in 29 cities
1QFY06 2QFY06 3QF06 „ Fiber rings in business districts and close to
Bharti RCVL commercial buildings are operational
` buildings passed – 50,000
EBITDA & OPM
2,000 40
(Rs.mn) (%) Â RCVL offers around 14 products and
30
1,500 services by leveraging its fibre-rich
20
1,000 10 network
500 0 „ Products include Centrex, E1 DID, MPLS –
(10)
0 VPN
(20)
(500) (30)
 50% share of the IDC (hosting) biz
1QFY06 2QFY06 3QF06
EBIDTA - Bharti EBIDTA - RCVL
OPM - Bharti (RHS) OPM - RCVL (RHS)

8
Long Distance: Leveraging FLAG in key to margin
expansion
Revenues EBIDTA Revenue breakdown
20,000 2,500 50
(Rs.mn) (Rs.mn) (%) (RCVL)
2,000 40 Managed NLD
15,000
data wholesale
1,500 30 Leased 1% 39%
10,000 lines
1,000 20 7%
5,000
500 10
IRU
0 0 0 8% ILD
1QFY06 2QFY06 3QF06 1QFY06 2QFY06 3QF06 ILD retail wholesale
13% 32%
Bharti RCVL EBIDTA - Bharti EBIDTA - RCVL
OPM - Bharti (RHS) OPM - RCVL (RHS)

 RCVL EBIDTA has steadily climbed to a level comparable that of Bharti

 RCVL claims a 46% share of the International Long Distance (ILD) minutes
„ We estimate total ILD minutes (incoming + outgoing) at around 10bn in FY06E

 Dominant share of the US-India retail volumes

„ We understand RCVL’s India calling card has a 40% share US-India retail voice traffic

 FLAG has turned +ve at the EBIDTA level

9
RCVL: Closing the gap with Bharti..
Bharti RCVL
1QFY06 2QFY06 3QF06 1QFY06 2QFY06 3QF06

Customers
Wireless (mn) 12.26 14.07 16.33 11.65 13.00 14.68 RCVL customer base is largely similar to that
Fixed Wireless/Wireline 0.93 1.06 1.20 1.72 2.09 2.57 of Bharti – however there are significant
Total (m) 13.19 15.13 17.53 13.37 15.08 17.25 differences in ARPU, MoU and churn rates
Mkt share - wireless 21.6% 21.8% 21.7% 20.5% 20.2% 19.5%

Network Coverage
Census Tows - - 3,300 - - 3,684
Villages - - - - - 235,971
Population - - 38% - - 54%
Backbone (rkms) - - 30,000 - - 60,000

Traffic (mn mins/day) 148 170 208 - - 320 Though RCVL topline is similar to that of
MoU (mins) 383 388 411 510 568 547 Bharti, a divisional breakdown reflects the
fact that RCVL has yet to scale its
Gross ARPU (Rs/month) 493 476 470 399 420 412 enterprise and broadband business
Net ARPU (Rs/month) 345 338 336 255 266 271

Revenue per minute 1.29 1.23 1.14 0.78 0.74 0.75

The largest difference is in Access charges
Income Statement (Rs bn)
and license fee as a % of sales. RCVL’s Access
Revenues 25.2 27.1 30.3 25.4 27.9 33.3
charges and license fee amount to 28% and
Access and IUC 4.9 4.9 5.6 7.1 8.2 8.3
Total Operating Expenses 13.3 14.2 16.0 15.2 13.9 14.5 6% as compared to 18% and 10% for Bharti
License Fee 2.4 2.7 3.0 1.4 1.6 2.0
Total Cost 15.8 16.9 19.1 23.7 23.7 24.8
EBIDTA 9.4 10.2 11.2 1.7 4.2 8.5 The increase in EBIDTA for RCVL in 3Q06 is
Net Interest 0.1 0.8 0.9 0.4 0.5 1.3 largely driven by less than proportionate
Depreciation & Amortization 3.4 3.7 4.0 3.8 3.8 4.0 increase in Access charges and license fees
PBT 6.0 5.8 6.4 (2.4) (0.2) 3.2
PAT before minority int 5.2 5.3 5.5 (2.5) (0.2) 3.1

