Passive Infrastructure Sharing BSNL's Pitch Document 2009 | New Delhi

1 Dec-01Dec-02Dec-03Dec-04Dec-05Dec-06Dec-07Dec-08 1 Dec-09Dec-10Dec-11Dec-12Dec-13 Subscribers (Mn) Wireless market is set to boom in the next 5 years Growth will be heavily front-loaded with ~50% new adds in next two years Source: COAI, AUSPI, TRAI, Census data, literature survey, BCG analysis India wireless connections growth (past and projected) ~50% of total net adds during Heavily front-loaded growth in the wireless market has necessitated faster time to market for all operators

2 The growing wireless space is likely to see intensified competition in the next 2 years New Licensees set to rollout services Incumbent players on large scale expansion mode In partnership with Unitech In partnership with Shyam Telelink As Swan- Etisalat Expansion to new circles Launch of GSM services Increasing competition puts pressure on margins and forces operators to lower their cost to serve

3 At the same time, wireless ARPU is projected to decrease going forward % Average ARPU ARPU expected to decrease by ~7% p.a. over the next 5 years Declining ARPUs will lead operators to reduce their cost to serve to protect their margins 1. Includes all mobility revenues, including Enterprise wireless CUG Source: TRAI, Literature survey, Analyst reports, BCG analysis

4 Lower cost to serve Low cost of network rollout Low cost of network operations Reduce upfront capex investment Low upfront capital commitment; opex model Enable faster time to market First to reach new subscribers First to reach potentially high ARPU locations BSNL can help operators address the challenges of the changing industry dynamics Your Requirements Our Value Proposition Low infrastructure rental fees and low pass- through expenses Rentals lower than the market average Pre-existing anchor tenancy decreases pass-through expenses Nationwide presence Network across 21 circles Presence in dense urban as well as remote rural areas Presence in circles that will see high number of new subscribers Ready for tenancy All towers ready for sharing Technologically compatible for all services 1 2 3

5 BSNL Infrastructure at a glance Transparency in our billing and operations Presence Our Brand Perception Financing of operations All tower rollout funded through internal reserves 21 Circles across India (except Delhi and Mumbai) Tower Portfolio December ,000 towers December ,500 towers Current Tenancy 1.1 (with no external tenant) Type of Coverage Balanced split between urban and rural BTSs Type of Towers GBT = 67%, RTT = 33%

6 Rs. 5,000-10,000 as site rental per month in a semi-urban area Rs. 25,000 – 40,000 for a GBT / month Included in passive infra rental Rs. 60, ,000 per month No upfront investment Rs. 11 – 16 lakhs 1 per year Sharing BSNL's passive infrastructure will help operators lower the cost of network roll-out and operations Typical costs for own buildout Hire from others 2 Cost of land Cost of passive infrastructure R&M cost Energy costs (diesel and power) Hire from BSNL Rs. 4-5 lakhs for site space in a semi-urban area Rs lakhs for a GBT Rs. 30, ,000 per tower per year Rs. 60, ,000 per month Rs lakhs upfront Rs. 7.5 – 10 lakhs per year 50% savings vis-à-vis market Most BSNL sites are owned and have no implied rental 10%-15% lower than the industry leader Included in passive infra rental 50% savings vis-à-vis market All BSNL sites have anchor tenant which reduces energy costs No upfront investment 25% - 40% savings on annual expenditure Expenses borne by the operator while installing BTS 1. Assuming 10% depreciation of land cost and capex to calculate yearly allocation of cost 2. Speciafically stands for independent IP with no anchor tenant Total cost 1

7 BSNL offers you the best value proposition in the market – large number of towers across India at an affordable price LowHigh Number of towers High Low Passive infra rental/ slot LowHigh Number of circles in which IP provides service High Low Quippo GTL Indus RTIL BIL BSNL GTL Quippo BIL Indus RTIL BSNL BSNL charges rentals comparable to the independent IP but provides operator with bulk volume across India Source: Based on current industry prices as received by BSNL in its EOI solicited for hiring towers from the market Passive infra rental/ slot 1 INDICATIVE

8 BSNL has a strong nationwide coverage that extends across urban and rural area Operator can leverage the flexibility of an urban/rural rollout as it's operations warrant BSNL's network covers 602 districts (96% of all districts) in India BSNL covers 55%-60% of India's population BSNL covers ~75% of all villages with more than 5,000 and ~48% of all villages with more than 1,000 population 2 BSNL's network is present in 21 Telecom Circles in India (except Delhi and Mumbai)

9 Very low growth circlesLow growth circlesMedium growth circlesHigh growth circlesVery high growth circle Competition BSNL No. of sharable towers BSNL's extensive tower base will help you roll-out network in target geographies faster Note: Competition stands for WTTIL-Quippo in this illustration; Projected net adds based on income levels and teledensity between BSNL outpaces competition in terms of capacity in high growth circles Growth criteria Growth criteria (Net adds) Circle Names Very low growth Less than 5 mnJammu & Kashmir, Himachal Pradesh, North East, Chennai Low growth Between 5-10 mnPunjab, Orissa, Kerala, Haryana, Assam, Kolkata, Delhi, Mumbai Medium growth Between mnRajasthan, West Bengal, Tamil Nadu, Karnataka High growth Between mnMadhya Pradesh, UP West, Maharashtra, Gujarat, Andhra Pradesh Very High growth Greater than 25 mnUP East, Bihar

10 Number of sharable towers with 0 BSNL BTSNumber of sharable towers with 0 BSNL BTSNumber of sharable towers with 0 BSNL BTSNumber of sharable towers with 1 BSNL BTSNumber of sharable towers with 1 BSNL BTSNumber of sharable towers with 1 BSNL BTSNumber of sharable towers with 2 BSNL BTSNumber of sharable towers with 2 BSNL BTSNumber of sharable towers with 2 BSNL BTSNumber of sharable towers with 3 BSNL BTSNumber of sharable towers with 3 BSNL BTSNumber of sharable towers with 3 BSNL BTS 1. Old data used for 7 states, currently does not exclude USO towers Note: Assumes that all BTS installed are GSM BTS. Source: BSNL (Asset Validation Drive) Number of sharable towers by existing number of BSNL BTS BSNL towers are "ready for occupancy" ~98% of towers have 1 or 2 BSNL BTS already installed; infrastructure already in place 3

11 BSNL can be the choice infrastructure partner for your organization