10
..but enterprise biz yet to scale up
Divisional Performance
(Rs. bn) Bharti RCVL
1QFY06 2QFY06 3QF06 1QFY06 2QFY06 3QF06
Revenues (Rs. bn)
Wireless 17.5 19.1 21.7 15.1 18.1 20.0
Long distance 5.2 5.6 6.3 14.8 16.2 17.9
Broadband & Enterprise 5.0 5.4 5.7 1.0 0.9 1.3
Intersegment (2.5) (2.9) (3.5) (6.3) (7.3) (5.9)
Total 25.2 27.1 30.3 24.5 27.9 33.3

EBIDTA (Rs. bn)

Wireless 6.1 6.9 7.9 3.4 5.1 6.4
Long distance 1.9 2.0 2.1 0.3 0.9 2.0
Broadband & Enterprise 1.6 1.5 1.6 (0.2) 0.1 0.2
Others/corp office (0.2) (0.3) (0.4) (1.8) (1.9) (0.1)
Total 9.4 10.2 11.2 1.7 4.2 8.5

Margins (%)
Wireless 34.8 36.5 36.5 22.7 28.0 31.9
Long distance 35.9 36.3 33.7 1.9 5.5 11.1
Broadband & Enterprise 32.8 28.1 27.6 (23.8) 14.4 19.0
Total 37.4 37.7 37.0 6.8 14.9 25.5

11
RCVL: Valuation of current business
Bharti RCVL
FY06E FY07E FY06E FY07E
Wireless Wireless assumptions:
Mobile subs India 89 125 89 125
Mkt share 21.5% 21.5% 19.3% 19.3% „ RIC to maintain its wireless mkt-share
Co mobile subs 19.17 26.83 17.2 24.1 „ Expect EBIDTA margins to average 33% as
FWT 3.0 4.2
Total subs 19.2 26.8 20.2 28.2 against 32% in 3QFY06E
ARPU 462 402 342
Discount to Bharti 85% Long Distance assumptions
Revenues 83,581 110,936 75,046 99,194
Margin 35% 36% 33% „ We have assumed it to grow at the same rate as
EBIDTA 28,835 39,382 32,734 that of Bharti
Long distance „ Expect EBIDTA margins of around 13% as against
Revenue 23,785 25,979 68,570 85,713 11% in 3QFY06E.
YoY 25%
Margin 30.5% 30.0% 13% „ 30% of revenues are currently accounted by US-
EBIDTA 7,254 7,794 - 11,143 India calling card where the margin will be around
Enterprise 9-10%
Revenue 22,627 30,703 4,556 7,290
YoY 25% 60%
Margin 32.8% 29.7% 30% Enterprise business assumptions:
EBIDTA 7,433 9,120 2,187 „ RIC to grow at faster rate than Bharti (low base)
Less Intersegment (13,545) (15,492) (25,935) (31,122) „ Expect EBIDTA margins to average 30% as
against 19% in 3QFY06E
Total Revenues (Rs mn) 116,448 152,127 122,237 161,075
Total EBIDTA (Rs mn) 43,850 56,766 46,064
EV/EBIDTA 16 13 11 Valuation
EV 719,929 506,700
Net debt (Rs mn) 38,000 36,000 „ Bharti currently trades at an FY07 EV/EBIDTA
Equity value (Rs mn) 681,929 470,700 multiple of 12x and 13x for consensus and ENAM
Equity value ($bn) 15.2 10.5
No of shares 1889 1,988 estimates respectively
Equity value (Rs/share) 361 237

12
DCF valuation for existing business
(Rs. bn) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Year 1 2 4 5 6 7 8 9 10 11 12 13

Key Assumptions (%)

Cost of equity 18.0
Cost of debt 7.5
Discount rate 14.0
Terminal growth rate of cash flow 4.0

Growth in invested capital (%) 30 20 20 20 15 15 15 13 11 8 6 4

Asset turn (x) 1.57 1.51 1.50 1.55 1.65 1.75 1.85 1.70 1.55 1.40 1.25 1.10
EBIDTA margin (%) 21.5 25.0 30.4 32.5 36.0 39.8 42.5 40.7 39.1 37.7 36.8 36.6
Tax rate (%) 0.0 0.0 0.0 2.0 4.0 6.0 8.0 13.4 18.8 24.2 29.6 35.0
Implicit ROIC (%) 22.9 27.2 30.0 33.4 41.2 49.4 56.2 44.8 35.0 26.7 19.9 14.3

Sales 192 240 286 355 453 553 672 711 731 730 707 660
EBIDTA 41 60 87 115 163 220 285 289 286 276 260 241
Less Tax 0 0 0 (2) (5) (10) (18) (29) (38) (45) (47) (46)
Total Cash Inflow 41 60 87 114 158 210 268 260 247 231 213 195
Capex 54 70 91 105 115 126 136 136 133 131 128 125
Change in working capital (4) (22) (23) (22) (29) (24) (18) (9) (1) 5 8 (16)
Total cash outflow 50 49 68 83 86 101 118 127 132 135 136 109
Free Cash Flow (9) 11 19 31 72 109 150 134 115 96 77 86

PV of Cash flow 323.1

PV of Terminal Value 127.3
Less Opening Net Debt (Net cash) 36.0
Equity value (Rs bn) 414
Equity value ($ bn) 9.2
No of shares 1988
Equity value (Rs/share) 207

13
Consumer broadband: Sizing the revenue
opportunity
Consumer broadband
Revenues: Rs 214bn ($4.7bn)

Films Television Radio Music sales

Revenues: Rs 40bn Ad Revenues: Rs 60bn Pay revenues: Rs 90bn Revenues: Rs 3bn Rs 7bn

ƒ Exhibition: Rs 12bn (30%) ƒ Broadcasters: Rs 51bn ƒ Broadcasters: Rs 16bn ƒ Channel operator: Rs 2.5bn
ƒ Production: Rs 12-14bn (30-35%) Of which Production: Rs 20bn ƒ LCO: Rs 70bn
Internet
ƒ Ad agency: Rs 0.5bn
ƒ Distribution: Rs 3-4bn (8-10%) ƒ Ad agencies: Rs 9bn ƒ MSO: Rs 4bn Rs 14bn
Of which Processing: Rs 0.9bn ƒ DTH:
Note: Tax is about 30% of film collections ƒ Broadband

 $5bn existing market will explode with increase in broadband penetration

„ We have Current broadband penetration stands at 10% of total internet connections

 Current landscape
„ Under capitalized and poorly regulated cable industry does not have the resources to upgrade technology
„ Incumbent telcos have rolled out broadband internet and are conducting trials of IPTV

 RCVL strategy: FTTH architecture to provide Gigabit Ethernet

„ IP-enable network to deliver voice, cable, internet, VOD, gaming etc.
„ Content acquisition and applications being ramped up
„ R-World acting as a laboratory – providing valuable consumer insights to RCVL.
Source: ENAM Research

14
Consumer Broadband Business Scenarios
FY2009
Current Optimistic Pessimistic Most Likely Comment/Assumption

Cable Homes (mn) - All India 60 91.25 Current cable homes based on NRS estimates.
Share of cable homes in top 200 cities 50% 50% 50% Growth assumed @10% p.a
Addressable Mkt -Top 200 cities (mn) 45.6 45.6 45.6 We believe this is a realistic estimate
ARPU (Rs/month)
- Cable 250 333 289 289
YoY growth 10% 5% 5%
- Internet 200 200 123 146 Current ARPU is based on TRAI report Sept'05
YoY growth 0% -15% -10%
- Voice 700 700 430 510 Current ARPU based on post-paid mobile ARPU in
YoY growth 0% -15% -10% Metro & Cat A circles as per TRAI
- Value added services 100 58 Non-voice revenues currently account for 10% of
% of cable ARPU 30% 20% mobile ARPU - we have benchmarked against that
Total ARPU (Rs/month) 1,150 1,333 842 1,009
ARPU p. a ($) 307 355 224 268 Bharti's current Fixed line/broadband ARPU is ~$302
Addressable Mkt by 2009 ( $ bn) 16.2 10.2 12.2
Projections
Estimated Market share 30% 15% 20% Average mkt share (FY2009) of RCVL
Subscribers (mn) 13.7 6.8 9.1
Revenues ($ bn) 4.9 1.5 2.4
EBITDA (40% margin) 1.9 0.6 1.0 RCVL has indicated this level of margin.
Valuation
EV/EBITDA (X) 12 10 10
EV ($ bn in April 2009) 23.3 6.1 9.8
Implied EV/Sub ($, in 2009) 1,706 898 1,070 Bharti's mobile subscriber currently trades at EV of ~$740
Discounting Rate 25%
EV Discounted to present ($ bn) 12.0 3.1 5.1
Net debt ($ bn) 1.0 1.0 1.0 We believe RCVL will have to spend $1bn for CBB
Equity value ($ bn) 11.0 2.1 4.0 which will debt-financed
Equity value (Rs/ share) 247 48 91 Assuming 1998 shares

15
Valuation comparison
Company Name Price/ Mkt Cap Period Net sales Sales EBITDA PAT EBITDA FDEPS EPS gwth RoCE RoE Adj.P/E EV/ Mkt cap/
FV (Rs.bn) (Rs.mn) gwth (%) (Rs.mn) (Rs.mn) margin (%) (Rs.) (%) (%) (%) (x) EBITDA (X) sales (x)

Bharti 376 710 FY04 48,320 15,970 5,076 33.1 2.7 9.8 12.7 137.3 46.9 14.7
10 FY05 80,028 66 30,128 14,977 37.6 8.1 195 17.1 30.2 46.5 24.8 8.9
FY06E 116,448 46 43,850 22,717 37.7 12.0 49 20.2 33.4 31.3 17.1 6.1
FY07E 152,127 31 56,766 29,190 37.3 15.5 28 20.8 31.0 24.3 13.2 4.7

VSNL 367 105 FY04 31,642 5,306 3,434 16.8 12.1 5.9 6.4 30.5 19.7 3.3
10 FY05 33,030 4 7,691 3,338 23.3 11.7 (3) 5.9 6.1 31.3 13.6 3.2
FY06E 37,586 14 8,358 3,639 22.2 12.8 9 6.0 6.2 28.8 12.5 2.8
FY07E 44,543 19 9,752 4,455 21.9 15.6 22 7.1 7.3 23.5 10.7 2.3

MTNL 144 91 FY04 63,696 19,500 11,505 30.6 18.3 5.9 6.4 7.9 2.3 1.6
10 FY05 55,924 (12) 13,478 9,390 24.1 14.9 (18) 5.9 6.1 9.6 3.4 1.9
FY06E 50,983 (9) 9,536 7,129 18.7 11.3 (24) 6.0 6.2 12.7 4.8 2.1
FY07E 56,066 10 11,896 8,039 21.2 12.8 13 7.1 7.3 11.3 3.8 1.9

16
Key management personnel
Anil Ambani

S P Shukla B D Khurana Prakash Bajpai

Wireless Long Distance business Broadband

Before joining Infocomm, Mr Mr Khurana is a very well-respected figure in the Indian Mr Bajpai was previously with
Shukla was with Reliance Telecom telecom industry. Tatas and responsible for their
(the GSM business) fixed –line business in Mumbai
and Maharashtra

17
In conclusion
 Significant visibility of existing business - $10.5bn valuation sustainable
„ Discount to Bharti is warranted to lower quality of customer base

 Consumer broadband opportunity – a leap of faith

„ Our high discount rate and conservative assumptions factor in the execution/time-duration risk

 Impact of management change

„ Transition has been relatively smooth
„ Wireless net adds have started to gain momentum after a lull
„ Core professional managers have helped maintain continuity

 We reiterate our medium term price target of Rs 340-350

18
 Appendix
RCVL Network Infrastructure
RCVL business strategy

19
RCVL: Network Infrastructure and Technology
 Wireless Network: CDMA 1X RTT, Radio Network largely from Lucent
„ Network dimensioned for 30m subscribers
„ Pan-India coverage; rivaled only by that of incumbent BSNL
„ RTL has a GSM network largely in the East and North-east states of India

 Backbone: Optic Fibre with DWDM, Ericsson Switches

„ 60,000 route-kilometers, fully integrated network, IP-based network
„ DWDM ensures that capacity can be scaled significantly
„ Current only 1-2 lambdas have been lit

 Metro Ethernet
„ Self healing rings in 200 cities/towns. G655 fiber which can transmit upto 64 lambdas of 10Gbps each
„ The base-stations of the CDMA radio-network are connected to this ring network
„ Currently enterprise business is operational in 29 cities which utilize these self-healing rings

 FLAG & FALCON

„ FLAG – 52,000 km global network. Connects the high-demand regions of Asia-Pac and Indian subcontinent
„ FALCON – 11,500 cable kilometers, 4 fiber pair, 2.56 Tbps capacity
` Project cost of $400m. To be fully commissioned by 2QFY07

 Internet data Centre

„ 205,000 sqft of space, 600TB capacity, Level 3

 Centralized Network Operating Centre

„ The FLAG Network is also being integrated into this NOC which will provide seamless connectivity across the entire
Infocomm infrastructure

20
Wireless Strategy- To effect a disruptive change
 Offering based on a robust, scalable, Technology platform
„ CDMA 1x 2000 RTT network currently dimensioned for 30m subscribers
` High initial capacity and lower cost/erlang (than GSM) especially under “coverage-constrained” conditions.
` Supports high speed wireless data services and facilitates smooth and cost effective transition to EV-DO/EV-DV
i.e. 3G

 Pan-India network from inception enabling a compelling value proposition

„ Leveraged the network effect which lead a rapid subscriber ramp-up
„ National roaming at very low cost
„ Data-enabled handsets even at the low-end of the price band
„ Walled-garden approach to Data through the R-World Platform - News Clips; Movie Clips; Games;
Sports apart from the usual SMS, MMS etc.

 Unparalled distribution network and Customer Touch Points

„ Reliance Webworlds – a unique distribution model
` multifunctional outlets which provide localized customer care, broadband cyber cafes offering internet, multiplayer
gaming, video conferencing etc.

21
Wireless strategy: Micro-economics
 The strategy to expand the leadership margin…

Significant start-up
Offers low voice Encourages higher Forces higher capex
capacity to take
prices & free content Minutes of Usage on competitors
advantage of scale

„ Network sized up „ Offers lowest prices on „ Infocomm’s MOU is „ Price content cheaply -
30mn subscribers the street and content substantially higher -- as subscriber base
„ Attractive financing is free than its GSM builds up
options to seed the „ Lower revenue per counterparts which „ Modular roll-out will
CDMA hand-sets minute as content is acts as a deterrent for restrict economies of
„ Lock consumers and free the consumer to switch scale and hence ability
lower churn „ Lower margins in the services to price content
short-term „ Get consumers economically
habituated to a higher
level of MoU and its
R-world content
offering

22
Broadband : the key drivers…
The key drivers of broadband penetration

„ Korea & Japan have benefited from focused

Regulatory
Frame work national policy
„ US making a strong push in recent times
„ In India, through the government had set an
pr
ov R ambitious target of 3m by Dec-2005, there
es
n. rat id eg
es u
a lato have been no significant policy initiatives.
tio le
op cce

p r
de latf y fr Most of initiatives have been routed through
ad a

ve orm am „
d rn
an t u

lo
pm fo ew the incumbent telcos (BSNL & MTNL) which
db in

en r ap ork
oa es

t pl have rolled out DSL based broadband at very

br ric

ica
rp

tio low tariffs ($10/month)

we

n
Lo

Applications and rapid adoption

Pricing Lowers per user prices
Applications

„ BSNL has an offer which bundles a basic PC „ Applications such as VOD, gaming, etc.
with its broadband offering. facilitate broadband penetration
„ The consumer pays for the PC and the „ Local language content necessary for mass
subscription on a monthly basis. broadband adoption
„ Top 10 websites in Korea are local regional
content

23
Reliance CBB Strategy: plugging it all
RIC insight
Infrastructure
for access „ 60,000 kms of fiber optic roll-out supporting
terabyte bandwidth capacity – ensures no
capacity constraints well into the future

y es

Av
Offering based on Gigabit ethernet

lit ot

ai pro
„

e. ua m

la m ac
bi o c
ur q ro
technology

lit te es
ct o r p

y
ru f ls

of s p s d e
st nd eve

vi rol vi
fra a t l

ab ife ce
in dem ten

le ra s
er con

in tio
fra n
Reinforcing
rth d

st of
fu ase

ru
growth cycle

ct
e
cr

ur
In

e
Proliferation of access devices
Content promotes content creation Access

RIC insight RIC insight

„ Wireless content portal offering nearly 70 „ IP based set-top box – to ensure open
applications helps understand consumer behavior platform and benefit from scale.
„ Gaming applications under development „ We understand the RCVL has discontinued its
„ Retail outlets show-casing broadband offerings earlier plan to use its in-house developed
„ Regional content proprietary set-top box
„ Microsoft IPTV platform to deliver television

24
Consumer Broadband offering
A high speed optical Gigabit Ethernet network supported by an IP-based Set-Top Box

 Entering the residential Cable TV / Home Entertainment market with Triple Play
of Voice, Video and Data services at affordable prices
„ Digital TV
„ EPG, Time Shifted TV, PVR
„ Video on Demand
„ Video Conferencing
„ VoIP
„ Email, SMS, Chat
„ Information and Community Portal
„ Broadband Internet
„ IP Telephony
„ Interactive TV/ Games
„ Home Security

25
Enterprise Broadband Business offering
 Metro ethernet network architecture providing bandwidth of 10/100 Mbps to
each customer by taking Fiber to the Building
„ One Partner Addressing all Info Communication needs – Fully Integrated and Seamless Solution driven
on the back of a Converged Network

 Products / Services Offered

„ POTS, Mobile
„ Universal Access Numbers, Audio Conferencing, Video Conferencing
„ NLD / ILD
„ Hosting Services
„ Leased Lines
„ Broadband Internet Access
„ Data Applications – Accounting, Sales Force Management, Fleet Management etc.
„ Critical Leased Lines

Full suite of voice & data products and applications

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Capex comparison: the competitive
advantage
USA RIC
Capex/ Sub ARPU Capex/ Sub ARPU
Wireless $200 $30
Capex per subscriber

Wireless $100 $10

$/sub Wireline $1,200 $35+$35

Cable $1,100 $38+$38 Wireline/BB $230 $20

New services
Actual Capex
Upgrading costs India

Legacy cost

USA Scale orders during telecom downturn

Cheap Labour costs

No right of way & local charges

Density of Usage I.e higher

home passed per cable km
Source: Morgan Stanley, ENAM Research

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 ENAM Securities Pvt. Ltd.

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ENAM Research
Analyst Sector Coverage E-mail Tel. (Direct)
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ENAM Sales
Sales E-mail Mobile Tel. (Direct)
Dharmesh Mehta dharmesh@enam.com +91 98200 40245 +91-22 5554 7777
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Himanshu Negandhi himanshu@enam.com +91 98202 14223 +91-22 5554 7755
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Vimesh Zaveri vimesh@enam.com +91 98201 22254 +91-22 5554 7717

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 Thank You

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